Exhibit 4.1
LINE OF CREDIT AGREEMENT
XXXXXXXXXXXX.XXX, INC. of 000 XXXXX XXXXXXX, XXXXXXXXX, XX 00000 (jointly and
severally if more than one, the "Borrower") and Fleet National Bank, a national
banking association created and existing under the laws of the United States of
America with a principal office located at 000 Xxxxxxxxxxx Xxxxxx, Xxxxxxxxxx,
XX 00000 (the "Bank"), for valuable consideration, the receipt of which is
hereby acknowledged, agree as follows:
I. DEFINITIONS.
1. Each reference herein to:
a. "Accounts", "Chattel Paper", "Electronic Chattel Paper", "Consumer
Goods", "Documents", "Equipment", "Farm Products", "Fixtures", "General
Intangibles", "Payment Intangibles", "Goods", "Instruments",
"Inventory", "Money", "Promissory Note", "Software", "Investment
Property", "Securities", "Deposit Accounts", and "Letter-Of-Credit
Rights" shall have the meaning assigned to each in the Uniform
Commercial Code from time to time in effect in the State (the "UCC");
b. "Affiliates of Borrower" means any person or entity that, directly or
indirectly, controls, is controlled by or is under common control with
the Borrower or is an inside director or officer of the Borrower. For
purposes of this definition, the term "control" (including the terms
"controlling", "controlled by" and "under common control with") means
the possession, direct or indirect, of the power to vote five percent
(5%) or more of (i) the voting stock of a corporation, (ii) the
partnership interests of a partnership, or (iii) the membership
interests of a limited liability company, or to direct or cause the
direction of the management and policies of any such entity, whether
through the ownership of voting stock, partnership interests,
membership interests, by contract or otherwise;
c. "Books and Records" shall mean all books, correspondence, credit files,
records and other documents relating directly or indirectly to the
Obligations and the Collateral, including, without limitation, all
tapes, cards, runs, data bases, software programs, diskettes, and other
papers and documents in the possession or control of the Borrower, any
computer service bureau, or other agent or independent contractor;
d. "Loan Documents" shall mean this Agreement, the Note, any Bank issued
Commitment Letter and any amendments thereto, and any and all
mortgages, pledge agreements, security agreements, financing
statements, guaranties and other documents related to this Agreement
and/or the Loan;
e. "Material Adverse Change" shall mean with respect to the Borrower and
any guarantors and any of their respective properties or revenues, an
event, action or condition that would or is reasonably likely to (i)
adversely affect the validity or enforceability of, or the authority of
the Borrower and/or any guarantor to perform their respective
obligations under, the Loan Documents, or (ii) materially
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adversely affect the business, operations, assets or condition
(financial or otherwise) of the Borrower and/or any guarantor or the
ability of the Borrower and/or any guarantor to perform their
respective obligations under any of the Loan Documents, or (iii)
materially adversely affect the value of any Collateral;
f. "Rate" The term "Prime Rate" means the variable per annum rate of
interest so designated from time to time by the Bank as its prime rate.
The Prime Rate is a reference rate and does not necessarily represent
the lowest or best rate being charged to any customer. Changes in the
rate of interest resulting from changes in the Prime Rate shall take
place immediately without notice or demand of any kind.
g. "State" shall mean the State of New York.
II. LOAN.
1. Credit Limit. This Agreement evidences a line of credit for the
Borrower's short-term borrowing needs (the "Loan") with a credit limit
(the "Credit Limit") not to exceed the maximum principal sum of Two
Hundred Fifty Thousand and No/100 Dollars ($250,000.00). Such Credit
Limit is further modified by the provisions of Paragraph 10 of this
Part II. Within such Credit Limit, until demand by the Bank and/or
termination of the Bank's commitment upon the occurrence of an Event of
Default, the Borrower may borrow, repay, and re-borrow hereunder.
2. Advances. The Bank agrees to make advances to the Borrower until demand
by the Bank and/or termination of the Bank's commitment upon the
occurrence of an Event of Default, provided that the aggregate
principal amount of the Loan does not exceed the Credit Limit. The
outstanding principal balance of all advances shall bear interest at
the sum of the Prime Rate plus ONE HALF percent (0.50%) per annum.
3. Excess Advances. If for any reason the aggregate outstanding principal
balance of the Loan should at any time exceed the Credit Limit, the
Borrower shall, without demand, immediately pay to the Bank a sum
sufficient to reduce the outstanding principal balance of the Loan to
the Credit Limit, together with accrued interest on the portion of the
principal repaid.
4. Minimum Amount of Advance. Each advance under this Agreement shall be
in the minimum amount of One Thousand Dollars ($1,000.00) or the
unadvanced balance of the Credit Limit, whichever is less.
5. Telephone Access. The Borrower shall access the Loan by a telephonic
request. The Borrower accepts all risks inherent in such request. The
Borrower absolves the Bank from all damages, loss and liabilities of
whatsoever nature which may result from an unauthorized telephonic
request, a defective transmission, or a telephonic request which is
misunderstood by the Bank employee. Neither the Bank; nor any of its
directors, officers or employees shall be under any duty to pass upon
the validity, accuracy, authorization, effectiveness, or genuineness of
any telephonic request, and the Bank and its directors, officers and
employees shall be entitled to assume that any such telephonic
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instructions are valid, effective, accurate, genuine and authorized.
The Borrower consents to the Bank's taping and recording of all
telephonic conversations relating to this Agreement and the Loan. All
advances shall be disbursed by the Bank by deposit of the Loan proceeds
to the Borrower's deposit account with the Bank.
