EXHIBIT 10.06
LOAN AGREEMENT
This Loan Agreement (the "Agreement") is entered into as of this 25th day
of January 1999 between Autodesk, Inc. (the "Holder"), a Delaware corporation,
with its principal offices located at 000 XxXxxxx Xxxxxxx, Xxx Xxxxxx,
Xxxxxxxxxx 00000 and Avatech Solutions, Inc., with its principal offices located
at Owings Mills, Maryland, Avatech of California, Inc., Avatech of Connecticut,
Inc., Avatech Solutions of Colorado, Inc., Avatech of Florida, Inc., Avatech of
Maryland, Inc., Avatech of Michigan, Inc., Avatech of Nebraska, Inc., Avatech of
New Jersey, Inc., Avatech of New York, Inc., Avatech of Virginia, Inc., and
Technical Learningware Company, Inc. (hereinafter collectively the "Borrower").
RECITALS
A. Holder wishes to lend to Borrower and Borrower wishes to borrow from
Holder up to Three Million Dollars ($3,000,000.00) on the terms and conditions
set forth in the Secured Promissory Notes attached hereto as Exhibit A (the
"Note")
X. Xxxxxx and Borrower agree that such loan and any and all other
amounts due Holder from Borrower at any time shall be secured by the assets of
Borrower (the "Collateral") on the terms and conditions set forth in the
Security Agreement between Holder and Borrower attached hereto as Exhibit B (the
"Security Agreement").
C. In connection with making such loan, Holder requires that Borrower
makes certain representations, warranties and covenants, all as set forth
hereinafter, upon which Holder relies in making such loan.
NOW, THEREFORE, IN CONSIDERATION FOR THE MUTUAL COVENANTS AND
REPRESENTATIONS SET FORTH HEREIN, THE PARTIES AGREE AS FOLLOWS:
1. LOAN.
1.1 Subject to the terms and conditions of this Agreement,
Holder agrees to lend to Borrower and Borrower agrees to borrow from Holder up
to Three Million Dollars ($3,000,000.00) pursuant to the terms and conditions of
the Note.
1.2 The loan shall be made at a closing (the "Closing") to be
held at the principal officers of Holder, as set forth above, on the date of
this Agreement or such later date as shall be mutually agreeable to Holder and
Borrower (the "Closing Date"), at which time Holder shall (i) deliver to
Borrower a wire transfer of Three Million Dollars ($3,000,000.00); and (ii)
Borrower shall execute and deliver to Holder the Note and Borrower and Holder
shall execute the Security Agreement.
1.3 Borrower understands that Holder makes no promises of any
further
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support. Accordingly, Holder shall have no obligation to provide any further
financial support beyond that contemplated under the terms of this Agreement,
nor shall Holder have any obligation to provide any technical, marketing or
other advice, or opportunities to Borrower. Holder reserves the right to provide
or refuse to provide any assistance in Holder's sole discretion.
2. SECURITY.
All obligations of Borrower under this Agreement and the Note shall
be secured by the Collateral pursuant to the terms and conditions set forth in
the Security Agreement, executed by Borrower as debtor in favor of Holder as
secured party, granting Holder a security interest in the Collateral (subject
only to the security interest held by First Union National Bank, or such
financial institution replacing it as a secured party, under various loan
documents for an amount not exceeding Three Million Dollars ($3,000,000.00) in
principal, plus interest, attorneys' fees, late charges, and other costs and
expenses due and owing under the agreements between Borrower and First Union
National Bank (the "Credit Limit")). Borrower covenants and agrees to execute
and deliver the Security Agreement and such other documents as may be necessary
for the perfection and preservation of Holder's security interest in the
Collateral.
3. CONDITIONS PRECEDENT.
The obligation of Holder to disburse the loan to Borrower at Closing
is subject to the condition precedent that, on the Closing Date, there shall
have been delivered to Holder the following documents executed by Borrower:
3.1 This Agreement;
3.2 The Note;
3.3 The Security Agreement; and
3.4 Appropriate Financing Statements on Form UCC-1 relating to
the Collateral subject to the Security Agreement.
4. REPRESENTATIONS AND WARRANTIES OF BORROWER.
Borrower represents and warrants that:
4.1 Each company listed as Borrower is a corporation duly
organized and existing under the laws of a state, and is properly licensed and
in good standing in every jurisdiction in which it is doing business, except
where failure to be so qualified would not have a material adverse effect on
Borrower's business.
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4.2 The execution, delivery and performance of this Agreement
and any instrument or agreement required of Borrower hereunder are within
Borrower's powers, have been duly authorized and are not in conflict with the
terms of the articles of incorporation or bylaws of Borrower, or any instrument
or agreement to which Borrower is a party or by which Borrower is bound or
affected.
4.3 No approval, consent, exemption or other action by, or
notice to or filing with, any governmental authority is necessary in connection
with the execution, delivery, performance, or enforcement of this Agreement or
any instrument or agreement required hereunder, except as may have been obtained
and certified copies of which have been delivered to Holder.
4.4 There is no law, rule or regulation, nor is there any
judgment, decree or order of any court or governmental authority binding on
Borrower, which would be contravened by the execution, delivery, performance or
enforcement of this Agreement or any instrument or agreement required of
Borrower hereunder.
4.5 This Agreement is a legal, valid and binding agreement of
Borrower, enforceable against Borrower in accordance with its terms, and any
instrument or agreement required to Borrower hereunder, when executed and
delivered, and will be similarly legal, valid, binding and enforceable, except
as enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally, and subject to rules
of law governing specific performance, injunctive relief and other equitable
remedies.
4.6 Borrower has good and marketable title to the Collateral
which is subject to the Security Agreement, free and clear of all clouds to
title and of all security interests, liens, encumbrances or rights of others,
other than those in favor of First Union National Bank and those listed on
Schedule A attached hereto.
4.7 Borrower represent that as of the Closing that the loan by
Holder hereunder shall be prior and superior to any other indebtedness of
Borrower other than the security interest held by First Union National Bank
("Bank"). Except for the due filing or recording of financing statements on Form
UCC-1 pursuant to the Security Agreement, no further action is necessary in
order to establish and perfect Holder's security interest in or lien on all
Collateral subject only to the security interest of the Bank.
4.8 There are no suits, proceedings, claim or disputes pending
or, to the knowledge of Borrower, threatened against or affecting Borrower or
its property, the adverse determination of which might affect Borrower's
financial condition or operations or impair Borrower's ability to perform their
obligations hereunder or under any instrument or agreement required hereunder.
4.9 Borrower has provided to Holder preliminary drafts of
financial statements of Borrower for fiscal year end 1997 and 1998 (June 1997
and June 1998), and financial
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statement and balance sheet, and unaudited financial statements for the period
of July through September 1998 (collectively the "Financial Statements").
Borrower represents that the Financial Statements were prepared in accordance
with generally accepted accounting principles and fairly represents Borrower's
financial condition and results of operations as of the date thereof.
5. COVENANTS.
Borrower covenants and agrees that so long as any amount is due
Holder from Borrower upon the Note or otherwise:
5.1 Borrower will promptly notify Holder of any "Event of
Default" (the term "Events of Default" being as defined in the form of Security
Agreement attached hereto as Exhibit B) or any event which, upon a lapse of time
or notice or both, would become an Event of Default.
5.2 Borrower will deliver to Holder as soon as available, but no
later than one hundred twenty (120) days after the close of each fiscal year,
Borrower's financial statements for the fiscal year, prepared in accordance with
generally accepted accounting principles and certified by independent certified
public accountants reasonably acceptable to Holder.
