EXHIBIT 10.19
Xxxxxxx Factors, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
SECURITY AGREEMENT
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(Accounts Receivable - Financing)
Gentlemen:
We propose the following arrangements with you, effective as of the date of
your acceptance, wherein yu may make loans and advances to us in accordance with
the terms, provisions and conditions hereinafter stated:
1. As security for all such loans and advances (both referred to as
"Advances"), and for all other debts, liabilities and obligations of every
nature whatsoever now or hereafter owing from the undersigned to you, the
undersigned hereby sells, assigns, transfers, sets over, hypothecates and
pledges to you at your office in the City of New York, with absolute recourse to
us, and grants you a security interest in all Receivables (as hereinafter
defined) and all general intangibles (as such term is defined in the Uniform
Commercial Code) and all intellectual property including but not limited to
lists, data, computer memory and software, now or hereafter owned by us. For
the purposes of this agreement the term "Receivables" means and includes all
accounts, accounts receivable, contract rights, instruments, documents, chattel
paper and leases, and any and all other forms of claims or obligations owing to
us, whether secured or unsecured, all proceeds thereof including insurance
thereon and all or rights as to any merchandise which is represented thereby
(delivered or undelivered) including all of our rights of stoppage in transit,
replevin and reclamation and as an unpaid vendor or lienor. You shall be
privileged to enjoy all the rights and remedies of the seller of such goods and
shall be and become subrogated to all guaranties and securities possessed by us
or due to come into our hands, but you shall not be liable in any manner for
exercising or refusing to exercise any rights thereby bestowed. From time to
time at you request, but not less than weekly, we shall provide you with
schedules describing all Receivables created or acquired by us, in form
satisfactory to you, and shall execute and deliver to you at your office in the
City of New York, written assignments of such Receivables to you and shall
furnish at the same time copies of customers' invoices or the equivalent,
together with original shipping or delivery receipts for all merchandise sold
and/or the original of all contracts, mortgages and other documents executed by
the customers and/or all notes, bills, acceptances or other evidences of their
indebtedness, duly endorsed in blank by us, and at the end of every month a
detailed open item Accounts Receivable Trial Balance indicating each customer's
name, address and owing by individual invoice and/or any other information or
documents you may call upon us from time to time to submit, but your failure to
request any or all of the foregoing or our failure to deliver same shall not
affect your security interest in or rights to Receivables.
2. At the time of assignment of Receivables and periodically thereafter,
you may in your sole and absolute discretion make Advances to us which, in the
aggregate at any time outstanding, will not exceed the lesser of (i)
$1,500,000.00 (the "Maximum Revolving Amount"), or (ii) eighty percent (80%)
(the "Advance Percentage") of the net face amount of all Eligible Receivables
(as hereinafter defined), less such reserves as you may deem reasonably proper
and necessary from time to time, and you will charge the amount of each such
advance to our account. Notwithstanding the above, it is understood that you
may, at our request, from time to time advance a sum that is more or less than
the sum determined by application of the above percentage of Eligible
Receivables and may, in fact, make Advances at a time when there are no Eligible
Receivables. You may, or we shall upon request from you, at any time notify
customers that Receivables have been assigned to you. You may collect
Receivables directly in your own name or our name and charge the collection
costs and expenses to our account. But, until you give us other instructions,
we shall continue to make collection of all Receivables for you. All payments
on account of Receivables shall be your specific property; we shall receive
them as your trustee and we shall immediately deliver them to you in their
original form. After allowing four (4) banking days for collection time, you
will credit all such payments to our account and, subject to the provisions of
this Agreement, you will at our request remit to us any net balance standing to
our credit on your books, or any part thereof. In consideration for your
agreement to make the loans referenced above, upon the execution of this
Agreement and upon each anniversary of its effective date, we shall, in addition
to the payment of the other fees stated herein, pay you a yearly facility fee
equal to one and one-half percent (1 1/2%) of the Maximum Revolving Amount in
effect on such date; it being understood that we may, upon
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written notice to you, elect to reduce the Maximum Revolving Amount at any time,
any such reduction being irrevocable.
