BUSINESS LOAN AGREEMENT (ASSET BASED)
Exhibit
99.1
|
Principal
|
Loan Date |
Maturity
|
Loan No | Call/Coll | Account | Officer | Initials |
|
$1,300,000.00
|
02-27-2009 | 05-27-2010 | 3004100 |
4a/0047
|
1239 | 100 | |
|
References
in the boxes above are for Xxxxxx's use only and do not limit the
applicability of this document to any particular loan or
item.
|
|||||||
|
Any
item above containing "***" has been omitted due to text length
limitations.
|
|||||||
| Borrower: | Aspyra, Inc. | Lender: | Western Commercial Bank |
| 26115-A Mureau Road | 00000 Xxxxxx Xxxxxx, Xxxxx 000 | ||
| Calabasas, CA 91302 | Woodland Hills, CA 91367 |
THIS
BUSINESS LOAN AGREEMENT (ASSET BASED) dated February 27,
2009, is made and executed between Aspyra, Inc. ("Borrower") and Western
Commercial Bank ("Lender") on the following terms and conditions. Borrower has
received prior commercial loans from Lender
or has applied to Lender for a commercial loan or loans or other
financial accommodations, including those which may be described on any exhibit
or schedule attached to this Agreement. Xxxxxxxx understands and agrees that:
(A)
in granting, renewing, or extending any Loan, Lender is relying upon
Borrower's representations, warranties, and agreements as
set forth in this Agreement; (B) the granting, renewing, or extending of
any Loan by Xxxxxx at all times shall be subject to Xxxxxx's sole judgment and
discretion; and (C) all such Loans shall be and remain subject to the terms and
conditions of this Agreement.
TERM. This Agreement shall be effective as of
February 27, 2009, and shall continue in full force and effect until such time
as all of Borrower's Loans in favor of Lender have been paid in full, including
principal, interest, costs, expenses, attorneys' fees, and other fees and
charges, or until such time as the parties may agree in writing to terminate
this Agreement.
ADVANCE
AUTHORITY. The following person or
persons are authorized, except as provided in this paragraph, to request
advances and authorize payments under the line of credit until Xxxxxx receives
from Borrower, at Xxxxxx's address shown above, written notice of revocation of
such authority: Xxxxxx Xxxxxx, CEO of Aspyra, Inc.; and Xxxxxxx Xxxxxxxxx, Chief
Financial Officer of Aspyra, Inc. Minimum advance amount of
$1,000.00.
LINE OF CREDIT. Xxxxxx agrees to make Advances
to Borrower from time to time from the date of this Agreement to the Expiration
Date, provided the aggregate amount of such Advances outstanding at any time
does not exceed the Borrowing Base. Within the foregoing limits, Borrower may
borrow, partially or wholly prepay, and reborrow under this Agreement as
follows:
Conditions Precedent to Each Advance. Xxxxxx's
obligation to make any Advance to or for the account of Borrower under this
Agreement is subject to the following conditions precedent, with all documents,
instruments, opinions, reports, and other items required under this Agreement to
be in form and substance satisfactory to Lender:
(1) Lender
shall have received evidence that this Agreement and all Related Documents have
been duly authorized, executed, and delivered by Xxxxxxxx to
Lender.
(2) Lender
shall have received such opinions of counsel, supplemental opinions, and
documents as Xxxxxx may request.
(3) The
security interests in the Collateral shall have been duly authorized, created,
and perfected with first lien priority and shall be in full force and
effect.
(4) All
guaranties required by Lender for the credit facility(ies) shall have been
executed by each Guarantor, delivered to Lender, and be in full force and
effect.
(5) Lender,
at its option and for its sole benefit, shall have conducted an audit of
Borrower's Accounts, Inventory, books, records, and operations, and Lender shall
be satisfied as to their condition.
(6) Borrower
shall have paid to Lender all fees, costs, and expenses specified in this
Agreement and the Related Documents as are then due and payable.
(7) There
shall not exist at the time of any Advance a condition which would constitute an
Event of Default under this Agreement, and Borrower shall have delivered to
Lender the compliance certificate called for in the paragraph below titled
"Compliance Certificate.'
Making Loan Advances. Advances under this
credit facility, as well as directions for payment from Xxxxxxxx's accounts, may
be requested orally or in writing by authorized persons. Lender may, but need
not, require that all oral requests be confirmed in writing. Each Advance shall
be conclusively deemed to have been made at the request of and for the benefit
of Borrower (1) when credited to any deposit account of Borrower maintained with
Lender or (2) when
advanced in accordance with the instructions of an authorized person.
Lender, at its option, may set a cutoff time, after which all requests for
Advances will be treated as having been requested on the next succeeding
Business Day. Under no circumstances shall Lender be required to make any
Advance in an amount less than $1,000.00.
Mandatory Loan Repayments. If at any time the
aggregate principal amount of the outstanding Advances shall exceed the
applicable Borrowing Base, Borrower, immediately upon written or oral notice
from Lender, shall pay to Lender an amount equal to the difference between the
outstanding principal balance of the Advances and the Borrowing Base. On the
Expiration Date, Borrower shall pay to Lender in full the aggregate unpaid
principal amount of all Advances then outstanding and all accrued unpaid
interest, together with all other applicable fees, costs and charges, if any,
not yet paid.
Loan Account. Lender shall maintain on its
books a record of account in which Lender shall make entries for each Advance
and such other debits and credits as shall be appropriate in connection with the
credit facility. Lender shall provide Borrower with periodic statements of
Xxxxxxxx's account, which statements shall be considered to be correct and
conclusively binding on Borrower unless Borrower notifies Lender to the contrary
within thirty (30) days after Xxxxxxxx's receipt of any such statement which
Borrower deems to be incorrect.
COLLATERAL. To secure payment of the Primary
Credit Facility and performance of all other Loans, obligations and duties owed
by Borrower to Lender, Borrower (and others, if required) shall grant to Lender
Security Interests in such property and assets as Lender may require. Lender's
Security Interests in the Collateral shall be continuing liens and shall include
the proceeds and products of the Collateral, including without limitation the
proceeds of any insurance. With respect to the Collateral, Xxxxxxxx agrees and
represents and warrants to Xxxxxx:
Perfection of Security
Interests. Xxxxxxxx agrees to execute all documents perfecting Xxxxxx's
Security Interest and to take whatever actions are requested by Xxxxxx to
perfect and continue Xxxxxx's Security Interests in the Collateral. Upon request
of Xxxxxx, Xxxxxxxx will deliver to Lender any and all of the documents
evidencing or constituting the Collateral, and Borrower will note Xxxxxx's
interest upon any and all chattel paper and instruments if not delivered to
Lender for possession by Xxxxxx. Contemporaneous with the execution of this
Agreement, Xxxxxxxx will execute one or more UCC financing statements and any
similar statements as may be required by applicable law, and Lender will file
such financing statements and all such similar statements in the appropriate
location or locations. Borrower hereby appoints Xxxxxx as its irrevocable
attorney-in-fact for the purpose of executing any documents necessary to perfect
or to continue any Security Interest. Lender may at any time, and without
further authorization from Borrower, file a carbon, photograph, facsimile, or
other reproduction
of any financing statement for use as a financing statement. Borrower will
reimburse Lender for all expenses for the perfection, termination, and
the continuation of the perfection of Xxxxxx's security interest in the
Collateral. Borrower promptly will notify Lender before any change in Xxxxxxxx's
name including any change to the assumed business names of Xxxxxxxx. Borrower
also promptly will notify Lender before any change in Borrower's Social Security
Number or Employer Identification Number. Xxxxxxxx further agrees to notify
Xxxxxx in writing prior to any change in address or location of Xxxxxxxx's
principal governance office or should Borrower merge or consolidate with any
other entity.
