8-K
SUI Group Holdings Ltd. (SUIG)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 31, 2025
| MILL CITY VENTURES III, LTD. | ||
|---|---|---|
| (Exact name of registrant as specified in its charter) | ||
| Minnesota | 001-41472 | 90-0316651 |
| --- | --- | --- |
| (State or other jurisdiction | (Commission File Number) | (IRS Employer |
| of incorporation) | Identification No.) |
1907 Wayzata Boulevard, Suite 205
Wayzata, MN 55391
(Address of principal executive offices)
(952) 479-1923
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
On January 31, 2025, Mill City Ventures III, Ltd. (“Mill City”) entered into an Amended and Restated Subordination and Intercreditor Agreement with Orion Pip, LLC, as administrative agent and collateral agent for senior lenders to Mustang Funding, LLC, and with Mustang Funding, LLC. The agreement contains customary and negotiated terms and conditions relating to the full subordination of Mill City’s right to payment (subject to certain exceptions) and right to collateral pledged by Mustang Funding in favor of Mill City to secure the obligations of Mustang Funding under that certain Fourth Short-Term Loan Agreement and Fourth Short-Term Promissory Note in the original principal amount of $10 million (most recently amended effective January 21, 2025 to extend the maturity date of Mill City’s loan to Mustang Funding to March 28, 2027, and to increase the per annum rate of interest to 20%, as earlier disclosed). The agreement is deemed effective as of January 24, 2025.
On February 1, 2025, Mill City entered into a Security Agreement with Mustang Funding, LLC, also deemed effective as of January 24, 2025, pursuant to which Mustang Funding granted Mill City a security interest in substantially all of Mustang Funding’s assets, subject to certain enumerated exceptions, as collateral security for the above-described $10 million principal amount loan.
On February 1, 2025, Mill City entered into new Executive Employment Agreements with each of Douglas M. Polinsky, the Chief Executive Officer of Mill City, and Joseph A. Geraci II, the Chief Financial Officer of Mill City. These new Executive Employment Agreements are substantially identical to the prior executive employment agreements with these executives that had earlier expired on December 31, 2024, each containing the same two-year term and restrictive covenants, and were deemed to be effective as of January 1, 2025. The new Executive Agreements increase the base salary of each executive to $220,000 per year.
Copies of the above-described Amended and Restated Subordination and Intercreditor Agreement, Security Agreement, and Executive Employment Agreements are being filed as exhibits to this report. In addition, Mill City is filing a copy of Amendment 5 to Fourth Short-Term Loan Agreement and Fourth Short-Term Promissory Note as an exhibit to this report (the entry into which, and the terms of which, were earlier disclosed in a current report on Form 8-K filed on January 28, 2025).
Item 8.01 Other Events.
On February 3, 2025, Mill City issued a press release, a copy of which is being filed as an exhibit to this report.
Item 8.01 Financial Statements and Exhibits.
(d) Exhibits.
* filed herewith
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MILL CITY VENTURES III, LTD. | ||
|---|---|---|
| Date: February 3, 2025 | ||
| By: | /s/ Joseph A. Geraci, II | |
| Joseph A. Geraci, II | ||
| Chief Financial Officer | ||
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Exhibit Index
mcvt_ex101.htm EXHIBIT 10.1
AMENDMENT NO. 5 TO
FOURTH SHORT-TERM LOAN AGREEMENT AND
FOURTH SHORT-TERM PROMISSORY NOTE
This Amendment No. 5 to Fourth Short-Term Loan Agreement and Fourth Short-Term Promissory Note (this “Amendment”), dated effective as of January 21, 2025 (the “Effective Date”), is between Mustang Funding, LLC, a Delaware limited liability company (“Borrower”), and Mill City Ventures III, Ltd., a Minnesota corporation (“Lender”), for the purpose of amending that certain Fourth Short-Term Loan Agreement by and between Lender and Borrower dated as of September 29, 2023 (the ”Loan Agreement”), and associated Fourth Short-Term Promissory Note (the ”Note”), as each of the Loan Agreement and Note have been amended pursuant to an Amendment No. 1 to Fourth Short-Term Loan Agreement and Fourth Short-Term Promissory Note dated as of April 29, 2024 (“Amendment No. 1”), an Amendment No. 2 to Fourth Short-Term Loan Agreement and Fourth Short-Term Promissory Note dated as of November 18, 2024, an Amendment No. 3 to Fourth Short-Term Loan Agreement and Fourth Short-Term Promissory Note dated as of December 18, 2024, and an Amendment No. 4 to Fourth Short-Term Loan Agreement and Fourth Short-Term Promissory Note dated as of January 7, 2025. (Borrower and Lender are each a “Party” and, together, the “Parties.”)
Capitalized terms not otherwise defined in this Amendment have the meanings given to them in the Loan Agreement.
- Change in Definition of Maturity Date. The defined term “Maturity Date,” which appears in the Loan Agreement (and is used in the Note), is hereby amended to read in its entirety as set forth below:
“Maturity Date” is March 28, 2027.
- Increase in Loan Rate. From and after the Effective Date, the defined term “Loan Rate” is hereby amended to read in its entirety as set forth below:
“Loan Rate” means twenty percent (20%) per annum, with fifteen percent (15%) per annum being payable in cash on a monthly basis, and five percent (5%) per annum being payable as deferred interest, all as described in Section 1(c).
- Deferred Interest. From and after the Effective Date, a new ultimate paragraph of Section 1(c) is hereby added to the Loan Agreement as follows:
Notwithstanding the foregoing, the deferred interest component of the Loan Rate shall be payable in cash only upon the Maturity Date (or the earlier acceleration of all amounts due and owing in connection with this Agreement).
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Representations and Warranties. By executing this Amendment, Borrower hereby represents and warrants to Lender that: (a) except as set forth on Schedule 2(a) attached hereto, all of the representations and warranties of Borrower contained in Section 3 of the Loan Agreement are true and correct as if made on the Effective Date, other than those representations and warranties contained in the Loan Agreement and made as of a specific date; and (b) except as set forth on Schedule 2(b) attached hereto, Borrower has complied with all covenants and negative covenants contained in the Loan Agreement, specifically including but not limited to Section 5 of the Loan Agreement, excepting only those covenants contained in Section 5(a)(i) of the Loan Agreement and that were waived pursuant to the Amendment No. 1. Upon Borrower’s request, Lender agrees that it will provide customary waivers with respect to the items described in Schedules 2(a) and 2(b).
Release. Borrower hereby releases the Lender and each of its officers, directors, agents, employees, legal counsel and other representatives from any and all claims, demands, causes of action, liability, damage, loss, cost and expense which it has paid, incurred or sustained or believed Borrower has paid, incurred or sustained, known or unknown, absolute or contingent, liquidated or unliquidated, as a result of or related to (a) the transactions evidenced by or related to the Note and the Loan Agreement up to and through the delivery of this Amendment or (b) the extension or denial of credit.
Other Matters. Other than as specifically set forth in Section 1 above, the Loan Agreement and the Note, as each such document has been amended to date, shall be unaffected by this Amendment.
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IN WITNESS WHEREOF, the Parties have caused their authorized representatives to set their hands to this Amendment to be effective as of the Effective Date.
| LENDER: | BORROWER: | ||
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| MILL CITY VENTURES III, LTD. | MUSTANG FUNDING, LLC | ||
| By: | /s/ Joseph A. Geraci II | By: | /s/ James K. Beltz |
| Name: | Joseph Geraci | Name: | James K. Beltz |
| Title: | CFO | Title: | President |
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mcvt_ex102.htm EXHIBIT 10.2
AMENDED AND RESTATED SUBORDINATION AND INTERCREDITOR AGREEMENT
This Amended and Restated Subordination and Intercreditor Agreement (this “Agreement”) is made as of January 24, 2025, by and among (i) Mill City Ventures III, Ltd., a Minnesota corporation (“Subordinated Creditor”), (ii) Orion Pip LLC, a Delaware limited liability company, as administrative agent and as collateral agent (in such capacities, together with its successors and assigns, the “Senior Agent”) for itself and the Senior Lenders (as defined below) (together with the Senior Agent, each individually, a “Senior Creditor” and collectively, the “Senior Creditors”), and (iii) Mustang Funding, LLC, a Delaware limited liability company (the “Company”).
W I T N E S S E T H
Reference is made to that certain Senior Secured Credit and Guaranty Agreement, dated as of December 28, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Company, the certain subsidiaries of the Company (together with Company, the “Credit Parties”, and each, a “Credit Party”), Senior Agent and the lenders from time to time party thereto (the “Senior Lenders”), pursuant to which the Senior Lenders have agreed to make Loans (as defined in the Credit Agreement) to the Company upon the terms, and subject to the conditions, in each case specified in the Credit Agreement and the other Credit Documents (as defined in the Credit Agreement). Such Loans, together with all other obligations, liabilities and indebtedness of every nature of any Credit Party from time to time owed to the Senior Agent and the other Senior Lenders under the Credit Documents, any amendments, modifications, renewals or extensions thereof and any interest, fees and other charges accruing thereon or due or to become due with respect, whether or not such interest, fees and other charges are allowed claims, are collectively referred to herein as the “Senior Debt”.
Reference is also made to that certain Promissory Note issued pursuant to the Short-Term Loan Agreement, dated December 12, 2022, as earlier amended on April 29, 2024, November 18, 2024, December 18, 2024, January 7, 2025, and January 21, 2025 (as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof, the Promissory Note and Short-Term Loan Agreement are collectively referred to hereinafter as the “Subordinated Note”), made by the Company to the Subordinated Creditor, evidencing the loans made by the Subordinated Creditor to the Company thereby (such loans, the “Subordinated Debt”) and that certain Security Agreement dated as of the date hereof by and between the Company and the Subordinated Creditor (the “Subordinated Security Agreement” and together with the Subordinated Note, the “Subordinated Debt Documents”).
The parties hereto desire to enter into this Agreement to provide for the subordination in right and time of payment of the Subordinated Debt to the Senior Debt due or to become due to the Senior Lenders.