6. DEMAND LOAN. ON DEMAND BY THE BANK, THE ENTIRE OUTSTANDING PRINCIPAL
BALANCE OF THE LOAN AND ALL ACCRUED INTEREST SHALL IMMEDIATELY BECOME
DUE AND PAYABLE
7. Note; Interest Calculation. The Loan shall be evidenced by the
Borrower's note of even date with this Agreement (which note and all
amendments thereto and any additional or supplementary notes executed
pursuant to this Agreement are herein referred to collectively as the
"Note"). After demand, all principal and other amounts outstanding and
payable under the Note shall bear interest at the rate of sixteen
percent (16%) per annum until paid in full. Interest shall be
calculated on the basis of a 360-day year using the actual number of
days elapsed.
8. Late Fee. if the entire amount of any required principal and/or
interest is not paid in full within ten (10) days after the same is due
(whether as a result of acceleration, maturity or otherwise) the
Borrower shall pay to the Bank a late fee equal to five percent (5%) of
the required payment; provided that such late fee shall be reduced to
two percent (2%) of any required principal and interest payment that is
not paid within fifteen (15) days of the date it is due if the Note is
secured by a mortgage on an owner-occupied residence.
9. Prepayment. The Borrower shall have the right at any time and from time
to time to prepay the Loan in whole or in part, without premium or
penalty, but with accrued interest to the day of such prepayment on the
amount prepaid.
10. Annual Clean Up. As long as this Agreement remains in effect, the
Borrower shall at least once each twelve (12) month period pay such
amount of outstanding advances and accrued interest thereon as may be
necessary to maintain for a period of at least thirty (30) consecutive
days thereafter a Loan balance less than or equal to twenty five
percent (25%) of the Credit Limit. The Borrower's compliance with this
provision shall not cause a termination of any security agreements,
mortgages or other agreements which may secure the Loan.
11. Commitment Fee. A non-refundable commitment fee of $750.00 will be due
and payable at closing, and a commitment fee will be charged to the
Borrower on the annual renewal date ( if any) of the loan.
III. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants that:
1. Organization and Powers. (a) If a corporate, partnership, limited
liability company or trust Borrower, it is duly organized, validly
existing and in good standing, (b) it has the power and authority to
own its properties and to carry on its business as now being conducted
and, if a corporate, partnership, limited liability company or trust
Borrower, is
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qualified to do business in every jurisdiction where such
qualification is necessary, (c) it has the power to execute, deliver
and perform the Loan Documents, (d) the execution, delivery and
performance of the Loan Documents have been duly authorized by all
requisite action, (e) the execution, delivery and performance of the
Loan Documents will not violate any provision of law, any order of any
court or other agency of government, the Articles of Incorporation or
By-laws of a corporate Borrower, the partnership agreement of a
partnership Borrower, the Articles of Incorporation or Operating
Agreement of a limited liability company Borrower, or the trust
agreement of a trust Borrower, or any indenture, agreement or other
instrument to which it is a party, or by which it is bound, or be in
conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any such indenture, agreement
or other instrument, or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of the
property or assets of the Borrower (other than in favor of the Bank)
or the acceleration of any of its outstanding indebtedness.
2. Financial Statements. The Borrower has heretofore furnished to the Bank
accurate and complete financial data and other information based on its
operations in previous years, and said financial data fairly presents
the financial position and the results of operations for the periods
indicated therein. There has been no Material Adverse Change since the
date of the most recent financial statement.
3. Litigation. There is no action, suit or proceeding at law or in equity
or by or before any governmental instrumentality or other agency now
pending or threatened against or affecting the Borrower.
4. No Conflict. The Borrower is not a party to any agreement or instrument
or subject to any restriction materially or adversely affecting its
business, properties or assets, operations or condition, financial or
otherwise. The Borrower has no knowledge that it is in default in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument to
which it is a party.
5. Use of Proceeds. THE LOAN IS A BUSINESS PURPOSE LOAN AND THE PROCEEDS
WILL BE USED, IN WHOLE OR IN PART, FOR COMMERCIAL OR BUSINESS PURPOSES
AND NOT FOR PERSONAL, FAMILY, HOUSEHOLD OR OTHER CONSUMER PURPOSES. No
part of the proceeds of the Loan will be used to purchase or carry,
directly or indirectly, any margin stock or margin security (within the
meaning of Regulation U of the Board of Governors of the Federal
Reserve System) or to extend credit to others for the purpose of
purchasing or carrying any such margin stock or margin security. If
requested by the Bank, the Borrower will furnish in connection with
this Agreement a statement in conformity with the requirements of
Federal Reserve Form U-1 referred to in said Regulation U.
IV. CONDITIONS OF LENDING.
Until such time as the Bank's commitment is terminated in accordance with this
Agreement the Bank shall be obligated to make advances under this Agreement only
if on the date such advance is requested:
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a. The representations and warranties in Part III hereof are true
and correct;
b. No Event of Default exists; and
c. The Bank shall have received: (a) certificate of authority,
(b) the original Loan Documents, and (c) such additional
supporting documents as the Bank may reasonably request.
V. COVENANTS.
The Borrower covenants sand agrees that it will:
1. a. Legal Existence; Insurance; Etc. Keep in full force and effect its
legal existence (if a corporation, partnership, limited liability
company or trust), rights, licenses, permits and franchises and operate
its business as conducted prior to the date hereof; maintain all
property used in the conduct of its business and keep the same in good
repair, working order and condition; and maintain adequate insurance on
its properties against fire, theft, and extended coverage risks and
against public liability and property damage and products liability and
such other risks as may be required by law or as may be reasonably
required by the Bank, in such form, for such periods, and written by
such companies as may be satisfactory to the Bank, such insurance in
the case of a secured loan to name the Bank as additional insured
and/or mortgagee/loss payee. All policies of insurance shall provide
for at least twenty (20) days' written notice to the Bank prior to
cancellation or change in the coverage, scope or amount of any such
policies or policies. Borrower shall furnish the Bank with certificates
of compliance with the foregoing insurance provision.
b. Compliance with Laws. Comply with all present and future applicable
laws, ordinances, rules, regulations, directives and other requirements
of all governmental instrumentalities, including without limitation
those relating to Hazardous Substances, within such time periods as
required thereby, with time being of the essence.
