Exhibit 10.1

 

Execution Version

 

CREDIT AGREEMENT

 

This Agreement is entered into as of November 1, 2017, by and between Comerica Bank (“Bank”) and Presentation Technologies, LLC, a Delaware limited liability company, formerly known as Presentation Technologies, Inc., a Texas corporation (singularly and collectively, if more than one party, “Borrower”).

 

This Agreement amends, restates, and supersedes in its entirety, without novation, that certain Credit Agreement dated as of May 31, 2011, by and between J & S Audio Visual Communications, Inc., now known as J & S Audio Visual Communications, LLC, and Bank, as assumed by Borrower, as the same has been amended, restated or modified from time to time (the “Prior Agreement”).

 

In consideration of all present and future loans and credit from time to time made available by Bank to or in favor of Borrower, and in consideration of all present and future Indebtedness (as herein defined) of Borrower to Bank, Borrower represents, warrants, covenants and agrees as follows:

 

SECTION 1                                DEFINITIONS.

 

(a)          Defined Terms.   As used in this Agreement, the following terms shall have the respective meanings set forth below:

 

“ Acquisition Agreement ” shall mean that certain Unit Purchase Agreement dated as of July 25, 2017, by and among Monroe Jost, Kevin Jost, Todd Jost, Presentation Technologies, Inc. and PT Holdco, LLC and any and all amendments, modifications, restatements, renewals and/or extensions of the foregoing.

 

“ Adjusted ECF Amount ” is defined in Section 2(c)(iv)  hereunder.

 

“ Advance Formula ” shall have the respective meaning ascribed to such term in the Advance Formula Agreement.

 

“ Advance Formula Agreement ” shall mean an Advance Formula Agreement of even date herewith executed and delivered by Borrower unto Bank, as the same may be amended, restated, substituted and/or replaced from time to time.

 

“ Affiliate ” or “ Affiliates ” shall mean, when used with respect to any Person, any other Person which, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with such Person.  For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), with respect to any Person, shall mean possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

 

“ Agreement ” shall mean this Credit Agreement, as the same may be amended from time to time.

 

“ Authorized Officer ” shall mean the chief executive officer, the president or the chief financial officer, or in his/her absence, another responsible senior officer, of Borrower or any other Loan Party, or the general partner of, or the partner or one of the partners required to bind, Borrower or any other Loan Party, as applicable.

 

“ Capital Expenditure ” shall mean any expenditure by a Person for (a) an asset which will be used in a year or years subsequent to the year in which the expenditure is made and which asset is properly classified in relevant financial statements of such Person as equipment, real property, a fixed asset or a similar type of capitalized asset in accordance with GAAP, or (b) an asset relating to or acquired in connection with an acquired business, and (c) any and all acquisition costs related to (a) or (b) above.

 

“ Capitalized Lease ” shall mean, as applied to any Person, any lease of any property (whether real, personal or mixed) with respect to which the discounted present value of the rental obligations of such Person as lessee thereunder, in conformity with GAAP, is required to be capitalized on the balance sheet of that Person.

 

“ Change of Control ” shall mean any of the following:  (a) the failure of Ashford Hospitality Services, LLC to collectively own, directly or indirectly, at least 100% of the issued and outstanding Equity Interests in PT Holdco, LLC; (b) the failure of PT Holdco, LLC to collectively own, directly or indirectly, at least 51% of the issued and outstanding Equity Interests in Borrower, free and clear of all Liens, rights, options, warrants or other similar agreements or understandings, other than Permitted Encumbrances; (c) any Loan Party shall have effected a sale of all or substantially all of its assets except as expressly permitted or consented to in accordance with the terms of this Agreement; or (d) Borrower shall fail to own, directly or indirectly, 100% of the issued and outstanding Equity Interests of any Subsidiary (other than a Foreign Subsidiary that is not a Foreign Pledgor so long as no Event of Default has occurred and is continuing or would result therefrom).

 

“ Collateral ” shall mean all property, assets and rights in which a Lien or other encumbrance in favor of or for the benefit of Bank is or has been granted or arises or has arisen, or may hereafter be granted or arise, under or in connection with any Loan Document to secure the payment or performance of any portion of the Indebtedness.

 

“ Compliance Certificate ” shall mean a Compliance Certificate in such form and detail as may be required by or otherwise reasonably satisfactory to Bank, certified by an Authorized Officer of Borrower, (a) certifying that, as of the date thereof, to the best of such Authorized Officer’s knowledge, no Default or Event of Default shall have occurred and be continuing or exist, or if any Default or Event of Default shall have occurred and be continuing or exist, specifying, in detail, the

 

 

nature and period of existence thereof and any action taken or proposed to be taken by Borrower and/or any other Loan Party in respect thereof, (b) certifying as to whether Borrower and/or any other Loan Party, as applicable, is/are in compliance with the financial covenant(s) contained in Sections 4(k) - (n)  of this Agreement and as more particularly described in said Compliance Certificate (which Compliance Certificate shall set forth, in reasonable detail, the calculations and the resultant ratios or financial tests of the Borrower and/or such Loan Party, as applicable, determined thereunder), and (c) certifying that, as of the date thereof, e ach of the representations and warranties of each Loan Party under any Loan Document shall be true and correct in all material respects as if made on each loan disbursement date (except to the extent stated to relate to a specific earlier date, in which case such representation and warranty shall be true and correct as of such earlier date, and except that for purposes of the Compliance Certificate, the representations and warranties contained in Section 3(g)  shall be deemed to refer to the most recent statements furnished pursuant to Sections 4(a)(i)  and 4(a)(ii) ).

 

“ Consolidated ” or “ consolidated ” shall mean, when used with reference to any financial term in this Agreement, the aggregate for two or more persons of the amounts signified by such term for all such persons determined on a consolidated basis in accordance with GAAP.  Unless otherwise specified herein, references to “consolidated” financial statements or data of Borrower includes consolidation with its Subsidiaries in accordance with GAAP.

 

“ CPA ” shall mean an independent certified public accountant of nationally recognized standing selected by Borrower or another Loan Party, as applicable, and any other firm reasonably acceptable to Bank.

 

“ Current Maturities of Long Term Debt ” shall mean, in respect of any applicable Person(s) and as of any applicable date of determination thereof, that portion of the Long Term Debt of such Person(s) that should be classified as a current liability at such time in accordance with GAAP, including, without limitation, that portion of capital lease obligations of such Person(s) that would be so classified at such time per GAAP.

 

“ Debt ” shall mean as to any Person, without duplication (a) all Funded Debt of a Person, (b)  all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (c) all indebtedness of such Person arising in connection with any Hedging Transaction entered into by such Person, (d) all recourse Debt of any partnership of which such Person is the general partner, and (e) any Off Balance Sheet Liabilities.

 

“ Default ” shall mean any condition or event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default.

 

“ Distributions ” shall mean, in respect of any applicable Person(s), dividends on, or other payments or distributions on account of, or the setting apart of money for a sinking or other analogous fund for, or the purchase, redemption, retirement or other acquisition of, any Equity Interest of such Person(s) or of any warrants, options or other rights to acquire the same.

 

“ Domestic Subsidiary ” shall mean any Subsidiary of Borrower incorporated or organized under the laws of the United States of America, or any state or other political subdivision thereof, provided such Subsidiary is owned by such Borrower or a Domestic Subsidiary of such Borrower, and “Domestic Subsidiaries” shall mean any or all of them.

 

“ Draw Term Note ” shall mean the Draw Term Note dated the date hereof in the maximum original principal amount of $2,000,000 made by Borrower payable to the order of Bank, as the same may be renewed, extended, modified, increased or restated from time to time.

 

“ EBITDA ” shall mean, with respect to any Person as calculated on a consolidated basis in accordance with GAAP, and as to any applicable period of determination, (i) the Net Income of such Person for such period before deduction for interest expense, expense for income taxes (and for other taxes of such Person determined by reference to the income or profits of such Person) and the amount of depreciation and amortization expense of such Person, plus (ii) (A) Transaction Costs, (B) subject to regulations mandated or interpreted by the Securities Exchange Commission, amortization of hotel and convention signing fees during such period and (C) subject to regulations mandated or interpreted by the Securities Exchange Commission, non-recurring gains and losses and unrealized gains and losses, including such gains and losses arising from foreign currency transactions and other non-cash items including without limitation, non-cash impairment charges, any changes in the fair market value of any Hedging Transaction, and amortization of stock grants.

 

“ Eligible Account ” and/or “ Eligible Inventory ” shall have the respective meanings ascribed to such terms in the Advance Formula Agreement (if any).

 

“ Environmental Laws ” shall mean all laws, statutes, codes, ordinances, rules, regulations, orders, decrees and directives issued by any federal, state, local, foreign or other governmental or quasi-governmental authority or body (or any agency, instrumentality or political subdivision thereof) relating to the environment or pertaining to Hazardous Materials; any so-called “superfund” or “superlien” law pertaining to Hazardous Materials on or about any Property at any time owned, leased or otherwise used by Borrower or any of its Subsidiaries (if applicable), or any portion thereof, including, without limitation, those relating to soil, surface, subsurface groundwater conditions and the condition of the ambient air; and any other federal, state, foreign or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning, any Hazardous Material, as now or at any time hereafter in effect.

 

 

“ Equipment Note ” shall mean the Equipment Note dated the date hereof in the maximum original principal amount of $3,000,000 made by Borrower payable to the order of Bank, as the same may be renewed, extended, modified, increased or restated from time to time.

 

“ Equity Interest ” shall mean, with respect to any Person, (i) all of the shares of capital stock of (or other ownership or profit interests in) such Person, (ii) all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, (iii) all of the securities convertible into or exchangeable for shares of capital stock (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and (iv) all of the other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination.

 

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended, or any successor act or code.

 

“ Event of Default ” shall mean the occurrence or existence of any of the conditions or events set forth in Section 6 of this Agreement.

 

“ Excess Cash Flow ” shall mean, as of the end of each fiscal year for the year then ended, for the Borrower as calculated on a consolidated basis in accordance with GAAP, the sum of the following:  (a) EBITDA, minus (b) the sum of (i) non financed Capital Expenditures made during such fiscal year, (ii) all scheduled principal payments of debt made during such fiscal year (including, but not limited to, scheduled or unscheduled payments made under the Equipment Note, Draw Term Note and Term Note, but excluding payments made under the Revolving Credit Note), (iii) all capital lease obligations during such fiscal year, (iv) the interest expense during such fiscal year and (v) without duplication, Tax Distributions and taxes paid, and (vi) without duplication, Transaction Costs.

 

“ Foreign Pledgor ” shall mean any Foreign Subsidiary that grants a Lien in all or certain of its assets in accordance with Section 4(p) .

 

“ Foreign Subsidiary ” shall mean any Subsidiary of Borrower other than a Domestic Subsidiary.

 

“ Funded Debt ” of any Person shall mean, without duplication, as calculated on a consolidated basis in accordance with GAAP, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services as of such date (other than operating leases and trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices) or which is evidenced by a note, bond, debenture or similar instrument, (b) the principal component of all obligations of such Person under Capitalized Leases, (c) all reimbursement obligations (actual, contingent or otherwise) of such Person in respect of letters of credit, bankers acceptances or similar obligations issued or created for the account of such Person, (d) all liabilities of the type described in (a), (b) and (c) above that are secured by any Liens on any property owned by such Person as of such date even though such Person has not assumed or otherwise become liable for the payment thereof, the amount of which is determined in accordance with GAAP; provided however that so long as such Person is not personally liable for any such liability, the amount of such liability shall be deemed to be the lesser of the fair market value at such date of the property subject to the Lien securing such liability and the amount of the liability secured, and (e) all Guarantee Obligations in respect of any liability which constitutes Funded Debt; provided, however that Funded Debt shall not include any indebtedness under any Hedging Transaction prior to the occurrence of a termination event with respect thereto.

 

“ GAAP ” shall mean U.S. generally accepted accounting principles consistently applied.

 

“ Guarantor ” or “ Guarantors ” shall mean, as the context dictates, any Person(s) (other than Borrower) who shall, at any time, guarantee or otherwise be or become obligated for the repayment of all or any part of the Indebtedness.

 

“ Guarantee Obligation ” shall mean as to any Person (the “guaranteeing person”), as calculated on a consolidated basis in accordance with GAAP, any obligation of the guaranteeing Person in respect of any obligation of another Person (the “primary obligor”) (including, without limitation, any bank under any letter of credit), the creation of which was induced by a reimbursement agreement, guaranty agreement, keepwell agreement, purchase agreement, counterindemnity or similar obligation issued by the guaranteeing person, in either case guaranteeing or in effect guaranteeing any Debt, leases, dividends or other obligations (the “primary obligations”) of the primary obligor in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may

 

 

be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the applicable Person in good faith.

 

“ Hazardous Materials ” shall mean all of the following:  any asbestos, petroleum, petroleum by-products, flammable explosives, radioactive materials, and any hazardous or toxic materials, as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601 et seq.), or in any other Environmental Law.

 

“ Hedging Agreement ” shall mean any agreement relating to a Hedging Transaction entered into between Borrower and Bank or an Affiliate of Bank.

 

“ Hedging Transaction ” shall mean each interest rate swap transaction, basis swap transaction, forward rate transaction, equity transaction, equity index transaction, foreign exchange transaction, cap transaction, floor transaction (including any option with respect to any of these transactions and any combination of any of the foregoing).

 

“ Indebtedness ” shall mean any and all present and future indebtedness, obligations or liabilities of the Borrower and/or any other Loan Party to the Bank, howsoever arising, evidenced or incurred in connection with the Loan Documents, whether absolute or contingent, direct or indirect, voluntary or involuntary, liquidated or unliquidated, joint or several, now or hereafter existing or arising, due or to become due, whether known or unknown (including without limitation, payment obligations under Hedging Transactions evidenced by Hedging Agreements and any liabilities of any Loan Party to Bank arising in connection with any Lender Products), including, without limitation, (a) any and all direct indebtedness of the Borrower and/or any other Loan Party to the Bank, including indebtedness evidenced by any and all promissory notes; (b) any and all indebtedness, obligations or liabilities of the Borrower and/or any other Loan Party to the Bank arising under any guaranty; (c) any and all indebtedness, obligations or liabilities of the Borrower and/or any other Loan Party to the Bank arising from applications or agreements for the issuance of letters of credit; (d) late charges, loan fees or charges and overdraft indebtedness; (e) any agreement to indemnify the Bank for environmental liability or to clean up hazardous waste; (f) any and all indebtedness, obligations or liabilities for which the Borrower and/or any other Loan Party would otherwise be liable to the Bank were it not for the invalidity, irregularity or unenforceability of them by reason of any bankruptcy, insolvency or other law or order of any kind, or for any other reason, including, without limit, liability for interest and attorneys’ fees on, or in connection with, any of the Indebtedness from and after the filing by or against the Borrower and/or any other Loan Party of a bankruptcy petition, whether an involuntary or voluntary bankruptcy case, including, without limitation, all attorneys’ fees and costs incurred in connection with motions for relief from stay, cash collateral motions, nondischargeability motions, preference liability motions, fraudulent conveyance liability motions, fraudulent transfer liability motions and all other motions brought by the Borrower, any other Loan Party, the Bank or third parties in any way relating to the Bank’s rights with respect to Borrower, any other Loan Party or third party and/or affecting any Collateral securing any obligation owed to Bank by the Borrower, any other Loan Party or any third party, probate proceedings, on appeal or otherwise; (g) any and all amendments, modifications, restatements, renewals and/or extensions of any of the above, including, without limit, amendments, modifications, restatements, renewals and/or extensions which are evidenced by new or additional instruments, documents or agreements; (h) all costs incurred by Bank in establishing, determining, continuing, or defending the validity or priority of its security interest, or in pursuing its rights and remedies under this Agreement, the other Loan Documents or in connection with any proceeding involving Bank as a result of any financial accommodation to Borrower and/or any other Loan Party; and (i) all costs of collecting Indebtedness, including, without limit, attorneys’ fees and costs.

 

“ Leased Property ” shall mean any real Property of Borrower or any of its Domestic Subsidiaries (if applicable) which constitutes Collateral and which is subject to a lease under which Borrower or such Domestic Subsidiary, to the extent applicable, is the lessor or landlord.

 

“ Lender Products ” shall mean any one or more of the following types of services or facilities extended to any Loan Party by Bank: (i) credit cards, (ii) credit card processing services, (iii) debit cards, (iv) purchase cards, (v) Automated Clearing House (ACH) transactions, (vi) cash management, including controlled disbursement services, and (vii) establishing and maintaining deposit accounts.

 

“ Leverage Ratio ” shall mean, in respect of any applicable Person(s) as calculated on a consolidated basis in accordance with GAAP and for any applicable period of determination and as of any applicable date of determination, the ratio of (a) Funded Debt as of such date, to (b) EBITDA for such period.

 

“ Lien ” shall mean any mortgage, pledge, encumbrance, security interest, assignment, lien or charge or other interest of any kind upon any property or assets, whether real, personal or mixed, to secure any indebtedness, obligation or liability owed to or claimed by any Person, whether arising under or based upon contract, law or otherwise.

 

“ Loan(s) ” shall mean each loan, advance or other extension of credit made by Bank to or otherwise in favor of Borrower pursuant to this Agreement and the other Loan Documents.

 

 

“ Loan Documents ” shall mean this Agreement and any and all notes, instruments, documents, guarantees and agreements at any time evidencing, governing, securing or otherwise relating to any Loan(s) and/or any of the Indebtedness.

 

“ Loan Party ” shall mean each Borrower, each Guarantor, each Foreign Pledgor and each other Person who shall, at any time, be liable for the payment of all or any part of the Indebtedness or who shall own any property that is, at any time, subject to a Lien which secures all or any part of the Indebtedness.

 

“ Long Term Debt ” shall mean, in respect of any applicable Person(s) as calculated on a consolidated basis in accordance with GAAP and as of any applicable date of determination thereof, all Funded Debt of such Person(s) which should be classified as “funded indebtedness” or “long term indebtedness” on a balance sheet of such Person(s) as of such date, including, without limitation, to the extent not otherwise included, capital lease obligations of such Person(s) to the extent classified as long term at such time, in accordance with GAAP.

 

“ Material Adverse Effect ” shall mean any act, event, condition or circumstance which has had or could have a material and adverse effect on (i) the business, operations, condition (financial or otherwise), performance, assets or liabilities of the Loan Parties, taken as a whole, (ii) the ability of the Loan Parties, taken as a whole, to perform their obligations under any Loan Document to which they are a party or by which they are bound, or the enforceability of any of the Indebtedness or any Loan Document or any rights or remedies of Bank thereunder, or (iii) any Loan Party’s interest in, or the value, perfection or priority of Bank’s security interest or lien in any material Collateral or the ability of Bank to realize on any material Collateral.

 

“ Net Income ” shall mean, in respect of any applicable Person(s) as calculated on a consolidated basis and for any applicable period of determination, the net income (or loss) of such Person(s) for such period, as determined in accordance with GAAP, but excluding, in any event:

 

(a)                                  any extraordinary gains or losses or any gains or losses on the sale or other disposition, not in the ordinary course of business, of investments or fixed or capital assets, and any taxes on the excluded gains and any tax deductions or credits on account of any excluded losses; and

 

(b)                                  in the case of Borrower, net earnings of any Person in which Borrower has an ownership interest, unless either (i) such net earnings shall have actually been received by Borrower in the form of cash Distributions or (ii) such Person is a Subsidiary that is, directly or indirectly, wholly-owned by Borrower.

 

“ Notes ” shall mean, collectively, the Term Note, the Revolving Credit Note, the Draw Term Note, and the Equipment Note.

 

“ Off Balance Sheet Liability(ies) ” of a Person shall mean (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivables sold by such Person, (ii) any liability under any sale and leaseback transaction which is not a Capitalized Lease, (iii) any liability under any so-called “synthetic lease” transaction entered into by such Person, or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of Debt or any of the liabilities set forth in subsections (i)-(iii) of this definition, but which does not constitute a liability on the balance sheets of such Person.

 

“ Original ECF Amount ” is defined in Section 2(c)(iv)  hereof.

 

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation, or any successor thereto.

 

“ Person ” or “ person ” shall mean any individual, corporation, partnership, joint venture, limited liability company, association, trust, unincorporated association, joint stock company, government, municipality, political subdivision or agency, or other entity.

 

“ Post-Distribution Fixed Charge Coverage Ratio ” shall mean, in respect of any applicable Person(s) as calculated on a consolidated basis and in accordance with GAAP and for any applicable period of determination and as of any applicable date of determination, the ratio of (a) the sum of (i) EBITDA of such Person(s) for such period, minus (ii) without duplication, the aggregate amount of cash Distributions, including, without limit, Tax Distributions, made by such Person(s) during such period, minus (iii) without duplication, the aggregate amount of taxes paid in cash by such Person during such period to (b) the sum (i) the Current Maturities of Long Term Debt of such Person(s) at such time of determination, plus (ii) the interest expense of such Person(s) for such period.

 

“ Pre-Distribution Fixed Charge Coverage Ratio ” shall mean, in respect of any applicable Person(s) as calculated on a consolidated basis and in accordance with GAAP and for any applicable period of determination and as of any applicable date of determination, the ratio of (a) the sum of (i) EBITDA of such Person(s) for such period, minus (ii) without duplication, Tax Distributions, made by such Person(s) during such period, minus (iii) without duplication, the aggregate amount of taxes paid in cash by such Person during such Period to (b) the sum (i) the Current Maturities of Long Term Debt of such Person(s) at such time of determination, plus (ii) the interest expense of such Person(s) for such period.

 

“ Property ” shall mean any real or personal property now or at any time owned, occupied or operated by Borrower and/or any of its Subsidiaries (if applicable).

 

 

“ Reinvest ” or “ Reinvestment ” shall mean, with respect to any net cash proceeds, insurance proceeds or condemnation proceeds received by any Person, the application of such monies to (i) repair, improve or replace any tangible personal ( excluding inventory) or real property of the Loan Parties or any intellectual property reasonably necessary in order to use or benefit from any property or (ii) acquire any such property (excluding inventory) to be used in the business of such Person.

 

“ Revolving Credit Maximum Amount ” shall mean the lesser of (a) $3,000,000 or (b) the maximum amount permitted by the Advance Formula Agreement.

 

“ Revolving Credit Note ” shall mean the Master Revolving Note dated the date hereof in the maximum original principal amount of $3,000,000 made by Borrower payable to the order of Bank, as the same may be renewed, extended, modified, increased or restated from time to time.

 

“ Senior Funded Debt ” shall mean, in respect of any applicable Person and at any time (without duplication), an amount equal to (a) Funded Debt of such Person minus (b) all Subordinated Debt of such Person.

 

“ Senior Funded Debt to EBITDA Ratio ” shall mean, in respect of any applicable Person(s) as of any applicable date of determination for any applicable time of determination, all determined in accordance with GAAP and on a consolidated basis, the ratio of (a) the Senior Funded Debt of such Person(s) to (b) the sum of the EBITDA of such Person(s) for such period.

 

“ Subordinated Debt ” shall mean any Debt of Borrower or any other Loan Party (excluding PT Holdco, LLC) which has been subordinated to the Indebtedness pursuant to a subordination agreement in form and content satisfactory to Bank.

 

“ Subsidiary ” or “ Subsidiaries ” shall mean as to any particular parent entity, any corporation, partnership, limited liability company or other entity (whether now existing or hereafter organized or acquired) in which more than fifty percent (50%) of the outstanding equity ownership interests having voting rights as of any applicable date of determination, shall be owned directly, or indirectly through one or more Subsidiaries, by such parent entity.

 

“ Tax Distributions ” shall mean, in respect of any applicable Person, dividend payments and other Distributions made by such Person to its respective shareholders, members or other Person(s) holding Equity Interests therein, as applicable, in an amount not to exceed the income tax liability, if any, of such shareholders, members or other Person(s) arising or incurred directly as a result of the pass-through of income items to such shareholders, members or other Person(s) as a result of such Person’s status as a Subchapter S corporation under the United States Internal Revenue Code, as amended, or as a limited liability company, as applicable.

 

“ Term Note ” shall mean the Term Note dated the date hereof in the maximum original principal amount of $10,000,000 made by Borrower payable to the order of Bank, as the same may be renewed, extended, modified, increased or restated from time to time.

 

“ Transaction Costs ” shall mean the non-recurring fees, costs and expenses payable by any Loan Party in connection with the transactions that are the subject of the Acquisition Agreement and the Loan Documents that are (a) incurred prior to, on or within 60 days after, the Closing Date, during such period and reviewed and approved by Bank in its reasonable discretion or (b) otherwise approved in writing by Bank.

 

“ Uniform Commercial Code ” shall mean the Texas Business and Commerce Code as amended, supplemented, revised or replaced from time to time.

 

(b)          Accounting Principles.   Unless expressly provided to the contrary, all accounting and financial terms and calculations hereunder or pursuant hereto shall be defined and determined in accordance with GAAP.  If at any time any change in GAAP (including the adoption of the International Financial Reporting Standards) would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either Borrower or Bank shall so request, Bank and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided , that until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein; (ii) Borrower shall provide to Bank financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP; provided further that any obligations of Borrower or any of its Subsidiaries under a lease (whether existing now or entered into in the future) that is not (or would not be) a capitalized lease obligation under GAAP as in effect as of the date hereof shall not be treated as a capitalized lease obligation solely as a result of the adoption of changes in GAAP.

 

(c)           Section Headings and References.   Section headings and numbers have been set forth herein for convenience only; unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.

 

(d)          Construction and Interpretation.   Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, and the term “including” is not limiting.  The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.  Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against Bank or Borrower, whether under any rule of construction or otherwise; on the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of all parties hereto.

 

 

SECTION 2                                LOAN DOCUMENTS.   Each Loan shall be evidenced by a promissory note or other agreement or evidence of Indebtedness reasonably acceptable to Bank, in each case, executed and delivered by Borrower unto Bank; and each Loan shall be subject to the terms, covenants and conditions of each such promissory note or other agreement or evidence of Indebtedness, together with this Agreement and the other Loan Documents.  The funding, disbursement and extension of any extension of credit (other than a Loan under the Revolving Credit Note, the Equipment Note, the Term Note, or the Draw Term Note) to or in favor of Borrower shall be subject to the execution and/or delivery unto Bank of such Loan Documents as Bank may reasonably require, and shall be further subject to the satisfaction of such other conditions and requirements as Bank may from time to time require.

 

(a)          Unused Commitment Fee.   Borrower shall pay to Bank an unused commitment fee in an amount equal to the product of (i) 0.25% per annum (for the avoidance of doubt, such amount to be paid quarterly and divided accordingly), and multiplied by (ii) the difference between (A) the sum of the maximum face amount of the Revolving Credit Note and Equipment Note (as such maximum face amounts may change pursuant to the terms of this Agreement, the Notes, or by written agreement of Borrower and Bank from time to time) and (B) the sum of the average daily aggregate principal balance of all advances outstanding under the Revolving Credit Note and the Equipment Note during the calendar quarter then ended.  Such fee, if any, shall be computed and shall be payable quarterly in arrears as of the end of each of calendar quarter.  Bank will invoice Borrower for such fees, which invoice shall be due and payable within 15 days after receipt.  Notwithstanding the foregoing, the unused commitment fee, set forth in this paragraph, as it pertains to the Equipment Note, shall be calculated and assessed only with respect to the “Draw Period” (as defined in the Equipment Note), and not for any period thereafter.

 

(b)          Upfront Fee.   Borrower shall pay to Bank a one-time upfront fee in an amount equal to $90,000, which fee is deemed fully earned, due and payable on the date hereof.

 

(c)           Mandatory Prepayment.

 

(i)                   Promptly upon the incurrence of any Debt (other than capital lease obligations) owed to a Person other than Bank, Borrower shall make a prepayment to Bank in an amount equal to 100% of the net cash proceeds received by the Loan Parties from the incurrence of such Debt.

 

(ii)                Promptly upon the sale, transfer or disposition of any assets or property by any Loan Party (other than the sale of inventory in the ordinary course of business and the sale or disposal of obsolete, worn out or damaged equipment and inventory), Borrower shall make a prepayment to Bank in an amount equal to 100% of the net cash proceeds received by the Loan Parties from such sale, transfer or disposition; provided however, any net cash proceeds from the sale, transfer or disposition of assets of less than $5,000,000 in the aggregate received during any fiscal year of Borrower may be Reinvested by Borrower or such Subsidiary if the following conditions are satisfied:  (A) promptly following the receipt of such net cash proceeds, Borrower provides to Bank a reinvestment certificate stating (1) that no Default or Event of Default has occurred and is continuing either as of the date of the receipt of such proceeds or as of the date of such reinvestment certificate, (2) that such proceeds have been received and (3) a description of the planned Reinvestment of such proceeds), (B) the Reinvestment of such proceeds is completed within 120 days and (C) no Default or Event of Default shall have occurred and be continuing at the time of the application of such proceeds to Reinvestment.  If any such proceeds have not been Reinvested at the end of the periods provided above, Borrower shall promptly pay such net cash proceeds to Bank to be applied in accordance with this Section 2(c) .

 

(iii)             Promptly upon the issuance of any Equity Interests in Borrower or any of its Subsidiaries, Borrower shall make a prepayment to Bank in an amount equal to 50% of the net cash proceeds received by the Loan Parties from the issuance of such Equity Interests.

 

(iv)            Beginning with the fiscal year ending December 31, 2017 and for each fiscal year thereafter, on or before 45 days after the end of such fiscal year (“ECF Payment Date”), Borrower will calculate the amount of the Excess Cash Flow as of the end of such fiscal year (such amount of Excess Cash Flow referred to herein as the “Original ECF Amount”), and Borrower shall make a prepayment to Bank (an “Excess Cash Flow Payment”) in an amount equal to 25% of the Original ECF Amount; provided , however, that in the event Borrower’s Senior Funded Debt to EBITDA Ratio exceeds 2.375 to 1.00, such prepayment shall be an amount equal to 50% of the Original ECF Amount. Furthermore, upon receipt of the audited financial statements required to be delivered under Section 4(a)(i)  for such fiscal year, Borrower will re-calculate the amount of the Excess Cash Flow as of the end of such fiscal year (such amount of Excess Cash Flow referred to herein as the “Adjusted ECF Amount”), and Borrower agrees to each of the following:

 

A.                                     If the Original ECF Amount exceeds the Adjusted ECF Amount, then on the ECF Payment Date for the next succeeding fiscal year, the Excess Cash Flow Payment due for such next succeeding fiscal year shall be reduced by an amount equal to the lesser of (1) the resulting decrease in the amount of Excess Cash Flow Payment if such payment had been calculated based on the Adjusted ECF Amount or (2) 15% of EBITDA for such fiscal year.

 

B.                                     If the Adjusted ECF Amount exceeds the Original ECF Amount, then on the ECF Payment Date for the next succeeding fiscal year, Borrower shall make an additional prepayment to Bank in an amount equal to the lesser of (1) the resulting increase in the Excess Cash Flow Payment if such payment had been calculated based on the Adjusted ECF Amount or (2) 15% of EBITDA for such fiscal year.

 

 

All payments made under Section 2(c)(iv)  and received by Bank shall be applied in payment of the Indebtedness in the following order:  first, to outstanding principal amount of the Loans under the Term Note (in inverse order of maturities until paid in full); second, to outstanding principal amount of the Loans under the Draw Term Note (in inverse order of maturities until paid in full); third, to Bank’s costs and expenses; fourth, to the outstanding principal amount of the loans under the Revolving Credit Note until paid in full; fifth, to the outstanding principal amount of the Loans under the Equipment Note; sixth, to prepay any outstanding Indebtedness, including providing cash collateral any undrawn letters of credit issued hereunder; and seventh, any remaining amount to the Borrower.  Any such reductions in the amount of the Notes as provided in this Section 2(c)(iv)  shall be in addition to all scheduled principal payments and optional payments.  No prepayment penalty or premium shall be required with respect to any mandatory prepayment made pursuant to this Section 2(c)(iv)  or any voluntary prepayment of the outstanding amounts of Notes as provided therein.