NOW, THEREFORE, in consideration of the foregoing and for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
- Subordination:
| a. | Subordination. Notwithstanding any provision of the Subordinated Debt Documents, each of the Company and Subordinated Creditor hereby covenants, for the benefit of the Senior Lenders, that all obligations of the Company under the Subordinated Debt Documents and all rights of Subordinated Creditor to repayment of Subordinated Debt, are each hereby expressly made subordinate and junior to Senior Lenders in (i) right and time of payment and (ii) exercise of remedies, in each case to the prior Payment in Full (as defined below) of all Senior Debt. |
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| b. | Subordination of Liens and Security Interests; Agreement Not to Contest; Agreement to Release Liens. Until Payment in Full of all Senior Debt has occurred, the Company shall not grant to the Subordinated Creditor, and the Subordinated Creditor shall not take, any lien, security interest, or other collateral of any kind, nature, or description as security for the Subordinated Debt, except as provided in the Subordinated Debt Documents as in effect on the date of this Agreement. Any such lien, security interest, or collateral, all liens and security interests of the Subordinated Creditor in the Collateral (as defined in the Credit Agreement), whether permitted hereunder or not, shall be and hereby are subordinated for all purposes and in all respects to the liens and security interests of the Senior Agent, for the benefit of the Senior Lenders, in the Collateral, regardless of the time, manner or order of creation or perfection of any such liens and security interests. The Subordinated Creditor agrees that it will not at any time contest the validity, perfection, priority or enforceability of the Senior Debt, the Credit Agreement and the other Credit Documents (as defined in the Credit Agreement), or the liens and security interests of the Senior Agent, for the benefit of the Senior Lenders, in the Collateral securing the Senior Debt. In the event that the Senior Agent releases or agrees to release any of its liens or security interests in any portion of the Collateral in connection with the sale or other disposition thereof, or any of the Collateral is sold or retained pursuant to a foreclosure or other enforcement action, the Subordinated Creditor shall promptly consent to such sale or other disposition and promptly execute and deliver to the Senior Agent such termination statements and releases as the Senior Agent shall reasonably request to effect the release of the liens and security interests of the Subordinated Creditor in such Collateral. In furtherance of the foregoing, the Subordinated Creditor hereby irrevocably appoints the Senior Agent as its attorney-in-fact, with full authority in the place and stead of such Subordinated Creditor and in the name of such Subordinated Creditor or otherwise, to execute and deliver any document or instrument which such Subordinated Creditor may be required to deliver pursuant to this subsection. |
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| c. | Permitted Payments. Notwithstanding the foregoing, provided no Default or Event of Default (each as defined in the Credit Agreement) has occurred and is continuing both before and after giving effect to such payment, the Company may pay to the Subordinated Creditor all amounts due and owing under the Subordinated Note from (i) free cash or (ii) the proceeds of the issuance of equity or debt authorized in accordance with the provisions of the Credit Agreement (collectively, the “Permitted Payments”). Any payments prohibited by the terms of this Section 1(c), may be paid by the Company to the Subordinated Creditor (each a “Catch Up Payment”) after the Company has cured, or Senior Creditors have waived, the Default or Event of Default prohibiting such payment, but only to the extent such Catch Up Payment would not give rise to a Default or Event of Default. |
| d. | Turnover. If any payment or distribution of any character or any security, whether in cash, securities, or other property, shall be received by the Subordinated Creditor in contravention of any of the terms hereof, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to the Senior Agent for application to the payment of all Senior Debt remaining unpaid. In the event of the failure of the Subordinated Creditor to endorse or assign any such payment, distribution or security, the Senior Agent is hereby irrevocably authorized to endorse or assign the same. With respect to any such payments or distributions in cash, property, or other assets received by Subordinated Creditor, Subordinated Creditor shall be subrogated to the rights of such Senior Creditor to receive distributions with respect to the Senior Debt until the Subordinated Debt is Paid in Full (as defined in Section 6(a) below). |
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| e. | Waiver. WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THE SUBORDINATED DEBT DOCUMENTS, SUBORDINATED CREDITOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS AND DEFENSES ARISING OUT OF AN ELECTION OF REMEDIES BY THE SENIOR AGENT OR ANY OTHER SENIOR CREDITOR, EVEN THOUGH THAT ELECTION OF REMEDIES HAS DESTROYED SUBORDINATED CREDITOR’S RIGHTS OF SUBROGATION AND REIMBURSEMENT AGAINST THE COMPANY BY THE OPERATION OF ANY APPLICABLE LAW. AN ELECTION OF REMEDIES INCLUDES, WITHOUT LIMITATION, ANY foreclose upon any Collateral (as defined in the Credit Agreement) held by ANY SENIOR CREDITOR by one or more judicial or non-judicial sales or other dispositions, whether or not every aspect of any such sale is commercially reasonable or otherwise fails to comply with applicable law. |
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| f. | Stand Still. “Collection Action” means (a) to ask for, demand, or sue for any payment, distribution, or any other remedy in respect of indebtedness, (b) to accelerate such indebtedness, or (c) the commencement of, or the joinder with any creditor in commencing, any petition of bankruptcy, assignment for the benefit of creditors or any other creditors' agreement or insolvency proceeding against the Company or any assets of the Company. Notwithstanding Section 1(c) hereof, after any Default or Event of Default (each as described in the Credit Agreement) and until the earlier of (1) 180 days thereafter without any Collection Action having been initiated by the Senior Creditors or (2) six months following the Payment in Full of all Senior Debt, the Subordinated Creditor shall not: (i) take any Collection Action against the Company or with respect to the Subordinated Debt; (ii) sell, assign, transfer, pledge, mortgage, charge, hypothecate, or grant a security interest in the Subordinated Debt Documents or any of the Subordinated Debt, except subject to Section 1 hereof; (iii) advance any additional debt or liability, or the like, to, or receive any loan, dividend, return of capital, advance, gift, or any other transfer of any property whether real or personal, or tangible or intangible, from the Company; (iv) contest, protest, direct or object to any Collection Action by any Senior Creditor; nor (iv) object to (and hereby waives any and all claims with respect to) the forbearance by any Senior Creditor from taking any Collection Action. Notwithstanding the foregoing, if any Default or Event of Default is cured by the Company (to the extent capable of being cured) or waived by the Senior Creditors, Subordinated Creditor shall be entitled to do any of the foregoing as permitted hereby unless and until another Default or Event of Default occurs under the Credit Agreement. |
- Agreements by Subordinated Creditor and Company: Subordinated Creditor and the Company agree as follows:
a. The Subordinated Debt is, and shall always be, evidenced exclusively by the Subordinated Debt Documents.
b. The Company shall advise the Subordinated Creditor of the occurrence of any Default or Event of Default under the Credit Agreement; provided, that the failure of the Company to do so shall in no way effect the rights and privileges of the Senior Agent or other Senior Creditors or the duties or obligations of the Subordinated Creditor under this Agreement.
c. Except as expressly permitted pursuant to Section 1(c) hereof, Subordinated Creditor shall not demand, accept, or receive from the Company or any other Person, directly or indirectly, and the Company shall not make or give to Subordinated Creditor, directly or indirectly, any payment or other value in cash or in kind, on account of the Subordinated Debt.
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d. The Company shall not set off, establish a contra account, or otherwise apply, all or any part of the Subordinated Debt towards satisfaction of any obligation of the Subordinated Creditor to the Company.
e. Neither the Subordinated Creditor nor the Company shall, without the prior written consent of the Senior Agent, which is not to be unreasonably withheld or conditioned, (i) amend, restate, supplement or otherwise modify the Subordinated Debt Documents or (ii) alter, amend, or change the amount of, or any term of payment of, the Subordinated Debt (other than the forgiveness of the Subordinated Debt in whole or in part, or extension of any payment date therefor).
f. Subordinated Creditor shall not enforce any of its rights, remedies, powers, privileges and discretions with respect to the Subordinated Debt except as permitted in Section 1(f). Notwithstanding the foregoing, nothing contained herein shall prevent the Subordinated Creditor from: (i) taking any action to the extent necessary to prevent the running of any applicable statute of limitation or similar restriction on claims; (ii) the filing of any necessary responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding, or other pleading made by any Person objecting to or otherwise seeking the disallowance of the claims of the Subordinated Creditor, provided that such action is not in contravention of this Agreement or adverse to the rights, remedies or liens of Senior Creditors; or (iii) voting, filing proofs of claim and taking any other action with respect to the Subordinated Debt in any Debtor Relief Law (as defined in the Credit Agreement) to the extent not inconsistent with the other provisions of this Agreement.
Further Assurances: The Subordinated Creditor and the Company shall execute all such further instruments and do such other and further acts as the Senior Agent may reasonably request in furtherance of the Senior Agent’s rights enumerated hereunder. The respective obligations of the Subordinated Creditor and the Company hereunder being unique, are specifically enforceable by the Senior Agent.
Subordinated Creditor’s Obligations: In the event that, notwithstanding the restrictions set forth in Section 2, above, Subordinated Creditor receives any payment on account of the Subordinated Debt not expressly permitted by Section 1 above, Subordinated Creditor shall hold such payment in trust for the Senior Agent, for the benefit of the Senior Creditors, and shall not commingle such payment with any other funds of such Subordinated Creditor. Subordinated Creditor shall deliver all such payments to the Senior Agent, promptly upon receipt thereof in the identical form received, duly endorsed to the Senior Agent.
Certain Waivers By Subordinated Creditor: The Subordinated Creditor:
a. Waives notice of non-payment, presentment, demand, notice, protest or otherwise with respect to the Senior Debt.
b. Waives notice of the acceptance of this Agreement by the Senior Agent.
c. Except as otherwise provided under Section 8 hereof, assents to any extension, renewal, indulgence or waiver, permitted to the Company and/or any other Person liable or obligated to the Senior Agent or any other Senior Creditor for or on the Senior Debt; provided, however, that the stated maturity of any Senior Debt may not be extended without the prior written consent of the Subordinated Creditor.
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d. Waives all suretyship defenses generally.
e. If entitled thereto, waives the right to notice and/or hearing prior to the Senior Agent’s exercising of the Senior Agent’s rights and remedies hereunder or under any Credit Document.
No action by the Senior Agent which has been assented to herein shall affect the obligations of the Subordinated Creditor to the Senior Agent hereunder.
- Continuing Effectiveness of Subordination:
a. The Senior Agent and the other Senior Creditors may continue to rely upon this Agreement and the subordination effected hereby with respect to all Senior Debt which may arise hereafter. This Agreement shall remain in full force and effect until the Senior Debt (other than contingent indemnification obligations for which a claim has not been asserted) are irrevocably paid in full in cash and all Commitments have terminated (“Paid in Full” and “Payment in Full”). Upon Payment in Full, this Agreement shall automatically terminate without further action by the Parties to this Agreement.
b. The subordination effected hereby shall not be affected by any release, discharge or invalidation, by operation of law or otherwise, of the Senior Debt or by the legal incapacity of the Company, Subordinated Creditor or any other Person liable or obligated to the Senior Agent or any other Senior Creditor for or on the Senior Debt.
c. All interest on the Senior Debt for which the Company has agreed to be liable and all fees and expenses shall continue to accrue and shall continue to be Senior Debt for purposes of the subordination effected hereby notwithstanding any stay to the enforcement thereof against the Company, or disallowance therefor against the Company.
d. This Agreement, if previously terminated, shall be automatically reinstated, without any further action, if at any time any payment made or value received by either Senior Agent or any other Senior Creditor with respect to any Senior Debt is rescinded or must otherwise be returned by the Senior Agent or such other Senior Creditor upon the insolvency, bankruptcy or reorganization of Subordinated Creditor, the Company or otherwise, all as though such payment had not been made or value received.
- Insolvency:
a. In the event of any voluntary or involuntary insolvency, bankruptcy, receivership, custodianship, liquidation, dissolution, reorganization, assignment for the benefit of creditors, appointment of a custodian, receiver, trustee or other officer with similar powers or any other proceeding for the liquidation, dissolution or other winding up of a Person (each, a “Proceeding”) involving the Company:
i. This Agreement shall remain in full force and effect. All references to the Company shall include the Company as a debtor in possession and any receiver, assignee or trustee in any Proceeding. The provisions of this Agreement are intended to be and shall be enforceable under Section 510(a) of the United States Bankruptcy Code.
ii. The Senior Debt shall be Paid in Full before any payments in respect of the Subordinated Debt, whether in cash, securities (other than securities which are subordinated in right of payment, redemption or dividend payment, as applicable, to the same extent as provided herein) or other property, shall be made to Subordinated Creditor.
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iii. Payments in respect of the Subordinated Debt, whether in cash, securities (other than securities which are subordinated in right of payment, redemption or dividend payment, as applicable, to the same extent as provided herein) or other property which would otherwise, but for the terms hereof, be payable or deliverable on account of the Subordinated Debt Documents shall be paid or delivered directly to the Senior Agent until the Senior Debt is Paid in Full. Subordinated Creditor irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise deliver all such payments to the Senior Agent. Subordinated Creditor also irrevocably authorizes and empowers the Senior Agent, in the name of the Subordinated Creditor, to demand, sue for, collect and receive any and all such payments.
iv. The Subordinated Debt shall continue to be treated as subordinate to the Senior Debt, and the provisions of this Agreement shall continue to govern the relative rights and priorities of the Senior Creditors and the Subordinated Creditor, even if all or part of the Senior Debt or the security interests securing the Senior Debt are subordinated, set aside, avoided, invalidated or disallowed in connection with any such Proceeding.
b. If the Company shall become subject to a Proceeding, and if Senior Creditors shall desire to permit the use of cash collateral or to provide financing to the Company, the Subordinated Creditor agree that adequate notice to the Subordinated Creditor shall be deemed to have been provided if the Subordinated Creditor receive notice in accordance with Section 19 hereof (together with all applicable pleadings) no less than one (1) Business Day prior to the entry of an order approving same.
c. The Subordinated Creditor agrees that the Senior Agent may consent to the use of cash collateral or provide (or consent to a third party providing) financing to the Company on such terms and conditions and in such amounts as the Senior Agent, in its sole and exclusive discretion, may decide and, in connection therewith, the Company may grant to the Senior Creditors liens and security interests upon all of the property of the Company, which liens and security interests (i) shall secure payment of all Senior Debt (whether such Senior Debt arose prior to the commencement of any Proceeding or at any time thereafter) and all other financing provided by the Senior Creditors during such Proceeding and (ii) shall be superior in priority to the liens and security interests, if any, in favor of the Subordinated Creditor on the property of the Company.
d. Subordinated Creditor agrees that it will not object to or oppose a sale or other disposition of any Collateral (as defined in the Credit Agreement) free and clear of security interests, liens (if any), or other claims of Subordinated Creditor under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code, if the Senior Agent has consented to such sale or disposition and shall be deemed to have consented to such sale or disposition pursuant to Section 363(f) of the Bankruptcy Code. Subordinated Creditor agrees not to assert any right it may have to “adequate protection” of the Subordinated Creditor’s interest in any Collateral in any Proceeding and agrees that it will not seek to have the automatic stay lifted with respect to any Collateral without the prior written consent of Senior Agent. The Subordinated Creditor waives any claim it may now or hereafter have arising out of Senior Agent’s election, in any Proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, and/or any borrowing or grant of a security interest under Section 364 of the Bankruptcy Code by the Company, as debtor in possession.