2. Operation of Business. Maintain and operate its business in a proper
and efficient manner.
3. Payment of Taxes. Pay and discharge all taxes, assessments, and
governmental charges imposed upon Borrower, its income or its property
before the same shall be in default, as well as all lawful claims for
labor, materials and supplies or otherwise which, if unpaid, might
become a lien upon any such properties.
4. Financial Statements. Furnish to the Bank:
a. promptly, from time to time as requested by the Bank, and in all
events within one hundred twenty (120) days after the close of
each applicable party's tax year, (i) with respect to the Borrower
and all corporate, partnership or trust guarantors, financial
statements (audited if requested), balance sheets, profit and loss
statements, together with supporting schedules, signed and in such
form as may be acceptable to the Bank; (ii) with respect to all
individual guarantors, signed personal financial statements; and
(iii) with respect to all entities and individuals
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referred to in (i) and (ii), current Federal income tax returns
(with all schedules and exhibits), or in the case of a
partnership, Form 1065 (with all schedules and exhibits). In any
event, all the documents referred to in this subparagraph (a),
regardless of when last submitted, must be submitted to the Bank,
as often as the Bank shall deem necessary, if there occurs a
Material Adverse Change.
b. promptly, from time to time, such other information regarding the
operations, assets, business, affairs and financial condition of
the Borrower and all guarantors, as the Bank may reasonably
request; and
c. with respect to all personal financial statements submitted by
individual guarantors, such statements shall be on forms
prescribed by the Bank.
5. Inspection. Permit agents or representatives of the Bank, at reasonable
hours and upon reasonable notice, to inspect the Books and Records of
the Borrower and to make abstracts or reproductions thereof, all at the
Borrower's expense.
6. Adverse Changes. Promptly advise the Bank of any Material Adverse
Change.
7. Accounting System. Maintain a standard system of accounting in
accordance with generally accepted accounting principles.
8. Depository. Maintain the Bank as the Borrower's principal depository.
9. Indebtedness. Not incur or permit to exist any indebtedness or
liability except indebtedness to the Bank or any Bank affiliate,
indebtedness with respect to warranty, trade obligations and other
liabilities incurred in the ordinary course of business, and any
indebtedness or liability permitted in writing by the Bank.
10. Liens. Not create, assume or suffer to exist any mortgage, security
interest, or lien on any of its assets, now or hereafter owned, other
than liens securing indebtedness to the Bank or any Bank affiliate,
liens securing the payment of taxes not yet due, liens imposed by law
(other than for borrowed money), liens incurred by the Borrower in good
faith in the ordinary course of business, and other liens permitted in
writing by the Bank.
11. Guaranties; Etc. Not guarantee, endorse or otherwise become or be
responsible for obligations of any other person or entity, whether by
agreement to purchase the indebtedness of any other person or entity or
agreement for the furnishing of funds to any other person or entity
through purchase of Goods, supplies or services, or by way of stock
purchase, capital contribution, advance or loan, for the purpose of
paying or discharging any indebtedness or obligation of such other
person or entity, or otherwise, except endorsements of negotiable
instruments for collection in the ordinary course of business.
12. Investments. Not purchase, invest in or otherwise acquire or hold
Securities including, without limitation, capital stock (including
closely held stock) and evidences of indebtedness of, or make loans or
advances to, or enter into any arrangement for the purpose of providing
funds or credit to, any other person or entity (including, without
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limitation, all Affiliates of the Borrower), except investments in
short-term obligations of the United States and certificates of deposit
issued by the Bank or any Bank Affiliate.
13. Sales of Accounts and Instruments. Not sell, assign, discount or
dispose of any Accounts or Instruments held by the Borrower, with or
without recourse, except for collection (including endorsements) in the
ordinary course of business.
14. Sales and Transfers. Not sell, assign, lease, transfer, sell and
leaseback, or otherwise dispose of all or any material amount of its
assets not in the ordinary course of business to any person or entity
or turn over the management of, or enter into a management contract
with respect to, such assets.
15. Valuation. Not write up (by creating an appraisal surplus or otherwise)
the value of any capital assets above their cost less the depreciation
regularly allowable thereon.
16. Fundamental Changes. Not dissolve, liquidate, consolidate with or merge
with any corporation, limited liability company or other entity or
agree to do any of the foregoing.
17. Distributions. If a corporate Borrower, not declare or pay any
dividends, or make any distribution to holders of shares of its capital
stock (and on account of such capital stock) of cash, capital stock or
other property, or directly or indirectly, redeem, purchase or
otherwise acquire any shares of its capital stock of any class; and if
a partnership or limited liability company Borrower, not permit the
return or withdrawal of any capital contributions; provided, however,
that if the Borrower is an "S" Corporation under the Internal Revenue
Code, the Borrower may make annually such cash distributions to its
shareholders as shall equal the sum of federal income taxes which are
allocable to such shareholders' income received or deemed to have been
received on account of such shareholders' capital stock in the
Borrower.
18. Notice of Default. Upon becoming aware of any Event of Default, or of
any occurrence which but for the giving of notice or the passage of
time would become an Event of Default, the Borrower shall promptly
deliver written notice thereof to the Bank.