Collateral Records. Borrower does now, and at
all times hereafter shall, keep correct and accurate records of the Collateral,
all of which records shall be available to Lender or Xxxxxx's representative
upon demand for inspection and copying at any reasonable time. With respect to
the Accounts, Xxxxxxxx agrees to keep and maintain such records as Lender may
require, including without limitation information concerning Eligible Accounts
and Account balances and agings. Records related to Accounts (Receivables) are
or will be located at 00000-X Xxxxxx Xxxx, Xxxxxxxxx, XX 00000. With respect to
the Inventory, Xxxxxxxx agrees to keep and maintain such records as Lender may
require, including without limitation information concerning Eligible Inventory
and records itemizing and describing the kind, type, quality, and quantity of
Inventory, Borrower's Inventory costs and selling prices, and the daily
withdrawals and additions to Inventory. Records related to Inventory are or will
be located at 00000-X Xxxxxx Xxxx, Xxxxxxxxx, XX 00000. The above is an accurate
and complete list of all locations at which Borrower keeps or maintains business
records concerning Xxxxxxxx's collateral.
Collateral Schedules. Concurrently with the
execution and delivery of this Agreement, Borrower shall execute and deliver to
Lender schedules of Accounts and Inventory and schedules of Eligible Accounts
and Eligible Inventory in form and substance satisfactory to the Lender.
Thereafter supplemental schedules shall be delivered according to the following
schedule: With respect to Eligible Accounts, schedules shall be delivered
monthly. With respect to Eligible Inventory, schedules shall be delivered
Monthly.
Representations and Warranties Concerning
Accounts. With respect to the Accounts, Borrower represents and warrants
to Lender: (1) Each Account represented by Borrower to be an Eligible Account
for purposes of this Agreement conforms to the requirements of the definition of
an Eligible Account; (2) All Account information listed on schedules delivered
to Lender will be true and correct, subject to immaterial variance; and (3)
Lender, its assigns, or agents shall have the right at any time and at
Borrower's expense to inspect, examine, and audit Xxxxxxxx's records and to
confirm with Account Debtors the accuracy of such Accounts.
Representations and Warranties Concerning
Inventory. With respect to the Inventory, Borrower represents and
warrants to Lender: (1) All Inventory represented by Borrower to be Eligible
Inventory for purposes of this Agreement conforms to the requirements of the
definition of Eligible Inventory; (2) All Inventory values listed on schedules
delivered to Lender will be true and correct, subject to immaterial variance;
(3) The value of the Inventory will be determined on a consistent accounting
basis; (4) Except as agreed to the contrary by Xxxxxx in writing, all Eligible
Inventory is now and at all times hereafter will be in Borrower's physical
possession and shall not be held by others on consignment, sale on approval, or
sale or return; (5) Except as reflected in the Inventory schedules delivered to
Lender, all Eligible Inventory is now and at all times hereafter will be of good
and merchantable quality, free from defects; (6) Eligible Inventory is not now
and will not at any time hereafter be stored with a bailee, warehouseman, or
similar party without Lender's prior written consent, and, in such event,
Borrower will concurrently at the time of bailment cause any such bailee,
warehouseman, or similar party to issue and deliver to Lender, in form
acceptable to Lender, warehouse receipts in Lender name evidencing the storage
of Inventory; and (7) Lender, its assigns, or agents shall have the right at any
time and at Borrower's expense to inspect and examine the Inventory and to check
and test
the same as to quality, quantity, value, and condition.
CONDITIONS
PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Xxxxxx's satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to
Lender the following documents for the Loan: (1) the Note; (2) Security
Agreements granting to Lender security interests in the Collateral; (3)
financing statements and all other documents perfecting Lender's Security
Interests; (4) evidence of insurance as required below; (5) together with all
such Related Documents as Lender may require for the Loan; all in form and
substance satisfactory to Lender and Lender's counsel.
Borrower's Authorization. Borrower shall have
provided in form and substance satisfactory to Lender properly certified
resolutions, duly authorizing the execution and delivery of this Agreement, the
Note and the Related Documents. In addition, Borrower shall have provided such
other resolutions, authorizations, documents and instruments as Lender or its
counsel, may require.
Fees and Expenses Under This Agreement.
Borrower shall have paid to Lender all fees, costs, and expenses specified in
this Agreement and the Related Documents as are then due and
payable.
Representations and Warranties. The
representations and warranties set forth in this Agreement, in the Related
Documents, and in any document or certificate delivered to Lender under this
Agreement are true and correct.
No Event of Default. There shall not exist at
the time of any Advance a condition which would constitute an Event of Default
under this Agreement or under any Related Document.
REPRESENTATIONS
AND WARRANTIES. Borrower represents and warrants to Lender, as of the
date of this Agreement, as of the date of each disbursement of loan proceeds, as
of the date of any renewal, extension or modification of any Loan, and at all
times any Indebtedness exists:
Organization.
Borrower is a corporation for profit which is,
and at all times shall be, duly organized, validly existing, and in good
standing under and by virtue of the laws of the State of California. Borrower is
duly authorized to transact business in all other states in which Borrower is
doing business, having obtained all necessary filings, governmental licenses and
approvals for each state in which Borrower is doing business. Specifically,
Borrower is, and at all times shall be, duly qualified as a foreign corporation
in all states in which the failure to so qualify would have a material adverse
effect on its business or financial condition. Borrower has the full power and
authority to own its properties and to transact the business in which it is
presently engaged or presently proposes to engage. Borrower maintains an office
at 00000-X Xxxxxx Xxxx, Xxxxxxxxx, XX 00000. Unless Borrower has designated
otherwise in writing, the principal office is the office at which Borrower keeps
its books and records including its records concerning the Collateral. Borrower
will notify Lender prior to any change in the location of Xxxxxxxx's state of
organization or any change in Borrower's name. Borrower shall do all things
necessary to preserve and to keep in full force and effect its existence, rights
and privileges, and shall comply with all regulations, rules, ordinances,
statutes, orders and decrees of any governmental or quasi-governmental authority
or court applicable to Borrower and Xxxxxxxx's business
activities.
