Document:

ex10-4.htm

Exhibit 10.4

 

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.  THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (B) AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.

 

THIS NOTE IS REGISTERED WITH THE AGENT PURSUANT TO SECTION 24(B) OF THE SECURITY AGREEMENT (AS DEFINED BELOW).  TRANSFER OF ALL OR ANY PORTION OF THIS NOTE IS PERMITTED SUBJECT TO THE PROVISIONS SET FORTH IN SUCH SECTION 24(B) WHICH REQUIRE, AMONG OTHER THINGS, THAT NO TRANSFER IS EFFECTIVE UNTIL THE TRANSFEREE IS REFLECTED AS SUCH ON THE REGISTRY MAINTAINED WITH THE AGENT PURSUANT TO SUCH SECTION 24(B).

 

SECURED TERM NOTE

 

FOR VALUE RECEIVED, each of MGL Solutions, Inc., a Delaware corporation (the “Parent”), and the other companies listed on Exhibit A attached hereto (such other companies together with the Parent, each a “Company” and collectively, the “Companies”), hereby, jointly and severally, promises to pay to Laurus Master Fund, Ltd. (In Liquidation) (the “Holder”) or its registered assigns or successors in interest, the sum of ONE MILLION FOUR HUNDRED FOURTEEN THOUSAND FIVE HUNDRED FOURTEEN AND NO/100 Dollars ($1,414,514.00), together with any accrued and unpaid interest hereon, on May 30, 2011 (the “Maturity Date”) if not sooner indefeasibly paid in full.

 

Capitalized terms used herein without definition shall have the meanings ascribed to such terms in that certain Security Agreement dated as of the date hereof (as amended, restated, modified and/or supplemented from time to time, the “Security Agreement”) among the Companies, the Holder, each other Lender and LV Administrative Services, Inc., as administrative and collateral agent for the Lenders (the “Agent” together with the Lenders, collectively, the “Creditor Parties”).

 

The following terms shall apply to this Secured Term Note (this “Note”):

 

ARTICLE I

 

CONTRACT RATE AND AMORTIZATION

 

1.1 Contract Rate.  Subject to Sections 2.2 and 3.9, interest payable on the outstanding principal amount of this Note (the “Principal Amount”) shall accrue at a rate per annum equal to twelve percent (12%) (the “Contract Rate”).  Interest shall be (i) calculated on the basis of a 360 day year, and (ii) payable in full on the Maturity Date or earlier upon acceleration in accordance with the terms of the Security Agreement.

 

1.2 Principal Payments.  The outstanding Principal Amount together with any accrued and unpaid interest and any and all other unpaid amounts which are then owing by the Companies to the Holder under this Note, the Security Agreement and/or any other Ancillary Agreement shall be due and payable on the Maturity Date or earlier upon acceleration in accordance with the terms of the Security Agreement.

 

  

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1.3 Optional Redemption in Cash.  The Companies may prepay the outstanding Principal Amount, in whole or in part, without penalty or premium by paying to the Holder an amount equal to the Principal Amount to be redeemed together with accrued but unpaid interest thereon and any and all other sums due, accrued or payable to the Holder arising under this Note, the Security Agreement or any other Ancillary Agreement.

 

ARTICLE II

 

EVENTS OF DEFAULT

 

2.1 Events of Default.  The occurrence of any Event of Default under the Security Agreement shall constitute an event of default (“Event of Default”) hereunder.

 

2.2 Default Interest.  Following the occurrence and during the continuance of an Event of Default, each Company shall, jointly and severally, pay additional interest on the outstanding principal balance of this Note in an amount equal to two percent (2.00%) per month, and all outstanding obligations under this Note, the Security Agreement and each other Ancillary Agreement, including unpaid interest, shall continue to accrue interest at such additional interest rate from the date of such Event of Default until the date such Event of Default is cured or waived.

