Exhibit
10.1
LOAN AND SECURITY
AGREEMENT
(ALL
ASSETS)
This Loan
Agreement (" Agreement ") is entered into February 20,
2009, by and between Thermodynetics, Inc. (" Lender
") a Nevada corporation with its principal executive offices at 651
Day Hill Road, Windsor, Connecticut 06095 and Tower Structures,
Inc. (" Borrower ") a Connecticut corporation with its
principal executive offices at 370 South Main Street, Terryville,
Connecticut 06786.
RECITALS:
A.
This Agreement applies to the loan or
loans made by Lender to Borrower (individually and collectively,
the " Loan ") evidenced by one or more promissory notes of
even date herewith or other notes subject hereto, as modified from
time to time (whethr one or more, the " Note ") and all Loan
Documents. The terms " Loan Documents " and "
Obligations ," as used in this Agreement, are defined in the
Note.
B.
The aggregate principal amount to be
loaned by Lender shall be a maximum of three hundred thousand
($300,000) dollars and may be loaned in separate
tranches.
C.
The Loan will be secured by all of the
assets of Borrower.
D.
Lender shall have the right to appoint
one member to the Board of Directors of Borrower for so long as
either the Loan is outstanding or Lender holds at least one (1%)
percent of the common stock of Borrower or Borrower's future United
Kingdom parent corporation.
E.
Borrower is required to be 100% acquired
by American Modular Holdings, Ltd. (“ AMH-UK ”),
a United Kingdom corporation as Borrower's anticipated and intended
future parent corporation, in a stock-for-stock exchange on terms
to be determined (the " Acquisition ").
F.
Borrower shall not have more than three
directors on its Board of Directors. However the Board of
Directors of Borrower and/or Borrower's UK parent may be expanded
to five members upon the successful completion of Borrower's
intended UK parent’s initial public offering (“
IPO ”), and of the five members two may be required to
be UK based as may be required by Weavering Corporate Finance, 3
Queen Street, Mayfair, London, England, a UK finance company,
engaged under the terms of the letter dated September 19,
2008.
G.
Borrower will issue to and register in
the name of Thermodynetics, Inc. an aggregate number of shares of
convertible preferred stock at the closing of this Loan; such
shares shall be convertible into six (6%) percent of the issued and
outstanding capital stock on a post initial public offering basis
of the publicly traded entity being either Borrower or Borrower's
future United Kingdom parent corporation.
H.
Certain shareholders of Borrower shall,
as additional security, pledge to Lender all of their common stock
of Borrower subject to a maximum collection equal to
forty-five
(45%) percent of the outstanding capital
stock of Borrower, and subject to a continuing pledge upon the
acquisition of Borrower by its intended UK parent on a share for
share exchange basis.
I.
The chief executive officer of Borrower
shall be Robert A. Lerman.
J.
Borrower will issue to and register in
the name of Robert A. Lerman an aggregate of 500 shares of its
outstanding common stock at the closing of this Loan.
K.
In addition to the shares of stock issued
to Robert Lerman and Thermodynetics, Inc. on a pre-IPO basis which
is intended to equal such 5% and 6% interests, they will have a
warrant or right exercisable at $.0001 per share to purchase up to
their respective 5% and 6% interests in AMH-UK on a post-IPO basis
in the event there is a differential; in no event shall this right
alone provide a right to purchase, pursuant to this transaction,
more than 5% and 6% holdings by Robert Lerman and Thermodynetics,
Inc., respectively. This right is in addition to the pledge
of 45% of the stock of Borrower by certain shareholders of
Borrower.
THEREFORE, FOR ONE
DOLLAR or other good and valuable consideration mutually exchanged,
the receipt and adequacy of which is acknowledged, including but
not limited to relying upon the covenants, agreements,
representations and warranties contained in this Agreement, Lender
is willing to extend credit to Borrower and Borrower desires to
borrow monies upon the terms and subject to the conditions set
forth herein, and Lender and Borrower agree as follows:
1.