 

All payments made under this Section 2(c)  (other than under Section 2(c)(iv) ) and received by Bank shall be applied in payment of the Indebtedness in the following order:  first, to Bank’s costs and expenses; second, to outstanding principal amount of the Loans under the Term Note (in inverse order of maturities until paid in full); third, to outstanding principal amount of the Loans under the Draw Term Note (in inverse order of maturities until paid in full); fourth, to the outstanding principal amount of the loans under the Revolving Credit Note until paid in full; fifth, to the outstanding principal amount of the Loans under the Equipment Note; sixth, to prepay any outstanding Indebtedness, including providing cash collateral any undrawn letters of credit issued hereunder; and seventh, any remaining amount to the Borrower.  Any such reductions in the amount of the Notes as provided in this Section 2(c)  shall be in addition to all scheduled principal payments and optional payments.  No prepayment penalty or premium shall be required with respect to any mandatory prepayment made pursuant to this Section 2(c)  or any voluntary prepayment of the outstanding amounts of Notes as provided therein.

 

(d)          Application of Proceeds. All payments made under the Loan Documents (other than (i) under Section 2(c) , (ii) optional prepayments of amounts owed under the Revolving Credit Note, or (iii) otherwise expressly directed elsewhere pursuant to one of the Loan Documents) and received by Bank shall be applied in payment of the Indebtedness in the following order:  first, to Bank’s costs and expenses; second, to outstanding principal amount of the Loans under the Term Note (in inverse order of maturities until paid in full); third, to outstanding principal amount of the Loans under the Draw Term Note (in inverse order of maturities until paid in full); fourth, to the outstanding principal amount of the loans under the Revolving Credit Note until paid in full; fifth, to the outstanding principal amount of the Loans under the Equipment Note; sixth, to prepay any outstanding Indebtedness, including providing cash collateral any undrawn letters of credit issued hereunder; and seventh, any remaining amount to the Borrower.  Any such reductions in the amount of the Notes as provided in this Section 2(d)  shall be in addition to all scheduled principal payments and optional payments.  No prepayment penalty or premium shall be required with respect to any mandatory prepayment made pursuant to this Section 2(d)  or any voluntary prepayment of the outstanding amounts of Notes as provided therein.

 

(e)           Conditions Precedent to Initial Loans.   The obligation of Bank to make the initial Loans under or pursuant to this Agreement on the date hereof shall be subject to the satisfaction or waiver by the Bank of the following conditions precedent, which conditions precedent shall have no applicability after funding the initial Loans:

 

(i)                   Bank shall have received (i) from each party hereto either a counterpart of this Agreement signed on behalf of such party and (ii) duly executed copies of the Loan Documents and such other certificates, documents, instruments and agreements as Bank shall reasonably request in connection with the transactions contemplated by this Agreement and the other Loan Documents, including, without limitation, a written opinion of the Loan Parties’ counsels, addressed to and in form and substance satisfactory to Bank.

 

(ii)                Bank shall have received (i) a certificate of each Loan Party, dated as of the date hereof, which shall (A) certify the resolutions of its Board of Directors, members or other body authorizing the execution, delivery and performance of the Loan Documents to which it is a party, and (B) identify by name and title and bear the signatures of the officers of such Loan Party authorized to sign the Loan Documents to which it is a party, (ii) the charter, articles or certificate of organization or incorporation of each Loan Party certified by the relevant authority of the jurisdiction of organization of such Loan Party and a true and correct copy of its bylaws or operating, management or partnership agreement, or other organizational or governing documents, and (iii) a long form good standing certificate for each Loan Party from its jurisdiction of organization.

 

(iii)             Bank shall have received the results of a recent lien search in the jurisdiction of organization of each Loan Party and each jurisdiction where assets of the Loan Parties are located, and such search shall reveal no Liens on any of the assets of the Loan Parties except for liens permitted by Section 6.02 or Permitted Encumbrances or Liens discharged on or prior to the date hereof pursuant to a pay-off letter or other documentation satisfactory to Bank.

 

(iv)            Bank shall have received satisfactory pay-off letters for all existing debt of the Loan Parties required to be repaid and which confirms that all Liens upon any of the property of the Loan Parties constituting Collateral will be terminated concurrently with such payment.

 

(v)               Bank shall have received evidence of insurance coverage in form, scope, and substance reasonably satisfactory to the Bank and otherwise in compliance with the terms of the Loan Documents.

 

 

(vi)            All actions, proceedings, instruments and documents required to carry out the borrowings and transactions contemplated by this Agreement or any other Loan Document or incidental thereto, and all other related legal matters, shall have been reasonably satisfactory to and approved by Bank.

 

(vii)         Borrower shall pay to Bank all fees and expenses (including, but not limited to reasonable attorney’s fees, recordation costs, and title policy fees, if any) incurred or required to be paid in connection with the execution and delivery of this Agreement and the related Loan Documents, including the upfront fee more specifically described in Section 2(b) .

 

(viii)      Bank shall have received copies of organizational documents of the Loan Parties.

 

(ix)            Bank shall have received copies of the Acquisition Agreement and all other agreements, documents and instruments related thereto, all to be in form and substance reasonably satisfactory to Bank, and evidence of consummation of the transactions described therein.

 

(x)               Bank shall have received a pledge from PT Holdco, LLC of all its equity interests in Borrower.

 

(xi)            Bank shall have received evidence that PT Holdco, LLC has made a cash payment of at least $7,000,000.00 in the aggregate to Sellers as part of the transaction contemplated by the Acquisition Agreement, as described in the estimated transaction sources and uses described on the Schedule of Sources and Uses provided by Borrower to Bank prior to the date hereof.

 

(xii)         An audit of Borrower’s accounts, inventory, and any other Collateral required by Bank, in form and content acceptable to Bank, shall have been completed.

 

(xiii)      Borrower shall deliver to Bank pro forma financial statements, aged no more than 30 days from the date of this Agreement, and a Compliance Certificate, demonstrating pro forma compliance with financial covenants specified in Sections 4(k) , 4(l) , 4(m)  and 4(n) .

 

(xiv)     Bank shall have received background checks on key personnel, which background checks shall be in form and content acceptable to Bank.

 

(xv)        Bank shall have received an asset appraisal acceptable to Bank.

 

(xvi)     Bank shall have received, for each leased property of a Loan Party (excluding PT Holdco, LLC), an executed landlord waiver or subordination by the applicable landlord, such waiver or subordination to be in form and substance satisfactory to Bank.

 

(xvii) Borrower shall deliver evidence demonstrating on a pro forma basis that as of the date hereof, Borrower maintains a Senior Funded Debt to EBITDA Ratio not to exceed 3.0 to 1.0 and a Leverage Ratio not to exceed 4.0 to 1.0.

 

(xviii) Borrower shall deliver to Bank a borrowing base report, in form and substance satisfactory to Bank, which shall demonstrate the aggregate amount of the initial Loan requested under the Revolving Credit Note is not greater than 80% of the Revolving Credit Maximum Amount, together with supporting documentation (detailing accounts receivable, accounts payable and inventory), all dated no earlier than 30 days prior to the date hereof.

 

(xix)     Bank shall have received a plan regarding financial management of Borrower’s business affairs with its financial officer, in form and content reasonably acceptable to Bank.

 

(xx)        Bank shall have received such other reports or due diligence materials as Bank may reasonably request.

 

(f)            Conditions Precedent to All Loans.   The obligation of Bank to make any Loan or issue letters of credit under or pursuant to this Agreement and the other Loan Documents (including the initial Loans made on the date hereof) shall be subject to the following conditions precedent (unless expressly waived by Bank):

 

(i)                   Each Loan Party shall have performed and complied with all agreements and conditions contained in the Loan Documents applicable to it and which are then in effect.

 

(ii)                Each of the representations and warranties of each Loan Party under any Loan Document shall be true and correct in all material respects as if made on each loan disbursement date (except to the extent stated to relate to a specific earlier date, in which case such representation and warranty shall be true and correct as of such earlier date, and except that for purposes of this Section 2(f)(ii) , the representations and warranties contained in Section 3(g)  shall be deemed to refer to the most recent statements furnished pursuant to Sections 4(a)(i)  and 4(a)(ii) ).

 

(iii)             No Default or Event of Default shall have occurred and be continuing; there shall have been no change in the condition (financial or otherwise), properties, business, or operations of any Loan Party since the date of the financial statements most recently delivered to Bank prior to the date of this Agreement that could reasonably be expected to have a Material Adverse Effect; and no provision of law, any order of any governmental authority, or any regulation, rule or interpretation thereof, shall have had any Material Adverse Effect on the validity or enforceability of any Loan Document.

 

 

SECTION 3                                REPRESENTATIONS AND WARRANTIES.   Borrower, for and on behalf of itself and its Subsidiaries, hereby represents and warrants to Bank that:

 

(a)          Authority.   It is duly organized, validly existing and in good standing under the laws of the State of its incorporation or organization, as applicable; it is duly qualified and authorized to do business in each jurisdiction where the character of its assets or the nature of its activities makes such qualification necessary, and it has the legal power and authority to own its properties and assets and to carry out its business as now being conducted in each such jurisdiction wherein such qualification is necessary; execution, delivery and performance of this Agreement, and any and all other Loan Documents to which Borrower or a Domestic Subsidiary is a party or by which it is otherwise bound, are within Borrower’s or such Domestic Subsidiary’s respective powers and authorities, have been duly authorized by all requisite corporate or other necessary or appropriate action, and are not in contravention or violation of law or the terms of Borrower’s or such Domestic Subsidiary’s organizational or other governing documents, and do not require the consent or approval of any governmental body, agency or authority.

 

(b)          Enforceability of Agreement and Loan Documents.   This Agreement, and any other Loan Documents contemplated hereby, when executed, issued and/or delivered by Borrower or a Domestic Subsidiary, or by which Borrower or a Domestic Subsidiary is otherwise bound, will be valid and binding and legally enforceable against Borrower or such Domestic Subsidiary in accordance with their terms.

 

(c)           Non-Contravention.   The execution, delivery and performance of this Agreement, and any other Loan Documents required under or contemplated by this Agreement to which Borrower or a Domestic Subsidiary is a party or by which it is otherwise bound, and the issuance of this Agreement and any such other Loan Documents by Borrower or a Domestic Subsidiary, and the borrowings and other transactions contemplated hereby and thereby, are not in contravention or violation of the unwaived terms of any indenture, agreement or undertaking to which such Person is a party or by which such Person or any of such Person’s property or assets is bound, and will not result in the creation or imposition of any Lien of any nature whatsoever upon any of the property or assets of such Person, except to or in favor of Bank.

 

(d)          Litigation or Proceedings.   No litigation or other proceeding before any court or administrative agency is pending, or, to the knowledge of Borrower or any of its officers, is threatened against Borrower or a Subsidiary, the outcome of which could reasonably be expected to have a Material Adverse Effect.

 

(e)           No Liens.   There are no Liens on any of Borrower’s or a Domestic Subsidiary’s Property or assets, except Permitted Encumbrances (as hereinafter defined).

 

(f)            No Defaults.   There exists no Default or Event of Default under any of the Indebtedness.

 

(g)           Financial Statements; No Material Adverse Change.   The most recent financial statements with respect to Borrower delivered to Bank fairly present in all material respects the financial condition of Borrower and its Subsidiaries as of the date thereof and for the period(s) covered thereby in accordance with GAAP, and since September 30, 2017 there has been no material adverse change in the condition (financial or otherwise) of Borrower and its Subsidiaries.

 

(h)          Subsidiaries.   As of the date of this Agreement, Borrower has no Subsidiaries, except those, if any, disclosed on the Schedule of Subsidiaries attached to this Agreement, which Schedule sets forth the name, place of incorporation, and percentage of ownership of Borrower in each such Subsidiary.

 

(i)              Regulation U or T; Margin Stock.   Borrower is not engaged principally, or as one of its important activities, in the business of extending credit to others for the purpose of purchasing or carrying “margin stock” or “margin securities” within the meanings of Regulation U or Regulation T of the Board of Governors of the Federal Reserve System, or any regulations, interpretations or rulings thereunder.

 

(j)             Legal Name.   Borrower’s true and correct legal name is that set forth on the signature page to this Agreement.  Except as disclosed in writing to Bank on or before the date of this Agreement, Borrower has not conducted business under any name other than that set forth on the signature page to this Agreement.

 

(k)          Solvency.   Each of the Loan Parties is solvent and is able to pay its respective debts (including, without limit, trade debts) as they mature.

 

(l)              Taxes.   All taxes, assessments and other similar imposts and charges levied, assessed or imposed upon Borrower, any Domestic Subsidiary and/or any of its property or assets have been paid, except to the extent being diligently contested in good faith.

 

(m)      Hazardous Materials.   Neither Borrower nor any Domestic Subsidiary has used Hazardous Materials on, in, under or otherwise affecting any Property now or at any time owned, occupied or operated by Borrower or such Domestic Subsidiary or upon which Borrower or such Domestic Subsidiary has a place of business in any manner which violates any Environmental Law(s), to the extent that any such violation could reasonably be expected to have a Material Adverse Effect.  Borrower has never received any notice of any violation of any Environmental Law(s), and to the best of Borrower’s knowledge, there have been no actions commenced or threatened by any party against Borrower or any of the Property for non-compliance with any Environmental Law(s), which, in any case, could reasonably be expected to have a Material Adverse Effect.

 

 

(n)          Collateral Documents .   Any and all security agreements, mortgages, deeds of trust, pledge agreements, assignments, financing statements and other documents executed and delivered to Bank by a Loan Party to protect or perfect Liens upon the Collateral required by the Loan Documents as security for the Indebtedness and to accord Bank a perfected security position in the Collateral are effective to create in favor of Bank a legal, valid and enforceable first priority Lien (subject to Permitted Encumbrances) on all right, title and interest of Borrower and the other Loan Parties in the Collateral described therein.  Except for filings completed prior to the date of this Agreement and as contemplated hereby and by the Loan Documents, no filing or other action will be necessary to perfect or protect such Liens.

 

(o)          Compliance with Laws .   (i) Each Loan Party has complied with all applicable federal, state and local laws, ordinances, codes, rules, regulations, consent decrees and administrative orders, including but not limited to applicable Environmental Laws, and is in compliance with any requirement of law, except to the extent that failure to comply therewith could not reasonably be expected to have a Material Adverse Effect; and (ii) neither the extensions of credit made pursuant to this Agreement or the use of the proceeds thereof by the Loan Parties will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto, or The United and Strengthening America by providing appropriate Tools Required to Intercept and Obstruct Terrorism (“USA Patriot Act”) Act of 2001, Public Law 10756, October 26, 2001 or  Executive Order 13224 of September 23, 2001 issued by the President of the United States (66 Fed. Reg. 49049 (2001)).

 

(p)          Accuracy of Information .   Neither this Agreement nor any other Loan Document, certificate, information or report furnished or to be furnished by or on behalf of a Loan Party to Bank in connection with any of the transactions contemplated hereby or thereby contains a misstatement of material fact, or omits to state a material fact required to be stated in order to make the statements contained herein or therein, taken as a whole, not misleading in the light of the circumstances under which such statements were made.  There is no fact, other than information known to the public generally, known to any Loan Party after reasonable inquiry, that could reasonably be expect to have a Material Adverse Effect that has not expressly been disclosed to Bank in writing.

 

(q)          Leases.   All leases covering any Leased Property, if any, are in full force and effect, there are no defaults under any of the provisions thereof, and all conditions to the effectiveness or continuing effectiveness thereof required to be satisfied as of the date hereof have been satisfied.

 

SECTION 4                                AFFIRMATIVE COVENANTS.   So long as Bank shall have any commitment or obligation, if any, to make or extend any Loans to or in favor of Borrower, and/or so long as any Indebtedness remains unpaid and outstanding, Borrower covenants and agrees that it shall, and shall cause its Subsidiaries (to the extent applicable):

 

(a)          Financial Statements; Reporting Requirements.   Provide to Bank, or cause to be provided to Bank, the following, each of which shall be prepared in accordance with GAAP, and shall be in form and detail acceptable to Bank:

 

(i)                   As soon as available, and in any event within 120 days after and as of the end of each fiscal year of Borrower, annual CPA audited consolidated and consolidating financial statements of Borrower for and as of the end of each such fiscal year, containing the balance sheet of Borrower as of the close of each such fiscal year, statements of income and retained earnings and a statement of cash flows of Borrower for each such fiscal year, and such other comments and financial details as are usually included in similar reports or as may be requested by Bank, certified by an Authorized Officer of Borrower.

 

(ii)                As soon as available, and in any event within 45 days after and as of the end of each calendar month, internally prepared consolidated and consolidating financial statements of Borrower, containing the balance sheet of Borrower and its Subsidiaries as of the end of each such period, and statements of income and retained earnings for Borrower for such period and for the portion of the fiscal year of Borrower through the end of the period then ending, and such other comments and financial details as are usually included in similar reports or as may be requested by Bank, certified by an Authorized Officer of Borrower.

 

(iii)             As soon as available, and in any event within 45 days after and as of the end of each fiscal quarter, internally prepared consolidated and consolidating statement of cash flows for Borrower for such period and for the portion of the fiscal year of Borrower through the end of the period then ending, and such other comments and financial details as are usually included in similar reports or as may be requested by Bank, certified by an Authorized Officer of Borrower.

 

(iv)            Simultaneous with the delivery to Bank of the respective financial statements required in Section 4(a)(i)   above as well as within 45 days after and as of the end of each fiscal quarter of Borrower, a Compliance Certificate.

 

(v)               Within 45 days after and as of the end of each calendar month accounts payable agings of Borrower, its Domestic Subsidiaries and its Foreign Pledgors as of such time, certified by an Authorized Officer of Borrower.

 

(vi)            Within 45 days after and as of the end of each calendar month accounts receivable agings of Borrower, its Domestic Subsidiaries and its Foreign Pledgors as of such time, certified by an Authorized Officer of Borrower.

 

(vii)         Within 45 days after and as of the end of each calendar month borrowing base reports of Borrower as of such time, which borrowing base reports shall include a schedule identifying each Eligible Account at such time, and such other matters and information relating to the Eligible Accounts as Bank may request (in each case, to the extent Eligible

 

 

Accounts are included under the applicable Advance Formula Agreement), reports as to the amount of Eligible Inventory, including, without limitation, designations as to the types of Eligible Inventory, the additions and subtractions thereto, and such other matters and information relating to the Eligible Inventory as Bank may request (in each case, to the extent Eligible Inventory is included under the applicable Advance Formula Agreement), together with a certificate setting forth Borrower’s calculation of the Advance Formula as of the date of such borrowing base report.  Each borrowing base certificate so delivered to Bank shall be certified by an Authorized Officer of Borrower.

 

(viii)      Promptly after becoming aware of the occurrence or existence of any Default or Event of Default, or of any other condition, occurrence or event which has had or could reasonably be expected to have a Material Adverse Effect, a written statement of an Authorized Officer of Borrower setting forth the details of such Default or Event of Default, or such other condition or occurrence, and the action which Borrower has taken or caused to be taken, or proposes to take or cause to be taken, with respect thereto.

 

(ix)            Such other information concerning Borrower, any Loan Party and/or any Guarantor as Bank shall reasonably request from time to time.

 

(b)          Keeping of Books and Records; Inspections and Audits.   Keep proper books of record and account in which full and correct entries shall be made of all of its financial transactions and its assets and businesses so as to permit the presentation of financial statements (including, without limitation, any financial statements required to be delivered to Bank pursuant to this Agreement) prepared in accordance with GAAP; permit Bank, or its representatives, at reasonable times and intervals, to visit all of Borrower’s or a Subsidiary’s offices and to make inquiries as to Borrower’s or a Subsidiary’s respective financial matters with its respective directors, officers, employees, and independent certified public accountants; permit Bank, through Bank’s authorized attorneys, accountants and representatives, to inspect, audit and examine Borrower’s or a Subsidiary’s books, accounts, records, ledgers and assets and properties of every kind and description, wherever located, at all reasonable times during normal business hours including, without limit, audits of Borrower’s or a Domestic Subsidiary’s or a Foreign Pledgor’s accounts receivable, inventory and other Collateral, provided that so long as no Event of Default exists and is continuing, Bank shall not conduct such audits more frequently than semi-annually at the Borrower’s expense as provided in this clause (b) .  Borrower shall reimburse Bank for all reasonable costs and expenses incurred by Bank in connection with such inspections, examinations and audits, and to pay to Bank such fees as Bank may reasonably charge in respect of such inspections, examinations and audits, or as otherwise mutually agreed upon by Borrower and Bank.

 

(c)           Maintain Insurance.   Keep its insurable properties (including, without limitation, any Collateral at any time securing all or any part of the Indebtedness) adequately insured and maintain (i) insurance against fire and other risks customarily insured against under an “all-risk” policy and such additional risks customarily insured against by companies engaged in the same or a similar business to that of Borrower, (ii) necessary workers’ compensation insurance, (iii) public liability and product liability insurance, and (iv) such other insurance as may be required by law or as may be reasonably required in writing by Bank, all of which insurance shall be in such amounts, contain such terms, be in such form, be for such purposes, prepaid for such time periods, and written by such companies as may be reasonably satisfactory to Bank.  All such policies shall contain a provision whereby they may not be canceled or materially amended except upon 30 days’ prior written notice to Bank.  Borrower will promptly deliver to Bank, at Bank’s request, evidence satisfactory to Bank that such insurance has been so procured and, with respect to casualty insurance, made payable to Bank.  If Borrower or a Domestic Subsidiary fails to maintain satisfactory insurance as herein provided, Bank shall have the option (but not the obligation) to do so, and Borrower agrees to repay Bank, upon demand, with interest at the highest rate of interest applicable to any of the Indebtedness, all amounts so expended by Bank.  Bank acknowledges that Borrower’s insurance in effect as of the date hereof as evidenced by documentation previously provided by Borrower to Bank is satisfactory to Bank as of the date hereof.

 

(d)          Pay Taxes.   Pay promptly and within the time that they can be paid without late charge, penalty or interest, all taxes, assessments and similar imposts and charges of every kind and nature lawfully levied, assessed or imposed upon Borrower, any Subsidiary and/or their respective property or assets, except to the extent being diligently contested in good faith and, if requested by Bank, evidence that adequate reserves as required by GAAP are being maintained.  If Borrower or a Subsidiary fails to pay such taxes and assessments within the time they can be paid without penalty, late charge or interest, Bank shall have the option (but not the obligation) to do so, and Borrower agrees to repay Bank, upon demand, with interest at the highest rate of interest applicable to any of the Indebtedness, all amounts so expended by Bank.

 

(e)           Maintain Existence.   Do or cause to be done all things necessary to preserve and keep in full force and effect Borrower’s or a Subsidiary’s corporate or other applicable existence, rights and franchises and comply with all material applicable laws, ordinances and government rules and regulations to which it is subject; continue to conduct and operate its business substantially as conducted and operated during the present and preceding calendar year; at all times maintain, preserve and protect all franchises and trade names and preserve all the remainder of its property and keep the same in good repair, working order and condition; maintain all permits, licenses, approvals and agreements which it is required to maintain or comply with, where the failure to do so could reasonably be expected to have a Material Adverse Effect; maintain Borrower’s and each Subsidiary’s same place(s) of business, chief executive office or residence, as applicable, as currently exists, and not relocate said address(es) without giving Bank 30 days’ prior written notice of such proposed change, but the giving of such notice shall not cure or remedy any Default or Event of Default caused by such change; and from time to time make, or cause to be made, all needed and proper repairs, renewals, replacements, betterments and improvements thereto so that the business carried on in connection therewith may be properly and advantageously conducted at all times.

 

 

(f)            Environmental Laws.   Comply, and cause each of its Subsidiaries (to the extent applicable) to comply, in all material respects with all applicable Environmental Laws, and maintain all material permits, licenses and approvals required under applicable Environmental Laws, where the failure to do so could reasonably be expected to have a Material Adverse Effect; and promptly provide to Bank, immediately upon receipt thereof, copies of any material correspondence, notice, pleading, citation, indictment, complaint, order, decree, or other document from any source asserting or alleging a violation of any Environmental Laws by Borrower and/or any of its Subsidiaries, or of any circumstance or condition which requires or may require a financial contribution by  Borrower and/or any of its Subsidiaries, or a clean-up, removal, remedial action or other response by or on behalf of Borrower and/or any of its Subsidiaries under applicable Environmental Law(s), or which seeks damages or civil, criminal, or punitive penalties from Borrower and/or any of its Subsidiaries for any violation or alleged violation of any Environmental Law(s) by Borrower and/or any of its Subsidiaries.  Borrower hereby indemnifies, saves and holds Bank, and any of Bank’s past, present and future officers, directors, shareholders, employees, representatives and consultants, harmless from and against any and all losses, damages, suits, penalties, costs, liabilities and expenses (including, without limitation, reasonable legal expenses and attorneys’ fees) incurred or arising out of any claim, loss or damage of any property, injuries to or death of any persons, contamination of or adverse effects on the environment, or other violation or asserted violation of any applicable Environmental Law(s); provided, however, that the foregoing indemnification shall not be applicable, and Borrower shall not be liable for any such losses, damages, suits, penalties, costs, liabilities or expenses, to the extent (but only to the extent) the same arise or result from any gross negligence or willful misconduct of Bank or any of its agents or employees.  The provisions of this Section shall survive repayment of the Indebtedness and satisfaction of all obligations of Borrower to Bank and termination of this Agreement.

 

(g)           Maintain Bank Accounts.   Maintain all of Borrower’s and its Domestic Subsidiaries’ principal bank accounts with Bank and notify Bank immediately in writing of the establishment or existence of any other bank account, deposit account or other account into which money may be deposited (other than with Bank); provided, however, providing any such notice to Bank shall not waive the occurrence or existence of any Default or Event of Default arising or existing as a result of the establishment or existence of any account(s) in violation of this Section.

 

(h)          Copies of Leases.   Deliver to Bank copies of all leases existing and in effect as of the date of this Agreement with respect to any Leased Property, and deliver to Bank copies of all proposed leases (whether as of the date of this Agreement or hereafter) with respect to any such Leased Property prior to execution thereof.  All leases with respect to any such Leased Property (and renewals, extensions and material modifications thereof), and all tenants of such Leased Property, shall be subject to Bank’s written approval prior to execution of any lease (or any renewal, extension or material modification thereof), including, without limitation, Bank’s approval of the financial statements of each proposed tenant, which approval shall be in the reasonable discretion of Bank.  Bank may require financial information concerning each proposed tenant of any such Leased Property, including a minimum of one (1) year’s operating statements.  Borrower shall use its best efforts to keep any such Leased Property fully leased.  Borrower shall fully and faithfully perform each and every covenant, agreement, or obligation of lessor or landlord under any and all leases covering any portion of any such Leased Property.  Upon the request of Bank, Borrower shall provide Bank with a current rent roll supplying the name of each tenant of any such Leased Property and the net monthly rental for each space and such other information as Bank may request.

 

(i)              ERISA Compliance.   At all times meet, and cause each of its Subsidiaries to meet, the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA; promptly after Borrower knows or has reason to know of the occurrence of any event, which would constitute a reportable event or prohibited transaction under ERISA, or that the PBGC or Borrower has instituted or will institute proceedings to terminate an employee pension plan, deliver to Bank a certificate of an Authorized Officer of Borrower setting forth details as to such event or proceedings and the action which Borrower proposes to take with respect thereto, together with a copy of any notice of such event which may be required to be filed with the PBGC; and upon the request of Bank, furnish to Bank (or cause the plan administrator to furnish Bank) a copy of the annual return (including all schedules and attachments) for each plan covered by ERISA, and filed with the Internal Revenue Service by Borrower or any of its Subsidiaries not later than ten (10) days after such report has been so filed.  Borrower shall be permitted to voluntarily terminate employee pension or benefit plans, so long as any such voluntary termination is done in accordance with ERISA and does not result in a material liability or obligation to such Borrower and does not result in a Material Adverse Effect.

 

(j)             Interest Rate Protection .  As soon as possible, but in no event later than 90 days after the date hereof, maintain at all times, in an amount not less than 50% of the aggregate unpaid principal balance outstanding under the Term Note as of any time of determination, such Specified Hedging Agreements (as defined in the Term Note) as are reasonably acceptable to Bank with such parties as are reasonably acceptable to Bank.

 

(k)          Leverage Ratio.   Maintain a consolidated maximum Leverage Ratio of not more than 3.00 to 1.00.  For purposes of this Agreement, the Leverage Ratio shall be calculated quarterly as of the end of each fiscal quarter of Borrower for the four fiscal quarter period most recently ended, commencing with the fiscal quarter ending as of December 31, 2017.

 

(l)              Pre-Distribution Fixed Charge Coverage Ratio.   Maintain a consolidated Pre-Distribution Fixed Charge Coverage Ratio of not less than 1.2 to 1.00.  For purposes of this Agreement, the Pre-Distribution Fixed Charge Coverage Ratio shall be calculated quarterly as of the end of each fiscal quarter of Borrower for the four fiscal quarter period most recently ended, commencing with the fiscal quarter of ending as of December 31, 2017.

 

(m)      Post-Distribution Fixed Charge Coverage Ratio.   Maintain a consolidated Post-Distribution Fixed Charge Coverage Ratio of not less than 1.1 to 1.00.  For purposes of this Agreement, the Post-Distribution Fixed Charge Coverage Ratio shall be calculated

 

 

quarterly as of the end of each fiscal quarter of Borrower for the four fiscal quarter period most recently ended, commencing with the fiscal quarter of ending as of December 31, 2017.

 

(n)          Capital Expenditures.   Not make or incur consolidated Capital Expenditures in excess of Six Million Dollars ($6,000,000.00), in aggregate during any consecutive four fiscal quarter period of Borrower, tested quarterly.

 

(o)          Future Subsidiaries .  Within thirty (30) days (or such later date as Bank may reasonably agree) after formation, creation or acquisition thereof, deliver to Bank notice of each Subsidiary of Borrower formed, created or acquired after the date hereof (which notice shall include the information described in Section 3(h)  of this Agreement with respect to such Subsidiary) and (i) if such Subsidiary is a Domestic Subsidiary, (1) at Bank’s discretion, cause such Subsidiary to become a Guarantor and cause such Subsidiary to execute and deliver guaranty agreements or joinder agreements in favor of Bank, which shall be substantially similar to that certain Guaranty (or the joinder attached thereto) executed by certain Loan Parties (excluding PT Holdco, LLC) in favor of Bank as of the date hereof, to guarantee the payment and performance of the Indebtedness, (2) execute and deliver to Bank security agreements, pledge agreements, joinder agreements and such other documents, instruments and agreements, which shall be substantially similar to that certain Security Agreement (or the joinder attached thereto) executed by certain Loan Parties in favor of Bank as of the date hereof, to grant perfected first priority Liens (subject only to Permitted Encumbrances) in such Subsidiary’s tangible and intangible assets, and (3) execute and deliver such further documents, instruments and agreements and take such further action as may be reasonably requested by Bank to carry out the provisions and purposes of the Loan Documents, and in each case, Borrower shall, or shall cause a Loan Party to, execute and deliver amendments and supplements and take any other actions reasonably requested by Bank to grant to Bank perfected first priority Liens (subject only to Permitted Encumbrances) in all Equity Interests in such Subsidiary; and (ii) if such Subsidiary is a Foreign Subsidiary, Borrower shall, or shall cause a Loan Party to, execute and deliver amendments and supplements and take any other actions reasonably requested by Bank to grant to Bank perfected first priority Liens (subject only to Permitted Encumbrances) in sixty-five percent (65%) of the Equity Interests in such Foreign Subsidiary.

 

(p)          Post-Closing Obligations. Loan Parties shall:

 

(i)                   within one year of the date hereof, provide Bank with proof of the dissolution of J&S Audio Visual Jamaica, LLP and PT Mexico Services, Inc.

 

(ii)                use commercially reasonable efforts to furnish or cause to be furnished to Bank, within 75 days after the date hereof (or such later date as agreed to by Bank in its sole discretion), executed landlord waivers or subordination agreements executed by the landlords of all locations leased by a Loan Party, all to be in form and substance reasonably satisfactory to Bank.