VI. SECURITY AGREEMENT AND OTHER SECURITY DOCUMENTS. In addition to any
Collateral which may be provided for in Part VI of this Agreement, the
Loan is secured by one or more of the following additional documents:
Pledge Agreement(s).
1. Security Interest; Collateral; Obligations. The Borrower hereby grants
to the Bank, as security for any and all obligations whatsoever of the
Borrower to the Bank, whether direct, indirect, absolute or contingent,
due or to become due, and whether now existing or hereafter arising and
howsoever evidenced or acquired, including without limitation all
indebtedness and liabilities evidenced by the Loan, this Agreement, the
other Loan Documents, or arising under any foreign exchange contracts,
interest rate swap, cap, floor or hedging agreements, or other similar
agreements or arrangements, letter of credit reimbursement agreements,
and checking account overdrafts and any other amounts due to the Bank
under any existing or future agreements relating to cash management
services, excluding, however, indebtedness incurred primarily for
personal, family or household purposes (collectively. the
"Obligations"), a first lien on, and a security
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interest in and agrees and acknowledges that the Bank has and
will continue to have a first lien on and a perfected security
interest in all of the Collateral described below, both presently
owned and after acquired, together with all proceeds and products
thereof, additions and accessions thereto, and all replacements
and substitutions therefor (collectively, the "Collateral"),
excluding, however, all such Collateral which constitutes
Consumer Goods in the hands of the Borrower: an assignment of a
Fleet Money Market Account #[DELETED], in the name of
XxxxxxxxxXxx.Xxx, Inc.
2. Borrower hereby warrants, covenants and agrees that:
a. Title; Adverse Liens. Except for prior security interests
disclosed on Exhibit A-2 (if any) and except for the security
interest granted hereby, the Borrower is the owner of presently
owned Collateral and will be the owner of Collateral hereafter
acquired free from any adverse lien, and Borrower will defend the
Collateral against the claims and demands of all persons at any
time claiming the same or any interest therein.
b. Financing Statements. Except for financing statements evidencing
the security interests which may be listed on Exhibit A-2 (if
any), no financing statements covering any Collateral are on file
in any public office. At the request of the Bank, the Borrower
will execute one or more (i) financing statements pursuant to the
UCC; (ii) title certificate lien application forms; and (iii)
other documents necessary or advisable to perfect the security
interests evidenced hereby, all in form satisfactory to the Bank.
Where allowed by law, the Borrower hereby irrevocably authorizes
the Bank to file financing statements and amendments without the
signature of the Borrower. The Borrower will pay the act of
filing the aforesaid documents or filing or recording this
Agreement in all public offices wherever filing or recording is
deemed by the Bank to be necessary or desirable.
c. Adverse Liens. The Borrower will keep the Collateral free from
any future adverse liens.
d. Taxes. The Borrower will pay promptly when due all taxes and
assessments upon the Collateral or for its use or operation or
upon this Agreement and any of the other Loan Documents.
e. Insurance. With respect to all required insurance policies and
coverage, the Bank may act either in its name or as attorney for
the Borrower (for that purpose by these presents duly authorized
and appointed with full power of substitution and revocation) in
obtaining, adjusting, settling and canceling such insurance and
endorsing any drafts in payment of any loss.
f. Preservation of Collateral. The Bank may, at its election,
discharge taxes and liens levied or placed on the Collateral, pay
for insurance on the Collateral and pay for the maintenance and
preservation of the Collateral. The Borrower agrees to reimburse
Bank on demand for any payment made, or any expense incurred by
the Bank pursuant to the foregoing authorization, and in any
event all such
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payments and expenses shall constitute an Obligation hereunder.
If the Borrower fails to insure Collateral as required by this
Agreement or any of the Loan Documents, the Borrower shall pay to
the Bank on the date of such failure a nonrefundable fee for each
such failure equal to the sum of (i) $100 plus (ii) the amount of
the insurance premium cost incurred by the Bank. Notwithstanding
the foregoing, neither the charging or payment of such fee nor
this provision shall in any way be deemed to waive or imply or
constitute a basis for waiver of any default occasioned by
Borrower's failure to comply with the insurance requirements of
this Agreement or any of the Loan Documents.
g. Possession and Use. Other than with respect to Collateral in
which the Bank's security interest is perfected by the Bank's
possession thereof, such as instruments, documents, cash, bank
accounts, etc., which so long as any of the Obligations remain
outstanding and unpaid shall remain in the possession of the
Bank, until an Event of Default, the Borrower may have possession
of the Collateral, provided that the Borrower will not use the
Collateral in any unlawful manner or in a manner inconsistent
with this Agreement, the Loan Documents, or any policy of
insurance thereon.
h. Power of Attorney. The Borrower irrevocably designates and
appoints the Bank its true and lawful attorney with full power of
substitution and revocation to execute, deliver, and record in
the name of the Borrower all financing statements, amendments,
continuation statements, title certificate lien applications and
other documents deemed by the Bank to be necessary or advisable
to perfect or to continue the perfection of the security
interests granted hereunder.
i. Reproduction as Financing Statement. A carbon, photographic, or
other reproduction of a security agreement or a financing
statement is sufficient as a financing statement.