3. Interest hereunder upon the net balance of our account due at the close
of each day, which will be due and payable at the close of each month, shall be
based upon the highest publicly announced "reference", "prime", or "base"
interest rate of Chase Manhattan Bank (the "Prime Rate") (which is now 8 1/2%
per annum) plus one and one-half percent (1 1/2%) (the "Effective Rate"). The
effective rate shall be increased or decreased as the case may be for each
increase or decrease in the Prime Rate in an amount equal to such increase or
decrease in the Prime Rate; each change to be effective as at the first day of
the month after the related change in such Prime Rate; but in no event shall the
Effective Rate of interest hereunder be less than 8% per annum, nor shall
interest charged hereunder be less than $60,000.00 in any contract year, nor in
excess of the maximum rate you are permitted to charge by law. However, upon
the occurrence of an Event of Default by the undersigned under this Agreement,
any supplement hereto or any related agreement and subsequent to any termination
of this Agreement pursuant to paragraph 11 hereof, interest upon the net balance
of our account due at the close of each day shall be payable at a fluctuating
interest rate per annum equal to the Effective Rate plus four percent (4%), but
not in excess of the maximum rate permitted by law. Interest shall be
calculated on the basis of actual days elapsed and on a 360 day year. Nothing
herein shall limit or restrict your right to adjust advance formulas upward or
downward and eligibility requirements based upon your lending criteria which is
established in your sole discretion and on your own collateral evaluations. You
will account monthly to us and each monthly accounting will be final, binding
and conclusive upon us unless we give you written notice by registered mail of
specified exceptions thereto within 30 days of its date. Such notice shall only
be deemed an objection to those items specifically objected to therein. All
interest is payable to you daily but shall be charged to our account monthly as
a cash advance made by you to us for our account.
4. "Eligible Receivables" shall mean and include each Receivable which
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conforms to the following criteria: (a) shipment of the merchandise or the
rendition of services has been completed; (b) no return, rejection or
repossession of the merchandise has occurred; (c) merchandise or services shall
not have been rejected or disputed by the customer and there shall not have been
asserted any offset, defense or counterclaim; (d) it continues to be in full
conformity with the representations and warranties made by the undersigned to
you with respect thereto; (e) you are, and continue to be, satisfied with the
credit standing of the customer in relation to the amount of credit extended;
(f) it is documented by an invoice in a form approved by you and shall not be
unpaid more than 90 days from the date of invoice; (g) less than 25% of the
unpaid amount of invoices due from such customer and its affiliates remain
unpaid more than 90 days from the date of invoice; (h) it is not evidenced
by chattel paper or an instrument any kind with respect to or in payment of the
Receivable unless such instrument is duly endorsed to and in your possession or
represents a check in payment of a Receivable; (i) if the customer is located
outside of the United States, the goods which gave rise to such Receivable were
shipped after receipt by us from or on behalf of the customer of an irrevocable
letter of credit, assigned and delivered to you and confirmed by a financial
institution acceptable to you and is in form and substance acceptable to you
payable in the full amount of the Receivable in United States dollars at a place
of payment located within the United States; (j) such Receivable is not subject
to any lien other than in your favor; (k) it does not arise out of transactions
with any employee, officer, agent, director, stockholder or affiliate of the
undersigned; (l) it is payable to the undersigned; (m) it does not arise out of
a xxxx and hold sale prior to shipment or a sale to any customer to whom we are
indebted; (n) it is net of any returns, discounts, claims, credits and
allowances; (o) if the Receivable arises out of contracts between the
undersigned and the United States, any state, or any department, agency or
instrumentality of any of them, we have so notified you, in writing, prior to
the creation of such Receivable, and, if you so request, there has been
compliance with any governmental notice or approval requirements, including
without limitation, compliance with the Federal Assignment of Claims Act; (p) it
is a good and valid account representing an undisputed bona fide indebtedness
incurred by the customer therein named, for a fixed sum as set forth in the
invoice relating thereto with respect to an unconditional sale and delivery upon
the stated terms of goods sold by the undersigned, or work, labor and/or
services rendered by the undersigned; and (q) it is otherwise satisfactory to
you as determined in good faith by you in the reasonable exercise of your
discretion. We warrant and agree as to each such Receivable that: (i) we have
good title thereto and good right to sell, negotiate, pledge and assign the same
to you: and (ii) all documents delivered to you in connection therewith will be
genuine. If any Eligible Receivable is later deemed ineligible, you shall have
the right to demand payment therefor, but such demand or payment therefor shall
not be deemed a reassignment and title to all Receivables, Eligible and
ineligible, will remain in you until all of our obligations to you have been
fully satisfied. Any merchandise which is returned by customers or otherwise
recovered, or held subject to xxxx and hold invoices, shall be set aside, marked
in your name,
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held by us as your trustee and insured by us for your benefit, and shall remain
a part of your security until the amount of Receivables represented thereby has
been paid to you. We shall notify you promptly of all returns and recoveries of
merchandise and of all disputes and claims, and we shall settle or adjust all
disputes and claims at no expense to you, but no discount, credit or allowance
shall be granted to any customer and no returns of merchandise shall be accepted
by us without your prior consent, except in the ordinary course of business and
involving less than $25,000.00 in any separate instance. You will always retain
the right to settle or adjust disputes and claims directly with customers for
amounts and upon terms which you consider advisable and the right to dispose of
merchandise returns as you see fit, all without liability to us. In all cases
you will credit our account with only the net amounts received by you in payment
of Receivables. We exonerate you from any liability for any loss, depreciation
or other damage to Receivables unless caused by your willful and malicious act.