SECURITY INTEREST
. Borrower for valuable
consideration, receipt whereof is hereby acknowledged, hereby
grants to Lender a continuing security interest in and to, and
assigns to Lender, all assets of the Borrower, wherever located and
whether now owned or hereafter acquired, including, without
limitation, the following:
(a)
all inventory, including all goods,
merchandise, raw materials and work in process, finished goods, and
other tangible personal property now owned or hereafter acquired
and held for sale or lease or furnished or to be furnished under
contracts of service or used or consumed in Borrower's business
(all hereinafter called the " Inventory "
);
(b)
all accounts (as defined in Article 9 of
the Uniform Commercial Code, hereinafter " Accounts
" ), contracts, contract rights, notes, bills, drafts,
acceptances, general intangibles (including without limitation
registered and unregistered tradenames, copyrights, customer lists,
goodwill, computer programs, computer records, computer software,
computer data, trade secrets, trademarks, patents, ledger sheets,
files, records, data processing records relating to any Accounts
and all tax refunds of every kind and nature to which Borrower is
now or hereafter may become entitled to, no matter how arising),
instruments, documents, chattel paper (whether tangible or
electronic) deposit accounts, letter of credit rights (whether or
not the letter of credit is evidenced by a writing), securities,
security entitlements, security accounts, investment property,
supporting obligations, choses in action, commercial tort claims,
and all other debts, obligations and liabilities in whatever form,
owing to Borrower from any person, firm or corporation or any other
legal entity, whether now existing or hereafter arising, now or
hereafter received by or belonging or owing to Borrower, for goods
sold by it or for services rendered by it, or however otherwise
same may have been established or created, all guarantees and
securities therefor, all right, title and interest of Borrower in
the merchandise or services which gave rise thereto, including the
rights of reclamation and stoppage in transit, all rights to
replevy goods, and all rights of an unpaid seller of merchandise or
services (all hereinafter called the "
Receivables " );
(c)
all machinery, equipment, fixtures and
other goods (as defined in Article 9 of the Uniform Commercial
Code) whether now owned or hereafter acquired by Borrower and
wherever located, all replacements and substitutions therefor or
accessions thereto and all proceeds thereof (all hereinafter called
the " Equipment " ); and
(d)
all proceeds and products of all of the
foregoing in any form, including, without limitation, all proceeds
of credit, fire or other insurance, and also including, without
limitation, rents and profits resulting from the temporary use of
any of the foregoing (which, with Inventory, Receivables and
Equipment are all hereinafter called " Collateral
" ).
2.
OBLIGATIONS SECURED
. The security interest granted
hereby is to secure payment and performance of all debts,
liabilities and obligations of Borrower to Lender hereunder,
including but not limited to the Loan, and also any and all other
debts, liabilities and obligations of Borrower to Lender of every
kind and description, direct or indirect, absolute or contingent,
primary or secondary, due or to become due, now existing or
hereafter arising, whether or not such obligations are related to
the transactions described in this Agreement, by class, or kind, or
whether or not contemplated by the parties at the time of the
granting of this security interest, regardless of how they arise or
by what agreement or instrument they may be evidenced or whether
evidenced by any agreement or instrument, and includes obligations
to perform acts and refrain from taking action as well as
obligations to pay money including, without limitation, all
interest, fees, charges, expenses and overdrafts, and also
including, without limitation, all obligations and liabilities
which Lender may incur or become liable for, on account of, or as a
result of, any transactions between Lender and Borrower including
any which may arise out of any letter of credit, acceptance or
similar instrument or obligation issued or caused to be issued for
the account of Borrower (all hereinafter called "
Obligations " ).
3.
BORROWER'S PLACES OF BUSINESS,
INVENTORY LOCATIONS AND RETURNS POLICY . Borrower warrants that Borrower has no places
of business other than that shown at the end of this Agreement,
unless other places of business are listed on Schedule
"A" , annexed hereto, in which event Borrower represents
that it has additional places of business at those locations set
forth on Schedule "A".
Borrower's
principal executive office and the office where Borrower keeps its
records concerning its accounts, contract rights and other
property, is that shown at the end of this Agreement. All
Inventory presently owned by Borrower is stored at the locations
set forth on Schedule "A".
Borrower shall
promptly notify Lender in writing of any change in the location of
any place of business or the location of any Inventory or the
establishment of any new place of business or location of Inventory
or office where its records are kept which would be shown in this
Agreement if it were executed after such change.
Borrower
represents and warrants that it has described its returns policy in
writing to Lender and that it does now, and will continue to, apply
such policy consistently in the conduct of its business and agrees
that it shall notify Lender in writing before changing its policy
or the application thereof.
4.