Assumed Business
Names. Xxxxxxxx has filed or recorded all
documents or filings required by law relating to all assumed business names used
by Xxxxxxxx. Excluding the name of Xxxxxxxx, the following is a complete list of
all assumed business names under which Borrower does business:
None.
Authorization. Borrower's
execution, delivery, and performance of this Agreement and all the Related
Documents have been duly authorized by all necessary action by Borrower and do
not conflict with, result in a violation of, or constitute a default under (1)
any provision of (a) Borrower's articles of incorporation or organization, or
bylaws, or (b) any agreement or other instrument binding upon Borrower or (2)
any law, governmental regulation, court decree, or order applicable to Borrower
or to Borrower's properties.
Financial Information. Each of
Xxxxxxxx's financial statements supplied to Xxxxxx truly and completely
disclosed Xxxxxxxx's financial condition as of the date of the statement, and
there has been no material adverse change in Xxxxxxxx's financial condition
subsequent to the date of the most recent financial statement supplied to
Lender. Borrower has no material contingent obligations except as disclosed in
such financial statements.
Legal Effect. This Agreement
constitutes, and any instrument or agreement Borrower is required to give under
this Agreement when delivered will constitute legal, valid, and binding
obligations of Borrower enforceable against Borrower in accordance with their
respective terms.
Properties. Except as contemplated by
this Agreement or as previously disclosed in Xxxxxxxx's financial statements or
in writing to Lender and as accepted by Xxxxxx, and except for property tax
liens for taxes not presently due and payable, Borrower owns and has good title
to all of Borrower's properties free and clear of all Security Interests, and
has not executed any security documents or financing statements relating to such
properties. All of Xxxxxxxx's properties are titled in Borrower's legal name,
and Xxxxxxxx has not used or filed a financing statement under any other name
for at least the last five (5) years.
Hazardous Substances. Except as
disclosed to and acknowledged by Xxxxxx in writing, Borrower represents and
warrants that: (1) During the period of Borrower's ownership of the Collateral,
there has been no use, generation, manufacture, storage, treatment, disposal,
release or threatened release of any Hazardous Substance by any person on,
under, about or from any of the Collateral. (2) Borrower has no knowledge of, or
reason to believe that there has been
(a) any breach or violation of any Environmental Laws; (b) any use, generation,
manufacture, storage, treatment, disposal, release or threatened release of any
Hazardous Substance on, under, about or from the Collateral by any prior owners
or occupants of any of the Collateral; or (c) any actual or threatened
litigation or claims of any kind by any person relating to such matters. (3)
Neither Borrower nor any tenant, contractor, agent or other authorized user of
any of the Collateral shall use, generate, manufacture, store, treat, dispose of
or release any Hazardous Substance on, under, about or from any of the
Collateral; and any such activity shall be conducted in compliance with all
applicable federal, state, and local laws, regulations, and ordinances,
including without limitation all Environmental Laws. Borrower authorizes Lender
and its agents to enter upon the Collateral to make such inspections and tests
as Lender may deem appropriate to determine compliance of the Collateral with
this section of the Agreement. Any inspections or tests made by Lender shall be
at Borrower's expense and for Lender's purposes only and shall not be construed
to create any responsibility or liability on the part of Lender to Borrower or
to any other person. The representations and warranties contained herein are
based on Borrower's due diligence in investigating the Collateral for hazardous
waste and Hazardous Substances. Borrower hereby CI )
releases and waives any future claims against Lender for indemnity or
contribution in the event Borrower becomes liable for cleanup or other costs
under any such laws, and (2) agrees to indemnify, defend, and hold harmless
Lender against any and all claims, losses, liabilities, damages, penalties, and
expenses which Lender may directly or indirectly sustain or suffer resulting
from a breach of this section of the Agreement or as a consequence of any use,
generation, manufacture, storage, disposal, release or threatened release of a
hazardous waste or substance on the Collateral. The provisions of this section
of the Agreement, including the
obligation to indemnify and defend, shall survive the payment of the
Indebtedness and the termination, expiration or satisfaction of this Agreement
and shall not be affected by Lender's acquisition of any interest in any of the
Collateral, whether by foreclosure or otherwise.
Litigation and Claims. No litigation,
claim, investigation, administrative proceeding or similar action (including
those for unpaid taxes) against Borrower is pending or threatened, and no other
event has occurred which may materially adversely affect Borrower's financial
condition or properties, other than litigation, claims, or other events, if any,
that have been disclosed to and acknowledged by Xxxxxx in writing.
Taxes. To the
best of Xxxxxxxx's knowledge, all of Xxxxxxxx's tax returns and reports
that are or were required to be filed, have been filed, and all taxes,
assessments and other governmental charges have been paid in full, except those
presently being or to be contested by Borrower in good faith in the ordinary
course of business and for which adequate reserves have been
provided.
Lien Priority. Unless otherwise previously
disclosed to Lender in writing, Xxxxxxxx has not entered into or granted any
Security Agreements, or permitted the filing or attachment of any Security
Interests on or affecting any of the Collateral directly or indirectly securing
repayment of Borrower's Loan and Note, that would be prior or that may in any
way be superior to Xxxxxx's Security Interests and rights in and to such
Collateral.
Binding Effect. This
Agreement, the Note, all Security Agreements (if any), and all Related Documents
are binding upon the signers thereof, as well as upon their successors,
representatives and assigns, and are legally enforceable in accordance with
their respective terms.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Xxxxxx that, so
long as this Agreement remains in effect, Borrower will:
Notices of Claims and Litigation. Promptly inform Xxxxxx in writing of (1) all
material adverse changes in Borrower's financial condition, and (2) all existing
and all threatened litigation, claims, investigations, administrative
proceedings or similar actions affecting Borrower or any Guarantor which could
materially affect the financial condition of Borrower or the financial condition
of any Guarantor.
Financial Records. Maintain its books and records in accordance with
GAAP, applied on a consistent basis, and permit Xxxxxx to examine and audit
Xxxxxxxx's books and records at all reasonable times.
Financial Statements. Furnish Lender with such financial statements and
other related information at such frequencies and in such detail as Lender may
reasonably request.
Additional Information. Furnish such additional information and statements,
as Xxxxxx may request from time to time.