 

(iii)             within 45 days of the date hereof, cause J&S Audio Visual Dominican Republic, LP to executed and/or deliver (i) security agreements, financing statements, other Collateral Documents and other Loan Documents in form and substance satisfactory to Bank for the purpose of granting, confirming, and perfecting first priority Liens or security interests in all assets of such Loan Party located in the Dominican Republican under Dominican Republic law, and (ii) a written opinion of the Loan Parties’ Dominican Republic counsel, addressed to and in form and substance satisfactory to Bank.

 

(iv)            Within 30 days of the date hereof, provide Bank with proof of release of guaranties provided by a Loan Party for the debt and obligations of JS Royal Lane Owner, LLC as of the date hereof.

 

(q)          Further Assurances .   Execute and/or deliver, and cause each other Loan Party and Domestic Subsidiary required to be a Loan Party hereunder to execute and/or deliver, (i) to further secure the Indebtedness whenever reasonably requested by Bank, deeds of trust, mortgages, chattel mortgages, security agreements, financing statements, other Collateral Documents and other Loan Documents in form and substance satisfactory to Bank for the purpose of granting, confirming, and perfecting first priority Liens or security interests (subject only to Permitted Encumbrances) in any real or personal property now owned or hereafter acquired by any Loan Party or Subsidiary required to be a Loan Party hereunder, (ii) such further documents, instruments and agreements and take such further action as may be reasonably requested by Bank to carry out the provisions and purposes of the Loan Documents, and (iii) amendments and supplements and take any other actions reasonably requested by Bank to grant to Bank perfected first priority Liens in all Equity Interests in each Domestic Subsidiary and sixty-five percent (65%) of the Equity Interests in each Foreign Subsidiary. If a Foreign Subsidiary elects to be a Foreign Pledgor, such Foreign Pledgor shall execute and/or deliver (i) to further secure the Indebtedness whenever requested by Bank in its discretion, deeds of trust, mortgages, chattel mortgages, security agreements, financing statements, other Collateral Documents and other Loan Documents in form and substance satisfactory to Bank for the purpose of granting, confirming, and perfecting first priority Liens or security interests (subject only to Permitted Encumbrances) in any accounts receivables, inventory, and other payment intangibles now owned or hereafter acquired by any Loan Party or Subsidiary required to be a Loan Party hereunder, and (ii) such further documents, instruments and agreements and take such further action as may be reasonably requested by Bank to carry out the provisions and purposes of the Loan Documents.

 

(r)             Leased Locations .  (i) Within 45 days of effectiveness of an applicable lease agreement for a newly leased location of a Loan Party, deliver to Bank a current and updated Schedule of Leased Real Property to be attached hereto, and (ii) use commercially reasonable efforts to furnish or cause to be furnished to Bank executed landlord waivers or subordination agreements executed by the landlords of any locations leased by a Loan Party which are newly listed on such Schedule of Leased Real Property, all to be in form and substance reasonably satisfactory to Bank.

 

 

SECTION 5                                NEGATIVE COVENANTS.   So long as Bank shall have any commitment or obligation, if any, to make or extend any Loans to or in favor of Borrower, and/or so long as any Indebtedness remains unpaid and outstanding, Borrower covenants and agrees that it shall not, and shall not permit any Subsidiary to, without the prior written consent of Bank:

 

(a)          Dividends.   Declare or pay any dividends on, or make any other Distribution (whether by reduction of capital or otherwise), except (i) dividends payable solely in capital stock of Borrower, (ii) Distribution made by any Subsidiary to Borrower, and (iii) so long as no Default or Event of Default shall have occurred and be continuing or exist, or would arise, occur or exist after giving effect thereto, (1) Tax Distributions and (2) so long as the aggregate amount outstanding under the Revolving Credit Note will not be greater than 80% of the Revolving Credit Maximum Amount after giving effect to such Distributions, other Distributions to holders of an Equity Interest in Borrower.

 

(b)          Redeem Stock.   Purchase, redeem, retire or otherwise acquire any of the shares of its capital stock, or make any commitment to do so except the exercise of the put or call rights contemplated in that certain Amended and Restated Limited Liability Company Agreement of Borrower dated as of October 31, 2017 so long as the financing of any such exercise of the put or call right is provided by PT Holdco, LLC, Ashford Hospitality Services, LLC or an affiliate thereof (other than Borrower or any of its Subsidiaries).

 

(c)           Liens.   Create, incur, assume or suffer to exist any Lien of any kind upon any of its property or assets, whether now owned or hereafter acquired, other than the following (collectively, “Permitted Encumbrances”):

 

(i)                   Liens to or in favor of Bank;

 

(ii)                Liens for taxes, assessments or other governmental charges incurred in the ordinary course of business and for which no interest, late charge or penalty is attaching or which is being contested in good faith by appropriate proceedings diligently pursued and, if requested by Bank, bonded in an amount and manner satisfactory to Bank;

 

(iii)             Liens, not delinquent, created by statute in connection with workers’ compensation, unemployment insurance, social security, old age pensions (subject to the applicable provisions of this Agreement) and similar statutory obligations;

 

(iv)            Liens to secure purchase money indebtedness or capital lease obligations of Borrower or a Subsidiary otherwise expressly permitted under this Agreement, so long as such security interests and capital leases arise or are created substantially contemporaneously with the purchase, acquisition or lease by Borrower or such Subsidiary of the respective property or assets to which such security interests relate and the incurrence of the respective purchase money indebtedness which such security interests secure, secure only the respective purchase money indebtedness or certain lease obligations so incurred by Borrower or such Subsidiary to enable Borrower or such Subsidiary to so purchase, acquire or lease such property or assets, and no other Debt, and encumber only the respective property or assets so purchased, acquired, or lease and no other property or assets of Borrower or such Subsidiary;

 

(v)               Liens in favor of mechanics, materialmen, carriers, warehousemen or other like statutory or common law Liens securing obligations incurred in good faith in the ordinary course of business that are not yet due and payable or that are being contested in good faith by appropriate proceedings diligently pursued; and

 

(vi)            other Liens (if any) existing as of the date hereof and described in the Schedule of Permitted Liens attached hereto to secure Debt existing and outstanding as of the date hereof, but no other Debt, except as permitted in Section 5(d)(iii)  below.

 

(d)          Debt. Incur, create, assume or permit to exist any Debt of any kind or nature whatsoever, except  (without duplication) for (i) the Indebtedness, (ii) Subordinated Debt, (iii) existing indebtedness (if any) to the extent set forth in the Schedule of Debt attached hereto or in the most recent financial statements of Borrower delivered to Bank prior to the date of this Agreement, (iv) unsecured trade indebtedness, utility indebtedness and non-extraordinary accounts payable incurred and paid in the ordinary course of business, (v) purchase money indebtedness and lease obligations (whether in respect of Capitalized Leases, operating leases or otherwise,  but excluding any leases of Real Estate such as office leases, warehouse leases, or otherwise) not to exceed $3,000,000, in aggregate, at any time, (vi) Debt owing solely between or among Loan Parties (other than any Foreign Pledgors and PT Holdco, LLC), (vii) Debt owed by any Foreign Pledgor to any other Loan Party (excluding PT Holdco, LLC) which is not a Foreign Pledgor so long as the sum of all such Debt plus the outstanding amounts permitted under Section 5(e)(iii)  shall not exceed $1,000,000, in aggregate, at any time outstanding, (viii) other unsecured Debt not to exceed $1,000,000, in aggregate, at any time outstanding, and (ix) leases of Real Estate (if any) to the extent set forth in the Schedule of Leased Real Property attached hereto, as may be revised from time to time, pursuant to Section 4(r)  of this Agreement.

 

(e)           Loans and Advances.   Make loans, advances or extensions of credit to any Person, except (i) sales on open account in the ordinary course of business, (ii) loans, advances and extensions of credit solely between or among Loan Parties (other than any Foreign Pledgors and PT Holdco, LLC), and (iii) loans, advances and extensions of credit by any Loan Party (excluding PT Holdco, LLC) to any Foreign Pledgor so long as the sum of such loans, advances and extensions of credit plus the outstanding Debt permitted under Section 5(d)(vii)  shall not exceed $2,000,000, in aggregate, at any time outstanding.

 

(f)            Guaranties.   Guarantee or otherwise, directly or indirectly, in any way be or become responsible for obligations of any other Person, except (i) guaranties in favor of Bank; (ii) the endorsement of negotiable instruments in the ordinary course of business for deposit or collection; and (iii) guaranties of any Debt permitted under Section 5(d)  of other Loan Parties or Foreign Subsidiaries.

 

 

(g)           Subordinate Indebtedness.   Subordinate any indebtedness due to it from any Person to indebtedness of other creditors of such Person.

 

(h)          Asset Dispositions; Dissolution; Mergers; Capital Structure; Business Purpose.   Except as permitted in Section 5(i)  below, (i) subject to compliance with Section 2(d)(ii)  herein, sell, lease (as lessor), transfer or otherwise dispose of any of its properties or assets in excess of $1,000,000 in any fiscal year, except as to the sale of inventory in the ordinary course of business; (ii) change its name,  its corporate identity or structure, its form of organization or the state in which it has been formed or organized; (iii) dissolve or liquidate or consolidate with or merge into any other Person, or permit any other Person to merge into it; (iv) acquire all or substantially all the properties or assets of any other Person; (v) enter into any reorganization or recapitalization, or reclassify its capital stock; (vi) enter into any sale-leaseback transaction; (vii) permit any levy, attachment or restraint to be made affecting any of Borrower’s or a Subsidiary’s assets; (viii) permit any judicial officer or assignee to be appointed or to take possession of any or all of Borrower’s or a Subsidiary’s assets; or (ix) make any other change in Borrower’s or a Subsidiary’s financial structure or in any of its respective business objects, purposes or operations which, in the opinion of Bank, could reasonably be expected to have a Material Adverse Effect; (x) enter into any transaction not in the ordinary course of Borrower’s or a Subsidiary’s business in excess of $1,000,000, in the aggregate per fiscal year; or (xi) make any payment on account of any Subordinated Debt in violation of the provisions of any subordination agreement between Bank and the applicable subordinated debt holder, or otherwise fail to comply with the terms and conditions set forth in any such subordination agreement.

 

(i)              Investments.   Purchase or hold beneficially any stock or other securities of, or make any investment or acquire any interest whatsoever in, any other Person, except for (i) the common stock of any Subsidiaries owned by Borrower on the date of this Agreement, as more particularly described in the Schedule of Subsidiaries attached hereto, (ii) certificates of deposit or time deposits with Bank, (iii) direct obligations of the United States of America, or any agency thereof, maturing within one (1) year from the date of acquisition thereof, and (iv) other investments not to exceed $1,000,000, in the aggregate, per fiscal year.

 

(j)             Apply Proceeds to Purchase or Carry Margin Stock.   Apply any of the proceeds of any loan, advance or other extension of credit by Bank to or in favor of Borrower, directly or indirectly to the purchase or carrying of any “margin stock” or “margin securities” within the meanings of Regulation U or Regulation T of the Board of Governors of the Federal Reserve System, or any regulations, interpretations or rulings thereunder; or extend credit to others directly or indirectly for the purpose of purchasing or carrying any such margin stock or margin securities.

 

(k)          Pension Plans; PBGC.   Allow any fact, condition or event to occur or exist with respect to any employee pension or profit sharing plan established or maintained by it which might constitute grounds for termination of any such plan or for the court appointment of a trustee to administer any such plan; or permit any such plan to be the subject of termination proceedings (whether voluntary or involuntary) from which termination proceedings there may result in a liability of Borrower to the PBGC which, in the opinion of Bank, will reasonably be expected to have a Material Adverse Effect.

 

(l)              Subsidiaries.   Except to the extent such Subsidiary becomes a Loan Party in accordance with Section 4(n) , form, create or acquire any Subsidiary.

 

(m)      Transactions with Affiliates.   Enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or assets or the rendering of any service, with any Affiliate, other than (i) transactions between or among Loan Parties that are otherwise permitted under this Agreement and (ii) such transactions that are otherwise permitted (or not restricted) under this Agreement, are in the ordinary course of its business and are upon fair and reasonable terms no less favorable to it than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate.

 

(n)          Negative Pledge.   Create, incur, assume or suffer to exist any contract, agreement or understanding (other than this Agreement, the Loan Documents or a Permitted Encumbrance) that in any way prohibits or restricts the granting, conveying, creation or imposition of any Lien on any of its Property in favor of Bank to secure the Indebtedness, or restricts any Subsidiary from paying dividends or making any other Distributions in respect of its Equity Interests to Borrower or any other Loan Party.

 

(o)          Equity Issuances.   Permit any Subsidiary of Borrower to issue any additional Equity Interests unless concurrently with such issuance such Equity Interests are pledged by the holder thereof to Bank to secure the Indebtedness.

 

(p)          Certain Amendments and Modifications .   No Loan Party will waive, supplement, modify or amend any of its certificate of formation, by-laws, operating, limited liability company or partnership agreement or other organizational documents, in each case to the extent any such waiver, supplement, modification or amendment would be adverse to Bank in any material respect (and provided that Borrower promptly furnishes to Bank a copy of such waiver, supplement, modification or amendment).

 

(q)          Inactive Subsidiaries.  Permit J&S Audio Visual Jamaica, LLP or PT Mexico Services, Inc. to hold any assets, conduct any type of business, receive proceeds of any Loans, or receive any loans, advances, or investments from Borrower, any of Borrower’s other Subsidiaries or any other Loan Party.

 

SECTION 6                                EVENTS OF DEFAULT.   An “Event of Default” shall be deemed to have occurred or exist under this Agreement upon the occurrence and/or existence of any of the following conditions or events:

 

A.             Borrower and/or any other Loan Party shall fail to pay (i) any principal or interest of the Indebtedness at such time the same becomes due or (ii) any other amounts owing by Borrower and/or such Loan Party to Bank under the Indebtedness within five (5)

 

 

Business Days of such time as the same becomes due or, upon expiration of the applicable grace period provided with respect thereto, if any, in the relevant Loan Document(s);

 

B.             any representation, warranty, certification or statement made or deemed to have been made by Borrower and/or any other Loan Party herein, or in any certificate, financial statement or other document or agreement delivered by or on behalf of Borrower and/or any such Loan Party in connection with the Indebtedness or any of the Loan Documents shall prove to be untrue or incomplete in any material respect as of the date made or deemed made;

 

C.             Borrower and/or any other Loan Party, to the extent applicable, shall fail to observe or perform any condition, covenant or agreement set forth in Sections 4(a) , 4(b)  (as to rights to inspect and audit), 4(e)  (as to maintenance of existence), 4(g) , 4(j)  – 4(p) , and Section 5 herein;

 

D.             Borrower and/or any other Loan Party, to the extent applicable, shall fail to observe or perform any condition, covenant or agreement of Borrower and/or any such Loan Party set forth in this Agreement or any other Loan Document (other than as provided in clauses (a) , (b)  and (c)  above) and, in each such case, such failure continues for a period of 30 days or more; provided , to the extent that such failure cannot reasonably be cured within such initial period and Borrower is diligently and in good faith pursuing a cure thereof, such initial 30-day period may be extended by Borrower by an additional 15 days upon written notice by Borrower to Bank, which notice shall have been received by Bank prior to the expiration of the initial 30-day period;

 

E.              if there shall be any Change of Control; provided, however , notwithstanding anything to the contrary in this Agreement, the exercise of put or call rights contemplated in that certain Amended and Restated Limited Liability Company Agreement of Borrower dated as of October 31, 2017 shall be permitted and shall not be considered an Event of Default;

 

F.               if (i) any party subordinating its claims to that of Bank’s terminates, rescinds, revokes or violates the terms of its subordination, or (ii) any Loan Party (other than Borrower) dies or terminates, rescinds, revokes or violates the terms of any guaranty, pledge, collateral assignment, subordination agreement or other document, instrument or agreement entered into by such Loan Party in favor of Bank, including, without limitation, any document evidencing the pledge by such Loan Party of property that is subject to a Lien which secures all or any part of the Indebtedness;

 

G.             Borrower and/or any other Loan Party shall (i) fail to pay when due any of its Debt (other than to Bank) of more than $500,000, or shall fail to observe or perform any term, condition, covenant or agreement of Borrower and/or any such Loan Party set forth in any document, instrument or agreement evidencing, securing or relating to such Debt, and such failure shall remain unremedied or uncured beyond any applicable period of grace or cure, if any, provided with respect thereto so as to permit the holder(s) of such Debt to accelerate the maturity or payment of such Debt, or (ii) or shall fail to observe or perform any term, condition, covenant or agreement of Borrower and/or any such Loan Party set forth in any material agreement, contract, indenture, instrument or undertaking to which Borrower and/or any such Loan Party is a party with any one or more third parties (other than Bank) or by which it may be otherwise bound, and such failure could result in the acceleration of the maturity or payment of Borrower’s indebtedness to others, whether under any such agreement, contract, indenture, instrument or undertaking or otherwise, or which failure could reasonably be expected to have a Material Adverse Effect;

 

H.            if Borrower and/or any other Loan Party (i) become(s) insolvent or the subject of a voluntary or involuntary proceeding in bankruptcy, or a reorganization, arrangement or creditor composition proceeding, (ii) cease(s) doing business as a going concern, (iii) is enjoined restrained or in any way prevented by court order or other legal or administrative action or proceedings from continuing to conduct all or any material part of its business affairs, (iv)  is the subject of a dissolution, merger or consolidation not permitted herein, or (v) has any of its property or assets attached, seized, subject to a writ or distress warrant, or come into the possession of any trustee, receiver, controller, custodian, assignee for the benefit of creditors or any other person or entity having powers or duties like or similar to the powers and duties of trustee, receiver, controller, custodian or assignee for the benefit of creditors, and, in each case of clauses (i) , (iii)  and (v)  the same are not released, discharged or bonded against within sixty (60) days thereafter;

 

I.                 if any reportable event, which the Bank determines constitutes grounds for the termination of any deferred compensation plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer any such plan, shall have occurred and be continuing thirty (30) days after written notice of such determination shall have been given to Borrower by Bank, or any such plan shall be terminated within the meaning of Title IV of ERISA, or a trustee shall be appointed by the appropriate United States District Court to administer any such plan, or the PBGC shall institute proceedings to terminate any plan;

 

J.                 if (i) there shall be rendered against Borrower and/or any other Loan Party one or more judgments for the payment of money that collectively with the amounts referenced in Sections 6.J (ii)  and (iii)  herein exceeds $1,250,000, in the aggregate, which has or have become non-appealable and shall remain undischarged, unsatisfied by insurance and unstayed or unbonded for more than sixty (60) days, whether or not consecutive; or (ii) a levy, lien, writ of attachment or garnishment against any of the property or assets of Borrower and/or any other Loan Party shall be issued and levied in any action(s) claiming an amount that collectively with the amounts referenced in Sections 6.J (i)  and (iii)  herein exceeds $1,250,000.00, in aggregate, and not released or appealed and bonded in an amount and manner satisfactory to Bank within sixty (60) days after such issuance and levy, or (iii) a settlement, or a series of related settlements, is agreed upon by Borrower and/or any other Loan Party for the payment or money or the delivery of goods or services by Borrower and/or such Loan Party that collectively with the amounts referenced in Sections 6.J (i)  and (ii)  herein exceeds $1,250,000.00, in the aggregate;

 

 

K.             if an event or condition that is a Material Adverse Effect under clause (ii)  or (iii)  of such definition of “Material Adverse Effect” has resulted or occurred;

 

L.              Any loss, theft, substantial damage or destruction to or of a material portion of the Collateral, which is not covered by insurance as required pursuant to this Agreement or for which loss, theft, damage, or destruction the provider of such insurance has not confirmed coverage in writing, or the issuance or filing of any attachment, levy, garnishment or the commencement of any proceeding in connection with a material portion of the Collateral or of any other judicial process of, upon or in respect of Borrower or any Loan Party, or a material portion of the Collateral;

 

M.          Insolvency, business failure, or assignment for the benefit of creditors of or by Borrower or any Loan Party; or commencement of any proceedings under any state or federal bankruptcy or insolvency laws or laws for the relief of debtors by or against Borrower or any Loan Party; or the appointment of a receiver, trustee, court appointee, sequestrator or otherwise, for all or any part of the property of Borrower or any Loan Party; or

 

N.             the occurrence or existence of any Event of Default set forth in any other Loan Document.

 

SECTION 7                                REMEDIES.   Upon the occurrence and at any time during the continuance or existence of any Event of Default, Bank may, with or without notice to Borrower or any other Loan Party, declare all outstanding Indebtedness to be due and payable, whereupon all such Indebtedness then outstanding shall immediately become due and payable, without further notice or demand, and any commitment or obligation, if any, on the part of Bank to make or extend Loans shall immediately terminate.  Further, upon the occurrence or at any time during the continuance or existence of any Event of Default hereunder, Bank may collect, deal with and dispose of all or any part of any Collateral in any manner permitted or authorized by the Uniform Commercial Code or other applicable law (including public or private sale), and after deducting expenses (including, without limitation, reasonable attorneys’ fees and expenses), Bank may apply the proceeds thereof in part or full payment of any of the Indebtedness, whether due or not, in the manner set forth in Section 2(d)  herein.  In addition to the foregoing, upon the occurrence and at any time during the continuance or existence of any Event of Default hereunder, Bank may exercise any and all rights and remedies available to it as a result thereof, whether under this Agreement or other Loan Documents, at law (including, without limit, the Uniform Commercial Code), or otherwise.  Notwithstanding anything to the contrary set forth in any other Loan Document, Bank shall not be obligated to make or extend any Loans or advances to any Borrower(s) during the existence of any Default or Event of Default.

 

SECTION 8                                DEMAND BASIS LOANS.  Borrower hereby acknowledges and agrees that in the event the Loan Documents expressly provide that any portion of the Indebtedness shall at any time be on a demand basis, Borrower’s compliance with the terms and conditions set forth herein, and the absence of any Event of Default hereunder, shall not, in any way whatsoever, limit, restrict or otherwise affect or impair Bank’s right or ability to make demand for payment of any or all of such Indebtedness which may be on a demand basis at any such time, in Bank’s sole and absolute discretion, with or without reason or cause, and the existence of any Event of Default hereunder shall not be the sole reason or basis for enabling Bank to make demand for payment of all or any part of such Indebtedness.

 

SECTION 9                                WAIVERS OF DEFAULTS; NO FORBEARANCE.   No Event of Default shall be waived by Bank except in writing and a waiver of any Event of Default shall not be a waiver of any other default or of the same default on a future occasion.  No forbearance on the part of the Bank in enforcing any of its rights or remedies under this Agreement or any other Loan Document, nor any renewal, extension or rearrangement of any payment or covenant to be made or performed by Borrower hereunder or any such other Loan Document, shall constitute a waiver of any of the terms of this Agreement or such Loan Document or of any such right or remedy.  No single or partial exercise of any right, power or privilege hereunder, or any delay in the exercise hereof, shall preclude other or further exercise of the rights of the parties under this Agreement and/or the other Loan Documents.

 

SECTION 10                         GOVERNING LAW.   This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of TEXAS.

 

SECTION 11                         SUCCESSORS AND ASSIGNS.   This Agreement shall inure to the benefit of and shall be binding upon the parties hereto and their respective successors and assigns; provided, however, that Borrower shall not assign or transfer any of its respective rights or obligations hereunder or otherwise in respect of any of the Indebtedness without the prior written consent of Bank.

 

SECTION 12                         COUNTERPARTS.   This Agreement may be executed in multiple counterparts, each of which shall be deemed an original instrument, and all of which shall constitute a single agreement.  The signature of a party to any counterpart shall be sufficient to legally bind such party.  Bank may remove the signature pages from one or more counterparts and attach them to any other counterpart for the purpose of having a single document containing the signatures of all parties.   Delivery of an executed counterpart of a signature page to this Agreement by facsimile, emailed portable document format (“pdf”), or tagged image file format (“tiff”) or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of an original executed counterpart of this Agreement.  Any party sending an executed counterpart of a signature page to this Agreement by facsimile, pdf, tiff or any other electronic means shall also send the original thereof to Bank within five (5) days thereafter, but failure to do so shall not affect the validity, enforceability, or binding effect of this Agreement.

 

SECTION 13                         NOTICES.   Unless otherwise provided in this Agreement, all notices and other communications by any party to the other party(ies) relating to this Agreement shall be in writing and shall be given by personal delivery, by United States mail, postage

 

 

prepaid, by reputable overnight courier or by facsimile, and addressed or delivered to the respective party(ies) at the addresses stated below, or to such other addresses as such party(ies) may from time to time specify to the other(s) in writing.  Requests for information made to Borrower by Bank from time to time hereunder may be made orally or in writing, at Bank’s discretion.

 

Borrower Address(es):

 

Presentation Technologies, LLC

9150 North Royal Lane, Suite 150

Irving, TX 75063
Facsimile No.: (972) 247-2590

Attention: Kevin Jost

 

Bank Address:

 

Comerica Bank
8850 Boedeker Street, 4 th  Floor
Dallas, Texas  75225
Facsimile No.:  (214) 890-5186
Attention:  Julie Brandenburg

 

SECTION 14                         COSTS AND EXPENSES.   Borrower shall pay or reimburse Bank for (a) all actual, out-of-pocket costs, expenses, fees and charges paid or incurred by Bank (including, without limitation, Bank’s reasonable attorneys’ fees and costs and/or fees and transfer charges in connection with the preparation, closing and consummation of this Agreement and/or the other Loan Documents and/or the Loans or transactions contemplated hereby or thereby, or in connection with the administration of this Agreement or any of the other Loan Document, (b) all costs, expenses, fees and charges paid or incurred by Bank (including, without limitation, Bank’s attorneys’ fees and costs and/or fees, transfer charges and costs of Bank’s in-house counsel), in connection with the enforcement of this Agreement or any of the other Loan Documents, provided, with respect to litigation expenses only, Bank must be the prevailing party, and (c) all stamp and other taxes and duties (except for taxes on the overall net income of Bank imposed by the jurisdiction in which Bank’s principal executive office is located) payable or determined to be payable in connection with the execution, delivery, filing or recording of this Agreement and the other Loan Documents and the consummation of the transactions contemplated hereby, and any and all liabilities with respect to or resulting from any delay in paying or omitting to pay such taxes or duties.  In addition, Borrower shall immediately and without demand reimburse Bank for all sums expended by Bank in connection with any action brought by Bank in respect of any Default or Event of Default or to enforce any provision of this Agreement or the other Loan Documents and/or to exercise or enforce any rights or remedies of Bank.  Borrower authorizes and approves all advances and payments by Bank for items described in this Section as Indebtedness secured by the Collateral.

 

SECTION 15                         INDEMNIFICATION AND HOLD HARMLESS.  WITHOUT LIMITING ANY OTHER PROVISIONS OF THIS AGREEMENT, BORROWER AGREES TO INDEMNIFY AND HOLD BANK HARMLESS FROM AND AGAINST ALL LOSSES, COSTS, DAMAGES, LIABILITIES AND EXPENSES, INCLUDING, WITHOUT LIMITATION, IN-HOUSE AND OUTSIDE ATTORNEYS’ FEES AND DISBURSEMENTS, INCURRED BY BANK IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY LOANS OR TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR BY REASON OF ANY DEFAULT OR EVENT OF DEFAULT, OR ENFORCING THE OBLIGATIONS OF BORROWER OR ANY LOAN PARTY UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AS APPLICABLE, OR IN EXERCISING ANY RIGHTS OR REMEDIES OF BANK OR IN THE PROSECUTION OR DEFENSE OF ANY ACTION OR PROCEEDING CONCERNING ANY MATTER GROWING OUT OF OR CONNECTED WITH THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS; PROVIDED, HOWEVER, THAT THE FOREGOING SHALL NOT BE APPLICABLE, AND THE BORROWER SHALL NOT BE LIABLE FOR ANY SUCH LOSSES, COSTS, DAMAGES, LIABILITIES OR EXPENSES, TO THE EXTENT (BUT ONLY TO THE EXTENT) THE SAME ARISE OR RESULT FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF BANK OR ANY OF ITS AGENTS OR EMPLOYEES.  THE PROVISIONS OF THIS SECTION SHALL SURVIVE REPAYMENT OF THE INDEBTEDNESS AND SATISFACTION OF ALL OBLIGATIONS OF BORROWER TO BANK AND TERMINATION OF THIS AGREEMENT.

 

SECTION 16                         AMENDMENTS AND WAIVERS.   All amendments to or waivers or terminations of this Agreement or the other Loan Documents must be in writing.  All prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of this Agreement and the other Loan Documents, if any, are hereby superseded and merged into this Agreement and the Loan Documents.  Time is of the essence for the performance of all obligations set forth in this Agreement.  Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.  Borrower acknowledges that Bank may provide information regarding Borrower and the Loans to Bank’s parent, Subsidiaries, Affiliates and service providers.

 

SECTION 17                         MULTIPLE BORROWERS.   If there is more than one Borrower under this Agreement, unless otherwise expressly provided herein, each and every reference to the term “Borrower” in this Agreement shall mean and refer to each such Borrower, and all undertakings, agreements, warranties, covenants, liabilities and obligations of each Borrower, and all rights, powers and authorities given to or conferred upon Bank hereunder, shall apply to each Borrower severally and to all of them jointly.

 

 

SECTION 18                         REINSTATEMENT; SEVERABILITY.   Bank’s rights under this Agreement and the other Loan Documents shall be reinstated and revived, and the enforceability of this Agreement and the other Loan Documents shall continue, with respect to any amount at any time paid on account of the Indebtedness which thereafter shall be required to be restored or returned by Bank, all as though such amount had not been paid.  The rights of Bank created or granted herein and the enforceability of this Agreement and the other Loan Documents at all times shall remain effective to cover the full amount of all the Indebtedness even though the Indebtedness, including any part thereof or any other security or guaranty therefor, may be or hereafter may become invalid or otherwise unenforceable as against Borrower.

 

SECTION 19                         WAIVER OF JURY TRIAL.  BORROWER AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES.  TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVE ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.

 

SECTION 20                         ORAL AGREEMENTS INEFFECTIVE.  THIS WRITTEN LOAN AGREEMENT (AS DEFINED BY SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE) REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

SECTION 21                         This Agreement amends, restates, supersedes and replaces that certain Credit Agreement dated as of September 12, 2011 between J & S Audio Visual Communications, LLC, formerly known as J & S Audio Visual Communication, Inc. and the Bank as amended (the “Prior Agreement”), the obligations of which Prior Agreement have been assigned to and assumed by the Borrower; provided, however, (i) the execution by Borrower of this Agreement shall not, in any manner or circumstance, be deemed to be a novation of or to have terminated, extinguished or discharged any of the Borrower’s indebtedness evidenced by the Prior Agreement, all of which indebtedness shall continue under and shall hereinafter be evidenced and governed by this Agreement, and (ii) all Collateral and guaranties securing or supporting the Prior Agreement shall continue to secure and support this Agreement.

 

[Remainder of Page Intentionally Left Blank.  Signature Pages Follow.]

 

 

This Agreement is effective as of the day and year first set forth above.

 

	BORROWER:
	PRESENTATION TECHNOLOGIES, LLC
	By:	/s/ Kevin Jost
		Kevin Jost
		President

 

 

	COMERICA BANK
	By:	/s/ Corey R. Bailey
		Corey R. Bailey
		Senior Vice President

 

Exhibit 10.2

 

Execution Version

 

 

Term Note

 

AMOUNT	NOTE DATE	MATURITY DATE
$10,000,000.00	November 1, 2017	November 1, 2022

 

FOR VALUE RECEIVED, the undersigned promise(s) to pay to the order of COMERICA BANK (herein called “Bank”), at any office of the Bank in the State of Texas, the principal sum of TEN MILLION AND NO/100 DOLLARS ($10,000,000.00), payable in monthly installments equal to Eighty-Three Thousand Three Hundred Thirty-Three and 33/100 Dollars ($83,333.33) each, PLUS interest, commencing on December 1, 2017, and on each succeeding Installment Payment Date thereafter, until the maturity date set forth above (the “Maturity Date”).  On the Maturity Date, the entire unpaid balance of principal, interest and all other sums hereunder shall be due and payable in full (unless sooner accelerated in accordance with the terms of this Note).

 

This Note is a note under which an advance is made, subject to the terms and conditions of this Note and that certain Credit Agreement dated effective as of the date hereof between the undersigned and Bank (as the same has been and may be amended, restated or modified from time to time, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein will have the meaning given such terms in the Credit Agreement.