 

2.3 Default Payment.  Following the occurrence and during the continuance of an Event of Default, the Agent may, in a notice to the Company Agent, demand repayment in full of all obligations and liabilities owing by the Companies to the Holder under this Note, the Security Agreement and/or any other Ancillary Agreement and/or may elect, in addition to all rights and remedies of the Agent under the Security Agreement and the other Ancillary Agreements and all obligations and liabilities of each Company under the Security Agreement and the other Ancillary Agreements, to require the Companies, jointly and severally, to make a Default Payment (“Default Payment”).  The Default Payment shall be one hundred ten percent (110%) of the sum of the outstanding principal amount of this Note, plus accrued but unpaid interest, plus all other fees then remaining unpaid, plus all other amounts payable hereunder.  The Default Payment shall be due and payable immediately on the date that the Agent has demanded payment of the Default Payment pursuant to this Section 2.3.

 

ARTICLE III

 

MISCELLANEOUS

 

3.1 Cumulative Remedies.  The remedies under this Note shall be cumulative.

 

3.2 Failure or Indulgence Not Waiver.  No failure or delay on the part of the Holder hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.  All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

  

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3.3 Notices.  Any notice herein required or permitted to be given shall be given in writing in accordance with the terms of the Security Agreement.

 

3.4 Amendment Provision.  The term “Note” and all references thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented, and any successor instrument as such successor instrument may be amended or supplemented.

 

3.5 Assignability.  This Note shall be binding upon each Company and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns, and may be assigned by the Holder in accordance with the requirements of the Security Agreement.  No Company may assign any of its obligations under this Note without the prior written consent of the Holder, any such purported assignment without such consent being null and void.

 

3.6 Cost of Collection.  In case of the occurrence of an Event of Default under this Note, the Companies shall, jointly and severally, pay the Holder the Holder’s reasonable costs of collection, including reasonable attorneys’ fees.

 

3.7 Governing Law, Jurisdiction and Waiver of Jury Trial.

 

(a) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

 

(b) EACH COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE AND/OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY COMPANY, ON THE ONE HAND, AND THE HOLDER AND/OR ANY OTHER CREDITOR PARTY, ON THE OTHER HAND, PERTAINING TO THIS NOTE OR ANY OF THE OTHER ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE OR ANY OF THE ANCILLARY AGREEMENTS; PROVIDED, THAT EACH COMPANY ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER AND/OR ANY OTHER CREDITOR PARTY FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE HOLDER AND/OR ANY OTHER CREDITOR PARTY.  EACH COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS.  EACH COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE PARENT AT THE ADDRESS SET FORTH IN THE SECURITY AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE PARENT’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

 

  

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(c) EACH COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND/OR OF ARBITRATION, EACH COMPANY HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE HOLDER AND/OR ANY OTHER CREDITOR PARTY, ON THE ONE HAND, AND ANY COMPANY, ON THE OTHER HAND, ON THE ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, ANY OTHER ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

 

3.8 Severability.  In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note.

 

3.9 Maximum Payments.  Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law.  In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum rate permitted by such law, any payments in excess of such maximum rate shall be credited against amounts owed by the Companies to the Holder and thus refunded to the Companies.

 

3.10 Security Interest.  The Agent, for the ratable benefit of the Creditor Parties, has been granted a security interest in certain assets of the Companies as more fully described in the Security Agreement and the other Ancillary Agreements.

 

3.11 Construction; Counterparts.  Each party acknowledges that its legal counsel participated in the preparation of this Note and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Note to favor any party against the other.  This Note may be executed by the parties hereto in one or more counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same instrument.  Any signature delivered by a party by facsimile or electronic transmission shall be deemed to be an original signature hereto.

 

  

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3.12 Registered Obligation. This Note shall be registered (and such registration shall thereafter be maintained) as set forth in Section 24(b) of the Security Agreement.  Notwithstanding any document, instrument or agreement relating to this Note to the contrary, transfer of this Note (or the right to any payments of principal or stated interest thereunder) may only be effected by (i) surrender of this Note and either the reissuance by the Companies of this Note to the new holder or the issuance by the Companies of a new instrument to the new holder or (ii) registration of such holder as an assignee in accordance with Section 24(b) of the Security Agreement.