Insurance. Maintain fire and other risk insurance, public
liability insurance, and such other insurance as Lender may require with respect
to Borrower's properties and operations, in form, amounts, coverages and with
insurance companies acceptable to Lender. Borrower, upon request of Xxxxxx, will
deliver to Lender from time to time the policies or certificates of insurance in
form satisfactory to Lender, including stipulations that
coverages will not be cancelled or diminished without at least thirty
(30) days prior written notice to Lender. Each insurance policy also shall
include an endorsement providing that coverage in favor of Lender will not be
impaired in any way by any act, omission or default of Borrower or any other
person. In connection with all policies covering assets in which Lender holds or
is offered a security interest for the Loans, Borrower will provide Lender with
such lender's loss payable or other endorsements as Lender may
require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports
on each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (1) the name
of
the insurer; (2) the risks insured; (3) the amount of the policy; (4)
the properties insured; (5) the then current property values on the basis
of which insurance has been obtained, and the manner of determining those
values; and (6) the expiration date of the policy. In addition, upon request
of
Lender (however not more often than annually), Borrower will have an
independent appraiser satisfactory to Lender determine, as applicable, the
actual cash value or replacement cost of any Collateral. The cost of
such appraisal shall be paid by Borrower.
Other Agreements. Comply with all terms and
conditions of all other agreements, whether now or hereafter existing, between
Borrower and any other party and notify Lender immediately in writing of any
default in connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for
Xxxxxxxx's business operations, unless specifically consented to the contrary by
Xxxxxx in writing.
Taxes, Charges and Liens. Pay and discharge
when due all of its indebtedness and obligations, including without limitation
all assessments, taxes, governmental charges, levies and liens, of every kind
and nature, imposed upon Borrower or its properties, income, or profits, prior
to the date on which penalties would attach, and all lawful claims that, if
unpaid, might become a lien or charge upon any of Borrower's properties, income,
or profits. Provided however, Xxxxxxxx will not be required to pay and discharge
any such assessment, tax, charge, xxxx, xxxx or claim so long as (1) the
legality of the same shall be contested in good faith by appropriate
proceedings, and (2) Borrower shall have established on Borrower's books
adequate reserves with respect to such contested assessment, tax, charge, levy,
lien, or claim in accordance with GAAP.
Performance. Perform and comply, in a timely
manner, with all terms, conditions, and provisions set forth in this Agreement,
in the Related Documents, and in all other instruments and agreements between
Borrower and Lender. Borrower shall notify Xxxxxx immediately in writing of any
default in connection with any agreement.
Operations. Maintain executive and management
personnel with substantially the same qualifications and experience as the
present executive and management personnel; provide written notice to Lender of
any change in executive and management personnel; conduct its business affairs
in a reasonable and prudent manner.
Environmental Studies. Promptly conduct and
complete, at Borrower's expense, all such investigations, studies, samplings and
testings as may be requested by Lender or any governmental authority relative to
any substance, or any waste or by-product of any substance defined as toxic or a
hazardous substance under applicable federal, state, or local law, rule,
regulation, order or directive, at or affecting any property or any facility
owned, leased or used by Borrower.
Compliance with Governmental Requirements.
Comply with all laws, ordinances, and regulations, now or hereafter in effect,
of all governmental authorities applicable to the conduct of Borrower's
properties, businesses and operations, and to the use or occupancy of the
Collateral, including without limitation, the Americans With Disabilities Act.
Borrower may contest in good faith any such law, ordinance, or regulation and
withhold compliance during any proceeding, including appropriate appeals, so
long as Borrower has notified Lender in writing prior to doing so and so long
as, in Xxxxxx's sole opinion, Xxxxxx's interests in the Collateral are not
jeopardized. Lender may require Borrower to post adequate security or a surety
bond, reasonably satisfactory to Lender, to protect Xxxxxx's
interest.
Inspection. Permit employees or agents of
Lender at any reasonable time to inspect any and all Collateral for the Loan or
Loans and Xxxxxxxx's other properties and to examine or audit Xxxxxxxx's books,
accounts, and records and to make copies and memoranda of Xxxxxxxx's books,
accounts, and records. If Borrower now or at any time hereafter maintains any
records (including without limitation computer generated records and computer
software programs for the generation of such records) in the possession of a
third party, Borrower, upon request of Xxxxxx, shall notify such party to permit
Lender
free access to such records at all reasonable times and to provide Lender
with copies of any records it may request, all at Borrower's
expense.
Compliance Certificates. Unless waived in
writing by Xxxxxx, provide Lender at least annually, with a certificate executed
by Xxxxxxxx's chief financial officer, or other officer or person acceptable to
Lender, certifying that the representations and warranties set forth in this
Agreement are true and correct as of the date of the certificate and further
certifying that, as of the date of the certificate, no Event of Default exists
under this Agreement.
Environmental
Compliance and Reports. Borrower shall comply
in all respects with any and all Environmental Laws; not cause or permit to
exist, as a result of an intentional or unintentional action or omission on
Borrower's part or on the part of any third party, on property owned and/or
occupied by Borrower, any environmental activity where damage may result to the
environment, unless such environmental activity is pursuant to and in compliance
with the conditions of a permit issued by the appropriate federal, state or
local governmental authorities; shall furnish to Lender promptly and in any
event within thirty (30) days after receipt thereof a copy of any notice,
summons, lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any intentional or
unintentional action or omission on Borrower's part in connection with any
environmental activity whether or not there is damage to the environment and/or
other natural resources.
Additional
Assurances. Make, execute and deliver to
Lender such promissory notes, mortgages, deeds of trust, security agreements,
assignments, financing statements, instruments, documents and
other agreements as Lender or its attorneys may reasonably request to
evidence and secure the Loans and to perfect all Security
Interests.
XXXXXX'S
EXPENDITURES. If any action or
proceeding is commenced that would materially affect Xxxxxx's interest in the
Collateral or if Borrower fails to comply with any provision of this Agreement
or any Related Documents, including but not limited to Borrower's failure to
discharge or pay when due any amounts Borrower is required to discharge or pay
under this Agreement or any Related Documents, Lender on Borrower's behalf may
(but shall not be obligated to) take any action that Lender deems appropriate,
including but not limited to discharging or paying all taxes, liens, security
interests, encumbrances and other claims, at any time levied or placed on any
Collateral and paying all costs for insuring, maintaining and preserving any
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Xxxxxxxx. All such
expenses will become a part of the Indebtedness and, at Xxxxxx's option, will
(A) be payable on demand; (B) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (1 } the term of any applicable insurance policy; or (2) the
remaining term of the Note; or (C) be treated as a balloon payment which will be
due and payable at the Note's maturity.
NEGATIVE
COVENANTS. Borrower covenants and
agrees with Lender that while this Agreement is in effect, Borrower shall not,
without the prior written consent of Lender:
Indebtedness and Liens. (1)
Except for trade debt incurred in the normal course of business and indebtedness
to Lender contemplated by this Agreement, create, incur or assume indebtedness
for borrowed money, including capital leases, (2) sell, transfer, mortgage,
assign, pledge, lease, grant a security interest in, or encumber any of
Borrower's assets (except as allowed as Permitted Liens), or (3) sell with
recourse any of Borrower's accounts, except to Xxxxxx.