 

Subject to the terms and conditions of this Note, the unpaid principal balance of all Indebtedness outstanding under this Note from time to time shall bear interest at the Applicable Interest Rate, or any number or combination of such Applicable Interest Rate(s), as elected by the undersigned or as otherwise determined under this Note.

 

Interest accruing hereunder on the basis of the Daily Adjusting LIBOR Rate and on the basis of the Prime Referenced Rate (to the extent applicable) shall be computed on the basis of a 360-day year if this Note evidences a business or commercial loan or a 365/366-day year if a consumer loan, and shall be assessed for the actual number of days elapsed, and in such computation, effect shall be given to any change in the Applicable Interest Rate as a result of any change in the Daily Adjusting LIBOR Rate or, to the extent applicable, the Prime Referenced Rate, on the date of each such change.  Interest accruing on the basis of the LIBOR-based Rate shall be computed on the basis of a 360 day year and shall be assessed for the actual number of days elapsed from the first day of the Interest Period applicable thereto but not including the last day thereof.

 

Accrued and unpaid interest on the unpaid principal balance outstanding hereunder shall be payable, in arrears, on each Installment Payment Date, until all Indebtedness outstanding under this Note is paid in full (whether in accordance with the terms hereof, by acceleration, or otherwise).

 

Payments under this Note shall be first applied to accrued and unpaid interest hereunder and the balance, if any, to principal.

 

From and after the occurrence of any Event of Default, and so long as any such Event of Default remains unremedied or uncured thereafter, the Indebtedness outstanding under this Note shall bear interest at a per annum rate of three percent (3%) above the otherwise Applicable Interest Rate(s), which interest shall be payable upon demand. In addition to the foregoing, a late payment charge equal to five percent (5%) of each late payment hereunder may be charged on any payment not received by Bank within ten (10) calendar days after the payment due date therefor, but acceptance of payment of any such charge shall not constitute a waiver of any Default hereunder.

 

In no event shall the interest payable under this Note at any time exceed the Maximum Rate.  The term “Maximum Rate”, as used herein, shall mean at the particular time in question the maximum nonusurious rate of interest which, under applicable law, may then be charged on this Note.  If on any day the Applicable Interest Rate(s) hereunder in respect of any Indebtedness under this Note shall exceed the Maximum Rate for that day, the rate of interest applicable to such Indebtedness shall be fixed at the Maximum Rate on that day and on each day thereafter until the total amount of interest accrued on the unpaid principal balance of this Note equals the total amount of interest which would have accrued if there had been no Maximum Rate.  If such maximum rate of interest changes after the date hereof, the Maximum Rate shall be automatically increased or decreased, as the case may be, without notice to the undersigned from time to time as of the effective date of each change in such maximum rate.  For purposes of determining the Maximum Rate under the law of the State of Texas, the applicable interest rate ceiling shall be the “weekly ceiling” from time to time in effect under Chapter 303 of the Texas Finance Code, as amended.

 

The amount from time to time outstanding under this Note, the Applicable Interest Rate(s), the Interest Period(s), if applicable, and the amount and date of any repayment shall be noted on Bank’s records, which records shall be conclusive evidence thereof, absent manifest error; provided, however, any failure by Bank to make any such notation, or any error in any such notation, shall not relieve the undersigned of its/their obligations to repay Bank all amounts payable by the undersigned to Bank under or pursuant to this Note, when due in accordance with the terms hereof.

 

1

 

The undersigned may elect the LIBOR-based Rate or the Daily Adjusting LIBOR Rate as the basis for the Applicable Interest Rate for all or any part of the unpaid principal balance outstanding under this Note, subject to the following: (a) the undersigned shall, by 11:00 a.m. (Detroit, Michigan time) on the proposed effective date of such election, (i) deliver to Bank a Notice of Interest Rate executed by the undersigned setting forth the information required on the Notice of Interest Rate form attached hereto as Exhibit “A”, or (ii) to the extent applicable, submit such election through Bank’s Loan Management System  (each an “Election”); (b) any conversion from an Applicable Interest Rate based upon the LIBOR-based Rate to an Applicable Interest Rate based upon the Daily Adjusting LIBOR Rate or (subject to the terms of this Note) based upon the Prime Referenced Rate shall only be effective as of the last day of the Interest Period applicable to such LIBOR-based Rate; and (c) in the case of a LIBOR-based Rate Election, (i) the principal Indebtedness outstanding under this Note which is to bear interest on the basis of the relevant LIBOR-based Rate for the applicable Interest Period must be at least Two Hundred Fifty Thousand Dollars ($250,000.00) (or such lesser amount as is acceptable to Bank in its sole discretion) as of the first day of such Interest Period; (ii) no Default, or any condition or event which, with the giving of notice or the running of time, or both, would constitute a Default, shall have occurred and be continuing or exist under this Note; (iii) if, at the time of any such Election, the LIBOR-based Rate is the basis for the Applicable Interest Rate with respect to all or any part of the Indebtedness which is to be subject to such Election, such Election shall be effective only as of the last day of the Interest Period applicable to such existing LIBOR-based Rate; (iv) the undersigned shall elect Interest Periods hereunder so as to permit the undersigned to make any mandatory principal payments required under the terms of this Note, when due in accordance with the terms hereof, without prepaying any Indebtedness hereunder which is then bearing interest on the basis of the LIBOR-based Rate prior to the end of the Interest Period applicable thereto; and (v) any LIBOR-based Rate Election by the undersigned hereunder shall not be revocable by the undersigned. Any election by the undersigned of an Applicable Interest Rate based upon the Daily Adjusting LIBOR Rate for all or any part of the Indebtedness hereunder shall remain in effect, and the Daily Adjusting LIBOR Rate shall continue to be the basis for the Applicable Interest Rate for such Indebtedness hereunder, unless and until Bank receives an Election from the undersigned in accordance with the foregoing, making a LIBOR-based Rate Election hereunder in respect of such Indebtedness, subject in all respects to the terms and conditions of this Note.

 

In the event that the undersigned is unable to submit an Election of an Applicable Interest Rate or an applicable Interest Period hereunder through the Bank’s Loan Management System, the undersigned may submit or deliver a written Notice of Interest Rate, duly completed and executed by the undersigned, to Bank by hand delivery, first class mail, overnight courier, facsimile, email or other means of delivery acceptable to Bank. Elections of Applicable Interest Rates and applicable Interest Periods hereunder may be submitted in the undersigned’s discretion by telephonic notice to Bank. Any such election submitted by telephonic notice shall be confirmed by the undersigned that same day by submission to Bank of a written Notice of Interest Rate, as provided herein. The undersigned acknowledge(s) that if the undersigned elect(s) an Applicable Interest Rate and/or Interest Period by telephone, facsimile, email or other means of delivery (other than by hand delivery, first class mail or overnight courier), it shall be for the undersigned’s convenience and all risks involved in the use of any such procedure shall be borne by the undersigned, and the undersigned expressly agree(s) to indemnify and hold Bank harmless therefor.  Bank shall have no duty to confirm the authority of anyone making such an election or request by telephone, facsimile, email or any such other means of delivery. In the event that the undersigned elect(s) to make or submit any such election or request by telephonic notice, facsimile, email or other means of delivery acceptable to Bank, the undersigned acknowledge(s) and agree(s) that Bank may impose or require such verification, authentication and other procedures as Bank may require from time to time.

 

In the event that the LIBOR-based Rate is at any time the basis for the Applicable Interest Rate for all or any part of the principal Indebtedness outstanding under this Note, effective as of the last day of the Interest Period applicable to such LIBOR-based Rate and as of the last day of each succeeding Interest Period, the LIBOR-based Rate for such Indebtedness shall be determined as of each such date in accordance with the terms of this Note, and the LIBOR-based Rate shall continue to be the basis for the Applicable Interest Rate for and in respect of such  Indebtedness for successive Interest Periods equal to the same period of time as the Interest Period then ending for such LIBOR-based Rate (but not less than one (1) month), unless and until the Bank receives an Election from the undersigned in accordance with the terms of this Note requesting a LIBOR-based Rate with an Interest Period having a duration different from the Interest Period then in effect or requesting the conversion to the Daily Adjusting LIBOR Rate as the basis for the Applicable Interest Rate for such Indebtedness hereunder; or unless the undersigned is/are not entitled to elect the LIBOR-based Rate as the basis for the Applicable Interest Rate for all or any part of the principal Indebtedness outstanding hereunder in accordance with the terms of this Note or the LIBOR-based Rate is not otherwise available to the undersigned as the basis for the Applicable Interest Rate for all or any part of the principal Indebtedness outstanding hereunder in accordance with the terms of this Note, in which case, the Daily Adjusting LIBOR Rate or (subject to the terms of this Note) the Prime Referenced Rate, shall be the basis for the Applicable Interest Rate hereunder in respect of such Indebtedness for such period, subject in all respects to the terms and conditions of this Note. The foregoing shall not in any way whatsoever limit or otherwise affect any of Bank’s rights or remedies under this Note upon the occurrence of any Default or Event of Default hereunder.

 

Subject to the definition of an “Interest Period” hereunder, in the event that any payment under this Note becomes due and payable on any day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day, and, to the extent applicable, interest shall continue to accrue and be payable thereon during such extension at the rates set forth in this Note.

 

All payments to be made by the undersigned to Bank under or pursuant to this Note shall be in immediately available United States funds, without setoff or counterclaim, and in the event that any payments submitted hereunder are in funds not available until collected, said payments shall continue to bear interest until collected.

 

2

 

In the event that the LIBOR-based Rate is the basis for the Applicable Interest Rate for all or any part of the principal Indebtedness outstanding under this Note, and any payment or prepayment of any such Indebtedness shall occur on any day other than the last day of the Interest Period applicable thereto (whether voluntarily, by acceleration, required payment or otherwise), or if the undersigned make(s) a LIBOR-based Rate Election with respect to all or any part of the principal indebtedness outstanding under this Note in accordance with the terms and conditions hereof, and, subsequent to such election, but prior to the commencement of the Interest Period applicable thereto, the undersigned (or any of them) revoke(s) such election for any reason whatsoever, or if the undersigned shall fail to make any payment of principal or interest hereunder at any time that the LIBOR-based Rate is the basis for the Applicable Interest Rate hereunder in respect of such Indebtedness, the undersigned shall reimburse Bank, on demand, for any resulting loss, cost or expense incurred by Bank as a result thereof, including, without limitation, any such loss, cost or expense incurred in obtaining, liquidating, employing or redeploying deposits from third parties.  Such amount payable by the undersigned to Bank may include, without limitation, an amount equal to the excess, if any, of (a) the amount of interest which would have accrued on the amount so prepaid, for the period from the date of such prepayment through the last day of the relevant Interest Period, at the applicable rate of interest provided under this Note, over (b) the amount of interest (as reasonably determined by Bank) which would have accrued to Bank on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market.  Calculation of any amounts payable to Bank under this paragraph shall be made as though Bank shall have actually funded or committed to fund the relevant Indebtedness hereunder through the purchase of an underlying deposit in an amount equal to the amount of such Indebtedness and having a maturity comparable to the relevant Interest Period; provided, however, that Bank may fund the Indebtedness hereunder in any manner it deems fit and the foregoing assumptions shall be utilized only for the purpose of the calculation of amounts payable under this paragraph.  Upon the written request of the undersigned, Bank shall deliver to the undersigned a certificate setting forth the basis for determining such losses, costs and expenses, which certificate shall be conclusively presumed correct, absent manifest error. The undersigned may prepay at any time all or any part of the outstanding balance of any Indebtedness hereunder which is bearing interest at such time based upon the Daily Adjusting LIBOR Rate or any Indebtedness hereunder which is bearing interest based upon the Prime Referenced Rate at any such time without premium or penalty. Any prepayment hereunder shall also be accompanied by the payment of all accrued and unpaid interest on the amount so prepaid. Partial prepayments hereunder shall be applied to the installments hereunder in the inverse order of their maturities.

 

For any Indebtedness hereunder for which the Applicable Interest Rate is at any time based upon the LIBOR-based Rate or the Daily Adjusting LIBOR Rate, if Bank shall designate a LIBOR Lending Office which maintains books separate from those of the rest of Bank, Bank shall have the option of maintaining and carrying this Note and the relevant Indebtedness hereunder on the books of such LIBOR Lending Office.

 

If, at any time, Bank determines that, (a) Bank is unable to determine or ascertain the LIBOR-based Rate or the Daily Adjusting LIBOR Rate, or (b) by reason of circumstances affecting the foreign exchange and interbank markets generally, deposits in eurodollars in the applicable amounts or for the relative maturities are not being offered to Bank for any applicable Interest Period, or (c) the Applicable Interest Rate will not accurately or fairly cover or reflect the cost to Bank of maintaining any of the Indebtedness under this Note based upon the LIBOR-based Rate or the Daily Adjusting LIBOR Rate, then Bank shall forthwith give notice thereof to the undersigned.  Thereafter, until Bank notifies the undersigned that such conditions or circumstances no longer exist, any obligation of the Bank to maintain any of the Indebtedness outstanding under this Note at an Applicable Interest Rate based upon the LIBOR-based Rate or the Daily Adjusting LIBOR Rate shall be suspended, and the Prime Referenced Rate shall be the basis for the Applicable Interest Rate for all Indebtedness hereunder during such period of time.

 

If any Change in Law shall make it unlawful or impossible for the Bank (or its LIBOR Lending Office) to maintain any of the Indebtedness under this Note with interest based upon the LIBOR-based Rate or the Daily Adjusting LIBOR Rate, Bank shall forthwith give notice thereof to the undersigned.  Thereafter, (a) until Bank notifies the undersigned that such conditions or circumstances no longer exist, any obligation of the Bank to maintain any of the Indebtedness hereunder at an Applicable Interest Rate based  upon the LIBOR-based Rate or the Daily Adjusting LIBOR Rate  and the right of the undersigned to make a LIBOR-based Rate Election with respect to the Indebtedness outstanding under this Note shall be suspended, and thereafter, the Prime Referenced Rate shall be the basis for the Applicable Interest Rate for the Indebtedness hereunder during such period of time, and (b) if Bank may not lawfully continue to maintain the Indebtedness hereunder at an Applicable Interest Rate based upon the LIBOR-based Rate to the end of the then current Interest Period applicable thereto, the Prime Referenced Rate shall be the basis for the Applicable Interest Rate for the remainder of such Interest Period.

 

If any Change in Law shall (a) subject Bank (or its LIBOR Lending Office) to any tax, duty or other charge with respect to this Note or any Indebtedness hereunder, or shall change the basis of taxation of payments to Bank (or its LIBOR Lending Office) of the principal of or interest under this Note or any other amounts due under this Note in respect thereof (except for changes in the rate of tax on the overall net income of Bank or its LIBOR Lending Office imposed by the jurisdiction in which Bank’s principal executive office or LIBOR Lending Office is located); or (b) impose, modify or deem applicable any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by Bank (or its LIBOR Lending Office), or shall impose on Bank (or its LIBOR Lending Office) or the foreign exchange and interbank markets any other condition affecting this Note or the Indebtedness hereunder; and the result of any of the foregoing is to increase the cost to Bank of maintaining any part of the Indebtedness hereunder or to reduce the amount of any sum received or receivable by Bank under this Note by an amount deemed by the Bank to be material, then the undersigned shall pay to Bank, within fifteen (15) days of the undersigned’s receipt of written notice from Bank demanding such compensation, such additional amount or amounts as will compensate Bank for such increased cost or reduction.  A certificate of Bank, prepared in good faith and in

 

3

 

reasonable detail by Bank and submitted by Bank to the undersigned, setting forth the basis for determining such additional amount or amounts necessary to compensate Bank shall be conclusive and binding for all purposes, absent manifest error.

 

In the event that any Change in Law affects or would affect the amount of capital or liquidity required or expected to be maintained by Bank (or any corporation controlling Bank), and Bank determines that the amount of such capital or liquidity is increased by or based upon the existence of any obligations of Bank hereunder or the maintaining of any Indebtedness hereunder, and such increase has the effect of reducing the rate of return on Bank’s (or such controlling corporation’s) capital as a consequence of such obligations or the maintaining of such Indebtedness hereunder to a level below that which Bank (or such controlling corporation) could have achieved but for such circumstances (taking into consideration its policies with respect to capital adequacy and liquidity), then the undersigned shall pay to Bank, within fifteen (15) days of the undersigned’s receipt of written notice from Bank demanding such compensation, additional amounts as are sufficient to compensate Bank (or such controlling corporation) for any increase in the amount of capital and/or liquidity and reduced rate of return which Bank reasonably determines to be allocable to the existence of any obligations of the Bank hereunder or to maintaining any Indebtedness hereunder.  A certificate of Bank as to the amount of such compensation, prepared in good faith and in reasonable detail by the Bank and submitted by Bank to the undersigned, shall be conclusive and binding for all purposes absent manifest error.

 

This Note and any other Indebtedness are secured by and the Bank is granted a security interest in and lien upon the Collateral. Notwithstanding the above, (i) to the extent that any portion of the Indebtedness is a consumer loan, that portion shall not be secured by any deed of trust or mortgage on or other security interest in any of the undersigned’s principal dwelling or in any of the undersigned’s real property which is not a purchase money security interest as to that portion, unless expressly provided to the contrary in another place, or (ii) if the undersigned (or any of them) has (have) given or give(s) Bank a deed of trust or mortgage covering California real property, that deed of trust or mortgage shall not secure this Note or any other indebtedness of the undersigned (or any of them), unless expressly provided to the contrary in another place, or (iii) if the undersigned (or any of them) has (have) given or give(s) the Bank a deed of trust or mortgage covering real property which, under Texas law, constitutes the homestead of such person, that deed of trust or mortgage shall not secure this Note or any other indebtedness of the undersigned (or any of them) unless expressly provided to the contrary in another place.

 

Upon the occurrence and during the continuance of an Event of Default, the Bank may, at its option and without prior notice to the undersigned (or any of them), cease advancing money or extending credit to or for the benefit of the undersigned under this Note or any other Loan Document, terminate this Note as to any future liability or obligation of Bank, but without affecting Bank’s rights and security interests in any Collateral and the Indebtedness of the undersigned to Bank, declare any or all of the Indebtedness to be immediately due and payable (notwithstanding any provisions contained in the evidence of it to the contrary), sell or liquidate all or any portion of the Collateral, set off against the Indebtedness any amounts owing by the Bank to the undersigned (or any of them), charge interest at the default rate provided in the document evidencing the relevant Indebtedness and exercise any one or more of the rights and remedies granted to the Bank by any Loan Document or given to it under applicable law.

 

The undersigned authorize(s) the Bank to charge any account(s) of the undersigned (or any of them) with the Bank for any and all sums due hereunder when due; provided, however, that such authorization shall not affect any of the undersigned’s obligation to pay to the Bank all amounts when due, whether or not any such account balances that are maintained by the undersigned with the Bank are insufficient to pay to the Bank  any amounts when due, and to the extent that such accounts are insufficient to pay to the Bank all such amounts, the undersigned shall remain liable for any deficiencies until paid in full.

 

If this Note is signed by two or more parties (whether by all as makers or by one or more as an accommodation party or otherwise), the obligations and undertakings under this Note shall be that of all and any two or more jointly and also of each severally. This Note shall bind the undersigned, and the undersigned’s respective heirs, personal representatives, successors and assigns.

 

The undersigned waive(s) presentment, demand, protest, notice of dishonor, notice of demand or intent to demand, notice of acceleration or intent to accelerate, and all other notices, and agree(s) that no extension or indulgence to the undersigned (or any of them) or release, substitution or nonenforcement of any security, or release or substitution of any of the undersigned, any guarantor or any other party, whether with or without notice, shall affect the obligations of any of the undersigned. The undersigned waive(s) all defenses or right to discharge available under Section 3-605 of the Uniform Commercial Code and waive(s) all other suretyship defenses or right to discharge. The undersigned agree(s) that the Bank has the right to sell, assign, or grant participations or any interest in, any or all of the Indebtedness, and that, in connection with this right, but without limiting its ability to make other disclosures to the full extent allowable, the Bank may disclose all documents and information which the Bank now or later has relating to the undersigned or the Indebtedness.  The undersigned agree(s) that the Bank may provide information relating to this Note or relating to the undersigned to the Bank’s parent, affiliates, subsidiaries and service providers.

 

The undersigned agree(s) to pay or reimburse to Bank, or any other holder or owner of this Note, on demand, (a) all actual, out-of-pocket costs, expenses, fees and charges paid or incurred by Bank (including, without limitation, Bank’s reasonable attorneys’ fees and costs and/or fees and transfer charges in connection with the preparation, closing and consummation of this Note and/or the other Loan Documents and/or the Loans or transactions contemplated hereby or thereby, or in connection with the administration of this Note or the Indebtedness and (b) all costs, expenses, fees and charges paid or incurred by Bank (including, without limitation, Bank’s attorneys’ fees and costs and/or fees, transfer charges and costs of Bank’s in-house counsel), in connection with the enforcement in any other matter or proceeding relating to this Note or the Indebtedness.

 

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The undersigned acknowledge(s) and agree(s) that there are no contrary agreements, oral or written, establishing a term of this Note and agree(s) that the terms and conditions of this Note may not be amended, waived or modified except in a writing signed by an officer of the Bank expressly stating that the writing constitutes an amendment, waiver or modification of the terms of this Note. As used in this Note, the word “undersigned” means, individually and collectively, each maker, accommodation party, endorser and other party signing this Note in a similar capacity. If any provision of this Note is unenforceable in whole or part for any reason, the remaining provisions shall continue to be effective.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. Chapter 346 of the Texas Finance Code (and as the same may be incorporated by reference in other Texas statutes) shall not apply to the Indebtedness evidenced by this Note.

 

This Note and all other Loan Documents (whether executed and delivered prior to, concurrently with or subsequent to this Note), as such Loan Documents may have been or may hereafter be amended from time to time are intended to be performed in accordance with, and only to the extent permitted by, all applicable usury laws.  If any provision hereof or of any of the other Loan Documents or the application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, neither the application of such provision to any other person or circumstance nor the remainder of the instrument in which such provision is contained shall be affected thereby and shall be enforced to the greatest extent permitted by law.  It is expressly stipulated and agreed to be the intent of the holder hereof to at all times comply with the usury and other applicable laws now or hereafter governing the interest payable on the indebtedness evidenced by this Note.  If the applicable law is ever revised, repealed or judicially interpreted so as to render usurious any amount called for under this Note or under any of the other Loan Documents, or contracted for, charged, taken, reserved or received with respect to the indebtedness evidenced by this Note, or if Bank’s exercise of the option to accelerate the maturity of this Note, or if any prepayment by the undersigned or prepayment agreement results (or would, if complied with, result) in the undersigned having paid, contracted for or being charged for any interest in excess of that permitted by law, then it is the express intent of the undersigned and Bank that this Note and the other Loan Documents shall be limited to the extent necessary to prevent such result and all excess amounts theretofore collected by Bank shall be credited on the principal balance of this Note or, if fully paid, upon such other Indebtedness as shall then remain outstanding (or, if this Note and all other Indebtedness have been paid in full, refunded to the undersigned), and the provisions of this Note and the other Loan Documents shall immediately be deemed reformed and the amounts thereafter collectable hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the then applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder or thereunder.  All sums paid, or agreed to be paid, by the undersigned for the use, forbearance, detention, taking, charging, receiving or reserving of the indebtedness of the undersigned to Bank under this Note or arising under or pursuant to the other Loan Documents shall, to the maximum extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the rate or amount of interest on account of such indebtedness does not exceed the usury ceiling from time to time in effect and applicable to such indebtedness for so long as such indebtedness is outstanding.  To the extent federal law permits Bank to contract for, charge or receive a greater amount of interest, Bank will rely on federal law instead of the Texas Finance Code, as supplemented by Texas Credit Title, for the purpose of determining the Maximum Rate.  Additionally, to the maximum extent permitted by applicable law now or hereafter in effect, Bank may, at its option and from time to time, implement any other method of computing the Maximum Rate under the Texas Finance Code, as supplemented by Texas Credit Title, or under other applicable law, by giving notice, if required, to the undersigned as provided by applicable law now or hereafter in effect.  Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, it is not the intention of Bank to accelerate the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration.

 

For the purposes of this Note, the following terms have the following meanings:

 

“Applicable Interest Rate” means, in respect of all or any part of the Indebtedness hereunder, either the LIBOR-based Rate plus the Applicable Margin, the Daily Adjusting LIBOR Rate plus the Applicable Margin, or (subject to the terms of this Note) the Prime Referenced Rate plus the Applicable Margin, as selected by the undersigned from time to time or as otherwise determined in accordance with the terms and conditions of this Note.

 

“Applicable Margin” means:

 

(a)                                  in respect of the LIBOR—based Rate, three and one quarter percent (3.25%) per annum ; and

 

(b)                                  in respect of the Daily Adjusting LIBOR Rate and, to the extent applicable, the Prime Referenced Rate, three and one quarter percent (3.25%) per annum.

 

“Business Day” means any day, other than a Saturday, Sunday or any other day designated as a holiday under Federal or applicable State statute or regulation, on which Bank is open for all or substantially all of its domestic and international business (including dealings in foreign exchange) in Detroit, Michigan, and, in respect of notices and determinations relating to the LIBOR-based Rate and the Daily Adjusting LIBOR Rate, also a day on which dealings in dollar deposits are also carried on in the London interbank market and on which banks are open for business in London, England.

 

“Change in Law” means the occurrence, after the date hereof, of any of the following: (i) the adoption or introduction of, or any change in any applicable law, treaty, rule or regulation (whether domestic or foreign) now or hereafter in effect and whether or not applicable to

 

5

 

Bank on such date, or (ii) any change in interpretation, administration or implementation thereof of any such law, treaty, rule or regulation by any Governmental Authority, or (iii) the issuance, making or implementation by any Governmental Authority of any interpretation, administration, request, regulation, guideline, or directive (whether or not having the force of law),  including, without limitation, any risk-based capital guidelines or any interpretation, administration, request, regulation, guideline, or directive relating to liquidity. For purposes of this definition, (x) a change in law, treaty, rule, regulation, interpretation, administration or implementation shall include, without limitation, any change made or which becomes effective on the basis of a law, treaty, rule, regulation, interpretation administration or implementation then in force, the effective date of which change is delayed by the terms of such law, treaty, rule, regulation, interpretation, administration or implementation, and (y) the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173) and all requests, rules, regulations, guidelines, interpretations or directives promulgated thereunder or issued in connection therewith shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or promulgated, whether before or after the date hereof, and (z) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall each be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.

 

“Daily Adjusting LIBOR Rate” means, for any day, a per annum interest rate which is equal to the quotient of the following:

 

(a)                                  for any day, the per annum rate of interest determined on the basis of the rate for deposits in United States Dollars for a period equal to one (1) month appearing on Page BBAM of the Bloomberg Financial Markets Information Service as of 11:00 a.m. (London, England time) (or as soon thereafter as practical) on such day, or if such day is not a Business Day, on the immediately preceding Business Day.  In the event that such rate does not appear on Page BBAM of the Bloomberg Financial Markets Information Service (or otherwise on such Service) on any day, the “Daily Adjusting LIBOR Rate” for such day shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be reasonably selected by Bank, or, in the absence of such other service, the “Daily Adjusting LIBOR Rate” for such day shall, instead, be determined based upon the average of the rates at which Bank is offered dollar deposits at or about 11:00 a.m. (Detroit, Michigan time) (or as soon thereafter as practical), on such day, or if such day is not a Business Day, on the immediately preceding Business Day, in the interbank eurodollar market in an amount comparable to the applicable principal amount of the Indebtedness outstanding hereunder which is to bear interest on the basis of such Daily Adjusting LIBOR Rate and for a period equal to one (1) month;

 

divided by

 

(b)                                  1.00 minus the maximum rate (expressed as a decimal) on such day at which Bank is required to maintain reserves on “Euro-currency Liabilities” as defined in and pursuant to Regulation D of the Board of Governors of the Federal Reserve System or, if such regulation or definition is modified, and as long as Bank is required to maintain reserves against a category of liabilities which includes eurodollar deposits or includes a category of assets which includes eurodollar loans, the rate at which such reserves are required to be maintained on such category;

 

provided , however , and notwithstanding anything to the contrary set forth in this Note, if at any time the Daily Adjusting LIBOR Rate determined as provided above would be less than zero percent (0%), then the Daily Adjusting LIBOR Rate shall be deemed to be zero percent (0%) per annum for all purposes of this Note (the “Daily Adjusting LIBOR 0% Floor”), except for any portion of any principal Indebtedness outstanding under this Note which, at any such time, is subject to any Specified Hedging Agreement, in which case, the Daily Adjusting LIBOR Rate for such portion of such Indebtedness shall be determined without giving effect to the Daily Adjusting LIBOR 0% Floor. Each calculation by Bank of the Daily Adjusting LIBOR Rate shall be conclusive and binding for all purposes, absent manifest error.

 

“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including, without limitation, any supranational bodies such as the European Union or the European Central Bank).

 

“Installment Payment Date” means December 1, 2017, and the first (1 st ) day of each succeeding month thereafter occurring during the term of this Note.

 

“Interest Period” means, a period of one (1) month, two (2) months, or three (3) months (or such shorter period as may be acceptable to Bank in its sole discretion), as selected by the undersigned (and which period is acceptable to Bank in its sole discretion), or as otherwise determined pursuant to and in accordance with the terms of this Note, commencing on the effective date of a LIBOR-based Rate Election by the undersigned with respect to all or any part of the Indebtedness hereunder, or in the case of successive continuations of the LIBOR-based Rate as the basis for the Applicable Interest Rate hereunder, as herein provided, on the last day of the preceding Interest Period then ending, provided that:

 

(a)                                  any Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day, except that if the next succeeding Business Day falls in another calendar month, the Interest Period shall end on the next preceding Business Day, and when an Interest Period begins on a day which has no numerically corresponding

 

6

 

day in the calendar month during which such Interest Period is to end, it shall end on the last Business Day of such calendar month;

 

(b)                                  the undersigned shall elect Interest Periods hereunder so as to permit the undersigned to make the mandatory installment payments required under the terms of this Note, when due in accordance with the terms hereof, without prepaying any Indebtedness hereunder which is then bearing interest on the basis of the LIBOR-based Rate prior to the end of the Interest Period applicable thereto; and

 

(c)                                   no Interest Period shall extend beyond the Maturity Date.

 

“LIBOR-based Rate” means a per annum interest rate which is equal to the quotient of the following:

 

(a)                                  the LIBOR Rate;

 

divided by

 

(b)                                  1.00 minus the maximum rate (expressed as a decimal) during such Interest Period at which Bank is required to maintain reserves on “Euro-currency Liabilities” as defined in and pursuant to Regulation D of the Board of Governors of the Federal Reserve System or, if such regulation or definition is modified, and as long as Bank is required to maintain reserves against a category of liabilities which includes eurodollar deposits or includes a category of assets which includes eurodollar loans, the rate at which such reserves are required to be maintained on such category.

 

“LIBOR-based Rate Election” means an election by the undersigned of the LIBOR-based Rate as the basis for the Applicable Interest Rate for all or any part of the Indebtedness hereunder, subject to and in accordance with the terms and conditions of this Note.

 

“LIBOR Lending Office” means Bank’s office located in the Cayman Islands, British West Indies, or such other branch of Bank, domestic or foreign, as it may hereafter designate as its LIBOR Lending Office by notice to the undersigned.