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e. If Subordinated Creditor fails to file a proof of claim in connection with any Proceeding accurately reflecting its claims, and such filing is required to preserve such claims or is requested by the Senior Agent, then Subordinated Creditor agrees to execute, verify, deliver, and file such proof of claim and hereby irrevocably authorizes, empowers, and appoints the Senior Agent as its agent and attorney-in-fact to execute, verify, deliver and file such proof of claim upon the failure of Subordinated Creditor to do so prior to ten (10) days before the expiration of the time to file such proof of claim. Furthermore, Subordinated Creditor agrees to not vote its claim in any Proceeding without the prior written consent of the Senior Agent and hereby irrevocably authorizes, empowers, and appoints the Senior Agent as its agent and attorney-in-fact, for the Senior Agent’s use and benefit without notice to Subordinated Creditor, to accept or reject any plan of reorganization and otherwise vote such claim in such Proceeding in any way the Senior Agent chooses. Notwithstanding the foregoing, the Senior Agent shall not have any obligation to execute, verify, deliver and/or file any such proof of claim or to vote any such claim in any Proceeding.
f. This Agreement shall constitute a “subordination agreement” for the purposes of Section 510(a) of the Bankruptcy Code and shall be enforceable in any Bankruptcy Proceeding in accordance with its terms. In the event of any insolvency or bankruptcy proceeding (and any receivership, liquidation, reorganization or other similar proceeding in connection therewith being collectively referred to as an “Insolvency Proceeding”) relative to the Company or Subordinated Creditor or its or their respective creditors or property, the subordination provisions of this Agreement shall remain in full force and effect and all principal of, premium and interest on all Senior Debt shall first be Paid in Full before any payment on account of principal, premium, if any, or interest shall be made upon the Subordinated Debt Documents, and in any such proceedings any payment or distribution of any kind or character, whether in cash, securities or other property, which may be payable or deliverable in respect of the Subordinated Debt Documents shall be paid or delivered directly to the Senior Agent for application in payment thereof, unless and until such Senior Debt shall have been Paid in Full. No Senior Creditor be prejudiced in its right to enforce the subordination provisions of this Agreement by any act or failure to act on the part of the Company or any Senior Creditor.
Modification to Credit Agreements: Subordinated Creditor acknowledges and agrees that the Credit Agreement and any and all loan documents executed in connection therewith may be amended, restated, supplemented or otherwise modified from time to time; provided, however, that the stated maturity of any Senior Debt may not be extended without the prior written consent of the Subordinated Creditor, and further that no amendment or supplement shall prohibit the repayment, in the absence of a Default or Event of Default (each as defined in the Credit Agreement), of the Subordinated Debt with (i) free cash or (ii) proceeds of the issuance of equity or debt either of which are authorized in accordance with the provisions of the Credit Agreement. The Company shall promptly after the execution of any amendment or modification to the Credit Agreement, give copies thereof to the Subordinated Creditor, but the failure to do so by the Company shall in no way effect any of the rights or privileges of the Senior Agent under this Agreement.
Senior Agent’s Books and Records: The books and records of the Senior Agent showing the accounts between the Senior Agent and the Company and (if any) the Senior Agent and the Subordinated Creditor shall be admissible in any action or proceeding to enforce this Agreement and shall constitute prima facie evidence and proof of the items contained therein, absent manifest error.
Effect of Breach of Agreement: The Company and Subordinated Creditor each hereby acknowledges and agrees that any failure by any or all of the Company and Subordinated Creditor to promptly, punctually, and faithfully perform or discharge any of their respective obligations hereunder shall be an Event of Default under the Credit Agreement.
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Costs of Enforcement: The Company will pay on demand all attorneys’ fees and out-of-pocket expenses incurred by the Senior Agent’s and any other Senior Creditor’s attorneys and all costs incurred by the Senior Agent or any other Senior Creditor, including, without limitation, costs associated with travel on behalf of the Senior Agent or any other Senior Creditor, which costs and expenses are related to the Senior Agent’s or such other Senior Creditor’s efforts to preserve, protect, collect, or enforce any of the obligations of the Company and/or any of the Senior Agent’s Rights and Remedies (as defined in Section 13) hereunder (whether or not suit is instituted by or against the Senior Agent or any other Senior Creditor).
Incorporation: This Agreement constitutes the entire agreement and understanding of the parties relating to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, whether oral or written, relating to the subject matter hereof. No provisions hereof may be altered, amended, waived, canceled, or modified, except by a written instrument executed, sealed, and acknowledged by a duly authorized officer of the Senior Agent, the Company and the Subordinated Creditor with respect to which such alteration, amendment, waiver, cancellation or modification applies.
Senior Agent’s Rights and Remedies: The rights, remedies, powers, privileges, and discretions of the Senior Agent hereunder (hereinafter, the “Senior Agent’s Rights and Remedies”) shall be cumulative and not exclusive of any rights or remedies which it would otherwise have. No delay or omission by the Senior Agent in exercising or enforcing any of the Senior Agent’s Rights and Remedies shall operate as, or constitute, a waiver thereof. No waiver by the Senior Agent of any of the Senior Agent’s Rights and Remedies or of any default or remedy under any other agreement with the Company or the Subordinated Creditor shall operate as a waiver of any other default hereunder or thereunder. No exercise of the Senior Agent’s Rights and Remedies and no other agreement or transaction, of whatever nature, entered into between the Senior Agent, the Subordinated Creditor and/or between the Senior Agent and the Company at any time shall preclude any other or further exercise of the Senior Agent’s Rights and Remedies. No waiver by the Senior Agent of any of the Senior Agent’s Rights and Remedies on any one occasion shall be deemed a continuing waiver. All of the Senior Agent’s Rights and Remedies and all of the Senior Agent’s rights, remedies, powers, privileges, and discretions under any other agreement with the Subordinated Creditor and/or the Company shall be cumulative, and not alternative or exclusive, and may be exercised by the Senior Agent at such time or times and in such order of preference as the Senior Agent in its sole discretion may determine. The Senior Agent may proceed with respect to the Subordinated Debt without resort or regard to other collateral or sources of satisfaction of the Senior Debt or, if any, the obligations and indebtedness of the Subordinated Creditor to the Senior Agent and the other Senior Creditors.
Binding Effect: This Agreement has been duly executed and delivered by the Subordinated Creditor and the Company. Subordinated Creditor and the Company each represents and warrants solely on behalf of itself, that this Agreement constitutes a legal, valid and binding obligation of such Person, enforceable against such Person thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and the laws of agency and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. This Agreement shall be binding upon Subordinated Creditor, the Company and their respective, representatives, successors, and assigns, and shall inure to the benefit of and be enforceable by the Senior Agent and the other Senior Creditors, and their respective successors and assigns. This Agreement shall remain in full force and effect until the Senior Creditors are Paid in Full.
Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICT OF LAWS THEREOF, BUT INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
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- Jurisdiction; Consent to Service of Process.
a. THE SUBORDINATED CREDITOR AND THE COMPANY EACH IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE SUBORDINATED CREDITOR AND THE COMPANY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE SUBORDINATED CREDITOR AND THE COMPANY AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE AGENT OR ANY OTHER SENIOR CREDITOR MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST THE SUBORDINATED CREDITOR, THE COMPANY OR THEIR RESPECTIVE PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION.
b. THE SUBORDINATED CREDITOR AND THE COMPANY EACH IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (A) OF THIS SECTION. THE SUBORDINATED CREDITOR AND THE COMPANY EACH HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
c. THE SUBORDINATED CREDITOR AND THE COMPANY EACH AGREES THAT ANY ACTION COMMENCED BY SUCH PERSON ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT SOLELY IN A COURT REFERRED TO IN PARAGRAPH (A) OF THIS SECTION.
- Waiver of Jury Trial: The Senior Agent, the Company and Subordinated Creditor each respectively make the following waiver knowingly, voluntarily, and intentionally and understand that the Senior Agent, in the establishment and maintenance of the Senior Agent’s relationship with the Company, is relying thereon. THE AGENT, SUBORDINATED CREDITOR AND THE COMPANY EACH HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). THE AGENT, SUBORDINATED CREDITOR AND THE COMPANY EACH (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED TO IT, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT THE AGENT AND THE OTHER SENIOR CREDITORS HAVE BEEN INDUCED TO ENTER INTO THE CREDIT AGREEMENT AND THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.
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Counterparts: This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement in electronic format shall be effective as delivery of a manually executed counterpart of this Agreement.
Amendment and Restatement. This Agreement is being executed and delivered as an amendment and restatement in its entirety of that certain existing Subordination and Intercreditor Agreement dated as of December 28, 2022, by and among Subordinated Creditor, Senior Agent and the Company (as amended, restated, supplemented, and modified from time to time, the “Original Agreement”). The execution and delivery of this Agreement shall not constitute a novation of the Original Agreement and the obligations under the Original Agreement are being continued and superseded by this Agreement except as amended herein.
Notices: All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:
a. if to the Company, to:
c/o Mustang Funding, LLC
701 Lake Street E., Suite 250
Attn: James K Beltz
E-mail: jimmy@mustangfunding.com
b. if to the Subordinated Creditor, to:
Mill City Ventures III, Ltd.
1907 Wayzata Blvd., Wayzata MN 55391
Joseph A. Geraci, CFO
Email: jgeraci@millcityventures3.com
c. if to the Senior Agent, to:
Orion Pip LLC
405 Lexington Avenue
59th Floor
New York, NY 10174
E-mail: loanops@arenaco.com
Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.
[Signature Pages to Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date above first written.
| SUBORDINATED CREDITOR: | |
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| MILL CITY VENTURES III, LTD. | |
| By: | /s/ Joseph A. Geraci, II |
| Name: | Joseph A. Geraci II |
| Title: | Chief Financial Officer |
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[Signature Page (1 of 3) to Amended and Restated Subordination and Intercreditor Agreement]
| COMPANY: | |
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| MUSTANG FUNDING, LLC | |
| By: | /s/ James K. Beltz |
| Name: | James K. Beltz |
| Title: | President |
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[Signature Page (2 of 3) to Amended and Restated Subordination and Intercreditor Agreement]
| SENIOR AGENT: | |
|---|---|
| ORION PIP, LLC | |
| By: | /s/ Lawrence Cutler |
| Name: | Lawrence Cutler |
| Title: | Authorized Signatory |
[Signature Page (3 of 3) to Amended and Restated Subordination and Intercreditor Agreement]
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mcvt_ex103.htm EXHIBIT 10.3
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN AMENDED AND RESTATED SUBORDINATION AND INTERCREDITOR AGREEMENT (THE “SUBORDINATION AGREEMENT”) DATED AS OF THE DATE HEREOF AMONG MILL CITY VENTURES III, LTD., A MINNESOTA CORPORATION (“SUBORDINATED CREDITOR”), (II) ORION PIP LLC, A DELAWARE LIMITED LIABILITY COMPANY, AS ADMINISTRATIVE AGENT AND AS COLLATERAL AGENT (IN SUCH CAPACITIES, TOGETHER WITH ITS SUCCESSORS AND ASSIGNS, THE “SENIOR AGENT”) AND (III) MUSTANG FUNDING, LLC, A DELAWARE LIMITED LIABILITY COMPANY (THE “COMPANY”) TO THE INDEBTEDNESS (INCLUDING INTEREST) OWED BY THE COMPANY PURSUANT TO THAT CERTAIN SENIOR SECURED CREDIT AND GUARANTY AGREEMENT DATED AS OF DECEMBER 28, 2022, BETWEEN THE COMPANY, THE GUARANTORS PARTY THERETO, THE LENDERS PARTY THERETO AND THE SENIOR AGENT, AS SUCH SENIOR SECURED CREDIT AND GUARANTY AGREEMENT HAS BEEN AND HEREAFTER MAY BE AMENDED, SUPPLEMENTED, OR OTHERWISE MODIFIED FROM TIME TO TIME (the “SENIOR CREDIT AGREEMENT”); AND EACH PARTY TO THIS AGREEMENT, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.
SECURITY AGREEMENT
This Security Agreement (“Agreement”) is made and entered into as of January 24, 2025 by Mustang Funding, LLC, a Delaware limited liability company (“Debtor”), in favor Mill City Ventures III, Ltd., a Minnesota corporation (“Lender”).
A. Debtor is indebted to Lender pursuant to that certain Fourth Short-Term Loan Agreement between Debtor and Lender, and the related Fourth Short-Term Promissory Note (each dated September 29, 2023, and each as earlier amended on April 29, 2024, November 18, 2024, December 18, 2024, January 7, 2025, and January 21, 2025, as so amended, collectively, the “Fourth Short-Term Loan”).
B. Lender has requested to obtain Collateral to secure the Obligations, and Debtor now desires to pledge, grant, transfer, and assign to Lender a security interest in the Collateral (as hereinafter defined) to secure the Obligations (as hereinafter defined).
Therefore, for good and valuable consideration, Debtor hereby agrees for the benefit of Lender as follows:
ARTICLE I. SECURITY INTEREST
1.1 Grant of Security Interest. Debtor hereby grants a security interest in and collaterally assigns the Collateral (defined below) to Lender to secure all Obligations (defined below) to Lender. The intent of the parties hereto is that the Collateral secures all Obligations to Lender, whether or not such Obligations exist under this Agreement or any other agreements, whether now or hereafter existing, between the Debtor and Lender, and relating to the Fourth Short-Term Loan (together and individually, and including any subsequent amendments thereto, the “Loan Documents”).
