LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT, as amended, restated, extended or otherwise
modified by the parties hereto, their successors and assigns, from time to time,
including, without limitation, all schedules and attachments hereto
("Agreement"), is made and entered into this ____ day of ____________
2004, by and between Hesperia Truss, Inc., a corporation organized and existing
under the laws of California with a principal place of business located at 0000
X. Xxxxxx, Xxxxxxxx, XX 00000 ("Borrower") and MERCANTILE CAPITAL,
L.P., with offices located at 000 X. Xxxxxxxxx Xxx., Xxxxx 000, Xxxxxxxxx, XX
00000-0000 ("Lender").
WITNESSETH:
BACKGROUND
Borrower has requested Lender to establish on its books and records a
revolving credit facility ("Revolving Credit") pursuant to which
Lender may make revolving loans and advances to Borrower up to an aggregate
amount at one time outstanding equal to One Million Dollars ($1,000,000)
("Revolving Credit Limit") secured by the Collateral, as such term is
defined in Section 3 herein, and evidenced by a promissory note (the
"Revolving Loan Note") of even date. Lender is willing to do so upon
the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the promises herein contained, and each
intending to be legally bound hereby, the parties agree as follows:
1. DEFINITIONS. All terms defined in Schedule
1 and all other capitalized terms defined in this Agreement, shall have the
meanings ascribed to them herein when used in the Loan Documents, unless
otherwise defined therein.
2. THE LOANS.
2.1 The Revolving Credit. Subject to the terms and limitations hereof,
Borrower may borrow, repay without penalty or premium and re-borrow hereunder
the amount equal to the Borrowing Base or any lesser amount (the "Revolving
Loans" and together with all other loans and advances made hereunder, the
"Loans"), each advance evidenced by Lender's books and Records, from
time to time until the earliest of: (a)_______________________; (b) the
occurrence of an Event of Default; or (c) that date specified in a written
notice of termination from either party to the other party, provided that if
such notice is from Lender to Borrower such date shall be no less than 30 days
following the date of such notice (any such event, a "Revolving Credit
Termination Date").
2.1.1 Each application by Borrower for a Loan hereunder shall be accompanied
by; (a) a fully completed Borrowing Base Certificate; (b) an accounts receivable
aging report based upon invoice dates; and (c) copies of: (i) invoices and/or
written contracts or orders from which the Account arose; (ii) credit memos
(which shall be issued promptly by Borrower and reflected in Borrower's next
Borrowing Base Certificate and/or accounts receivable reconciliation); (iii)
debit memos; (iv) valid shipping or delivery receipts evidencing the shipment of
the Goods that gave rise to the Account and bills of lading ("Shipping
Documents"); (v) warehouse receipts; (vi) sales journals; (vii) cash
receipts registers; (viii) Chattel Paper and (ix) any other documents required
by Lender (items (i) through (ix) hereinafter referred to as "Account
Substantiation Documents").
2.1.2 If, at any time, the Revolving Loans exceed the most current calculated
Borrowing Base of Borrower in Lender's possession, Borrower shall immediately
repay to Lender, in cash, such amounts, plus interest thereon, as may be
necessary to eliminate such excess, and Lender may charge any Deposit Account of
any nature of Borrower for such amount.
2.1.3 For the purpose of determining the existence of a Borrowing Base
sufficient to support the Revolving Loans from time to time outstanding
hereunder, Borrower shall deliver to Lender weekly and at such other time or
times as Lender may specify, a Borrowing Base Certificate, an Inventory
Certificate, an accounts receivable aging report based upon invoice dates and an
Inventory listing, in form and content acceptable to Lender and copies of all
Account Substantiation Documents.
2.1.4 The Lender may, at its option, on not less than thirty (30) days'
written notice to Borrower, permanently reduce the Revolving Credit Limit.
2.2 Disbursement of the Loans. The Lender will
credit the proceeds of the Loans to or for the benefit of Borrower via wire
transfer or ACH to Borrower's operating account as Borrower shall designate by
written notice to Lender, except for the payment of amounts due to or for the
benefit of Lender hereunder which shall be made directly to Lender.
2.3 Interest Rates and Payments of Interest.
Interest shall accrue and be paid as follows:
2.3.1 Interest will accrue at the rate set forth in Schedule
2 and made part hereof and shall be calculated on the basis of a 360-day
year, counting the actual number of days elapsed, on the greater of $100,000 or
the principal balance of the Loans, from time to time outstanding, and shall be
payable on the first (1st) day of each month commencing on the first (1st) day
of the first month after the Closing Date and continuing on the same day of each
month thereafter until all Obligations are satisfied in full.
2.3.2If the rate is related to the Base Rate, each
time the Base Rate shall change, the Interest Rate on the Loans shall change
contemporaneously with such change in the Base Rate. If, at any time, any rate
shall be deemed by any competent court of law, Governmental Authority or
tribunal to exceed the maximum rate of interest permitted by any applicable
Laws, then, for such time as such Rate would be deemed excessive, application
thereof shall be suspended and there shall be charged in lieu thereof the
maximum rate of interest permissible under such Laws.
2.3.3 The Lender agrees to
give the Borrower next Business Day availability on payments received and
deposited into Lender's account at _______________________________________ (the
"Concentration Account"). Provided, however; that (a) for the purpose
of computing interest hereunder such items shall be applied by Lender on account
of the Revolving Loans the number of days equal to the Float Factor described in
Schedule 2 after same have been deposited into the Concentration Account,
and (b) no such item received by Lender shall constitute payment to Lender
unless such item is actually collected by the bank at which Lender maintains its
Concentration Account, presently, Wilmington Trust Company of Pennsylvania.
2.4 Fees.
Borrower hereby agrees to pay the fees described on Schedule 2 which
shall constitute additional Obligations hereunder secured by the Collateral. Any
of such fees not paid when due shall bear interest from the date due until paid
at the interest rate specified in Paragraph 2.3.1:
2.4.1 Other Fees,
Charges and Expenses. The Borrower shall promptly pay to or on behalf of
Lender from time to time the reasonable fees and expenses of the Lender's
counsel, appraisers, environmental consultants, auditors and other expenses of
Lender in connection with this Agreement and the Obligations.
3. COLLATERAL
SECURITY.
3.1 Grant of Security
Interests. As security for the timely satisfaction of all Obligations,
Borrower hereby assigns, transfers and sets over to Lender all of its right,
title and interest in and to, and grant Lender a continuing lien on and security
interest in and to all of the Borrower's Assets, including but not limited to,
those described in Schedule 3, wherever located, whether now owned or
hereafter acquired, together with all replacements therefor and all cash and
non-cash Proceeds (including, but without limitation, insurance Proceeds and
Proceeds of Proceeds) thereof, collectively called the "Collateral"
which, together with all of Borrower's other property of any kind held by
Lender, shall stand as one general, continuing collateral security for all
Obligations of the Borrower to Lender and may be retained by Lender until all
Obligations have been satisfied in full..
3.2 Priority of Liens.
Except for the Liens set forth on Schedule 4, as approved by Lender
("Permitted Liens"), Lender's Liens in and to the Collateral shall be
first and prior Liens to all Liens against the Assets of Borrower now existing
or hereafter arising ("Lender's Prior Security Interest").
3.3 Financing Statements.
Borrower hereby: (a) authorizes Lender to file any financing statements
(including amendments thereto and continuation statements thereof) in form
satisfactory to Lender as Lender may specify; (b) agrees to take such other
steps as Lender may direct, including the noting of Lender's lien on the
Collateral and on any certificates or documents of title therefor, all to
perfect Lender's liens on and security interests in the Collateral; and (c)
agrees to pay or reimburse Lender for all costs and taxes of filing or recording
the same in such public offices as Lender may designate. In addition to the
foregoing, and not in limitation thereof, a carbon, photographic, or other
reproduction of this Agreement shall be sufficient as a financing statement and
may be filed in any appropriate office in lieu thereof. Borrower hereby
irrevocably appoints Lender as its attorney-in-fact (without requiring Lender to
act as such) to execute any financing statements, including amendments thereto
and continuation statements thereof in the name of Borrower, and to perform all
other acts and deeds that Lender deems appropriate to perfect and continue its
security interest in, and to protect and preserve, the Collateral.
3.4 Lender's Special
Rights
3.4.1 Lender (through any
of its officers, employees, auditors or agents) shall have the right in its sole
discretion and without notice to Borrower at any time or times hereafter to: (a)
confirm orders, Account Debtor balances and invoices and verify the validity of
Accounts, Inventory and/or invoices or any other matter relating to any Account
or Inventory by mail, telephone, telegraph or otherwise, in the name of Borrower
or Lender or any other name Lender so chooses; (b) notify all Account Debtors
that the Accounts have been assigned to Lender and Lender has a security
interest therein; (c) direct all Account Debtors to make payment to Lender of
all Accounts; (d) enforce payment and collect, by legal proceedings or
otherwise, any Accounts in the name of Lender; and (e) during Borrower's usual
business hours, or during the usual business hours of any third party having
control over the Records of Borrower, (i) conduct such collateral examinations
and audits Lender deems appropriate of Borrower's books and Records, and (ii)
inspect and verify Borrower's books and Records in order to verify the amount or
condition of, or any other matter relating to, the Collateral and Borrower's
financial condition..
3.4.2 Lender shall be
entitled to conduct, from time to time during the term of this Agreement,
examinations of Borrower's business operations, Inventory and Records and to
check and test the same as to quality, quantity, value and condition. Borrower
will be obligated to pay or reimburse Lender for the costs of such examinations.
3.5 Landlords'
/Mortgagees' Waivers. Borrower will cause each landlord and mortgagee, of
all premises leased or owned, wherein any of the Collateral may be located, to
execute and deliver to Lender instruments, in form and substance satisfactory to
Lender, by which such landlord or mortgagee waives or subordinates its rights,
if any, to the Collateral.
3.6 Insecurity Clause.
Borrower agrees that if any of the Collateral shall at any time be insufficient
or otherwise unsatisfactory to Lender in its sole judgment, Borrower shall
either (a) within five (5) days of notice of such Collateral deficiency, reduce
the amount of the outstanding Obligations to an amount such that the value of
the Collateral in relation to the outstanding Obligations is satisfactory to
Lender, or (b) after such five (5) day period, on demand, forthwith pledge,
assign, transfer or grant Lender a continuing lien on and security interest in
and to, or deposit with Lender as part of the Collateral, additional property
satisfactory to Lender.
4. OTHER PROVISIONS.
4.1 Lock Box.
Borrower will direct all of its Account Debtors to forward payments directly to
the lockbox facility ("Lock Box") maintained with
_________________________("Lock Box Bank"). The Lock Box address is
________________, P.O. Box _________, ______________________. Lender shall apply
such payments to reduce the outstanding Obligations. In the event that Borrower
receives Remittances, Borrower agrees that such Remittances shall be held in express
trust for the benefit of Lender which shall be immediately notified of
such receipt. Borrower shall immediately upon receipt, turn over all Remittances
to Lender in precisely the form received, except for the endorsement of Borrower
when necessary to permit the collection of the Remittances which endorsement
Borrower hereby agrees to make. Pending such deposit, Borrower will not
commingle any Remittances (including all pre-payments) with any of its other
funds or property, but will hold them separate and apart therefrom expressly in
trust for Lender. Such statements, reports of collections and adjustments as
Lender may, from time to time, specify shall accompany all Remittances. All
funds received by Lender will be applied to reduce the Obligations, subject to
collection. Borrower shall have no right of access to or withdrawal from the
Lock Box. Lender shall have no duty to segregate Proceeds of Collateral remitted
to the Lock Box, or deposited in the Concentration Account pursuant to Paragraph
4.2 below, from other funds or property remitted to the Lock Box or deposited in
the Concentration Account.
4.2 Concentration
Account. All Proceeds of any Collateral shall be deposited into the
Concentration Account through the Lock Box, direct deposit by Borrower or
Account Debtor or otherwise. Borrower hereby absolutely assigns to Lender all
amounts now or hereafter due the Borrower in connection with its Accounts.
Borrower shall, at the request of Lender, cause all invoices of Borrower
forwarded to Account Debtors to notify such Account Debtors to make all payments
in connection with such invoices directly to the Lender for deposit into the
Concentration Account. It is further understood that the Concentration Account
is the Lender's account and Borrower agrees that Borrower shall have no right to
withdraw monies from the Concentration Account.
4.3 Collections. Lender may at any time, in the
exercise of its rights under Section 3.4, take control of the cash and
non-cash Proceeds of any of Borrower's Accounts, and charge the collection costs
and expenses to a deposit account of Borrower, but, unless and until Lender does
so or gives Borrower other written instructions, the collection of the Accounts
shall be in accordance with the terms and conditions of this Agreement. The
receipt of any wire transfer of funds, check, or other item of payment by Lender
shall be applied to conditionally reduce the Obligations, but shall not be
considered a payment on account unless such wire transfer is of immediately
available federal funds and is made to the Concentration Account of Lender or
unless and until such check or other item of payment is honored when presented
for payment.
4.3.1 The costs of all
collection and enforcement proceedings against any Account Debtor, including
reasonable attorney's fees and out-of-pocket expenses, shall be borne solely by
Borrower whether incurred by Lender or by Borrower.
4.4 Cash Collateral.
Until such time as the amounts now or hereafter on deposit in any account are
delivered to the Lender in accordance with the provisions set forth in this
Agreement, such amounts shall be deemed to be held by the Borrower for the
benefit of the Lender in express trust and such amounts together
with all amounts now or hereafter on deposit in the Concentration Account shall
be deemed to be "Cash Collateral" under Section 363 of the Bankruptcy
Code. In the event that Borrower files a voluntary petition in Bankruptcy or is
made subject to any involuntary Bankruptcy proceeding, the Borrower may not use
such Cash Collateral without the consent of the Lender and/or an order of any
the Bankruptcy Court pursuant to 11 U.S.C. Section 363(b)(2). The Borrower hereby
waives any right it may have to assert that the Lender's liens on and security
interests in and to such amounts and other like Collateral does not constitute
Cash Collateral.
4.5 Power of Attorney. Borrower hereby
irrevocably authorizes and empowers Lender, grants a power of attorney, coupled
with an interest to, and appoints Lender, or any officer, director or employee
of Lender, as attorney-in-fact for Borrower, with full authority for and on
behalf of Borrower, and in its name, place and stead, to take any action which
Borrower or any officer or director of Borrower could do if then present, as
may, in the opinion of Lender, be necessary or advisable, to; (a) cause any
amounts on deposit in any Deposit Account of Borrower with any bank or other
depository ("Depository") to be transferred to Lender including,
without limitation, the power and authority to sign, seal, execute and deliver
for and on behalf of Borrower, and in its name, place and stead, any agreement,
document or instrument of any nature, including, without limitation, any Control
Agreements, deposit agreements, signature cards, corporate resolutions or as may
otherwise be required by any Depository at which Borrower maintains any account
of any nature, to cause such Depository to transfer to Lender, all amounts of
Borrower now or hereafter on deposit with such Depository; (b) cause such
Depository to provide to Lender all information in possession of such Depository
with respect to any accounts of Borrower, of any nature, on deposit with such
Depository, including, without limitation, account balances, account statements,
checks, drafts or other items drawn on such account, deposit and withdraw
tickets; (c) change the name of any such account from Borrower's name to the
name of the Lender; (d) give orders to any Depository with respect to any such
accounts, including, without limitation, orders to transfer the balances in any
such accounts to Lender; and (e) take such other action as may in the opinion of
Lender, be necessary to cause all accounts now or hereafter on deposit in any
such depository institution to be transferred to Lender.