Continuity of Operations. (1)
Engage in any business activities substantially different than those in which
Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer,
acquire or consolidate with any other entity, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business, or (3) pay
any dividends on Borrower's stock (other than dividends payable in its stock),
provided, however that notwithstanding the foregoing, but only so long as no
Event of Default has occurred and is continuing or would result from the payment
of dividends, if Borrower is a "Subchapter S Corporation" (as defined in the
Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on
its stock to its shareholders from time to time in amounts necessary to enable
the shareholders to pay income taxes and make estimated income tax payments to
satisfy their liabilities under federal and state law which arise
solely from their status as Shareholders of a Subchapter S Corporation because
of their ownership of shares of Borrower's stock, or purchase or retire any of
Borrower's outstanding shares or alter or amend Borrower's capital
structure.
Loans, Acquisitions and Guaranties. (1) Loan,
invest in or advance money or assets to any other person, enterprise or entity,
(2) purchase, create or acquire any interest in any other enterprise or entity,
or (3) incur any obligation as surety or guarantor other than in the ordinary
course of business.
Agreements. Borrower will not enter into any
agreement containing any provisions which would be violated or breached by the
performance of Borrower's obligations under this Agreement or in connection
herewith.
CESSATION OF ADVANCES. If
Lender has made any commitment to make any Loan to Borrower, whether under this
Agreement or under any other agreement, Lender shall have no obligation to make
Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is
in default under the terms of this Agreement or any of the Related Documents or
any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower
or any Guarantor dies, becomes incompetent or becomes insolvent, files a
petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C)
there occurs a material adverse change in Borrower's financial condition, in the
financial condition of any Guarantor, or in the value of any Collateral securing
any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such Guarantor's guaranty of the Loan or any other loan with
Lender; or {E) Lender in good xxxxx xxxxx itself insecure, even though no Event
of Default shall have occurred.
RIGHT OF SETOFF. To the extent permitted by
applicable law, Lender reserves a right of setoff in all Borrower's accounts
with Lender (whether checking, savings, or some other account). This includes
all accounts Borrower holds jointly with someone else and all accounts Borrower
may open in the future. However, this does not include any IRA or Xxxxx
accounts, or any trust accounts for which setoff would be prohibited by law.
Xxxxxxxx authorizes Xxxxxx, to the extent permitted by applicable law, to charge
or setoff all sums owing on the Indebtedness against any and all such
accounts.
DEFAULT. Each of the following shall constitute
an Event of Default under this Agreement:
Payment Default. Xxxxxxxx fails to make any
payment when due under the Loan.
Other Defaults. Borrower fails to comply with
or to perform any other term, obligation, covenant or condition contained in
this Agreement or in any of the Related Documents or to comply with or to
perform any term, obligation, covenant or condition contained in any other
agreement between Lender and Borrower.
False Statements. Any warranty, representation
or statement made or furnished to Lender by Borrower or on Borrower's behalf
under this Agreement or the Related Documents is false or misleading in any
material respect, either now or at the time made or furnished or becomes false
or misleading at any time thereafter.
Insolvency. The dissolution or termination of
Xxxxxxxx's existence as a going business, the insolvency of Xxxxxxxx, the
appointment of a receiver for any part of Xxxxxxxx's property, any assignment
for the benefit of creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or against
Borrower.
Defective Collateralization. This Agreement or any of
the Related Documents ceases to be in full force and effect (including
failure of any collateral document to create a valid and perfected security
interest or lien) at any time and for any reason.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing the Loan. This includes a garnishment of any of
Xxxxxxxx's accounts, including deposit accounts, with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Xxxxxxxx as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Xxxxxx written notice of
the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to
any Guarantor of any of the Indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
Guaranty of the Indebtedness.
Change in Ownership. Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower.
Adverse Change. A material adverse
change occurs in Borrower's financial condition, or Xxxxxx believes the prospect
of payment or performance of the Loan is impaired.
Insecurity. Lender in good faith believes itself
insecure.
Right to Cure. If any default,
other than a default on Indebtedness, is curable and if Borrower or Grantor, as
the case may be, has not been given a notice of a similar default within the
preceding twelve (12) months, it may be cured if Borrower or Grantor, as the
case may be, after receiving written notice from Lender demanding cure of such
default: (1) cure the default within fifteen (15) days; or (2) if the cure
requires more than fifteen (15) days, immediately initiate steps which Xxxxxx
deems in Xxxxxx's sole discretion to be sufficient to cure the default and
thereafter continue and complete all reasonable and necessary steps sufficient
to produce compliance as soon as reasonably
practical.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
further Loan Advances or disbursements), and, at Lender's option, all
Indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender's rights
and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Xxxxxx to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Xxxxxx's
right to declare a default and to exercise its rights and
remedies.
FUNDING RESTRICTIONS. The funding under this loan is restricted. The
maximum outstanding loan amount under this, and any other loan for which
Borrower is contingently liable, shall not exceed Western Commercial Bank's
legal lending limit, less the amount of the participations sold to participating
institutions.
FINANCIAL COVENANTS.
1. Xxxxxx
agrees to move forward with this commitment in the form of a modification of the
note for an extension of time as specified herewith. Lender preserves any and
all rights there under to protect its interests (due to the classification of
this loan the condition of how the loan is to be documented will remain).
2. Borrower
has 3 business days to cure any overadvance on the line of
credit.
3. Borrower
will provide monthly agings and a borrowing base certificate along with internal
financial statements no less than monthly and no later than 25 days past the
preceding month end. Financial information shall include an aging of accounts
payable as well and any other such items as the Lender may
determine.
4. Borrower
to maintain its primary deposit relationship with Xxxxxx during the life of the
loan, no split borrowing is allowed.
5. Loan
documents - modification of current agreement subject to the
following:
a. Cash to
be no less than $300,000 until June 30, 2009; thereafter no less than $500,000
at any time
b. Debt to
Effective Tangible Net Worth (Debt to ETNW) - Not greater than 2:1 and includes
intangibles
c. Borrower
to comply with a working capital ratio of no less than .40 to 1 until June 30,
2009; thereafter no less that .65 to 1 at any time. Working capital ratio is
defined as current assets (less prepaids) divided by current liabilities (less
deferred service contract revenue) as defined by GAAP.
d. Convertable
debt, preferred debt and/or interest/dividends cannot be repaid prior to Lender
debt.
e.
Withdrawals and distributions not to exceed net profit monitored
quarterly.
DEFINITIONS.