5.3 Borrower will deliver to Holder as soon as available, but no
later than forty-five (45) days after the close of each quarter, Borrower's
unaudited financial statements as of the close of such quarter, certified by a
responsible officer of Borrower as being complete and correct and fairly
representing Borrower's financial condition and results of operations.
5.4 Borrower will deliver to Holder at the Closing a written
budget for each fiscal year occurring during the term of this Agreement and,
when available but in no event later than ninety (90) days after each fiscal
year end occurring during the term of this Agreement, a budget for each
succeeding fiscal year, together with any written revisions to such budgets.
5.5 Borrower will deliver to Holder such additional information
relating to Borrower's financial condition and results of operations as Holder
may reasonably request from time to time.
5.6 Borrower agrees that proceeds from the loan made hereunder
shall be used for the purpose of opening new offices, hiring new employees,
producing training materials, purchasing and selling Holder's products, and
repayment of any debt due and owed by Borrower to Holder or to First Union
National Bank. In no event shall proceeds from the loan be used for any of the
following purposes without prior written consent of Holder:
(a) Acquisition of securities or assets of another
business;
(b) Acquisition of property, plant or equipment except (i)
acquisitions in the ordinary course of business each in the amount of less than
Fifty Thousand Dollars
4
($50,000.00); and (ii) such equipment or Holder's products as are directly
related to the primary purpose of the loan.
(c) Repayment of any debt, including shareholder notes,
other than as explicitly allowed in this section;
(d) Bonuses, extraordinary salary increases or deferred
compensation for officers or directors of Borrower; or
(e) Trade shows, advertising, production of marketing
materials or brochures.
5.7 Borrower will promptly notify Holder of any material claim,
action, suit or proceeding against Borrower or its assets.
5.8 Borrower will maintain current capital, including
subordinated debt, of at least One Million Five Hundred Thousand Dollars
($1,500,000.00), plus equity existing as of the date of this Agreement.
5.9 Borrower will maintain a ratio of current assets to current
liabilities (excluding the current portion of any subordinated indebtedness), in
each case determined in accordance with generally accepted accounting principles
of at least 1.0 to 1.0.
5.10 Borrower will maintain a ratio of total liabilities to
permanent capital of no greater than 10 to 1.0
5.11 Borrower will not borrow, from First Union National Bank or
otherwise, additional funds such that at any time there is due and owing from
Borrower to First Union National Bank an amount in excess of the Credit Limit or
further encumber any of the assets constituting Collateral under the Security
Agreement without the prior written consent of Holder.
6. EVENTS OF DEFAULT.
The occurrence of any of the "Events of Default" as defined in the
Security Agreement, at the option of Holder, shall make the remaining unpaid
balance of the Note immediately due and payable.
7. CONFIDENTIAL INFORMATION.
Each of Holder and Borrower agrees not to use any Confidential
Information of the other party disclosed to it, for its own use or use by any
other person or for any purposes except to carry out, perform and enforce its
obligations under agreements between Holder and Borrower, and not to disclose
any such Confidential Information except to employees (or
5
consultants subject to confidentiality provisions similar to this Section 7) who
are required to have such information in order to carry out, perform or enforce
such obligations. Borrower and Holder will take all reasonable measures to
protect the secrecy and avoid disclosure or use of Confidential Information in
order to prevent it from entering the public domain or possession of persons
other than those persons authorized hereunder to have any such information,
which measures shall include, without limitation, the highest degree of care
that each utilizes to protect its own confidential information of a similar
nature. Either party shall notify the affected party promptly in writing of any
misuse or misappropriation of Confidential Information which may come to such
party's attention.
For purposes of this section, "Confidential Information" means (i)
the terms of this Agreement, the Secured Promissory Note and Security Agreement
and accompanying transactions (provided, however, that said Agreement, Secured
Promissory Note and Security Agreement may be disclosed to a party having a
secured position with Borrower prior to that of Holder), as well as (ii) any
proprietary information, technical data, trade secrets or know-how, including,
without limitation, research, product plans, products, services, customers,
markets, software, developments, inventions, processes, formulae, technology,
designs, drawings, engineering, hardware configuration information, marketing,
finances or other business or technological information disclosed by either
party to the other either directly or indirectly. "Confidential Information" of
a disclosing party does not include any information which: (i) is known to the
receiving party at the time of disclosure; (ii) has become publicly known
through no wrongful act of the receiving party; (iii) has been rightfully
received by the receiving party from a third party without restriction on
disclosure and without breach of any agreement with the disclosing party; (iv)
has been independently developed by the receiving party as evidenced by
appropriate documentation; (v) has been approved for release by written
authorization executed by an authorized officer of the disclosing party; (vi) is
required to be disclosed by the receiving party pursuant to a requirement of
law; or (vii) (A) is not provided in writing or on magnetic media, or (B) if
provided orally, is not confirmed in writing to be confidential within fifteen
(15) days after disclosure. Should Borrower wish to disclose the specific terms
of this Agreement or the other Loan Documents to a potential investor or
investors, it shall first obtain written consent to such disclosure from Holder,
which consent shall not be unreasonably withheld with respect to bona fide
potential investors.
Each party acknowledges that the other's Confidential Information is
unique property of extreme value to the other party, and that unauthorized use
or disclosure thereof would cause the other party irreparable harm that could
not be compensated by monetary damages. Accordingly, each party agrees that the
other will be entitle to injunctive and preliminary relief to remedy any actual
or threatened unauthorized use or disclosure of the other party's Confidential
Information.
Nothing in this Section 7 is intended to supersede any existing
agreement between the parties under which confidential technical or market
information has or may be given by one party to the other. As to matters not
covered by such existing agreements, this Section 7 shall
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control in the absence of any specific agreement to the contrary.
8. MISCELLANEOUS.
8.1 Any communications between the parties hereto or notices or
requests provided herein to be given may be given by mailing the same, postage
prepaid, to the other party as follows:
BORROWER:
Avatech Solutions, Inc.
00000 Xxxxxxxx Xxxxx, Xxxxx X
Xxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
and a courtesy copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx and Xxxxxxx
20th Floor, Xxxxxxx Center South
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
HOLDER:
Autodesk, Inc.
000 XxXxxxx Xxxxxxx
Xxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Treasurer
8.2 This Agreement, together with the covenants and
warranties contained in it, shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, provided, however, that
Borrower may not assign this Agreement or any of the rights of Borrower
hereunder without the prior written consent of Holder.
8.3 No delay or omission by Holder to exercise any
right under this Agreement shall impair any such right, nor shall it be
construed as a waiver thereof. No waiver of any single breach or default under
this Agreement shall be deemed a waiver of any other breach or default. Any
waiver, consent or approval under this Agreement must be in writing to be
effective.
8.4 Borrower and Holder each shall bear its own costs
and expenses incurred in connection with the preparation and administration of
this Agreement and any instrument or agreement required hereunder. Borrower
agrees to pay all costs, expenses and
7
attorneys' fees reasonably incurred by Holder in connection with the enforcement
of this Agreement.
8.5 This Agreement, and any agreement, document or
instrument attached hereto or referred to herein, integrate all the terms and
conditions mentioned herein or incidental hereto, and supersede all oral
negotiations and prior writings in respect to the subject matter hereof. In the
event of any conflict between the terms, conditions and provisions of this
Agreement and any such agreement, document or instrument, the terms, conditions
and provisions of this Agreement shall prevail. This Agreement may be executed
in counterparts, and each counterpart shall be deemed an original instrument,
but together shall constitute one and the same instrument. Additionally, any
signatures sent by facsimile shall be deemed to be originals and shall have all
of the same force and effect and import as an original signature, regardless of
whether or not the parties shall or shall not later receive one or more such
original signature.