We agree to execute and authorize you to execute in our name, such further
instruments (including financing and continuation statements) as may be required
or permitted by any law relating to notices of or affidavits in connection with
assignments of accounts receivable or other security granted to you by us and to
cooperate with you in the filing or recording and renewal thereof.
5. During the term of this Agreement, we shall not sell, negotiate,
pledge, assign or grant or permit to exist any security interest, lien or
encumbrance in, any Receivables, general intangibles, goods or inventory (other
than sales of inventory in the ordinary course of business) to anyone other than
you without your prior consent, nor shall we grant or permit to exist without
your prior consent any mortgage, pledge, security interest, encumbrance or lien
or any kind upon any of our property, except liens for taxes not yet due, liens
incidental to our business which were not incurred in connection with the
borrowing of money or obtaining of advances or credit and which do not detract
from the value of our assets or impair the use thereof in the operation of our
business. We shall immediately place notations upon our books of account to
disclose the assignment of all Receivables to you. You will be entitled to hold
all sums at any time standing to our credit on your books and all of our
property at any time in your possession, or upon or in which you have a lien or
security interest, as security for all of our obligations (direct or indirect,
absolute or contingent, under this Agreement or otherwise) at any time owing to
you and to each corporation which is at any time your parent, subsidiary or
affiliate. Such obligations shall include, without limitation, all loans,
advances, debts, liabilities, obligations covenants and duties owing by us to,
all obligations (direct or indirect, absolute or contingent under this Agreement
or otherwise) for purchases made us from other clients factored or financed by
you or any such parent, subsidiary or affiliate, no matter how or when arising
and whether due or to become due, and further including all interest, fees,
charges, expenses and attorney's fees chargeable to our account or incurred in
connection with our account whether provided for herein or in any other
agreement between us, and you shall have the right to charge to our account the
amounts of all such obligations and pay over such amounts to such parent,
subsidiary or affiliate.
6. All advances and all other amounts chargeable to our account under this
Agreement shall be payable by us on the termination of this Agreement; recourse
to security will not be required at any time. We hereby waive presentment and
protest of any instrument and notice thereof, notice of default and all other
notices to which we might otherwise be entitled. We shall perform all steps
requested by you to create and maintain in your favor valid first security
interests in and valid first assignments of and/or liens on all Receivables and
all other security held by or for you and shall upon your request and at
reasonable intervals also furnish you with statements showing our financial
condition and the results of our operations and annually, at our expense, we
shall furnish you with audited operating statements and balance sheets prepared
by independent certified public accountants acceptable to you and accompanied by
the unqualified report of such accountants and on each anniversary hereof, a
list of our shareholders, officers and directors. We warrant that we and any
guarantors of our obligations hereunder are solvent and will so remain during
the term of this Agreement. You will have the right at all times to have access
to inspect, audit and make extracts from all of our records, files and books of
account. We appoint your officers or any other person whom you may designate as
our attorney with power to endorse our name on any checks, notes, acceptances,
money orders, drafts or other forms of payment or security that may come in your
possession; to sign our name on any invoice or xxxx of lading relating to any
Receivable, on drafts against customers, on schedules of assignments of
Receivables, on notices of assignment, on financing statements under the Uniform
Commercial Code and other public records, on verification of accounts and on
notices to customers; to notify the post office authorities to change the
address for delivery of our mail to an address designated by you; to receive,
open and dispose of all mail addressed to us; to send requests for verifications
of accounts to customers; and to do all other things you deem necessary to carry
out this Agreement. We hereby ratify and approve all acts of the attorney and
neither you nor the attorney will be liable for
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any acts of commission or omission, nor for any error of judgment or mistake of
fact or law. This power, being coupled with an interest, is irrevocable so long
as any money remains due to you from us.