BORROWER'S ADDITIONAL REPRESENTATIONS AND
WARRANTIES . Borrower represents and warrants
that:
(a)
Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Connecticut and shall hereafter remain in good standing as a
corporation in that state, and is duly qualified and in good
standing in every other state in which it is doing business, and
shall hereafter remain duly qualified and in good standing in every
other state in which the failure to qualify or become licensed
could have a material adverse effect on the financial condition,
business or operations of Borrower.
(b)
Borrower's exact legal name is as set
forth in this Agreement.
(c)
The organizational and tax identification
numbers of the Borrower is as set forth on Schedule "A" annexed
hereto.
(d)
The execution, delivery and performance
of this Agreement, and any other document executed in connection
herewith, are within Borrower's corporate powers, have been duly
authorized, are not in contravention of law or the terms of
Borrower's charter, by!laws or other incorporation papers, or of
any indenture, agreement or undertaking to which Borrower is a
party or by which it or any of its properties may be
bound.
(e)
All Articles or Certificates of
Incorporation, Articles of Organization and all amendments thereto
of Borrower have been duly filed and are in proper order, and
copies of which have all been submitted to Lender. All
capital stock issued by Borrower and outstanding was and is
properly issued and all books and records of Borrower, including
but not limited to its minute books, by!laws and books of account,
are accurate and up to date and will be so maintained.
(f)
Borrower owns all of the assets reflected
in the most recent of Borrower's financial statements or schedule
of assets to be acquired (“ Assets ”) provided
to Lender, except assets sold or otherwise disposed of in the
ordinary course of business since the date thereof, and such assets
together with any assets acquired since such date, including
without limitation the Collateral, are free and clear of any lien,
pledge, security interest, charge, mortgage or encumbrance of any
nature whatsoever, except (i) the security interests and other
encumbrances (if any) listed on Schedule "B" annexed hereto, (ii)
those leases of personal property set forth on Schedule "C" annexed
hereto, (iii) those liens permitted pursuant to Section 15(h) of
this Agreement, or (iv) liens and security interests in favor of
Lender. All sales or transfers of the Assets have complied
with all bankruptcy laws, bulk sales laws, and/or insolvency laws
applicable to the sellers thereof. Borrower has duly, validly
and lawfully acquired or shall acquire its Assets and all right,
title and interest thereto without claim of or from any of the
sellers’ creditors, government taxing authorities, or other
persons or entities.
(g)
Borrower has made or filed all tax
returns, reports and declarations relating to any material tax
liability required by any jurisdiction to which it is subject (any
tax liability which may result in a lien on any Collateral being
hereby deemed material); has paid all taxes shown or determined to
be due thereon except those being contested in good faith and which
Borrower has, prior to the date of such contest, identified in
writing to Lender as being contested; and has made adequate
provision for the payment of all taxes so contested, so that no
lien will encumber any Collateral, and in respect of subsequent
periods.
(h)
Borrower (i) is subject to no charter,
corporate or other legal restriction, or any judgment, award,
decree, order, governmental rule or regulation or contractual
restriction which could have a material adverse effect on its
financial condition, business or prospects, and (ii) is in
compliance with its charter documents and by!laws, all contractual
requirements by which it or any of its properties may be bound and
all applicable laws, rules and regulations (including without
limitation those relating to environmental protection) other than
laws, rules or regulations the validity or applicability of which
it is contesting in good faith or provisions of any of the
foregoing the failure to comply with which cannot reasonably be
expected to materially adversely affect its financial condition,
business or prospects or the value of any Collateral.
(i)
There is no action, suit, proceeding or
investigation pending or, to Borrower's knowledge, threatened
against or affecting it or any of its assets before or by any court
or other governmental authority which, if determined adversely to
it, would have a material adverse effect on its financial
condition, business or prospects or the value of any
Collateral.
(j)
Borrower is in compliance with ERISA; no
Reportable Event has occurred and is continuing with respect to any
Plan; and it has no unfunded vested liability under any Plan.
The word "Plan" as used in this Agreement means any
employee plan subject to Title IV of the Employee Retirement Income
Security Act of 1974 ( " ERISA " ) maintained
for employees of Borrower, any subsidiary of Borrower or any other
trade or business under common control with Borrower within the
meaning of Section 414(c) of the Internal Revenue Code of 1986 or
any regulations thereunder.
(k)
Conflicts of Interest: Robert A.