4.5.1 Borrower
does hereby irrevocably designate, make, constitute and appoint Lender (and any
of Lender's officers, employees or agents designated by Lender) as Borrower's
true and lawful attorney in fact (without requiring them to act as such) coupled
with an interest, with full power of substitution, hereby ratifying and
confirming all acts and deeds in connection herewith, with power, without notice
to Borrower, and at such time or times hereafter as Lender may in its sole
election determine, in Borrower's name and at Borrower's expense: (a) to endorse
the name of Borrower upon any and all remittances, checks, drafts, money orders
and other instruments for the payment of monies that are payable to Borrower and
constitute collections on Borrower's Accounts or Proceeds of any insurance; (b)
to demand payment of Accounts; (c) to execute in the name of Borrower any
schedules, assignments, instruments, documents, notices, and statements that
Borrower are obligated to give Lender hereunder; (d) to enforce payment of
Accounts by legal proceedings or otherwise; (e) to exercise all of Borrower's
rights and remedies with respect to the collection of Accounts; (f) to settle,
adjust, compromise, extend or renew any Account; (g) to settle, adjust or
compromise any legal proceedings brought to collect an Account; (h) to sell or
assign any Account upon such terms, for such amounts and at such time or times
as Lender deems advisable; (i) to discharge and release any Account; (j) to take
control in any manner of any item of payment or proceeds of an Account and for
this purpose to notify the postal authorities to change the address for delivery
of mail addressed to Borrower to such address as Lender may designate and to
receive, open and dispose of all mail addressed to Borrower; (k) to prepare,
file and sign Borrower's name on any Proof of Claim in any proceeding filed
under Title 11 of the United States Code or similar document as to an Account
Debtor; (l) to prepare, file and sign Borrower's name on any Notice of Lien,
Claim of Mechanic's Lien, Assignment or Satisfaction of Lien or Mechanic's Lien,
or similar document in connection with an Account; (m) to endorse the name of
Borrower upon any Chattel Paper, Document, Instrument, Receivable, invoice,
freight xxxx, Xxxx of Lading, Warehouse Receipt or similar documents or
agreement relating to any Inventory, Account or Goods pertaining thereto; (n) to
execute in the name of Borrower any Account Debtor notification; and (o) to do
all other acts necessary or desirable to protect Borrower's interest in the
Accounts and to enforce any Account or other Collateral.
4.5.2 Borrower releases
Lender from any and all causes of action or claims which Borrower may now or
hereafter have for any asserted loss or damage to Borrower claimed to be caused
by or arising from: (a) any failure of Lender to protect, enforce or collect in
whole or in part any Account; (b) Lender's notification to any Account Debtors
of Lender's security interests in any of the Accounts; (c) Lender's directing
any Account Debtors to pay any sums owing to Borrower directly to Lender; and
(d) any other act or omission to act on the part of Lender and any of its
officers, employees or agents designated by Lender except for willful
misconduct.
4.6 Additional
Accounts. Except for accounts listed on Schedule 4, which are subject
to a Control Agreement, Borrower shall not, without the prior written consent of
Lender, open or maintain any Deposit Accounts of any nature with any Depository.
Any Deposit Account shall, unless otherwise agreed to by Lender, be subject to a
Control Agreement and Borrower shall enter into with Lender, and cause each
Depository to enter into with Lender, a Control Agreement with respect to any
account of Borrower now or hereafter maintained at any Depository.
4.7 Payments.
All payments of interest on and principal of the Loans, all fees and all other
sums payable to the Lender hereunder shall be paid directly to the Lender in
immediately available funds, in such currency of the United States of America as
is, at the time of payment, legal tender for the payment of public and private
debts. Borrower shall make each payment hereunder not later than 12:00 p.m.,
local time, on the day when due, at the office of the Lender at 000 X. Xxxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxxxx 00000-0000. Should any payment of
principal or interest or fees become due and payable on a Saturday, Sunday or
legal holiday under the laws of the Commonwealth of Pennsylvania, the payment
date thereof shall be extended to the next succeeding business day and such
extension of time shall in such case be included in computing such interest or
fees, as the case may be. Any such payments or prepayments made shall be
applied, first to the payment of unpaid costs and charges due including late
fees, then to interest due and payable under the Revolving Loan Note and then to
the reduction of the outstanding principal balance thereof. So long as a
sufficient Borrowing Base exists, all payments of principal, interest, costs,
fees and expenses due to the Lender in connection with this Agreement, the Loan
Documents and the Loans shall be made as follows:
4.7.1 Borrower authorizes
and directs the Lender, at the Lender's option, to cause all interest and fees
due and payable pursuant to this Agreement in connection with the Revolving
Loans to be paid on the due date thereof by charging all such interest payments
and fees as and when due, as an advance against the Revolving Credit, and each
such advance shall be deemed to be a Revolving Loan and shall bear interest from
the date due until paid at the interest rate specified in Paragraph 2.3.1.
4.7.2 Borrower authorizes
and directs the Lender, at the Lender's option, to cure all costs, fees, taxes,
charges and expenses of any kind or description payable pursuant to this
Agreement or paid or incurred by Lender with respect to the Loans hereunder or
any Collateral therefor or the Collection of or realization upon same on the due
date thereof to be paid by charging such costs, fees or expenses as an advance
against the Revolving Credit, each such advance shall be deemed to be a
Revolving Loan and shall bear interest from the date due until paid at the
interest rate specified in Paragraph 2.3.1.
4.7.3 Principal payable on
account of the Revolving Loans shall be due and payable to the extent and on the
date of any collections received with respect to any Proceeds of the Collateral
if not otherwise applied to interest or other Obligations, and the outstanding
balance thereof shall be paid in full on the earlier of the Revolving Credit
Termination Date or on the acceleration of the Obligations under and pursuant to
this Agreement.
4.7.4 The balance of the
Obligations, if any, shall be payable as and when provided in this Agreement or
other Loan Documents or in any other agreements relating to such Obligation and,
if not specified, then on DEMAND. Unless expressly specified otherwise herein or
in other Loan Documents, any of such Obligations not paid when due shall bear
interest from the due date until paid at the interest rate specified in
Paragraph 2.3.1 hereof.
4.7.5 Anything herein to
the contrary notwithstanding, Borrower hereby authorizes Lender, without further
order or authorization of Borrower, to charge any Borrower's Deposit Account(s)
monthly, on the due date therefor, for all payments of principal and interest
and all other amounts due hereunder and under the Notes. Lender shall notify
Borrower of any charge to Borrower's account(s) promptly after such charge is
made.
4.8 Statements of Amount
Due. At least once each month, Lender shall render to Borrower a statement
of Borrower's Indebtedness to Lender hereunder plus interest accrued thereon,
which statements shall be considered correct and accepted by Borrower and
conclusively binding upon Borrower unless Borrower notifies Lender to the
contrary within ten (10) days from the date such statement is delivered setting
forth any error claimed by Borrower.
4.9 Joint and Several
Obligations. Each of the undersigned Borrowers, if more than one, hereby
irrevocably designate the other Borrower its attorney-in-fact to borrow, sign
and endorse the Revolving Loan Note, and execute and deliver all instruments,
documents, writings and further assurances, required hereunder on its behalf.
Each Borrower authorizes Lender to pay over or credit all Loan Proceeds to any
Borrower for distribution among such Borrowers, as their needs require. Each of
the Borrowers affirms and agrees that all Loans, advances, obligations and
liabilities hereunder and under the Revolving Loan Note issued pursuant hereto
shall be the joint and several obligation of each Borrower, and that each
Borrower shall make payment upon the Revolving Loan Note issued pursuant hereto
in accordance with its terms, or upon its earlier maturity by acceleration, call
or otherwise and that such Borrowers shall in no way be affected by any
extensions, renewals or forbearances granted by Lender to them or any of them,
failure of Lender to give them or any of them notice of borrowing or other
notice, any failure of Lender to pursue or preserve its rights against them or
any of them, the release by Lender of any Collateral now or hereafter acquired
or any guarantees or obligations, failure of Lender's best efforts in obtaining
"commercially reasonable" prices for any Collateral disposed of, and
that such agreement by each of such Borrowers to pay upon the Revolving Loan
Note issued pursuant hereto is unconditional and does not require prior recourse
by Lender to any Collateral .
4.10 Increased Costs.
If after the date of this Agreement, Lender shall have determined that its costs
of agreeing to make, or making, funding or maintaining the Loans or Lender's
obligations under this Agreement have increased, then Lender shall so notify
Borrower and within 15 days after receipt of such notice from Lender, Borrower
shall pay to Lender, from time to time as specified by Lender, additional
amounts that in the aggregate shall be sufficient to compensate Lender for such
increased cost. A certificate as to such increase in costs showing the manner of
calculation thereof shall be submitted by Lender to Borrower and shall, in the
absence of manifest error, be conclusive as to the amount thereof. This covenant
shall survive the termination of this Agreement and payment of the Revolving
Loan Note.
5. CONDITIONS
PRECEDENT.
Any obligation of
Lender to make any of the Loans hereunder is subject to the following
conditions precedent:
5.1 Payments. On or
before the Closing Date, Borrower shall have paid: (a) each of the Fees
described in Paragraph 2.4; (b) all charges, taxes and fees for recording,
insurance, title insurance, appraisals, environmental assessments and other
items required under this Agreement; and (c) all costs and expenses of Lender in
establishing the Loans and perfecting its interest in the Collateral, including,
without limitation, the fees and disbursements of Lender's counsel.
5.2 Documents Required
for the Closing. On or before the Closing Date, Borrower shall have duly
delivered to Lender duly executed original counterparts of the following, all in
form and content acceptable to Lender:
5.2.1 This Agreement;
5.2.2 The Revolving Loan
Note;
5.2.3 A fully completed and
executed Perfection Certificate;
5.2.4 A Surety Agreement
from each Surety, if any;
5.2.5 Subordination Agreement(s) from any Person(s) with an interest in or to whom any Subordinated
Debt is payable, in favor of Lender with respect to such Subordinated
Indebtedness, if any;
5.2.6 The UCC-1 financing
statements as required by Lender;
5.2.7 UCC-3 Termination
Statements with respect to any security interest of record in any of the
Collateral prior to the date hereof in favor of any Person other than Lender;
5.2.8 Landlord waivers and
mortgagee waivers with respect to any leased or mortgaged premises of Borrower
in which any Collateral is located, and as otherwise required in this Agreement;
5.2.9 Control Agreement(s)
with consent of Depository;
5.2.10 A certified copy of
the Borrower's fire, all risk, business interruption, public liability, flood
and casualty insurance policy or policies evidencing coverage satisfactory to
the Lender, with mortgagee and lender loss payable and additional insured
endorsements in form and substance satisfactory to the Lender naming the Lender
as mortgagee and loss payee and additional insured, as its interest may appear,
together with one or more certificates of insurance broker(s) satisfactory to
the Lender (Accord 27), setting forth the insurance obtained in accordance with
Paragraph 7.1.4 and stating that such insurance is in full force and effect, all
premiums then due thereon have been paid and the insurance policies relating
thereto comply with Paragraph 7.1.4, and such insurance is adequate and
providing not less than 30 days notice to Lender of any change or cancellation
of such coverages;
5.2.11 The initial
Borrowing
Base and Inventory Certificates each duly completed and executed by
Borrower;
5.2.12 Current Aging of
Borrower's Accounts based upon invoice date and an Inventory listing containing
information satisfactory to Lender;
5.2.13 Copies of all
Account Substantiation Documents in effect as of the Closing Date, if required
by Lender;
5.2.14 A tax clearance
certificate from each state for which Borrower, each Subsidiary or other entity
constituent of Borrower, if any, is required to pay any sales and use taxes,
evidencing payment of all sales and use taxes owed by any of them as of the
Closing Date:
5.2.15 A certified (as of
the date of the Closing) copy of resolutions of Borrower's and each Subsidiary
or other entity constituent of Borrower, if any, boards of directors or other
governing agency authorizing the execution, delivery and performance of this
Agreement, the Revolving Loan Note, the Collateral and Loan Documents and each
other document to be delivered pursuant hereto;
5.2.16 A certified (as of
the date of the Closing) copy of Borrower's and each Subsidiary or other entity
constituent of Borrower, if any, by-laws, operating agreement, partnership
agreement or other governing documents and all amendments to the foregoing;
5.2.17 A certificate (dated
the date of the Closing) of Borrower's and each Subsidiary or other entity
constituent of Borrower, if any, as applicable, corporate secretary or other
authorized officer, member or partner as to the incumbency and signatures of the
officers, members, partners, Authorized Financial Officer(s) or authorized
persons of Borrower, and each Subsidiary or other entity constituent of
Borrower, if any, signing this Agreement, the Notes, the Collateral and Loan
Documents and each other document to be delivered pursuant hereto;
5.2.18 A copy, certified as
of the most recent date practicable by the Secretary of the State of each
entity's state of formation, of Borrower's, each Subsidiary's or other entity
constituent of Borrower, if any, certificate of incorporation, partnership or
formation, together with a certificate (dated the date of the Closing) of
Borrower's and each Subsidiary's or other entity constituent of Borrower, if
any, as applicable corporate secretaries or other authorized Person to the
effect that such certificate of incorporation, partnership or formation has not
been amended since the date of the aforesaid certification;
5.2.19 Certificates, as of
the most recent dates practicable, of the aforesaid Secretary of State and the
Secretary of State of each state in which Borrower, each Subsidiary or other
entity constituent of Borrower, if any, is qualified as a foreign corporation,
partnership, limited liability company or other entity and the department of
revenue or taxation of each of the foregoing states, as to the good standing of
Borrower, each Subsidiary or other entity constituent of Borrower, if any;
5.2.20 A written opinion of
Borrower's counsel, satisfactory to Lender, dated the date of the Closing and
addressed to the Lender.
5.2.21 Mortgage and Lien
satisfactions as may be necessary to provide Lender a first Lien on and security
interest in the Collateral subject to Lender's Priority Security Interest;
5.2.22 Master address list
of Borrower's Account Debtors;
5.2.23 Assignments to
Lender of all copyrights, trademarks and patents of Borrower included in the
Collateral;
5.2.24 A certified copy of
fictitious name registration of Borrower filed with __________________.
5.2.25 Such other
agreements, documents or instruments required by Lender, or its counsel, to
evidence the transactions described in this Agreement and perfect the Liens and
security interests of Lender in the Collateral.
5.3 Miscellaneous
Conditions
5.3.1 The audit of
Borrower's Collateral shall have been performed by Lender, the results of which
shall be satisfactory to Lender, in its sole discretion.
5.3.2 Lender shall have
received UCC, Lien, tax, judgment and other searches required by Lender.
5.3.3 All accounts payable
of Borrower, which are now or will be as of the Closing Date, outstanding more
than 60 days from the date of invoice shall be paid in full
5.3.4 Lender
shall have received copies of all filing receipts and acknowledgments issued by
any governmental authority to evidence any recordation or filing necessary to
perfect the Lien of the Lender on the Collateral and evidence in a form
acceptable to the Lender that such Lien constitutes the Lender's Prior Security
Interest and is a valid and perfected lien subject only to Permitted Liens as
set forth on Schedule 4.
5.4 Legal Matters.
At the time of Closing and each subsequent disbursement, all legal matters
incidental thereto shall be reasonably satisfactory to Lender and its counsel.
6. REPRESENTATIONS
AND WARRANTIES.