(continued from Page 9)
Eligible Progress Billings. The words "Eligible
Progress Billings" mean, at any time, all of Borrower's Progress Billings as
defined below, except:
(1)
Progress Billings in which the customer does not have an eligible receivable
(i.e. If a Progress Billing customer has a trade receivable account that is
completely ineligible, then the Progress Billing receivable will also be
ineligible.
Progress Billings. The words "Progress
Billings" mean a chain of xxxxxxxx, usually following the percentage of
completion method of measuring sale under a long-term contract in favor of
Borrower (or to a third party grantor acceptable to Lender).
REPORTING
REQUIREMENTS.
1. Borrower
to provide FYE Reviewed Financial Statement within 90 days of FYE. 120 days will
be permitted if extension is filed with the SEC.
2. Borrower
to provide quarterly Financial Statements within 45 days of quarter end. 60 days
will be permitted if extension is filed with the SEC.
3. Borrower
to provide Tax Returns annually within 15 days of filing.
4. Borrower
to provide Trade Accounts Receivable aging, Progressive Billings receivable
aging, inventory listing, accounts payable agings and borrowing base certificate
monthly within 25 days of month end.
5.
Borrower to provide evidence of business insurance and product liability
insurance for the life of the loan.
LENDER
AUDITS.
Lender will
perform an Accounts Receivable and Accounts Payable audit annually at borrowers
expense.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or
amendment.
Arbitration. Xxxxxxxx and Xxxxxx agree that all
disputes, claims and controversies between them whether individual, joint, or
class in nature, arising from this Agreement or otherwise, including without
limitation contract and tort disputes, shall be arbitrated pursuant to the Rules
of the American Arbitration Association in effect at the time the claim is
filed, upon request of either party. No act to take or dispose of any Collateral
shall constitute a waiver of this arbitration agreement or be prohibited by this
arbitration agreement. This includes, without limitation, obtaining injunctive
relief or a temporary restraining order; invoking a power of sale under any deed
of trust or mortgage: obtaining a writ of attachment or imposition of a
receiver; or exercising any rights relating to personal property, including
taking or disposing of such property with or without judicial process pursuant
to Article 9 of the Uniform Commercial Code. Any disputes, claims, or
controversies concerning the lawfulness or reasonableness of any act, or
exercise of any right, concerning any Collateral, including any claim to
rescind, reform, or otherwise modify any agreement relating to the Collateral,
shall also be arbitrated, provided however that no arbitrator shall have the
right or the power to enjoin or restrain any act of any party. Borrower and
Xxxxxx agree that in the event of an action for judicial foreclosure pursuant to
California Code of Civil Procedure Section 726, or any similar provision in any
other state, the commencement of such an action will not constitute a waiver of
the right to arbitrate and the court shall refer to arbitration as much of such
action, including counterclaims, as lawfully may be referred to arbitration.
Judgment upon any award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in
this Agreement shall preclude any party from seeking equitable relief
from a court of competent jurisdiction. The statute of limitations, estoppel,
waiver, !aches, and similar doctrines which would otherwise be applicable in an
action brought by a party shall be applicable in any arbitration proceeding, and
the commencement of an arbitration proceeding shall be deemed the commencement
of an action for these purposes. The Federal Arbitration Act shall apply to the
construction, interpretation, and enforcement of this arbitration
provision.
Attorneys' Fees; Expenses. Xxxxxxxx agrees to pay upon demand all of Xxxxxx's
costs and expenses, including Xxxxxx's attorneys' fees and Xxxxxx's legal
expenses, incurred in connection with the enforcement of this Agreement. Lender
may hire or pay someone else to help enforce this Agreement, and Borrower shall
pay the costs and expenses of such enforcement. Costs and expenses include
Xxxxxx's attorneys' fees and legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Borrower also
shall pay all court costs and such additional fees as may be directed by the
court.
Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or define the
provisions of this Agreement.
Consent to Loan Participation. Xxxxxxxx
agrees and consents to Xxxxxx's sale or transfer, whether now or later, of one
or more participation interests in the Loan to one or more purchasers, whether
related or unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any other
matter relating to the Loan, and Borrower hereby waives any rights to privacy
Borrower may have with respect to such matters. Borrower additionally waives any
and all notices of sale of participation interests, as well as all notices of
any repurchase of such participation interests. Xxxxxxxx also agrees that the
purchasers of any such participation interests will be considered as the
absolute owners of such interests in the Loan and will have all the rights
granted under the participation agreement or agreements governing the sale of
such participation interests. Borrower further waives all rights of offset or
counterclaim that it may have now or later against Lender or against any
purchaser of such a participation interest and unconditionally agrees that
either Lender or such purchaser may enforce Xxxxxxxx's obligation under the Loan
irrespective of the failure or insolvency of any holder of any interest in the
Loan. Xxxxxxxx further agrees that the purchaser of any such participation
interests may enforce its interests irrespective of any personal claims or
defenses that Borrower may have against
Xxxxxx.
Governing
Law. This Agreement will be governed by federal law applicable to Lender
and, to the extent not preempted by federal law, the laws of the State of
California without regard to its conflicts of law provisions. This Agreement has
been accepted by Xxxxxx in the State of California.
Choice of Venue. If there is a lawsuit,
Xxxxxxxx agrees upon Xxxxxx's request to submit to the jurisdiction of the
courts of Los Angeles County, State of California.
No Waiver by Xxxxxx. Lender shall not be deemed
to have waived any rights under this Agreement unless such waiver is given in
writing and signed by Xxxxxx. No delay or omission on the part of Lender in
exercising any right shall operate as a waiver of such right or any other right.
A waiver by Xxxxxx of a provision of this Agreement shall not prejudice or
constitute a waiver of Lender's right otherwise to demand strict compliance with
that provision or any other provision of this Agreement. No prior waiver by
Xxxxxx, nor any course of dealing between Xxxxxx and Borrower, or between Lender
and any Grantor, shall constitute a waiver of any of Lender's rights or of any
of Borrower's or any Grantor's obligations as to any future transactions.
Whenever the consent of Lender is required under this Agreement, the granting of
such consent by Lender in any instance shall not constitute continuing consent
to subsequent instances where such consent is required and in all cases such
consent may be granted or withheld in the sole discretion of
Lender.
Notices. Any notice required to be given under
this Agreement shall be given in writing, and shall be effective when actually
delivered, when actually received by telefacsimile (unless otherwise required by
law), when deposited with a nationally recognized overnight courier, or, if
mailed, when deposited in the United States mail, as first class, certified or
registered mail postage prepaid, directed to the addresses shown near the
beginning of this Agreement. Any party may change its address for notices under
this Agreement by giving formal written notice to the other parties, specifying
that the purpose of the notice is to change the party's address. For notice
purposes, Xxxxxxxx agrees to keep Xxxxxx informed at all times of Xxxxxxxx's
current address. Unless otherwise provided or required by law, if there is more
than one Borrower, any notice given by Lender to any Borrower is deemed to be
notice given to all Borrowers.