 

[Balance of page intentionally left blank; signature page follows]

 

 

 

  

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IN WITNESS WHEREOF, each Company has caused this Secured Term Note to be signed in its name effective as of this ___ day of April, 2011.

 

MGL SOLUTIONS, INC.

 

By:                                                                             

Name:

Title:

 

  

  

  

 

EXHIBIT A

 

OTHER COMPANIES

 

 

Noneex10-5.htm

Exhibit 10.5

 

Commercial Sublease

This Commercial Sublease (this “Sublease”) is made and effective this 1st day of April 2011 between TransXpert, Inc., an Illinois Corporation (“Sub-Lessor”), and Quadrant 4 Systems, Inc., a Florida corporation, (“Sub-Lessee”) and is made in light of the facts: (i) that Sub-Lessor currently leases the “Premises” including the office space known as Suite 30, on the First Floor of the building described as and commonly known as the Meadows, at 2850 Golf Road, Rolling Meadows, Illinois (the “Building”), a space of approximately 1,500 square feet, more or less, together with all other commonly shared space on the floor within or adjacent the Premises under that certain “Lease” between Sub-Lessor, as tenant, and _____________________, as landlord, dated _________________ which Lease includes the Premises; and (ii) that Sub-Lessee desires to lease from Sub-Lessor, and Sub-Lessor desires to rent to Sub-Lessee, the Premises as described herein upon the terms and conditions set forth herein.

Now, THEREFORE, in consideration of the premises and of the mutual covenants and agreements of the parties herein contained and for other good and valuable consideration, the parties hereto hereby agree as follows:

	
1.  

	
Term and Rent.  Sub-Lessor demises the above Premises for a twelve (12) month “Term” commencing April 1, 2011 and ending March 31, 2012 at the monthly rental of One Thousand, Five Hundred Dollars ($1,500) payable in advance on the first day of each month for that month's rental, during the Term.  All rental payments shall be made to Sub-Lessor, at the address specified following the signature of Sub-Lessor.

	
2.  

	
Use.   Sub-Lessee shall use and occupy the Premises for general office use.  The Premises shall be used for no other purpose.  Sub-Lessor represents that the Premises may lawfully be used for such purpose.

	
3.  

	
Right to Sublet.  Sub-Lessor represents to Sub-Lessee that, as a condition precedent to any obligations of Sub-Lessee under this Sublease, Sub-Lessor has obtained all necessary consents and that the parties may enter into this Sublease without causing a violation or event of default under the Lease.

	
4.  

	
Care and Maintenance of Premises.   Sub-Lessee acknowledges that the Premises are in satisfactory order and repair, unless otherwise indicated herein.  Sub-Lessee shall, at its own expense and at all times, improve and maintain the Premises in good and safe condition, and shall surrender the same at termination hereof, in as good condition as received, normal wear and tear alone excepted.  Sub-Lessee shall be responsible for all repairs required within the Premises, excepting the roof, demising partitions (including entranceways), exterior walls, structural foundations, and mechanical systems servicing the Premises.  Sub-Lessee shall not, without first obtaining the written consent of Sub-Lessor, make any alterations, additions, or improvements, in, to or about the Premises.  Sub-Lessor may, as a condition to such consent, consult with or require consent of the landlord under the Lease.

	
5.  

	
Ordinances and Statutes.  Sub-Lessee shall comply with all statutes, ordinances and requirements of all municipal, state and federal authorities now in force or which may hereafter be in force, pertaining to the Premises, occasioned by or affecting the use thereof by Sub-Lessee.

 

  

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6.  