6.1 Corporate Existence,
etc. To induce Lender to enter into this Agreement, Borrower represents and
warrants to Lender as follows:
6.1.1 Borrower is duly
organized and validly existing, and in good standing under the laws of
____________, has the lawful power to own, lease, encumber and operate its
Assets and properties and to engage in the business it conducts, and is duly
qualified and in good standing as a foreign corporation in the jurisdictions
wherein the nature of the business transacted by it or property owned by it
makes such qualification necessary. The addresses of all places of business of
Borrower are as set forth in the Perfection Certificate. Borrower has no
Subsidiaries or other entities constituent of Borrower, or Affiliates except as
described in the Perfection Certificate. Borrower, except as disclosed to
Lender, has not changed its name, been the surviving entity in a merger,
acquired any business, or changed its principal executive offices within five
(5) years and one (1) month prior to the date hereof;
6.1.2 Borrower
has the requisite power and authority, corporate, partnership, limited liability
company or otherwise, to enter into and perform this Agreement, the Revolving
Loan Note and the Loan Documents to which it is a party and to incur the
Obligations herein and therein provided for and has taken all proper and
necessary action to authorize the execution, delivery and performance of this
Agreement, the Revolving Loan Note and the Loan Documents which are duly and
validly executed and constitute legal, valid, and binding obligations of
Borrower enforceable in accordance with their respective terms;
6.1.3 Borrower is not in default with respect to any
of its existing Indebtedness or under any agreement, commitment, lease,
contract, deed of trust, mortgage, note or other Instrument, and the making and
performance of this Agreement, the Revolving Loan Note and the Loan Documents
will not immediately, with the passage of time, with the giving of notice or
both: (a) violate the charter, by-laws, partnership agreement, operating
agreement, or other organizational documents of Borrower or, in any material
respect, violate any Laws, rule, regulation, order, writ, judgment, injunction,
decree, determination or award applicable to Borrower; or (b) result in a
default under any contract, agreement, indenture, note, loan or credit
agreement, license, lease or instrument to which Borrower is a party or by which
it or its property is bound; or result in the creation or imposition of any
security interest in or Lien or encumbrance upon any of the Assets of Borrower
except such as are in favor of Lender;
6.1.4 No
holder of any Indebtedness of Borrower has given notice of any asserted default
thereunder. No liquidation or dissolution of Borrower and no receivership,
insolvency, bankruptcy, reorganization or other similar proceeding relative to
Borrower or their properties is pending or, to the knowledge of Borrower,
threatened against them;
6.1.5 Except as described in Schedule 4, there
are no pending orders, notices, litigation, actions, claims, suits, proceedings
or investigations pending, or, to the knowledge of Borrower, threatened or
reasonably anticipated against or affecting Borrower at law or in equity or
before or by any governmental instrumentality or agency (domestic or foreign),
commission, board, bureau, arbitrator or arbitration panel which may be expected
to result in any Material Adverse Change in the business, operations, prospects,
properties or Assets (including, without limitation, the Collateral), or
condition (financial or otherwise) of Borrower . There is no judgment, liability
or award, which may be expected to result in any Material Adverse Change in the
business, operations, prospects, properties or Assets (including, without
limitation, the Collateral), or condition (financial or otherwise) of Borrower.
Borrower is not in default with respect to any judgment, order, writ,
injunction, decree, rule, award or regulation of any court, governmental
instrumentality or agency, commission, board, bureau, or arbitrator or
arbitration panel;
6.1.6 Borrower does not
know of, or anticipate any Material Adverse Change in its Assets, Liabilities,
properties, business, or condition (financial or otherwise);
6.1.7 Borrower has good and
marketable title to all of its properties and Assets, subject to no security
interest, encumbrance or Lien, or the claim of any third person, except for
Permitted Liens;
6.1.8 The Financial
Statements presented and to be presented to Lender, including any related
schedules and notes appended thereto, have been and will be prepared in
accordance with GAAP and fully and fairly present in all material respects the
financial condition of Borrower at the dates thereof and the results of
operations for the periods covered thereby. There have been no Material Adverse
Changes in the financial condition or business of Borrower from the date such
Financial Statements were presented to Lender to the date hereof;
6.1.9 As
of the date hereof, Borrower does not have any direct or contingent liability or
material Indebtedness of any nature, including, without limitation, liabilities
for taxes and any interest or penalties relating thereto, except to the extent
reflected (in a footnote or otherwise) and reserved against in the Financial
Statements of Borrower delivered to Lender prior to the date hereof or as
disclosed in Schedule 4. Borrower does not know and has no reasonable
grounds to know of any basis for the assertion against Borrower of any material
Indebtedness of any nature not fully reflected and reserved against in its
Financial Statements;
6.1.10 Borrower has filed
or caused to be filed all federal, state and local tax returns and other reports
it is required by Law to file prior to the date hereof and which are material to
the conduct of its business, or has timely filed requests for extensions to file
the same as permitted by Law, and has paid or caused to be paid all taxes,
assessments and other governmental charges due and payable prior to the date
hereof, and has made adequate provision for the payment of such taxes,
assessments or other charges accruing but not yet payable. Borrower does not
have any knowledge of any deficiency or additional assessment in a material
amount in connection with any taxes, assessments or charges not provided for on
its books and Records;
6.1.11 Borrower has
complied in all material respects with all applicable Laws with respect to: (a)
any restrictions, specifications or other requirements pertaining to products
that Borrower imports, manufactures or sells or to the services it performs; (b)
the conduct of its business and (c) the use, maintenance and operation of the
real and personal properties owned or leased by it in the operation of its
business;
6.1.12 No representation,
warranty or statement by Borrower contained herein or in any certificate or
other document furnished pursuant hereto contains any untrue statement of
material fact or omits to state a material fact necessary to make such
representation or warranty not misleading in light of the circumstances under
which it was made;
6.1.13 No recording,
filing, registration, notice or other similar action is required in order to
insure the legality, validity, binding effect or enforceability of this
Agreement or the Revolving Loan Note or the other documents and instruments
executed hereunder as against all persons, other than such filings as may be
required under the UCC and mortgages to perfect Lender's interest in all real
property owned by Borrower;
6.1.14 Except
as described on Schedule 4, there are no Liens or security interests in
any of the Borrower's Assets and Borrower does not know of any circumstances
which might lead to the imposition of any Lien;
6.1.15 Except
as described on Schedule 4, Borrower does not has any material leases,
contracts or commitments of any kind (such as employment agreements; collective
bargaining agreements; powers of attorney; distribution arrangements; patent,
trademark or copyright license agreements; contracts for future purchase or
delivery of goods or rendering of services; bonus, pension and retirement Plans;
or accrued vacation pay, insurance and welfare agreements); all parties
(including Borrower) to all such material leases, contracts and other
commitments to which Borrower are parties have complied with the provisions of
such leases, contracts and other commitments; no party is in default under any
thereof and no event has occurred which, but for the giving of notice or the
passage of time or both, could constitute a default;
6.1.16 Schedule
4 contains a complete and accurate list and summary description of all
Intellectual Property owned, licensed, leased or in any way used by Borrower.
None of the Intellectual Property infringes upon or interferes with any other
Intellectual Property or is being infringed upon or interfered with by any other
Intellectual Property. None of the Intellectual Property has been challenged or
threatened in any way. The Intellectual Property is not a substantial part of
the business of Borrower and the Intellectual Property is not necessary for the
operation of Borrower's business.
6.1.17 Borrower is in
compliance in all material respects with all applicable provisions of ERISA;
6.1.18 Borrower
does not have any Defined Benefit Pension Plan, as that term is defined in ERISA;
6.1.19 Except as disclosed in the Financial Statements
or on Schedule 4, or in the ordinary course of Borrower's business, no
officer of Borrower, and no other Affiliate of Borrower is currently a party to
any transaction with Borrower, including, without limitation, any contract,
agreement or other arrangement providing for the employment of, furnishing of
advisory or other services by, rental of real or personal property from, or
otherwise requiring payments to, any such officer or Affiliate;
6.1.20 No Event of Default
has occurred and is continuing or is about to occur;
6.1.21 The Obligations and
Indebtedness of Borrower under this Agreement, the Revolving Loan Note and any
other Loan Document are not subordinated in right of payment or otherwise to any
other obligation of Borrower or to the rights of others;
6.1.22 There are no
strikes, work stoppages, material grievance proceedings or other material
controversies pending or, to the best of Borrower's knowledge, threatened
between Borrower and any employees engaged in the business of Borrower or any
union or other collective bargaining unit representing such employees. Borrower
has complied and is in compliance with all Laws relating to the employment of
labor, including, without limitation, provisions relating to wages, hours,
collective bargaining, occupational safety and health, equal employment
opportunities and the withholding of income taxes and social security
contributions, the non-compliance of which might have a Material Adverse Effect
on its business, operations, prospects, Assets, properties or condition
(financial or otherwise);
6.1.23 Except
as disclosed to Lender in Schedule 4, Borrower shall not pay any
commission or finder's fee payable in connection with the Loans;
6.1.24 Each Account is: (a)
genuine and authentic, (b) in all respects, what it purports to be, and (c)
represents the bona fide sale of Goods or performance of services in the
ordinary course of the Borrower's business to the Account Debtor named in each
such Account. The amount set forth on the invoice or other billing statement for
such Account is true and correct. Each Account used as a base for borrowing
hereunder is an Eligible Account;
6.1.25 Borrower is and will
continue to be the absolute owner of all of its Inventory free and clear of all
liens and security interests other than Lender; and shall use and sell its
Inventory only in the ordinary course of Borrower's business and consistent with
the terms of this Agreement and any insurance thereon. All Inventory used as a
base for borrowing hereunder is Eligible Inventory. The Inventory of Borrower is
located at the locations set forth in the Perfection Certificate;
6.1.26 Borrower is not
party to or bound by any agreement or instrument or subject to any corporate or
other restriction the performance or observance of which now has or, as far as
Borrower can reasonably foresee, may have a Material Adverse Effect, financial
or otherwise, upon the Assets or business of Borrower.
6.1.27 Borrower is not now
and will not be engaged principally or, as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying or
trading in any margin stocks or margin securities (within the meaning of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System)
or other securities, and no part of the proceeds of the Loans hereunder has been
or will be applied for the purpose of purchasing or carrying or trading in any
such stock or securities or of refinancing any credit previously extended, or of
extending credit to others, for the purpose of purchasing or carrying any such
margin stock, margin securities or other securities in contravention of such
Regulations.
6.1.28 Borrower does not
operate or do business under any assumed, trade or fictitious names except as
described in the Perfection Certificate.
6.1.29 To the actual
knowledge of Borrower, no director, employee, principal shareholder or Control
Person of Borrower is a director, employee, principal shareholder or Control
Person of Lender and no employee, partner or Control Person of Lender is in
Control of Borrower.
6.1.30 Borrower does not
know of any activity at any real property or facility owned or operated by
Borrower (each a "Property") which has been conducted, or is being
conducted, except in compliance with all Environmental Laws, statutes,
ordinances, regulations, orders, and requirements of common law concerning (a)
those activities, (b) repairs or construction of any improvements, (c) handling
or storing of any materials, (d) discharges to the air, soil, surface water or
ground water, and (e) storage, treatment or disposal of any waste at or
connected with any activity at any Property.
6.1.31 Borrower does not
know of the presence of any contamination on the Property. As used in this
Agreement, the term "contamination" shall mean the uncontained
presence of hazardous substances at the Property, or arising from the Property,
which may require remediation under any applicable law; and the term
"hazardous substances" shall mean "hazardous substances" or
"contaminants" or "regulated substances" as defined pursuant
to any applicable Environmental Laws, if such presence would require removal or
remediation thereof under such Environmental Law.
6.1.32 Borrower does not
know of any chemical, material or substance, exposure to which is prohibited,
limited or regulated by a federal, state or local government agency, authority
or body, or which, even if not so regulated, to the best of Borrower's knowledge
after due investigation, may or could pose a hazard to health and safety of the
occupants of the Property or the owners or occupants of property adjacent to or
in the vicinity of the Property.
6.1.33 Borrower does not
know of any investigation of any Property for the presence of radon or radon gas
or the presence of the radioactive decay products or radon.
6.1.34 No tanks presently
or formerly used for the storage of any liquid or gas above or below ground are
present on any Property, except that Borrower has one propane tank at 0000 X.
Xxxxxx, Xxxxxxxx, XX 00000.
6.2 Solvency.
Borrower has sufficient capital to carry on all businesses and transactions in
which it now engages or is about to engage, is solvent and will continue to be
solvent after incurring the Loans and creating security interests of Lender in
the Collateral.
6.3 Investment Company.
Borrower is not an "investment company," or a company
"controlled" by an "investment company," within the meaning
of the Investment Company Act of 1940, as amended.
6.4 Survival. All of
the representations and warranties set forth in Paragraph 6.1 shall survive
until all Obligations are satisfied in full.
6.5 Names and addresses
of Borrower.
6.5.1 The addresses of all
places of business of Borrower and each trade name and trade style utilized by
Borrower and the address related to each such name are as set forth in the
Perfection Certificate.
6.5.2 The addresses where
Borrower keeps the Collateral and its books and Records concerning the
Collateral are as set forth in the Perfection Certificate.
6.5.3 The addresses at
which Inventory and Assets are located are as set forth in the Perfection
Certificate.
7. BORROWERS'
COVENANTS.