Severability. If a court of competent
jurisdiction finds any provision of this Agreement to be illegal, invalid, or
unenforceable as to any circumstance, that finding shall not make the offending
provision illegal, invalid, or unenforceable as to any other circumstance. if
feasible, the offending provision shall be considered modified so that it
becomes legal, valid and enforceable. If the offending provision cannot be so
modified, it shall be considered deleted from this Agreement. Unless otherwise
required by law, the illegality, invalidity, or unenforceability of any
provision of this Agreement shall not affect the legality, validity or
enforceability of any other provision of this Agreement.
Subsidiaries and Affiliates of Borrower. To the
extent the context of any provisions of this Agreement makes it appropriate,
including without limitation any representation, warranty or covenant, the word
"Borrower" as used in this Agreement shall include all of Borrower's
subsidiaries and affiliates. Notwithstanding the foregoing however, under no
circumstances shall this Agreement be construed to require Lender to make any
Loan or other financial accommodation to any of Borrower's subsidiaries or
affiliates.
Successors and Assigns. All covenants and agreements by or on behalf of
Borrower contained in this Agreement or any Related Documents shall bind
Xxxxxxxx's successors and assigns and shall inure to the benefit of Lender and
its successors and assigns. Borrower shall not, however, have the right to
assign Xxxxxxxx's rights under this Agreement or any interest therein, without
the prior written consent of Lender.
Survival of Representations and Warranties.
Xxxxxxxx understands and agrees that in
extending Loan Advances, Xxxxxx is relying on all representations, warranties,
and covenants made by Borrower in this Agreement or in any certificate or other
instrument delivered by Borrower to Lender under this Agreement or the Related
Documents. Borrower further agrees that regardless of any investigation made by
Xxxxxx, all such representations, warranties and covenants will survive the
extension of Loan Advances and delivery to Lender of the Related Documents,
shall be continuing in nature, shall be deemed made and redated by Xxxxxxxx at
the time each Loan Advance is made, and shall remain in full force and effect
until such time as Borrower's Indebtedness shall be paid in full, or until this
Agreement shall be terminated in the manner provided above, whichever is the
last to occur.
Time is of the Essence. Time is of the essence in the performance of this
Agreement.
Waive Jury. To the extent permitted by applicable law, all
parties to this Agreement hereby waive the right to any jury trial in
any action, proceeding, or counterclaim brought by any party against any other
party. (Initial Here
DEFINITIONS. The following capitalized words and terms shall have
the following meanings when used in this Agreement. Unless specifically stated
to the contrary, all references to dollar amounts shall mean amounts in lawful
money of the United States of America. Words and terms used in the singular
shall include the plural, and the plural shall include the singular, as the
context may require. Words and terms not otherwise defined in this Agreement
shall have the meanings attributed to such terms in the Uniform Commercial Code.
Accounting words and terms not otherwise defined in this Agreement shall have
the meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date of this Agreement:
Account. The
word "Account" means a trade account, account receivable, other receivable, or
other right to payment for goods sold or services rendered owing to Borrower (or
to a third party grantor acceptable to Lender).
Account Debtor. The words "Account Debtor" mean the person or entity
obligated upon an Account.
Advance. The
word "Advance" means a disbursement of Loan funds made, or to be made, to
Borrower or on Borrower's behalf under the terms and conditions of this
Agreement.
Agreement. The word "Agreement" means this Business Loan
Agreement (Asset Based), as this Business Loan Agreement (Asset Based) may be
amended or modified from time to time, together with all exhibits and schedules
attached to this Business Loan Agreement (Asset Based) from time to
time.
Borrower. The
word "Borrower" means Aspyra, Inc. and includes all co-signers and co-makers
signing the Note and all their successors and assigns.
Borrowing Base. The words "Borrowing Base" mean as determined by
Lender from time to time, the lesser of (1) $1,300,000.00 or (2) the sum of (a)
80.000% of the aggregate amount of Eligible Accounts (not to exceed in
corresponding Loan amount based on Eligible Accounts $1,300,000.00), plus (b)
30.000% of the aggregate amount of Eligible Inventory (not to exceed in
corresponding Loan amount based on Eligible Inventory $250,000.00), plus (c)
40.000% of the aggregate amount of Eligible Progress Billings (not to exceed in
corresponding Loan amount based on Eligible Progress Billings
$300,000.00).
Business Day. The words "Business Day" mean a day on which
commercial banks are open in the State of California.
Collateral. The word
"Collateral" means all property and assets granted as collateral security for a
Loan, whether real or personal property, whether granted directly or indirectly,
whether granted now or in the future, and whether granted in the form of a
security interest, mortgage, collateral mortgage, deed of trust, assignment,
pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel
trust, factor's lien, equipment trust, conditional sale, trust receipt, lien,
charge, lien or title retention contract, lease or consignment intended as a
security
device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise. The word Collateral also
includes without limitation all collateral described in the Collateral section
of this Agreement.
Eligible Accounts. The words "Eligible
Accounts" mean at any time, all of Borrower's Accounts which contain selling
terms and conditions acceptable to Lender. The net amount of any Eligible
Account against which Borrower may borrow shall exclude all returns, discounts,
credits, and offsets of any nature. Unless otherwise agreed to by Xxxxxx in
writing, Eligible Accounts do not include:
(1) Accounts
with respect to which the Account Debtor is employee or agent of
Xxxxxxxx.
(2) Accounts
with respect to which the Account Debtor is a subsidiary of, or affiliated with
Borrower or its shareholders, officers, or directors.
(3) Accounts
with respect to which goods are placed on consignment, guaranteed sale, or other
terms by reason of which the payment by the Account Debtor may be
conditional.
(4) Accounts
with respect to which the Account Debtor is not a resident of the United States,
except to the extent such Accounts are supported by insurance, bonds or other
assurances satisfactory to Lender.
(5) Accounts
with respect to which Borrower is or may become liable to the Account Debtor for
goods sold or services rendered by the Account Debtor to Borrower.
BUSINESS
LOAN AGREEMENT (ASSET BASED)
(Continued)
| LOAN NO: 3004100 |
PAGE
9
|
(6) Accounts
which are subject to dispute, counterclaim, or setoff.
(7) Accounts
with respect to which the goods have not been shipped or delivered, or the
services have not been rendered, to the Account Debtor.
(8) Accounts
with respect to which Lender, in its sole discretion, deems the creditworthiness
or financial condition of the Account Debtor to be
unsatisfactory.
(9) 4ccounts
of any Account Debtor who has filed or has had filed against it a petition in
bankruptcy or an application for relief under any provision of any state or
federal bankruptcy, insolvency, or debtor-in-relief acts; or who has had
appointed a trustee, custodian, or receiver for the assets of such Account
Debtor; or who has made an assignment for the benefit of creditors or has become
insolvent or fails generally to pay its debts (including its payrolls) as such
debts become due.