7. We agree to keep our books, records and accounts on a current basis in
accordance with generally accepted accounting principles, practices and
procedures in the United States of America in effect from time to time ("GAAP")
and in a manner satisfactory to you at our own cost and expense. All
assignments of Receivables to you by is shall be deemed to include all of our
right, title and interest to all of our books, records, files and all other data
and documents relating to each Receivable. If any tax by any governmental
authority is or may be imposed on or as a result of any transaction between us,
or in respect to sales or the merchandise affected by such sales, which you are
or may be required to withhold or pay, we agree to indemnify and hold you
harmless in respect of such taxes, and we will repay you the amount of any such
taxes which shall be charged to our account; and until we shall furnish you with
an indemnity therefor satisfactory to you (or supply you with evidence
satisfactory to you that due provision for the payment thereof has been made),
you may hold without interest any balance standing to our credit and you shall
retain your security interest in any and all collateral held by you. We hereby
represent and warrant during the term of this Agreement that (a) we have
submitted to you the address of our chief executive office (set fort below) and
the addresses of our other places of business and will promptly notify you in
writing of any closing of existing or opening of new places of business; (b) no
significant change in management or ownership will be made; (c) we will not
guarantee or endorse the obligations of any person1 firm or corporation, except
in the ordinary course of business, enter into any merger or consolidation, or
purchase or otherwise acquire the obligations, assets or stock of any person,
firm, corporation or other enterprise; (d) we will not incur indebtedness for
borrowed money, except to you; (e) we shall not at any time permit our Tangible
Net Worth (as customarily defined under GAAP) to be less than 250,000.00 and (f)
we shall not at any time permit our Working Capital (as customarily defined
under GAAP) to be less than $150,000.00.
8. We hereby further represent, warrant and covenant to you that: (a) the
execution, delivery and performance of this Agreement any supplements hereto and
all related documents, if any, the borrowing of the loans and advances hereunder
and thereunder, if any, and the grants of security interests hereunder and
thereunder if any, do not and will not (i) violate the provisions of any
applicable law. statute, rule, regulation, order or decree to which we are
subject, (ii) conflict with, result in a breach of, or constitute a default
under, our certificate of incorporation or by-laws, or any indenture, agreement
or other instrument to which we are a party, or by which we or any of our
property may be bound, or (iii) result in or require the creation or imposition
of any security interest, mortgage, pledge or other lien upon any property now
owned or hereafter acquired by us other than the security interests granted to
you hereunder; (b) the operation of our business is and will remain in
compliance in all material respects with all applicable laws including all
applicable environmental laws and regulations and all applicable state and
federal laws and regulations: (c) based upon the Employee Retirement Income
Security Act of 1974 ("ERISA") and the regulations and published interpretations
thereunder: (i) we have not engaged in any Prohibited Transactions as defined in
Section 406 of ERISA and Section 4975 of the Internal Revenue Code, as amended,
(ii) we have met all applicable minimum funding requirements under Section 302
of ERISA in respect of our plans, (iii) we have no knowledge of any event or
occurrence which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Title IV of ERISA to terminate any employee benefit
plan(s), (iv) we have no fiduciary responsibility for investments with respect
to any plan existing for the benefit of persons other than our employees and (v)
we have not withdrawn, completely or partially, from any multiemployer pension
plan so as to incur liability under the Multiemployer Pension Plan Amendments
Act of 1980; (d) we are a corporation duly incorporated, validly existing and in
good standing under the laws of the state of our incorporation and are and will
remain duly licensed and qualified to do business and are in good standing in
all other states where the nature of our business makes licensing or
qualification as a foreign corporation necessary; (e) there are no pending or
threatened investigations, actions or proceedings before or by any court,
govemmental department, commission, board, bureau or administrative agency which
if adversely determined would materially affect our condition, business or
operation; (f) we own and have good and marketable title to all of the goods and
chattels and other assets real and personal in which a lien or security interest
is given to you under your security agreements free and clear of all liens,
charges and encumbrances other than liens set forth on any schedule annexed to
said agreements; (g) we have filed all required tax returns and paid applicable
United States federal, state and local taxes, if any, other than taxes not yet