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1.2 “Collateral” means all personal property of Debtor whether now owned or existing or hereafter acquired by Debtor, wherever located (which includes all documents, general intangibles, additions and accessions, replacements, returned or repossessed goods, and books and records relating to the following; and all proceeds and products of the following) including, without limitation, the following:
All equipment (“Equipment”), fixtures, and inventory (“Inventory”) (including all goods held for sale, lease or demonstration or to be furnished under contracts of service, goods leased to others, trade-ins and repossessions, raw materials, work in process and materials or supplies used or consumed in Debtor’s business), including all spare and repair parts, special tools, equipment and replacements for any of the foregoing, and any software embedded therein or related thereto;
All accounts (“Accounts”), contract rights, documents, chattel paper (including electronic chattel paper), instruments, and general intangibles (including rights to payment from state or federal government assistance programs), all returned or repossessed goods the sale of which gave rise to any of the foregoing;
All financial assets, investment property, securities (whether certificated or uncertificated, and including investment company securities), security entitlements, securities accounts, commodity contracts, and commodity accounts, including all substitutions and additions thereto, and all dividends, distributions and sums distributable or payable from, upon or in respect of such property;
All motor vehicles, trailers, buses, other rolling stock and related equipment of every kind now existing or hereafter acquired and all additions and accessories thereto, whether located on any property owned or leased by Debtors or elsewhere;
All commercial tort claims;
All deposit accounts;
All letter-of-credit rights;
All supporting obligations that support the payment or performance of any of the foregoing; and
All additions and accessions to, all proceeds, products, offspring and profits of, and all rights and privileges incident to, any of the foregoing.
The terms set forth in this Agreement (including the specific items of collateral listed above) shall have the meanings set forth in the Uniform Commercial Code as adopted in the State of Delaware, unless otherwise defined herein.
1.3 “Certain Limited Exclusions”. Notwithstanding anything herein to the contrary, in no event shall the Collateral include, and Debtor shall not be deemed to have granted a security interest in, nor shall the security interest granted under Section 1.2 hereof attach to:
(a) prior to termination and repayment in full of all obligations under the Senior Credit Agreement and the termination of the Subordination Agreement, any property, assets or other interests of the Debtor that has not also been subject to a security interest granted to the Senior Agent or that is otherwise subject to the lien in favor of the Senior Agent;
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(b) any lease, intellectual property, general intangible, license, contract, property right, asset or agreement to which Debtor is a party or any of its rights or interests thereunder if and for so long as the grant of such security interest shall constitute or result in (i) the abandonment, invalidation or unenforceability of any right, title or interest of Debtor therein or (ii) in a breach or termination pursuant to the terms of, or a default under, or require the consent of any third party under (provided that Debtor shall use commercially reasonable efforts to obtain such consent), any such lease, intellectual property, general intangibles, license, contract, property right, asset or agreement (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law (including the U.S. Bankruptcy Code) or principles of equity); provided that the Collateral shall include and such security interest shall attach immediately at such time as the condition causing such abandonment, invalidation or unenforceability shall be remedied and to the extent severable, shall attach immediately to any portion of such lease, intellectual property, general intangible, license, contract, property rights or agreement that does not result in any of the consequences specified in clauses (i) or (ii) above;
(c) any intent-to-use United States trademark application for which an amendment to allege use or statement of use has not been filed under 15 U.S.C. § 1051(c) or 15 U.S.C. § 1051(d), respectively, or, if filed, has not been deemed in conformance with 15 U.S.C. § 1051(a), or examined and accepted, respectively, by the United States Patent and Trademark Office, in each case, only to the extent the grant of security interest in such intent-to-use Trademark is in violation of 15 U.S.C. § 1060 and only unless and until a “Statement of Use” or “Amendment to Allege Use” is filed, has been deemed in conformance with 15 U.S.C. §1051(a) or examined and accepted, respectively, by the United States Patent and Trademark Office at which point such Trademarks shall automatically be included as Collateral; and
(d) any general or limited partnership interests in a general or limited partnership or membership interests in a limited liability company to the extent not permitted under the applicable organizational instrument pursuant to which such partnership or limited liability company is formed; provided that (x) such prohibition was not created in contemplation of this exclusion and (y) the Debtor shall, following the written request of Lender, use commercially reasonable efforts to obtain a waiver, amendment or other modification of such organizational instrument necessary to allow for the granting of a Lien on such general or limited partnership interests, as the case may be, by Debtor hereunder.
1.4 “Obligations” means each and all of Debtor’s Obligations (as defined in the Fourth Short-Term Loan ) to Lender under the Fourth Short-Term Loan, this Agreement and any other Loan Document entered into from time to time between Lender and Debtor, in each case, whether now or hereafter existing or incurred, whether liquidated or unliquidated, whether absolute or contingent, and including principal, interest, fees, expenses and charges relating to any of the foregoing.
ARTICLE II. WARRANTIES AND COVENANTS
In addition to all other warranties and covenants of Debtor under the Loan Documents which are expressly incorporated herein as part of this Agreement and while any part of the credit granted to Debtor under the Loan Documents is available or any Obligations to Lender are unpaid or outstanding, Debtor continuously warrants and agrees as follows:
2.1 Debtor’s Name, Organization. Debtor will not do business under another name nor use any trade name without giving at least ten (10) days prior written notice to Lender. The address appearing in Schedule A below is Debtor’s principal place of business; and as of the date hereof, all tangible Collateral is located at that address or the other addresses listed Schedule A except to the extent that Debtor has provided prior written notice to Lender of any change of address.
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2.2 Status of Collateral. Except for items of insignificant or immaterial value or as otherwise reflected in writing by Debtor to Lender, (i) Collateral constituting inventory, equipment and fixtures is in good condition, not obsolete and is either currently saleable or usable; and (ii) Collateral constituting accounts, contract rights, notes, chattel paper and other third-party obligations to pay is fully enforceable in accordance with its terms and not subject to return, dispute, setoff, credit allowance or adjustment except for discounts for prompt payment. Unless Debtor provides Lender with written notice to the contrary, Debtor has no notice or knowledge of anything that would impair the ability of any third-party obligor to pay any debt to Debtor when due.
2.3 Ownership; Maintenance of Collateral; Restrictions on Liens and Dispositions. Debtor owns the Collateral free of all liens, claims, other encumbrances and security interests except in favor of Senior Agent, as permitted under the Senior Credit Agreement or as permitted in writing by Lender or Senior Agent from time to time. Debtor will: (i) maintain the Collateral in good condition and repair (reasonable wear and tear excepted) or replace any Collateral that Debtor reasonably determines is necessary for the operation of Debtor’s business, and not permit the value of such Collateral to be materially impaired (reasonable wear and tear excepted); (ii) [reserved]; (iii) keep the Collateral free from all liens and security interests (other than liens, security interests and encumbrances, in favor of Senior Agent and any other liens permitted under the Senior Credit Agreement, each a “Permitted Senior Creditor Lien”), executions, attachments, claims, encumbrances and security interests other than Lender’s security interest (and the security interest of the Senior Agent or one or more other senior creditors pursuant a written subordination and/or intercreditor agreement binding upon Lender, each a “Permitted Senior Lender”), in each case, excluding any purchase money security interests for furniture, fixtures and equipment to be used in the ordinary course of business (each a “Permitted PMSI” and together with the Permitted Senior Creditor Liens, each a “Permitted Lien”); (iv) defend the Collateral against all claims and legal proceedings by persons other than Lender, Senior Agent or a Permitted Senior Lender and any other holder of a Permitted Lien; (v) pay and discharge when due all material taxes, levies and other charges or fees upon the Collateral except for payment of taxes contested by Debtor in good faith by appropriate proceedings so long as no levy or lien has been imposed upon the Collateral; (vi) not lease, sell or transfer the Collateral to the extent such sale, lease or transfer is prohibited under the Senior Credit Agreement; (vii) not permit the Collateral, without the consent of Lender or the Senior Agent, to become a fixture or an accession to other goods; (viii) not permit the Collateral to be used in violation of any applicable law, regulation or policy of insurance, in each case, to the extent such violation could reasonably be expected to result in a Material Adverse Effect; and, (ix) as to the Collateral consisting of instruments and chattel paper, preserve Lender’s rights in it against all other parties, subject in each case, to the rights, interests and priority of the Senior Agent and the other lenders party to the Senior Credit Agreement from time to time.
2.4 Maintenance of Security Interest; Purchase Money Security Interests. Debtor shall take any action reasonably requested by Lender to preserve the Collateral and to establish the value of, the priority of, to perfect, to continue the perfection of or to enforce Lender’s interest in the Collateral and Lender’s rights under this Agreement; and shall pay all costs and expenses related thereto; provided that the parties hereto acknowledge and agree that if the Senior Credit Agreement does not prohibit the sale, lease, transfer or disposition of any Collateral, Debtor shall be permitted to sell, lease, transfer or dispose of such Collateral hereunder. Debtor and Lender intend to maintain the full effect of any purchase money security interest granted in favor of Lender notwithstanding the fact that the Collateral so purchased is also pledged as security for other Obligations under the Loan Documents.
2.5 Security Interest in Commercial Tort Claims. If a commercial tort claim reasonably expected to be in excess of $250,000 ever arises that is intended to compensate Debtor for loss of property that is Collateral or that is intended to compensate Debtor for loss of operating revenues, Debtor shall notify Lender of such claim, provide all documents pertinent to such claim, and grant Lender a security interest in such claim subject to any restrictions or limitations in favor of the Senior Agent.
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2.6 Collateral Inspections; Modifications and Changes in Collateral. At reasonable times and at reasonable intervals, and in no event more than once a calendar year unless an Event of Default has occurred and is continuing, Lender may examine the Collateral and Debtor’s records pertaining to it, wherever located, and make copies of such records at Debtor’s expense; and Debtor shall assist Lender in so doing. Without Lender’s prior written consent, Debtor shall not materially alter, modify, discount, extend, renew or cancel any Collateral, except for discounts, modifications, extensions, renewals or cancellations granted in Debtors’ ordinary course of business. Debtor shall promptly notify Lender in writing of any material change in the condition of the Collateral and of any change in location of a material portion of the Collateral, in each case, to the extent Debtor is also required to notify Senior Agent. Upon and during the continuance of any Event of Default, or if otherwise reasonably requested by Lender, Debtor shall reimburse Lender for the reasonable and customary out-of-pocket costs of Lender’s onsite inspections; provided that if no Event of Default has occurred and is continuing at the time of such inspection, then Debtor shall not be required to pay for on-site inspections.
2.7 Collateral Records, Reports and Statements. Debtor shall keep accurate and complete records respecting the Collateral. At such times as Lender may reasonably require, Debtor shall furnish to Lender any records/information Lender might reasonably request.
2.8 Chattel Paper, Instruments, Etc. Subject in all respects to the terms of the Subordination Agreement, the rights and interests of the Senior Agent and the other lenders from time to time party to the Senior Credit Agreement and the terms of any other written subordination or intercreditor agreement binding upon Lender and Debtor, (a) all chattel paper, instruments, drafts, notes, acceptances, and other documents that constitute Collateral shall be on forms that are reasonably satisfactory to Lender; and (b) if permitted, Debtor shall promptly mark chattel paper to indicate conspicuously Lender’s security interest therein, shall not deliver any chattel paper or negotiable instruments to any other entity and, upon request, shall deliver all original chattel paper, instruments, drafts, notes, acceptances and other documents which constitute Collateral to Lender.
2.9 Insurance. Debtors will maintain insurance as required under the Senior Credit Agreement; and subject to the rights and interests of the Senior Agent and the other lenders from time to time party to the Senior Credit Agreement and the terms of any other written subordination or intercreditor agreement binding upon Lender and Debtor, will designate Lender as loss payee with a “Lender’s Loss Payable” endorsement on any casualty policies and take such other action as Lender may reasonably request to ensure that Lender will receive the insurance proceeds of the Collateral. Subject in all respects to the terms of the Subordination Agreement, the rights and interests of the Senior Agent and the other lenders from time to time party to the Senior Credit Agreement and the terms of any other written subordination or intercreditor agreement binding upon Lender and Debtor: Debtor assigns all insurance proceeds to and irrevocably directs, while any Obligations remain unpaid, any insurer to pay to Lender the proceeds of all such insurance and any premium refund; authorizes Lender to endorse Debtor’s name to effect the same, to make, adjust or settle, in Debtor’s names, any claim on any insurance policy relating to the Collateral; and, at the option of Lender, authorizes Lender to apply such proceeds and refunds to the Obligations or to restoration of the Collateral, returning any excess to Debtor, subject to the terms of the Subordination Agreement.
2.10 Authorization of Filing. Debtor hereby authorizes Lender to file all financing statements describing the Collateral, and all amendments thereto, in any offices as Lender, in its sole discretion, may determine.
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ARTICLE III. COLLECTIONS
3.1 Deposit with Lender. Subject in all respects to the terms of the Subordination Agreement, the rights and interests of the Senior Agent and the other lenders from time to time party to the Senior Credit Agreement and the terms of any other written subordination or intercreditor agreement binding upon Lender and Debtor, (i) at any time during the continuance of an Event of Default, the Lender may require that all proceeds of Collateral received by Debtor shall be held by Debtor upon an express trust for Lender, shall not be commingled with any other funds or property of Debtor and shall be turned over to Lender in precisely the form received (but endorsed by Debtor, if necessary for collection) not later than the business day following the day of their receipt and (ii) during the continuance of an Event of Default, all proceeds of Collateral received by Lender directly or from Debtor shall be applied against the Obligations in such order and at such times as Lender shall determine in accordance with the terms of the Fourth Short-Term Loan.
