EXHIBIT 10.3
AGREEMENT TO LOAN FUNDS
This Agreement to Loan Funds is entered into this 5th day of November, 2003 by
and between Xxxxx X. Xxxxx, an individual, of 0000 000xx Xxxxxx Xxxxx,
Xxxxxxxxxx, Xxxxxxxxx 00000 ("Xxxxx") and Dotronix, Inc., a Minnesota
corporation, with its principal place of business located at 000 Xxxxx Xxxxxx
X.X., Xx. Xxxx Xxxxxxxxx 00000-0000 ("Dotronix").
WHEREAS, Xxxxx has agreed to loan certain funds to Dotronix and Dotronix has
agreed to borrow such funds from Xxxxx in the form of a Revolving Credit
Agreement; and
WHEREAS, the loan created by this Agreement is a condition precedent to Dotronix
finalizing the refinancing of that certain other debt arrangement with the
Estate of Xxxxxxx X. Xxxxxx;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:
1. Xxxxx shall loan to Dotronix an amount up to a maximum of four
hundred fifty thousand dollars ($450,000), pursuant to a
revolving credit agreement, containing usual and customary
terms agreed to by the parties (the "Revolving Credit
Agreement").
2. The term of the Revolving Credit Agreement shall be one year
from the date of its execution by the parties.
3. The interest rate on funds borrowed by Dotronix under the
Revolving Credit Agreement shall be five percent (5%) per
annum, payable monthly on the outstanding balance.
4. As security for the Revolving Credit Agreement, Dotronix shall
issue a promissory note, secured by the assets of Dotronix,
excluding the real property (and contents thereof) located in
Eau Claire, Wisconsin currently owned by Dotronix.
5. In addition, Xxxxx will have an option to convert the
principal amount due under the Revolving Credit Agreement into
Dotronix common stock, at a conversion price of $1.50 per
share issued, which option shall be exercisable based on the
loan amount outstanding on the last day of the term of the
Revolving Credit Agreement. This option must be exercised no
later than sixty (60) days prior to the expiration of the
Revolving Credit Agreement.
6. In addition, upon execution of the revolving Credit Agreement
and in consideration for Xxxxx borrowing funds to Dotronix
under the Revolving Credit Agreement, Dotronix shall grant to
Xxxxx a seven-year warrant to purchase up to one hundred
thousand (100,000) shares of Dotronix common stock at an
exercise price of ten cents ($.10) per share.
7. As a condition precedent to the obligations of Xxxxx
hereunder, Dotronix must reach an agreement with the Estate of
Xxxxxxx X. Xxxxxx to modify and extend the Loan and Security
Agreement dated February 23, 2000 according to the terms set
forth in Exhibit A hereto.
8. In addition:
(a) The parties shall each pay their own fees and
expenses related to the transactions contemplated
agreed to herein, including, without limitation,
attorney and accountant fees.
(b) The transactions contemplated herein are confidential
and may not be disclosed to anyone other than the
parties' respective legal and financial
representatives, the representatives of the Estate of
Xxxxxxx X. Xxxxxx and except as required by law
(including the public disclosure obligations of
Dotronix), without the consent of the other party.
(c) The purpose of this Agreement is to set forth the
essential terms and conditions of the agreement of
the parties. Upon execution of this Agreement, the
parties shall prepare definitive documents to fully
reflect the parties understanding and agreement,
which definitive documents shall replace this
Agreement.
(d) Time is of the essence to this Agreement and the
parties agree to use their best efforts to complete
the documentation agreed to herein by November 14,
2003.
(e) This Agreement shall be binding upon and insure to
the benefit of the parties, their respective
successors and their assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the day and year first above written.
/s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx
DOTRONIX, INC.
By /s/ Xxxxxx X. Xxxxx
-------------------------------------
Xxxxxx X. Xxxxx
Its Chief Financial Officer
EXHIBIT A
TERMS OF AMENDED LOAN AGREEMENT
(a) $850,000 of the outstanding balance due under the Loan
Agreement shall be forgiven by the Estate in exchange for
certain real property and other consideration from Dotronix.
(b) The Maximum Dollar Amount set forth in Section 2.1.A of the
Schedule, the dollar amount set forth in Section 2.1.C of the
Schedule, the principal amount of the Note, and the amount
secured by the Collateral Documents shall be $150,000.
(c) The Maturity Date set forth in Section 9.1 of the Schedule and
in the Note shall be November 30, 2008.
(d) The interest rate shall be 5% per annum, payable monthly.
(e) The amended Loan Agreement shall be subordinate to the
Revolving Credit Agreement between Dotronix and Xxxxx X.
Xxxxx.