Lerman . (i)
Borrower has engaged Robert A. Lerman as its chief executive
officer pursuant to that certain letter agreement dated October 16,
2008. (ii) Separately, Mr. Lerman will serve as a
director on the Board of Directors of Borrower. (iii)
As part of his CEO compensation under the letter, prior to the
issuance of the Loan, Mr. Lerman will be issued common stock of
Borrower to equal 5% of Borrower; such issuance will have
antidilution protection such that it will equal a 5% interest in
Borrower's future United Kingdom parent corporation after the
completion of Borrower's or Borrower's parent’s initial
public offering. (iv) Further, Mr. Lerman will be
paid $10,000 per month as compensation as CEO on a part time basis.
(l)
Conflicts of Interest: Lender and
Robert A. Lerman .
Borrower and Lender acknowledge Mr. Lerman is also the Chief
Executive Officer, President and a director on the Board of
Directors of Lender. Mr. Lerman owns approximately 27% of
Lender and is its largest single shareholder. Borrower and
Lender have been and are each hereby notified that conflicts of
interest exist with respect to Mr. Lerman's dual CEO positions.
In the event Borrower defaults on any loan or loans secured
hereunder, it is understood and agreed that Mr. Lerman will act on
behalf of Lender, and that he will abstain from advising or working
with Borrower; and that Mr. Lerman shall
resign from any and all of his officer and director positions of
Borrower so that he can assist Lender, without further conflict of
interest, in pursuing its remedies.
(m)
Conflicts of Interest: Tower
Acquisitions, Ltd., CMP and Robert A. Lerman
. Robert A. Lerman is the manager
and sole principal of Capital Management Partners, LLC ("
CMP "). CMP, along with Messrs. Mark O’Callaghan
(" MO ") and Irving Goldstein (" IG "), have a
consulting relationship with Borrower pursuant to that engagement
letter dated August, 2008 (the “ CMP Letter ”).
CMP, MO and IG are paid or to be paid collectively a total of
$5,000 per month.
(n)
Borrower acknowledges and affirms its
obligations under the CMP Letter that upon admission of Borrower to
the AIM or PLUS markets of the London capital markets and/or the
raising of additional funding through a pre-IPO/reverse merger
financing (individually or collectively the " Transaction ")
Borrower will pay to Tower Acquisitions Ltd. (“ Tower
Acquisitions "):
(i) a transaction fee of 5% in cash and
5% in free trading stock in the case of an IPO or simultaneous
IPO/reverse merger, or
(ii) 10% of funds raised in the case of a
reverse merger without a simultaneous IPO, or
(iii) 10% of funds raised in the case of
a private placement or financing other than a loan from Lender.
Borrower has indemnified CMP, MO and IG
of up to a maximum of $150,000. Mr. Lerman, IG, MO are
principles along with Lender of Tower Acquisitions. Robert A.
Lerman is the manager and sole principal of CMP.
Tower Acquisitions is a business that
provides business services to companies seeking financing and also
makes acquisitions for its own portfolio. Tower Acquisitions
is owned by IG, MO, Mr. Lerman, Lender and other persons.
(o)
Borrower acknowledges and affirms its
obligations under the CMP Letter that Borrower shall pay CMP a
transaction fee of 10% of funds raised in the
case of a pre-IPO financing arranged by CMP including monies
committed to Borrower under this Loan.
(p)
Licenses and Permits. Borrower
possesses, or is in the process of obtaining, all licenses and
permits necessary to operate its business as presently
contemplated.
5.
LOANS AND OTHER FINANCIAL
ACCOMMODATIONS.
(a)
Subject to the terms and provisions of
this Agreement, Lender hereby establishes a tranche-funded loan in
Borrower's favor in an amount not to exceed the Credit Limit (as
defined below). The amount of each tranche shall be
determined by Lender from time to time hereafter. Lender may
make such loans to Borrower, based upon such facts and
circumstances existing at the time of the request, as from time to
time Lender elects to make which are secured by Borrower's
Inventory, Accounts and all other Collateral and the proceeds
thereof. Without limiting the discretionary nature of
Lender's decision to make loans hereunder, or the term or demand
feature of any loans that Lender may make hereunder, Borrower
agrees that the aggregate principal of all loans outstanding at any
one time shall not exceed the Borrowing Base (as defined
below).