ARTICLE IV. RIGHTS AND DUTIES OF LENDER
In addition to all other rights (including setoff) and duties of Lender under the Loan Documents that are expressly incorporated herein as a part of this Agreement, and subject in all respects to the terms of the Subordination Agreement, the rights and interests of the Senior Agent and the other lenders from time to time party to the Senior Credit Agreement and the terms of any other written subordination or intercreditor agreement binding upon Lender and Debtor, the following provisions shall also apply:
4.1 Authority to Perform for Debtor. Subject to the terms of the Subordination Agreement, Debtor presently appoints any officer of Lender as Debtors’ attorney-in-fact (coupled with an interest and irrevocable while any Obligations remain unpaid) to do any of the following upon and during the continuation of a an Event of Default by Debtor hereunder (subject to any notice requirements or grace/cure periods under this or other agreements between Debtor and Lender): (i) to endorse or place the name of Debtor on any invoice or document of title relating to accounts, drafts against customers, notices to customers, notes, acceptances, assignments of government contracts, instruments, financing statements, checks, drafts, money orders, insurance claims or payments or other documents evidencing payment or a security interest relating to the Collateral; (ii) to receive, open and dispose of all mail addressed to Debtor and to notify the Post Office authorities to change the address for delivery of mail addressed to Debtor to an address designated by Lender; (iii) to do all such other acts and things necessary to carry out Debtor’s duties under this Agreement and the other Loan Documents; and (iv) to perfect, protect and/or realize upon Lender’s interest in the Collateral. If the Collateral includes funds or property in depository accounts, Debtor authorizes each of its depository institutions to remit to Lender, without liability to Debtor, all of Debtor’s funds on deposit with such institution upon written direction by Lender after Event of Default and during the continuance of an Event of Default by Debtor hereunder, subject to the terms of the Subordination Agreement. All acts by Lender are hereby ratified and approved, in each case, except arising out of Lender’s gross negligence, willful misconduct or bad faith, and Lender shall not be liable for any acts of commission or omission, nor for any efforts of judgment or mistakes of fact or law, in each case, except for any liabilities arising out of gross negligence, willful misconduct or bad faith of Lender.
4.2 Verification and Notification; Lender’s Rights. Lender may verify Collateral in any commercially reasonable manner, and Debtor shall assist Lender in so doing. Subject to the terms of the Subordination Agreement, upon the occurrence and during the continuance of an Event of Default, Lender may at any time and Debtor shall, upon request of the Lender, notify the account debtors to make payment directly to Lender; and Lender may enforce collection of, sell, settle, compromise, extend or renew the indebtedness of such account debtors; all without notice to or the consent the Debtor. Until account debtors are so notified, Debtor, as the agent of Lender, shall make collections on the Collateral subject to the terms of the Subordination Agreement. Lender may at any time notify any bailee possessing Collateral of Lender’s security interest and, upon the occurrence and during the continuance of an Event of Default hereunder, direct such bailee to turn over the Collateral to Lender subject to the terms of the Subordination Agreement.
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4.3 Collateral Preservation. Lender shall use reasonable care in the custody and preservation of any Collateral in its physical possession but in determining such standard of reasonable care, Debtor expressly acknowledges that Lender has no duty to: (i) insure the Collateral against hazards; (ii) protect it from seizure, theft or conversion by third parties, third parties’ claims or acts of God; (iii) give to Debtor any notices received by Lender regarding the Collateral; (iv) perfect or continue perfection of any security interest in favor of Debtor, (v) perform any services, complete any work-in-process or take any other action in connection with the management or maintenance of the Collateral; or (vi) sue or otherwise effect collection upon any accounts even if Lender shall have made a demand for payment upon individual account debtors. Notwithstanding any failure by Lender to use reasonable care in preserving the Collateral, Debtors agrees that Lender shall not be liable for consequential or special damages arising therefrom.
ARTICLE V. DEFAULTS AND REMEDIES
Subject in all respects to the terms of the Subordination Agreement, the rights and interests of the Senior Agent and the other lenders from time to time party to the Senior Credit Agreement and the terms of any other written subordination or intercreditor agreement binding upon Lender and Debtor, Lender may enforce its rights and remedies under this Agreement during the continuation of an Event of Default.
5.1 Cumulative Remedies; Notice; Waiver. In addition to the remedies for an Event of Default set forth in the Loan Documents, Lender upon the continuance of an Event of Default shall have all other rights and remedies provided by the Uniform Commercial Code, as well as any other applicable law and this Agreement. The rights and remedies specified herein are cumulative and are not exclusive of any rights or remedies that the Lender would otherwise have. With respect to such rights and remedies, subject to the terms of the Subordination Agreement:
(a) Assembling Collateral; Storage; Use of the Debtors Names/Other Property. Lender may require Debtor to assemble the Collateral and to make it available to Lender at any convenient place designated by Lender. Debtor recognizes that Lender will not have an adequate remedy in law if this obligation is breached and accordingly, Debtor’s obligation to assemble the Collateral shall be specifically enforceable. Lender shall have the right to take immediate possession of said Collateral and Debtor irrevocably authorizes Lender to enter any of the premises wherever said Collateral shall be located, and to store, repair, maintain, assemble, manufacture, advertise and sell, lease or dispose of (by public sale or otherwise) the same on said premises until sold, all without charge or rent to Lender. Lender is hereby granted an irrevocable license to use, without charge, Debtor’s equipment, inventory, labels, patents, copyrights, franchises, names, trade secrets, trade names, trademarks and advertising matter and any property of a similar nature; and Debtor’s rights under all licenses and franchise agreements shall inure to Lender’s benefit.
(b) Notice of Disposition. Written notice, when required by law, sent to the address of Debtor in this Agreement, at least thirty (30) calendar days (counting the day of sending) before the date of a proposed disposition of the Collateral is reasonable notice. Notification to account debtors by Lender shall not be deemed a disposition of the Collateral.
(c) Possession of Collateral/Commercial Reasonableness. Lender shall not, at any time, be obligated to either take or retain possession or control of the Collateral. With respect to Collateral in the possession or control of Lender, Debtor and Lender agree that as a standard for determining commercial reasonableness, Lender need not liquidate, collect, sell or otherwise dispose of any of the Collateral the disposition of which Lender believes, in good faith, would not be commercially reasonable, would subject Lender to third-party claims or liability, or that other potential purchasers could be attracted or that a better price could be obtained if Lender held the Collateral for up to one year; and Lender shall not then be deemed to have retained the Collateral in satisfaction of the Obligations. Furthermore, Lender may sell the Collateral on credit (and reduce the Obligations only when payment is received from the buyer), at wholesale and/or with or without an agent or broker, and Lender need not complete, process or repair the Collateral prior to disposition.
(d) Waiver by Lender. Lender may permit Debtor to attempt to remedy any Event of Default without waiving its rights and remedies hereunder, and Lender may waive any default without waiving any other subsequent or prior default by Debtor. Furthermore, delay on the part of Lender in exercising any right, power or privilege hereunder or at law shall not operate as a waiver thereof, nor shall any single or partial exercise of such right, power or privilege preclude other exercise thereof or the exercise of any other right, power or privilege. No waiver or suspension shall be deemed to have occurred unless Lender has expressly agreed in writing specifying such waiver or suspension.
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(e) Deficiency. In the event that the proceeds of any sale, collection or realization of or upon the Collateral by Lender are insufficient to pay all amounts to which Lender is legally entitled, then Debtor shall be liable for the deficiency, together with interest thereon as provided in the governing Loan Documents or (if no interest is so provided) at such other rate as shall be fixed by applicable law, together with the costs of collection and the fees and expenses of any attorneys employed by Lender to collect such deficiency.
ARTICLE VI. MISCELLANEOUS
All documents attached hereto, including any appendices, schedules, riders, and exhibits to this Agreement, are hereby expressly incorporated by reference.
Notices to Debtor or to Lender shall be given as provided in the Loan Documents.
Debtor shall (a) reimburse Lender and save Lender harmless against liability for the payment of all reasonable and customary out-of-pocket expenses arising in connection with enforcement of, or the preservation or exercise of any rights (including the right to collect and dispose of the Collateral) under, this Agreement or any of the other Loan Documents, including without limitation the fees and expenses of counsel to Lender arising in such connection; and (b) pay, and hold Lender harmless from and against, any and all present and future stamp taxes or similar document taxes or recording taxes and any and all charges with respect to or resulting from any delay in paying, or failure to pay, such taxes.
Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision hereof shall be prohibited by or invalid under applicable law, then such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
This Agreement contains the entire agreement of the parties hereto with respect to the matters contemplated herein, supersedes all prior oral and written agreements with respect to such matters, and may not be modified, deleted or amended except by written instrument executed by the parties. All terms of this Agreement shall be binding upon, and shall inure to the benefit of and be enforceable by, the parties and their respective successors and permitted assigns; provided, however, that Debtor shall not have the right to assign or transfer any of its rights or obligations hereunder without the prior written consent of Lender.
This Agreement shall terminate upon the payment and performance in full of all Obligations (excluding any inchoate indemnification obligations).
This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto shall be governed by and construed in accordance with the laws of the State of Minnesota (excluding the choice of law rules thereof); provided however, that the Dispute Resolution rules pursuant to Section 9(m) of the Fourth Short-Term Loan shall control. Lender and Debtor hereby acknowledge that each party participated in the negotiation and drafting of this Agreement and that, accordingly, no court construing this Agreement shall construe it more stringently against one party than against the other.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned has executed this Security Agreement as of the date first written above.
| MUSTANG FUNDING, LLC | |
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| /s/ James K. Beltz |
| By: | James K. Beltz |
| Its: | President |
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mcvt_ex104.htm EXHIBIT 10.4
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (“Agreement”) is made and entered into to be effective as of January 1, 2025, between Mill City Ventures III, Ltd. (the “Company”) and Douglas M. Polinsky, individually (the “Executive”).
RECITALS
WHEREAS, the Company desires to assure itself of the Executive’s employment during the period specified herein to maintain and grow the company’s business ventures and reputation in the industry;
WHEREAS, the Company further desires to ensure that confidential information or information that may give the Company competitive advantages be held in strict confidence. The marketplace in which Company does business is extremely competitive. In addition, the Company regards it to be vital to its interest that its employees, its customers, its venders and its prospective customers, and those of its associated companies, be free from recruitment, inducement and solicitation from Executive (other than in the course of Company business) and that the Company be protected against competition of the Executive;
WHEREAS, the Company and the Executive have been involved in negotiations regarding the creation of an employment relationship between the Company and the Executive;
WHEREAS, the negotiations between the Company and the Executive have been conducted on a good faith, arm’s-length basis by the Compensation Committee of the Company’s Board of Directors and the Executive;
WHEREAS, the Executive is prepared to enter into this Agreement and give the Company the assurance it desires; and
WHEREAS, based upon such negotiations and as a result thereof, the Company and the Executive have determined to enter into an employment relationship and to document the terms thereof.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants and agreements set forth herein, the parties agree as follows:
- Term. The Executive’s employment hereunder shall be effective as of January 1, 2025 (the “Effective Date”) and shall continue for Twenty-Four (24) months (“Term End Date”), unless terminated earlier pursuant to Section 9 of this Agreement, and that on such Term End Date the Agreement may be extended, upon the same terms and conditions, for an additional one (1) year as mutually agreed to by the Parties unless notice, at least sixty (60) days before the Term End date is given by one party to the other. The period during which the Executive is employed by the Company hereunder is hereinafter referred to as the “Employment Term.”
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- Employment. The Company hereby employs the Executive, and the Executive hereby accepts employment and shall serve as a Chief Executive Officer (“CEO”) of Company reporting to the Company Board of Directors. The Executive admits and acknowledges that prior to accepting the offer of employment from the Company, the Executive was advised that the employment involved agreeing to both a Restrictive Covenant agreement and a Confidential Information agreement and that terms of the Restrictive Covenant agreement and Confidential Information agreement were conveyed to and known by the Executive at the time the Executive accepted the Company’s offer of employment. The Executive thus acknowledges that the employment and increase in salary associated with the employment constitutes fair and adequate consideration for the Restrictive Covenant agreement and Confidential Information provisions. In addition, the Executive agrees, during the term hereof, to discharge faithfully, diligently and to the best of the Executive’s ability the responsibilities of a CEO of the Company as set forth in this Agreement or as defined from time to time by the Board of Directors of Company.
a. Duties. During the Employment Term, the Executive shall be responsible for Company operations and those relationships with the Company established by the Board of Directors, and such other duties and responsibilities as are established by the Board of Directors.
Extent of Services. The Executive shall devote a substantial amount of his business work related time and attention associated with his role with the Company to the performance of the Executive’s duties hereunder and will not engage in any other business, profession, or occupation for compensation or otherwise which would conflict or interfere with the performance of such duties either directly or indirectly without the prior written consent of the Board of Directors. Notwithstanding the foregoing, the Executive will be permitted to: (a) act or serve as a director, trustee, committee member, or principal of any type of business, civic, or charitable organization as long as such activities are disclosed in writing to the Board of Directors; and (b) purchase or own less than five percent (5%) of the publicly traded securities of any corporation, provided that such ownership represents a passive investment and that the Executive is not a controlling person of, or a member of a group that controls, such corporation, provided further that the activities described in clauses (a) and (b) do not interfere with the performance of the Executive’s duties and responsibilities to the Company as provided hereunder, including, but not limited to, the obligations set forth in Section 6 and Section 7 of this Agreement.