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8.6 This Agreement shall be construed in accordance
with the laws of the State of California (excluding rules regarding conflicts of
law). The parties hereby submit to the personal jurisdiction of and venue in the
Superior Court of the State of California, County of Marin, and the United
States District Court for the Northern District of California in San Francisco.
8.7 The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
8.8 In addition to any rights and remedies of Holder
provided by law, Holder shall have the right, without prior notice to Borrower,
any such notice being expressly waived by Borrower to the extent permitted by
applicable law, upon the occurrence and during the continuance of an Event of
Default, to set-off and apply against any indebtedness, whether matured or
unmatured, of Borrower to Holder, any amount owing from Holder to Borrower. The
aforesaid right of set-off may be exercised by Holder against Borrower or
against any trustee in bankruptcy, debtor-in-possession, assignee for the
benefit of creditors, receiver or execution, judgment or attachment creditor of
Borrower or against anyone else claiming through or against Borrower or such
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by Holder prior to the occurrence of an Event of Default. Holder
agrees promptly to notify Borrower after any such set-off and application by
Holder, PROVIDED that the failure to give such notice shall not affect the
validity of such set-off and application.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the day and year first above written.
"Holder" "Borrower"
AUTODESK, INC. AVATECH SOLUTIONS, INC.
By: /s/ [ILLEGIBLE] By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: [ILLEGIBLE] Name: XXXXX X. XXXXXX
-----------------------------
Title: [ILLEGIBLE] Title: CHAIRMAN & CEO
----------------------------
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AVATECH OF CALIFORNIA, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF CONNECTICUT, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH SOLUTIONS OF COLORADO, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF FLORIDA, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF MARYLAND, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF MICHIGAN, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF NEBRASKA, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF NEW JERSEY, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF NEW YORK, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF VIRGINIA, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
TECHNICAL LEARNINGWARE COMPANY,
INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxxx
----------------------------
Title: Chairman
----------------------------
EXHIBIT A
SECURED PROMISSORY NOTE
$3,000,000.00 January 25, 0000
Xxx Xxxxxx, Xxxxxxxxxx
FOR VALUE RECEIVED, Avatech Solutions, Inc., a corporation organized
under the laws of the State of Delaware, Avatech of California, Inc., Avatech of
Connecticut, Inc., Avatech Solutions of Colorado, Inc., Avatech of Florida,
Inc., Avatech of Maryland, Inc., Avatech of Michigan, Inc., Avatech of Nebraska,
Inc., Avatech of New Jersey, Inc., Avatech of New York, Inc., Avatech of
Virginia, Inc., and Technical Learningware Company, Inc. (hereinafter
collectively referred to as the "Borrower"), hereby promises to pay to Autodesk,
Inc., a corporation organized under the laws of the State of Delaware, or its
assigns ("Holder"), at the principal offices of the Holder presently located at
000 XxXxxxx Xxxxxxx, Xxx Xxxxxx, Xxxxxxxxxx 00000, the principal sum of Three
Million Dollars ($3,000,000.00), together with accrued interest at the rate
specified hereinafter.
This Note is issued subject to the terms and conditions of a Loan
Agreement between the Borrower and the Holder of even date herewith (the "Loan
Agreement"), as well as the following additional terms and conditions:
1. TERMS OF PAYMENT.
Principal and interest on this Note shall be due and payable
in eleven (11) quarterly equal installments (adjusted, however, for any
prepayments of principal) commencing with the payment of all accrued interest
and amortized principal on the first day of the month following six months from
the execution date (e.g., if the execution date is January 25, the first payment
shall be due August 1), and continuing thereafter on the same day of each
succeeding three month interval until maturity (e.g., if the execution date is
January 25, the second payment shall be due November 1). A copy of the payment
schedule is attached as Schedule 1.
2. RATE OF INTEREST.
The unpaid principal on this Note shall bear interest from
the date hereof until maturity at a rate of nine and three quarters percent
(9-3/4%) per annum.
3. SECURITY AGREEMENT.
Repayment of this Note is secured by certain assets of the
Borrower pursuant to a Security Agreement between the Borrower and the Holder of
even date herewith
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(the "Security Agreement")
4. PREPAYMENT.
This Note may be prepaid, at the Borrower's election, at any
time prior to maturity without premium or penalty. Prepayments shall be applied
first to interest accrued and then to principal due under this Note.
5. EVENTS OF DEFAULT.
If any Event of Default (as hereinafter defined) shall
occur, the Borrower hereby promises to give Holder immediate (other than as
provided in this Section 5) oral and written notice of such occurrence, the
principal and accrued interest on this Note may be accelerated and declared due
and payable at the option of Holder.
For the purposes of this Section 5, "Event of Default" shall
mean any of the following.
(a) NONPAYMENT.
Failure by the Borrower to pay the principal or
interest hereunder within ten (10) days after the date when due;
(b) ACT OF INSOLVENCY.
Any affirmative act of bankruptcy or insolvency by the
Borrower, or the filing by the Borrower of any petition or action under or the
commencement of any proceedings (not subject to subsection (c) below) relating
to the Borrower under any bankruptcy, reorganization, arrangement, readjustment
of debt, insolvency or moratorium law, or any other law or laws for the relief
of or relating to debtors, of any jurisdiction, or the appointment of a
receiver, liquidator, assignee, trustee, or sequestrator (or other similar
official) for the Borrower, or any substantial part of the properties or assets
of the Borrower, or the making by the Borrower of an assignment for the benefit
of creditors, or the admission by the borrower in writing of its inability to
pay its debts generally as they become due, or the taking of corporate action by
the Borrower in furtherance of any such action;
(c) INVOLUNTARY BANKRUPTCY.
The filing against the Borrower of any involuntary
petition under any bankruptcy, reorganization, arrangement, readjustment of
debt, insolvency, moratorium, dissolution or liquidation law, or any other law
or laws for the relief of or relating to debtors, of any jurisdiction, or the
entry or rendering of any order, judgment or decree approving the filing of the
petition in any such proceedings, or the appointment of any receiver,
liquidator,
13
assignee, trustee, sequestrator (or other similar official) for the Borrower or
any substantial part of the properties or assets of the Borrower, unless such
petition, order, judgment, decree or appointment is set aside or withdrawn or
ceases to be effective within thirty (30) days after the date of such filing,
rendering, entry or appointment, or the entry or rendering of an order, judgment
or decree adjudicating the Borrower bankrupt for insolvent;
(d) MISREPRESENTATION.
Any misrepresentation or omission of a material fact
in this Note, the Loan Agreement or the Security Agreement; or
(e) MATERIAL ADVERSE CHANGE.
Any Material Adverse Change in the condition of the
Borrower, which shall mean a material adverse change in (a) the business,
assets, operations, prospects or financial or other condition of Borrower; (b)
the ability of Borrower to pay or perform the Borrower's obligations in
accordance with the terms of this Note and the other transaction documents and
to avoid an Event of Default under any transaction document; or (c) the rights
and remedies of Holder under this Note, the other transaction documents or any
related document, instrument or agreement. if the Borrower fails to remedy the
Material Adverse Change within thirty (30) days of written notice thereof.
(f) CHANGE OF CONTROL.
A Change of Control of the Borrower, which shall mean
a merger, sale of securities or sale of all or substantially all of Borrower's
assets that results in a change of ownership of at least 50%, except such
changes of control which are entirely between the Borrower provided that written
notice of such change of control between Borrower is provided to Holder within
30 days of consummation of such change.
(g) OTHER BREACH OR DEFAULT.
A breach or default by the Borrower in the performance
or observance of any other term, covenant, representation, warranty or agreement
contained in this Note, the Loan Agreement or the Security Agreement to be
performed or observed by the Borrower, if the Borrower fails to cure within (30)
days of written notice of such breach or default to the Holder.