7.1 Affirmative
Covenants. Borrower does hereby covenant and agree with Lender that, so long
as any of the Obligations remain unsatisfied, it will:
7.1.1 Furnish Lender: (a)
within twenty (20) days after the close of each monthly accounting period in
each fiscal year of Borrower, a balance sheet and income statement of Borrower
as of the end of such monthly accounting period, prepared by the Authorized
Financial Officer of Borrower, all in reasonable detail and subject to year-end
adjustments, all prepared in accordance with GAAP, together with such other
financial statements prepared by Borrower for management during such monthly
period; (b) within forty-five (45) days after the close of each quarterly
accounting period in each fiscal year of Borrower, Consolidated and
consolidating income statements and balance sheets and statements of changes in
financial position of Borrower and its Affiliates, if any, all as of the end of
such quarterly period, prepared by the Authorized Financial Officer of Borrower,
all in reasonable detail, and prepared in accordance with GAAP; (c) within
ninety (90) days after the close of each fiscal year of Borrower: (i)
Consolidated and consolidating income statements and balance sheets of Borrower,
and its Affiliates, if any, all as of the end of such fiscal year; and (ii)
Consolidated and consolidating statement of stockholders' equity and a statement
of changes in financial position; all in reasonable detail, including supporting
schedules and comments, such annual statements, to be reviewed by, an
independent certified public accountant selected by Borrower, and acceptable to
Lender, to have been prepared in accordance with GAAP. Lender shall have the
right, from time to time, to discuss Borrower's financial affairs directly with
Borrower's independent certified accountants; (d) contemporaneously with each (i)
monthly and quarterly report required by the foregoing paragraphs, a certificate
of the Authorized Financial Officer of Borrower, and (ii) year end financial
reports required by the foregoing paragraphs, a copy of Borrower's
"management letter" issued by Borrower's independent certified public
accountant; (e) at Lender's request, copies of all receipts, if available or
other evidence of the payment, of United States withholding, FICA and other
applicable state and local payroll taxes, as such payments are made, and copies
of each quarterly, or as otherwise required by the Internal Revenue Service,
FICA and FUTA income tax withholding forms filed by Borrower, Borrower,
acknowledges that Borrower is responsible for the timely payment, when due, of
all such taxes; (f) within five (5) days after the close of each calendar month,
a Borrowing Base Certificate, an accounts receivable and accounts payable aging
and listing all as of the end of the immediately preceding month in form
satisfactory to Lender. All agings submitted hereunder shall reflect an
allocation to the corresponding invoice(s) of any and all payments or credits
(or any part thereof) received or given by Borrower; (g) within five (5) days
after the close of each calendar month, and at Lender's reasonable request, in
form satisfactory to Lender, an Accounts reconciliation which sets forth,
together with such other information requested by Lender, a listing of all
miscellaneous debits and credits to Borrower's Accounts, sufficient in detail to
enable Lender to reconcile the differences, if any, between the balance of
Borrower's Accounts as shown on Lender's books and Records, and the balance of
such Accounts shown on Borrower's books and Records. Upon receipt of such
reconciliation, the value of Borrower's Accounts on Lender's Records shall be
adjusted as appropriate and shall be reflected by Borrower in the next Borrowing
Base submitted by Borrower to Lender hereunder; (h) within five (5) days after
the close of each calendar month, and at Lender's reasonable request, an update
and list of all changes to the master address list of Borrower's Account
Debtors; (i) at Lender's request, all Shipping Documents evidencing the shipment
of Goods which gave rise to the Accounts, completion certificates or other proof
of the satisfactory performance of services that gave rise to an Account, and
Borrower's copy of any written order or contract that gave rise to the Account;
(j) weekly, on or before Tuesday of each week for the calendar week ending on
the Friday of the immediately preceding week, a Borrowing Base Certificate of
Borrower; (k) at Lender's request, Borrower shall submit copies of the invoices
for each Account of Borrower or Borrower's sales journal or such other Records
acceptable to Lender in substitution thereof; (l) within ten (10) days of the
close of each quarter, an Inventory Certificate; (m) within ten (10) days after
filing, copies of the federal income tax returns filed (together with all
schedules) or extensions requested by Borrower ; and (n) such additional
financial information regarding Borrower and its operations and financial
condition as Lender may, from time to time, reasonably require;
7.1.2 Cause Surety, if any,
to furnish to Lender: (a) not later than ninety (90) days after the close of
each calendar year, financial statements of Surety, in form and content
acceptable to Lender; (b) within 10 days of filing, copies of Surety's federal
tax returns (together with all schedules) or extensions requested by Surety; and
(c) such other financial information regarding Surety as Lender may, from time
to time, require;
7.1.3 Maintain the
Collateral and its other properties in good condition and repair (normal wear
and tear excepted) and will pay and discharge or cause to be paid and discharged
when due the costs of repairs to or maintenance of the same and will pay or
cause to be paid, all rental or mortgage payments due on the real estate owned
or leased by Borrower. Borrower hereby agrees that in the event Borrower fails
to pay or causes to be paid any such payment, Lender may do so and be
immediately reimbursed by Borrower therefor;
7.1.4 Maintain
or cause to be maintained, take out, pay for and keep in effect or cause to be
taken out, paid for, and kept in effect, so long as the Obligations remain
unsatisfied, such insurance against risks, including without limitation,
commercial general liability and property damage, business interruption, fire
and extended coverage with respect to the Collateral owned by any Borrower (to
the extent of its full insurable replacement value), vandalism and malicious
mischief and sprinkler leakage coverage and coverage against such other hazards,
as are customarily insured against by companies in the same or similar business,
and such other hazards as Lender may, from time to time reasonably require,
including flood hazard to the extent any Property is located in an area
designated or identified as an area having specified flood hazards, all in
amounts and with such insurance carriers as may be satisfactory to Lender, and
will deliver to Lender, upon their issuance, insurance policies for all
insurance then in force. All renewal and substitute policies of insurance shall
be delivered to Lender, premium paid, at least fifteen (15) days prior to the
termination of the policies previously delivered to Lender. All such insurance
policies will name Lender as loss payee and/or additional insured, as required
by Lender, and contain a provision whereby they may not be canceled or amended
except upon thirty (30) days written notice to Lender and shall be endorsed with
a standard mortgagee or loss payee clause, as applicable, in favor of Lender and
not subject to contribution. Borrower shall cause all hazard insurance policies
and any policies insuring the Collateral covered by this Agreement to provide,
and the insurers issuing such policies to certify to Lender, that (a) the
interest of Lender shall be insured regardless of any warranties, declarations
and conditions contained in such policies; (b) if such insurance be proposed to
be canceled or materially changed for any reason whatsoever, such insurer will
promptly notify Lender and such cancellation or change shall not be effective as
to Lender for thirty (30) days after receipt by Lender of such notice, unless
the effect of such change is to extend or increase coverage under the policy;
(c) Lender will have the right at its election to remedy any default in the
payment of premiums within thirty (30) days of notice from the insurer of such
default; and (d) loss payments in each instance will be payable to Lender as
mortgagee or secured party, or otherwise as its interest may appear. Without
limitation of the foregoing, such Proceeds may be applied at Lender's option in
whole or in part toward (a) the repair or replacement of any Collateral of
Borrower that has been damaged or destroyed and in respect of which the
insurance Proceeds were payable or (b) the payment or prepayment of the
outstanding principal of any of the Obligations and interest accrued thereon.
From and after the occurrence, and during the continuation of an Event of
Default, Borrower hereby irrevocably appoints Lender as its agent to sign and
endorse any and all checks, drafts or other instruments payable to Borrower
representing insurance Proceeds, and to satisfy any and all claims in connection
therewith;
7.1.5 Pay or cause to be
paid when due, all taxes, assessments and charges or levies imposed upon them or
on any of their property or which they are required to withhold and pay over,
except where contested in good faith by appropriate proceedings with adequate
reserves therefor having been set aside on their books; but Borrower shall pay
or cause to be paid all such taxes, assessments, charges or levies forthwith
whenever foreclosure on any lien that attaches (or security therefor) appears
imminent;
7.1.6 Sell its Inventory
and collect its Accounts only in the ordinary course of business;
7.1.7 Keep accurate and
complete in all material respects, books and Records relating to Accounts,
Inventory, receivables, other Collateral, and business affairs consistent with
sound accounting practices; keep complete and accurate Records (including all
books of original and final entry, computer programs, software, stored material
and data banks associated with or arising out of their business, operations
and/or record keeping) and make all necessary entries therein to reflect the
transactions and facts giving rise to Accounts, Chattel Paper, Inventory,
receivables and other Collateral, and all payments, debits, credits and
adjustments applicable thereto;
7.1.8 Give prompt notice to
Lender of: (a) any litigation in which Borrower is a party to the extent the
liability of Borrower in respect of such litigation is reasonably expected to
exceed $10,000, and (b) the institution of any other suit or any administrative
proceeding against Borrower that might materially and adversely affect its
individual operations, financial condition, property or business;
7.1.9 Maintain financial
records in accordance with GAAP and, upon reasonable notice by Lender, permit
any authorized representative designated by Lender to visit at reasonable times
and inspect any of the Properties of Borrower (including, without limitation,
their books of account, Records, correspondence and other papers and to make
extracts therefrom) and to discuss its affairs, finances and accounts with its
officers and its independent certified public accountants or other parties
preparing statements for or on behalf of Borrower;
7.1.10 Maintain its
corporate, partnership, limited liability company or other entity existence in
good standing; make no material change in the nature or character of its
business and not engage in any business which is materially different from the
business in which it is currently engaged; maintain and keep in full force and
effect all licenses and permits necessary to the proper conduct of its business;
and operate its business strictly in accordance with applicable federal, state
and local law;
7.1.11 Execute such other
and further documents, including, without limitation, indemnity agreements,
deeds of trust, security agreements, Pledge Agreements, Control Agreements,
assignments, financing statements, continuation statements and the like as may,
from time to time, in the reasonable opinion of Lender or Lender's counsel, be
necessary to perfect, confirm, establish, reestablish, continue or complete
Lender's security interest in the Collateral and the purposes and intentions of
this Agreement, it being the intention of Borrower to provide hereby a full and
absolute warranty of further assurance to Lender. If Borrower fails to execute
any such documents within five (5) days of being reasonably requested to do so
by Lender, Borrower hereby appoints Lender or any officer of Lender as Borrower's
attorney-in-fact for purposes of executing such documents in Borrower's name,
place and stead, which power of attorney shall be considered to be coupled with
an interest and irrevocable;
7.1.12 Notify Lender
immediately of the occurrence of any Event of Default hereunder, under the
agreements, documents or instruments, evidencing Loans by Lender to Borrower or
of any fact, condition or event that only with the giving of notice and/or
passage of time, or both would become an Event of Default, or of the failure of
Borrower to observe any of its undertakings hereunder;
7.1.13 Notify Lender ninety
(90) days in advance of any change in the location of any of its places of
business or of the establishment of any new or the discontinuance of any
existing place of business and furnish to Lender any new or replacement UCC-1
financing statements, duly signed by Borrower necessary to keep perfected
Lender's security interest in the Collateral;
7.1.14 Pay when due (or
within applicable grace periods) all Indebtedness due third Persons, except when
the amount thereof is being contested in good faith, by appropriate proceedings
and with adequate reserves therefor being set aside on the books of Borrower. If
default be made by Borrower in the payment of any principal (or installment
thereof) of, or interest on, any such Indebtedness, the Lender shall have the
right, in its discretion, to pay such interest or principal for the account of
Borrower and be reimbursed by Borrower therefor;
7.1.15 Furnish, or cause to
be furnished to Lender Inventory and Equipment appraisals and any information
regarding Borrower's or any Subsidiaries' or Affiliates' business affairs and
financial condition within a reasonable time after request therefor;
7.1.16 Permit Lender, its
officers, employees, designees and agents to have access, to inspect and audit,
at any time and from time to time, without prior notice to Borrower, during
regular business hours, the Collateral without hindrance or delay, such
Collateral audits to be performed at the times determined by Lender in its sole
discretion;
7.1.17 Permit Lender, its
officers, employees, designees and agents, without hindrance or delay, at such
times as Lender deems reasonably appropriate and without prior notice to
Borrower, to have access to, audit, inspect, and make copies of or extracts from
all of Borrower's books and Records including, without limitation, all journals,
orders, receipts and correspondence and any other books and Records pertaining
to Borrower's business which Lender may request, wherever located;
7.1.18 Cause all persons,
including computer service bureaus, bookkeeping services, accountants, auditors
and the like, to make all such books and Records in their possession available
to Lender, its officers, employees, designees and agents. If deemed necessary by
Lender, in Lender's sole discretion, upon the occurrence of an Event of Default,
Lender may remove them from any Borrower's place of business or any other place
where the same may be found for the purposes of examining, auditing or
reproducing the same. Any books or Records so removed by Lender shall be
returned by Lender as soon as Lender shall have completed its inspection, audit
or reproduction thereof;
7.1.19 Take all necessary
steps to preserve its corporate, partnership, limited liability company or other
entity existence and franchises and comply with all present and future Laws
applicable to it in the operation of its business, and all material agreements
to which it is subject except those with respect to which the failure to do so
would not have a Material Adverse Effect on Borrower;
7.1.20 Do all acts and make
all such filings as may be necessary to ensure that Borrower is duly qualified
to do business in all jurisdictions in which the conduct of its business or the
ownership of its properties makes such qualification necessary;
7.1.21 If any Account is or
becomes Chattel Paper and/or evidenced by a Promissory Note, trade acceptance or
any other Instrument for the payment of money, promptly deliver such Chattel
Paper and/or Instrument to Lender appropriately endorsed to Lender's order.
Regardless of the form of such endorsement, Borrower hereby waive presentment,
demand, dishonor, notice of dishonor, protest and notice of protest, and all
other notices with respect thereto;
7.1.22 Promptly advise
Lender whenever an Account Debtor refuses to accept delivery of any Goods in an
amount of not less than One Thousand ($1,000.00) Dollars from the sale of which
an Account arose and comply with any instructions that Lender may give regarding
the sale or other disposition of such returns;
7.1.23 Immediately notify
Lender if any Account arises out of a contract with the United States or any
department, agency, or instrumentality thereof, and execute any documents or
instruments and take any steps required by Lender so that all monies due and to
become due under such Accounts or Contracts shall be assigned to Lender and
notice thereof given to the government under the Federal Assignment of Claims
Act;
7.1.24 Promptly notify
Lender in writing of any agreement (express or implied) under which any terms of
sale (written or oral) differ from original terms or normal operating procedures
that may have been or will be granted;
7.1.25 When requested by
Lender from time to time, give Lender specific assignments and schedules of
Accounts after they come into existence, the form and content of such
assignments and schedules to be satisfactory to Lender;
7.1.26 Xxxx its books and
Records concerning Collateral in a manner reasonably satisfactory to Lender to
show Lender's security interest therein; and at Lender's request, upon the
occurrence of an Event of Default, notify all shippers, agents, landlords,
processors or others in possession of Inventory, and instruct them to hold such
Inventory for Lender's account and subject to Lender's instructions;
7.1.27 Instruct Borrower's
outside computer service company and accountants that Lender is irrevocably
empowered to have full access to and to have printouts and all information
respecting Borrower's financial records maintained by Borrower's outside
computer service company and/or accountants respecting any and all financial
Records now or hereafter maintained by the same on account of Borrower at
Borrower's expense and Lender will notify Borrower of any such contact;
7.1.28 Promptly notify
Lender of the occurrence or discovery of any event which would cause or has
caused all or any part of a previously Eligible Account or Eligible Inventory to
become ineligible;
7.1.29 Execute and deliver
to Lender any instrument, document, assignment or other writing which Lender
deems necessary or desirable to carry out the terms of this Agreement or to
enable Lender to perfect or enforce its Liens and security interests in the
Collateral;
7.1.30 Pay Lender on demand
the cost of collection or enforcement, including reasonable attorney's fees, of
all Accounts or other Collateral, if Lender undertakes such collection or
enforcement together with all taxes, charges and expenses of any nature paid or
incurred by Lender under or with respect to Loans hereunder or any of the
Collateral therefor, or Lender may charge any bank account of Borrower of any
nature for such amounts;
7.1.31At Closing and upon
acquisition of Inventory to be located at any location other than as set forth
on the Perfection Certificate, and/or as required by Lender, provide Lender with
a listing of all Inventory, indicating the nature of the Inventory, whether raw
materials or finished Goods, or work in process, the location of the Inventory,
indicating whether the premises is owned or leased by Borrower or a public
warehouse, and, in the case of leased premises, Borrower, as applicable, will
promptly furnish Lender with landlord (and/or mortgagee) waivers of lien in form
and content satisfactory to Lender. If the Inventory is covered by a xxxx of
lading or a warehouse receipt, Borrower shall deliver the signed xxxx of lading
or warehouse receipt to Lender endorsed in favor of Lender;
7.1.32 Indemnify and agree
to protect, defend and hold harmless Lender, any entity which
"controls" Lender, within the meaning of Section 15 of the Securities
Act of 1933, as amended, or is under common control with Lender and any member,
partner, officer, director, official, agent, employee or attorney of Lender, and
their respective heirs, administrators, executors, successors and assigns
(collectively, the "Indemnified Parties"), from and against any and
all losses, damages, expenses or liabilities of any kind or nature and from any
suits, claims or demands, including reasonable attorneys' fees incurred in
defending such claim, suffered by any of them and caused by, relating to,
arising out of, resulting from, or in any way connected with this Agreement, the
Loan Documents or the transactions contemplated herein and therein (unless
determined by a final judgment of a court of competent jurisdiction to have been
caused by the gross negligence or willful misconduct of the Indemnified
Parties), including, without limitation, (a) losses, damages (including
consequential damages payable to third parties), expenses or liabilities
sustained by Lender in connection with any environmental inspection, monitoring,
sampling or cleanup of any real estate or other Collateral owned or operated by
Borrower, required or mandated by any applicable environmental law; (b) any
untrue statement of a material fact contained in information submitted to Lender
by Borrower or the omission of any material fact necessary to be stated therein
in order to make such statement not misleading or incomplete; (c) the failure of
Borrower to perform any undertakings or obligations herein required to be
performed by Borrower ; and (d) the ownership, occupancy, operation, use or
maintenance of any Property or Collateral; (e) any breach of any covenant,
warranty, representation or other provision of this Agreement or the Loan
Documents; (f) any sale, lease, encumbrance or other disposition of any of the
Collateral, as that term is defined herein; (g) any alleged violation of any
Law, regulation or ordinance by Borrower in connection with this Agreement or
any other agreement or instrument with Borrower; (h) any personal injury or
property damage alleged to have been suffered in connection with the ownership,
use, possession, sale, lease or other disposition of any Collateral; or (i) any
claim by any person arising out of Borrower's breach of warranty or failure to
perform any of Borrower's obligations under any contract regarding the use,
sale, lease or other disposition of any Collateral. Borrower further agrees to
reimburse Lender for all reasonable counsel fees and costs expended or incurred
by Lender in connection with the foregoing. This indemnification shall survive,
for the period of the applicable statute of limitations, the termination of this
Agreement.