(b)
All loans made by Lender pursuant to this
Section 5 shall bear interest and, at the option of Lender, shall
be evidenced by and repayable in accordance with a note or notes
drawn to the order of Lender substantially the form of
Exhibit 1 hereto (individually or collectively the
" Note " ), as the same may hereafter be
amended, supplemented or restated from time to time and any note or
notes issued in substitution therefor, but in the absence of the
Note shall be conclusively evidenced by Lender's records of loans
and repayments and shall be payable immediately upon completion and
consummation of an initial public offering and/or in accordance
with their terms.
(c)
The term "Credit Limit" as used
herein shall mean an amount equal to Three Hundred Thousand
($300,000.00) Dollars.
(d)
Borrower hereby authorizes and directs
Lender, in Lender's sole discretion (provided, however, Lender
shall have no obligation to do so): (i) to pay accrued interest as
the same becomes due and payable pursuant to this Agreement or
pursuant to any note or other agreement between Borrower and
Lender, and to treat the same as a loan to Borrower, which shall be
added to Borrower's loan balance pursuant to this Agreement; (ii)
to charge any of Borrower's accounts under the control of Lender;
or (iii) apply the proceeds of Collateral, including, without
limitation, payments on Accounts and other payments from sales or
lease of Inventory and any other funds to the payment of such
items. Lender shall promptly notify Borrower of any such
charges or applications.
(e)
The Borrowing Base formula set forth
above is intended solely for monitoring purposes. The making
of loans, advances, and credits by Lender to Borrower in excess of
the above described Borrowing Base formula is for the benefit of
Borrower and does not affect the obligations of Borrower hereunder;
all such loans constitute Obligations and must be repaid by
Borrower in accordance with the terms of this Agreement.
(f)
Borrower acknowledges its obligations to
Robert A. Lerman as its chief executive officer pursuant to that
certain letter agreement dated October 16, 2008, principally that
Mr. Lerman will be issued common stock of Borrower to equal 5% of
Borrower and such amount shall be equal to 5% of the outstanding
capital stock of Borrower's future United Kingdom parent
corporation immediately after the completion of the initial public
offering. Further, Mr. Lerman will be paid $10,000 per month
as compensation as CEO on a part time basis.
(g)
Borrower acknowledges its obligations to
CMP, MO and IG under the CMP Letter, principally that CMP, MO and
IG are paid or to be paid collectively a total of $5,000 per month
through the month in which a Transaction is consummated.
(h)
Borrower acknowledges and affirms its
obligations under the CMP Letter that upon admission of Borrower to
the AIM or PLUS markets of the London capital markets and/or the
raising of additional funding through a pre-IPO/reverse merger
financing (individually or collectively the " Transaction ")
Borrower will pay to Tower Acquisitions a transaction fee of 5% in
cash and 5% in free trading stock in the case of an IPO or
simultaneous IPO/reverse merger, or 10% of funds raised in the case
of a reverse merger without a simultaneous IPO or in the case of a
private placement. Mr. Lerman, IG, MO are principals along
with Lender of Tower Acquisitions.
(i)
Loan Fee . Borrower hereby agrees that upon successful
completion of a Transaction Borrower shall pay to Lender a loan
commitment fee equal to $60,000, but if no Transaction closes on or
before August 31, 2009, then such commitment fee shall be due and
paid in 12 equal monthly installments commencing September 1, 2009.
(j)
Usury . If at any time the effective interest rate
under the Loan would, but for this paragraph, exceed the maximum
lawful rate, the effective interest rate under the Loan shall be
the maximum lawful rate, and any amount received by Lender in
excess of such rate shall be applied to principal and then to fees
and expenses, or, if no such amounts are owing, returned to
Borrower.
6.
Intentionally omitted.
7.
LENDER'S REPORTS
. After the end of each month,
Lender shall render to Borrower a statement of Borrower's loan
account with Lender hereunder, showing all applicable credits and
debits. Each statement shall be considered correct and to
have been accepted by Borrower and shall be conclusively binding
upon Borrower in respect of all charges, debits and credits of
whatsoever nature contained therein under or pursuant to this
Agreement, and the closing balance shown therein, unless Borrower
notifies Lender in writing of any discrepancy within twenty (20)
days from the mailing by Lender to Borrower of any such
statement.
8.
CONDITIONS OF LENDING.
(a)
The willingness of Lender to consider
making the initial loan advance hereunder, further advances
hereunder shall be subject to the condition precedent that Lender
shall have received all of the following, each in form and
substance satisfactory to Lender:
(i)
This Agreement, properly executed on
behalf of Borrower.