due or which may hereafter be paid without penalty, and have no knowledge of any
deficiency or additional assessment in connection therewith not provided for on
our books and will continue to do so during the term hereof; (h) we are (i) in
compliance with, and (ii) have procured and are now in possession of, all
licenses or permits required by any
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applicable federal, state or local law or regulation for the operation of our
business in each jurisdiction wherein we are now conducting or propose to
conduct business; (i) we are not in default in the payment of the principal of
or interest on any indebtedness for borrowed money or under any instrument or
agreement under and subject to which any indebtedness for borrowed money has
been issued and no event has occurred under the provisions of any such
instrument or agreement which with or without the lapse of time or the giving of
notice, or both, constitutes or would constitute, an event of default
thereunder; (j) we will promptly inform you of: (i) the commencement of all
proceedings and investigations by or before any governmental or nongovernmental
body and all actions and proceedings in any court or before any arbitrator
against or in any way concerning any of our properties, assets or business,
which might singly or in the aggregate, have a materially adverse effect on us,
(ii) any amendment of our certificate of incorporation or by-laws, (iii) any
change in our business, assets, liabilities, financial condition, results of
operations or business prospects which has had or might have any materially
adverse effect on us, (iv) any default or Event of Default hereunder or any
event which with the passage of time or giving of notice or both would
constitute a default or Event of Default, (v) any default or any event which
with the passage of time or giving of notice or both would constitute a default
under any agreement for the payment of money to which we are a party or by which
we or any of our properties may be bound or which would have a material adverse
effect on our business, operations, property or financial condition, (vi) any
change in the location of our places of business, and (vii) any change in our
corporate name; (k) all financial, projections prepared by us or at our
direction and delivered to you will represent, at the time of delivery to you,
our best estimate of our future financial performance and will be based upon
assumptions which are valid in light of the then current business conditions;
and (l) all balance sheet and income statements which have been delivered to you
fairly, accurately and properly state our financial condition and there has been
no material adverse change in our financial condition as reflected in such
statements since the date of the latest thereof and such statements do not fail
to disclose any fact or facts which might materially and adversely affect our
financial condition.
9. We irrevocably waive the right to: (i) direct the application of any
and all payments at any time or times hereafter received by you from or on our
behalf and we do hereby irrevocably agree that you shall have the continuing
exclusive right to apply and reapply any and all payments received at any time
or times hereafter against our debts and obligations hereunder in such manner as
you may deem advisable notwithstanding any entry by you upon any of your books
and records: (ii) pay any management fees or make any similar payments or
declare any dividends, except dividends payable exclusively in our stock or
redeem any of our stock or make any other payments in respect of our stock that
are the equivalent to dividends or stock redemption payments, to any shareholder
or affiliate as long as any debts and obligations hereunder remain outstanding
without your express prior written consent; and (iii) issue any guarantees of
the obligations of any third person or entity as long as any debts and
obligations hereunder remain outstanding, without your express prior written
consent.
10. Since the transactions hereunder will take place at your office in the
City of New York, this Agreement and all transactions, assignments and transfers
hereunder, and all rights of the parties, shall be governed as to validity,
construction, enforcement and in all other respects by the laws of the State of
New York. Each of the parties to this Agreement expressly submits and consents
to the jurisdiction of the courts of the State of New York, in the County of New
York, with respect to any controversy arising out of or relating to this
Agreement or any amendment or supplement hereto or to any transactions in
connection herewith and each of the parties to this Agreement hereby waives
personal service of any summons or complaint or other process or papers to be
issued in any action or proceeding involving any such controversy and hereby
agrees that service of such summons or complaint or process may be made by
registered or certified mail to the other party at the address appearing herein;
failure on the part of either party to appear or answer within thirty (30) days
of such mailings of such summons, complaint or process shall constitute a
default entitling the other party to enter a judgment or order as demanded or
prayed for therein to the extent that said Court or duly authorized officer
thereof may authorize or permit.