6. REPLACEMENT.
Upon receipt by the Borrower of evidence satisfactory to it
of the loss, theft, destruction or mutilation of this Note (provided that an
affidavit of Holder will be satisfactory for such purpose), and of indemnity
satisfactory to it (provided that if the Holder is
14
the original Holder hereof, its own indemnification agreement shall under all
circumstances be satisfactory, and no bond shall be required), and upon
surrender and cancellation of this Note, if mutilated, the Borrower will make
and deliver a new Note of the same terms in a principal amount equal to the
outstanding balance of this Note, dated as of the last date at which principal
or interest has been paid upon this Note.
7. ATTORNEYS' FEES.
The Borrower covenants that upon the occurrence of any Event
of Default it will pay to Holder all costs and expenses of collection and
enforcement of this Note, including reasonable attorneys' fees.
8. GOVERNING LAW.
This Agreement shall be construed in accordance with the
laws of the State of California (excluding rules regarding conflicts of law).
The parties hereby submit to the personal jurisdiction of and venue in the
Superior Court of the State of California, County of Marin, and the United
States District Court for the Northern District of California in San Francisco.
9. MISCELLANEOUS.
This Agreement may be executed in counterparts, and each
counterpart shall be deemed an original instrument, but together shall
constitute one and the same instrument. Additionally, any signatures sent by
facsimile shall be deemed to be originals and shall have all of the same force
and effect and import as an original signature, regardless of whether or not the
parties shall or shall not later receive one or more such original signature.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
in its corporate name by its duly authorized officer.
"Holder" "Borrower"
AUTODESK, INC. AVATECH SOLUTIONS, INC.
By: By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Name: XXXXX X. XXXXXX
-----------------------------
Title: Title: CHAIRMAN & CEO
-----------------------------
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AVATECH OF CALIFORNIA, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF CONNECTICUT, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH SOLUTIONS OF COLORADO, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF FLORIDA, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF MARYLAND, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF MICHIGAN, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF NEBRASKA, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF NEW JERSEY, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF NEW YORK, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF VIRGINIA, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
TECHNICAL LEARNINGWARE COMPANY,
INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxxx
-----------------------------
Title: Chairman
----------------------------
SCHEDULE 1
Note payment schedule.
SCHEDULE 1
AUTODESK, INC.
LOAN PAYMENT CALCULATION
AVATECH SOLUTIONS, INC.
REVISED DRAFT AMORTIZATION SCHEDULE (JULY, 2000)
SIMPLE INTEREST RATE 6.50%
PRINCIPAL AMOUNT: $(2,960,645.77)
PRINCIPAL INTEREST PAYMENTS INTEREST PRINCIPAL
--------- -------- -------- -------- ---------
06/30/00 0 (2,960,645.77)
07/31/00 1 (2,960,645.77) (16,344.39)
08/31/00 2 (2,960,645.77) (16,344.39)
09/30/00 3 (2,960,645.77) (15,817.15) (48,505.92) (48,505.92) --
10/31/00 4 (2,960,645.77) (16,344.39)
11/30/00 5 (2,960,645.77) (15,817.15)
12/31/00 6 (2,960,645.77) (16,344.39) (48,505.92) (48,505.92) --
01/31/01 7 (2,960,645.77) (16,344.39)
02/28/01 8 (2,960,645.77) (14,762.67)
03/31/01 9 (2,960,645.77) (16,344.39) (47,451.45) (47,451.45) --
04/30/01 10 (2,960,645.77) (15,817.15)
05/31/01 11 (2,960,645.77) (16,344.39)
06/30/01 12 (2,960,645.77) (15,817.15) (47,978.68) (47,978.68) --
07/31/01 13 (2,960,645.77) (16,344.39)
08/31/01 14 (2,960,645.77) (16,344.39)
09/30/01 15 (2,960,645.77) (15,817.15) (48,505.92) (48,505.92) --
10/31/01 16 (2,960,645.77) (16,344.39)
11/30/01 17 (2,960,645.77) (15,817.15)
12/31/01 18 (2,387,840.83) (16,344.39) (621,310.86) (48,505.92) (572,804.94)
01/31/02 19 (2,387,840.83) (13,182.19)
02/28/02 20 (2,387,840.83) (11,906.49)
03/31/02 21 (1,804,800.84) (13,182.19) (621,310.86) (38,270.87) (583,039.99)
04/30/02 22 (1,804,800.84) (9,642.09)
05/31/02 23 (1,804,800.84) (9,963.49)
06/30/02 24 (1,212,737.65) (9,642.09) (621,310.86) (29,247.66) (592,063.20)
07/31/02 25 (1,212,737.65) (6,694.98)
08/31/02 26 (1,212,737.65) (6,694.98)
09/30/02 27 (611,295.75) (6,479.01) (621,310.86) (19,868.96) (601,441.90)
10/31/02 28 (611,295.75) (3,374.69)
11/30/02 29 (611,295.75) (3,265.83)
12/31/02 30 (0.00) (3,374.69) (621,310.86) (10,015.20) (611,295.75)
============ =========== =============
3,347,502.20 (386,856.52) (2,960,645.77)
EXHIBIT B
SECURITY AGREEMENT
THIS AGREEMENT (the "Security Agreement") is entered into as of this
25th day of January 1999 between Autodesk, Inc. (the "Holder"), a Delaware
corporation, with its principal offices located at 000 XxXxxxx Xxxxxxx, Xxx
Xxxxxx, Xxxxxxxxxx 00000 and Avatech Solutions, Inc. with its principal offices
located at Owings Mills, Maryland, Avatech of California, Inc., Avatech of
Connecticut, Inc., Avatech Solutions of Colorado, Inc., Avatech of Florida,
Inc., Avatech of Maryland, Inc., Avatech of Michigan, Inc., Avatech of Nebraska,
Inc., Avatech of New Jersey, Inc., Avatech of New York, Inc., Avatech of
Virginia, Inc., and Technical Learningware Company, Inc. (hereinafter
collectively the "Borrower").
RECITALS:
A. Borrower and Holder have entered into a Loan Agreement of
even date herewith (the "Loan Agreement") pursuant to which the Holder has
agreed to lend up to Three Million Dollars ($3,000,000.00) to Borrower.
X. Xxxxxx has made such loan to Borrower pursuant to a secured
promissory note of even date herewith (the "Note").
C. In consideration of the loan pursuant to the Note, Borrower
wishes to grant to Holder a security interest in certain collateral to ensure
repayment of the loan and any and all other amounts now or hereafter due to
Holder from Borrower.
THE PARTIES THEREFORE, IN CONSIDERATION FOR THE MUTUAL COVENANTS SET
FORTH HEREIN, IN THE LOAN AGREEMENT AND IN THE NOTE, AGREE AS FOLLOWS:
1. GRANT OF SECURITY INTEREST.
Borrower hereby pledges and assigns to Holder and grants to
Holder a security interest in the Collateral (as defined in Section 2) to secure
the performance of Borrower's obligations to Holder: (a) under the Loan
Agreement, (b) under the Note, and (c) to pay any and all amounts due to Holder
from Borrower. All obligations of Borrower to Holder are collectively
"Borrower's Obligations".