(ii)
The Note drawn to the order of Lender in
the face amount of the interim funding amount, in the form
substantially as set forth on Schedule E .
(iii)
Evidence that Borrower has entered into a
real estate lease for the lease of its principal offices and
manufacturing facilities located at 367 and 370 South Main Street,
Terryville, Connecticut in form and substance satisfactory to
Lender.
(iv)
A true and correct copy of any and all
leases pursuant to which Borrower is leasing any real property,
together with a landlord's consent and waiver with respect to such
real property. All leases shall be satisfactory to Lender;
the real estate lease must, at a minimum satisfy the conditions set
forth in the letter of interest dated February 6, 2009 and signed
by Lender and Borrower.
(v)
Evidence that Borrower has entered into
equipment purchase contract(s) and/or equipment lease(s)
satisfactory to Lender.
(vi)
Evidence that Borrower has entered into
inventory purchase contract(s) satisfactory to Lender.
(vii)
Evidence that Borrower has employed or
engaged for employment and continues or will continue to employ a
sufficient staff of employees to operate its manufacturing facility
including adequate management and supervisory personnel.
(viii)
Current searches of appropriate filing
offices showing that (A) no state or federal tax liens have been
filed and remain in effect against Borrower, (B) no financing
statements have been filed and remain in effect against Borrower,
except those financing statements relating to liens set forth on
Schedule "B", the liens of the secured lender to be paid with the
proceeds of the initial loan and those financing statements filed
by Lender, and (C) Lender has duly filed all financing statements
necessary to perfect the security interests granted hereunder, to
the extent the security interests are capable of being perfected by
filing.
(ix)
As to the first advance only, a
certificate of the Secretary or an Assistant Secretary of Borrower,
certifying as to (A) the resolutions of the directors and, if
required, the shareholders of Borrower, authorizing the execution,
delivery and performance of this Agreement and related documents,
(B) the Certificate of Incorporation or Articles of Organization
and By-Laws of Borrower, and (C) the signatures of the officers or
agents of Borrower authorized to execute and deliver this Agreement
and other instruments, agreements and certificates, including loan
requests, on behalf of Borrower; an update certificate may be
required by Lender upon further advances.
(x)
As to the first advance only, a current
certificate issued by the Secretary of State of the state of
Borrower's incorporation, certifying that Borrower is in existence
and in compliance with all corporate organizational requirements of
such state; an updated certificate may be required by Lender for
subsequent advances in the event the previously issued certificate
was issued more than 120 days prior.
(xi)
As to the first advance only, evidence
that Borrower is duly licensed or qualified to transact business in
all jurisdictions where the character of the property owned or
leased or the nature of the business transacted by it makes such
licensing or qualification necessary; updated evidence may be
required by Lender for subsequent advances in the event the
previously supplied evidence was issued or generated more than 120
days prior.
(xii)
As to the first advance only, an opinion
of counsel to Borrower, addressed to Lender with respect to the
Loan and the business operations of Borrower; an updated opinion
may be required by Lender for subsequent advances in the event the
previously issued opinion was issued more than 180 days prior or
unless material events and the operations of Borrower have occurred
in which case Lender may require a legal opinion upon any further
advance.
(xiii)
Certificates of the insurance required
hereunder, with all hazard insurance containing a lender's loss
payable endorsement in favor of Lender and all credit insurance
naming Lender as co-insured.
(xiv)
As to the first advance only, a
subordination agreement, properly executed by each of the
subordinating creditors, if any, in form and substance satisfactory
to Lender.
(xv)
An opinion of counsel of each guarantor
which is not an individual, addressed to Lender. A list of
guarantors is attached hereto at Schedule “D
”; currently there are no guarantors.
(xvi)
Payment of the fees due through the date
of the initial loan, or such further interim advance loan, and
expenses incurred by Lender through such date required to be paid
by Borrower pursuant to this Agreement.
(xvii)
Such other documents, instruments and
agreements as Lender in its sole discretion may require.
(xviii)
Certain shareholders of Borrower, namely:
John Leader and Nicholas Ververis
, shall, as additional security, pledge to
Lender 3,274 and 1,226 shares, respectively,
of common stock of Borrower being equal to forty-five (45%) percent
of the issued and outstanding shares of common stock of Borrower.