 

“LIBOR Rate” means, with respect to any Indebtedness outstanding under this Note bearing interest on the basis of  the LIBOR-based Rate, the per annum rate of interest determined on the basis of the rate for deposits in United States Dollars for a period equal to the relevant Interest Period for such Indebtedness, commencing on the first day of such Interest Period, appearing on Page BBAM of the Bloomberg Financial Markets Information Service at or about 11:00 a.m. (London, England time) (or as soon thereafter as practical), two (2) Business Days prior to the first day of such Interest Period.  In the event that such rate does not appear on Page BBAM of the Bloomberg Financial Markets Information Service (or otherwise on such Service), the “LIBOR Rate” shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be reasonably selected by Bank, or, in the absence of such other service, the “LIBOR Rate” shall, instead, be determined based upon the average of the rates at which Bank is offered dollar deposits at or about 11:00 a.m. (Detroit, Michigan time) (or as soon thereafter as practical), two (2) Business Days prior to the first day of such Interest Period in the interbank eurodollar market in an amount comparable to the principal amount of the respective Indebtedness which is to bear interest on the basis of such LIBOR-based Rate and for a period equal to the relevant Interest Period; provided , however , and notwithstanding anything to the contrary set forth in this Note, if at any time the LIBOR Rate determined as provided above would be less than zero percent (0%), then the LIBOR Rate shall be deemed to be zero percent (0%) per annum for all purposes of this Note (the “LIBOR 0% Floor”), except for any portion of any principal Indebtedness outstanding under this Note which, at any such time, is/are subject to any Specified Hedging Agreement, in which case, the LIBOR Rate for such portion of such Indebtedness shall be determined without giving effect to the LIBOR 0% Floor. Each calculation by Bank of the LIBOR Rate shall be conclusive and binding for all purposes, absent manifest error.

 

“Loan Amount” means the face amount of this Note as set forth at the top of Page 1 hereof.

 

“Notice of Interest Rate” means a Notice of Interest Rate in form similar to that attached to this Note as Exhibit “A” issued and delivered by the undersigned to Bank in accordance with the terms of this Note.

 

“Prime Rate” means the per annum interest rate established by Bank as its prime rate for its borrowers, as such rate may vary from time to time, which rate is not necessarily the lowest rate on loans made by Bank at any such time.

 

“Prime Referenced Rate” means a per annum interest rate which is equal to the Prime Rate.

 

“Specified Hedging Agreement” means any agreement or other documentation between the undersigned (or any of them) and Bank providing for an interest rate swap that does not provide for a minimum rate of zero percent (0%) with respect to determinations of the Daily Adjusting LIBOR Rate or LIBOR Rate, as applicable, for the purposes of such interest rate swap (e.g., determines the floating amount by using the “negative interest rate method” rather than the “zero interest rate method” in the case of any such interest rate swap made under any master agreement or other documentation published by the International Swaps and Derivatives Association, Inc.).

 

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No delay or failure of Bank in exercising any right, power or privilege hereunder shall affect such right, power or privilege, nor shall any single or partial exercise thereof preclude any further exercise thereof, or the exercise of any other power, right or privilege.  The rights of Bank under this Note are cumulative and not exclusive of any right or remedies which Bank would otherwise have, whether by other instruments or by law.

 

THE UNDERSIGNED AND BANK, BY ACCEPTANCE OF THIS NOTE, ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES.  TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.

 

THIS WRITTEN LOAN AGREEMENT (AS DEFINED BY SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE) REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

This Note amends, restates, supersedes and replaces that certain CapEx Note dated as of December 29, 2015, made in the principal amount of Two-Hundred Fifty Thousand Dollars ($250,000.00), executed by J & S Audio Visual Communications, LLC, formerly known as J & S Audio Visual Communications, Inc. to the Bank as amended (the “Prior Note”), the obligations of which Prior Note have been assigned to and assumed by the undersigned; provided, however, (i) the execution and delivery by the undersigned of this Note shall not, in any manner or circumstance, be deemed to be a payment of, a novation of or to have terminated, extinguished or discharged any of the undersigned’s indebtedness evidenced by the Prior Note, all of which indebtedness shall continue under and shall hereinafter be evidenced and governed by this Note, and (ii) all Collateral and guaranties securing or supporting the Prior Note shall continue to secure and support this Note.

 

[Remainder of Page Intentionally Left Blank.  Signature Pages Follow.]

 

8

 

This Note is dated and shall be effective as of the date set forth above.

 

	BORROWER:
	PRESENTATION TECHNOLOGIES, LLC
	By:	/s/ Kevin Jost
		Kevin Jost
		President

 

			United States
Street Address	City	State	Country	Zip Code

 

For Bank Use Only
LOAN OFFICER INITIALS	LOAN GROUP NAME	OBLIGOR NAME
		Presentation Technologies, LLC
LOAN OFFICER I.D. NO.	LOAN GROUP NO.	OBLIGOR NO.	NOTE NO.	AMOUNT
				$10,000,000.00

 

TERM NOTE — SIGNATURE PAGE

 

 

EXHIBIT “A”

 

NOTICE OF INTEREST RATE

 

With reference to the Term Note dated as of November 1, 2017 (the “Note”), made in the principal amount of $10,000,000.00 by the undersigned payable to Comerica Bank (“Bank”), and subject to the terms and conditions of the Note, the undersigned hereby elect(s) the                                         * as the basis for the Applicable Interest Rate for $                     of principal Indebtedness outstanding under the Note.  Such election shall be effective as of                                 , and the Interest Period, if applicable, shall be for                                       (               )** month(s), and shall end on                                         .

 

In the event that the Indebtedness outstanding under the Note to which this Notice relates is currently bearing interest at the LIBOR-based Rate, the Interest Period with respect thereto ends on                                                                                                   .

 

The undersigned hereby certify(ies) that, as of the date hereof, no Default, or any condition or event which, with the giving of notice or the running of time, or both, would constitute a Default, has occurred and is continuing or exists under said Installment Note.

 

Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in said Installment Note.

 

Dated this                                          day of                                                                                                             .

 

	BORROWER:
	PRESENTATION TECHNOLOGIES, LLC
	By:
		Name:
		Title:

 

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*                  INSERT, AS APPLICABLE, “LIBOR-BASED RATE” OR “DAILY ADJUSTING LIBOR RATE”.

 

**           FOR AN ELECTION OF THE LIBOR-BASED RATE, INSERT THE APPLICABLE INTEREST PERIOD (I.E., “ONE (1)”, “TWO (2)” OR “THREE (3)” MONTHS).

 

TERM NOTE — EXHIBIT A

 

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Exhibit 10.3

 

Execution Version

 

 

Master Revolving Note

 

AMOUNT	NOTE DATE	MATURITY DATE
$3,000,000.00	November 1, 2017	November 1, 2022

 

On or before the maturity date set forth above (the “Maturity Date”), FOR VALUE RECEIVED, the undersigned promise(s) to pay to the order of COMERICA BANK (herein called “Bank”), at any office of the Bank in the State of Texas, the principal sum of THREE MILLION AND NO/100 DOLLARS ($3,000,000.00), or so much of said sum as has been advanced and is then outstanding under this Note, together with interest thereon as hereinafter set forth.

 

This Note is a note under which Advances, repayments and re-Advances may be made from time to time, subject to the terms and conditions of this Note and that certain Credit Agreement dated effective as of the date hereof between the undersigned and Bank (as the same has been and may be amended, restated or modified from time to time, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein will have the meaning given such terms in the Credit Agreement.

 

AT NO TIME SHALL THE BANK BE UNDER ANY OBLIGATION TO MAKE ANY ADVANCES TO THE UNDERSIGNED PURSUANT TO THIS NOTE (NOTWITHSTANDING ANYTHING EXPRESSED OR IMPLIED IN THIS NOTE OR ELSEWHERE TO THE CONTRARY, INCLUDING, WITHOUT LIMITATION, IF BANK SUPPLIES THE UNDERSIGNED WITH A BORROWING FORMULA) IN THE EVENT THAT ANY EVENT OF DEFAULT, OR ANY CONDITION OR EVENT WHICH, WITH THE GIVING OF NOTICE OR THE RUNNING OF TIME, OR BOTH, WOULD CONSTITUTE AN EVENT OF DEFAULT, SHALL HAVE OCCURRED AND BE CONTINUING OR EXIST, IN WHICH EVENT, BANK, AT ANY TIME AND FROM TIME TO TIME, WITHOUT NOTICE, AND IN ITS SOLE DISCRETION, MAY REFUSE TO MAKE ADVANCES TO THE UNDERSIGNED WITHOUT INCURRING ANY LIABILITY DUE TO THIS REFUSAL AND WITHOUT AFFECTING THE UNDERSIGNED’S LIABILITY UNDER THIS NOTE FOR ANY AND  ALL AMOUNTS ADVANCED.

 

Subject to the terms and conditions of this Note, each of the Advances made hereunder shall bear interest at the Applicable Interest Rate , as elected by the undersigned or as otherwise determined under this Note.

 

Accrued and unpaid interest on the unpaid principal balance of each outstanding Advance hereunder shall be payable monthly, in arrears, on the first Business Day of each month, from the date made until the same is paid in full (whether in accordance with the terms hereof, by acceleration or otherwise). Interest accruing on the basis of the Daily Adjusting LIBOR Rate and on the basis of the Prime Referenced Rate (to the extent applicable) shall be computed on the basis of a year of 360 days, and shall be assessed for the actual number of days elapsed, and in such computation, effect shall be given to any change in the Applicable Interest Rate as a result of any change in the Daily Adjusting LIBOR Rate or, to the extent applicable, the Prime Referenced Rate, on the date of each such change.  Interest accruing on the basis of the LIBOR-based Rate shall be computed on the basis of a 360 day year and shall be assessed for the actual number of days elapsed from the first day of the Interest Period applicable thereto but not including the last day thereof.

 

From and after the occurrence of any Event of Default hereunder, and so long as any such Event of Default remains unremedied or uncured thereafter, the Indebtedness outstanding under this Note shall bear interest at a per annum rate of three percent (3%) above the otherwise Applicable Interest Rate(s), which interest shall be payable upon demand. In addition to the foregoing, a late payment charge equal to five percent (5%) of each late payment hereunder may be charged on any payment not received by Bank within ten (10) calendar days after the payment due date therefor, but acceptance of payment of any such charge shall not constitute a waiver of any Default hereunder.

 

In no event shall the interest payable under this Note at any time exceed the Maximum Rate.  The term “Maximum Rate”, as used herein, shall mean at the particular time in question the maximum nonusurious rate of interest which, under applicable law, may then be charged on this Note.  If on any day the Applicable Interest Rate(s) hereunder in respect of any Indebtedness under this Note shall exceed the Maximum Rate for that day, the rate of interest applicable to such Indebtedness shall be fixed at the Maximum Rate on that day and on each day thereafter until the total amount of interest accrued on the unpaid principal balance of this Note equals the total amount of interest which would have accrued if there had been no Maximum Rate.  If such maximum rate of interest changes after the date hereof, the Maximum Rate shall be automatically increased or decreased, as the case may be, without notice to the undersigned from time to time as of the effective date of each change in such maximum rate.  For purposes of determining the Maximum Rate under the law of the State of Texas, the applicable interest rate ceiling shall be the “weekly ceiling” from time to time in effect under Chapter 303 of the Texas Finance Code, as amended.

 

The amount and date of each Advance, its Applicable Interest Rate, its Interest Period, if applicable, and the amount and date of any repayment shall be noted on Bank’s records, which records shall be conclusive evidence thereof, absent manifest error; provided , however , any failure by Bank to make any such notation, or any error in any such notation, shall not relieve the undersigned of its/their obligations to repay Bank all amounts payable by the undersigned to Bank under or pursuant to this Note, when due in accordance with the terms hereof.

 

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The undersigned may request an Advance hereunder, including the refunding of an outstanding Advance as the same type of Advance or the conversion of an outstanding Advance to another type of Advance, either (i) upon the delivery to Bank of a written Request for Advance duly completed and executed by the undersigned (as herein provided) or, (ii) to the extent applicable, pursuant to a request submitted through Bank’s Loan Management System (each a “Request”), in each case, subject to the following: (a) no Event of Default, or any condition or event which, with the giving of notice or the running of time, or both, would constitute an Event of Default, shall have occurred and be continuing or exist under this Note; (b) each such Request shall be delivered to Bank by 11:00 a.m. (Detroit, Michigan time) on the proposed date of the requested Advance; (c) the principal amount of each LIBOR-based Advance shall be at least Twenty Thousand Dollars ($20,000.00) (or such lesser amount as is acceptable to Bank in its sole discretion); (d) the proposed date of any refunding of any outstanding LIBOR-based Advance as another LIBOR-based Advance or the conversion of any outstanding LIBOR-based Advance to another type of Advance shall only be on the last day of the Interest Period applicable to such outstanding LIBOR-based Advance; (e) after giving effect to such Advance, the aggregate unpaid principal amount of Advances outstanding under this Note shall not exceed the Loan Amount; and (f) a Request, once delivered or submitted to Bank, shall not be revocable by the undersigned.

 

In the event that the undersigned is unable to request Advances hereunder through the Bank’s Loan Management System, Advances hereunder may be requested by delivery or submission to Bank by hand delivery, first class mail, overnight courier, facsimile, email or other means of delivery acceptable to Bank, of a written Request for Advance duly completed and executed by the undersigned. Advances hereunder may be requested in the undersigned’s discretion by telephonic notice to Bank. Any Advance requested by telephonic notice shall be confirmed by the undersigned that same day by submission to Bank of a written Request for Advance, as provided herein. The undersigned acknowledge(s) that if Bank makes an Advance based on a request made by telephone, facsimile, email or other means of delivery (other than by hand delivery, first class mail or overnight courier), it shall be for the undersigned’s convenience and all risks involved in the use of any such procedure shall be borne by the undersigned, and the undersigned expressly agree(s) to indemnify and hold Bank harmless therefor. Bank shall have no duty to confirm the authority of anyone requesting an Advance by telephone, facsimile, email or any such other means of delivery. In the event that the undersigned elect(s) to request Advances by telephonic notice, facsimile, email or other means of delivery acceptable to Bank, the undersigned acknowledge(s) and agree(s) that Bank may impose or require such verification, authentication and other procedures as Bank may require from time to time.

 

If, as to any outstanding LIBOR-based Advance, Bank shall not receive a timely Request, or telephonic notice, in accordance with the foregoing requesting the refunding or continuation of such Advance as another LIBOR-based Advance for a specified Interest Period or the conversion of such Advance to a Daily Adjusting LIBOR Rate Advance, effective as of the last day of the Interest Period applicable to such outstanding LIBOR-based Advance, and as of the last day of each succeeding Interest Period, the principal amount of such Advance which is not then repaid shall be automatically refunded or continued as a LIBOR-based Advance having an Interest Period equal to the same period of time as the Interest Period then ending for such outstanding LIBOR-based Advance, unless the undersigned is/are not entitled to request LIBOR-based Advances hereunder or otherwise elect the LIBOR-based Rate as the basis for the Applicable Interest Rate for the principal Indebtedness outstanding hereunder in accordance with the terms of this Note, or the LIBOR-based Rate is not otherwise available to the undersigned as the basis for the Applicable Interest Rate hereunder for the principal Indebtedness outstanding hereunder in accordance with the terms of this Note, in which case, the Daily Adjusting LIBOR Rate or, to the extent applicable, the Prime Referenced Rate, shall be the basis for the Applicable Interest Rate hereunder in respect of such Indebtedness for such period, subject in all respects to the terms and conditions of this Note. The foregoing shall not in any way whatsoever limit or otherwise affect any of Bank’s rights or remedies under this Note upon the occurrence of any Default or Event of Default.

 

Subject to the definition of an “Interest Period” hereunder, in the event that any payment under this Note becomes due and payable on any day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day, and, to the extent applicable, interest shall continue to accrue and be payable thereon during such extension at the rates set forth in this Note.

 

All payments to be made by the undersigned to Bank under or pursuant to this Note shall be in immediately available United States funds, without setoff or counterclaim, and in the event that any payments submitted hereunder are in funds not available until collected, said payments shall continue to bear interest until collected.

 

If the undersigned make(s) any payment of principal with respect to any LIBOR-based Advance on any day other than the last day of the Interest Period applicable thereto (whether voluntarily, by acceleration, required payment or otherwise), or if the undersigned fail(s) to borrow any LIBOR-based Advance or fail(s) to refund an outstanding LIBOR-based Advance as a LIBOR-based Advance or to convert an outstanding Advance to a LIBOR-based Advance, in any such case, after notice has been given by the undersigned (or any of them) to Bank in accordance with the terms of this Note requesting such Advance, or such refunding or conversion, or if the undersigned fail(s) to make any payment of principal or interest in respect of a LIBOR-based Advance when due, the undersigned shall reimburse Bank, on demand, for any resulting loss, cost or expense incurred by Bank as a result thereof, including, without limitation, any such loss, cost or expense incurred in obtaining, liquidating, employing or redeploying deposits from third parties, whether or not Bank shall have funded or committed to fund such Advance.  Such amount payable by the undersigned to Bank may include, without limitation, an amount equal to the excess, if any, of (a) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, refunded or converted, for the period from the date of such prepayment or of such failure to borrow, refund or convert, through the last day of the relevant Interest Period, at the applicable rate of interest for said Advance(s) provided under this Note, over (b) the amount of interest (as reasonably determined by Bank) which would have accrued to Bank on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market.  Calculation of any amounts payable to Bank under this paragraph shall be made as though Bank shall have actually funded or committed to fund the relevant LIBOR-based

 

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Advance through the purchase of an underlying deposit in an amount equal to the amount of such Advance and having a maturity comparable to the relevant Interest Period; provided , however , that Bank may fund any LIBOR-based Advance in any manner it deems fit and the foregoing assumptions shall be utilized only for the purpose of the calculation of amounts payable under this paragraph.  Upon the written request of the undersigned, Bank shall deliver to the undersigned a certificate setting forth the basis for determining such losses, costs and expenses, which certificate shall be conclusively presumed correct, absent manifest error. The undersigned may prepay at any time all or part of the outstanding balance of any Daily Adjusting LIBOR Rate Advance under this Note or any Indebtedness hereunder which is bearing interest based upon the Prime Referenced Rate at any such time without premium or penalty. Any prepayment hereunder shall also be accompanied by the payment of all accrued and unpaid interest on the amount so prepaid.

 

For any LIBOR-based Advance or any Daily Adjusting LIBOR Rate Advance, if Bank shall designate a LIBOR Lending Office which maintains books separate from those of the rest of Bank, Bank shall have the option of maintaining and carrying such Advance on the books of such LIBOR Lending Office.

 

If, at any time, Bank determines that, (a) Bank is unable to determine or ascertain the LIBOR-based Rate or the Daily Adjusting LIBOR Rate, or (b) by reason of circumstances affecting the foreign exchange and interbank markets generally, deposits in eurodollars in the applicable amounts or for the relative maturities are not being offered to Bank for any applicable Advance or Interest Period, or (c) the Applicable Interest Rate will not accurately or fairly cover or reflect the cost to Bank of maintaining any of the Indebtedness under this Note based upon the LIBOR-based Rate or the Daily Adjusting LIBOR Rate, then Bank shall forthwith give notice thereof to the undersigned.  Thereafter, until Bank notifies the undersigned that such conditions or circumstances no longer exist, the right of the undersigned to request a LIBOR-based Advance or a Daily Adjusting LIBOR Rate Advance and to convert an Advance to or refund an Advance as a LIBOR-based Advance or a Daily Adjusting LIBOR Rate Advance shall be suspended, and the Prime Referenced Rate shall be the basis for the Applicable Interest Rate for all Indebtedness hereunder during such period of time.

 

If any Change in Law shall make it unlawful or impossible for the Bank (or its LIBOR Lending Office) to make or maintain any Advance with interest based upon the LIBOR-based Rate or the Daily Adjusting LIBOR Rate, Bank shall forthwith give notice thereof to the undersigned.  Thereafter, (a) until Bank notifies the undersigned that such conditions or circumstances no longer exist, the right of the undersigned to request a LIBOR-based Advance or a Daily Adjusting LIBOR Rate Advance and to convert an Advance to or refund an Advance as a LIBOR-based Advance or a Daily Adjusting LIBOR Rate Advance shall be suspended, and thereafter, the Prime Referenced Rate shall be the basis for the Applicable Interest Rate for the Indebtedness hereunder during such period of time, and (b) if Bank may not lawfully continue to maintain an outstanding LIBOR-based Advance to the end of the then current Interest Period applicable thereto, the Prime Referenced Rate shall be the basis for the Applicable Interest Rate for the remainder of such Interest Period with respect to such outstanding Advance.

 

If any Change in Law shall (a) subject Bank (or its LIBOR Lending Office) to any tax, duty or other charge with respect to this Note or any Indebtedness hereunder, or shall change the basis of taxation of payments to Bank (or its LIBOR Lending Office) of the principal of or interest under this Note or any other amounts due under this Note in respect thereof (except for changes in the rate of tax on the overall net income of Bank or its LIBOR Lending Office imposed by the jurisdiction in which Bank’s principal executive office or LIBOR Lending Office is located); or (b) impose, modify or deem applicable any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by Bank (or its LIBOR Lending Office), or shall impose on Bank (or its LIBOR Lending Office) or the foreign exchange and interbank markets any other condition affecting this Note or the Indebtedness hereunder; and the result of any of the foregoing is to increase the cost to Bank of maintaining any part of the Indebtedness hereunder or to reduce the amount of any sum received or receivable by Bank under this Note by an amount deemed by the Bank to be material, then the undersigned shall pay to Bank, within fifteen (15) days of the undersigned’s receipt of written notice from Bank demanding such compensation, such additional amount or amounts as will compensate Bank for such increased cost or reduction.  A certificate of Bank, prepared in good faith and in reasonable detail by Bank and submitted by Bank to the undersigned, setting forth the basis for determining such additional amount or amounts necessary to compensate Bank shall be conclusive and binding for all purposes, absent manifest error.

 

In the event that any Change in Law affects or would affect the amount of capital or liquidity required or expected to be maintained by Bank (or any corporation controlling Bank), and Bank determines that the amount of such capital or liquidity is increased by or based upon the existence of any obligations of Bank hereunder or the maintaining of any Indebtedness hereunder, and such increase has the effect of reducing the rate of return on Bank’s (or such controlling corporation’s) capital as a consequence of such obligations or the maintaining of such Indebtedness hereunder to a level below that which Bank (or such controlling corporation) could have achieved but for such circumstances (taking into consideration its policies with respect to capital adequacy and liquidity), then the undersigned shall pay to Bank, within fifteen (15) days of the undersigned’s receipt of written notice from Bank demanding such compensation, additional amounts as are sufficient to compensate Bank (or such controlling corporation) for any increase in the amount of capital and/or liquidity and reduced rate of return which Bank reasonably determines to be allocable to the existence of any obligations of the Bank hereunder or to maintaining any Indebtedness hereunder.  A certificate of Bank as to the amount of such compensation, prepared in good faith and in reasonable detail by the Bank and submitted by Bank to the undersigned, shall be conclusive and binding for all purposes absent manifest error.

 

This Note and any other Indebtedness are secured by and the Bank is granted a security interest in and lien upon the Collateral. Notwithstanding the above, (i) to the extent that any portion of the Indebtedness is a consumer loan, that portion shall not be secured by any deed of trust or mortgage on or other security interest in any of the undersigned’s principal dwelling or in any of the

 

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undersigned’s real property which is not a purchase money security interest as to that portion, unless expressly provided to the contrary in another place, or (ii) if the undersigned (or any of them) has (have) given or give(s) Bank a deed of trust or mortgage covering California real property, that deed of trust or mortgage shall not secure this Note or any other indebtedness of the undersigned (or any of them), unless expressly provided to the contrary in another place, or (iii) if the undersigned (or any of them) has (have) given or give(s) the Bank a deed of trust or mortgage covering real property which, under Texas law, constitutes the homestead of such person, that deed of trust or mortgage shall not secure this Note or any other indebtedness of the undersigned (or any of them) unless expressly provided to the contrary in another place.

 

Upon the occurrence and during the continuance of an Event of Default, the Bank may, at its option and without prior notice to the undersigned (or any of them), cease advancing money or extending credit to or for the benefit of the undersigned under this Note or any other Loan Document, terminate this Note as to any future liability or obligation of Bank, but without affecting Bank’s rights and security interests in any Collateral and the Indebtedness of the undersigned to Bank, declare any or all of the Indebtedness to be immediately due and payable (notwithstanding any provisions contained in the evidence of it to the contrary), sell or liquidate all or any portion of the Collateral, set off against the Indebtedness any amounts owing by the Bank to the undersigned (or any of them), charge interest at the default rate provided in the document evidencing the relevant Indebtedness and exercise any one or more of the rights and remedies granted to the Bank by any Loan Document or given to it under applicable law.

 

The undersigned authorize(s) the Bank to charge any account(s) of the undersigned (or any of them) with the Bank for any and all sums due hereunder when due; provided , however , that such authorization shall not affect any of the undersigned’s obligation to pay to the Bank all amounts when due, whether or not any such account balances that are maintained by the undersigned with the Bank are insufficient to pay to the Bank  any amounts when due, and to the extent that such accounts are insufficient to pay to the Bank all such amounts, the undersigned shall remain liable for any deficiencies until paid in full.

 

If this Note is signed by two or more parties (whether by all as makers or by one or more as an accommodation party or otherwise), the obligations and undertakings under this Note shall be that of all and any two or more jointly and also of each severally. This Note shall bind the undersigned, and the undersigned’s respective heirs, personal representatives, successors and assigns.

 

The undersigned waive(s) presentment, demand, protest, notice of dishonor, notice of demand or intent to demand, notice of acceleration or intent to accelerate, and all other notices, and agree(s) that no extension or indulgence to the undersigned (or any of them) or release, substitution or nonenforcement of any security, or release or substitution of any of the undersigned, any guarantor or any other party, whether with or without notice, shall affect the obligations of any of the undersigned. The undersigned waive(s) all defenses or right to discharge available under Section 3-605 of the Uniform Commercial Code and waive(s) all other suretyship defenses or right to discharge.  The undersigned agree(s) that the Bank has the right to sell, assign, or grant participations or any interest in, any or all of the Indebtedness, and that, in connection with this right, but without limiting its ability to make other disclosures to the full extent allowable, the Bank may disclose all documents and information which the Bank now or later has relating to the undersigned or the Indebtedness.  The undersigned agree(s) that the Bank may provide information relating to this Note or relating to the undersigned to the Bank’s parent, affiliates, subsidiaries and service providers.

 

The undersigned agree(s) to pay or reimburse to Bank, or any other holder or owner of this Note, on demand, (a) all actual, out-of-pocket costs, expenses, fees and charges paid or incurred by Bank (including, without limitation, Bank’s reasonable attorneys’ fees and costs and/or fees and transfer charges in connection with the preparation, closing and consummation of this Note and/or the other Loan Documents and/or the Loans or transactions contemplated hereby or thereby, or in connection with the administration of this Note or the Indebtedness and (b) all costs, expenses, fees and charges paid or incurred by Bank (including, without limitation, Bank’s attorneys’ fees and costs and/or fees, transfer charges and costs of Bank’s in-house counsel), in connection with the enforcement in any other matter or proceeding relating to this Note or the Indebtedness.

 

The undersigned acknowledge(s) and agree(s) that there are no contrary agreements, oral or written, establishing a term of this Note and agree(s) that the terms and conditions of this Note may not be amended, waived or modified except in a writing signed by an officer of the Bank expressly stating that the writing constitutes an amendment, waiver or modification of the terms of this Note. As used in this Note, the word “undersigned” means, individually and collectively, each maker, accommodation party, endorser and other party signing this Note in a similar capacity. If any provision of this Note is unenforceable in whole or part for any reason, the remaining provisions shall continue to be effective.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS , WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.  Chapter 346 of the Texas Finance Code (and as the same may be incorporated by reference in other Texas statutes) shall not apply to the Indebtedness evidenced by this Note.

 

This Note and all other Loan Documents (whether executed and delivered prior to, concurrently with or subsequent to this Note), as such Loan Documents may have been or may hereafter be amended from time to time are intended to be performed in accordance with, and only to the extent permitted by, all applicable usury laws.  If any provision hereof or of any of the other Loan Documents or the application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, neither the application of such provision to any other person or circumstance nor the remainder of the instrument in which such provision is contained shall be affected thereby and shall be enforced to the greatest extent permitted by law.  It is expressly stipulated and agreed to be the intent of the holder hereof to at all times comply with the usury and other applicable laws now or hereafter governing the interest payable on the indebtedness evidenced by this Note.  If the applicable law is ever revised, repealed or judicially interpreted so

 

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as to render usurious any amount called for under this Note or under any of the other Loan Documents, or contracted for, charged, taken, reserved or received with respect to the indebtedness evidenced by this Note, or if Bank’s exercise of the option to accelerate the maturity of this Note, or if any prepayment by the undersigned or prepayment agreement results (or would, if complied with, result) in the undersigned having paid, contracted for or being charged for any interest in excess of that permitted by law, then it is the express intent of the undersigned and Bank that this Note and the other Loan Documents shall be limited to the extent necessary to prevent such result and all excess amounts theretofore collected by Bank shall be credited on the principal balance of this Note or, if fully paid, upon such other Indebtedness as shall then remain outstanding (or, if this Note and all other Indebtedness have been paid in full, refunded to the undersigned), and the provisions of this Note and the other Loan Documents shall immediately be deemed reformed and the amounts thereafter collectable hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the then applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder or thereunder.  All sums paid, or agreed to be paid, by the undersigned for the use, forbearance, detention, taking, charging, receiving or reserving of the indebtedness of the undersigned to Bank under this Note or arising under or pursuant to the other Loan Documents shall, to the maximum extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the rate or amount of interest on account of such indebtedness does not exceed the usury ceiling from time to time in effect and applicable to such indebtedness for so long as such indebtedness is outstanding.  To the extent federal law permits Bank to contract for, charge or receive a greater amount of interest, Bank will rely on federal law instead of the Texas Finance Code, as supplemented by Texas Credit Title, for the purpose of determining the Maximum Rate.  Additionally, to the maximum extent permitted by applicable law now or hereafter in effect, Bank may, at its option and from time to time, implement any other method of computing the Maximum Rate under the Texas Finance Code, as supplemented by Texas Credit Title, or under other applicable law, by giving notice, if required, to the undersigned as provided by applicable law now or hereafter in effect.  Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, it is not the intention of Bank to accelerate the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration.

 

For the purposes of this Note, the following terms have the following meanings:

 

“Advance” means a borrowing requested by the undersigned and made by Bank under this Note, including any refunding of an outstanding Advance as the same type of Advance or the conversion of any such outstanding Advance to another type of Advance, and shall include a LIBOR-based Advance, a Daily Adjusting LIBOR Rate Advance and (subject to the terms of this Note) a Prime-based Advance.

 

“Applicable Interest Rate” means the LIBOR-based Rate plus the Applicable Margin, the Daily Adjusting LIBOR Rate plus the Applicable Margin, or (subject to the terms of this Note) the Prime Referenced Rate plus the Applicable Margin, as selected by the undersigned from time to time or as otherwise determined in accordance with the terms and conditions of this Note.

 

“Applicable Margin” means:

 

(a)                                  in respect of the LIBOR—based Rate, three and one quarter percent (3.25%) per annum ; and

 

(b)                                  in respect of the Daily Adjusting LIBOR Rate and, to the extent applicable, the Prime Referenced Rate, three and one quarter percent (3.25%) per annum.

 

“Business Day” means any day, other than a Saturday, Sunday or any other day designated as a holiday under Federal or applicable State statute or regulation, on which Bank is open for all or substantially all of its domestic and international business (including dealings in foreign exchange) in Detroit, Michigan, and, in respect of notices and determinations relating to LIBOR-based Advances, Daily Adjusting LIBOR Rate Advances, the LIBOR-based Rate and the Daily Adjusting LIBOR Rate, also a day on which dealings in dollar deposits are also carried on in the London interbank market and on which banks are open for business in London, England.

 

“Change in Law” means the occurrence, after the date hereof, of any of the following: (i) the adoption or introduction of, or any change in any applicable law, treaty, rule or regulation (whether domestic or foreign) now or hereafter in effect and whether or not applicable to Bank on such date, or (ii) any change in interpretation, administration or implementation thereof of any such law, treaty, rule or regulation by any Governmental Authority, or (iii) the issuance, making or implementation by any Governmental Authority of any interpretation, administration, request, regulation, guideline, or directive (whether or not having the force of law), including, without limitation, any risk-based capital guidelines or any interpretation, administration, request, regulation, guideline, or directive relating to liquidity. For purposes of this definition, (x) a change in law, treaty, rule, regulation, interpretation, administration or implementation shall include, without limitation, any change made or which becomes effective on the basis of a law, treaty, rule, regulation, interpretation administration or implementation then in force, the effective date of which change is delayed by the terms of such law, treaty, rule, regulation, interpretation, administration or implementation, and (y) the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173) and all requests, rules, regulations, guidelines, interpretations or directives promulgated thereunder or issued in connection therewith shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or promulgated, whether before or after the date hereof, and (z) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall each be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.