	
Assignment and Subletting.   Sub-Lessee shall not assign this Sublease or further sublet any portion of the Premises without prior written consent of the Sub-Lessor, which shall not be unreasonably withheld but may be withheld if not permitted under the Lease.  Any such assignment or subletting without consent shall be void and, at the option of the Sub-Lessor, may terminate this Sublease.  Notwithstanding the foregoing, in the event Sub-Lessee forms a new entity to operate its business, Sub-Lessor agrees that Sub-Lessee may elect to assign this Sublease to such entity but same shall not relieve Sub-Lessee of any obligations hereunder and Sub-Lessee shall remain as a guarantor.

	
7.  

	
Utilities.  Sub-Lessee shall be solely liable for such additional telephone and internet services as are required in the operation of its business.  Sub-Lessor agrees to provide 2 telephone lines on the existing phone system, existing internet without warranty as to capacity, electrical service of scope and capacity to operate the Sub-Lessee’s business within the Premises and heating, cooling and ventilation and water and sewer and other utility services and other services all in a commercially reasonable manner to the Premises.

	
8.  

	
Entry and Inspection.  Sub-Lessee shall permit Sub-Lessor or Sub-Lessor's agents including parties authorized under the Lease to enter upon the Premises at reasonable times and upon reasonable notice, for the purpose of inspecting the same, making repairs or showing same to prospective tenants.

	
9.  

	
Indemnification of Sub-Lessor.  Sub-Lessor shall not be liable for any damage or injury to Sub-Lessee, or any other person, or to any property, occurring within the Premises, and Sub-Lessee agrees to hold Sub-Lessor harmless from any claim for damages, no matter how caused.  Sub-Lessee shall be solely responsible for all personal property and waives any claim or right of setoff against rent for loss thereto.

	
10.  

	
Insurance.  Sub-Lessee, at its expense, shall maintain public liability insurance including bodily injury and property damage insuring Sub-Lessee and Sub-Lessor with minimum coverage of $100,000 and shall provide Sub-Lessor with a certificate of insurance showing Sub-Lessor as additional insured.  If required under the Lease, such insurance shall also name as additional insured, the landlord and other parties as specified under the Lease.  To the maximum extent permitted by insurance policies which may be obtained by Sub-Lessor or Sub-Lessee, Sub-Lessee and Sub-Lessor, for the benefit of each other, waive any and all rights of subrogation which might otherwise exist.

	
11.  

	
Eminent Domain.  If the Premises or any part thereof or any estate therein, or any other part of the Building materially affecting Sub-Lessee's use of the Premises, shall be taken by eminent domain, this Sublease shall terminate on the date when title vests pursuant to such taking.  The rent, and any additional rent, shall be apportioned as of the termination date, and any rent paid for any period beyond that date shall be repaid to Sub-Lessee.  Sub-Lessee shall not be entitled to any part of the award for such taking or any payment in lieu thereof, but Sub-Lessee may file a claim for any taking of fixtures and improvements owned by Sub-Lessee, and for moving expenses.

 

  

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12.  

	
Destruction of Premises.  In the event of a partial destruction of the Premises during the Term hereof, from any cause, Sub-Lessor shall forthwith cause to be repaired the same, provided that such repairs can be made within sixty (60) days under existing governmental laws and regulations, but such partial destruction shall not terminate this Sublease, except that Sub-Lessee shall be entitled to a proportionate reduction of rent while such repairs are being made, based upon the extent to which the making of such repairs shall interfere with the business of Sub-Lessee within the Premises.  If such repairs cannot be made within said sixty (60) days, Sub-Lessor, at its option, may make the same within a reasonable time, this Sublease continuing in effect with the rent proportionately abated as aforesaid, and in the event that Sub-Lessor shall not elect to make such repairs which cannot be made within sixty (60) days, this Sublease may be terminated at the option of either party.  In the event that the Building in which the Premises may be situated is destroyed to an extent of not less than one-third of the replacement costs thereof, Sub-Lessor may elect to terminate this Sublease whether the Premises be injured or not.  A total destruction of the Building shall terminate this Sublease.

	
13.  