j. Remedies. If an Event of Default occurs, the Bank shall have the
rights and remedies provided in this Agreement, including without
limitation in Part VII hereof. In addition, the Bank may exercise
and shall have any and all rights and remedies accorded it by the
UCC. The Bank may require the Borrower to assemble the Collateral
and make it available to the Bank at a place to be designated by
the Bank which is reasonably convenient to both parties. The
requirement of reasonable notice shall be met, if notice is
mailed, postage prepaid, to the Borrower or other person entitled
thereto at least ten (10) days (including non-business days)
before the time of sale or disposition of the Collateral. The
Bank at its option may have a receiver appointed to take
possession of the Collateral, to use and operate the Collateral,
to collect the profits and proceeds therefrom, and to apply the
same as the court may direct. The Borrower agrees that the Bank's
legal remedies are inadequate and that the Bank shall be entitled
to obtain equitable relief upon the occurrence of an Event of
Default. The Borrower shall pay to the Bank on demand all
expenses, including reasonable legal expenses and attorney's fees
(which may include costs allocated by the Bank's internal legal
department), incurred or paid by the Bank in protecting or
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enforcing any rights of the Bank hereunder) including its right
to take possession of the Collateral, storing and disposing of
the same or in collecting the proceeds thereof.
k. Notification of Account Debtors. The Bank shall have the right to
demand from the Borrower a list of all Accounts and to notify any
and all account debtors to make payment thereof directly to the
Bank. The Borrower irrevocably designates and appoints the Bank
its true and lawful attorney with full power of substitution and
revocation in its own name or in the name of the Borrower to
demand, collect, receive, receipt for, and xxx for all amounts
due and to become due on the Accounts and to endorse the name of
the Borrower on all commercial paper given in payment or
part-payment thereof and in its discretion to file any claim or
take any other action which the Bank may deem necessary or
appropriate to protect and preserve and realize upon the security
interest of the Bank in the Accounts or the proceeds thereof. The
Bank shall also have the right to (i) open all mail addressed to
the Borrower; (ii) change the Post Office box or mailing address
of Borrower; and (iii) use the Borrower's stationery and billing
forms or facsimiles thereof, for the purpose of collecting
Accounts and realizing upon the Collateral.
l. Inspection and Appraisal. The Bank and its agents and
representatives (including without limitation appraisers,
engineers, and other professionals) shall, upon reasonable
advance notice, have access to the Borrower's premises for the
purpose of inspecting and appraising the Collateral and/or
performing environmental site assessments. AU fees and expenses
incurred by the Bank in connection with such inspections,
appraisals and site assessments shall be payable by the Borrower
to the Bank upon demand, and until paid in full, shall be secured
by the Bank's security interests.
VII. EVENTS OF DEFAULT.
THE ITEMIZATION OF THE FOLLOWING EVENTS OF DEFAULT DOES NOT CHANGE THE
DEMAND NATURE OF THE OBLIGATIONS EVIDENCED BY THIS AGREEMENT AND THE
NOTE. THE BANK MAY DEMAND THAT THE LOAN BE IMMEDIATELY REPAID IN FULL
AT ANY TIME WHETHER OR NOT AN EVENT OF DEFAULT HAD OCCURRED.
1. Listing of Events of Default. The occurrence of any of the following
events or conditions with respect to the Borrower shall, individually
and collectively, be an "Event of Default" hereunder:
a. any representation or warranty made herein or in any report,
certificate, financial statement or other instrument furnished in
connection with this Agreement or the Loan shall prove to be
false or misleading in any material respect;
b. failure to pay the principal of, or interest on, the Note or any
other indebtedness of the Borrower to the Bank, within ten (10)
days from the date the same or any installment thereof shall
become due and payable, whether at the due date thereof
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or at a date fixed for prepayment or by acceleration or
otherwise; provided, however, that such ten (10) day period shall
not apply in the event the Bank exercises its right under the
Loan Documents to demand immediate repayment of the Note;
c. default in the due observance or performance of any other
covenant, condition or agreement contained in this Agreement, any
of the other Loan Documents, or in any other agreement or
document evidencing or pertaining to Obligations, and such other
default shall remain unremedied for ten (10) days;
d. the acceleration of the maturity of any of the Borrower's
indebtedness other than to the Bank;
e. involvement in financial difficulties as evidenced by:
i. an attachment made on the Borrower's property or assets
which remains unreleased for a period in excess of
forty-five (45) days; or
ii. the inability to pay its debts (including without limitation
taxes) generally as they become due; or
iii. the appointment or authorization of a custodian as defined
in the Bankruptcy Code; provided, however, that in the case
of the appointment of a receiver in an involuntary
proceeding such appointment continues in effect and
undischarged for a period of thirty (30) days; or
iv. the entry of an order for relief in a voluntary case under
any chapter of the Bankruptcy Code; or
v. the filing of an involuntary petition under any chapter of
the Bankruptcy Code, which petition remains undismissed for
a period of thirty (30) days; or
vi. any other judicial modification or adjustment of the rights
of Borrower's creditors;
f. final judgment for the payment in excess of an aggregate of Ten
Thousand Dollars ($10,000.00) shall be rendered against the
Borrower and the same shall remain undischarged for a period of
thirty (30) consecutive days during which execution shall not be
effectively stayed;
g. any transfer (which shall include, without limitation, by sale,
exchange, gift, pledge, hypothecation, or by other means except
transfers by operation of law) to any person who is not
presently a shareholder of a corporate Borrower or the spouse or
child of a shareholder of a corporate Borrower of any voting
capital stock of the Borrower, except any transfers of such
shares upon the death of a shareholder either by will or by
intestacy;
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h. any transfer (as defined in (g)) to any person who is not
presently a partner of a partnership Borrower or the spouse or
child of a partner of a partnership Borrower of any partnership
interest in the Borrower, except any transfer of such interest
upon the death of a partner either by will or intestacy;
i. any transfer (as defined in (g)) to any person who is not
presently a member of a limited liability company Borrower or
the spouse or child of a member of a limited liability company
Borrower of any membership interest in the Borrower, except any
transfer of such interest upon the death of a member either by
will or intestacy;
j. in the case of a trust Borrower, (i) any change in the
beneficiaries of the trust; (ii) any dilution of the beneficial
interest of one or more of the beneficiaries; or (iii) any
change in the trustee or trustees;
k. the suspension of business for cause, other than strike,
casualty or other cause beyond the Borrower's control and in the
event of such suspension for cause beyond the Borrower's
control, failure to resume operations as soon as possible;
l. dissolution or termination of the legal existence of the
Borrower;
m. participation in any illegal activity or in any activity,
whether or not related to the business of the Borrower, that may
subject the assets of the Borrower to (i) a restraining order or
any form of injunction issued by any federal or state court, or
(ii) seizure, forfeiture or confiscation by any federal or state
governmental instrumentality;
n. if the Rank believes in good faith, at any time, that either (a)
the prospect of the Borrower's (i) repayment of the Loan or
payment of any of its other obligations under the Loan Documents
or (ii) performance of its duties thereunder is impaired or (b)
there is any Material Adverse Change;
o. a Borrower or Guarantor who is a natural person shall die; or
p. with respect to any guaranty and/or subordination agreement
included in the Loan Documents, the failure of the same to
remain in full force and effect until the Loan is paid in full
and this Agreement is terminated.