(10) Accounts
with respect to which the Account Debtor is the United States government or any
department or agency of the United States.
(11) Accounts
which have not been paid in full within 60
days of due date or within 90 days from the invoice date. The entire
balance of any Account of any single Account Debtor will be ineligible whenever
the portion of the Account which has not been paid within 60
days of due date or within 90
days from the invoice date is in excess of 25.000% of the total amount outstanding on
the Account.
(12) That
portion of the Accounts of any single Account Debtor which exceeds 25.000% of
all of Borrower's Accounts ("Concentrations"). Insured Concentrations exceeding
25.000% to large customers will exist
from time to time; approval from Lender will be obtained for Concentrations on
an as needed basis.
(13)
With respect to Accounts in which the Account Debtor is not a resident of the
United States, exceptions for the Canadian providences of Manitoba, Ontario and
Saskatchewan are made.
Eligible Inventory. The words "Eligible Inventory" mean, at any time,
all of Borrower's Inventory as defined below, except:
(1) Inventory
which is not owned by Borrower free and clear of all security interest, liens,
encumbrances, and claims of third parties.
(2) Inventory
which Lender, in its sole discretion, deems to be obsolete, unsalable, damaged,
defective, or unfit for further processing.
(3) Work
in progress.
(4) Out
of state Inventory, or Inventory on consignment.
Environmental Laws. The words "Environmental Laws" mean any and all
state, federal and local statutes, regulations and ordinances relating to the
protection of human health or the environment, including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments
and Reauthorization Act of 1986, Pub. L. No. 99-499 ("XXXX"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5
through 7.7 of Division 20 of the California Health and Safety Code, Section
25100, et seq., or other applicable state or federal laws, rules, or regulations
adopted pursuant thereto.
Event of Default. The words "Event of Default" mean any of the events
of default set forth in this Agreement in the default section of this
Agreement.
Expiration Date. The words "Expiration Date"
mean the date of termination of Xxxxxx's commitment to lend under this
Agreement.
GAAP. The word "GAAP" means generally accepted
accounting principles.
Grantor. The word "Grantor" means each and all
of the persons or entities granting a Security Interest in any Collateral for
the Loan, including without limitation all Borrowers granting such a Security
Interest.
Guarantor. The word "Guarantor" means any
guarantor, surety, or accommodation party of any or all of the
Loan.
Guaranty. The word "Guaranty" means the
guaranty from Guarantor to Lender, including without limitation a guaranty of
all or part of the Note.
Hazardous
Substances. The words "Hazardous Substances" mean materials that, because
of their quantity, concentration or physical, chemical or infectious
characteristics, may cause or pose a present or potential hazard to human health
or the environment when improperly used, treated, stored, disposed of,
generated, manufactured, transported or otherwise handled. The words "Hazardous
Substances" are used in their very broadest sense and include without limitation
any and all hazardous or toxic substances, materials or waste as defined by or
listed under the Environmental Laws. The term "Hazardous Substances" also
includes, without limitation, petroleum and petroleum by-products or any
fraction thereof and asbestos.
Indebtedness.
The word "Indebtedness" means the indebtedness evidenced by the Note or Related
Documents, including all principal and interest together with all other
indebtedness and costs and expenses for which Borrower is responsible under this
Agreement or under any of the Related Documents.
BUSINESS
LOAN AGREEMENT (ASSET BASED)
(Continued)
| LOAN NO: 3004100 |
PAGE
10
|
Inventory. The word "Inventory" means all of Borrower's raw
materials, work in process, finished goods, merchandise, parts and supplies, of
every kind and description, and goods held for sale or lease or furnished under
contracts of service in which Borrower now has or hereafter acquires any right,
whether held by Borrower or others, and all documents of title, warehouse
receipts, bills of lading, and all other documents of every type covering all or
any part of the foregoing. Inventory includes inventory temporarily out of
Xxxxxxxx's custody or possession and all returns on
Accounts.
Lender. The word "Lender" means Western
Commercial Bank, its successors and assigns.
Loan. The word "Loan" means any and all loans
and financial accommodations from Lender to Borrower whether now or hereafter
existing, and however evidenced, including without limitation those loans and
financial accommodations described herein or described on any exhibit or
schedule attached to this Agreement from time to time.
Note. The word "Note" means Note executed by
Xxxxxxxx dated February 27, 2007 in the original principal amount of
$1,300,000.00 together with all renewals of, extensions of, modifications of,
refinancings of and substitutions for the note or credit agreement.
Permitted Liens. The words "Permitted Liens"
mean (1) liens and security interests securing Indebtedness owed by Borrower to
Lender; (2) liens for taxes, assessments, or similar charges either not yet due
or being contested in good faith; (3) liens of materialmen, mechanics,
warehousemen, or carriers, or other like liens arising in the ordinary course of
business and securing obligations which are not yet delinquent; (4) purchase
money liens or purchase money security interests upon or in any property
acquired or held by Borrower in the ordinary course of business to secure
indebtedness outstanding on the date of this Agreement or permitted to be
incurred under the paragraph of this Agreement titled "Indebtedness and Liens";
(5) liens and security interests which, as of the date of this Agreement, have
been disclosed to and approved by the Lender in writing; and (6) those liens and
security interests which in the aggregate constitute an immaterial and
insignificant monetary amount with respect to the net value of Xxxxxxxx's
assets.
Primary Credit Facility. The words "Primary
Credit Facility" mean the credit facility described in the Line of Credit
section of this Agreement.
Related Documents. The words "Related
Documents" mean all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, security deeds, collateral mortgages, and all other instruments,
agreements and documents, whether now or hereafter existing, executed in
connection with the Loan.
Security Agreement. The words "Security
Agreement" mean and include without limitation any agreements, promises,
covenants, arrangements, understandings or other agreements, whether created by
law, contract, or otherwise, evidencing, governing, representing, or creating a
Security Interest.
Security Interest. The words "Security
Interest" mean, without limitation, any and all types of collateral security,
present and future, whether in the form of a lien, charge, encumbrance,
mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel
mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment
trust, conditional sale, trust receipt, lien or title retention contract, lease
or consignment intended as a security device, or any other security or lien
interest whatsoever whether created by law, contract, or otherwise,
XXXXXXXX ACKNOWLEDGES HAVING READ
ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT (ASSET BASED)
AND XXXXXXXX AGREES TO
ITS TERMS. THIS BUSINESS LOAN AGREEMENT (ASSET BASED) IS DATED FEBRUARY
27, 2009.
BORROWER:
ASPYRA,
INC.
By:
Xxxxxx
Xxxxxx, CEO of Aspyra, Inc.
LENDER:
WESTERN
COMMERCIAL BANK
By:
Authorized Signer