 

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“Daily Adjusting LIBOR Rate” means, for any day, a per annum interest rate which is equal to the quotient of the following:

 

(a)                                  for any day, the per annum rate of interest determined on the basis of the rate for deposits in United States Dollars for a period equal to one (1) month appearing on Page BBAM of the Bloomberg Financial Markets Information Service at or about 11:00 a.m. (London, England time) (or as soon thereafter as practical) on such day, or if such day is not a Business Day, on the immediately preceding Business Day.  In the event that such rate does not appear on Page BBAM of the Bloomberg Financial Markets Information Service (or otherwise on such Service) on any day, the “Daily Adjusting LIBOR Rate” for such day shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be reasonably selected by Bank, or, in the absence of such other service, the “Daily Adjusting LIBOR Rate” for such day shall, instead, be determined based upon the average of the rates at which Bank is offered dollar deposits at or about 11:00 a.m. (Detroit, Michigan time) (or as soon thereafter as practical), on such day, or if such day is not a Business Day, on the immediately preceding Business Day, in the interbank eurodollar market in an amount comparable to the applicable principal amount of Indebtedness outstanding hereunder which is to bear interest on the basis of such Daily Adjusting LIBOR Rate and for a period equal to one (1) month;

 

divided by

 

(b)                                  1.00 minus the maximum rate (expressed as a decimal) on such day at which Bank is required to maintain reserves on “Euro-currency Liabilities” as defined in and pursuant to Regulation D of the Board of Governors of the Federal Reserve System or, if such regulation or definition is modified, and as long as Bank is required to maintain reserves against a category of liabilities which includes eurodollar deposits or includes a category of assets which includes eurodollar loans, the rate at which such reserves are required to be maintained on such category;

 

provided , however , and notwithstanding anything to the contrary set forth in this Note, if at any time the Daily Adjusting LIBOR Rate determined as provided above would be less than zero percent (0%), then the Daily Adjusting LIBOR Rate shall be deemed to be zero percent (0%) per annum for all purposes of this Note (the “Daily Adjusting LIBOR 0% Floor”), except for any portion of any principal Indebtedness outstanding under this Note which, at any such time, is subject to any Specified Hedging Agreement, in which case, the Daily Adjusting LIBOR Rate for such portion of such Indebtedness shall be determined without giving effect to the Daily Adjusting LIBOR 0% Floor. Each calculation by Bank of the Daily Adjusting LIBOR Rate shall be conclusive and binding for all purposes, absent manifest error.

 

“Daily Adjusting LIBOR Rate Advance” means an Advance of which the Applicable Interest Rate is based on the Daily Adjusting LIBOR Rate.

 

“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including, without limitation, any supranational bodies such as the European Union or the European Central Bank).

 

“Interest Period” means, with respect to a LIBOR-based Advance, a period of one (1) month, two (2) months, or three (3) months, as selected by the undersigned (and which period is acceptable to Bank in its sole discretion), or as otherwise determined pursuant to and in accordance with the terms of this Note, commencing on the day a LIBOR-based Advance is made or the day an Advance is converted to a LIBOR-based Advance or the day an outstanding LIBOR-based Advance is refunded or continued as another LIBOR-based Advance for an applicable Interest Period, provided that any Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day, except that if the next succeeding Business Day falls in another calendar month, the Interest Period shall end on the next preceding Business Day, and when an Interest Period begins on a day which has no numerically corresponding day in the calendar month during which such Interest Period is to end, it shall end on the last Business Day of such calendar month. In the event that any LIBOR-based Advance is at any time refunded or continued as another LIBOR-based Advance for an additional Interest Period, such Interest Period shall commence on the last day of the preceding Interest Period then ending.

 

“LIBOR-based Advance” means an Advance of which the Applicable Interest Rate is based on the LIBOR-based Rate.

 

“LIBOR-based Rate” means a per annum interest rate which is equal to the quotient of the following:

 

(a)                                  the LIBOR Rate;

 

divided by

 

(b)                                  1.00 minus the maximum rate (expressed as a decimal) during such Interest Period at which Bank is required to maintain reserves on “Euro-currency Liabilities” as defined in and pursuant to Regulation D of the Board of Governors of the Federal Reserve System or, if such regulation or definition is modified, and as long as Bank is required to maintain reserves against a

 

6

 

category of liabilities which includes eurodollar deposits or includes a category of assets which includes eurodollar loans, the rate at which such reserves are required to be maintained on such category.

 

“LIBOR Lending Office” means Bank’s office located in the Cayman Islands, British West Indies, or such other branch of Bank, domestic or foreign, as it may hereafter designate as its LIBOR Lending Office by notice to the undersigned.

 

“LIBOR Rate” means, with respect to any Indebtedness outstanding under this Note bearing interest on the basis of  the LIBOR-based Rate, the per annum rate of interest determined on the basis of the rate for deposits in United States Dollars for a period equal to the relevant Interest Period for such Indebtedness, commencing on the first day of such Interest Period, appearing on Page BBAM of the Bloomberg Financial Markets Information Service at or about 11:00 a.m. (London, England time) (or as soon thereafter as practical), two (2) Business Days prior to the first day of such Interest Period.  In the event that such rate does not appear on Page BBAM of the Bloomberg Financial Markets Information Service (or otherwise on such Service), the “LIBOR Rate” shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be reasonably selected by Bank, or, in the absence of such other service, the “LIBOR Rate” shall, instead, be determined based upon the average of the rates at which Bank is offered dollar deposits at or about 11:00 a.m. (Detroit, Michigan time) (or as soon thereafter as practical), two (2) Business Days prior to the first day of such Interest Period in the interbank eurodollar market in an amount comparable to the principal amount of the respective LIBOR-based Advance which is to bear interest on the basis of such LIBOR-based Rate and for a period equal to the relevant Interest Period; provided , however , and notwithstanding anything to the contrary set forth in this Note, if at any time the LIBOR Rate determined as provided above would be less than zero percent (0%), then the LIBOR Rate shall be deemed to be zero percent (0%) per annum for all purposes of this Note (the “LIBOR 0% Floor”), except for any portion of any principal Indebtedness outstanding under this Note which, at any such time, is/are subject to any Specified Hedging Agreement, in which case, the LIBOR Rate for such portion of such Indebtedness shall be determined without giving effect to the LIBOR 0% Floor. Each calculation by Bank of the LIBOR Rate shall be conclusive and binding for all purposes, absent manifest error.

 

“Loan Amount” means the face amount of this Note as set forth at the top of Page 1 hereof.

 

“Prime Rate” means the per annum interest rate established by Bank as its prime rate for its borrowers, as such rate may vary from time to time, which rate is not necessarily the lowest rate on loans made by Bank at any such time.

 

“Prime-based Advance” means an Advance of which the Applicable Interest Rate is based on the Prime Referenced Rate, subject to the terms of this Note.

 

“Prime Referenced Rate” means a per annum interest rate which is equal to the Prime Rate, but in no event less than two and one-half percent (2.50%) per annum.

 

“Request for Advance” means a Request for Advance issued by the undersigned under this Note in the form annexed to this Note as Exhibit “A”.

 

“Specified Hedging Agreement” means any agreement or other documentation between the undersigned (or any of them) and Bank providing for an interest rate swap that does not provide for a minimum rate of zero percent (0%) with respect to determinations of the Daily Adjusting LIBOR Rate or LIBOR Rate, as applicable, for the purposes of such interest rate swap (e.g., determines the floating amount by using the “negative interest rate method” rather than the “zero interest rate method” in the case of any such interest rate swap made under any master agreement or other documentation published by the International Swaps and Derivatives Association, Inc.).

 

No delay or failure of Bank in exercising any right, power or privilege hereunder shall affect such right, power or privilege, nor shall any single or partial exercise thereof preclude any further exercise thereof, or the exercise of any other power, right or privilege.  The rights of Bank under this Note are cumulative and not exclusive of any right or remedies which Bank would otherwise have, whether by other instruments or by law.

 

THE UNDERSIGNED AND BANK, BY ACCEPTANCE OF THIS NOTE, ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES.  TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.

 

THIS WRITTEN LOAN AGREEMENT (AS DEFINED BY SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE) REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

7

 

This Note amends, restates, supersedes and replaces that certain Master Revolving Note in the original principal amount of Three Million Five Hundred Thousand Dollars ($3,500,000) dated May 31, 2011 by J & S Audio Visual Communications, LLC, formerly known as J & S Audio Visual Communications, Inc. to the Bank as amended (the “Prior Note”), the obligations of which Prior Note have been assigned to and assumed by the undersigned; provided, however, (i) the execution and delivery by the undersigned of this Note shall not, in any manner or circumstance, be deemed to be a payment of, a novation of or to have terminated, extinguished or discharged any of the undersigned’s indebtedness evidenced by the Prior Note, all of which indebtedness shall continue under and shall hereinafter be evidenced and governed by this Note, and (ii) all Collateral and guaranties securing or supporting the Prior Note shall continue to secure and support this Note.

 

[Remainder of Page Intentionally Blank.  Signature Pages Follow.]

 

8

 

This Note is dated and shall be effective as of the date set forth above.

 

	BORROWER:
	PRESENTATION TECHNOLOGIES, LLC
	By:	/s/ Kevin Jost
		Kevin Jost
		President

 

			United States
Street Address	City	State	Country	Zip Code

 

For Bank Use Only
LOAN OFFICER INITIALS	LOAN GROUP NAME	OBLIGOR NAME
		Presentation Technologies, LLC
LOAN OFFICER I.D. NO.	LOAN GROUP NO.	OBLIGOR NO.	NOTE NO.	AMOUNT
				$3,000,000.00

 

MASTER REVOLVING NOTE — SIGNATURE PAGE

 

 

EXHIBIT “A”

 

REQUEST FOR ADVANCE

 

The undersigned hereby request(s) COMERICA BANK (“Bank”) to make a                                                        * Advance to the undersigned on                                              , in the amount of                                                     Dollars ($                         ) under the Master Revolving Note dated as of November 1, 2017, issued by the undersigned to said Bank in the face amount of Three Million and No/Dollars ($3,000,000.00) (the “Note”). The Interest Period for the requested Advance, if applicable, shall be                                   (               ) ** month(s).  In the event that any part of the Advance requested hereby constitutes the refunding or conversion of an outstanding Advance, the amount to be refunded or converted is                                                                                                            Dollars ($                               ), and the last day of the Interest Period for the amounts being converted or refunded hereunder, if applicable, is                                 .

 

The undersigned represent(s), warrant(s) and certify(ies) that no Event of Default, or any condition or event which, with the giving of notice or the running of time, or both, would constitute a an Event of Default, has occurred and is continuing under the Note, and none will exist upon the making of the Advance requested hereunder.  The undersigned further certify(ies) that upon advancing the sum requested hereunder, the aggregate principal amount outstanding under the Note will not exceed the face amount thereof. If the amount advanced to the undersigned under the Note shall at any time exceed the face amount thereof, the undersigned will promptly pay such excess amount, upon notice or demand.

 

The undersigned hereby authorize(s) Bank to disburse the proceeds of the Advance being requested by this Request for Advance by crediting the account of the undersigned with Bank separately designated by the undersigned, unless this Request for Advance is being submitted for a conversion or refunding of all or any part of any outstanding Advance(s), in which case, such proceeds shall be deemed to be utilized, to the extent necessary, to refund or convert that portion stated above of the existing outstandings under such Advance(s).

 

Capitalized terms used but not otherwise defined herein shall have the respective meanings given to them in the Note.

 

Dated this              day of                                                    .

 

	BORROWER:
	PRESENTATION TECHNOLOGIES, LLC
	By:
		Name:
		Title:

 

*                  INSERT, AS APPLICABLE, “LIBOR-BASED” OR “DAILY ADJUSTING LIBOR RATE”.

 

**           FOR A LIBOR-BASED ADVANCE, INSERT THE APPLICABLE INTEREST PERIOD (I.E., “ONE (1)”, “TWO (2)” OR “THREE (3)” MONTHS).

 

MASTER REVOLVING NOTE — EXHIBIT A

 

Exhibit 10.4

 

Execution Version

 

 

Draw Term Note

 

AMOUNT	NOTE DATE	MATURITY DATE
$ 2,000,000.00	November 1, 2017	November 1, 2022

 

FOR VALUE RECEIVED, the undersigned promise(s) to pay to the order of COMERICA BANK (herein called “Bank”), at any office of the Bank in the State of Texas, the principal sum of TWO MILLION and NO/100DOLLARS ($2,000,000.00), or so much of said sum as has been advanced and is then outstanding under this Note, together with interest thereon as hereinafter set forth.

 

This Note is a note under which Advances shall be made, subject to the terms and conditions of this Note and that certain Credit Agreement dated effective as of the date hereof between the undersigned and Bank (as the same has been and may be amended, restated or modified from time to time, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein will have the meaning given such terms in the Credit Agreement.

 

Subject to the terms and conditions of this Note, the unpaid principal balance of all Indebtedness outstanding under this Note from time to time shall bear interest at the Applicable Interest Rate.

 

This Note is a note under which Advances in an aggregate principal amount not to exceed the Loan Amount may be made from time to time up and until November 1, 2019, subject to the terms of this Note.  The principal amount under this Note shall be the sum of all Advances made by the Bank to or at the request of the undersigned, less principal payments actually received in cash by the Bank.  When the aggregate principal amount of all Advances made at any time under this Note equals the Loan Amount, no further Advances shall be available under this Note.  Amounts advanced under this Note cannot be reborrowed, regardless of any repayments, whether voluntarily, by required payment or otherwise.  A refunding of an outstanding Advance as the same type of Advance or the conversion of an outstanding Advance to another type of Advance in accordance with the foregoing shall not be deemed to be a repayment of an Advance or a reborrowing under this Note. No interest shall accrue under this Note until the date of the first Advance made by the Bank; after that, interest on all Advances shall accrue and be computed on the principal balance outstanding from time to time under this Note in accordance with the terms hereof until the same is paid in full.

 

AT NO TIME SHALL THE BANK BE UNDER ANY OBLIGATION TO MAKE ANY ADVANCES TO THE UNDERSIGNED PURSUANT TO THIS NOTE (NOTWITHSTANDING ANYTHING EXPRESSED OR IMPLIED IN THIS NOTE OR ELSEWHERE TO THE CONTRARY, INCLUDING, WITHOUT LIMITATION, IF BANK SUPPLIES THE UNDERSIGNED WITH A BORROWING FORMULA) IN THE EVENT THAT ANY DEFAULT, OR ANY CONDITION OR EVENT WHICH, WITH THE GIVING OF NOTICE OR THE RUNNING OF TIME, OR BOTH, WOULD CONSTITUTE A DEFAULT, SHALL HAVE OCCURRED AND BE CONTINUING OR EXIST, IN WHICH EVENT, BANK, AT ANY TIME AND FROM TIME TO TIME, WITHOUT NOTICE, AND IN ITS SOLE DISCRETION, MAY REFUSE TO MAKE ADVANCES TO THE UNDERSIGNED WITHOUT INCURRING ANY LIABILITY DUE TO THIS REFUSAL AND WITHOUT AFFECTING THE UNDERSIGNED’S LIABILITY UNDER THIS NOTE FOR ANY AND  ALL AMOUNTS ADVANCED.

 

Interest accruing hereunder on the basis of the Daily Adjusting LIBOR Rate and on the basis of the Prime Referenced Rate (to the extent applicable) shall be computed on the basis of a 360-day year if this Note evidences a business or commercial loan or a 365/366-day year if a consumer loan, and shall be assessed for the actual number of days elapsed, and in such computation, effect shall be given to any change in the Applicable Interest Rate as a result of any change in the Daily Adjusting LIBOR Rate or, to the extent applicable, the Prime Referenced Rate, on the date of each such change.  Interest accruing on the basis of the LIBOR-based Rate shall be computed on the basis of a 360 day year and shall be assessed for the actual number of days elapsed from the first day of the Interest Period applicable thereto but not including the last day thereof.

 

The outstanding principal amount of each Advance shall be payable in monthly payments equal to 1/120th of the original principal amount of such Advance, PLUS interest, commencing on the first business day of the next calendar month following the date of such Advance and on each succeeding Installment Payment Date thereafter. The entire remaining unpaid balance of principal and accrued interest on this Note shall be payable on the Maturity Date set forth above.

 

Payments under this Note shall be first applied to accrued and unpaid interest hereunder and the balance, if any, to principal.

 

In the event the periodic installments set forth above are inclusive of interest, the undersigned hereby acknowledge(s) and agree(s) that such installments are based upon the original principal amount of Indebtedness outstanding under this Note, an assumed fixed rate of interest, and an assumed amortization term, notwithstanding the fact that the Applicable Interest Rate may change from time to time during the term of this Note. Therefore, in the event that the Applicable Interest Rate changes at any time as a result of any change(s) in the Daily Adjusting LIBOR Rate or, to the extent applicable, the Prime Referenced Rate, Bank may, in its sole discretion, recalculate

 

*                  INSERT, AS APPLICABLE, “LIBOR-BASED” OR “DAILY ADJUSTING LIBOR RATE”.

 

**           FOR A LIBOR-BASED ADVANCE, INSERT THE APPLICABLE INTEREST PERIOD (I.E., “ONE (1)”, “TWO (2)” OR “THREE (3)” MONTHS).

 

1

 

the installments of principal and interest required to be made by the undersigned under and pursuant to the terms of this Note, and the undersigned agree(s) to pay such installments as they may be recalculated by Bank, and the undersigned acknowledge(s) and agree(s) that any such recalculation shall not affect the Maturity Date of this Note or any other terms or provisions herein set forth.

 

From and after the occurrence of any Default hereunder, and so long as any such Default remains unremedied or uncured thereafter, the Indebtedness outstanding under this Note shall bear interest at a per annum rate of three percent (3%) above the otherwise Applicable Interest Rate, which interest shall be payable upon demand. In addition to the foregoing, a late payment charge equal to five percent (5%) of each late payment hereunder may be charged on any payment not received by Bank within ten (10) calendar days after the payment due date therefor, but acceptance of payment of any such charge shall not constitute a waiver of any Default hereunder.

 

In no event shall the interest payable under this Note at any time exceed the Maximum Rate.  The term “Maximum Rate”, as used herein, shall mean at the particular time in question the maximum nonusurious rate of interest which, under applicable law, may then be charged on this Note.  If on any day the Applicable Interest Rate hereunder in respect of any Indebtedness under this Note shall exceed the Maximum Rate for that day, the rate of interest applicable to such Indebtedness shall be fixed at the Maximum Rate on that day and on each day thereafter until the total amount of interest accrued on the unpaid principal balance of this Note equals the total amount of interest which would have accrued if there had been no Maximum Rate. If such maximum rate of interest changes after the date hereof, the Maximum Rate shall be automatically increased or decreased, as the case may be, without notice to the undersigned from time to time as of the effective date of each change in such maximum rate.  For purposes of determining the Maximum Rate under the law of the State of Texas, the applicable interest rate ceiling shall be the “weekly ceiling” from time to time in effect under Chapter 303 of the Texas Finance Code, as amended.

 

The amount from time to time outstanding under this Note and the date of each Advance, the applicable interest rate and the amount and date of any repayment shall be noted on Bank’s records, which records shall be conclusive evidence thereof, absent manifest error; provided , however , any failure by Bank to make any such notation, or any error in any such notation, shall not relieve the undersigned of its/their obligations to repay Bank all amounts payable by the undersigned to Bank under or pursuant to this Note, when due in accordance with the terms hereof.

 

The undersigned may request an Advance hereunder either (i) upon the delivery to Bank of a written Request for Advance duly completed and executed by the undersigned (as herein provided) or, (ii) to the extent applicable, pursuant to a request submitted through Bank’s Loan Management System (each a “Request”), in each case, subject to the following: (a) no Default, or any condition or event which, with the giving of notice or the running of time, or both, would constitute a Default, shall have occurred and be continuing or exist under this Note; (b) each such Request shall be delivered to Bank by 11:00 a.m. ( Detroit, Michigan time) on the proposed date of the requested Advance; (c) after giving effect to such Advance, the aggregate principal amount of Advances made under this Note (excluding refundings and conversions of outstanding Advances) shall not exceed the Loan Amount; (d) a Request, once delivered or submitted  to Bank, shall not be revocable by the undersigned; and (e) the amount of such Advance must be at least Two Hundred Fifty Thousand Dollars ($250,000.00) (or such lesser amount as is acceptable to Bank in its sole discretion).  As aforesaid, any amount(s) repaid under this Note may not be reborrowed.

 

The undersigned may elect the LIBOR-based Rate or the Daily Adjusting LIBOR Rate as the basis for the Applicable Interest Rate for all or any part of the unpaid principal balance outstanding under this Note, subject to the following: (a) the undersigned shall, by 11:00 a.m. (Detroit, Michigan time) on the proposed effective date of such election, (i) deliver to Bank a Notice of Interest Rate executed by the undersigned setting forth the information required on the Notice of Interest Rate form attached hereto as Exhibit “A”, or (ii) to the extent applicable, submit such election through Bank’s Loan Management System  (each an “Election”); (b) any conversion from an Applicable Interest Rate based upon the LIBOR-based Rate to an Applicable Interest Rate based upon the Daily Adjusting LIBOR Rate or (subject to the terms of this Note) based upon the Prime Referenced Rate shall only be effective as of the last day of the Interest Period applicable to such LIBOR-based Rate; and (c) in the case of a LIBOR-based Rate Election, (i) the principal Indebtedness outstanding under this Note which is to bear interest on the basis of the relevant LIBOR-based Rate for the applicable Interest Period must be at least Two Hundred Fifty Thousand Dollars ($250,000.00) (or such lesser amount as is acceptable to Bank in its sole discretion) as of the first day of such Interest Period; (ii) no Default, or any condition or event which, with the giving of notice or the running of time, or both, would constitute a Default, shall have occurred and be continuing or exist under this Note; (iii) if, at the time of any such Election, the LIBOR-based Rate is the basis for the Applicable Interest Rate with respect to all or any part of the Indebtedness which is to be subject to such Election, such Election shall be effective only as of the last day of the Interest Period applicable to such existing LIBOR-based Rate; (iv) the undersigned shall elect Interest Periods hereunder so as to permit the undersigned to make any mandatory principal payments required under the terms of this Note, when due in accordance with the terms hereof, without prepaying any Indebtedness hereunder which is then bearing interest on the basis of the LIBOR-based Rate prior to the end of the Interest Period applicable thereto; and (v) any LIBOR-based Rate Election by the undersigned hereunder shall not be revocable by the undersigned. Any election by the undersigned of an Applicable Interest Rate based upon the Daily Adjusting LIBOR Rate for all or any part of the Indebtedness hereunder shall remain in effect, and the Daily Adjusting LIBOR Rate shall continue to be the basis for the Applicable Interest Rate for such Indebtedness hereunder, unless and until Bank receives an Election from the undersigned in accordance with the foregoing, making a LIBOR-based Rate Election hereunder in respect of such Indebtedness, subject in all respects to the terms and conditions of this Note.

 

In the event that the undersigned is unable to submit an Election of an Applicable Interest Rate or an applicable Interest Period hereunder through the Bank’s Loan Management System, the undersigned may submit or deliver a written Notice of Interest Rate, duly

 

2

 

completed and executed by the undersigned, to Bank by hand delivery, first class mail, overnight courier, facsimile, email or other means of delivery acceptable to Bank. Elections of Applicable Interest Rates and applicable Interest Periods hereunder may be submitted in the undersigned’s discretion by telephonic notice to Bank. Any such election submitted by telephonic notice shall be confirmed by the undersigned that same day by submission to Bank of a written Notice of Interest Rate, as provided herein. The undersigned acknowledge(s) that if the undersigned elect(s) an Applicable Interest Rate and/or Interest Period by telephone, facsimile, email or other means of delivery (other than by hand delivery, first class mail or overnight courier), it shall be for the undersigned’s convenience and all risks involved in the use of any such procedure shall be borne by the undersigned, and the undersigned expressly agree(s) to indemnify and hold Bank harmless therefor.  Bank shall have no duty to confirm the authority of anyone making such an election or request by telephone, facsimile, email or any such other means of delivery. In the event that the undersigned elect(s) to make or submit any such election or request by telephonic notice, facsimile, email or other means of delivery acceptable to Bank, the undersigned acknowledge(s) and agree(s) that Bank may impose or require such verification, authentication and other procedures as Bank may require from time to time.

 

In the event that the LIBOR-based Rate is at any time the basis for the Applicable Interest Rate for all or any part of the principal Indebtedness outstanding under this Note, effective as of the last day of the Interest Period applicable to such LIBOR-based Rate and as of the last day of each succeeding Interest Period, the LIBOR-based Rate for such Indebtedness shall be determined as of each such date in accordance with the terms of this Note, and the LIBOR-based Rate shall continue to be the basis for the Applicable Interest Rate for and in respect of such  Indebtedness for successive Interest Periods equal to the same period of time as the Interest Period then ending for such LIBOR-based Rate (but not less than one (1) month), unless and until the Bank receives an Election from the undersigned in accordance with the terms of this Note requesting a LIBOR-based Rate with an Interest Period having a duration different from the Interest Period then in effect or requesting the conversion to the Daily Adjusting LIBOR Rate as the basis for the Applicable Interest Rate for such Indebtedness hereunder; or unless the undersigned is/are not entitled to elect the LIBOR-based Rate as the basis for the Applicable Interest Rate for all or any part of the principal Indebtedness outstanding hereunder in accordance with the terms of this Note or the LIBOR-based Rate is not otherwise available to the undersigned as the basis for the Applicable Interest Rate for all or any part of the principal Indebtedness outstanding hereunder in accordance with the terms of this Note, in which case, the Daily Adjusting LIBOR Rate or (subject to the terms of this Note) the Prime Referenced Rate, shall be the basis for the Applicable Interest Rate hereunder in respect of such Indebtedness for such period, subject in all respects to the terms and conditions of this Note. The foregoing shall not in any way whatsoever limit or otherwise affect any of Bank’s rights or remedies under this Note upon the occurrence of any Default or Event of Default hereunder.

 

Subject to the definition of an “Interest Period” hereunder, in the event that any payment under this Note becomes due and payable on any day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day, and, to the extent applicable, interest shall continue to accrue and be payable thereon during such extension at the rates set forth in this Note.

 

All payments to be made by the undersigned to Bank under or pursuant to this Note shall be in immediately available United States funds, without setoff or counterclaim, and in the event that any payments submitted hereunder are in funds not available until collected, said payments shall continue to bear interest until collected.

 

In the event that the LIBOR-based Rate is the basis for the Applicable Interest Rate for all or any part of the principal Indebtedness outstanding under this Note, and any payment or prepayment of any such Indebtedness shall occur on any day other than the last day of the Interest Period applicable thereto (whether voluntarily, by acceleration, required payment or otherwise), or if the undersigned make(s) a LIBOR-based Rate Election with respect to all or any part of the principal indebtedness outstanding under this Note in accordance with the terms and conditions hereof, and, subsequent to such election, but prior to the commencement of the Interest Period applicable thereto, the undersigned (or any of them) revoke(s) such election for any reason whatsoever, or if the undersigned shall fail to make any payment of principal or interest hereunder at any time that the LIBOR-based Rate is the basis for the Applicable Interest Rate hereunder in respect of such Indebtedness, the undersigned shall reimburse Bank, on demand, for any resulting loss, cost or expense incurred by Bank as a result thereof, including, without limitation, any such loss, cost or expense incurred in obtaining, liquidating, employing or redeploying deposits from third parties.  Such amount payable by the undersigned to Bank may include, without limitation, an amount equal to the excess, if any, of (a) the amount of interest which would have accrued on the amount so prepaid, for the period from the date of such prepayment through the last day of the relevant Interest Period, at the applicable rate of interest provided under this Note, over (b) the amount of interest (as reasonably determined by Bank) which would have accrued to Bank on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market.  Calculation of any amounts payable to Bank under this paragraph shall be made as though Bank shall have actually funded or committed to fund the relevant Indebtedness hereunder through the purchase of an underlying deposit in an amount equal to the amount of such Indebtedness and having a maturity comparable to the relevant Interest Period; provided, however, that Bank may fund the Indebtedness hereunder in any manner it deems fit and the foregoing assumptions shall be utilized only for the purpose of the calculation of amounts payable under this paragraph.  Upon the written request of the undersigned, Bank shall deliver to the undersigned a certificate setting forth the basis for determining such losses, costs and expenses, which certificate shall be conclusively presumed correct, absent manifest error. The undersigned may prepay at any time all or any part of the outstanding balance of any Indebtedness hereunder which is bearing interest at such time based upon the Daily Adjusting LIBOR Rate or any Indebtedness hereunder which is bearing interest based upon the Prime Referenced Rate at any such time without premium or penalty. Any prepayment hereunder shall also be accompanied by the payment of all accrued and unpaid interest on the amount so prepaid. Partial prepayments hereunder shall be applied to the installments hereunder in the inverse order of their maturities.

 

3

 

For any Indebtedness hereunder for which the Applicable Interest Rate is at any time based upon the LIBOR-based Rate or the Daily Adjusting LIBOR Rate, if Bank shall designate a LIBOR Lending Office which maintains books separate from those of the rest of Bank, Bank shall have the option of maintaining and carrying this Note and the relevant Indebtedness hereunder on the books of such LIBOR Lending Office.

 

If, at any time, Bank determines that, (a) Bank is unable to determine or ascertain the LIBOR-based Rate or the Daily Adjusting LIBOR Rate, or (b) by reason of circumstances affecting the foreign exchange and interbank markets generally, deposits in eurodollars in the applicable amounts or for the relative maturities are not being offered to Bank for any applicable Interest Period, or (c) the Applicable Interest Rate will not accurately or fairly cover or reflect the cost to Bank of maintaining any of the Indebtedness under this Note based upon the LIBOR-based Rate or the Daily Adjusting LIBOR Rate, then Bank shall forthwith give notice thereof to the undersigned.  Thereafter, until Bank notifies the undersigned that such conditions or circumstances no longer exist, any obligation of the Bank to maintain any of the Indebtedness outstanding under this Note at an Applicable Interest Rate based upon the LIBOR-based Rate or the Daily Adjusting LIBOR Rate shall be suspended, and the Prime Referenced Rate shall be the basis for the Applicable Interest Rate for all Indebtedness hereunder during such period of time.

 

If any Change in Law shall make it unlawful or impossible for the Bank (or its LIBOR Lending Office) to maintain any of the Indebtedness under this Note with interest based upon the LIBOR-based Rate or the Daily Adjusting LIBOR Rate, Bank shall forthwith give notice thereof to the undersigned.  Thereafter, (a) until Bank notifies the undersigned that such conditions or circumstances no longer exist, any obligation of the Bank to maintain any of the Indebtedness hereunder at an Applicable Interest Rate based  upon the LIBOR-based Rate or the Daily Adjusting LIBOR Rate  and the right of the undersigned to make a LIBOR-based Rate Election with respect to the Indebtedness outstanding under this Note shall be suspended, and thereafter, the Prime Referenced Rate shall be the basis for the Applicable Interest Rate for the Indebtedness hereunder during such period of time, and (b) if Bank may not lawfully continue to maintain the Indebtedness hereunder at an Applicable Interest Rate based upon the LIBOR-based Rate to the end of the then current Interest Period applicable thereto, the Prime Referenced Rate shall be the basis for the Applicable Interest Rate for the remainder of such Interest Period.