2. Certain Cross-Defaults. The happening of any event or condition set
forth in subsection 1(e), (f), (1), or (m) above, with respect to a
general partner of a partnership Borrower or any guarantor of the Loan
shall likewise constitute an Event of Default.
3. Termination of Commitment. If an Event of Default occurs, the Bank, at
its option, may (i) make demand for payment of the entire outstanding
principal balance and all accrued interest on account of the advances
and any other amounts due to the Bank (the Bank having the right at all
times, whether or not an Event of Default has occurred, to make such
demand); and (ii) terminate the commitment to make advances under this
Agreement, provided, however, that if the Bank shall exercise its
discretionary right to
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make demand, such demand shall also terminate the Bank's commitment to
make advances, whether or not an Event of Default has occurred).
VIII. MISCELLANEOUS.
1. Waiver of Event of Default. No delay in terminating the Bank's
commitment under this Agreement and/or in making demand shall affect
the rights of the Bank later to take such action with respect thereto,
and no waiver as to one Event of Default shall affect rights as to any
other default.
2. Notices. Except as otherwise specifically provided for herein, any
notice, demand or communication hereunder shall be given in writing
(including facsimile transmission or telex) and mailed or delivered to
each party at its address set forth below, or, as to each party, at
such other address as shall be designated by such party by a prior
notice to the other party in accordance with the terms of this
provision. Any notice to the Borrower shall be sent as follows:
XXXXXXXXXXXX.XXX, INC., 000 XXXXX XXXXXXX, XXXXXXXXX, XX 00000. All
notices hereunder shall be effective upon the earliest to occur of (i)
five (5) business days after such notice is mailed, by registered nr
certified mail, postage prepaid (return receipt requested), (ii) upon
delivery by hand (iii) upon delivery if delivered by overnight courier
(such delivery to be evidenced by the courier's records), and (iv) in
the case of any notice or communication by telex or telecopy, on the
date when sent.
3. Survival. This Agreement and all covenants, agreements, representations
and warranties made herein and in the certificates delivered pursuant
hereto shall survive any making by the Bank of the Loan and the
execution and delivery of any Loan Documents and shall continue in full
force and effect until this Agreement is terminated and all the
Obligations are paid in full.
4. Legal Fees and Expenses; Additional Fees and Charges. The Borrower will
pay all expenses incurred by the Bank in connection with the
preparation of the Loan Documents, the making of the Loan, and the
enforcement of the rights of the Bank in connection with this
Agreement, any of the other Loan Documents and the Loan, including, but
not limited to, the reasonable fees of its counsel (which may include
costs allocated by the Bank's internal legal department), plus the
disbursements of said counsel. Borrower further agrees to pay to the
Bank on demand all reasonable fees, costs and expenses incurred by the
Bank in connection with the administration of the Loan, including,
without limitation, overnight courier fees, lien search fees, and
filing and recording fees. The Borrower agrees to pay on demand the
Bank's service fees and charges for administrative costs as in effect
from time to time (including, without limitation, such fees and charges
as may be expressly provided for in this Agreement). Any such fee or
charge may be implemented by the Bank from time to time or, in the case
of any such existing fee or charge, the amount thereof maybe increased
by the Bank from time to time, in each instance, in or to such amount
as the Bank in its sole discretion deems reasonable.
-14-
5. Choice of Law. This Agreement and all the other Loan Documents shall be
construed in accordance with and governed by the local laws (excluding
the conflict of laws rules, so-called) of the State.
6. Written Modification and Waiver. No modification or waiver of any
provision of this Agreement or of any of the other Loan Documents nor
consent to any departure by the Borrower therefrom shall in any event
be effective unless the same shall be in writing, and then such waiver
or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or
demand in the same, similar or other circumstances.
7. Accounting Practice. All matters involving accounting practice are to
be determined both as to classification of items and amounts in
accordance with generally accepted principles of accounting practice
consistently applied by the Borrower's accountants in the preparation
of its previous annual financial statements.
8. Documentation. All documents required hereunder shall be in form and
substance satisfactory to the Bank.
9. Replacement Documents. Upon receipt of an affidavit of an officer of
the Bank as to the loss, theft, destruction or mutilation of the Note
or an security document which is not of public record, and, in the case
of any such loss, theft, destruction, mutilation, upon cancellation of
such Note or other security document, the Borrower will issue, in lieu
thereof, a replacement note or other security document in the same
principal amount thereof and otherwise of like tenor.
10. Joint and Several Obligations. If this Agreement is signed by more than
one Borrower, all obligations of the Borrowers are their joint and
several obligations, and all references to the Borrower herein shall be
deemed to refer to each of them, either of them, and all of them.