Compensation. The Company shall pay the Executive compensation as set forth on the attached Schedule A (“Salary”) which shall be paid in monthly installments, less withholdings required by state and federal law and other agreed-to withholdings, pursuant to customary payroll practices and applicable wage payment laws, but no less frequently than monthly. The Salary indicated in Schedule A may not be decreased without the Executive’s prior written consent.
Employment Benefits. During the term of the Executive’s employment hereunder, the Executive shall be entitled to the following benefits to the extent that the Company offers and continues to offer them:
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a. Health and 401K as available and offered by the Company from time to time.
b. As provided for in Company’s operating budget each year, reimbursement for business out-of-pocket expenses reasonably incurred and approved pursuant to Company’s standard business expense approval process, and aligned with the operating budget in the performance of the Executive’s services pursuant to this Agreement. All reimbursable expenses shall be appropriately documented in reasonable detail by the Executive upon submission of any request for reimbursement, and in a format and manner consistent with the Company’s expense reporting policy.
c. Up to three weeks of paid time off (“PTO”) and other executive level benefits as provided by the Company from time to time, and in addition the following paid holidays: New Years Day, Fourth of July, Thanksgiving Day as well as the day after Thanksgiving, Memorial Day, Labor Day and Christmas. Any of these holidays that land on a Saturday, the paid day off will be the preceding Friday and any such holiday landing on a Sunday, the paid day off will be the following Monday.
- Restrictive Covenants. For the purpose of this Section 6 only, the definition of the “Company” as identified above is expanded to include the Company and any entity that owns any portion of Company or any company owned by Company. During the term of this Agreement and for a period of two (2) years thereafter, the Executive shall not indirectly or directly, in any capacity, including but not limited to, as an owner, partner, shareholder, director, officer, manager, employee, agent, adviser or consultant, in any business, firm, organizations, partnership, corporation or other entity located anywhere in the United States of America in which the Company does, or has done, business in or identified for expansion into, with the preceding twelve months of Executive’s employment ending with the Company:
a. sell, for himself or for, or through another, contract with, solicit, accept business from, provide products or services to or accept employment, or attempt to contract, solicit, accept business, or accept employment with, or from, any Customer of the Company that did business with the Company, or was provided services by the Company, while Executive was employed by the Company or any Customer that had done so with the Company within twelve (12) months of the commencement of Executive’s employment with Company or provide services to or support or aid another in any way that is providing products or services that are the same or similar to those provided by the Company to a customer of the Company that did business with the Company while the Executive was employed by the Company. The Executive acknowledges and agrees that all customers of the Company are the property and assets of the Company, regardless of whether any customer became a customer of Company through the Executive or not;
b. induce or attempt to induce any employee of the Company to leave the employ of the Company, or any affiliated company, or any consultant, vendor, or other independent contractor for the Company to change or terminate any relationship between that person or entity and the Company or employee any such employee for themselves or for any other person or company they are associated with directly or indirectly;
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c. assign or otherwise transfer, whether or not for consideration, any customer or employee lists, internal memoranda, bills, receipts, confidential information, or any other form of business records or documents, or any tangible materials concerning the Company; or
d. assist or support, or encourage, or attempt to assist or encourage, any other person or entity in carrying out, directly or indirectly, any activity that would be prohibited by the above provisions of this Section 6 if such activity were carried out by the Executive, directly or indirectly, or induce any employee of the Company to carry out, directly or indirectly, any such activity.
- Duty Not To Disclose Confidential Information.
a. Disclosure or Use of Confidential Information. The Executive agrees that the Executive will not use, directly or indirectly, the Company’s Confidential Information for the benefit of any person, entity or organization other than the Company or allow such to occur or disclose such Confidential Information without the written authorization of the Board of Directors, either during or after the term of this Agreement, for as long as such information retains the characteristics of Confidential Information as deemed by the Company, or except as expressly permitted by this Agreement or as required by applicable law, subpoena or other legal process. The Executive will be solely responsible for causing the compliance of, and any breach of, the confidentiality obligations set forth in this Agreement by the Executive’s agents or other representatives. In the event that the Executive is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, the Executive will notify the Company promptly of the request or requirement so that the Company may seek an appropriate protective order or waive compliance with the provisions of this Section. If, in the absence of a protective order or a duly given waiver by the Company, the Executive is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt or otherwise be in violation of applicable law, the Executive may disclose such Confidential Information to the tribunal; provided, however, that the Executive will use his reasonable efforts to obtain, at the written request of the Company, an order for filing under seal or other assurance that confidential treatment will be accorded to the Confidential Information required to be disclosed.
b. Trade Secrets. Any trade secrets of the Company will be entitled to all of the protections and benefits under applicable state trade secret law and any other applicable law. If any information that the Company deems to be a trade secret is found by a court of competent jurisdiction not to be a trade secret for purposes of this Agreement, such information will, nevertheless, be considered Confidential Information for purposes of this Agreement.
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c. Confidential Information Defined. For purposes of this Agreement, the term “Confidential Information” means oral or written knowledge and information not generally known whether presently existing or developed in the future, including trade secrets, about the Company’s methods, processes, technology, intellectual property, expansion, planned expansion, expected markets, market projections, Company projections and revenue, suppliers and venders’ margins, products and services, costs and shipping prices, payment and credit information, customer profiles and analysis, prospect tracking recording, financial information, budget and financial plans, costing, pricing, billing information, tax data, sales and marketing information, business strategies and plans, technical information including software, research, product development information; personnel information such as salaries, phone numbers, titles, benefits, bonuses, employment histories, shareholder information and stock data; and any discoveries, inventions, ideas, methods, products, equipment, developments, improvements or programs including but not limited to information relating to such matters as research and development, inventions, designs, formulas, pricing, margins, suppliers, studies, plans, specifications or components pertaining to or used in connection with any and all, products and services contemplated, under development or developed (in whole or in part) by the Company’s processes, techniques, composition of materials, applications for particular technologies, materials or designs, business relationships and expansions, including projected or anticipated expansions, of the Company (including proposed relationships with suppliers, distributors, licensees and licensors), vendor names, customer lists, management systems, financial data, financial statements and sales and marketing and expansion plans. All information which Executive acquires or becomes acquainted with during employment with Company whether developed by Executive or by others, which the Executive has a reasonable basis to believe to be Confidential Information of the Company or which is treated by the Company as being confidential, will be presumed to be Confidential Information. The term “Confidential Information” does not include information which (i) is or becomes generally available to the public other than as a result of a disclosure by the Executive or his agents or other representatives, or (ii) relates to any business pursuit that the Company has abandoned or that the Board of Directors of the Company has determined to wind down.
d. The Executive expressly undertakes to retain in confidence all confidential and proprietary information including, but not limited to, information identified above provided to the Executive by the Company, the Company’s agents, or customers, or any other information that the Executive may have or may acquire or become acquainted with during the term of his employment with the Company, whether developed by the Executive or with the assistance of others. The Executive further expressly agrees that he or she shall not during the term of his employment or at any time thereafter divulge or furnish or make accessible to anyone or use in any way, other than for benefit of the Company, in the ordinary course of business of the Company, any and all confidential information transmitted to the Executive by the Company, the Company’s agents or clients or any other information the Executive may have or has acquired or become acquainted with, during the term of his or her employment with the Company whether developed by him or her or with the assistance of others.
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e. Executive further shall make no attempts nor assist any other parties in attempting to download, transfer, print or otherwise transfer, or print, or copy any of the Company’s confidential information or trade secrets or reverse compile, disassemble, or otherwise reverse engineer the Company’s confidential information or trade secrets provided by the Company or the Company’s clients, nor shall the Executive knowingly permit others to do so.
Relief. In agreeing to the restrictive covenant agreement and confidential information provision described in Section 6 and Section 7, respectively, the Executive acknowledges that the Company would not enter into employment with the Executive but for the Restrictive Covenant and Confidential Information provisions and that such provisions and this Agreement are material terms of this Agreement, and further agrees that in the event of a violation of the Restrictive Covenant and Confidential Information provisions set forth herein, such will be deemed a breach of this Agreement and the Company shall be entitled to obtain injunctive or other equitable relief against the Executive including damages if available and ascertainable. In the event that any court of competent jurisdiction determines that the any of the Restrictive Covenant and Confidential Information provisions of this Agreement are determined to be unenforceable for any reason, then such court is hereby authorized by the parties hereto to amend such provision to the extent required for such provision to be enforceable.
Termination of Employment. **** Anything herein contained to the contrary notwithstanding, the Company and the Executive shall have the following rights with respect to termination of the Executive's employment under this Agreement:
a. Death or Disability of Executive. If the Executive dies or becomes disabled during the Employment Period, then the Executive’s employment hereunder shall terminate, in which event any unpaid Salary accrued to the date of the Executive’s death or disability shall be paid to the Executive’s legal representative. The Company shall have no further obligation to the Executive or his legal representative under this Agreement except for the Executive’s obligations under the restrictive covenant agreement of Section 6, the confidentiality provisions of Section 7, and the provisions of Section 11, each of which shall survive this Agreement in such event.
i. For purposes of this Agreement, “Disability” shall mean a physical or mental impairment of Executive that prohibits or would prohibit Executive, with or without reasonable accommodation, from performing the material duties of his employment under this Agreement for more than ninety (90) days in the aggregate during any 12-month period, excluding absences resulting from ordinary transitory illnesses or injury or vacation or holidays; provided however, in the event that the Company temporarily replaces the Executive, or transfers the Executive’s duties or responsibilities to another individual on account of the Executive’s inability to perform such duties due to a mental or physical incapacity which is, or is reasonably expected to become, a Disability, then the Executive’s employment shall not be deemed terminated by the Company. Any question as to the existence of the Executive’s Disability as to which the Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Executive and the Company. If the Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Executive shall be final and conclusive for all purposes of this Agreement.
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b. Termination by the Company for Due Cause. The Company may terminate the Executive’s employment immediately under this Agreement for Due Cause as defined in Section 9(c). If the Company terminates the Executive’s employment for Due Cause, then in such case the Executive shall be entitled to payment of his accrued and unpaid Salary under Section 4 to the date of such termination and neither the Company nor the Executive shall have any further obligation to the other under this Agreement, except for the restrictive covenants in Section 6, the confidentiality provisions in Section 7, and the provisions of Section 11, each of which shall survive this Agreement in such event.
c. Definition of Due Cause. As used in this Agreement, the term “Due Cause” shall mean: (a) the continued failure by the Executive to perform or substantially perform the Executive’s duties hereunder or to comply with Company policies, other than by reason of Disability as determined by Company; (b) the Executive’s repeated and material failure to comply with any valid and legal directive of Company’s Board of Directors; (c) the knowing engagement by the Executive in conduct injurious to the Company or its reputation, (d) the Executive’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent) or a crime that constitutes at a minimum a misdemeanor involving moral turpitude; (e) the Executive’s habitual alcohol or controlled substance abuse; (f) the Executive’s embezzlement, misappropriation, or fraud, whether or not related to the Executive’s employment with the Company; (g) the Executive’s material breach of any material obligation under this Agreement; (h) any material failure by the Executive to comply with the Company’s written policies or rules, as they may be in effect from time to time during the Employment Term, after written warning thereof provided by the Board of Directors; or (i) violation by the Executive of the terms of the restrictive covenant agreement of Section 6 or the confidentiality provisions of Section 7. In the event of any act or event which the Company believes constitutes Due Cause under this Section, the Executive shall be given written notice by the Company that it intends to terminate the Executive’s employment for Due Cause, which written notice shall specify the act or event upon the basis of which the Company intends so to terminate the Executive’s employment, and the Executive shall thereupon have ten days to cure any acts or omissions constituting Due Cause (but only under clauses b, g, h, or i above, and then only to the extent any such acts or omissions are capable of cure).
d. Mutual Agreement. Executive and Company can mutually agree in writing to the termination of this Agreement and Executives employment, in which event any unpaid Salary accrued to the date of Executive last day of employment, along with any amounts still owed and payable pursuant to such mutual agreement, shall be paid to Executive and the Company shall have no further obligation to the Executive or his or her legal representative under this Agreement except for Executive’s obligations under the restrictive covenants agreement of Section 6, the confidentiality provisions of Section 7 and the provisions of Section 11, each of which shall survive this Agreement in such event.
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Entire Agreement; Modification; Waiver. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. There are no warranties, representations or agreements among the parties in connection with the subject matter hereof, except as set forth or referred to herein. No supplement, modification, waiver or termination of this Agreement or any of its provisions shall be binding unless executed in writing by the parties to be bound. No waiver of any of the provisions of this Agreement shall constitute a waiver of any other provision, and no such waiver shall constitute a continuing waiver unless otherwise expressly provided.
Cooperation. The parties agree that certain matters in which the Executive will be involved during the Employment Term may necessitate the Executive’s cooperation in the future. Accordingly, following the termination of the Executive’s employment for any reason, to the extent reasonably requested by Company Board of Directors, the Executive shall cooperate with the Company in connection with matters arising out of the Executive’s service to the Company’s business; provided that, the Company shall make reasonable efforts to minimize disruption of the Executive’s other activities. The Company shall reimburse the Executive for reasonable expenses.