7.1.33 In case any action
shall be brought against Lender or any other Indemnified Party in respect to
which indemnity may be sought against Borrower, Lender or such other Indemnified
Party shall promptly notify Borrower and Borrower shall assume the defense
thereof, including the employment of counsel selected by Borrower and
satisfactory to Lender, the payment of all reasonable costs and expenses and the
right to negotiate and consent to settlement. The failure of Lender to so notify
Borrower shall not relieve Borrower of any liability they may have under the
foregoing indemnification provisions from any liability which Borrower may
otherwise have to Lender, or any of the other Indemnified Parties, except to the
extent materially prejudiced by such delay or failure of notice. In the event
that Borrower shall not be proceeding diligently to defend such claim, Lender
shall have the right, at its sole option, to employ separate counsel in any such
action and to participate in the defense thereof, all at Borrower's sole cost
and expense. Borrower shall not be liable for any settlement of any such action
effected without the applicable Person's consent (unless Borrower fails to
defend such claim), but if settled with Borrower's consent, or if there be a
final judgment for the claimant in any such action, Borrower agrees to indemnify
and save harmless Lender from and against any loss or liability by reason of
such settlement or judgment;
7.1.34 Immediately notify
Lender should any circumstances arise that might lead to imposition of a Lien
pursuant to any Environmental Law, as such statutes may be amended from time to
time and take such actions as may be necessary to prevent such Lien from
attaching to any of the Collateral;
7.1.35 Obtain all Permits
required to be obtained from any Governmental Authority under any law, rule or
regulation, including any Environmental Law, shall maintain all Permits required
to be maintained under any such laws, rules or regulations, and shall
immediately notify Lender of Borrower's failure to obtain or maintain any Permit
required to be obtained or maintained under any such laws, rules or regulations;
7.1.36 Upon an Event of
Default, grant Lender an irrevocable and exclusive, worldwide, royalty free
license to use in any manner and for any purpose all of the Intellectual
Property;
7.2 Negative Covenants.
Without the prior written consent of Lender, Borrower shall not:
7.2.1 Change its name, its
place of business, or, if more than one, chief executive office or its mailing
address, organizational identification number, if it has one; change its type of
organization, jurisdiction of organization or other legal structure or enter
into any merger, consolidation, reorganization or recapitalization;
7.2.2 Create,
incur or assume or permit to exist any liability for borrowed money or lease
except for borrowings from Lender, the existing Indebtedness set forth on Schedule
4 and purchase money loans or leases incurred to purchase or lease Equipment
used in the ordinary course of Borrower's business provided that; (a) any Liens
created to secure such Debt shall be created within 6 months of the acquisition
or lease of the related asset; (b) such Liens do not at any time encumber any
property other than the property financed by such Debt (c) the amount of Debt
secured thereby is not increased; and (d) the principal amount of Debt secured
by any such Lien shall at no time exceed one hundred percent (100%) of the
original purchase price or lease payment amount of such property at the time it
was acquired;
7.2.3 Wind up, liquidate or
dissolve its affairs, enter into any merger, consolidation, reorganization or
recapitalization, reclassify its capital stock or make any change to its
formation documents;
7.2.4 Sell, transfer,
assign, lease or otherwise dispose of all or (except in the ordinary course of
business) any material part of its Assets, nor permit the transfer of any
Collateral or Property or any interest of Borrower therein;
7.2.5 Factor any of its
Accounts, nor grant, create, incur or permit to exist any mortgage, pledge, a
security interest in or Lien upon, or for any other purpose assign or transfer,
either absolutely or as collateral security, any of the Collateral except in
favor of Lender;
7.2.6 Notify any Account
Debtor to make payment except to the Lock Box, or request an Account Debtor to
withhold or stop any payment otherwise directed by Lender;
7.2.7 Become liable,
directly or indirectly, as guarantor, surety, endorser or otherwise for any
obligation of any other person, firm, or corporation except for endorsement of
commercial paper for deposit or collection in the ordinary course of business;
7.2.8 Declare or pay any
dividends, return any capital to any of its stockholders, partners, members or
other principals, authorize or make any distribution, payment or delivery of
property or cash to its stockholders, partners, members or other principals, or
make any other payment or distribution on account of its stock or other
ownership interest in cash or in equity except to the extent necessary to pay
the income taxes payable by the shareholders, partners or members of Borrower,
if Borrower is a Subchapter S Corporation, partnership or limited liability
company;
7.2.9 Make any loan or
advance to any officer, shareholder, member, partner, director or employee of
Borrower, or any of their Affiliates, except for temporary advances in the
ordinary course of business;
7.2.10 Purchase or
otherwise invest in or hold securities, non-operating real estate or other
non-operating Assets, except: (a) direct obligations of the United States of
America; (b) the present investment in any such Assets; (c) operating Assets
that hereafter become non-operating Assets; and (d) investment in bank
certificates of deposit at banks subject to a Control Agreement;
7.2.11 Issue, redeem,
purchase or retire any of its stock, partnership interests, limited liability
company interests, or other ownership interests, or grant or issue any warrant,
right or option pertaining thereto or other security exercisable or convertible
into any of the foregoing;
7.2.12 Enter into any new
agreement to rent or lease any real or personal property or enter into any
arrangement with any bank, insurance company or other lender or investor
providing for the leasing of any real or personal property or equipment (a)
which has been or is sold or transferred by Borrower to such lender or investor
or (b) which has been or is being acquired from another Person by such lender or
investor or (c) on which one or more buildings have been or are to be
constructed by such lender or investor, for the purpose of leasing such property
to Borrower ;
7.2.13 Make or furnish
Lender any financial statement, representation, warranty, certificate or other
document, statement or information that will contain any untrue, incorrect or
incomplete statement of material fact or that will omit to state a material fact
necessary to make it not misleading in light of the circumstances under which it
was furnished;
7.2.14 Directly or
indirectly apply any part of the proceeds of the Loan to the purchasing or
carrying of any "margin stock" within the meaning of Regulation G, T,
X or U of the Board of Governors of the Federal Reserve System, or any
regulations, interpretations or rulings thereunder;
7.2.15 Prepay any
Subordinated Indebtedness, Indebtedness for borrowed money, or Indebtedness
secured by any of its Assets (except the Obligations) or enter into or modify
any agreement as a result of which the terms of payment of any of the foregoing
Indebtedness are waived or modified;
7.2.16 Enter into a
sale-leaseback or synthetic lease transaction;
7.2.17 Acquire any stock
of, membership or partnership interest in, or all or substantially all of the
Assets of, any Person;
7.2.18 Change its fiscal
year;
7.2.19 Assign or attempt to
assign this Agreement or any other Loan Document or any of its rights, duties or
obligations hereunder or thereunder; or.
7.2.20Store, locate, move
or relocate all or any portion of the Collateral or the Records related thereto
in or to any other location except upon thirty (30) days prior written notice to
Lender.
8. DEFAULT.
8.1 Events
of Default. The occurrence of any one or more of the following events shall
constitute an "Event of Default" hereunder:
8.1.1 Any Obligor shall
fail to pay when due, any installment of principal or interest or fee payable
hereunder or any Obligation when due;
8.1.2 Any Obligor shall
fail to observe or perform any other obligation or covenant required to be
observed or performed by it hereunder, under any of the Loan Documents, or under
any other agreement between any Obligor and Lender or the occurrence of an Event
of Default under any other agreement between any Obligor and Lender;
8.1.3 Any
Obligor shall (a) fail to pay any secured Indebtedness due any third Person and
such failure shall continue beyond any applicable grace periods; (b) fail to pay
any Indebtedness due any third Person and such failure is not cured prior to any
acceleration of such Indebtedness by the applicable creditors, whichever is
earlier, or the exercise of any remedies permitted under any of the documents
evidencing such Indebtedness; or (c) any Obligor shall suffer to exist any other
event of default under any agreement binding upon any Obligor, provided that the
failure of any Individual Surety to pay any non-material consumer debt shall not
constitute an Event of Default hereunder, provided further that Obligor shall be
entitled to fail to pay Indebtedness which is the subject of a bona fide dispute
between such Obligor and the creditor thereof which is being prosecuted
diligently by such Obligor;
8.1.4 Any
Obligor shall make or furnish to Lender any representation, warranty, statement
or certificate in connection with this Agreement, the Loan Documents or the
Obligations which is not true and correct when made or furnished, or shall be
false, incorrect or incomplete when made;
8.1.5 Any
Obligor shall admit its inability to pay its debts as they mature, or shall make
an assignment for the benefit of its creditors;
8.1.6 Proceedings
in bankruptcy, or for reorganization of any Obligor, or for the readjustment of
any of its debts under Bankruptcy Code, as amended, or any part thereof, or
under any other laws, whether state or federal, for the relief of debtors, now
or hereafter existing, shall be commenced by or against any Obligor and, if
commenced against any Obligor, shall not be discharged within thirty (30) days
of their commencement;
8.1.7 A
receiver or trustee shall be appointed for any Obligor or for any substantial
part of its Assets, or any proceedings shall be instituted for the dissolution
or the full or partial liquidation of any Obligor, and such receiver or trustee
shall not be discharged within thirty (30) days of its appointment, or any
Obligor shall discontinue business or materially change the nature of its
business;
8.1.8 The
entry of any judgment against any Obligor which, if adversely decided, would
have a Material Adverse Effect, which remains unsatisfied for thirty (30) days
unless being contested by Obligor in good faith with appropriate proceedings and
with execution stayed; or a judgment creditor of any Obligor shall obtain
possession of any of the Collateral by any means, including, but without
limitation, levy, distraint, replevin or self-help;
8.1.9 Any
Governmental Authority or instrumentality seizes, appropriates, condemns or
occupies all or a substantial part of the Properties of any Obligor or
interferes in any substantial manner with the operation of the business of any
Obligor;
8.1.10 Any
Plan is terminated within the meaning of Title IV of ERISA, or a trustee is
appointed by the appropriate United States District Court to administer any
Plan, or the Pension Benefit Guaranty Corporation, or any successor thereto,
institutes proceedings to terminate any Plan or to appoint a trustee to
administer any Plan, or any Reportable Event or COBRA Violation occurs which
Lender determines in good faith indicates a substantial likelihood that an event
described above will occur;
8.1.11 If,
in Lender's judgment, the value of the Collateral so substantially deteriorates
or diminishes that Lender reasonably deems the Obligations to be inadequately
secured, and Obligor neither reduces the amount of the Obligations, nor provides
additional Collateral;
8.1.12 Any
obligee of Subordinated Indebtedness fails to comply with the subordination
provisions of the instrument evidencing Subordinated Indebtedness or any
Subordination Agreement referred to in this Agreement;
8.1.13 he validity or
enforceability of this Agreement, the Revolving Loan Note or any of the Loan
Documents, shall be contested by any Obligor or any Obligor shall deny that it
has any or further liability or obligation hereunder or therewith;
8.1.14 he occurrence of
any Material Adverse Change in the financial condition of any Obligor;
8.1.15 A Change in Control
of Borrower.
8.2Acceleration.
Immediately and without notice upon the occurrence and during the continuation
of any Event of Default, all Obligations, whether hereunder or otherwise, shall
immediately become due and payable without further action of any kind; and,
notwithstanding any outstanding commitment of Lender to Borrower to make
additional and further Loans to Borrower, upon the occurrence of any Event of
Default, any such commitment shall immediately become null and void and of no
force and effect whatsoever.
8.3 Remedies.
8.3.1 After
any acceleration due to an Event of Default, interest on the principal balance
of the Obligations outstanding from time to time shall accrue and is payable at
the interest rate set forth in Schedule 2 attached hereto plus Five
percent (5%) per annum from the date of such acceleration until all such
Obligations are satisfied in full and whether or not any judgment is entered
hereon (the sum of both rates, the "Default Rate"). In addition to the
rights and remedies given it by this Agreement and the Loan Documents, Lender
shall have all those allowed by all applicable laws, including, but without
limitation, the Uniform Commercial Code as enacted in any jurisdiction in which
any Collateral may be located and Lender may enforce such rights and pursue such
remedies without demand of performance and without other notice. Without
limiting the generality of the foregoing, Lender may immediately, without demand
of performance and without other notice (except as specifically required by this
Agreement or the Loan Documents) or demand whatsoever to any Obligor, all of
which are hereby expressly waived, and without advertisement, take possession of
the Collateral, exercise the Warrant of Attorney contained in Section 9.17
herein, retain all of Borrower's Records, sell at public or private sale or
otherwise realize upon in Pennsylvania, or elsewhere, the whole or, from time to
time, any part of the Collateral or any interest which any Obligor may have
therein. After deducting from the Proceeds of sale or other disposition of the
Collateral all expenses (including all expenses for legal services), Lender
shall apply such Proceeds toward the satisfaction of the Obligations. Any
remainder of the Proceeds after satisfaction in full of the Obligations shall be
distributed as required by applicable Laws. Notice of any sale or other
disposition shall be given to Borrower at least ten (10) days before the time of
any intended public sale or of the time after which any intended private sale or
other disposition of the Collateral is to be made, which Borrower hereby agrees
shall be reasonable notice of such sale or other disposition. Borrower agrees to
assemble, or to cause to be assembled at its expense, the Collateral at such
place or places, as Lender shall designate. At any such sale or other
disposition, Lender may, to the extent permissible under applicable laws,
purchase the whole or any part of the Collateral, free from any right of
redemption on the part of any Obligor, which right is hereby waived and
released. Without limiting the generality of any of the rights and remedies
conferred upon Lender under this paragraph, Lender may, to the full extent
permitted by applicable Laws: (a) enter upon the premises of Borrower, exclude
therefrom Borrower or any Affiliate thereof, and take immediate possession of
the Collateral, either personally or by means of a receiver appointed by a court
of competent jurisdiction, using all necessary force to do so; (b) at Lender's
option, use, operate, manage and control the Collateral in any lawful manner;
(c) collect and receive all rents, income, revenue, earnings, issues and profits
therefrom; and (d) maintain, repair, renovate, alter or remove the Collateral as
Lender may determine in its discretion.