2. COLLATERAL.
The collateral covered by this Security Agreement consists
of the following (the "Collateral"):
19
All right, title and interest of Borrower now owned or
hereafter acquired in and to the following:
(a) All equipment and fixtures (including, without
limitation, furniture, vehicles and other machinery and office equipment),
together with all additions and accessions thereto and replacements therefor
(collectively, the "Equipment");
(b) All inventory (including, without limitation,
(i) all raw materials, work in process and finished goods and (ii) all such
goods which are returned to or repossessed by Borrower), together with all
additions and accessions thereto, replacements therefor, products thereof and
documents therefor (collectively, the "Inventory");
(c) All accounts, chattel paper, contract rights
and rights to the payment of money (collectively, the "Receivables");
(d) All assets and general intangibles, including,
without limitation, (i) customer and supplier lists and contracts, books and
records, insurance policies, tax refunds, contracts for the purchase of real or
personal property; (ii) all patents, copyrights, trademarks, trade names,
service marks and other intellectual property rights, (iii) all licenses to use,
applications for, and other rights to, such patents, copyrights, trademarks,
trade names and service marks, and (iv) all goodwill of Borrower;
(e) All deposit accounts, money, certificated
securities, uncertificated securities, instruments and documents; and
(f) All proceeds of the foregoing (including,
without limitation, whatever is receivable or received when Collateral or
proceeds is sold, collected, exchanged, returned, substituted or otherwise
disposed of, whether such disposition is voluntary or involuntary, including
rights to payment and return premiums and insurance proceeds under insurance
with respect to any Collateral, and all rights to payment with respect to any
cause of actions affecting or relating to the Collateral).
3. BORROWER'S OBLIGATIONS SECURED HEREBY.
Borrower's Obligations to Holder secured hereby are the
following:
3.1 NOTE.
Payment of the principal and interest evidenced by the
Note, together with any future advances thereunder and amendments thereof;
20
3.2 ACCOUNT BALANCES.
Payment of any and all amounts due to Holder from
Borrower including, but not limited to, amounts due for purchases by Borrower of
products from Holder.
3.3 PERFORMANCE.
Performance and discharge of each and every obligation
of Borrower under this Security Agreement, the Loan Agreement and the Note.
4. BORROWER'S COVENANTS.
Borrower agrees and covenants that:
4.1 FURTHER ENCUMBRANCES.
Except to the extent of the Credit Limit (as that term
is defined in the Loan Agreement) provided to Borrower by First Union National
Bank which holds a security interest with Borrower as of the date of this
Security Agreement, Borrower shall not, without Holder's consent (which consent
shall not be unreasonably withheld) grant a security interest in any of the
Collateral or execute any financing statements covering any of the Collateral in
favor of any person until Borrower's Obligations secured under this Security
Agreement shall have been repaid and performed in full. Notwithstanding the
foregoing, Borrower may allow a financial institution to replace First Union
National Bank and obtain, in place of said bank, the secured position held by
First Union National Bank as of the date of this Agreement to the extent of the
Credit Limit.
4.2 USE OF COLLATERAL.
The Collateral will not be used for any unlawful
purpose. Excepting the existing security interest of First Union National Bank,
borrower will keep the Collateral free and clear of liens and adverse claims.
4.3 INDEMNIFICATION.
Borrower shall indemnify Holder against all losses,
claims, demands and liabilities of every kind caused by or respecting the
Collateral.
4.4 PERFECTION OF SECURITY INTEREST.
Immediately upon execution of this Security Agreement,
Borrower and Holder shall execute and file Financing Statements on Form UCC-1
with respect to
21
the Collateral and shall execute and deliver such other documents as Holder
deems necessary to create, perfect and continue the security interest in the
Collateral contemplated hereby, including, but not limited, to the forms and
documents attached hereto as Attachment A.
4.5 COLLECTION OF ACCOUNTS.
Borrower shall collect with diligence all of its
Receivables and proceeds of Inventory, Equipment and other personal property.
4.6 RECORDS.
Borrower shall prepare and keep in accordance with
generally accepted accounting principles consistently applied, complete and
accurate records regarding all Accounts, Inventory, Equipment, Fixtures and
Other Personal Property, and proceeds thereof, and if and when requested by
Holder, shall, from time to time, prepare and deliver a complete and accurate
schedule of all the Collateral, in such detail as Holder may reasonably request.
4.7 INSPECTION OF BORROWER'S BOOKS.
Borrower shall permit Holder and its designees at
reasonable times and from time to time to inspect Borrower's books, records and
properties and to audit and to make copies of extracts from such books and
records.
4.8 FEES AND COSTS.
Upon any Event of Default, Borrower shall pay all
expenses, including attorneys' fees, incurred by Holder in the preservation,
realization, enforcement or exercise of any of Holder's rights under this
Security Agreement.
5. EVENTS OF DEFAULT.
The following are an Event of Default under this Security
Agreement.
5.1 The occurrence of any Event of Default, as defined in
the Note;
5.2 The failure to pay an amount due Holder when and as
due, provided however, that, to the extent amounts are past due from Borrower to
Holder for more than thirty (30) days as of the date of this Security Agreement,
then as to that amount such failure to pay when due shall not constitute a
default under this Section 5.2 until March 5, 1999.
22
5.3 To the extent not otherwise deemed a default under
Sections 5.1 or 5.2 herein, the breach or default by Borrower of any agreement
Borrower has with any party holding a security interest in any property of
Borrower, provided, however, that, to the extent Borrower is in breach or
default of any agreement with First Union National Bank as of the date of this
Agreement, this Section 5.3 shall not apply to the limited extent of that
specific breach or default with said bank until March 5, 1999.
6. REMEDIES ON DEFAULT.
Upon the occurrence of an Event of Default, provided that
payment in full has not been made, the Holder shall have all rights, privileges,
powers and remedies provided by law, which rights, privileges, powers, and
remedies shall be cumulative, and no single or partial exercise of any of them
shall preclude the further or other exercise of the same or any of them. By way
of example and not by way of limitation, Holder may, pursuant to this Section 6,
exercise any one or all of the remedies hereinafter set forth:
6.1 PAYMENT UNDER NOTE; ACCOUNT BALANCE.
The Holder may by notice under Section 12 declare the
aggregate unpaid principal balance of the Note and all other amounts owing to
Holder from Borrower, together with all unpaid accrued interest thereon, to be
immediately due and payable to the Holder.
6.2 POSSESSION OF COLLATERAL.
(a) The Holder may take possession of all
Collateral covered hereby (which Collateral Borrower will assemble and make
available to Holder) using the employees, facilities, equipment and other
property of Borrower to do so, all at Borrower's expense and without
compensation to Borrower.
(b) If and when requested by Holder, Borrower
shall upon any Event of Default prepare and deliver to Holder assignments in
writing of all Collateral and related accounts, instruments, documents and other
evidences thereof.
6.3 USE, OPERATION AND SALE OF COLLATERAL BY HOLDER.
The Holder may use, operate, consume and sell the
Collateral in its possession as appropriate for the purpose of performing
Borrower's obligations with respect thereto. Borrower and Holder agree that
public or private sales, for cash or on credit, to a wholesaler or retailer or
use of Collateral of the types subject to this Security Agreement, or at public
auction, are all commercially reasonable since differences in the sales prices
generally realized in the different kinds of sale are ordinarily offset by the
differences in the costs and credit risks of such sales.
23
7. PAYMENTS AFTER AN EVENT OF DEFAULT.
All payments received and amounts realized by the Holder
pursuant to Section 6, including all such payments and amounts received after
the Holder has declared pursuant to Section 6.1 the entire unpaid principal and
interest amount of the Note to be due and payable, as well as all payments or
amounts then held or thereafter received by the Holder as part of the Collateral
while an Event of Default shall be continuing, shall be promptly applied and
distributed by the Holder in the following order of priority:
(a) First, to the payment of all amounts claimed
due by a person holding a secured interest in the Collateral prior to the
interest of Holder, and all reasonable costs and expenses, including legal
expenses and attorneys fees, incurred or made hereunder by the Holder, including
any such costs and expenses of foreclosure or suit, if any, and of any sale or
the exercise of any other remedy under Section 6, and of all taxes, assessments
or liens superior to the lien granted under this Security Agreement, except any
taxes, assessments or other superior lien subject to which any said sale under
Section 6 hereof may have been made;
(b) Second, to the payment of all amounts then
owned by Borrower to Holder, excepting the amount then owing or unpaid on the
Note;
(c) Third, to the payment of the amount then owing
or unpaid on the Note, with application to be made first to the unpaid interest
thereon and second, to the unpaid principal thereof, such application to be made
upon presentation of the Note and the notation thereon of the payment, if
partially paid, or the surrender and cancellation thereof, if fully paid; and
(d) Fourth, to the payment of the balance or
surplus, if any, to Borrower, its successors and assigns, or to any other party
who may be lawfully entitled to receive the same.
