Exhibit 4.1
LOAN MODIFICATION AGREEMENT AND
AMENDMENT TO LOAN DOCUMENTS
THIS LOAN MODIFICATION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS (this
"Agreement") is being entered into as of the 3rd day of April, 2003, by and
between COMPASS BANK, an Alabama state banking corporation (the "Bank") and
OPTIMATION, INC., an Alabama corporation (the "Borrower"), NEMATRON CORPORATION,
a Michigan corporation, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
P R E A M B L E
The Borrower is the maker of a certain Revolving Credit Commercial Note in the
original principal amount of $450,000.00 dated June 26, 1998, as amended by that
certain Revolving Credit Commercial Note from Borrower to Compass Bank in the
original principal amount of $650,000.00 dated July 9, 1999, as amended by that
certain Revolving Credit Commercial Note from Borrower to Compass Bank in the
original principal amount of $650,000.00 dated July 19, 2000, as amended by that
certain Revolving Credit Commercial Note from Borrower to Compass Bank in the
original principal amount of $620,000.00 dated June 8, 2001, as amended by that
certain Revolving Credit Commercial Note from Borrower to Compass Bank in the
original principal amount of $465,000.00 dated November 27, 2001, as amended by
that certain extension and amendment to promissory note from Borrower to Compass
Bank in the original principal amount of $405,000.00 dated February 25, 2002, as
amended by that certain Extension and Amendment to Promissory Note from Borrower
to Compass Bank in the original principal amount of $385,000.00 dated May 5,
2002, as amended by that certain Extension and Amendment to Promissory Note from
Borrower to Compass Bank in the original principal amount of $385,000.00 dated
July 5, 2002, as amended by that certain Amended and Restated Promissory Note
from Borrower to Compass Bank in the original principal amount of $335,000.00
dated October 4, 2002, as amended by that certain Amended and Restated
Promissory Note from Borrower to Compass Bank in the original principal amount
of $270,000.00 dated as of January 3, 2003, as amended by that certain Amended
and Restated Promissory Note in the original principal amount of $225,000.00
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dated as of the date hereof (as amended from time to time, the "Note"), which
evidences a certain term loan from the Bank to the Borrower (the "Loan"). The
Loan was extended pursuant to that certain Revolving Credit and Security
Agreement executed between Borrower and Lender dated June 26, 1998, as amended
by that certain Modification Agreement and Amendment to Loan Documents dated
December 15, 1998, as amended by that certain Revolving Credit and Security
Agreement dated July 9, 1999, as amended by that certain Modification Agreement
and Amendment to Loan Documents dated July 19, 2000, as amended by that certain
Modification Agreement and Amendment to Loan Documents dated June 8, 2001, as
amended by that certain Modification Agreement and Amendment to Loan Documents
dated November 27, 2001, as amended by that certain Modification Agreement and
Amendment to Loan Documents dated February 25, 2002, as amended by that certain
Modification Agreement and Amendment to Loan Documents dated May 5, 2002, as
amended by that certain Modification Agreement and Amendment to Loan Documents
dated July 5, 2002, as amended by that certain Modification Agreement and
Amendment to Loan Documents dated October 4, 2002, as amended by that certain
Modification Agreement and Amendment to Loan Documents dated as of January 3,
2003 (as amended, the "Loan Agreement"), and is secured by, among other things,
the Loan Agreement, Continuing Guaranty Agreements executed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ dated October 4, 2002, Continuing Guaranty Agreement
executed by Nematron Corporation dated as of March 20, 2001, and UCC-1 financing
statements executed by Borrower in favor of Lender. The Bank and the Borrower
have agreed to renew and modify the Loan, and to amend the documents and
instruments evidencing, securing, relating to, guaranteeing or executed or
delivered in connection with the Loan (collectively, the "Loan Documents").
Accordingly, the Bank and the Borrower have agreed that the Loan shall be
modified and renewed, and that the Loan Documents shall be amended as set forth
below.
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A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, the mutual agreements of the
parties as set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and to induce Bank to
renew and modify the Loan, the parties, intending to be legally bound hereby,
agree as follows:
A. Modification Fee. The Borrower shall pay to Bank in consideration of the
Bank's commitment to modify the Loan, a non-refundable modification fee in
the amount of $150.00, which shall be deemed earned as of the date of
Bank's commitment, and shall be paid on or before the date hereof.
B. Modification of Loan. The amount of the Loan shall be changed to
$225,000.00. The Maturity Date of the Loan shall be changed to July 3,
2003.
C. Amendment of Loan Agreement. The Loan Agreement shall be and the same
hereby is amended as follows:
(i) Section 3.1 shall be and hereby is deleted in its entirety and the
following inserted in place thereof:
"3.1 At no time shall the outstanding principal amount of the Loan
exceed the Borrowing Base. In the event the outstanding
principal balance of the Loan exceeds the Borrowing Base,
Borrower shall promptly make such principal reduction payment
in immediately available funds as is necessary to bring the
outstanding principal balance of the Loan to an amount which is
equal to or less than the Borrowing Base. The "Borrowing Base"
shall be calculated pursuant to the following formula: eighty
percent (80%) of Borrower's Eligible Accounts Receivable, not to
exceed $225,000.00 at any one time outstanding, plus fity
percent (50%) of the value of Borrower's Eligible Inventory, not
to exceed the amount of $110,000.00 at any one time outstanding.