Upon the acquisition of Borrower by AMH-UK, the Pledged
Collateral shall be exchanged for their holdings equal to
forty-five (45%) percent of AMH-UK, defined below, issued and
outstanding ordinary shares of its capital stock; continued to be
defined as “Pledged Collateral” and shall bear a
continuing pledged security interest in favor of Lender. The
Pledged Collateral will remain subject to the pledge until the Loan
is paid in full, or until the IPO is completed and the Loan is paid
in full. In any event, upon payment in full of the Loan and
the fees and charges thereunder, the security interest for the
Pledged Collateral will be released and said stock shall be
returned to the respective pledgors.
(b)
Lender will not consider a request for
any loan advance unless on the date thereof:
(i)
the representations and warranties
contained in Sections 3 and 4 hereof are correct on and as of the
date of such loan as though made on and as of such date, except to
the extent that such representations and warranties relate solely
to an earlier date; and
(ii)
no event has occurred and is continuing,
or would result from such loan which constitutes an Event of
Default or which, with notice or the passage of time or both, would
constitute an Event of Default.
9.
CAPITAL ADEQUACY.
(a)
If Lender shall determine that, after the
date hereof, that Borrower fails to have adequate capital to pay
its operational expenses, Lender shall have no obligation to make
any further loan advances whether or not Borrower has borrowed up
to the Credit Limit hereunder.
10.
COLLECTIONS; SET OFF; DEPOSIT
ACCOUNTS; LOCKBOX; NOTICE OF ASSIGNMENT; EXPENSES; POWER OF
ATTORNEY.
(a)
In the event of a default, Borrower shall
immediately, upon receipt of all checks, drafts, cash and other
remittances in payment of any Inventory sold or in payment or on
account of Borrower's accounts, contracts, contract rights, notes,
bills, drafts, acceptances, general intangibles, choses in action
and all other forms of obligations, deliver the same to Lender
accompanied by a remittance report in form specified by Lender.
Said proceeds shall be delivered to Lender in the same form
received except for the endorsement of Borrower where necessary to
permit collection of items, which endorsement Borrower agrees to
make. Lender shall deposit any and all monies in the lockbox
account of Borrower provided for in this §11. (i) Upon
final collection of such monies, Lender shall distribute from such
lockbox account 66.6% of such monies to Borrower's operating
checking account; and (ii) further, upon final collection of such
monies, Lender shall distribute from such lockbox account 33.3% of
such monies to
Lender's operating checking account as payments
against the principal or interest of any loans secured hereby;
(iii) however, in the event of a default then the distributions
from the lockbox shall be governed by §18 hereof; provided,
however, for the purpose of computing interest, any items requiring
clearance or payment shall not be considered to have been credited
against any loans secured hereby until three (3) business days
after receipt by Lender of any such items. The order and method of
such application shall be in the sole discretion of Lender and any
portion of such funds which Lender elects not to so apply shall be
paid over from time to time by Lender to Borrower.
(b)
In the event of a default, Lender will at
all times thereafter have the right to require Borrower to enter
into a lockbox arrangement with Lender for the collection of such
remittances and payments at a financial institution which has
agreed to accept drafts under a written depository transfer
agreement with Lender and to block Borrower's account and waive its
rights as against such account.
(c)
As used in this Agreement, "business
day(s)" shall mean any day which is neither a Saturday, Sunday nor
a holiday on which commercial lenders are authorized or required to
be closed in Hartford, Connecticut.
(d)
Lender has no duty to protect, insure,
collect or realize upon the accounts or other collateral or
preserve rights in them. Borrower releases Lender from any
liability for any act or omission relating to the collection of the
Obligations, the accounts or other collateral or this Agreement,
except as a result of` Lender's willful misconduct or gross
negligence.
(e)
Borrower and any guarantor hereby grants
to Lender a lien, security interest and right of setoff as security
for all liabilities and Obligations to Lender, whether now existing
or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession,
custody, safekeeping or control of Lender or any entity in the
control of Citizens Financial Group, Inc., or in transit to any of
them. At any time, without demand or notice, Lender may set
off the same or any part thereof and apply the same to any
liability or Obligation of Borrower and any guarantor even though
unmatured and regardless of the adequacy of any other collateral
securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE
LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS
RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED.