8.3.2 To
the extent that applicable law imposes duties on Lender to exercise remedies in
a commercially reasonable manner, Borrower acknowledges and agrees that it is
not commercially unreasonable for Lender (a) to fail to incur expenses
reasonably deemed significant by Lender to prepare Collateral for disposition or
otherwise to complete raw material or work in process into finished goods or
other finished products for disposition, (b) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not
required by other law, to fail to obtain governmental or third party consents
for the collection or disposition of Collateral to be collected or disposed of,
(c) to fail to exercise collection remedies against Account Debtors or other
Persons obligated on Collateral or to remove Liens on or any adverse claims
against Collateral, (d) to exercise collection remedies against Account Debtors
and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (f) to contact other
Persons, whether or not in the same business as Borrower, for expressions of
interest in acquiring all or any portion of the Collateral, (g) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the Collateral is of a specialized nature, (h) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
(k) to purchase insurance or credit enhancements to insure Lender against risks
of loss, collection or disposition of Collateral or to provide to Lender a
guaranteed return from the collection or disposition of Collateral, or to the
extent deemed appropriate by Lender, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist Lender in the
collection or disposition of any of the Collateral. Borrower acknowledges that
the purpose of this Paragraph 8.3.2 is to provide non-exhaustive indications of
what actions or omissions by Lender would not be commercially unreasonable in
Lender's exercise of remedies against the Collateral and that other actions or
omissions by Lender shall not be deemed commercially unreasonable solely on
account of not being indicated in this Paragraph 8.3.2. Without limitation upon
the foregoing, nothing contained in this Paragraph 8.3.2 shall be construed to
grant any rights to Borrower or to impose any duties on Lender that would not
have been granted or imposed by this Agreement or by applicable law in the
absence of this Paragraph 8.3.2.
9. MISCELLANEOUS.
9.1Construction.
The provisions of this Agreement shall be in addition to those of any guaranty,
surety, hypothecation, pledge or security agreement, note, or other evidence of
liability held by Lender, and any other agreement between Borrower and any
entity constituent of Borrower as guarantor or otherwise, and Lender, all of
which shall be construed as complementary to each other. Nothing herein
contained shall prevent Lender from enforcing any or all other notes, guaranty,
surety, hypothecation, pledge or security agreements in accordance with their
respective terms. The parties acknowledge that any and all Accounts assigned or
transferred to Lender or in which Lender is granted a security interest
hereunder have been assigned, and transferred to Lender, and Lender was granted
a security interest therein, as security for Lender's Loan and advances
hereunder, and Borrower's Obligations, and are not and have not been, in fact,
sold to Lender regardless of whether any assignment thereof, which is or may be
separate from this Agreement, is absolute.
9.2 Term of Agreement.
This Agreement shall terminate after payment in full of the Revolving Loan Note
and the discharge of all obligations and undertakings of Borrower to Lender,
whether arising hereunder or otherwise. Lender's agreement hereunder to make the
Loans shall terminate on the earliest of: (a) the occurrence of an Event of
Default; (b) the Revolving Credit Termination Date; or (c) on the date specified
in the notice given by Lender pursuant to this Agreement; provided that certain
agreements of Borrower hereunder shall continue in full force and effect beyond
the Revolving Credit Termination Date or other termination hereof. In addition,
the renewal of the Revolving Credit shall be subject to annual review by Lender.
9.2.1 On the Revolving
Credit Termination Date, all of the Obligations shall be immediately due and
payable. The termination of this Agreement shall not affect the rights,
liabilities and obligations of the parties with respect to the Obligations as of
the date of termination, or the Collateral which secures and is to secure the
Obligations, which Collateral shall remain subject to the liens and security
interests granted hereunder until all of the Obligations are satisfied in full.
The failure of Lender to enforce any of the terms and provisions hereof or
failure to declare default hereunder shall apply only in a particular instance,
and shall not operate as a continuing waiver.
9.3 Accounting Terms.
All accounting terms not specifically defined herein shall be construed in
accordance with GAAP, except as otherwise stated herein.
9.4 Stamp or Excise Tax.
Should any stamp or excise tax be payable in respect of this Agreement, the
Revolving Loan Note and other documents to be delivered hereunder, or any
modification hereof or thereof, Borrower shall pay the same and shall hold
Lender harmless from any and all liabilities with respect to or resulting from
any delay in paying or any failure to pay such taxes.
9.5Further Assurance.
From time to time, Borrower will execute and deliver to Lender such additional
documents and will provide such additional information as Lender may reasonably
require to carry out the terms of this Agreement and be informed of Borrower's
status and affairs.
9.6 Enforcement and
Waiver by Lender. Lender shall have the right at all times to enforce the
provisions of this Agreement and the Loan Documents in strict accordance with
the terms hereof and thereof, notwithstanding any conduct or custom on the part
of Lender in refraining from so doing at any time or times. The failure of
Lender at any time or times to enforce its rights under such provisions strictly
in accordance with the same shall not be construed as having created a custom in
any way or manner contrary to specific provisions of this Agreement or as having
in any way or manner modified or waived the same. All rights and remedies of
Lender are cumulative and the occurrence and the exercise of one right or remedy
shall not be deemed a waiver or release of any other right or remedy.
9.7 Expenses of Lender.
Borrower will pay all expenses including the fees and expenses of legal counsel
for Lender, incurred in connection with the administration, amendment,
modification or enforcement of this Agreement and the Loan Documents and the
collection or attempted collection of the Obligations, the Revolving Loan Note
and the Collateral.
9.8 Notice. Any
notices or consents required or permitted by this Agreement shall be in writing
and shall be delivered in person or sent by first class or certified mail,
return receipt requested, postage prepaid, by reputable overnight carrier, or by
fax, as follows, unless such address is changed by written notice hereunder:
If to Borrower:
Hesperia Truss, Inc.
0000 X. Xxxxxx
Xxxxxxxx, XX 00000
Attention: __________________________
Facsimile: ______________________
and
_________________________________
_________________________________
_________________________________
_________________________________
Xxxxxxxxxxxx, Xxxxxxxxxxxx 0000x
Facsimile: ________________________
If to Lender:
Mercantile Capital, LP
000 X. Xxxxxxxxx Xxx., Xxxxx 000
Xxxxxxxxx, XX 00000-0000
Attn: _________________________________
Facsimile: _______________________
9.8.1 Notices shall be
deemed to have been received if hand delivered, when delivered, if sent by
certified mail or first class mail, three (3) calendar days after the date
deposited in the United States Mail, if by overnight courier, on the date
scheduled for delivery, and if by fax, when transmitted. Any party may change
the name and address of the person to whom notices hereunder are to be sent by
giving notice to such other party as specified hereunder.
9.9 Waiver and Release
by Borrower. To the maximum extent permitted by applicable Laws, Borrower
waives protest of all commercial paper at any time held by Lender on which
Borrower is in any way liable and notice after acceleration in the manner
herein provided before exercise by Lender of the remedies of self-help, set-off,
or of other summary procedures permitted by any applicable laws, or by any
agreement with Borrower, and, except where required hereby or by any applicable
laws, notice of any other action taken by Lender; and release Lender and its
officers, attorneys, agents and employees from any and all claims for loss or
damages caused by any act or omission on the part of any of them except willful
misconduct.
9.10 Applicable Law.
The internal laws of the Commonwealth of Pennsylvania shall govern the
construction of this Agreement, the Loan Documents and the rights and remedies
of the parties hereto, without regard to its conflict of laws principles.
9.11Consent to
Jurisdiction, Service and Venue. For the purpose of any suit, action or
proceeding arising out of or relating to this Agreement, the Revolving Loan Note
or the Loan Documents, Borrower hereby irrevocably consents and submits to the
jurisdiction and venue of any of the Courts of the Commonwealth of Pennsylvania
or any Federal court located in the Eastern District of Pennsylvania including,
without limitation, the Court of Common Pleas of Xxxxxxxxxx County and the
United States District Court for the Eastern District of Pennsylvania,
regardless of the convenience of such forum, and Borrower further agrees and
consents to accept and acknowledge all service of process carried out by means
of registered mail, return receipt requested in connection with any such matter.
The provisions of this Section shall not limit or otherwise affect the right of
Lender to institute and conduct action in any other appropriate manner,
jurisdiction or court.
9.12 Binding Effect,
Assignment and Entire Agreement. This Agreement shall inure to the benefit
of and shall be binding upon the respective successors and permitted assigns of
the parties hereto. Borrower does not have any right to assign any of its rights
or obligations hereunder without the prior written consent of Lender; provided,
however, that Lender shall be permitted to assign all of its rights,
privileges and obligations hereunder at any time. This Agreement and the Loan
Documents executed and delivered pursuant hereto, constitute the entire
agreement between the parties and may be amended only by a writing signed on
behalf of each party.
9.13 Severability.
If any provision of this Agreement shall be held invalid under any applicable
Laws, such invalidity shall not affect any other provision of this Agreement
that can be given effect without the invalid provision, and to this end, the
provisions hereof are severable.
9.14 Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
but one and the same instrument.
9.15 Seal. This
Agreement is intended to take effect as an instrument under seal.
9.16 Time of the Essence.
Time is of the essence in this Agreement.
9.17 WARRANT
OF ATTORNEY.
THE FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF AUTHORITY FOR ANY ATTORNEY TO
CONFESS JUDGMENT AGAINST BORROWER. IN GRANTING THIS WARRANT OF ATTORNEY TO
CONFESS JUDGMENT AGAINST BORROWER, BORROWER, FOLLOWING CONSULTATION WITH
SEPARATE COUNSEL FOR BORROWER AND WITH KNOWLEDGE OF THE LEGAL EFFECT HEREOF,
HEREBY KNOWINGLY, INTENTIONALLY, VOLUNTARILY AND UNCONDITIONALLY WAIVES ANY AND
ALL RIGHTS BORROWER HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR
HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES OF
AMERICA, THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE. IT IS SPECIFICALLY
ACKNOWLEDGED BY THE UNDERSIGNED THAT LENDER HAS RELIED ON THIS WARRANT OF
ATTORNEY IN ENTERING INTO THIS AGREEMENT AND AS AN INDUCEMENT TO GRANT FINANCIAL
ACCOMMODATIONS TO BORROWER.
BORROWER HEREBY IRREVOCABLY
AUTHORIZES AND EMPOWERS ANY ATTORNEY OR ANY CLERK OF ANY COURT OF RECORD, TO
APPEAR FOR AND CONFESS JUDGMENT AGAINST BORROWER, (A) FOR SUCH SUMS AS ARE DUE
AND/OR MAY BECOME DUE ON THE OBLIGATIONS EVIDENCED BY THIS AGREEMENT, AND/OR (B)
IN ANY ACTION OF REPLEVIN INSTITUTED BY LENDER TO OBTAIN POSSESSION OF ANY
COLLATERAL SECURING THE NOTE OR SECURING ANY OF THE OBLIGATIONS, IN EITHER CASE
WITH OR WITHOUT DECLARATION, WITH COSTS OF SUIT, WITHOUT STAY OF EXECUTION AND
WITH AN AMOUNT, FOR LIEN PRIORITY PURPOSES, EQUAL TO THE AMOUNT OF SUCH
JUDGMENT, PLUS ATTORNEYS' COLLECTION FEES. TO THE EXTENT PERMITTED BY LAW,
OBLIGORS: (1) WAIVE THE RIGHT OF INQUISITION ON ANY REAL ESTATE LEVIED ON,
VOLUNTARILY CONDEMN THE SAME, AUTHORIZE THE PROTHONOTARY OR CLERK TO ENTER UPON
THE WRIT OF EXECUTION; (2) WAIVE AND RELEASE ALL RELIEF FROM ALL REDEMPTION,
APPRAISEMENT, STAY, EXEMPTION, OR APPEAL LAWS OF ANY STATE NOW IN FORCE OR
HEREAFTER ENACTED; AND (3) RELEASE ALL ERRORS IN SUCH PROCEEDINGS. IF A COPY OF
THIS AGREEMENT, VERIFIED BY AFFIDAVIT BY OR ON BEHALF OF LENDER SHALL HAVE BEEN
FILED IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL OF THIS
AGREEMENT AS A WARRANT OF ATTORNEY. THE AUTHORITY AND POWER TO APPEAR FOR AND
ENTER JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED BY THE INITIAL EXERCISE
THEREOF, AND THE SAME MAY BE EXERCISED, FROM TIME TO TIME, AS OFTEN AS LENDER
MAY DEEM NECESSARY AND DESIRABLE, AND THIS AGREEMENT SHALL BE A SUFFICIENT
WARRANT THEREFOR. LENDER MAY ENTER ONE OR MORE JUDGMENTS IN THE SAME OR
DIFFERENT JURISDICTIONS FOR ALL OR PART OF BORROWER'S OBLIGATIONS, WITHOUT
REGARD TO WHETHER JUDGMENT HAS THERETOFORE BEEN ENTERED ON MORE THAN ONE
OCCASION FOR THE SAME OBLIGATIONS. IN THE EVENT ANY JUDGMENT ENTERED AGAINST
BORROWER HEREUNDER IS STRICKEN OR OPENED UPON APPLICATION BY OR ON BORROWER'S
BEHALF FOR ANY REASON WHATSOEVER, LENDER IS HEREBY AUTHORIZED AND EMPOWERED TO
AGAIN APPEAR FOR AND CONFESS JUDGMENT AGAINST BORROWER FOR ANY PART OR ALL OF
THE OBLIGATIONS; INCLUDING, WITHOUT LIMITATION, A SUBSEQUENT ENTRY OR ENTRIES OF
JUDGMENT BY LENDER TO CURE ANY ERROR OR DEFECTS IN SUCH PRIOR PROCEEDINGS.
9.18 Usury. If the
applicable interest rate from time to time shall exceed the maximum rate of
interest permitted by applicable law, then the applicable interest rate during
such time shall be reduced so as to equal the maximum rate of interest permitted
by applicable law, and, in the event a payment is made by Borrower or received
by Lender in excess of the applicable legal limits, the amount of such excess
payment shall be credited to the account of Borrower as a payment of principal.
9.19 Gender, Etc.
Whenever used herein, the singular shall include the plural, the plural shall
include the singular, and the use of the masculine, feminine or neuter gender
shall include all genders, as the context may require.
9.20 Headings. The
Section and subsection headings of this Agreement are for convenience of
reference only, and shall not limit or otherwise affect any of the terms hereof.
9.21 Signatures by
Facsimile. Any facsimile signature of any party hereto shall constitute a
legal, valid and binding execution hereby by such party.
9.22 WAIVER OF JURY
TRIAL. BORROWER ACKNOWLEDGES AND AGREES THAT: (a) ANY SUIT, ACTION OR
PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT OR INSTITUTED BY THE LENDER,
BORROWER OR ANY OTHER PARTY HERETO OR ANY SUCCESSOR OR ASSIGN OF LENDER,
BORROWER OR ANY OTHER PARTY HERETO, ON OR WITH RESPECT TO THIS AGREEMENT OR ANY
OF THE LOAN DOCUMENTS OR THE OTHER DOCUMENTS REQUIRED HEREUNDER OR THE DEALINGS
OF THE PARTIES WITH RESPECT HERETO, OR THERETO, SHALL BE TRIED ONLY BY A COURT
AND NOT BY A JURY AND BORROWER WAIVES THE RIGHT TO TRIAL BY JURY; (b) BORROWER
WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR
PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; AND (c) THIS SECTION IS A
SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND THE LENDER WOULD NOT EXTEND
CREDIT TO THE BORROWER IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART
OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
ATTEST: HESPERIA TRUSS, INC.
By:_____________________________
By:
_________________________________ (SEAL)
_________________________________
Its: ________________________
MERCANTILE CAPITAL, L.P.
By: _________________________________
__________________________________
SURETY'S(IES') ACKNOWLEDGEMENT:
Name of Individual Surety, Surety under a Surety Agreement in favor of
Lender dated the ____ day of ____________ 2004 hereby acknowledges receipt of
this Agreement and consents to its terms and conditions.