11. Unenforceability. In the event any term or provision of this Agreement
or the application thereof to any person or circumstance shall, to any
extent, be held invalid or unenforceable, the remainder of this
Agreement or the application of such term or provision to persons or
circumstances other than those to which it is held invalid or
unenforceable, shall be valid and enforceable to the fullest extent
permitted by law.
12. Cumulative Remedies; Setoff. The rights and remedies provided the Bank
in this Agreement and in the other Loan Documents shall be cumulative
and shall be in addition to and not in derogation of any rights or
remedies provided the Bank in any other document, instrument or
agreement or under applicable law or otherwise, and may be exercised
concurrently or successively. The Borrower hereby grants to the Bank, a
continuing lieu, security interest and right of setoff as security for
all liabilities and obligations to the Bank, whether now existing or
hereafter arising, upon and against all deposits, credits, collateral
and property, now or hereafter in the possession, custody, safekeeping
or control of the Bank or any entity under the control of Fleet Boston
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Financial Corporation and its successors and assigns or in transit to
any of them. At any time, without demand or notice (any such notice
being expressly waived by the Borrower), the Bank may setoff the same
or any part thereof and apply the same to any liability or obligation
of the Borrower and any guarantor even though unmatured and regardless
of the adequacy of any other collateral securing the Loan. ANY AND ALL
RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS
OR OTHER PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
13. Assignments and Participations; Credit Reporting. The Borrower agrees
that the Bank shall have the right at all times to sell all or any
portion of the Loan and all Loan Documents, and to grant one or more
participations in the Loan and in all Loan Documents. In connection
therewith, the Borrower hereby irrevocably authorizes the Bank to
deliver to each such purchaser, participant and prospective purchaser
and prospective participant originals and copies of all Loan Documents
and all financial statements and other credit and factual data from
time to time in the Bank's possession which relate to the Borrower
and/or all guarantors, if any, of the Loan. The Borrower further agrees
that the Bank shall have the right at all times to disclose and report
to credit reporting agencies and credit rating agencies such
information pertaining to the Borrower and/or all guarantors, if any,
as is consistent with the Bank's policies and practices from time to
time in effect.
14. Pledge to Federal Reserve. The Bank may at any time pledge or assign
all or any portion of its rights under the Loan Documents [including
any portion of the promissory note] to any of the twelve (12) Federal
Reserve Banks organized under Section 4 of the Federal Reserve Act, 12
U.S.C. Section 341. No such pledge or assignment or enforcement thereof
shall release the Bank from its obligations under any of the Loan
Documents.
15. Maximum Rate of Interest. All provisions of this Agreement are
expressly subject to the condition that in no event shall the amount
paid or agreed to be paid to the Bank hereunder and deemed interest
under applicable law exceed the maximum rate of interest on the unpaid
principal balance of the Loan allowed by applicable law (the "Maximum
Allowable Rate"), which shall mean the law in effect on the date of
this Agreement, except that if there is a change in such law which
results in a higher Maximum Allowable Rate being applicable to this
Agreement, then this Agreement shall be governed by such amended law
from and after its effective date. In the event that fulfillment of any
provision of this Agreement results in the interest rate hereunder
being in excess of the Maximum Allowable Rate, the obligation to be
fulfilled shall automatically be reduced to eliminate such excess. If,
notwithstanding the foregoing, the Bank receives an amount which under
applicable law would cause the interest rate set forth in this
Agreement to exceed the Maximum Allowable Rate, the portion thereof
which would be excessive shall automatically be applied to and deemed a
prepayment of the unpaid principal balance of the Loan and not a
payment of interest.
-16-
16. WAIVER OF JURY TRIAL. THE BORROWER WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS
AGREEMENT AND ANY OF THE OTHER LOAN DOCUMENTS, AND AGREES THAT ANY SUCH
DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
17. Jurisdiction and Venue. The Borrower irrevocably consents that any
legal action or proceeding against it or any of its property with
respect to any matter arising under or relating to this Agreement and
the other Loan Documents may be brought in any court of the State, or
any Federal Court of the United States of America located in the State,
as the Bank may elect, and by execution and delivery of this Agreement
the Borrower hereby submits to and accepts with regard to any such
action or proceeding, for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid
courts. The Borrower further irrevocably consents to the service of
process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the
Borrower at its address set forth herein. The foregoing, however, shall
not limit the Bank's rights to serve process in any other manner
permitted by law or to bring any legal action or proceeding or to
obtain execution of judgment in any other jurisdiction. The Borrower
irrevocably waives any objection which it may now or hereafter have to
the laying of the venue of any suit, action or proceeding arising out
of or relating to this Agreement and the other Loan Documents, and
further irrevocably waives any claim that the State is not a convenient
forum for any such suit, action or proceeding.
18. Presentment; Etc. The Borrower expressly waives presentment, notice of
dishonor, protest and notice of non-payment.
19. Debit. The Borrower hereby irrevocably authorizes the Bank and any
subsequent holder of the Note, both before and after demand, to debit
any of the Borrower's business accounts maintained with the Bank (or
subsequent holder) for all sums (including without limitation
principal, interest, late fees, and other fees) payable from time to
time under this Agreement and the other Loan Documents. In addition, if
the Borrower has signed a separate authorization, the Bank is
authorized to initiate ACH debit transfers for the Loan payments and on
the business account(s) specified in the authorization. These
provisions shall not obligate the Bank to create or allow any
overdraft, and such authority shall not relieve the Borrower of the
obligation to assure that payments are made when due.
20. Integration. The Loan Documents supersede all prior agreements between
the parties with respect to the Loan, whether oral or written,
including, without limitation, all correspondence between counsel for
the respective parties. The Loan Documents constitute the entire
agreements between the parties with respect to the Loan, and the
rights, duties, and obligations of the parties with respect thereto.