11. This Agreement shall have an initial term of two years from its
effective date and shall thereafter be automatically renewed for successive
periods of two years unless terminated by us at the conclusion of its initial
term or any renewal term by giving you at least sixty (60) days prior written
notice; provided, however, that you may terminate it at any tune during the
initial term or any. renewal term by giving us at least sixty (60) days prior
written notice. The mailing of a registered or certified letter of notice
addressed by one party to the other at its usual address shall constitute
sufficient notice, and the termination shall be effective on the appropriate
date specified in such letter. Upon the effective date of termination all
outstanding Advances and all other moneys chargeable to our
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account under this Agreement, supplements hereto, or otherwise, shall become
immediately due and payable without further notice or demand. Your rights with
respect to obligations owing to you prior to the effective date of termination
will not be affected by termination, and all of the provisions of this
Agreement, including without limitation, all of our representations, warranties,
covenants and agreements and all other provisions binding upon us contained
herein, shall continue operative until all such obligations have been fully
satisfied or indemnified in a manner satisfactory to you.
12. To the extent you receive any payment or payments by or on our behalf
which payment or payments, or any part thereof, are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to
be'repaid to us, our estate, trustee, receiver, custodian or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then to the extent of such payment or repayment, the obligation or part thereof
which has been paid, reduced or satisfied by the amount so repaid shall be
reinstated and included within the liabilities as of the date such initial
payment, reduction or satisfaction occurred and same shall be secured by our
assets in which you have been granted a lien or security interest.
13. The occurrence of any one or more of the following events shall
constitute an "Event of Default": (a) default in the payment or performance,
when due or payable, of any payment required under this Agreement or under any
future agreement or supplement with you or under any agreement to which we are a
party with third parties; (b)any warranty, representation, or other statement
made or furnished to you by us or on our behalf or by any guarantor of our
obligations hereunder or in connection herewith or in any instrument furnished
in compliance with or in reference to this Agreement proves to have been false
or misleading in any material respect when made or furnished or becomes false in
any material respect; (c) we fail or neglect to perform, keep or observe any
term, provision, condition. covenant, warranty or representation contained in
this Agreement or in any other agreement between us or any rider or supplement
which is required to be performed, kept or observed by us; (d) any statement,
report, financial statement, or certificate made or delivered by us, or by any
of our officers, employees or agents, to you is not true and correct in any
material respect; (e) the imposition of a lien or encumbrance on any of our
assets, including the Receivables, or the making of any levy, seizure or
attachment on all or any of our assets, including the Receivables; (f) any
material adverse change in our financial condition or the financial condition of
any guarantor of our obligations hereunder; (g) we or any guarantor of our
obligations hereunder become insolvent, or unable to meet our debts, as they
mature, or fail, suspend or go out of business or a case is commenced under the
Bankruptcy Code or an order for relief in a case under the Bankruptcy Code is
entered with respect to us or any such guarantor, or a custodian or receiver (or
other court designee performing the functions of a receiver) is appointed for or
takes possession of either our or any such guarantor's assets or affairs; (h) we
or any guarantor of our obligations hereunder cease to conduct our business as
now conducted or are enjoined, restrained or in any way prevented by court,
governmental or administrative order from conducting all or any material part of
our business affairs; (i) a notice of any lien. levy or assessment is filed of
record with respect to all or any of our assets by the United States, or any
department, agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency, including, without limitation, the
Pension Benefit Guaranty Corporation, if any taxes or debts owing at any time or
times hereafter to any one of them becomes a lien or encumbrance upon any of the
Receivables or any of our other assets and the same is not released within
thirty (30) days after the same becomes a lien or encumbrance; (j) you shall in
good xxxxx xxxx yourself insecure or unsafe; (k) any guaranty given you with
respect to our obligations, is limited or terminated or otherwise deemed
unenforceable or invalid; (1) death of a guarantor of our obligations hereunder
or in connection herewith, which guaranty is not replaced by a guarantor,
acceptable to you in your sole discretion; or (m) we shall fail to pay our taxes
when due unless such taxes are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been provided on
our books.