Proprietary Rights and Work Product. The Executive acknowledges and agrees that all right, title, and interest in and to all writings, works of authorship, technology, inventions, discoveries, processes, techniques, methods, ideas, concepts, research, proposals, materials, and all other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, amended, conceived, or reduced to practice by the Executive individually or jointly with others during the period of his employment by the Company and relate in any way to the business or contemplated business, products, activities, research, expansion or development of the Company or result from any work performed by the Executive for the Company (in each case, regardless of when or where prepared or whose equipment or other resources is used in preparing the same), all rights and claims related to the foregoing, and all printed, physical and electronic copies, and other tangible embodiments thereof (collectively, “Work Product”), as well as any and all rights in and to any US and foreign: (a) patents, patent disclosures and inventions (whether patentable or not); (b) trademarks, service marks, trade dress, trade names, logos, corporate names, and domain names, and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing; (c) copyrights and copyrightable works (including computer programs) and rights in data and databases; (d) trade secrets, know-how, and other confidential information; and (e) all other intellectual property rights, in each case whether registered or unregistered and including all registrations and applications for, and renewals and extensions of, such rights, all improvements thereto and all similar or equivalent rights or forms of protection in any part of the world (collectively, “Intellectual Property Rights”), shall be the sole and exclusive property of the Company.
Contract Formation; Governing Law, Jurisdiction, and Venue. The Parties agree this Agreement was formed in the State of Minnesota. All of the terms, conditions, and other provisions of this Agreement shall be interpreted and governed by reference to the laws of the State of Minnesota, without giving effect to choice of law principles thereof, and any dispute arising herefrom and the remedies available shall be determined in accordance with such laws, and any litigation or other proceeding shall be venued in the Fourth Judicial District Court for the State of Minnesota in Minneapolis, Minnesota. Reasonable attorneys’ fees under the circumstances, costs, and disbursements shall be awarded to the prevailing party in any action brought under this Agreement.
Severability. If any provision of this Agreement or the application of such provision to any person or circumstance shall be held invalid, the remainder of this Agreement or the application of such provision to persons or circumstances other than those to which it is held invalid shall not be affected thereby.
Indebtedness. If, during the course of the Executive’s employment under this Agreement, the Executive becomes indebted to the Company for any reason, the Executive agrees that it will provide to the Company written permission after the debt arises that provides that the Company may, if it so elects, set off any sum due to the Company from the Executive and collect from the Executive any remaining balance.
Counterparts. This Agreement may be executed in any number of counterparts, any one of which shall be deemed to be an original, but all of which shall constitute but one and the same instrument.
Not Assignable. This Agreement is not assignable, except that the Company may assign this Agreement to any parent, subsidiary, other affiliated corporation or upon a sale of Company’s to a bona fide buyer.
Headings. Section headings used in this Agreement are for convenience only and shall not affect the construction of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Executive Employment Agreement as of the date first above written.
| THE EXECUTIVE | THE COMPANY | |
|---|---|---|
| MILL CITY VENTURES III, LTD. | ||
| /s/Douglas M. Polinsky | By: | /s/ Howard P. Liszt |
| Douglas M. Polinsky | Its: | Chair of Compensation Committee |
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Schedule A
For the period of January 1, 2025 to December 31, 2026, the Executive’s personal compensation plan is outlined below:
| · | Base gross salary is $220,000 per year |
|---|
| · | Bonuses at the discretion of the Company |
mcvt_ex105.htm EXHIBIT 10.5
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (“Agreement”) is made and entered into to be effective as of January 1, 2025, between Mill City Ventures III, Ltd. (the “Company”) and Jospeh A. Geraci, individually (the “Executive”).
RECITALS
WHEREAS, the Company desires to assure itself of the Executive’s employment during the period specified herein to maintain and grow the company’s business ventures and reputation in the industry;
WHEREAS, the Company further desires to ensure that confidential information or information that may give the Company competitive advantages be held in strict confidence. The marketplace in which Company does business is extremely competitive. In addition, the Company regards it to be vital to its interest that its employees, its customers, its venders and its prospective customers, and those of its associated companies, be free from recruitment, inducement and solicitation from Executive (other than in the course of Company business) and that the Company be protected against competition of the Executive;
WHEREAS, the Company and the Executive have been involved in negotiations regarding the creation of an employment relationship between the Company and the Executive;
WHEREAS, the negotiations between the Company and the Executive have been conducted on a good faith, arm’s-length basis by the Compensation Committee of the Company’s Board of Directors and the Executive;
WHEREAS, the Executive is prepared to enter into this Agreement and give the Company the assurance it desires; and
WHEREAS, based upon such negotiations and as a result thereof, the Company and the Executive have determined to enter into an employment relationship and to document the terms thereof.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants and agreements set forth herein, the parties agree as follows:
- Term. The Executive’s employment hereunder shall be effective as of January 1, 2025 (the “Effective Date”) and shall continue for Twenty-Four (24) months (“Term End Date”), unless terminated earlier pursuant to Section 9 of this Agreement, and that on such Term End Date the Agreement may be extended, upon the same terms and conditions, for an additional one (1) year as mutually agreed to by the Parties unless notice, at least sixty (60) days before the Term End date is given by one party to the other. The period during which the Executive is employed by the Company hereunder is hereinafter referred to as the “Employment Term.”
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- Employment. The Company hereby employs the Executive, and the Executive hereby accepts employment and shall serve as a Chief Financial Officer (“CFO”) of Company reporting to the Company Board of Directors or the Chief Executive Officer (“CEO”). The Executive admits and acknowledges that prior to accepting the offer of employment from the Company, the Executive was advised that the employment involved agreeing to both a Restrictive Covenant agreement and a Confidential Information agreement and that terms of the Restrictive Covenant agreement and Confidential Information agreement were conveyed to and known by the Executive at the time the Executive accepted the Company’s offer of employment. The Executive thus acknowledges that the employment and increase in salary associated with the employment constitutes fair and adequate consideration for the Restrictive Covenant agreement and Confidential Information provisions. In addition, the Executive agrees, during the term hereof, to discharge faithfully, diligently and to the best of the Executive’s ability the responsibilities of a CFO of the Company as set forth in this Agreement or as defined from time to time by the Board of Directors of Company or the CEO.
a. Duties. During the Employment Term, the Executive shall be responsible for Company operations and those relationships with the Company established by the Board of Directors or CEO, and such other duties and responsibilities as are established by the Board of Directors or the CEO.
Extent of Services. The Executive shall devote a substantial amount of his business work related time and attention associated with his role with the Company to the performance of the Executive’s duties hereunder and will not engage in any other business, profession, or occupation for compensation or otherwise which would conflict or interfere with the performance of such duties either directly or indirectly without the prior written consent of the Board of Directors. Notwithstanding the foregoing, the Executive will be permitted to: (a) act or serve as a director, trustee, committee member, or principal of any type of business, civic, or charitable organization as long as such activities are disclosed in writing to the Board of Directors; and (b) purchase or own less than five percent (5%) of the publicly traded securities of any corporation, provided that such ownership represents a passive investment and that the Executive is not a controlling person of, or a member of a group that controls, such corporation, provided further that the activities described in clauses (a) and (b) do not interfere with the performance of the Executive’s duties and responsibilities to the Company as provided hereunder, including, but not limited to, the obligations set forth in Section 6 and Section 7 of this Agreement.
Compensation. The Company shall pay the Executive compensation as set forth on the attached Schedule A (“Salary”) which shall be paid in monthly installments, less withholdings required by state and federal law and other agreed-to withholdings, pursuant to customary payroll practices and applicable wage payment laws, but no less frequently than monthly. The Salary indicated in Schedule A may not be decreased without the Executive’s prior written consent.
Employment Benefits. During the term of the Executive’s employment hereunder, the Executive shall be entitled to the following benefits to the extent that the Company offers and continues to offer them:
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a. Health and 401K as available and offered by the Company from time to time.
b. As provided for in Company’s operating budget each year, reimbursement for business out-of-pocket expenses reasonably incurred and approved pursuant to Company’s standard business expense approval process, and aligned with the operating budget in the performance of the Executive’s services pursuant to this Agreement. All reimbursable expenses shall be appropriately documented in reasonable detail by the Executive upon submission of any request for reimbursement, and in a format and manner consistent with the Company’s expense reporting policy.
c. Up to three weeks of paid time off (“PTO”) and other executive level benefits as provided by the Company from time to time, and in addition the following paid holidays: New Years Day, Fourth of July, Thanksgiving Day as well as the day after Thanksgiving, Memorial Day, Labor Day and Christmas. Any of these holidays that land on a Saturday, the paid day off will be the preceding Friday and any such holiday landing on a Sunday, the paid day off will be the following Monday.
- Restrictive Covenants. For the purpose of this Section 6 only, the definition of the “Company” as identified above is expanded to include the Company and any entity that owns any portion of Company or any company owned by Company. During the term of this Agreement and for a period of two (2) years thereafter, the Executive shall not indirectly or directly, in any capacity, including but not limited to, as an owner, partner, shareholder, director, officer, manager, employee, agent, adviser or consultant, in any business, firm, organizations, partnership, corporation or other entity located anywhere in the United States of America in which the Company does, or has done, business in or identified for expansion into, with the preceding twelve months of Executive’s employment ending with the Company:
a. sell, for himself or for, or through another, contract with, solicit, accept business from, provide products or services to or accept employment, or attempt to contract, solicit, accept business, or accept employment with, or from, any Customer of the Company that did business with the Company, or was provided services by the Company, while Executive was employed by the Company or any Customer that had done so with the Company within twelve (12) months of the commencement of Executive’s employment with Company or provide services to or support or aid another in any way that is providing products or services that are the same or similar to those provided by the Company to a customer of the Company that did business with the Company while the Executive was employed by the Company. The Executive acknowledges and agrees that all customers of the Company are the property and assets of the Company, regardless of whether any customer became a customer of Company through the Executive or not;
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b. induce or attempt to induce any employee of the Company to leave the employ of the Company, or any affiliated company, or any consultant, vendor, or other independent contractor for the Company to change or terminate any relationship between that person or entity and the Company or employee any such employee for themselves or for any other person or company they are associated with directly or indirectly;
c. assign or otherwise transfer, whether or not for consideration, any customer or employee lists, internal memoranda, bills, receipts, confidential information, or any other form of business records or documents, or any tangible materials concerning the Company; or
d. assist or support, or encourage, or attempt to assist or encourage, any other person or entity in carrying out, directly or indirectly, any activity that would be prohibited by the above provisions of this Section 6 if such activity were carried out by the Executive, directly or indirectly, or induce any employee of the Company to carry out, directly or indirectly, any such activity.
- Duty Not To Disclose Confidential Information.
a. Disclosure or Use of Confidential Information. The Executive agrees that the Executive will not use, directly or indirectly, the Company’s Confidential Information for the benefit of any person, entity or organization other than the Company or allow such to occur or disclose such Confidential Information without the written authorization of the Board of Directors, either during or after the term of this Agreement, for as long as such information retains the characteristics of Confidential Information as deemed by the Company, or except as expressly permitted by this Agreement or as required by applicable law, subpoena or other legal process. The Executive will be solely responsible for causing the compliance of, and any breach of, the confidentiality obligations set forth in this Agreement by the Executive’s agents or other representatives. In the event that the Executive is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, the Executive will notify the Company promptly of the request or requirement so that the Company may seek an appropriate protective order or waive compliance with the provisions of this Section. If, in the absence of a protective order or a duly given waiver by the Company, the Executive is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt or otherwise be in violation of applicable law, the Executive may disclose such Confidential Information to the tribunal; provided, however, that the Executive will use his reasonable efforts to obtain, at the written request of the Company, an order for filing under seal or other assurance that confidential treatment will be accorded to the Confidential Information required to be disclosed.
b. Trade Secrets. Any trade secrets of the Company will be entitled to all of the protections and benefits under applicable state trade secret law and any other applicable law. If any information that the Company deems to be a trade secret is found by a court of competent jurisdiction not to be a trade secret for purposes of this Agreement, such information will, nevertheless, be considered Confidential Information for purposes of this Agreement.