Name of Individual Surety
______________________________________
[Its:/Individually]
Schedule 1
1) "Accounts",
"Chattel Paper", "Contracts", "Contract
Rights", "Documents", "Equipment",
"Fixtures" "General Intangibles", "Goods",
"Inventory", "Investment Property", "Instruments",
"Letter-of-Credit Rights", "Deposit Accounts",
"Payment Intangibles", "Health Care Insurance
Receivables", "Records", "Promissory Notes",
"Supporting Obligations" and "Proceeds" shall
have the same respective meanings as are given to those terms in the Uniform
Commercial Code except that the term "Accounts" shall also
include all amounts due under any lease of real property, a note receivable, any
right to payment under a note receivable, any right to payment which has been
earned under an Account, a Contract Right, HealthCare Insurance Receivable, or
credit card receivable, Letter-of-Credit Right, Payment Intangibles and all
rights to payment arising out of or related to any and all personal property
lease agreements, personal property rental agreements and consignment agreements
in which any Borrower is the lessor, renter or consignor, and this Agreement
shall also be considered an assignment of all such lease, rental and consignment
agreements and "Inventory" shall include the property described
in this Schedule 1,Paragraph 29).
2) "Account Debtor"
shall mean the Person with respect to any Account, and/or the prospective
purchaser with respect to any Contract Right, and/or any party who enters into
or proposes to enter into any contract or other arrangement with Borrower
pursuant to which Borrower is to deliver any personal property or perform any
service.
3) "Affiliate" shall mean any Person
which, directly or indirectly, controls, is controlled by or is under common
control with the Borrower, or any stockholder, partner, owner or member of the
Borrower or any Person which controls any stockholder, partner, owner or member
of the Borrower. For the purpose of this definition, "control" means
the possession, directly or indirectly, of the power to direct or to cause the
direction of management and policies or having the ordinary voting power to
elect the Board of Directors or other governing body, whether through the
ownership of voting securities, by contract, by agreement or otherwise.
4) "Assets"
means all assets that should, in accordance with GAAP, consistently applied, be
classified as assets on a balance sheet of the Borrower.
5) "Authorized
Financial Officer" means any corporate officer, proprietor, partner or
any individual designated in writing by Borrower as such.
6) "Base Rate" means the base
commercial lending rate of Wilmington Trust Company of Pennsylvania as publicly
announced to be in effect from time to time, such Base Rate to be adjusted
automatically, without notice, on the effective date of any change in Wilmington
Trust's base commercial lending rate. If such rate ceases to be available or is
otherwise not published, Lender may use a similar published prime or base rate
as chosen by Lender. The Base Rate is not necessarily the lowest or best rate of
interest offered by Lender to any Borrower or class of Borrowers.
7) "Borrowing Base"
means an amount equal to the lesser of the Revolving Credit Limit or the
aggregate of the percentage and other limitations and sub-limits set forth in Schedule
2 attached hereto and made part hereof, which Schedule 2 may be
amended from time to time by the Lender at its sole discretion.
8) "Borrowing Base Certificate" means
a certificate, satisfactory to Lender, certified to be true and correct by an
Authorized Financial Officer of Borrower that mathematically computes the
Borrowing Base.
9) "Business Day" shall mean any day
other than a Saturday, Sunday or other day on which banking institutions in the
Commonwealth of Pennsylvania are either authorized or required to be and remain
closed to the general public.
10) "Change in
Control" shall mean either (i) the termination of the employment of
Xxxxxx Xxxxx as Chief Executive Officer of the Borrower. For purposes hereof,
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of Borrower's management or policies,
whether through the ownership of securities, by contract or otherwise.
11) "Closing"
means the receipt or waiver by Lender of all the agreements, documents and
instruments required hereunder in form and content acceptable to Lender, and the
satisfaction by Borrower or waiver or extension by Lender of all or part of the
Conditions Precedent set forth in Section 5 hereof. "Closing Date",
means the date upon which Lender has elected to make the initial disbursement of
the Loan(s) to Borrower. The Closing Date shall be_____________________, unless
otherwise extended by Lender.
12) "COBRA
Violations" shall mean a failure by the Borrower to comply with group
health plan continuation coverage requirements of Section 601 et seq. of
ERISA.
13) "Collateral
Documents" means all other agreements, documents or instruments
pursuant to which Lender obtains any Lien or other security interest in the
Collateral or any other property of Borrower.
14) "Control
Agreement" shall mean the agreement between Borrower, Lender and
Borrower's bank evidencing Lender's security interest in and control of
Borrower's bank account(s).
15) "Debt"
shall mean all of Borrower's Liabilities (determined in accordance with GAAP).
16) "Dollars"
and "$" means dollars in the lawful currency of the United States.
17) "Eligible
Account" means an Account that Lender in its reasonable credit judgment
determines shall be an "Eligible Account" and conforms and continues
to conform to the following conditions which Lender may, in its sole discretion,
establish, determine or adjust from time to time:
a) The Account and all
papers and documents relating thereto are authentic, valid and subsisting and
arose from a bona fide outright sale of Goods, merchandise or other property by
Borrower, or for services performed by Borrower in the ordinary course of
Borrower's business, based upon an enforceable order or contract, written or
oral, for Goods shipped or services performed, and such Goods, merchandise or
other property have been shipped to the appropriate Account Debtor (or the sale
has otherwise been consummated), and the services have been performed for the
appropriate Account Debtor in full compliance with the specifications of the
Account Debtor, and an invoice has been issued for the full amount due from the
Account Debtor;
b) Borrower's title to the
Account and, except as to the rights of the Account Debtor, to any Goods, is
absolute and is not subject to any prior assignment, claim, lien or security
interest;
c) The amount shown on the
books of Borrower and on any invoice or statement delivered to Lender is owing
to Borrower, and no partial payment has been made thereon by anyone;
d) The Account is not; (i)
a contra account, (ii) C.O.D. or sight draft account, (iii) a commission account
(iv) an Intercompany Account, (v) in default, or (vi) subject to any claim or
reduction, counterclaim, set off, recoupment or any claim for credits,
allowances or adjustments by the Account Debtor because of returned, inferior or
damaged Goods or unsatisfactory services, or for any other reason, except for
customary discounts allowed for prompt payment;
e)The Account is not due
from an Account Debtor located outside of the continental United States;
f) The Account is readily
collectible and is not an invalid, disputed or unenforceable Account, and is not
an Account that Lender, in its sole discretion, has determined to be ineligible,
in whole or in part, and has notified Borrower thereof;
g) The Account Debtor has
not returned or refused to retain any Goods from the sale of which the Account
arose;
h) The Account is evidenced
by an invoice that has a definite due date, is not pre-billed and is due and
payable not more than thirty (30) days from the invoice date and is not more
than sixty (60) days past due on such thirty (30) day terms, and in any event is
not outstanding more than ninety (90) days from the invoice date;
i) No Account arises out of
a contract with or from, an Account Debtor that, by its terms, forbids or makes
void or unenforceable the assignment by Borrower to Lender of the Account
arising with respect thereto;
j) Borrower has not
received any note, trade acceptance, draft or other Instrument with respect to
or in payment for the Account, nor any Chattel Paper with respect to the Goods
giving rise to the Account and, if any such Instrument or Chattel Paper is
received, Borrower will immediately notify Lender and, at the latter's request,
endorse or assign and deliver the same to Lender (if Borrower receives any such
Instrument or Chattel Paper, Borrower shall not replace the Account with such
Instrument or Chattel Paper without prior notice to Lender and delivery of such
original Instrument or Chattel Paper to Lender);
k) Borrower has no
knowledge of and has not received any notice of the death of any Account Debtor
or a partner thereof if the Account Debtor is an individual or a partnership,
nor of the dissolution, termination of existence, insolvency, business failure,
appointment of a receiver for any part of the property of, assignment for the
benefit of creditors by, or the filing of a petition in bankruptcy or the
commencement of any proceeding under any bankruptcy or insolvency laws by or
against the Account Debtor (if Borrower has or obtains any such knowledge or
upon the receipt by Borrower of any such notice (whether oral or written), it
will immediately give Lender written advice thereof);
l) The Account Debtor is
not a parent, Subsidiary, or an Affiliate of Borrower nor an officer, director,
employee or partner of Borrower or of a parent, Subsidiary or Affiliate of
Borrower nor owned or controlled by any of the foregoing;
m) The Account is not due
from any federal governmental authority unless such Account, if necessary to
perfect Lender's interest therein or Lender's right of direct payment thereunder,
has been properly assigned directly to Lender (and acknowledged as assigned by
the Account Debtor thereon) in form satisfactory to Lender;
n) The Account is not
contingent upon the fulfillment of any condition or contingent upon the payment
of any monies due from a third party;
o) The Account is supported
by valid Shipping Documents;
p)The Account is not the
result of guaranteed sales nor does it arise from a consignment arrangement or
similar transaction;
q) The Account is not a
"xxxx and hold" transaction, nor did it arise as a result of a billing
for Goods which have not been shipped nor a "pre-billed" transaction,
however denominated;
r) The Account is not a
progress billing (if any Account results from a progress billing, Borrower shall
furnish Lender with copies of all Contracts related to such Account upon
Lender's request, but in any event, prior to the start of the initial
fabrication of the product or shipment or provision of services);
s) The Account is not a
retainer (including, but not limited to construction retainages), nor does it
represent interest or finance charges;
t) Less than 50% of the
Account is ineligible for any reason;
u) The Account represents
not more than the percentage of the total accounts receivable as described in Schedule
2 ("Account Concentration");
v) The Account is an
Account on which Lender has a first and exclusive lien and security interest;
w) The Account meets such
other specifications and requirements as Lender may in its sole discretion
establish or determine from time to time. Lender shall have the right, at any
time and from time to time after the Closing Date, to adjust any such criteria
and to establish new criteria, all in its reasonable credit judgment; and
x) Any Account that was
originally an Eligible Account shall cease to be an Eligible Account in the
event (a) it shall not continue to conform to the conditions and warranties set
forth in this Agreement or (b) Lender shall notify Borrower that such Account or
the Account Debtor is unsatisfactory. In the event of any dispute whether an
Account is or has ceased to be an Eligible Account, the decision of the Lender
shall control.
18) "Eligible
Inventory" means Inventory that Lender in its reasonable credit
judgment determines shall be "Eligible Inventory" and meets the
following criteria and conforms and continues to conform to the following
conditions which Lender may, in its sole discretion, establish, determine or
adjust from time to time:
a) The title of Borrower in
and to the Inventory is absolute and lawfully in Borrower and subject to no
prior assignment, claim, lien or security interest, and Borrower has the right
of assignment thereof and the power to grant to Lender a lien on and security
interest therein;
b) The Inventory is
intended for sale or lease by Borrower in the ordinary course of Borrower's
business at regular prices;
c) If the Inventory is
represented by a Document, the Document is lawfully owned by, and in possession
of, Borrower, and Borrower shall immediately deliver such Document to Lender;
d) The Inventory is located
on Borrower's premises or on premises leased by Borrower with a landlord which
has delivered to Lender a Landlord's Waiver in form and content acceptable to
Lender;
e) The Inventory is
otherwise acceptable to Lender in its discretion;
f) Eligible Inventory shall
exclude all Inventory which is obsolete, damaged, returned, consigned, leased,
"on hold", bailed or determined by Lender in its sole discretion to be
ineligible in whole or in part and has so notified Borrower. Lender shall have
the right, at any time and from time to time after the Closing Date, to adjust
any such criteria and to establish new criteria, all in its reasonable credit
judgment; and
g) Advances based on
Eligible Inventory shall be made only at the time Borrower obtains all rights to
such Eligible Inventory.
19) "Environmental
Laws" shall mean any federal, state, county, regional or local statute,
law, ordinance, rule, regulation, order, directive, regulations or requirement,
together with all successor statutes, laws, ordinances, rules, regulations,
orders, directives, regulations or requirements governing the control, storage,
removal, spill, release or discharge of Hazardous Materials.
20) "ERISA"
shall mean the Employee Retirement Income Security Act of 1974 (together with
all rules and regulations promulgated thereunder), as amended, supplemented,
replaced, or modified from time to time.
21) "ERISA
Affiliate" shall mean, as to Borrower, any Person (whether or not
incorporated), which, together with Borrower, would be treated as a single
employer under Section 4001 of ERISA.
22) "Financial
Statements" means the consolidated and consolidating balance sheet,
statements of income and retained earnings and statements of cash flow of the
Borrower and its Subsidiaries and Affiliates and all other financial statements
of Borrower and its Subsidiaries or Affiliates, prepared in accordance with GAAP,
submitted and to be submitted to Lender hereunder, and in form and content
acceptable to Lender.
23) "Float Factor"
shall mean the number of days described in Schedule 2.
24) "GAAP" or
"generally accepted accounting principles" shall mean generally
accepted accounting principles applied on a consistent basis, in accordance with
the Statement of Auditing Standards No. 69, "The Meaning of Present Fairly
in Conformity with Generally Accepted Accounting Principles in the Independent
Auditor's Report" (SAS 69) or superseding pronouncements, issued by the
Auditing Standards Board of the American Institute of Certified Public
Accountants and/or in statements of the Financial Accounting Standards Board
and/or in such other statements by such other entity as Lender may reasonably
approve, which are applicable in the circumstances as of the date in question.
The requirement that such principles be applied on a consistent basis shall mean
that the accounting principles observed in a current period are comparable in
all material respects to those applied in a preceding period, or, in the event
of a material change in any accounting principle from that observed in any
previous period, (a) financial reports covering preceding periods during the
term of this Agreement are restated to reflect such change and provide a
consistent basis for comparison among periods and (b) the financial covenants
set forth herein, if any, shall be adjusted as determined by the Lender to
reflect similar performance standards as those measured by the existing
covenants using the previously observed accounting principles.
25) "Governmental
Authority" means any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
26) "Indebtedness"
means, as to any Obligor, all Liabilities, indebtedness or obligations of
Borrower to any Person of any kind or nature, now or hereafter arising, due and
payable, or to become due and payable, matured or unmatured, liquidated or
unliquidated, direct, secondary or contingent, fixed or otherwise, joint or
several.
27) "Ineligible
Account" means all or any part of any Account that is not an Eligible
Account.
28) "Intercompany
Accounts" means all assets and liabilities, however arising, which are
due to the Borrower from, which are due from the Borrower to, or which otherwise
arise from any transaction by the Borrower with, any Affiliate of the Borrower.
29) "Inventory"
means and includes all of the following, whether now owned or hereafter
acquired, new or used and wherever located;
a) All tangible personal
property or Goods or Equipment now owned or hereafter acquired by Borrower,
which are held for sale, consignment or lease by Borrower in the ordinary course
of Borrower's business or are furnished or to be furnished by Borrower under
contracts of service;
b) All tangible personal
property or Goods or Equipment which Borrower has so consigned, leased or
furnished, including all tangible personal property or Goods or Equipment held
by others for sale or consignment from Borrower;
c) All tangible personal
property or Goods or Equipment sold by Borrower on a sale or return basis;
d) All tangible personal
property or Goods or Equipment returned to Borrower or repossessed by Borrower
following a sale, consignment or lease thereof by Borrower and all Documents of
Title (as that term is defined in the UCC) or certificates of title or origin
and tangible personal property represented thereby;
e) All raw materials,
ingredients, work in process, finished goods, packaging materials, labels and
other materials and supplies ("Materials") of every kind or nature
used, useful or consumed in connection with the production, packaging, packing,
shipping, installation, advertising or sale of such personal property or Goods
or Equipment;
f) All Proceeds and
products from the sale or other disposition of such personal property or Goods,
Equipment or Materials, including all personal property, Goods, Equipment or
Materials returned, repossessed or acquired by Borrower by way of substitution
or replacement, and all additions and accessions thereto, and all Documents and
Instruments covering such personal property, Goods, Equipment or Materials;
g) All of the rights or
interests of Borrower as an unpaid seller, including stoppage in transit,
detinue and reclamation; and
h) All of the above owned
by Borrower or in which Borrower now has or in which Borrower may hereafter
acquire an interest, whether in transit or in the constructive or actual
possession of Borrower or held by Borrower or by others for the account of
Borrower (including any of the above held on consignment) including, without
limitation, all of the above which may be located at the property or other
premises of Borrower or upon the premises of any carriers, forwarding agents,
truckers, warehousemen, vendors, selling agents, finishers, converters,
distributors, customers or other third parties who may have possession,
temporary or otherwise, thereof.