8. POWER OF ATTORNEY.
Borrower hereby appoints Holder the attorney-in-fact of
Borrower to prepare, sign and file or record, for Borrower in Borrower's names,
any financing statements, applications for registration and like papers and to
take any other action deemed by Holder necessary or desirable in order to
perfect the security interest of Holder hereunder, and to perform any obligation
of Holder hereunder at Borrower's expense, but without obligation to do so.
Holder agrees to provide prior written notice to Borrower of any such action
taken as attorney-in-fact of Borrower, together with copies of any financing
statements, applications or other papers executed in such capacity by Holder.
24
9. HOLDER'S RIGHT TO CURE: REIMBURSEMENT.
In the event Borrower should fail to do any act as herein
provided, Holder may, but without obligation to do so, without notice or release
of Borrower from any obligation hereof, make or do the same in such manner and
to such extent as Holder may deem necessary to protect the Collateral,
including, without limitation, the defense of any action purporting to affect
the Collateral or the rights or powers of Holder hereunder, at Borrower's
expense.
10. ASSIGNS AND SUCCESSORS.
This Security Agreement, together with the covenants and
warranties contained in it, shall inure to the benefit of Holder, its successors
and assigns, and shall be binding upon Borrower, its successors and assigns;
provided, however that Borrower may not assign this Agreement or any of the
rights or obligations of Borrower hereunder without the prior written consent of
Holder.
11. PRESENTMENT: APPLICATION.
Presentment, protest, notice of protest, notice of dishonor
and notice of nonpayment are waived with respect to any proceeds to which Holder
is entitled hereunder and any rights to direct the application of payments for
security for indebtedness of Borrower hereunder, or indebtedness of customers of
Borrower, and any right to require proceedings against others or to require
exhaustion of security, are waived.
12. NOTICES.
All notices, payments, and other communications called for
or required by this Security Agreement shall be in writing and shall be deemed
to have been validly given on the date of service if served personally on any
party to whom notice is to be given, or on the third day after mailing if mailed
to any party to whom notice is to be given by first class mail, registered or
certified, postage prepaid, and properly addressed as follows:
TO BORROWER AT: Avatech Solutions, Inc.
00000 Xxxxxxxx Xxxxx, Xxxxx X
Xxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
and a courtesy copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx and Xxxxxxx
20th Floor, Xxxxxxx Center South
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
25
TO HOLDER AT: Autodesk, Inc.
000 XxXxxxx Xxxxxxx
Xxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Treasurer
13. GOVERNING LAW: JURISDICTION.
This Agreement shall be construed in accordance with the
laws of the State of California (excluding rules regarding conflicts of law).
The parties hereby submit to the personal jurisdiction of and venue in the
Superior Court of the State of California, County of Marin and the United
States District Court for the Northern District of California in San Francisco.
14. ENFORCEMENT.
If any portion of this Security Agreement be determined to
be invalid or unenforceable, the remainder shall be valid and enforceable to the
maximum extent possible.
15. MISCELLANEOUS.
The headings set forth in this Security Agreement are for
the convenience of the parties and shall not by themselves determine the
interpretation or construction of this Security Agreement. This Agreement may be
executed in counterparts, and each counterpart shall be deemed an original
instrument, but together shall constitute one and the same instrument.
Additionally, any signatures sent by facsimile shall be deemed to be originals
and shall have all of the same force and effect and import as an original
signature, regardless of whether or not the parties shall or shall not later
receive one or more such original signature.
IN WITNESS WHEREOF, the parties have executed this Security
Agreement on the date set forth above.
"Holder" "Borrower"
AUTODESK, INC. AVATECH SOLUTIONS, INC.
By: /s/ [ILLEGIBLE] By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: [ILLEGIBLE] Name: XXXXX X. XXXXXX
----------------------------
Title: [ILLEGIBLE] Title: CHAIRMAN, CEO
---------------------------
26
AVATECH OF CALIFORNIA, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF CONNECTICUT, INC
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH SOLUTIONS OF COLORADO, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF FLORIDA, INC
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF MARYLAND, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF MICHIGAN, INC
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF NEBRASKA, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF NEW JERSEY, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF NEW YORK, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
AVATECH OF VIRGINIA, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
TECHNICAL LEARNINGWARE COMPANY,
INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxxx
-----------------------------
Title: Chairman
----------------------------
SECOND AMENDMENT TO LOAN AGREEMENT
This Second Amendment to the Loan Agreement (the "Second Amendment"), effective
as of December 17, 1999 ("Effective Date"), supplements and amends the terms of
the Loan Agreement entered into between Autodesk, Inc. ("Holder") and Avatech
Solutions, Inc, a corporation organized under the laws of the State of Delaware,
Avatech of California, Inc., Avatech of Connecticut, Inc., Avatech Solutions of
Colorado, Inc., Avatech of Florida, Inc., Avatech of Maryland, Inc., Avatech of
Michigan, Inc., Avatech of Nebraska, Inc., Avatech of New Jersey, Inc., Avatech
of New York, Inc., Avatech of Virginia, Inc., and Technical Learningware
Company, Inc., (hereinafter collectively referred to as the "Borrower") with the
effective date of January 25, 1999 (the "Agreement") and the Amendment with the
Effective Date of October 18, 1999 ("First Amendment"). Capitalized terms not
otherwise defined shall have the meaning set forth in the Agreement.
RECITALS
WHEREAS, the parties wish to modify the schedule for payments and modify certain
covenants under the terms of the Agreement.
NOWTHEREFORE, in consideration of the mutual covenants herein the parties agree
as follows:
TERMS
1. ACKNOWLEDGEMENT OF DEFAULT AND WAIVER. Borrower hereby acknowledges that
Borrower has not met the terms of the covenants as set forth in Section 5.8
(minimum current capital) and Section 5.9 (minimum current ratio). These
violations constitute an "Event of Default" as defined in the Agreement. Holder
hereby agrees to waive the violations and are considering the Borrower to be in
compliance with the aforementioned through September 30, 1999. Subsequent to
September 30, 1999, the original provisions of these sections are hereby
modified to be as follows:
Section 5.8: Borrower will maintain tangible net worth, including subordinated
debt, of at least One Million Dollars ($1,000,000.00) through
June 29, 2000 and One Million Four Hundred Thousand Dollars
($1,400,000.00) from June 30, 2000 forward.
Section 5.9: Borrower will maintain a ratio of current assets to current
liabilities (excluding the current portion of any subordinated
indebtedness), in each case determined in accordance with
generally accepted accounting principles of at least .90 through
June 29, 2000 and .95 through June 30, 2000.
2. Exhibit A "Secured Promissory Note", Section 1 "Terms of Payment" shall be
amended to include the following:
1
"Borrower shall be required to pay Holder for interest only for
the period from October 31, 1999 through September 30, 2000 as
set forth in the amended Schedule 1.
3. Exhibit A, Schedule 1 shall be amended and replaced with the Schedule 1
attached hereto.
4. Except as modified herein, all other terms and conditions in the Agreement
shall remain in full force and effect.