Upon the occurrence of an Event of Default you may, at your option,
terminate this Agreement, any supplement or rider hereto and any agreement
related hereto, and all Advances and other debts and obligations to you shall be
immediately due and payable. Without further demand and upon five (5) days
notice (which we agree constitutes reasonable notice) you may, at your option,
sell and deliver any or all Receivables and any or all other Security held by or
for you, at public or private sale, for cash, upon credit or otherwise, at such
prices and upon such terms as you may deem advisable, in New York or at such
other place or places as you may designate, at your sole discretion, and you may
be the purchaser at any such sale, if it is public, free from any right of
redemption which is also waived by us, or you may otherwise recover upon the
Receivables in any commercially reasonable manner as you, in your sole
discretion deem advisable. The proceeds of any sale shall be applied first to
all costs and expenses
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of sale, including attorneys' fees, and second to the payment (in whatever order
you elect) of all of our obligations to you, whether absolute or contingent, or
whether due or to become due, and whether under this Agreement or otherwise.
Such obligations shall include damages sustained by reason of any default by us.
You will return any surplus to us and we shall remain liable to you for any
deficiency. Failure by you to exercise any right, remedy or option under this
Agreement or any related agreement or delay by you in exercising the same will
not operate as a waiver; no waiver by you will be effective unless it is
confirmed in writing and then only to the extent specifically stated. In
addition to all other sums due you, we will pay you all costs and expenses
incurred by you, including a reasonable allowance for attorneys' fees and
internal collection efforts, to obtain or enforce payment of Receivables,
Advances, interest, or other charges due you hereunder or under any related
agreement. Both you and we waive all right to a trial by jury in any litigation
relating to transactions under this Agreement, supplements hereto and any
related agreements and we agree not to assert any counterclaim of any nature in
any such litigation. Your rights and remedies under this Agreement will be
cumulative and not exclusive of any other right or remedy which you may have
under the Uniform Commercial Code or other provisions of law; nothing herein
contained shall limit or otherwise affect any other existing or future lien,
security interest, or right to which you may be entitled. This Agreement cannot
be changed or terminated orally, is our entire contract, and is for the benefit
of and binding upon the parties hereto and their respective successors and
assigns.
14. We will pay all of your out-of-pocket costs and expenses, including
without limitation reasonable attorneys' fees and disbursements and appraisers,
in connection with the preparation, execution and delivery of this Agreement,
supplements hereto and related agreements, if any, and as they may be amended
from time to time hereafter, and in connection with the prosecution or defense
of any action, contest, dispute, suit or proceeding concerning any matter in any
way arising out of, related to, or connected with this Agreement, supplements
hereto and related agreements. We will also pay all of your out-of-pocket costs
and expenses, including without limitation reasonable attorneys' fees and
disbursements, in connection with (a) the preparation, execution and delivery of
any waiver, amendment or consent proposed or executed in connection with the
transactions contemplated by this Agreement and any supplements hereto and
related agreements, (b) your obtaining performance of our obligations under this
Agreement and any supplements hereto and related agreements, including, but not
limited to, the enforcement or defense of your security interests, assignments
of rights and liens hereunder and under any supplements hereto and related
agreements as valid first security interests, (c) any attempt to inspect,
verify, protect collect, sell, liquidate or otherwise dispose of any security
held by you, and (d) any consultations in connection with any of the foregoing.
We shall also pay your customary charges for all services performed by you for
us at our request and all banking facility charges incurred in connection with
the opening and operation of our account with you. In addition, and not as a
limitation of the above, we shall pay you $500 per month to perform any
collateral monitoring namely any field examination, collateral analysis or other
business analysis, the need for which is determined by you and for which
monitoring is undertaken by you or for your benefit, plus all costs and
disbursements incurred by you in the performance of such examinations or
analysis. All charges, costs and expenses reflected therein, together with all
filing, recording and search fees, taxes and interest payable by us to you shall
be payable on demand and may be charged by you to our account.
Very truly yours,
METRO SERVICES GROUP, INC.
Attest:
By: /s/ Xxxxxx Xxxxxxx
/s/ Xxxxxxx Xxxxxxx ---------------------------------------
------------------------------ Xxxxxx Xxxxxxx, Chief Executive Officer
Xxxxxxx Xxxxxxx, Secretary
Date: April , 1997
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Accepted at New York, New York Address: 000 Xxxxxxx Xxxxxx
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XXXXXXX FACTORS, INC. Xxx Xxxx, XX 00000
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By:
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Xxxxxxxx X. X'Xxxx, Xx. Vice President
Date: April , 1997
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