(f)
Borrower shall pay to Lender on demand
any and all reasonable counsel fees and/or legal fees, and other
expenses incurred by Lender in connection with the preparation,
interpretation, enforcement, administration or amendment of this
Agreement, or of any documents relating thereto, and any and all
expenses, including, but not limited to, a collection charge on all
Accounts collected, all reasonable attorneys' fees and expenses,
and all other expenses of like or unlike nature which may be
expended by Lender to obtain or enforce payment of any Account
either as against the account debtor, Borrower, or any guarantor or
surety of Borrower or in the prosecution or defense of any action
or concerning any matter growing out of or connected with the
subject matter of this Agreement, the Obligations or the Collateral
or any of Lender's rights or interests therein or thereto,
including, without limiting the generality of the foregoing, any
counsel fees or expenses incurred in any bankruptcy or insolvency
proceedings and all costs and expenses incurred or paid by Lender
in connection with the administration, supervision, protection or
realization on any security held by Lender for the debt secured
hereby, whether such security was granted by Borrower or by any
other person primarily or secondarily liable (with or without
recourse) with respect to such debt, and all costs and expenses
incurred by Lender in connection with the defense, settlement or
satisfaction of any action, claim or demand asserted against Lender
in connection therewith, which amounts shall be considered advances
to protect Lender's security, and shall be secured hereby. At
its option, and without limiting any other rights or remedies,
Lender may at any time pay or discharge any
taxes, liens, security interests or other
encumbrances at any time levied against or placed on any of the
Collateral, and may procure and pay any premiums on any insurance
required to be carried by Borrower, and provide for the maintenance
and preservation of any of the Collateral, and otherwise take any
action reasonably deemed necessary by Lender to protect its
security, and all amounts expended by Lender in connection with any
of the foregoing matters, including reasonable attorneys' fees,
shall be considered obligations of Borrower and shall be secured
hereby.
(g)
Borrower shall not pay or be liable for
its own counsel fees and/or legal fees associated with the Loan and
its closing; Messrs. John Leader and Nicholas Ververis and/or
American Modular Corporation, LLC shall be responsible for
Borrower's costs associated with the Loan closing.
(h)
Borrower does hereby make, constitute and
appoint any officer or agent of Lender as Borrower's true and
lawful attorney!-in-!fact, with power to endorse the name of
Borrower or any of Borrower's officers or agents upon any notes,
checks, drafts, money orders, or other instruments of payment
(including payments payable under any policy of insurance on the
Collateral) or Collateral that may come into possession of Lender
in full or part payment of any amounts owing to Lender; to sign and
endorse the name of Borrower or any of Borrower's officers or
agents upon any invoice, freight or express bill, bill of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts, and any
instrument or documents relating thereto or to Borrower's rights
therein; to give written notice to such office and officials of the
United States Post Office to effect such change or changes of
address so that all mail addressed to Borrower may be delivered
directly to Lender; granting upon Borrower's said attorney full
power to do any and all things necessary to be done in and about
the premises as fully and effectually as Borrower might or could
do, and hereby ratifying all that said attorney shall lawfully do
or cause to be done by virtue hereof. Neither Lender nor the
attorney shall be liable for any acts or omissions nor for any
error of judgment or mistake, except for their gross negligence or
willful misconduct. This power of attorney shall be
irrevocable for the term of this Agreement and all transactions
hereunder and thereafter as long as Borrower may be indebted to
Lender , but shall terminate at such time as
Borrower is not indebted to Lender
.
11.
FINANCING STATEMENTS
. (I) Borrower hereby irrevocably
authorizes Lender at any time and from time to time to file in any
Uniform Commercial Code jurisdiction any initial financing
statements and amendments thereto that (a) indicate the Collateral
(i) as all assets of Borrower or words of similar effect,
regardless of whether any particular asset comprised in the
Collateral falls within the scope of Article 9 of the Uniform
Commercial Code of such jurisdiction, or (ii) as being of an equal
or lesser scope or with greater detail, and (b) contain any other
information required by the Uniform Commercial Code for the
sufficiency or filing office acceptance of any financing statement
or amendment, including (i) whether Borrower is an organization,
the type of organization and any organization identification number
issued to Borrower, and (ii) in the case of a financing statement
filed as a fixture filing or indicating Collateral as as-extracted
Collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates. Borrower agrees to
furnish any such information to Lender promptly upon request.
Borrower also ratifies its authorization for Lender to have
filed in any Uniform Commercial Code jurisdiction any like initial
financing statements or amendments thereto if filed prior to the
date hereof.
(II)
Upon payment in full of the Obligations,
Lender shall promptly release any and all security
interests