"Holder" "Borrower"
AUTODESK, INC. AVATECH SOLUTIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------- --------------------------------
Name: Xxxxxx X. Xxxxxxxx Name: XXXXXX X. XXXXXXXXX
----------------------------- ------------------------------
Title: [ILLEGIBLE] Title: President
---------------------------- -----------------------------
Date: 12/17/99 Date: 12/20/99
----------------------------- ------------------------------
2
AVATECH OF CALIFORNIA, INC. AVATECH OF CONNECTICUT, INC
By: /s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------ -------------------------------
Name: XXXXXX X. XXXXXXXXX Name:
----------------------------- ------------------------------
Title: Treasurer Title: Treasurer
---------------------------- -----------------------------
Date: 12/20/99 Date: 12/20/99
----------------------------- ------------------------------
AVATECH SOLUTIONS OF COLORADO, INC. AVATECH OF FLORIDA, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------ -------------------------------
Name: Name:
----------------------------- ------------------------------
Title: Treasurer Title: Treasurer
---------------------------- -----------------------------
Date: 12/20/99 Date: 12/20/99
---------------------------- ------------------------------
AVATECH OF MARYLAND, INC AVATECH OF MICHIGAN, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------ -------------------------------
Name: Name:
----------------------------- ------------------------------
Title: Treasurer Title: Treasurer
---------------------------- -----------------------------
Date: 12/20/99 Date: 12/20/99
----------------------------- ------------------------------
AVATECH OF NEBRASKA, INC AVATECH OF NEW JERSEY, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------ -------------------------------
Name: Name:
----------------------------- ------------------------------
Title: Treasurer Title: Treasurer
---------------------------- -----------------------------
Date: 12/20/99 Date: 12/20/99
----------------------------- ------------------------------
AVATECH OF NEW YORK, INC. AVATECH OF VIRGINIA, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------ -------------------------------
Name: Name:
----------------------------- ------------------------------
Title: Treasurer Title: Treasurer
---------------------------- -----------------------------
Date: 12/20/99 Date: 12/20/99
----------------------------- ------------------------------
TECHNICAL LEARNINGWARE COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------
Name:
-----------------------------
Title: Chief Operating Officer
----------------------------
Date: 12/20/99
-----------------------------
3
THIRD AMENDMENT TO LOAN AGREEMENT
This Third Amendment, effective as of July 27, 2000 ("Effective Date"), amends
the terms of the Loan Agreement entered into between Autodesk, Inc. ("Holder")
and Avatech Solutions, Inc, a corporation organized under the laws of the State
of Delaware, Avatech of California, Inc., Avatech of Connecticut, Inc., Avatech
Solutions of Colorado, Inc., Avatech of Florida, Inc., Avatech of Maryland,
Inc., Avatech of Michigan, Inc., Avatech of Nebraska, Inc., Avatech of New
Jersey, Inc., Avatech of New York, Inc., Avatech of Virginia, Inc., and
Technical Learningware Company, Inc., (hereinafter collectively referred to as
the "Borrower") with the effective date of January 25, 1999, as amended by the
First Amendment with the Effective Date of October 18, 1999 and the Second
Amendment with the Effective Date of December 17, 1999 (collectively the
"Agreement"). Capitalized terms not otherwise defined shall have the meaning set
forth in the Agreement.
RECITALS
WHEREAS, the parties wish to modify the schedule for payments and the terms of
the Secured Promissory Note set forth in Exhibit A and temporarily waive
Borrower's obligation to comply with certain covenants under the terms of the
Agreement.
NOW THEREFORE, in consideration of the mutual covenants herein the parties agree
as follows:
TERMS
1. ACKNOWLEDGMENT OF DEFAULT AND WAIVER. Borrower hereby acknowledges that
Borrower has failed to comply with the terms of the covenants as set forth
in Section 5.8 (minimum current capital) and Section 5.9 (minimum current
ratio) and that this failure constitutes an "Event of Default" as defined
in the Agreement. Holder hereby agrees to waive the violations and to
consider the Borrower to be in compliance with the aforementioned covenants
through September 30, 2000. On or before, September 30, 2000, the parties
shall amend the above covenants and all other covenants set forth in the
Agreement to conform to those agreed by Borrower and Borrower's
then-current financial institution, and Borrower shall thenceforth comply
with such amended covenants.
2. AMENDMENT OF SECURED PROMISSORY NOTE. Exhibit A ("Secured Promissory Note")
to the Agreement is hereby deleted in its entirely and replaced with
Exhibit A to this Third Amendment. Concurrently with the execution of this
Third Amendment, the parties shall execute the amended Secured Promissory
Note, which upon its execution shall supersede the Secured Promissory Note
dated January 25, 1999.
1
3. OTHER TERMS AND CONDITIONS. Except as modified herein, all other terms and
conditions in the Agreement shall remain in full force and effect.
"Holder" "Borrower"
AUTODESK, INC. AVATECH SOLUTIONS, INC.
By: /s/ [ILLEGIBLE] By: /s/ Xxxxx X. Xxxxxx
------------------------------- --------------------------------
Name: [ILLEGIBLE] Name: Xxxxx X. Xxxxxx
----------------------------- ------------------------------
Title: [ILLEGIBLE] Title: CHAIRMAN & CEO
---------------------------- -----------------------------
Date: July 28, 2000 Date: July 31st 2000
----------------------------- ------------------------------
2
AVATECH OF CALIFORNIA, INC. AVATECH OF CONNECTICUT, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------- --------------------------------
Name: XXXXX X. XXXXXX Name: XXXXX X. XXXXXX
----------------------------- ------------------------------
Title: PRESIDENT Title: PRESIDENT
---------------------------- -----------------------------
Date: July 31st 2000 Date: July 31st 2000
----------------------------- ------------------------------
AVATECH SOLUTIONS OF COLORADO, INC. AVATECH OF FLORIDA, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------- --------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
Date: July 31st 2000 Date: July 31st 2000
----------------------------- ------------------------------
AVATECH OF MARYLAND, INC. AVATECH OF MICHIGAN, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------- --------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
Date: July 31st 2000 Date: July 31st 2000
----------------------------- ------------------------------
AVATECH OF NEBRASKA, INC AVATECH OF NEW JERSEY, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------- --------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
Date: July 31st 2000 Date: July 31st 2000
----------------------------- ------------------------------
AVATECH OF NEW YORK, INC. AVATECH OF VIRGINIA, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------- --------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
Date: July 31st 2000 Date: July 31st 2000
----------------------------- ------------------------------
TECHNICAL LEARNINGWARE COMPANY, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
Date: July 31st 2000
-----------------------------
3
SECURED PROMISSORY NOTE
$2,960,645.77 July 27, 0000
Xxx Xxxxxx, Xxxxxxxxxx
For Value Received, Avatech Solutions, Inc., a corporation organized under
the laws of the State of Delaware, Avatech of California, Inc., Avatech of
Connecticut, Inc., Avatech Solutions of Colorado, Inc., Avatech of Florida,
Inc., Avatech of Maryland, Inc., Avatech of Michigan, Inc., Avatech of Nebraska,
Inc., Avatech of New Jersey, Inc., Avatech of New York, Inc., Avatech of
Virginia, Inc., and Technical Learningware Company, Inc. (hereinafter
collectively referred to as the "Borrower"), hereby promises to pay to Autodesk,
Inc., a corporation organized under the laws of the State of Delaware, or its
assigns ("Holder"), at the principal offices of the Holder presently located a
000 XxXxxxx Xxxxxxx, Xxx Xxxxxx, Xxxxxxxxxx 00000, the principal sum of Two
Million Nine Hundred Sixty Thousand Six Hundred Forty Five Dollars and Seventy
Seven Cents ($2,960,645.77), together with accrued interest at the rate
specified hereinafter.