30) "Inventory
Certificate" means a certificate, satisfactory to Lender, certified to
be true and correct by an Authorized Financial Officer of Borrower that
accurately represents the breakdown, value and location of the then current
Inventory of Borrower.
31) "Laws" means all ordinances, statutes, rules,
regulations, orders, injunctions, writs or decrees of any Governmental Authority
or agency thereof or any court or similar entity established by any thereof.
32) "Lien"
means:
a) Any interest in real,
personal and intangible property securing an obligation owed to, or a claim by,
a Person other than the owner of the property, whether such interest is based on
the common law, statute, or contract, and including a security interest, charge,
claim, or lien arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, agreement, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes;
b) To the extent not
included under clause (a), any reservation, exception, encroachment, easement,
right-of-way, covenant, condition, restriction, lease or other title exception
or encumbrance affecting property; and
c) Any contingent or other
agreement to provide any of the foregoing.
33) "Loan Documents"
shall mean this Agreement, the Revolving Loan Note, the Collateral Documents,
Surety Agreement(s), Validity Indemnification(s), Subordination Agreement(s),
Letter(s) of Credit and/or any deed of trust, mortgage, assignment of lease,
note, contract, security instrument, encumbrance, financing statement,
certificate, assignment, pledge, report, subordination, conditional sale, other
title retention agreement, or other document related to or delivered in
connection with the transactions contemplated by this Agreement.
34) "Material
Adverse Change" shall mean any changes that could result in a Material
Adverse Effect.
35) "Material
Adverse Effect" shall mean any set of circumstances or events which
a) Has or could reasonably
be expected to have any material adverse effect whatsoever upon the validity or
enforceability of this Agreement or any other Loan Document,
b) Is or could reasonably
be expected to be material and adverse to the properties, Assets, condition
(financial or otherwise) or business operations, results of operations of the
Borrower, any Subsidiary or to the prospects of Borrower, or any Subsidiary,
c) Impairs materially or
could reasonably be expected to impair materially the ability of Borrower, or
any Subsidiary to duly and punctually pay or perform its Obligations or
d) Materially impairs or
could reasonably be expected to materially impair the ability of the Lender to
enforce its legal remedies pursuant to this Agreement or any other Loan
Document.
36) "Obligations"
means the obligations of any Obligor:
a) To pay the principal of
and all interest on all present and future Loans and advances made hereunder in
accordance with the terms hereof or otherwise to or for
the benefit of Borrower and to satisfy all of its other Indebtedness,
obligations, liabilities, covenants, duties and Debts to Lender for payment or
performance, whether hereunder or otherwise, whether now existing or hereafter
incurred or arising, matured or unmatured, due or to become due, absolute,
direct or contingent, joint or several, primary or secondary, including any
extensions, modifications, renewals thereof and substitutions therefor, whether
or not evidenced by any note, agreement or other Instrument or Document, whether
arising from an extension of credit, opening of a Letter of Credit, acceptance,
loan, guaranty, indemnification, overdraft or otherwise including all
Indebtedness, liabilities or obligations arising from any Obligor to others
which the Lender may have obtained by purchase, negotiation, discount,
assignment or otherwise;
b) To repay to Lender all
amounts advanced by Lender hereunder or under the Loan Documents or otherwise on
behalf of (or for the benefit of) any Obligor including, without limitation,
advances for principal or interest payments to prior or subordinate secured
parties, mortgagees, or lienors, or for taxes, levies, insurance, rent, repairs
to, maintenance or storage of any of the Collateral; and
c) To pay all of Lender's
expenses and costs including without limitation, all filing, recording and
satisfaction fees, or taxes, and the fees and expenses of its counsel in
connection with the preparation, administration, amendment, modification or
enforcement of this Agreement and the documents required hereunder, the
perfection or maintenance of Lender's Liens on and security interests in the
Collateral, or any proceeding brought or threatened to enforce payment of any of
the Obligations referred to in the foregoing.
37) "Obligor"
means Borrower, Surety, Indemnifier and any other Person directly or indirectly
obligated with respect to the Obligations.
38) "Perfection
Certificate" means the Perfection Certificate to be completed and
delivered by Borrower prior to Closing with appropriate insertions and signed by
an Authorized Financial Officer of Borrower.
39) "Permit"
means any permit, license, registration, authorization or other governmental
approval required to be obtained and maintained under any Environmental Law or
other applicable law, rule or regulation of any Governmental Authority.
40) "Person"
means any individual, sole proprietorship, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, limited liability company, court, Governmental Authority, government or
political subdivision or agency thereof or any other entity.
41) "Plan"
shall mean any pension plan, which is covered by Title IV of ERISA and in
respect of which Borrower, or any ERISA Affiliate thereof is an
"employer" as defined in Section 3(5) of ERISA.
42) "Pledge
Agreement" means an agreement in favor of Lender, in form and content
acceptable to Lender executed by any Person maintaining any property on behalf
of the Borrower, acknowledging Lender's control over and rights in and to the
pledged property.
43) "Records"
means correspondence, memoranda, tapes, discs, CD-ROMS, papers, books and other
documents, or transcribed information of any type, whether expressed in
ordinary, computer, machine or electronic language and the Equipment in which
such information is stored or by which it is retrieved.
44) "Remittances"
means (a) all checks, drafts, cash and other remittances in payment of or on
account of payment of all its Accounts (including Ineligible Accounts and
Accounts with respect to which Lender has made no loan or advance hereunder) and
(b) whenever expressly required by Lender, the cash Proceeds of any returned
Goods from the sale of which any Account arose.
45) "Reportable
Event" shall mean any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder.
46) "Subsidiary"
shall mean, as to Borrower, any corporation of which Borrower directly or
indirectly through one or more intermediaries owns or controls at the time (i)
at least a majority of the outstanding stock having, under ordinary
circumstances (not dependent upon the happening of a contingency), voting power
to elect a majority of the board of directors (in the case of a corporation
having directors), or (ii) a majority of the voting stock of any corporation not
having directors. The term "Subsidiary" shall also mean any general or
limited partnership or other entity of which more than fifty percent (50%) of
the outstanding partnership interests or ownership interests shall, at the time
of determination, be owned, directly or indirectly, through one or more
intermediaries, by Borrower.
47) "Surety"
means collectively, any corporation, partnership, limited liability company or
other business entity which is now or may hereafter become a Surety under this
Agreement (each a "Corporate Surety"), and Name
of Individual Surety residing at Surety Address,
(an "Individual Surety"), all of which shall be jointly and
severally obligated hereunder.
48) "Surety
Agreement" means a duly authorized and executed surety agreement in
favor of Lender.
49) "Uniform
Commercial Code" or "UCC" shall mean the Uniform Commercial
Code as in effect in the Commonwealth of Pennsylvania or of any other state in
which any Collateral is located from time to time, (or any successor statute)
the laws of which are required, as a result thereof, to be applied in connection
with the perfection of security interest in the Collateral.
50) Other Definitional Provisions and Interpretive Provisions.
a) The meanings of defined
terms are equally applicable to the singular and plural forms of the defined
terms.
b) The words
"hereof," "herein," "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and Paragraph, Subparagraph, Subsection, Section, Schedule references
are to this Agreement unless otherwise specified.
c) The term
"documents" includes any and all instruments, documents, agreements,
certificates, indentures, notices and other writings, however evidenced.
d) The term
"including" is not limiting and means "including without
limitation."
e) In the computation of
periods of time from a specified date to a later specified date, the word
"from" means "from and including", the words "to"
and "until" each mean "to but excluding" and the word
"through" means "to and including."
f) Unless otherwise
expressly provided herein, (a) references to agreements (including this
Agreement) and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto, but only to the extent
such amendments and other modifications are not prohibited by the terms of any
Loan Document, and (b) references to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting the statute or regulation.
g) This Agreement and the
other Loan Documents may use several different limitations, tests or
measurements to regulate the same or similar matters. All such limitations,
tests and measurements are cumulative and shall each be performed in accordance
with their terms.
h) This Agreement and the
other Loan Documents are the result of negotiations among and have been reviewed
by counsel to the Lender, the Borrower and the other parties, and are the
products of all parties. Accordingly, they shall not be construed against the
Lender merely because of the Lender's involvement in their preparation.
Schedule 2
This Schedule 2 dated this ____ day of ____________ 2004, is attached
to and made part of that certain Loan and Security Agreement between Hesperia
Truss, Inc. ("Borrower") and MERCANTILE CAPITAL, L.P.
("Lender") dated the ____ day of ____________ 2004 (the
"Agreement").
The Agreement is hereby modified by the additional terms and provisions set
forth in this Schedule 2 as such schedule may from time to time be
amended and supplemented by Lender in its sole discretion ("Additional
Terms"), all of which are incorporated into and made part of the Agreement
as of the date hereof. If there is a conflict or discrepancy between the terms
and provisions of this Schedule 2, and any other Schedule 2 dated
prior to the date hereof, or of the Agreement, the terms and provisions of this Schedule
2 shall continue and prevail. All other terms and provisions of all Schedule
2's dated prior to the date hereof, and of the Agreement are hereby ratified
and confirmed in all respects and without condition are all incorporated herein
by reference as if set forth at length herein.
1) Borrowing Base
Rates of Advance:
a) Fifty
Percent 50% of Eligible Accounts;
b) Such
other percentages of the above as Lender may, from time to time at its sole
discretion, determine and give advance notice to Borrower).
2) Interest Rate(s):
a) Eligible Accounts:
Base Rate plus 3%, but not to be less than 7% for advances against accounts
receivable;
3) Fees:
a) Facility Fee.
Borrower shall pay to Lender, on or before the annual anniversary of the
Closing Date a non-refundable commitment fee ("Facility Fee")
equal to One Percent (1%) of the Revolving Credit Limit.
b) Audit Fee.
Borrower shall reimburse Lender for the cost of and related travel,
out-of-pocket and other expenses. Audits shall be performed at such times as
the Lender deems necessary or advisable in its sole discretion.
c) Collateral
Management Fee. Borrower shall pay Lender monthly, a collateral
management fee of 1.25% of the average loan balance. Such fee shall be due
and payable on the first day of each month in arrears.
4) Float Factor:
Five Business Days
5) Account
Concentration: Not to exceed 15 Percent (15%) of total Accounts
Receivable.
Schedule 3
Collateral
-
All money and cash of Borrower and all property of Borrower which at any time
Lender shall have in its possession, or which is in transit to it, all amounts
that may be owing from time to time by Lender to Borrower, and any balance or
share belonging, in whole or in part, to Borrower, in any deposit, agency,
trust, escrow or other account or accounts with any bank or other financial
institution (excluding all XXX, Xxxxxx and any trust, pension, profit sharing
and similar accounts subject to ERISA), including any certificate of deposit;
-
All Assets, including without limitation, all now owned or hereafter acquired
present and future Accounts (including Ineligible Accounts), Contract Rights,
Contracts, Chattel Paper, accounts receivable, notes receivable, Documents,
machinery, Equipment, Fixtures, furniture, Instruments, Inventory, Investment
Property, Letter-of- Credit Rights, Deposit Accounts, Payment Intangibles,
Health Care Insurance Receivables, Promissory Notes, Supporting Obligations,
General Intangibles, Goods, including any returned or repossessed Goods and all
rights of stoppage in transit and similar rights, Proceeds, all lease or
consignment agreements in which Borrower is lessor, consignor or consignee and
all rights of payment related to any of the foregoing, and all liens and
security instruments, books and Records evidencing, securing or relating to the
foregoing including, all data processing cards, tapes, tabulating runs,
programs, software and similar materials;
-
All guarantees, sureties and endorsements of Borrower's existing and future
Accounts, Contracts, Contract Rights, Chattel Paper, Documents, Instruments,
accounts receivable, Investment Property, Letter-of-Credit Rights, Deposit
Accounts, Payment Intangibles, Health Care Insurance Receivables, Promissory
Notes, Supporting Obligations, and Inventory;
-
All security or collateral held or taken by Borrower to secure the payment
and/or satisfaction of any Account, Chattel Paper, Contract, Contract Rights,
Document, Instrument, account receivable, Investment Property, Letter-of-Credit
Rights, Deposit Accounts, Payment Intangibles, Health Care Insurance
Receivables, Promissory Notes, Supporting Obligations, or Inventory, including
any returned or repossessed Goods;
-
All notes, drafts, acceptances, documents or certificates of title, including
bills of lading, warehouse receipts, policies and certificates of insurance
(including without limitation credit insurance), and securities (domestic and
foreign) now or hereafter owned by Borrower or in which Borrower has or acquires
an interest in connection with its Accounts, Contracts, Contract Rights, Chattel
Paper, Documents, Instruments, accounts receivable, Investment Property,
Letter-of-Credit Rights, Deposit Accounts, Payment Intangibles, Health Care
Insurance Receivables, Promissory Notes, Supporting Obligations, and Inventory;
-
All other rights of Borrower to the payment of money, including, without
limitation, tax refunds and amounts due from Affiliates, and rights under any
Letter of Credit;
-
All rights in connection with the residual value of any Goods or Inventory
sold, leased, consigned or otherwise disposed of, including but not limited to,
the proceeds of any third party's option to purchase such Inventory;
-
All of Borrower's rights in sale agreements, rental
agreements, lease agreements, bills of lading, documents of title, warehouse
receipts, charters, charter parties, bills of sale and other agreements arising
out of or relating to purchase of Goods or Inventory by or to Borrower, whether
directly or through any Affiliate of Borrower, or the sale, rental, lease,
consignment or other disposition of the such property or any portion thereof;
-
Any and all replacements and substitutions of all or any of the property
described in subparagraphs 1) through 10);
-
All insurance and all rights of payment or other rights of Borrower arising
out of, related to, or in connection with any of the foregoing;
-
All General Intangibles now or hereafter related to or arising from, used in
connection with or related to the possession, use, sale, lease, consignment or
other disposition of any of the foregoing and all insurance and all rights of
payment or other rights of Borrower arising out of, related to, or in connection
with any of the foregoing;
-
All Records pertaining to any of the foregoing.
Schedule 4
Exceptions/Additional Information
|
Section 4.6
|
Additional Accounts:
|
|
|
None
|
|
Section 5.3.4
|
Permitted Liens:
|
|
|
None
|
|
Section 6.1.4
|
Litigation/Claims:
|
|
|
None
|
|
Section 6.1.9, 6.1.15 & 7.2.2
|
Indebtedness/Leases/Contracts:
|
|
None |
|
Section 6.1.14
|
Other Liens
|
|
|
None
|
|
Section 6.1.16
|
Intellectual Property:
|
|
|
None
|
|
Section 6.1.23
|
Finder's Fees:
|
|
|
1.5% of the Revolving Credit Limit, payable to Capital Solutions Group.
|