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c. Confidential Information Defined. For purposes of this Agreement, the term “Confidential Information” means oral or written knowledge and information not generally known whether presently existing or developed in the future, including trade secrets, about the Company’s methods, processes, technology, intellectual property, expansion, planned expansion, expected markets, market projections, Company projections and revenue, suppliers and venders’ margins, products and services, costs and shipping prices, payment and credit information, customer profiles and analysis, prospect tracking recording, financial information, budget and financial plans, costing, pricing, billing information, tax data, sales and marketing information, business strategies and plans, technical information including software, research, product development information; personnel information such as salaries, phone numbers, titles, benefits, bonuses, employment histories, shareholder information and stock data; and any discoveries, inventions, ideas, methods, products, equipment, developments, improvements or programs including but not limited to information relating to such matters as research and development, inventions, designs, formulas, pricing, margins, suppliers, studies, plans, specifications or components pertaining to or used in connection with any and all, products and services contemplated, under development or developed (in whole or in part) by the Company’s processes, techniques, composition of materials, applications for particular technologies, materials or designs, business relationships and expansions, including projected or anticipated expansions, of the Company (including proposed relationships with suppliers, distributors, licensees and licensors), vendor names, customer lists, management systems, financial data, financial statements and sales and marketing and expansion plans. All information which Executive acquires or becomes acquainted with during employment with Company whether developed by Executive or by others, which the Executive has a reasonable basis to believe to be Confidential Information of the Company or which is treated by the Company as being confidential, will be presumed to be Confidential Information. The term “Confidential Information” does not include information which (i) is or becomes generally available to the public other than as a result of a disclosure by the Executive or his agents or other representatives, or (ii) relates to any business pursuit that the Company has abandoned or that the Board of Directors of the Company has determined to wind down.
d. The Executive expressly undertakes to retain in confidence all confidential and proprietary information including, but not limited to, information identified above provided to the Executive by the Company, the Company’s agents, or customers, or any other information that the Executive may have or may acquire or become acquainted with during the term of his employment with the Company, whether developed by the Executive or with the assistance of others. The Executive further expressly agrees that he or she shall not during the term of his employment or at any time thereafter divulge or furnish or make accessible to anyone or use in any way, other than for benefit of the Company, in the ordinary course of business of the Company, any and all confidential information transmitted to the Executive by the Company, the Company’s agents or clients or any other information the Executive may have or has acquired or become acquainted with, during the term of his or her employment with the Company whether developed by him or her or with the assistance of others.
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e. Executive further shall make no attempts nor assist any other parties in attempting to download, transfer, print or otherwise transfer, or print, or copy any of the Company’s confidential information or trade secrets or reverse compile, disassemble, or otherwise reverse engineer the Company’s confidential information or trade secrets provided by the Company or the Company’s clients, nor shall the Executive knowingly permit others to do so.
Relief. In agreeing to the restrictive covenant agreement and confidential information provision described in Section 6 and Section 7, respectively, the Executive acknowledges that the Company would not enter into employment with the Executive but for the Restrictive Covenant and Confidential Information provisions and that such provisions and this Agreement are material terms of this Agreement, and further agrees that in the event of a violation of the Restrictive Covenant and Confidential Information provisions set forth herein, such will be deemed a breach of this Agreement and the Company shall be entitled to obtain injunctive or other equitable relief against the Executive including damages if available and ascertainable. In the event that any court of competent jurisdiction determines that the any of the Restrictive Covenant and Confidential Information provisions of this Agreement are determined to be unenforceable for any reason, then such court is hereby authorized by the parties hereto to amend such provision to the extent required for such provision to be enforceable.
Termination of Employment. **** Anything herein contained to the contrary notwithstanding, the Company and the Executive shall have the following rights with respect to termination of the Executive's employment under this Agreement:
a. Death or Disability of Executive. If the Executive dies or becomes disabled during the Employment Period, then the Executive’s employment hereunder shall terminate, in which event any unpaid Salary accrued to the date of the Executive’s death or disability shall be paid to the Executive’s legal representative. The Company shall have no further obligation to the Executive or his legal representative under this Agreement except for the Executive’s obligations under the restrictive covenant agreement of Section 6, the confidentiality provisions of Section 7, and the provisions of Section 11, each of which shall survive this Agreement in such event.
i. For purposes of this Agreement, “Disability” shall mean a physical or mental impairment of Executive that prohibits or would prohibit Executive, with or without reasonable accommodation, from performing the material duties of his employment under this Agreement for more than ninety (90) days in the aggregate during any 12-month period, excluding absences resulting from ordinary transitory illnesses or injury or vacation or holidays; provided however, in the event that the Company temporarily replaces the Executive, or transfers the Executive’s duties or responsibilities to another individual on account of the Executive’s inability to perform such duties due to a mental or physical incapacity which is, or is reasonably expected to become, a Disability, then the Executive’s employment shall not be deemed terminated by the Company. Any question as to the existence of the Executive’s Disability as to which the Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Executive and the Company. If the Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Executive shall be final and conclusive for all purposes of this Agreement.
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b. Termination by the Company for Due Cause. The Company may terminate the Executive’s employment immediately under this Agreement for Due Cause as defined in Section 9(c). If the Company terminates the Executive’s employment for Due Cause, then in such case the Executive shall be entitled to payment of his accrued and unpaid Salary under Section 4 to the date of such termination and neither the Company nor the Executive shall have any further obligation to the other under this Agreement, except for the restrictive covenants in Section 6, the confidentiality provisions in Section 7, and the provisions of Section 11, each of which shall survive this Agreement in such event.
c. Definition of Due Cause. As used in this Agreement, the term “Due Cause” shall mean: (a) the continued failure by the Executive to perform or substantially perform the Executive’s duties hereunder or to comply with Company policies, other than by reason of Disability as determined by Company; (b) the Executive’s repeated and material failure to comply with any valid and legal directive of Company’s Board of Directors; (c) the knowing engagement by the Executive in conduct injurious to the Company or its reputation, (d) the Executive’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent) or a crime that constitutes at a minimum a misdemeanor involving moral turpitude; (e) the Executive’s habitual alcohol or controlled substance abuse; (f) the Executive’s embezzlement, misappropriation, or fraud, whether or not related to the Executive’s employment with the Company; (g) the Executive’s material breach of any material obligation under this Agreement; (h) any material failure by the Executive to comply with the Company’s written policies or rules, as they may be in effect from time to time during the Employment Term, after written warning thereof provided by the Board of Directors; or (i) violation by the Executive of the terms of the restrictive covenant agreement of Section 6 or the confidentiality provisions of Section 7. In the event of any act or event which the Company believes constitutes Due Cause under this Section, the Executive shall be given written notice by the Company that it intends to terminate the Executive’s employment for Due Cause, which written notice shall specify the act or event upon the basis of which the Company intends so to terminate the Executive’s employment, and the Executive shall thereupon have ten days to cure any acts or omissions constituting Due Cause (but only under clauses b, g, h, or i above, and then only to the extent any such acts or omissions are capable of cure).
d. Mutual Agreement. Executive and Company can mutually agree in writing to the termination of this Agreement and Executives employment, in which event any unpaid Salary accrued to the date of Executive last day of employment, along with any amounts still owed and payable pursuant to such mutual agreement, shall be paid to Executive and the Company shall have no further obligation to the Executive or his or her legal representative under this Agreement except for Executive’s obligations under the restrictive covenants agreement of Section 6, the confidentiality provisions of Section 7 and the provisions of Section 11, each of which shall survive this Agreement in such event.
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Entire Agreement; Modification; Waiver. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. There are no warranties, representations or agreements among the parties in connection with the subject matter hereof, except as set forth or referred to herein. No supplement, modification, waiver or termination of this Agreement or any of its provisions shall be binding unless executed in writing by the parties to be bound. No waiver of any of the provisions of this Agreement shall constitute a waiver of any other provision, and no such waiver shall constitute a continuing waiver unless otherwise expressly provided.
Cooperation. The parties agree that certain matters in which the Executive will be involved during the Employment Term may necessitate the Executive’s cooperation in the future. Accordingly, following the termination of the Executive’s employment for any reason, to the extent reasonably requested by Company Board of Directors, the Executive shall cooperate with the Company in connection with matters arising out of the Executive’s service to the Company’s business; provided that, the Company shall make reasonable efforts to minimize disruption of the Executive’s other activities. The Company shall reimburse the Executive for reasonable expenses.
Proprietary Rights and Work Product. The Executive acknowledges and agrees that all right, title, and interest in and to all writings, works of authorship, technology, inventions, discoveries, processes, techniques, methods, ideas, concepts, research, proposals, materials, and all other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, amended, conceived, or reduced to practice by the Executive individually or jointly with others during the period of his employment by the Company and relate in any way to the business or contemplated business, products, activities, research, expansion or development of the Company or result from any work performed by the Executive for the Company (in each case, regardless of when or where prepared or whose equipment or other resources is used in preparing the same), all rights and claims related to the foregoing, and all printed, physical and electronic copies, and other tangible embodiments thereof (collectively, “Work Product”), as well as any and all rights in and to any US and foreign: (a) patents, patent disclosures and inventions (whether patentable or not); (b) trademarks, service marks, trade dress, trade names, logos, corporate names, and domain names, and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing; (c) copyrights and copyrightable works (including computer programs) and rights in data and databases; (d) trade secrets, know-how, and other confidential information; and (e) all other intellectual property rights, in each case whether registered or unregistered and including all registrations and applications for, and renewals and extensions of, such rights, all improvements thereto and all similar or equivalent rights or forms of protection in any part of the world (collectively, “Intellectual Property Rights”), shall be the sole and exclusive property of the Company.
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Contract Formation; Governing Law, Jurisdiction, and Venue. The Parties agree this Agreement was formed in the State of Minnesota. All of the terms, conditions, and other provisions of this Agreement shall be interpreted and governed by reference to the laws of the State of Minnesota, without giving effect to choice of law principles thereof, and any dispute arising herefrom and the remedies available shall be determined in accordance with such laws, and any litigation or other proceeding shall be venued in the Fourth Judicial District Court for the State of Minnesota in Minneapolis, Minnesota. Reasonable attorneys’ fees under the circumstances, costs, and disbursements shall be awarded to the prevailing party in any action brought under this Agreement.
Severability. If any provision of this Agreement or the application of such provision to any person or circumstance shall be held invalid, the remainder of this Agreement or the application of such provision to persons or circumstances other than those to which it is held invalid shall not be affected thereby.
Indebtedness. If, during the course of the Executive’s employment under this Agreement, the Executive becomes indebted to the Company for any reason, the Executive agrees that it will provide to the Company written permission after the debt arises that provides that the Company may, if it so elects, set off any sum due to the Company from the Executive and collect from the Executive any remaining balance.
Counterparts. This Agreement may be executed in any number of counterparts, any one of which shall be deemed to be an original, but all of which shall constitute but one and the same instrument.
Not Assignable. This Agreement is not assignable, except that the Company may assign this Agreement to any parent, subsidiary, other affiliated corporation or upon a sale of Company’s to a bona fide buyer.
Headings. Section headings used in this Agreement are for convenience only and shall not affect the construction of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Executive Employment Agreement as of the date first above written.
| THE EXECUTIVE | THE COMPANY | |
|---|---|---|
| MILL CITY VENTURES III, LTD. | ||
| /s/ Joseph A. Geraci II | By: | /s/ Howard P. Liszt |
| Joseph A. Geraci II | Its: | Chair of Compensation Committee |
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Schedule A
For the period of January 1, 2025 to December 31, 2026, the Executive’s personal compensation plan is outlined below:
| · | Base gross salary is $220,000 per year |
|---|
| · | Bonuses at the discretion of the Company |
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mcvt_ex106.htm EXHIBIT 10.6
Mill City Ventures Collateralizes $10 Million Loan to Mustang Funding
Wayzata, MN – February 3, 2025 – Mill City Ventures III, Ltd. (NASDAQ: MCVT) announced today that it has entered into a Security Agreement with Mustang Funding, LLC. Under the Security Agreement, Mill City Ventures obtained a second-position lien on substantially all of Mustang Funding’s assets to serve as collateral for Mill City Ventures’ $10 million principal amount loan to Mustang Funding. Mill City Ventures also entered into an Amended and Restated Subordination and Intercreditor Agreement with the senior lender to Mustang Funding, and, as earlier announced, contemporaneously amended its Fourth Short-Term Loan Agreement and Fourth Short-Term Promissory Note with Mustang Funding. Mill City Ventures sought collateral for its loan pursuant to provisions that had been negotiated as part of its original lending transaction with Mustang Funding and in connection with its earlier-announced termination of its non-binding letter of intent with Mustang Funding. The Security Agreement, deemed effective as of January 24, 2025, reinforces Mill City Ventures’ commitment to risk-managed, short-term commercial lending strategies.
Under the terms of the agreement, Mustang Funding pledged a broad range of assets as collateral for its $10 million promissory note in favor of Mill City Ventures. This collateral ensures the protection of Mill City Ventures’ interests while enabling Mustang Funding and its subsidiaries to continue accessing capital to support business operations. The loan, advanced in stages beginning in December 2022 and ending in September 2023, has been amended multiple times to align with evolving business needs.
“We believe this agreement is a testament to our disciplined approach to structured finance and risk mitigation,” said Douglas Polinsky, Chief Executive Officer of Mill City Ventures. “By securing our position with collateral, we are not only enhancing the safety of our investment consistent with market-based commercial lending terms but also demonstrating our commitment to generating value for our shareholders.”
Mill City Ventures continues to pursue strategic lending opportunities that provide secure, high-yield returns for its investors. This latest agreement underscores the company’s focus on short-term, flexible and commercial-based asset-backed financing as the core elements of overall its investment strategy.
About Mill City Ventures III, Ltd.
Mill City Ventures III, Ltd. (NASDAQ: MCVT) is a specialty finance company focused on short-term lending and structured finance solutions. The company provides capital to businesses through secured loan agreements, offering investors attractive returns with a focus on asset-backed security and risk mitigation.
For more information, visit www.millcityventures3.com or contact:
Investor Relations Contact:
Joseph A. Geraci
Chief Financial Officer
Mill City Ventures III, Ltd.
612-868-5815
jg@millcityventures3.com