 

If any Change in Law shall (a) subject Bank (or its LIBOR Lending Office) to any tax, duty or other charge with respect to this Note or any Indebtedness hereunder, or shall change the basis of taxation of payments to Bank (or its LIBOR Lending Office) of the principal of or interest under this Note or any other amounts due under this Note in respect thereof (except for changes in the rate of tax on the overall net income of Bank or its LIBOR Lending Office imposed by the jurisdiction in which Bank’s principal executive office or LIBOR Lending Office is located); or (b) impose, modify or deem applicable any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by Bank (or its LIBOR Lending Office), or shall impose on Bank (or its LIBOR Lending Office) or the foreign exchange and interbank markets any other condition affecting this Note or the Indebtedness hereunder; and the result of any of the foregoing is to increase the cost to Bank of maintaining any part of the Indebtedness hereunder or to reduce the amount of any sum received or receivable by Bank under this Note by an amount deemed by the Bank to be material, then the undersigned shall pay to Bank, within fifteen (15) days of the undersigned’s receipt of written notice from Bank demanding such compensation, such additional amount or amounts as will compensate Bank for such increased cost or reduction.  A certificate of Bank, prepared in good faith and in reasonable detail by Bank and submitted by Bank to the undersigned, setting forth the basis for determining such additional amount or amounts necessary to compensate Bank shall be conclusive and binding for all purposes, absent manifest error.

 

In the event that any Change in Law affects or would affect the amount of capital or liquidity required or expected to be maintained by Bank (or any corporation controlling Bank), and Bank determines that the amount of such capital or liquidity is increased by or based upon the existence of any obligations of Bank hereunder or the maintaining of any Indebtedness hereunder, and such increase has the effect of reducing the rate of return on Bank’s (or such controlling corporation’s) capital as a consequence of such obligations or the maintaining of such Indebtedness hereunder to a level below that which Bank (or such controlling corporation) could have achieved but for such circumstances (taking into consideration its policies with respect to capital adequacy and liquidity), then the undersigned shall pay to Bank, within fifteen (15) days of the undersigned’s receipt of written notice from Bank demanding such compensation, additional amounts as are sufficient to compensate Bank (or such controlling corporation) for any increase in the amount of capital and/or liquidity and reduced rate of return which Bank reasonably determines to be allocable to the existence of any obligations of the Bank hereunder or to maintaining any Indebtedness hereunder.  A certificate of Bank as to the amount of such compensation, prepared in good faith and in reasonable detail by the Bank and submitted by Bank to the undersigned, shall be conclusive and binding for all purposes absent manifest error.

 

This Note and any other Indebtedness are secured by and the Bank is granted a security interest in and lien upon the Collateral. Notwithstanding the above, (i) to the extent that any portion of the Indebtedness is a consumer loan, that portion shall not be secured by any deed of trust or mortgage on or other security interest in any of the undersigned’s principal dwelling or in any of the undersigned’s real property which is not a purchase money security interest as to that portion, unless expressly provided to the contrary in another place, or (ii) if the undersigned (or any of them) has (have) given or give(s) Bank a deed of trust or mortgage covering California real property, that deed of trust or mortgage shall not secure this Note or any other indebtedness of the undersigned (or any of them), unless expressly provided to the contrary in another place, or (iii) if the undersigned (or any of them) has (have) given or give(s) the Bank a deed of trust or mortgage covering real property which, under Texas law, constitutes the homestead of such person, that deed of trust or mortgage shall not secure this Note or any other indebtedness of the undersigned (or any of them) unless expressly provided to the contrary in another place.

 

4

 

Upon the occurrence and during the continuance of an Event of Default, the Bank may, at its option and without prior notice to the undersigned (or any of them), cease advancing money or extending credit to or for the benefit of the undersigned under this Note or any other Loan Document, terminate this Note as to any future liability or obligation of Bank, but without affecting Bank’s rights and security interests in any Collateral and the Indebtedness of the undersigned to Bank, declare any or all of the Indebtedness to be immediately due and payable (notwithstanding any provisions contained in the evidence of it to the contrary), sell or liquidate all or any portion of the Collateral, set off against the Indebtedness any amounts owing by the Bank to the undersigned (or any of them), charge interest at the default rate provided in the document evidencing the relevant Indebtedness and exercise any one or more of the rights and remedies granted to the Bank by any Loan Document or given to it under applicable law.

 

The undersigned authorize(s) the Bank to charge any account(s) of the undersigned (or any of them) with the Bank for any and all sums due hereunder when due; provided, however, that such authorization shall not affect any of the undersigned’s obligation to pay to the Bank all amounts when due, whether or not any such account balances that are maintained by the undersigned with the Bank are insufficient to pay to the Bank  any amounts when due, and to the extent that such accounts are insufficient to pay to the Bank all such amounts, the undersigned shall remain liable for any deficiencies until paid in full.

 

If this Note is signed by two or more parties (whether by all as makers or by one or more as an accommodation party or otherwise), the obligations and undertakings under this Note shall be that of all and any two or more jointly and also of each severally. This Note shall bind the undersigned, and the undersigned’s respective heirs, personal representatives, successors and assigns.

 

The undersigned waive(s) presentment, demand, protest, notice of dishonor, notice of demand or intent to demand, notice of acceleration or intent to accelerate, and all other notices, and agree(s) that no extension or indulgence to the undersigned (or any of them) or release, substitution or nonenforcement of any security, or release or substitution of any of the undersigned, any guarantor or any other party, whether with or without notice, shall affect the obligations of any of the undersigned. The undersigned waive(s) all defenses or right to discharge available under Section  3-605 of the Uniform Commercial Code and waive(s) all other suretyship defenses or right to discharge. The undersigned agree(s) that the Bank has the right to sell, assign, or grant participations or any interest in, any or all of the Indebtedness, and that, in connection with this right, but without limiting its ability to make other disclosures to the full extent allowable, the Bank may disclose all documents and information which the Bank now or later has relating to the undersigned or the Indebtedness.  The undersigned agree(s) that the Bank may provide information relating to this Note or relating to the undersigned to the Bank’s parent, affiliates, subsidiaries and service providers.

 

The undersigned agree(s) to pay or reimburse to Bank, or any other holder or owner of this Note, on demand, (a) all actual, out-of-pocket costs, expenses, fees and charges paid or incurred by Bank (including, without limitation, Bank’s reasonable attorneys’ fees and costs and/or fees and transfer charges in connection with the preparation, closing and consummation of this Note and/or the other Loan Documents and/or the Loans or transactions contemplated hereby or thereby, or in connection with the administration of this Note or the Indebtedness and (b) all costs, expenses, fees and charges paid or incurred by Bank (including, without limitation, Bank’s attorneys’ fees and costs and/or fees, transfer charges and costs of Bank’s in-house counsel), in connection with the enforcement in any other matter or proceeding relating to this Note or the Indebtedness.

 

The undersigned acknowledge(s) and agree(s) that there are no contrary agreements, oral or written, establishing a term of this Note and agree(s) that the terms and conditions of this Note may not be amended, waived or modified except in a writing signed by an officer of the Bank expressly stating that the writing constitutes an amendment, waiver or modification of the terms of this Note. As used in this Note, the word “undersigned” means, individually and collectively, each maker, accommodation party, endorser and other party signing this Note in a similar capacity. If any provision of this Note is unenforceable in whole or part for any reason, the remaining provisions shall continue to be effective. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.  Chapter 346 of the Texas Finance Code (and as the same may be incorporated by reference in other Texas statutes) shall not apply to the Indebtedness evidenced by this Note.

 

This Note and all other Loan Documents (whether executed and delivered prior to, concurrently with or subsequent to this Note), as such Loan Documents may have been or may hereafter be amended from time to time are intended to be performed in accordance with, and only to the extent permitted by, all applicable usury laws.  If any provision hereof or of any of the other Loan Documents or the application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, neither the application of such provision to any other person or circumstance nor the remainder of the instrument in which such provision is contained shall be affected thereby and shall be enforced to the greatest extent permitted by law.  It is expressly stipulated and agreed to be the intent of the holder hereof to at all times comply with the usury and other applicable laws now or hereafter governing the interest payable on the indebtedness evidenced by this Note.  If the applicable law is ever revised, repealed or judicially interpreted so as to render usurious any amount called for under this Note or under any of the other Loan Documents, or contracted for, charged, taken, reserved or received with respect to the indebtedness evidenced by this Note, or if Bank’s exercise of the option to accelerate the maturity of this Note, or if any prepayment by the undersigned or prepayment agreement results (or would, if complied with, result) in the undersigned having paid, contracted for or being charged for any interest in excess of that permitted by law, then it is the express intent of the undersigned and Bank that this Note and the other Loan Documents shall be limited to the extent necessary to prevent such result and all excess amounts theretofore collected by Bank shall be credited on the principal balance of this Note or, if fully paid, upon such other Indebtedness as shall then remain outstanding (or, if this Note and all other Indebtedness have been paid in full, refunded to the undersigned), and the provisions of this Note and the other Loan Documents shall immediately be deemed reformed

 

5

 

and the amounts thereafter collectable hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the then applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder or thereunder.  All sums paid, or agreed to be paid, by the undersigned for the use, forbearance, detention, taking, charging, receiving or reserving of the indebtedness of the undersigned to Bank under this Note or arising under or pursuant to the other Loan Documents shall, to the maximum extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the rate or amount of interest on account of such indebtedness does not exceed the usury ceiling from time to time in effect and applicable to such indebtedness for so long as such indebtedness is outstanding.  To the extent federal law permits Bank to contract for, charge or receive a greater amount of interest, Bank will rely on federal law instead of the Texas Finance Code, as supplemented by Texas Credit Title, for the purpose of determining the Maximum Rate.  Additionally, to the maximum extent permitted by applicable law now or hereafter in effect, Bank may, at its option and from time to time, implement any other method of computing the Maximum Rate under the Texas Finance Code, as supplemented by Texas Credit Title, or under other applicable law, by giving notice, if required, to the undersigned as provided by applicable law now or hereafter in effect.  Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, it is not the intention of Bank to accelerate the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration.

 

For the purposes of this Note, the following terms have the following meanings:

 

“Advance” means a borrowing requested by the undersigned and made by Bank under this Note.

 

“Applicable Interest Rate” means, in respect of all or any part of the Indebtedness hereunder, either the LIBOR-based Rate plus the Applicable Margin, the Daily Adjusting LIBOR Rate plus the Applicable Margin, or (subject to the terms of this Note) the Prime Referenced Rate plus the Applicable Margin, as selected by the undersigned from time to time or as otherwise determined in accordance with the terms and conditions of this Note.

 

“Applicable Margin” means:

 

(a)                                  in respect of the LIBOR—based Rate, three and one quarter percent (3.25%) per annum ; and

 

(b)                                  in respect of the Daily Adjusting LIBOR Rate and, to the extent applicable, the Prime Referenced Rate, three and one quarter percent (3.25%) per annum.

 

“Business Day” means any day, other than a Saturday, Sunday or any other day designated as a holiday under Federal or applicable State statute or regulation, on which Bank is open for all or substantially all of its domestic and international business (including dealings in foreign exchange) in Detroit, Michigan, and, in respect of notices and determinations relating to the the LIBOR-based Rate and Daily Adjusting LIBOR Rate, also a day on which dealings in dollar deposits are also carried on in the London interbank market and on which banks are open for business in London, England.

 

Change in Law” means the occurrence, after the date hereof, of any of the following: (i) the adoption or introduction of, or any change in any applicable law, treaty, rule or regulation (whether domestic or foreign) now or hereafter in effect and whether or not applicable to Bank on such date, or (ii) any change in interpretation, administration or implementation thereof of any such law, treaty, rule or regulation by any Governmental Authority, or (iii) the issuance, making or implementation by any Governmental Authority of any interpretation, administration, request, regulation, guideline, or directive (whether or not having the force of law),  including, without limitation, any risk-based capital guidelines or any interpretation, administration, request, regulation, guideline, or directive relating to liquidity. For purposes of this definition, (x) a change in law, treaty, rule, regulation, interpretation, administration or implementation shall include, without limitation, any change made or which becomes effective on the basis of a law, treaty, rule, regulation, interpretation administration or implementation then in force, the effective date of which change is delayed by the terms of such law, treaty, rule, regulation, interpretation, administration or implementation, and (y) the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173) and all requests, rules, regulations, guidelines, interpretations or directives promulgated thereunder or issued in connection therewith shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or promulgated, whether before or after the date hereof, and (z) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall each be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.

 

“Daily Adjusting LIBOR Rate” means, for any day, a per annum interest rate which is equal to the quotient of the following:

 

(a)                                  for any day, the per annum rate of interest determined on the basis of the rate for deposits in United States Dollars for a period equal to one (1) month appearing on Page BBAM of the Bloomberg Financial Markets Information Service at or about 11:00 a.m. (London, England time) (or as soon thereafter as practical) on such day, or if such day is not a Business Day, on the immediately preceding Business Day.  In the event that such rate does not appear on Page BBAM of the Bloomberg Financial Markets Information Service (or otherwise on such Service) on any day, the “Daily Adjusting LIBOR Rate” for such day shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be reasonably selected by Bank, or, in the absence of such other service, the “Daily Adjusting LIBOR Rate” for such day shall, instead, be

 

6

 

determined based upon the average of the rates at which Bank is offered dollar deposits at or about 11:00 a.m. (Detroit, Michigan time) (or as soon thereafter as practical), on such day, or if such day is not a Business Day, on the immediately preceding Business Day, in the interbank eurodollar market in an amount comparable to the principal amount of the Indebtedness outstanding hereunder which is to bear interest on the basis of such Daily Adjusting LIBOR Rate and for a period equal to one (1) month;

 

divided by

 

(b)                                  1.00 minus the maximum rate (expressed as a decimal) on such day at which Bank is required to maintain reserves on “Euro-currency Liabilities” as defined in and pursuant to Regulation D of the Board of Governors of the Federal Reserve System or, if such regulation or definition is modified, and as long as Bank is required to maintain reserves against a category of liabilities which includes eurodollar deposits or includes a category of assets which includes eurodollar loans, the rate at which such reserves are required to be maintained on such category;

 

provided , however , and notwithstanding anything to the contrary set forth in this Note, if at any time the Daily Adjusting LIBOR Rate determined as provided above would be less than zero percent (0%), then the Daily Adjusting LIBOR Rate shall be deemed to be zero percent (0%) per annum for all purposes of this Note (the “Daily Adjusting LIBOR 0% Floor”), except for any portion of any principal Indebtedness outstanding under this Note which, at any such time, is subject to any Specified Hedging Agreement, in which case, the Daily Adjusting LIBOR Rate for such portion of such Indebtedness shall be determined without giving effect to the Daily Adjusting LIBOR 0% Floor. Each calculation by Bank of the Daily Adjusting LIBOR Rate shall be conclusive and binding for all purposes, absent manifest error.

 

“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including, without limitation, any supranational bodies such as the European Union or the European Central Bank).

 

“Installment Payment Date” means December 1, 2017, and the first (1 st ) day of each succeeding month thereafter occurring during the term of this Note.

 

“Interest Period” means, a period of one (1) month, two (2) months, or three (3) months (or such shorter period as may be acceptable to Bank in its sole discretion), as selected by the undersigned (and which period is acceptable to Bank in its sole discretion), or as otherwise determined pursuant to and in accordance with the terms of this Note, commencing on the effective date of a LIBOR-based Rate Election by the undersigned with respect to all or any part of the Indebtedness hereunder, or in the case of successive continuations of the LIBOR-based Rate as the basis for the Applicable Interest Rate hereunder, as herein provided, on the last day of the preceding Interest Period then ending, provided that:

 

(a)                                  any Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day, except that if the next succeeding Business Day falls in another calendar month, the Interest Period shall end on the next preceding Business Day, and when an Interest Period begins on a day which has no numerically corresponding day in the calendar month during which such Interest Period is to end, it shall end on the last Business Day of such calendar month;

 

(b)                                  the undersigned shall elect Interest Periods hereunder so as to permit the undersigned to make the mandatory installment payments required under the terms of this Note, when due in accordance with the terms hereof, without prepaying any Indebtedness hereunder which is then bearing interest on the basis of the LIBOR-based Rate prior to the end of the Interest Period applicable thereto; and

 

(c)                                   no Interest Period shall extend beyond the Maturity Date.

 

“LIBOR-based Rate” means a per annum interest rate which is equal to the quotient of the following:

 

(a)                                  the LIBOR Rate;

 

divided by

 

(b)                                  1.00 minus the maximum rate (expressed as a decimal) during such Interest Period at which Bank is required to maintain reserves on “Euro-currency Liabilities” as defined in and pursuant to Regulation D of the Board of Governors of the Federal Reserve System or, if such regulation or definition is modified, and as long as Bank is required to maintain reserves against a category of liabilities which includes eurodollar deposits or includes a category of assets which includes eurodollar loans, the rate at which such reserves are required to be maintained on such category.

 

7

 

“LIBOR-based Rate Election” means an election by the undersigned of the LIBOR-based Rate as the basis for the Applicable Interest Rate for all or any part of the Indebtedness hereunder, subject to and in accordance with the terms and conditions of this Note.

 

“LIBOR Lending Office” means Bank’s office located in the Cayman Islands, British West Indies, or such other branch of Bank, domestic or foreign, as it may hereafter designate as its LIBOR Lending Office by notice to the undersigned.

 

“LIBOR Rate” means, with respect to any Indebtedness outstanding under this Note bearing interest on the basis of  the LIBOR-based Rate, the per annum rate of interest determined on the basis of the rate for deposits in United States Dollars for a period equal to the relevant Interest Period for such Indebtedness, commencing on the first day of such Interest Period, appearing on Page BBAM of the Bloomberg Financial Markets Information Service at or about 11:00 a.m. (London, England time) (or as soon thereafter as practical), two (2) Business Days prior to the first day of such Interest Period.  In the event that such rate does not appear on Page BBAM of the Bloomberg Financial Markets Information Service (or otherwise on such Service), the “LIBOR Rate” shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be reasonably selected by Bank, or, in the absence of such other service, the “LIBOR Rate” shall, instead, be determined based upon the average of the rates at which Bank is offered dollar deposits at or about 11:00 a.m. (Detroit, Michigan time) (or as soon thereafter as practical), two (2) Business Days prior to the first day of such Interest Period in the interbank eurodollar market in an amount comparable to the principal amount of the respective Indebtedness which is to bear interest on the basis of such LIBOR-based Rate and for a period equal to the relevant Interest Period; provided , however , and notwithstanding anything to the contrary set forth in this Note, if at any time the LIBOR Rate determined as provided above would be less than zero percent (0%), then the LIBOR Rate shall be deemed to be zero percent (0%) per annum for all purposes of this Note (the “LIBOR 0% Floor”), except for any portion of any principal Indebtedness outstanding under this Note which, at any such time, is/are subject to any Specified Hedging Agreement, in which case, the LIBOR Rate for such portion of such Indebtedness shall be determined without giving effect to the LIBOR 0% Floor. Each calculation by Bank of the LIBOR Rate shall be conclusive and binding for all purposes, absent manifest error.

 

“Loan Amount” means the face amount of this Note as set forth at the top of Page 1 hereof.

 

“Prime Rate” means the per annum interest rate established by Bank as its prime rate for its borrowers, as such rate may vary from time to time, which rate is not necessarily the lowest rate on loans made by Bank at any such time.

 

“Prime Referenced Rate” means a per annum interest rate which is equal to the Prime Rate.

 

“Request for Advance” means a Request for Advance issued by the undersigned under this Note in the form annexed to this Note as Exhibit “A”.

 

“Specified Hedging Agreement” means any agreement or other documentation between the undersigned (or any of them) and Bank providing for an interest rate swap that does not provide for a minimum rate of zero percent (0%) with respect to determinations of the LIBOR Rate or Daily Adjusting LIBOR Rate, as applicable, for the purposes of such interest rate swap (e.g., determines the floating amount by using the “negative interest rate method” rather than the “zero interest rate method” in the case of any such interest rate swap made under any master agreement or other documentation published by the International Swaps and Derivatives Association, Inc.).

 

No delay or failure of Bank in exercising any right, power or privilege hereunder shall affect such right, power or privilege, nor shall any single or partial exercise thereof preclude any further exercise thereof, or the exercise of any other power, right or privilege.  The rights of Bank under this Note are cumulative and not exclusive of any right or remedies which Bank would otherwise have, whether by other instruments or by law.

 

THE UNDERSIGNED AND BANK, BY ACCEPTANCE OF THIS NOTE, ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES.  TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.

 

THIS WRITTEN LOAN AGREEMENT (AS DEFINED BY SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE) REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

[Remainder of Page Intentionally Left Blank.  Signature Pages Follow.]

 

8

 

This Note is dated and shall be effective as of the date set forth above.

 

	BORROWER:
	PRESENTATION TECHNOLOGIES, LLC
	By:	/s/ Kevin Jost
		Kevin Jost
		President

 

			United States
Street Address	City	State	Country	Zip Code

 

For Bank Use Only
LOAN OFFICER INITIALS	LOAN GROUP NAME	OBLIGOR NAME
		Presentation Technologies, LLC
LOAN OFFICER I.D. NO.	LOAN GROUP NO.	OBLIGOR NO.	NOTE NO.	AMOUNT
				$2,000,000.00

 

DRAW TERM NOTE — SIGNATURE PAGE

 

 

EXHIBIT “A”

 

REQUEST FOR ADVANCE

 

The undersigned hereby request(s) COMERICA BANK (“Bank”) to make a                                                                                                                                                                          * Advance to the undersigned on                                                                                                                                           , in the amount of                                                     Dollars ($                                                                             ) under the Draw Term Note dated as of November 1, 2017, issued by the undersigned to said Bank in the face amount of Two Million and NO/100 Dollars ($2,000,000.00) (the “Note”). The Interest Period for the requested Advance, if applicable, shall be                                                                                                        (                                             ) ** month(s).  In the event that any part of the Advance requested hereby constitutes the refunding or conversion of an outstanding Advance, the amount to be refunded or converted is                                                                                                                                                                                                                                                                                                                                      Dollars ($                                                                                             ), and the last day of the Interest Period for the amounts being converted or refunded hereunder, if applicable, is                                                                                                    .

 

The undersigned represent(s), warrant(s) and certify(ies) that no Default, or any condition or event which, with the giving of notice or the running of time, or both, would constitute a Default, has occurred and is continuing under the Note, and none will exist upon the making of the Advance requested hereunder.  The undersigned further certify(ies) that upon advancing the sum requested hereunder, the aggregate principal amount outstanding under the Note will not exceed the face amount thereof. If the amount advanced to the undersigned under the Note shall at any time exceed the face amount thereof, the undersigned will immediately pay such excess amount, without any necessity of notice or demand.

 

The undersigned hereby authorize(s) Bank to disburse the proceeds of the Advance being requested by this Request for Advance by crediting the account of the undersigned with Bank separately designated by the undersigned, unless this Request for Advance is being submitted for a conversion or refunding of all or any part of any outstanding Advance(s), in which case, such proceeds shall be deemed to be utilized, to the extent necessary, to refund or convert that portion stated above of the existing outstandings under such Advance(s).

 

Capitalized terms used but not otherwise defined herein shall have the respective meanings given to them in the Note.

 

Dated this                                          day of                                                                                                                                                             .

 

	BORROWER:
	PRESENTATION TECHNOLOGIES, LLC
	By:
		Name:
		Title:

 

*                  INSERT, AS APPLICABLE, “LIBOR-BASED” OR “DAILY ADJUSTING LIBOR RATE”.

 

**           FOR A LIBOR-BASED ADVANCE, INSERT THE APPLICABLE INTEREST PERIOD (I.E., “ONE (1)”, “TWO (2)” OR “THREE (3)” MONTHS).

 

DRAW TERM NOTE — EXHIBIT A

 

Exhibit 10.5

 

Execution Version

 

 

Equipment Note

 

AMOUNT	NOTE DATE	MATURITY DATE
$3,000,000.00	November 1, 2017	November 1, 2022

 

On or before the maturity date set forth above (the “Maturity Date”), FOR VALUE RECEIVED, the undersigned promise(s) to pay to the order of COMERICA BANK (herein called “Bank”), at any office of the Bank in the State of Texas, the principal sum of THREE MILLION and 00/100 DOLLARS ($3,000,000.00), or so much of said sum as has been advanced and is then outstanding under this Note, together with interest thereon as hereinafter set forth.

 

This Note is a note under which Advances in an aggregate principal amount not to exceed the Loan Amount may be made from time to time, subject to the terms of this Note and that certain Credit Agreement dated effective as of the date hereof between the undersigned and Bank (as the same has been and may be amended, restated or modified from time to time, the “Credit Agreement”).  The principal amount under this Note shall be the sum of all Advances made by the Bank to or at the request of the undersigned, less principal payments actually received in cash by the Bank.  When the aggregate principal amount of all Advances made at any time under this Note equals the Loan Amount, no further Advances shall be available under this Note.  Amounts advanced under this Note cannot be reborrowed, regardless of any repayments, whether voluntarily, by required payment or otherwise.  A refunding of an outstanding Advance as the same type of Advance or the conversion of an outstanding Advance to another type of Advance in accordance with the foregoing shall not be deemed to be a repayment of an Advance or a reborrowing under this Note.  Capitalized terms used herein and not otherwise defined herein will have the meaning given such terms in the Credit Agreement.

 

On the earlier of (a) March 1 or September 1 of each calendar year or (b) the first Business Day of the next succeeding month following the date all outstanding Advances not yet converted to an Equipment Term Loan equals or exceeds $250,000 in the aggregate (each such date, a “Conversion Date”), the outstanding principal amount of such Advance(s) shall be converted to a term loan (each such term loan referred to herein as an “Equipment Term Loan”).  No payment of principal shall be required hereunder with respect to the outstanding principal amount of an Advance until such time as such Advance is converted into an Equipment Term Loan.  The outstanding principal amount of each Equipment Term Loan shall be payable in monthly payments equal to 1/60th of the original principal amount of such Equipment Term Loan, PLUS interest, commencing on the applicable Conversion Date and on the first Business Day of each month thereafter until the same is paid in full (whether in accordance with the terms hereof, by acceleration, or otherwise).

 

Each Advance made under this Note shall be for the sole and exclusive purpose of financing the undersigned’s purchase or acquisition of new machinery or equipment to be used in the ordinary course of the undersigned’s business. The principal amount of each Advance hereunder shall not exceed an amount equal to one hundred percent (100%) of the hard cost of the respective machinery or equipment to be purchased or acquired by the undersigned with the proceeds of such Advance, as evidenced by invoices and other documents reasonably acceptable to Bank.

 

AT NO TIME SHALL THE BANK BE UNDER ANY OBLIGATION TO MAKE ANY ADVANCES TO THE UNDERSIGNED PURSUANT TO THIS NOTE (NOTWITHSTANDING ANYTHING EXPRESSED OR IMPLIED IN THIS NOTE OR ELSEWHERE TO THE CONTRARY, INCLUDING, WITHOUT LIMITATION, IF BANK SUPPLIES THE UNDERSIGNED WITH A BORROWING FORMULA) IN THE EVENT THAT ANY EVENT OF DEFAULT, OR ANY CONDITION OR EVENT WHICH, WITH THE GIVING OF NOTICE OR THE RUNNING OF TIME, OR BOTH, WOULD CONSTITUTE AN EVENT OF DEFAULT, SHALL HAVE OCCURRED AND BE CONTINUING OR EXIST, IN WHICH EVENT, BANK, AT ANY TIME AND FROM TIME TO TIME, WITHOUT NOTICE, AND IN ITS SOLE DISCRETION, MAY REFUSE TO MAKE ADVANCES TO THE UNDERSIGNED WITHOUT INCURRING ANY LIABILITY DUE TO THIS REFUSAL AND WITHOUT AFFECTING THE UNDERSIGNED’S LIABILITY UNDER THIS NOTE FOR ANY AND  ALL AMOUNTS ADVANCED.

 

Subject to the terms and conditions of this Note, each of the Advances made hereunder shall bear interest at the Applicable Interest Rate, as elected by the undersigned or as otherwise determined under this Note.

 

Accrued and unpaid interest on the unpaid principal balance of each outstanding Advance hereunder shall be payable monthly, in arrears, on the first Business Day of each month, from the date made until the same is paid in full (whether in accordance with the terms hereof, by acceleration, or otherwise). Interest accruing on the basis of the Daily Adjusting LIBOR Rate and on the basis of the Prime Referenced Rate (to the extent applicable) shall be computed on the basis of a year of 360 days, and shall be assessed for the actual number of days elapsed, and in such computation, effect shall be given to any change in the Applicable Interest Rate as a result of any change in the Daily Adjusting LIBOR Rate or, to the extent applicable, the Prime Referenced Rate, on the date of each such change.  Interest accruing on the basis of the LIBOR-based Rate shall be computed on the basis of a 360 day year and shall be assessed for the actual number of days elapsed from the first day of the Interest Period applicable thereto but not including the last day thereof.

 

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From and after the occurrence of any Event of Default, and so long as any such Event of Default remains unremedied or uncured thereafter, the Indebtedness outstanding under this Note shall bear interest at a per annum rate of three percent (3%) above the otherwise Applicable Interest Rate(s), which interest shall be payable upon demand. In addition to the foregoing, a late payment charge equal to five percent (5%) of each late payment hereunder may be charged on any payment not received by Bank within ten (10) calendar days after the payment due date therefor, but acceptance of payment of any such charge shall not constitute a waiver of any Default hereunder.

 

In no event shall the interest payable under this Note at any time exceed the Maximum Rate.  The term “Maximum Rate”, as used herein, shall mean at the particular time in question the maximum nonusurious rate of interest which, under applicable law, may then be charged on this Note.  If on any day the Applicable Interest Rate(s) hereunder in respect of any Indebtedness under this Note shall exceed the Maximum Rate for that day, the rate of interest applicable to such Indebtedness shall be fixed at the Maximum Rate on that day and on each day thereafter until the total amount of interest accrued on the unpaid principal balance of this Note equals the total amount of interest which would have accrued if there had been no Maximum Rate. If such maximum rate of interest changes after the date hereof, the Maximum Rate shall be automatically increased or decreased, as the case may be, without notice to the undersigned from time to time as of the effective date of each change in such maximum rate.  For purposes of determining the Maximum Rate under the law of the State of Texas, the applicable interest rate ceiling shall be the “weekly ceiling” from time to time in effect under Chapter 303 of the Texas Finance Code, as amended.

 

The amount and date of each Advance, its Applicable Interest Rate, its Interest Period, if applicable, and the amount and date of any repayment shall be noted on Bank’s records, which records shall be conclusive evidence thereof, absent manifest error; provided , however , any failure by Bank to make any such notation, or any error in any such notation, shall not relieve the undersigned of its/their obligations to repay Bank all amounts payable by the undersigned to Bank under or pursuant to this Note, when due in accordance with the terms hereof.

 

The undersigned may request an Advance hereunder, including the refunding of an outstanding Advance as the same type of Advance or the conversion of an outstanding Advance to another type of Advance, either (i) upon the delivery to Bank of a written Request for Advance duly completed and executed by the undersigned (as herein provided) or, (ii) to the extent applicable, pursuant to a request submitted through Bank’s Loan Management System (each a “Request”), in each case, subject to the following: (a) no Event of Default, or any condition or event which, with the giving of notice or the running of time, or both, would constitute an Event of Default, shall have occurred and be continuing or exist under this Note; (b) each such Request shall be delivered to Bank by 11:00 a.m. (Detroit, Michigan time) on the proposed date of the requested Advance; (c) the principal amount of each LIBOR-based Advance shall be at least Twenty Thousand Dollars ($20,000.00) (or such lesser amount as is acceptable to Bank in its sole discretion); (d) the proposed date of any refunding of any outstanding LIBOR-based Advance as another LIBOR-based Advance or the conversion of any outstanding LIBOR-based Advance to another type of Advance shall only be on the last day of the Interest Period applicable to such outstanding LIBOR-based Advance; (e) after giving effect to such Advance, the aggregate principal amount of Advances made under this Note (excluding refundings and conversions of outstanding Advances) shall not exceed the Loan Amount; and (f) a Request, once delivered or submitted  to Bank, shall not be revocable by the undersigned. As aforesaid, any amount(s) repaid under this Note may not be reborrowed. A refunding of an outstanding Advance as the same type of Advance or the conversion of an outstanding Advance to another type of Advance in accordance with the foregoing shall not be deemed to be a repayment of an Advance or a reborrowing under this Note.

