INVENTORY AND EQUIPMENT LOAN AGREEMENT
Dated as of October 1, 2006
Among
LE' ELEGANT BATH, INC. - DBA, AMERICAN BATH FACTORY
And
GATEWAY VENTURE HOLDINGS LTD AND ITS WHOLLY OWNED SUBSIDIARY XXXXXXXX
CORPORATE ADMINISTRATION INC.
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PARTIES
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THIS Agreement ("Agreement"), dated as of October 1, 2006 is by and among
Le' Elegant Bath, Inc. - DBA, AMERICAN BATH FACTORY, a California Corporation,
00000 Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxxxxx 00000 ("ABF"), and GATEWAY DISTRIBUTORS
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LTD, and its wholly owned subsidiary, XXXXXXXX CORPORATE ADMINISTRATION, INC,
0000 Xxxx Xxxxxxxx Xxxx, Xxxxx Xxx Xxxxx 00000, a Nevada Corporation ( "MCA").
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WHEREAS MCA intends to make certain advances to ABF based on the value of
certain of its inventory and of its equipment, the whole subject to the terms
and conditions of the present Agreement.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
1 PREAMBLE
1.1 The preamble is deemed to be part of this Agreement.
2. DEMAND INVENTORY LOAN AND EQUIPMENT LOAN
2.1 MCA agrees to make loans to ABF, repayable on demand, by way of advances on
a revolving basis, based on the value of certain of its inventory, in accordance
and subject to the terms and conditions hereof (the -INVENTORY LOAN-);
2.2 MCA agrees to make loans to ABF, repayable on demand, by way of advances on
a revolving basis, based on the value of certain of its equipment, in accordance
and subject to the terms and conditions hereof (the -EQUIPMENT LOAN-);
2.3 The parties hereby agree that the aggregate sums advanced by MCA to ABF,
shall not exceed $5,000,000.00, with respect to the Inventory Loan and
$5,000,000.00 with respect to the Equipment Loan.
3. DEFINITIONS
3.1 For the purposes hereof, the following words or expressions shall have the
meaning ascribed to them.
(a) ELIGIBLE INVENTORY: means ABF's inventory of Raw Materials or
Finished Goods, which is not subject to any conditional sale,
consignment or other vendor's right of ownership or revindication;
(b) RAW MATERIALS: means the source materials used in the production
of finished goods for the purposes of resale which includes but is not
limited to plastics, metals, fasteners and supplies of various
sources.
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(c) FINISHED GOODS: means only the products for the current selling
season of ABF, which are not subject to a license or any other
intellectual property right given or granted to the Borrower except if
such licensor or holder of the intellectual property right has agreed
and consented to the security to be granted.
(d) COST OF ELIGIBLE INVENTORY: means (i) with respect to Raw
Materials or Finished Goods, the price paid by ABF for the purchase of
the products net of transportation costs, commissions, duties, taxes
and any other charges.
(e) ELIGIBLE EQUIPMENT: means ABF's equipment and office furniture,
which is not subject to any conditional sale, consignment or other
vendor's right of ownership or revindication;
4. DISBURSEMENT OF THE INVENTORY LOAN AND OF THE EQUIPMENT LOAN AND DIRECTIONS
OF PAYMENT
4.1 The Inventory Loan shall be disbursed by MCA to ABF, at its request. All
advances shall be made by MCA to ABF by way of wire transfer at a cost of $20.00
per transfer.
4.2 The Equipment Loan shall be disbursed by MCA to ABF, at its request. All
advances shall be made by MCA to ABF by way of wire transfer at a cost of $20.00
per transfer.
4.3 ABF hereby directs and instructs MCA to use, from time to time, the proceeds
of all sums available to ABF in virtue of the Agreement, to reduce the amounts
outstanding under the Inventory Loan and the Equipment Loan of ABF, on a pro
rata basis unless otherwise designated by ABF.
5. REIMBURSEMENT OF THE INVENTORY LOAN AND OF THE EQUIPMENT LOAN
5.1 The Inventory Loan shall be repayable on demand. In addition, if at any
given time the outstanding advances exceeds the amount approved, then ABF shall
automatically be deemed to be on notice to reimburse such excess without any
other demand by MCA unless arrangements are made to extend the terms with MCA.
5.2 The Equipment Loan shall be repayable on demand. In addition, if at any
given time the outstanding advances exceeds the amount approved, then ABF shall
automatically be deemed to be on notice to reimburse such excess without any
other demand by MCA unless arrangements are made to extend the terms with MCA.
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6. INTEREST
6.1 ABF shall pay to MCA interest, calculated daily and charged monthly, on the
last day of each month, while the Inventory Loan and the Equipment Loan are
outstanding, both before and after default, at a rate per annum calculated on
the daily outstanding balance of the Inventory Loan and of the Equipment Loan,
at a rate equal to seven and one-half percent (7.5%).
7. TERM OF AGREEMENT
7.1 This Agreement shall remain in force for a period of one year from the date
of signature thereof and will be automatically renewed for successive periods of
one (1) year, unless either party give at least ninety (90) days prior notice.
8.CONDITIONS OF LOAN
8.1 The following covenants shall apply:
(a) ABF shall not grant or allow any lien, charge, lease or other encumbrance,
whether fixed or floating, to be registered against or exist on any of its
Inventory or Equipment for which it has borrowed funds.
(b) Borrower shall during the term of this Agreement:
i) maintain a computer system to provide current detailed inventory, to
allow MCA to evaluate its inventory.
9. LEGAL
9.1 Governing Law. This Agreement and the legal relations among the parties
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hereto shall be governed by and construed in accordance with the internal
substantive laws of the State of Nevada (without regard to the laws of conflict
that might otherwise apply) as to all matters, including without limitation
matters of validity, construction, effect, performance and remedies.
9.2 Arbitration. Any controversy or claim arising out of or relating to this
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Agreement, or the making, performance or interpretation thereof, including
without limitation alleged fraudulent inducement thereof, shall be settled by
binding arbitration in Las Vegas, Nevada by a panel of three arbitrators in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. Judgment upon any arbitration award may be entered in any court
having jurisdiction thereof and the parties consent to the jurisdiction of the
courts of the State of Nevada for this purpose.
10. AUTHORIZATION
10.1 ABF authorizes MCA to accept telephone and facsimile communications on its
behalf as full and sufficient authority to act in accordance with the
communications, as received by MCA.
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10.2 ABF shall be bound by all such telephone and facsimile communications from
itself in the same manner and extent as if such communications were originally
handwritten and signed by ABF, and ABF shall hold MCA at all times fully
indemnified from all claims and demands in respect of all such instructions, in
the event such telephone and facsimile communications were made without
authority or otherwise.
Xxxxxxxx Corporate Administration
By: Date:
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Xxxxx Xxxxxx
President, CFO
Le' Elegant Bath, Inc. - DBA, American Bath Factory
By: Date:
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Xxxxxxx X. Xxxxxxx
President
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