	
Sub-Lessor's Remedies on Default.  If Sub-Lessee defaults in the payment of rent, or any additional rent, or defaults in the performance of any of the other covenants or conditions hereof, Sub-Lessor may give Sub-Lessee notice of such default and if Sub-Lessee does not cure any such default within 5 days as to monetary defaults or within 20 days as to non-monetary defaults, after the giving of such notice (or if such other default is of such nature that it cannot be completely cured within such period, if Sub-Lessee does not commence such curing within such 20 days and thereafter proceed with reasonable diligence and in good faith to cure such default), then Sub-Lessor may terminate this Sublease following such notice and failure to cure.  On the date specified in such notice, the Term shall terminate, and Sub-Lessee shall then quit and surrender the Premises to Sub-Lessor, but Sub-Lessee shall remain liable as hereinafter provided.  If this Sublease shall have been so terminated by Sub-Lessor, Sub-Lessor may, at any time thereafter, resume possession of the Premises by any lawful means and remove Sub-Lessee or other occupants and their effects.  No failure to enforce any term or condition hereof shall be deemed a waiver.  Sub-Lessor shall be entitled to a charge of 10% for all rent payments not received by the 5th of the month, not as a penalty but solely to offset costs of delayed payment which are impossible to ascertain in advance.

	
14.  

	
Operating Expense and Rent Increase.  In the event the Lease provides for any increase during any year of the Term for real estate taxes, increase of costs of operations including maintenance, repairs, utilities, taxes and/or insurance over and above the amount of such costs for the year during which the Term commences, Sub-Lessee shall pay to Sub-Lesser upon presentation of notice of same, its proportional share of the increase in said costs.  In the event that such increases are for a year extending beyond the Term, the obligation of Sub-Lessee shall be proportionate to the portion of the Term included in such year.  The Rent stated above is a fixed rent for the Term but shall be increased only to reflect increases in the cost of living.  On each successive February 1 after commencement during the Term, the Rent shall be adjusted but not decreased pursuant to the following formula: Rent (being the new adjusted Rent) equals Rent in effect prior to this calculation multiplied by the ratio of the Cost of Living Index for the month prior to the anniversary date of this adjustment over the Index for the prior year’s month.  The Consumer Price Index shall be ("All Urban Consumers" 1967=100) as published by the Bureau of Labor Statistics, United States Department of Labor of the city in which the Building is situated (or such other index as recognized as a successor index in the event this index is longer published and converted using the conversion factor published by the United States Department of Labor).

 

  

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15.  

	
Termination.  Either party may terminate this Sublease upon thirty (30) days notice to the other but no termination shall relieve Sub-Lessee of its obligations to pay rent or any increase or expenses permitted herein.

	
16.  

	
Attorney's Fees.  In case suit should be brought for recovery of the Premises or for any sum due hereunder, or because of any act which may arise out of the possession of the Premises, by either party, the prevailing party shall be entitled to all costs incurred in connection with such action, including a reasonable attorney's fee.

	
17.  

	
Notices.  Any notice which either party may, or is required to give, shall be given by mailing the same, postage prepaid, to Sub-Lessee or Sub-Lessor, as the case may be, at the address set forth following its signature, or at such other places as may be designated by the parties from time to time.

	
18.  

	
Heirs, Assigns, Successors.  This Sublease is binding upon and inures to the benefit of the heirs, assigns and successors in interest to the parties.

	
19.  

	
Subordination.  This Sublease is and shall be subordinated to all existing and future liens and encumbrances against the Building and to the terms of the Lease, which terms are incorporated herein by reference.

	
20.  

	
Entire Agreement.  The foregoing constitutes the entire agreement between the parties and may be modified only by a writing signed by both parties.

Sub-Lessor: Sub-Lessee:

WITNESS, the signatures of Sub-Lessor and Sub-Lessee executed in Rolling Meadows, Illinois as of the date first above written.

TransXpert, Inc.                                                                           Quadrant 4 Systems, Inc.

By:                                                                                                   By:                                                       

Address:

 

                                                                                                                                                                                      

 

                                                                                                                                                                                      

  

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