 

In the event that the undersigned is unable to request Advances hereunder through the Bank’s Loan Management System, Advances hereunder may be requested by delivery or submission to Bank by hand delivery, first class mail, overnight courier, facsimile, email or other means of delivery acceptable to Bank, of a written Request for Advance duly completed and executed by the undersigned. Advances hereunder may be requested in the undersigned’s discretion by telephonic notice to Bank. Any Advance requested by telephonic notice shall be confirmed by the undersigned that same day by submission to Bank of a written Request for Advance, as provided herein. The undersigned acknowledge(s) that if Bank makes an Advance based on a request made by telephone, facsimile, email or other means of delivery (other than by hand delivery, first class mail or overnight courier), it shall be for the undersigned’s convenience and all risks involved in the use of any such procedure shall be borne by the undersigned, and the undersigned expressly agree(s) to indemnify and hold Bank harmless therefor.  Bank shall have no duty to confirm the authority of anyone requesting an Advance by telephone, facsimile, email or any such other means of delivery. In the event that the undersigned elect(s) to request Advances by telephonic notice, facsimile, email or other means of delivery acceptable to Bank, the undersigned acknowledge(s) and agree(s) that Bank may impose or require such verification, authentication and other procedures as Bank may require from time to time.

 

If, as to any outstanding LIBOR-based Advance, Bank shall not receive a timely Request, or telephonic notice, in accordance with the foregoing requesting the refunding or continuation of such Advance as another LIBOR-based Advance for a specified Interest Period or the conversion of such Advance to a Daily Adjusting LIBOR Rate Advance, effective as of the last day of the Interest Period applicable to such outstanding LIBOR-based Advance, and as of the last day of each succeeding Interest Period, the principal amount of such Advance which is not then repaid shall be automatically refunded or continued as a LIBOR-based Advance having an Interest Period equal to the same period of time as the Interest Period then ending for such outstanding LIBOR-based Advance, unless the undersigned is/are not entitled to request LIBOR-based Advances hereunder or otherwise elect the LIBOR-based Rate as the basis for the Applicable Interest Rate for the principal Indebtedness outstanding hereunder in accordance with the terms of this Note, or the LIBOR-based Rate is not otherwise available to the undersigned as the basis for the Applicable Interest Rate hereunder for the principal Indebtedness outstanding hereunder in accordance with the terms of this Note, in which case, the Daily Adjusting LIBOR Rate

 

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or, to the extent applicable, the Prime Referenced Rate, shall be the basis for the Applicable Interest Rate hereunder in respect of such Indebtedness for such period, subject in all respects to the terms and conditions of this Note. The foregoing shall not in any way whatsoever limit or otherwise affect any of Bank’s rights or remedies under this Note upon the occurrence of any Default or Event of Default.

 

Subject to the definition of an “Interest Period” hereunder, in the event that any payment under this Note becomes due and payable on any day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day, and, to the extent applicable, interest shall continue to accrue and be payable thereon during such extension at the rates set forth in this Note.

 

All payments to be made by the undersigned to Bank under or pursuant to this Note shall be in immediately available United States funds, without setoff or counterclaim, and in the event that any payments submitted hereunder are in funds not available until collected, said payments shall continue to bear interest until collected.

 

If the undersigned make(s) any payment of principal with respect to any LIBOR-based Advance on any day other than the last day of the Interest Period applicable thereto (whether voluntarily, by acceleration, required payment or otherwise), or if the undersigned fail(s) to borrow any LIBOR-based Advance or fail(s) to refund an outstanding LIBOR-based Advance as a LIBOR-based Advance or to convert an outstanding Advance to a LIBOR-based Advance, in any such case, after notice has been given by the undersigned (or any of them) to Bank in accordance with the terms of this Note requesting such Advance, or such refunding or conversion, or if the undersigned fail(s) to make any payment of principal or interest in respect of a LIBOR-based Advance when due, the undersigned shall reimburse Bank, on demand, for any resulting loss, cost or expense incurred by Bank as a result thereof, including, without limitation, any such loss, cost or expense incurred in obtaining, liquidating, employing or redeploying deposits from third parties, whether or not Bank shall have funded or committed to fund such Advance.  Such amount payable by the undersigned to Bank may include, without limitation, an amount equal to the excess, if any, of (a) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, refunded or converted, for the period from the date of such prepayment or of such failure to borrow, refund or convert, through the last day of the relevant Interest Period, at the applicable rate of interest for said Advance(s) provided under this Note, over (b) the amount of interest (as reasonably determined by Bank) which would have accrued to Bank on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market.  Calculation of any amounts payable to Bank under this paragraph shall be made as though Bank shall have actually funded or committed to fund the relevant LIBOR-based Advance through the purchase of an underlying deposit in an amount equal to the amount of such Advance and having a maturity comparable to the relevant Interest Period; provided , however , that Bank may fund any LIBOR-based Advance in any manner it deems fit and the foregoing assumptions shall be utilized only for the purpose of the calculation of amounts payable under this paragraph.  Upon the written request of the undersigned, Bank shall deliver to the undersigned a certificate setting forth the basis for determining such losses, costs and expenses, which certificate shall be conclusively presumed correct, absent manifest error. The undersigned may prepay at any time all or part of the outstanding balance of any Daily Adjusting LIBOR Rate Advance under this Note or any Indebtedness hereunder which is bearing interest based upon the Prime Referenced Rate at any such time without premium or penalty. Any prepayment hereunder shall also be accompanied by the payment of all accrued and unpaid interest on the amount so prepaid.

 

For any LIBOR-based Advance or any Daily Adjusting LIBOR Rate Advance, if Bank shall designate a LIBOR Lending Office which maintains books separate from those of the rest of Bank, Bank shall have the option of maintaining and carrying such Advance on the books of such LIBOR Lending Office.

 

If, at any time, Bank determines that, (a) Bank is unable to determine or ascertain the LIBOR-based Rate or the Daily Adjusting LIBOR Rate, or (b) by reason of circumstances affecting the foreign exchange and interbank markets generally, deposits in eurodollars in the applicable amounts or for the relative maturities are not being offered to Bank for any applicable Advance or Interest Period, or (c) the Applicable Interest Rate will not accurately or fairly cover or reflect the cost to Bank of maintaining any of the Indebtedness under this Note based upon the LIBOR-based Rate or the Daily Adjusting LIBOR Rate, then Bank shall forthwith give notice thereof to the undersigned.  Thereafter, until Bank notifies the undersigned that such conditions or circumstances no longer exist, the right of the undersigned to request a LIBOR-based Advance or a Daily Adjusting LIBOR Rate Advance and to convert an Advance to or refund an Advance as a LIBOR-based Advance or a Daily Adjusting LIBOR Rate Advance shall be suspended, and the Prime Referenced Rate shall be the basis for the Applicable Interest Rate for all Indebtedness hereunder during such period of time.

 

If any Change in Law shall make it unlawful or impossible for the Bank (or its LIBOR Lending Office) to make or maintain any Advance with interest based upon the LIBOR-based Rate or the Daily Adjusting LIBOR Rate, Bank shall forthwith give notice thereof to the undersigned.  Thereafter, (a) until Bank notifies the undersigned that such conditions or circumstances no longer exist, the right of the undersigned to request a LIBOR-based Advance or a Daily Adjusting LIBOR Rate Advance and to convert an Advance to or refund an Advance as a LIBOR-based Advance or a Daily Adjusting LIBOR Rate Advance shall be suspended, and thereafter, the Prime Referenced Rate shall be the basis for the Applicable Interest Rate for the Indebtedness hereunder during such period of time, and (b) if Bank may not lawfully continue to maintain an outstanding LIBOR-based Advance to the end of the then current Interest Period applicable thereto, the Prime Referenced Rate shall be the basis for the Applicable Interest Rate for the remainder of such Interest Period with respect to such outstanding Advance.

 

If any Change in Law shall (a) subject Bank (or its LIBOR Lending Office) to any tax, duty or other charge with respect to this Note or any Indebtedness hereunder, or shall change the basis of taxation of payments to Bank (or its LIBOR Lending Office) of the principal of or interest under this Note or any other amounts due under this Note in respect thereof (except for changes in the rate of tax on the

 

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overall net income of Bank or its LIBOR Lending Office imposed by the jurisdiction in which Bank’s principal executive office or LIBOR Lending Office is located); or (b) impose, modify or deem applicable any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by Bank (or its LIBOR Lending Office), or shall impose on Bank (or its LIBOR Lending Office) or the foreign exchange and interbank markets any other condition affecting this Note or the Indebtedness hereunder; and the result of any of the foregoing is to increase the cost to Bank of maintaining any part of the Indebtedness hereunder or to reduce the amount of any sum received or receivable by Bank under this Note by an amount deemed by the Bank to be material, then the undersigned shall pay to Bank, within fifteen (15) days of the undersigned’s receipt of written notice from Bank demanding such compensation, such additional amount or amounts as will compensate Bank for such increased cost or reduction.  A certificate of Bank, prepared in good faith and in reasonable detail by Bank and submitted by Bank to the undersigned, setting forth the basis for determining such additional amount or amounts necessary to compensate Bank shall be conclusive and binding for all purposes, absent manifest error.

 

In the event that any Change in Law affects or would affect the amount of capital or liquidity required or expected to be maintained by Bank (or any corporation controlling Bank), and Bank determines that the amount of such capital or liquidity is increased by or based upon the existence of any obligations of Bank hereunder or the maintaining of any Indebtedness hereunder, and such increase has the effect of reducing the rate of return on Bank’s (or such controlling corporation’s) capital as a consequence of such obligations or the maintaining of such Indebtedness hereunder to a level below that which Bank (or such controlling corporation) could have achieved but for such circumstances (taking into consideration its policies with respect to capital adequacy and liquidity), then the undersigned shall pay to Bank, within fifteen (15) days of the undersigned’s receipt of written notice from Bank demanding such compensation, additional amounts as are sufficient to compensate Bank (or such controlling corporation) for any increase in the amount of capital and/or liquidity and reduced rate of return which Bank reasonably determines to be allocable to the existence of any obligations of the Bank hereunder or to maintaining any Indebtedness hereunder.  A certificate of Bank as to the amount of such compensation, prepared in good faith and in reasonable detail by the Bank and submitted by Bank to the undersigned, shall be conclusive and binding for all purposes absent manifest error.

 

This Note and any other Indebtedness are secured by and the Bank is granted a security interest in and lien upon the Collateral. Notwithstanding the above, (i) to the extent that any portion of the Indebtedness is a consumer loan, that portion shall not be secured by any deed of trust or mortgage on or other security interest in any of the undersigned’s principal dwelling or in any of the undersigned’s real property which is not a purchase money security interest as to that portion, unless expressly provided to the contrary in another place, or (ii) if the undersigned (or any of them) has (have) given or give(s) Bank a deed of trust or mortgage covering California real property, that deed of trust or mortgage shall not secure this Note or any other indebtedness of the undersigned (or any of them), unless expressly provided to the contrary in another place, or (iii) if the undersigned (or any of them) has (have) given or give(s) the Bank a deed of trust or mortgage covering real property which, under Texas law, constitutes the homestead of such person, that deed of trust or mortgage shall not secure this Note or any other indebtedness of the undersigned (or any of them) unless expressly provided to the contrary in another place.

 

Upon the occurrence and during the continuance of an Event of Default, the Bank may, at its option and without prior notice to the undersigned (or any of them), cease advancing money or extending credit to or for the benefit of the undersigned under this Note or any other Loan Document, terminate this Note as to any future liability or obligation of Bank, but without affecting Bank’s rights and security interests in any Collateral and the Indebtedness of the undersigned to Bank, declare any or all of the Indebtedness to be immediately due and payable (notwithstanding any provisions contained in the evidence of it to the contrary), sell or liquidate all or any portion of the Collateral, set off against the Indebtedness any amounts owing by the Bank to the undersigned (or any of them), charge interest at the default rate provided in the document evidencing the relevant Indebtedness and exercise any one or more of the rights and remedies granted to the Bank by any Loan Document or given to it under applicable law.

 

The undersigned authorize(s) the Bank to charge any account(s) of the undersigned (or any of them) with the Bank for any and all sums due hereunder when due; provided , however , that such authorization shall not affect any of the undersigned’s obligation to pay to the Bank all amounts when due, whether or not any such account balances that are maintained by the undersigned with the Bank are insufficient to pay to the Bank  any amounts when due, and to the extent that such accounts are insufficient to pay to the Bank all such amounts, the undersigned shall remain liable for any deficiencies until paid in full.

 

If this Note is signed by two or more parties (whether by all as makers or by one or more as an accommodation party or otherwise), the obligations and undertakings under this Note shall be that of all and any two or more jointly and also of each severally. This Note shall bind the undersigned, and the undersigned’s respective heirs, personal representatives, successors and assigns.

 

The undersigned waive(s) presentment, demand, protest, notice of dishonor, notice of demand or intent to demand, notice of acceleration or intent to accelerate, and all other notices, and agree(s) that no extension or indulgence to the undersigned (or any of them) or release, substitution or nonenforcement of any security, or release or substitution of any of the undersigned, any guarantor or any other party, whether with or without notice, shall affect the obligations of any of the undersigned. The undersigned waive(s) all defenses or right to discharge available under Section 3-605 of the Uniform Commercial Code and waive(s) all other suretyship defenses or right to discharge. The undersigned agree(s) that the Bank has the right to sell, assign, or grant participations or any interest in, any or all of the Indebtedness, and that, in connection with this right, but without limiting its ability to make other disclosures to the full extent allowable, the Bank may disclose all documents and information which the Bank now or later has relating to the

 

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undersigned or the Indebtedness.  The undersigned agree(s) that the Bank may provide information relating to this Note or relating to the undersigned to the Bank’s parent, affiliates, subsidiaries and service providers.

 

The undersigned agree(s) to pay or reimburse to Bank, or any other holder or owner of this Note, on demand, (a) all actual, out-of-pocket costs, expenses, fees and charges paid or incurred by Bank (including, without limitation, Bank’s reasonable attorneys’ fees and costs and/or fees and transfer charges in connection with the preparation, closing and consummation of this Note and/or the other Loan Documents and/or the Loans or transactions contemplated hereby or thereby, or in connection with the administration of this Note or the Indebtedness and (b) all costs, expenses, fees and charges paid or incurred by Bank (including, without limitation, Bank’s attorneys’ fees and costs and/or fees, transfer charges and costs of Bank’s in-house counsel), in connection with the enforcement in any other matter or proceeding relating to this Note or the Indebtedness.

 

The undersigned acknowledge(s) and agree(s) that there are no contrary agreements, oral or written, establishing a term of this Note and agree(s) that the terms and conditions of this Note may not be amended, waived or modified except in a writing signed by an officer of the Bank expressly stating that the writing constitutes an amendment, waiver or modification of the terms of this Note. As used in this Note, the word “undersigned” means, individually and collectively, each maker, accommodation party, endorser and other party signing this Note in a similar capacity. If any provision of this Note is unenforceable in whole or part for any reason, the remaining provisions shall continue to be effective.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. Chapter 346 of the Texas Finance Code (and as the same may be incorporated by reference in other Texas statutes) shall not apply to the Indebtedness evidenced by this Note.

 

This Note and all other Loan Documents (whether executed and delivered prior to, concurrently with or subsequent to this Note), as such Loan Documents may have been or may hereafter be amended from time to time are intended to be performed in accordance with, and only to the extent permitted by, all applicable usury laws.  If any provision hereof or of any of the other Loan Documents or the application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, neither the application of such provision to any other person or circumstance nor the remainder of the instrument in which such provision is contained shall be affected thereby and shall be enforced to the greatest extent permitted by law.  It is expressly stipulated and agreed to be the intent of the holder hereof to at all times comply with the usury and other applicable laws now or hereafter governing the interest payable on the indebtedness evidenced by this Note.  If the applicable law is ever revised, repealed or judicially interpreted so as to render usurious any amount called for under this Note or under any of the other Loan Documents, or contracted for, charged, taken, reserved or received with respect to the indebtedness evidenced by this Note, or if Bank’s exercise of the option to accelerate the maturity of this Note, or if any prepayment by the undersigned or prepayment agreement results (or would, if complied with, result) in the undersigned having paid, contracted for or being charged for any interest in excess of that permitted by law, then it is the express intent of the undersigned and Bank that this Note and the other Loan Documents shall be limited to the extent necessary to prevent such result and all excess amounts theretofore collected by Bank shall be credited on the principal balance of this Note or, if fully paid, upon such other Indebtedness as shall then remain outstanding (or, if this Note and all other Indebtedness have been paid in full, refunded to the undersigned), and the provisions of this Note and the other Loan Documents shall immediately be deemed reformed and the amounts thereafter collectable hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the then applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder or thereunder.  All sums paid, or agreed to be paid, by the undersigned for the use, forbearance, detention, taking, charging, receiving or reserving of the indebtedness of the undersigned to Bank under this Note or arising under or pursuant to the other Loan Documents shall, to the maximum extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the rate or amount of interest on account of such indebtedness does not exceed the usury ceiling from time to time in effect and applicable to such indebtedness for so long as such indebtedness is outstanding.  To the extent federal law permits Bank to contract for, charge or receive a greater amount of interest, Bank will rely on federal law instead of the Texas Finance Code, as supplemented by Texas Credit Title, for the purpose of determining the Maximum Rate.  Additionally, to the maximum extent permitted by applicable law now or hereafter in effect, Bank may, at its option and from time to time, implement any other method of computing the Maximum Rate under the Texas Finance Code, as supplemented by Texas Credit Title, or under other applicable law, by giving notice, if required, to the undersigned as provided by applicable law now or hereafter in effect.  Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, it is not the intention of Bank to accelerate the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration.

 

For the purposes of this Note, the following terms have the following meanings:

 

“Advance” means a borrowing requested by the undersigned and made by Bank under this Note, including any refunding of an outstanding Advance as the same type of Advance or the conversion of any such outstanding Advance to another type of Advance, and shall include a LIBOR-based Advance, a Daily Adjusting LIBOR Rate Advance and (subject to the terms of this Note) a Prime-based Advance.

 

“Applicable Interest Rate” means the LIBOR-based Rate plus the Applicable Margin, the Daily Adjusting LIBOR Rate plus the Applicable Margin, or (subject to the terms of this Note) the Prime Referenced Rate plus the Applicable Margin, as selected by the undersigned from time to time or as otherwise determined in accordance with the terms and conditions of this Note.

 

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“Applicable Margin” means:

 

(a)                                  in respect of the LIBOR—based Rate, three and one quarter percent (3.25%) per annum ; and

 

(b)                                  in respect of the Daily Adjusting LIBOR Rate and, to the extent applicable, the Prime Referenced Rate, three and one quarter percent (3.25%) per annum.

 

“Business Day” means any day, other than a Saturday, Sunday or any other day designated as a holiday under Federal or applicable State statute or regulation, on which Bank is open for all or substantially all of its domestic and international business (including dealings in foreign exchange) in Detroit, Michigan, and, in respect of notices and determinations relating to LIBOR-based Advances, Daily Adjusting LIBOR Rate Advances, the LIBOR-based Rate and the Daily Adjusting LIBOR Rate, also a day on which dealings in dollar deposits are also carried on in the London interbank market and on which banks are open for business in London, England.

 

“Change in Law” means the occurrence, after the date hereof, of any of the following: (i) the adoption or introduction of, or any change in any applicable law, treaty, rule or regulation (whether domestic or foreign) now or hereafter in effect and whether or not applicable to Bank on such date, or (ii) any change in interpretation, administration or implementation thereof of any such law, treaty, rule or regulation by any Governmental Authority, or (iii) the issuance, making or implementation by any Governmental Authority of any interpretation, administration, request, regulation, guideline, or directive (whether or not having the force of law), including, without limitation, any risk-based capital guidelines or any interpretation, administration, request, regulation, guideline, or directive relating to liquidity. For purposes of this definition, (x) a change in law, treaty, rule, regulation, interpretation, administration or implementation shall include, without limitation, any change made or which becomes effective on the basis of a law, treaty, rule, regulation, interpretation administration or implementation then in force, the effective date of which change is delayed by the terms of such law, treaty, rule, regulation, interpretation, administration or implementation, and (y) the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173) and all requests, rules, regulations, guidelines, interpretations or directives promulgated thereunder or issued in connection therewith shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or promulgated, whether before or after the date hereof, and (z) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall each be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.

 

“Daily Adjusting LIBOR Rate” means, for any day, a per annum interest rate which is equal to the quotient of the following:

 

(a)                                  for any day, the per annum rate of interest determined on the basis of the rate for deposits in United States Dollars for a period equal to one (1) month appearing on Page BBAM of the Bloomberg Financial Markets Information Service at or about 11:00 a.m. (London, England time) (or as soon thereafter as practical) on such day, or if such day is not a Business Day, on the immediately preceding Business Day.  In the event that such rate does not appear on Page BBAM of the Bloomberg Financial Markets Information Service (or otherwise on such Service) on any day, the “Daily Adjusting LIBOR Rate” for such day shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be reasonably selected by Bank, or, in the absence of such other service, the “Daily Adjusting LIBOR Rate” for such day shall, instead, be determined based upon the average of the rates at which Bank is offered dollar deposits at or about 11:00 a.m. (Detroit, Michigan time) (or as soon thereafter as practical), on such day, or if such day is not a Business Day, on the immediately preceding Business Day, in the interbank eurodollar market in an amount comparable to the applicable principal amount of Indebtedness outstanding hereunder which is to bear interest on the basis of such Daily Adjusting LIBOR Rate and for a period equal to one (1) month;

 

divided by

 

(b)                                  1.00 minus the maximum rate (expressed as a decimal) on such day at which Bank is required to maintain reserves on “Euro-currency Liabilities” as defined in and pursuant to Regulation D of the Board of Governors of the Federal Reserve System or, if such regulation or definition is modified, and as long as Bank is required to maintain reserves against a category of liabilities which includes eurodollar deposits or includes a category of assets which includes eurodollar loans, the rate at which such reserves are required to be maintained on such category;

 

provided , however , and notwithstanding anything to the contrary set forth in this Note, if at any time the Daily Adjusting LIBOR Rate determined as provided above would be less than zero percent (0%), then the Daily Adjusting LIBOR Rate shall be deemed to be zero percent (0%) per annum for all purposes of this Note (the “Daily Adjusting LIBOR 0% Floor”), except for any portion of any principal Indebtedness outstanding under this Note which, at any such time, is subject to any Specified Hedging Agreement, in which case, the Daily Adjusting LIBOR Rate for such portion of such Indebtedness shall be determined without giving effect to the Daily Adjusting LIBOR 0% Floor. Each calculation by Bank of the Daily Adjusting LIBOR Rate shall be conclusive and binding for all purposes, absent manifest error.

 

“Daily Adjusting LIBOR Rate Advance” means an Advance of which the Applicable Interest Rate is based on the Daily Adjusting LIBOR Rate.

 

6

 

“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including, without limitation, any supranational bodies such as the European Union or the European Central Bank).

 

“Interest Period” means, with respect to a LIBOR-based Advance, a period of one (1) month, two (2) months, or three (3) months, as selected by the undersigned (and which period is acceptable to Bank in its sole discretion), or as otherwise determined pursuant to and in accordance with the terms of this Note, commencing on the day a LIBOR-based Advance is made or the day an Advance is converted to a LIBOR-based Advance or the day an outstanding LIBOR-based Advance is refunded or continued as another LIBOR-based Advance for an applicable Interest Period, provided that any Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day, except that if the next succeeding Business Day falls in another calendar month, the Interest Period shall end on the next preceding Business Day, and when an Interest Period begins on a day which has no numerically corresponding day in the calendar month during which such Interest Period is to end, it shall end on the last Business Day of such calendar month. In the event that any LIBOR-based Advance is at any time refunded or continued as another LIBOR-based Advance for an additional Interest Period, such Interest Period shall commence on the last day of the preceding Interest Period then ending.

 

“LIBOR-based Advance” means an Advance of which the Applicable Interest Rate is based on the LIBOR-based Rate.

 

“LIBOR-based Rate” means a per annum interest rate which is equal to the quotient of the following:

 

(a)                                  the LIBOR Rate;

 

divided by

 

(b)                                  1.00 minus the maximum rate (expressed as a decimal) during such Interest Period at which Bank is required to maintain reserves on “Euro-currency Liabilities” as defined in and pursuant to Regulation D of the Board of Governors of the Federal Reserve System or, if such regulation or definition is modified, and as long as Bank is required to maintain reserves against a category of liabilities which includes eurodollar deposits or includes a category of assets which includes eurodollar loans, the rate at which such reserves are required to be maintained on such category.

 

“LIBOR Lending Office” means Bank’s office located in the Cayman Islands, British West Indies, or such other branch of Bank, domestic or foreign, as it may hereafter designate as its LIBOR Lending Office by notice to the undersigned.

 

“LIBOR Rate” means, with respect to any Indebtedness outstanding under this Note bearing interest on the basis of  the LIBOR-based Rate, the per annum rate of interest determined on the basis of the rate for deposits in United States Dollars for a period equal to the relevant Interest Period for such Indebtedness, commencing on the first day of such Interest Period, appearing on Page BBAM of the Bloomberg Financial Markets Information Service at or about 11:00 a.m. (London, England time) (or as soon thereafter as practical), two (2) Business Days prior to the first day of such Interest Period.  In the event that such rate does not appear on Page BBAM of the Bloomberg Financial Markets Information Service (or otherwise on such Service), the “LIBOR Rate” shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be reasonably selected by Bank, or, in the absence of such other service, the “LIBOR Rate” shall, instead, be determined based upon the average of the rates at which Bank is offered dollar deposits at or about 11:00 a.m. (Detroit, Michigan time) (or as soon thereafter as practical), two (2) Business Days prior to the first day of such Interest Period in the interbank eurodollar market in an amount comparable to the principal amount of the respective LIBOR-based Advance which is to bear interest on the basis of such LIBOR-based Rate and for a period equal to the relevant Interest Period; provided , however , and notwithstanding anything to the contrary set forth in this Note, if at any time the LIBOR Rate determined as provided above would be less than zero percent (0%), then the LIBOR Rate shall be deemed to be zero percent (0%) per annum for all purposes of this Note (the “LIBOR 0% Floor”), except for any portion of any principal Indebtedness outstanding under this Note which, at any such time, is/are subject to any Specified Hedging Agreement, in which case, the LIBOR Rate for such portion of such Indebtedness shall be determined without giving effect to the LIBOR 0% Floor. Each calculation by Bank of the LIBOR Rate shall be conclusive and binding for all purposes, absent manifest error.

 

“Loan Amount” means the face amount of this Note as set forth at the top of Page 1 hereof.

 

“Prime Rate” means the per annum interest rate established by Bank as its prime rate for its borrowers, as such rate may vary from time to time, which rate is not necessarily the lowest rate on loans made by Bank at any such time.

 

“Prime-based Advance” means an Advance of which the Applicable Interest Rate is based on the Prime Referenced Rate, subject to the terms of this Note.

 

“Prime Referenced Rate” means a per annum interest rate which is equal to the Prime Rate.

 

7

 

“Request for Advance” means a Request for Advance issued by the undersigned under this Note in the form annexed to this Note as Exhibit “A”.

 

“Specified Hedging Agreement” means any agreement or other documentation between the undersigned (or any of them) and Bank providing for an interest rate swap that does not provide for a minimum rate of zero percent (0%) with respect to determinations of the Daily Adjusting LIBOR Rate or LIBOR Rate, as applicable, for the purposes of such interest rate swap (e.g., determines the floating amount by using the “negative interest rate method” rather than the “zero interest rate method” in the case of any such interest rate swap made under any master agreement or other documentation published by the International Swaps and Derivatives Association, Inc.).

 

No delay or failure of Bank in exercising any right, power or privilege hereunder shall affect such right, power or privilege, nor shall any single or partial exercise thereof preclude any further exercise thereof, or the exercise of any other power, right or privilege. The rights of Bank under this Note are cumulative and not exclusive of any right or remedies which Bank would otherwise have, whether by other instruments or by law.

 

THE UNDERSIGNED AND BANK, BY ACCEPTANCE OF THIS NOTE, ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES.  TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.

 

THIS WRITTEN LOAN AGREEMENT (AS DEFINED BY SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE) REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

This Note amends, restates, supersedes and replaces (i)  that certain Equipment Note B in the original principal amount of One Million Two Hundred Fifty Thousand Dollars ($1,250,000) dated June 15, 2015 and (ii) that certain SAF Equipment Note in the original principal amount of Five Hundred Thousand Dollars ($500,000) dated November 9, 2016, each executed by J & S Audio Visual Communications, LLC, formerly known as J & S Audio Visual Communications, Inc. to the Bank as amended (collectively, the “Prior Notes”), the obligations of which Prior Notes have been assigned to and assumed by the undersigned; provided, however, (i) the execution and delivery by the undersigned of this Note shall not, in any manner or circumstance, be deemed to be a payment of, a novation of or to have terminated, extinguished or discharged any of the undersigned’s indebtedness evidenced by the Prior Notes, all of which indebtedness shall continue under and shall hereinafter be evidenced and governed by this Note, and (ii) all Collateral and guaranties securing or supporting the Prior Notes shall continue to secure and support this Note.

 

[Remainder of Page Intentionally Left Blank.  Signature Pages Follow.]

 

8

 

This Note is dated and shall be effective as of the date set forth above.

 

	BORROWER:
	PRESENTATION TECHNOLOGIES, LLC
	By:	/s/ Kevin Jost
		Kevin Jost
		President

 

			United States
Street Address	City	State	Country	Zip Code

 

For Bank Use Only
LOAN OFFICER INITIALS	LOAN GROUP NAME	OBLIGOR NAME
		Presentation Technologies, LLC
LOAN OFFICER I.D. NO.	LOAN GROUP NO.	OBLIGOR NO.	NOTE NO.	AMOUNT
				$3,000,000.00

 

EQUIPMENT NOTE — SIGNATURE PAGE

 

 

EXHIBIT “A”

 

REQUEST FOR ADVANCE

 

The undersigned hereby request(s) COMERICA BANK (“Bank”) to make a                                                                                                                                                                          * Advance to the undersigned on                                                                                                                                           , in the amount of                                                     Dollars ($                                                                             ) under the Equipment Note dated as of November 1, 2017, issued by the undersigned to said Bank in the face amount of Three Million and No/100 Dollars ($3,000,000.00) (the “Note”). The Interest Period for the requested Advance, if applicable, shall be                                                                                                          (                                             ) ** month(s).  In the event that any part of the Advance requested hereby constitutes the refunding or conversion of an outstanding Advance, the amount to be refunded or converted is                                                                                                                                                                                                                                                                                                                                      Dollars ($                                                                                             ), and the last day of the Interest Period for the amounts being converted or refunded hereunder, if applicable, is                                                                                                    .

 

The undersigned represent(s), warrant(s) and certify(ies) that no Event of Default, or any condition or event which, with the giving of notice or the running of time, or both, would constitute an Event of  Default, has occurred and is continuing under the Note, and none will exist upon the making of the Advance requested hereunder.  The undersigned further certify(ies) that upon advancing the sum requested hereunder, the aggregate principal amount outstanding under the Note will not exceed the face amount thereof. If the amount advanced to the undersigned under the Note shall at any time exceed the face amount thereof, the undersigned will promptly pay such excess amount, without any necessity of notice or demand.

 

The undersigned hereby authorize(s) Bank to disburse the proceeds of the Advance being requested by this Request for Advance by crediting the account of the undersigned with Bank separately designated by the undersigned, unless this Request for Advance is being submitted for a conversion or refunding of all or any part of any outstanding Advance(s), in which case, such proceeds shall be deemed to be utilized, to the extent necessary, to refund or convert that portion stated above of the existing outstandings under such Advance(s).

 

Capitalized terms used but not otherwise defined herein shall have the respective meanings given to them in the Note.

 

Dated this                                          day of                                                                                                                                                             .

 

	BORROWER:
	PRESENTATION TECHNOLOGIES, LLC
	By:
		Name:
		Title:

 

*                  INSERT, AS APPLICABLE, “LIBOR-BASED” OR “DAILY ADJUSTING LIBOR RATE”.

 

**           FOR A LIBOR-BASED ADVANCE, INSERT THE APPLICABLE INTEREST PERIOD (I.E., “ONE (1)”, “TWO (2)” OR “THREE (3)” MONTHS).

 

EQUIPMENT NOTE — EXHIBIT A