This Note is issued subject to the terms and conditions of a Loan Agreement
between the Borrower and the Holder of even date herewith (the "Loan
Agreement"), as well as the following additional terms and conditions:
1. TERMS OF PAYMENT.
Principal and interest on this Note shall be due and payable on the
dates and in the amounts set forth in Schedule 1 hereto.
2. RATE OF INTEREST.
The unpaid principal on this Note shall bear interest from the date
hereof until maturity at a rate of six and fifty one-hundredths (6.50%) per
annum.
3. SECURITY AGREEMENT.
Repayment of this Note is secured by certain assets of the Borrower
pursuant to a Security Agreement between the Borrower and the Holder dated
January 25, 1999 (the "Security Agreement").
4. PREPAYMENT.
This Note may be prepaid, at the Borrower's election, at any time
prior to maturity without premium or penalty. Prepayments shall be applied first
to interest accrued and then to principal due under this Note in order of
maturity.
1
5. EVENTS OF DEFAULT.
If any Event of Default (as hereinafter defined) shall occur, the
Borrower hereby promises to give Holder immediate (other than as provided in
this Section 5) oral or written notice of such occurrence, the principal and
accrued interest on this Note may be accelerated and declared due and payable at
the option of Holder.
For the purposes of this Section 5, "Events of Default" shall mean
any of the following:
(a) NONPAYMENT.
Failure by the Borrower to pay the principal or interest
hereunder within thirty (30) days after the date when due;
(b) ACT OF INSOLVENCY.
Any affirmative act of bankruptcy or insolvency by the
Borrower, or the filing by the Borrower of any petition or action under or the
commencement of any proceedings (not subject to subsection (c) below) relating
to the Borrower under any bankruptcy, reorganization, arrangement, readjustment
of debt, insolvency or moratorium law, or any other law or laws for the relief
of or relating to debtors, of any jurisdiction, or the appointment of a
receiver, liquidator, assignee, trustee, or sequestrator (or other similar
official) for the Borrower, or any substantial part of the properties or assets
of the Borrower, or the making by the Borrower of an assignment for the benefit
of creditors, or the admission by the Borrower in writing of its inability to
pay its debts generally as they become due, or the taking of corporate action by
the Borrower in furtherance of any such action;
(c) INVOLUNTARY BANKRUPTCY.
The filing against the Borrower of any involuntary petition
under nay bankruptcy, reorganization, arrangement, readjustment of debt,
insolvency, moratorium, dissolution or liquidation law, or any other law or laws
for the relief of or relating to debtors, of any jurisdiction, or the entry or
rendering of any order, judgement or decree approving the filing of the petition
in any such proceedings, or the appointment of any receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) for the Borrower or
any substantial part of the properties or assets of the Borrower, unless such
petition, order, judgement, decree or appointment is set aside or withdrawn or
ceases to be effective within sixty (60) days after the date of such filing,
rendering, entry or appointment, or the entry or rendering of an order,
judgement or decree adjudicating the Borrower bankrupt or insolvent;
(d) MISREPRESENTATION.
Any misrepresentation or omission of a material fact in this
Note, the Loan Agreement or the Security Agreement; or
2
(e) MATERIAL ADVERSE CHANGE.
Any Material Adverse Change in the condition of the
Borrower, which shall mean a material adverse change in (a) the business,
assets, operations, prospects or financial or other condition of Borrower; (b)
the ability of Borrower to pay or perform the Borrower's obligations in
accordance with the terms of this Note and the other transaction documents and
to avoid an Event of Default under any transaction document; or (c) the rights
and remedies of Holder under this Note, the other transaction documents or any
related document, instrument or agreement, if the Borrower fails to remedy the
Material Adverse Change within thirty (30) days of written notice thereof;
(f) CHANGE OF CONTROL.
A Change of Control of the Borrower, which shall mean a
merger, sale of securities or sale of all or substantially all of Borrower's
assets that results in a change of ownership of at least 50%, except such
changes of control which are entirely between the Borrower provided that written
notice of such change of control between Borrower is provided to Holder within
thirty (30) days of consummation such change;
(g) OTHER BREACH OR DEFAULT.
A breach or default by the Borrower in the performance or
observance of any other term, covenant, representation, warranty or agreement
contained in this Note, the Loan Agreement or the Security Agreement to be
performed or observed by the Borrower, if the Borrower fails to cure within
thirty (30) days of written notice of such breach or default to the Holder.
6. REPLACEMENT.
Upon receipt by the Borrower of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Note (provided that an affidavit
of Holder will be satisfactory for such purpose), and of indemnity satisfactory
to it (provided that if the Holder is the original Holder hereof, its own
indemnification agreement shall under all circumstances be satisfactory, and no
bond shall be required), and upon surrender and cancellation of this Note, if
mutilated, the Borrower will make and deliver a new Note of the same terms in a
principal amount equal to the outstanding balance of this Note, dated as of the
last date at which principal or interest has been paid upon this Note.
7. ATTORNEYS' FEES.
The Borrower covenants that upon the occurrence of any Event of
Default it will pay to Holder all costs and expenses of collection and
enforcement of this Note, including reasonable attorney's fees.
3
7. ATTORNEYS' FEES.
The Borrower covenants that upon the occurrence of any Event of
Default it will pay to Holder all costs and expenses of collection and
enforcement of this Note, including reasonable attorneys' fees.
8. GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the
State of California (excluding rules regarding conflicts of law). The parties
hereby submit to the personal jurisdiction of and venue in the Superior Court of
the State of California, County of Marin, and the United States District Court
for the Northern District of California in San Francisco.
9. MISCELLANEOUS.
This Agreement may be executed in counterparts, and each counterpart
shall be deemed an original instrument, but together shall constitute one and
the same instrument. Additionally, any signatures sent by facsimile shall be
deemed to be originals and shall have all of the same force and effect and
import as an original signature, regardless of whether or not the parties shall
or shall not later receive one or more such original signature.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed in its
corporate name by its duly authorized officer.
"HOLDER" "BORROWER"
AUTODESK, INC. AVATECH SOLUTIONS, INC.
By: /s/ [ILLEGIBLE] By: /s/ Xxxxx X. Xxxxxx
------------------------------- --------------------------------
[ILLEGIBLE] Xxxxx X. Xxxxxx
---------------------------------- -----------------------------------
(PRINTED) (PRINTED)
[ILLEGIBLE] CHAIRMAN & CEO
---------------------------------- -----------------------------------
(TITLE) (TITLE)
July 28 2000 July 31st 2000
---------------------------------- -----------------------------------
(DATE) (DATE)
4
AVATECH OF CALIFORNIA, INC. AVATECH OF CONNECTICUT, INC
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------- --------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
Date: July 31st 2000 Date: July 31st 2000
----------------------------- ------------------------------
AVATECH SOLUTIONS OF COLORADO, INC. AVATECH OF FLORIDA, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------- --------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
Date: July 31st 2000 Date: July 31st 2000
----------------------------- ------------------------------
AVATECH OF MARYLAND, INC. AVATECH OF MICHIGAN, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------- --------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
Date: July 31st 2000 Date: July 31st 2000
----------------------------- ------------------------------
AVATECH OF NEBRASKA, INC AVATECH OF NEW JERSEY, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------- --------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
Date: July 31st 2000 Date: July 31st 2000
----------------------------- ------------------------------
AVATECH OF NEW YORK, INC. AVATECH OF VIRGINIA, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------- --------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
----------------------------- ------------------------------
Title: President Title: President
---------------------------- -----------------------------
Date: July 31st 2000 Date: July 31st 2000
----------------------------- ------------------------------
TECHNICAL LEARNINGWARE COMPANY, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
Date: July 31st 2000
-----------------------------
5