Notwithstanding the foregoing, advances under the Loan shall not
be revolving and no future advances of principal will be allowed."
(ii) Section 8.7 is hereby deleted in its entirety and the following
inserted in place thereof:
"8.7 Borrower shall not make any payments or distribute any funds to
Nematron Corporation, Nematron, Ltd., or any other subsidiaries
or affiliates thereof, in excess of One Thousand Dollars
($1,000.00) per month, with the exception of the following:
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(a) Payment to Nematron Corporation for ▇▇▇▇▇▇ ▇▇▇▇▇'▇
salary and benefits in monthly payments not to exceed the
aggregate amount of $11,343.00 per month;
(b) Payment to Nematron Corporation for ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇
salary and benefits, in monthly payments not to exceed the
aggregate amount of $9,578.00 per month."
(iii) Section 8 is hereby amended by inserting the following provisions
8.9, 8.10, 8.11, 8.12 and 8.13:
"8.9 Borrower shall maintain, serve and invoice directly all of
Borrower's customers, with the exceptions, however of:
(a) with respect to that certain product known as "Pointe
Controller," which may be sold and invoiced by Nematron
Corporation; provided, however, that Borrower shall be paid by
Nematron Corporation for at least Borrower's direct material
costs for such product, plus twenty percent (20%), within ten
(10) days from the date Nematron Corporation, Nematron, Ltd., or
any other subsidiaries or affiliates thereof receive payment for
such product from their respective customers, and in no event
later than 45 days from the date of invoice from Borrower, which
invoice Borrower agrees to promptly issue; and
(b) with respect to those certain products known as the "Legacy"
products, orders for which may be received and invoiced by
Nematron Corporation for joint customers of Nematron Corporation
and Borrower; provided, however, that Borrower shall be paid
by Nematron Corporation for at least Borrower's costs for
such product, plus twenty percent (20%), within ten (10) days
from the date Nematron Corporation, Nematron, Ltd., or any other
subsidiaries or affiliates thereof receive payment for such
product from the customers, and in no event later than 45 days
from the date of invoice from Borrower, which invoice
Borrower agrees to promptly issue.
8.10 There shall be no co-mingling of any assets, including without
limitation, cash, Accounts Receivables, Inventory and equipment,
between Borrower and Nematron Corporation, Nematron, Ltd., or
any other subsidiaries or affiliates thereof.
8.11 All of the Collateral shall remain at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇-▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
8.12 Borrower shall provide to Bank any and all amendments to its
Articles of Organization and/or Bylaws within ten (10) days of
the execution thereof.
8.13 Borrower shall furnish weekly to Bank its invoice register, sales
register, and cash receipts register for the immediately
preceding week."
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D. Effect on Loan Documents. Each of the Loan Documents shall be deemed
amended as set forth hereinabove and to the extent necessary to carry out
the intent of this Agreement. Without limiting the generality of the
foregoing, each reference in the Loan Documents to the "Note", the "Loan
Agreement", or any other "Loan Documents" shall be deemed to be references
to said documents, as amended hereby, each reference to the amount of the
Loan shall be changed to $225,000.00 and each reference to the Maturity
Date shall be changed to July 3, 2003. Except as is expressly set forth
herein, all of the Loan Documents shall remain in full force and effect in
accordance with their respective terms and shall continue to evidence,
secure, guarantee or relate to, as the case may be, the Loan.
E. Representations and Warranties. Each representation and warranty contained
in the Loan Documents is hereby reaffirmed as of the date hereof. The
Borrower hereby represents, warrants and certifies to Bank that no Event of
Default nor any condition or event that with notice or lapse of time or
both would constitute an Event of Default, has occurred and is continuing
under any of the Loan Documents or the Loan, and that Borrower has no
offsets or claims against Bank arising under, related to, or connected with
the Loan, the Loan Agreement or any of the other Loan Documents. Borrower
expressly understands and agrees that this Agreement is subject to
Borrower's strict and literal compliance with the terms, covenants and
provisions set forth herein, and further, Borrower expressly understands
and agrees that this Agreement shall not estop Lender from taking any
action permitted under the Note in the event of default, which may
hereafter occur or exist under the terms of said Note, Loan Agreement or by
reason of failure of Borrower to pay to Lender any one or more of payments
on said Note. Each individual executing this Agreement represents and
warrants that he or she is duly authorized to execute and deliver this
Agreement.
F. Additional Documentation; Expenses. Borrower shall provide to Bank (i) if
Borrower or any Guarantor is a business organization, certified resolutions
properly authorizing the transactions contemplated hereby and the execution
of this Agreement and all other documents and instruments being executed in
connection herewith; and (ii) all other documents and instruments required
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by Bank; all in form and substance satisfactory to Bank. Borrower shall pay
any recording and all other expenses incurred by Bank and Borrower in
connection with the modification of the Loan and any other transactions
contemplated hereby, including without limitation, title or other insurance
premiums, survey costs, legal expenses, recording fees and taxes.
G. Execution by Guarantors. Guarantors have executed this Agreement to
evidence their consent to the modification and amendments as described
herein, and to acknowledge the continuing effect of their respective
Guaranties and the obligations contained therein.
In witness whereof, the undersigned have caused this instrument to be duly
executed as of the date first set forth above.
Borrower:
Attest: Optimation, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ s/s ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Bank
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Its: Senior Vice President
ATTEST: NEMATRON CORPORATION, a Michigan
corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Secretary Its: President
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