21. Lender Liability. The Bank shall not be liable for any loss sustained
by any party resulting from any action, omission, or failure to act by
the Bank, whether with respect to the exercise or enforcement of the
Bank's rights or remedies under the Loan Documents, the Loan, or
otherwise, unless such loss is caused by the actual willful misconduct
of the Bank conducted in bad faith. IN NO EVENT SHALL THE BANK EVER BE
LIABLE
-17-
FOR CONSEQUENTIAL OR PUNITIVE DAMAGES, ANY RIGHT OR CLAIM THERETO
BEING EXPRESSLY AND UNCONDITIONALLY WAIVED.
22. Bank's Decisional Standards. To the extent that applicable laws require
the Bank's actions or decisions under the Loan Documents to be
conducted in good faith, the term "good faith" shall be defined (using
a subjective standard) as honesty in fact with regard to the conduct or
transaction concerned based upon the facts and circumstances actually
known to the individual(s) acting for the Bank, and such requirement
may be satisfied by reliance upon the advice of attorneys, accountants,
appraisers, architects, engineers, or other qualified professionals.
23. Descriptive Headings; Context. The captions in this Agreement are for
convenience of reference only and shall not define or limit any
provision. Whenever the context requires, reference in this Agreement
to the neuter gender shall include the masculine and/or feminine
gender, and the singular number shall include the plural, and, in each
case, vice versa.
24. Acknowledgement of Copy. The Borrower acknowledges that it has received
a fully executed copy of this Agreement.
The provisions of this Agreement shall bind the heirs, executors,
administrators, assigns and successors, as applicable, of the Borrower and shall
inure to the benefit of the Bank, its successors and assigns.
IN WITNESS WHEREOF, the Borrower and the Bank, by persons duly authorized, have
executed or caused this Agreement to be executed under seal as of September 23,
2003.
WITNESS
XXXXXXXXXXXX.XXX, INC.
/s/: Xxxxxxxxx Xxxxxx By: /s/: Xxxxxx X. Xxxxx
------------------------------- --------------------------------------
Name: Xxxxxx X. Xxxxx
Title: CEO
By:
------------------------------- --------------------------------------
Name:
Title:
Fleet National Bank
By: /s/: Xxxxx X. Xxxxx
--------------------------------------
Name:
Title:
-18-
RIDER TO LINE OF CREDIT AGREEMENT
DATED SEPTEMBER 23, 2003 BETWEEN
XXXXXXXXXXXX.XXX, INC., AS BORROWER
AND FLEET NATIONAL BANK, AS THE BANK
SUBPARAGRAPH 7 OF SECTION 2 LOAN, is hereby amended in its entirety as
follows:
"Note; Interest Calculation. The Loan shall be evidenced by the
Borrower's Note of even date with this Agreement (which Note and all
amendments thereto and any additional or supplementary notes executed
pursuant to this Agreement are herein referred to collectively as the
"Note"). Ten (10) days after written demand by the Bank, all principal
and other amounts outstanding and payable under the Note shall bear
interest at the rate of sixteen percent (16%) per annum, until paid in
full if the Loan is not paid prior to the expiration of said ten (10)
day period. Interest shall be calculated on the basis of a 360-day year
using the actual number of days elapsed. Failure by the Bank to give
written notice shall in no way limit the Bank's right to demand
immediate payment under this Agreement or the Note for any reason or no
reason."
XXXXXXXXXXXX.XXX, INC.
By: /s/: Xxxxxx X. Xxxxx
--------------------------
Name: Xxxxxx X. Xxxxx
Title: CEO
FLEET NATIONAL BANK
By: /s/: Xxxxx X. Xxxxx
--------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
-19-
PLEDGE AGREEMENT
XXXXXXXXXXXX.XXX., INC. (jointly and severally if more than one, the
"Pledgor") and Fleet National Bank, a national banking association created and
existing under the laws of the United States of America with a principal office
located at 000 Xxxxxxxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000 (the "Bank"), agree as
follows:
1. Definitions. The following additional definitions apply:
a. Borrower: XXXXXXXXXXXX.XXX, INC.
b. Liabilities: All obligations, indebtedness and liability of any type of
the Borrower and the Pledgor to the Bank, whether now existing or
hereafter incurred, whether direct, indirect, absolute or contingent,
whether otherwise guaranteed or secured, and howsoever evidenced or
acquired, or arising under any foreign exchange contracts, interest
rate swap, cap, floor or hedging agreements or other similar agreements
or arrangements, letter of credit reimbursement agreements, and
checking account overdrafts and any other amounts due to the Bank under
any existing or future agreements relating to cash management services,
excluding, however, indebtedness incurred primarily for personal,
family or household purposes; the obligations of the Borrower and the
Pledgor under any agreement evidencing any of the foregoing; and
expenses or costs incurred by the Bank in the enforcement of any of its
rights with respect thereto.
c. Pledged Collateral: (i) The property delivered or otherwise transferred
by the Pledgor to the Bank and consisting, as of the date of this
Agreement, of the property described on affixed Exhibit A, and any and
all substitutions, additions and accessions thereto upon which the
Pledgor hereby grants and pledges to the Bank, and upon which the Bank
shall have absolute control over, which Pledged Collateral shall
include, but not be limited to, investment property, securities,
securities entitlements and any and all financial assets credited to
such Pledged Collateral; (ii) any and all securities (both certificated
and uncertificated), closely held capital stock, notes, mortgages,
instruments, documents, letters of credit, certificates of deposit,
deposit accounts, bank accounts, balances in any account of the Pledgor
with the Bank, and all other property interests which may subsequently
be delivered or transferred by the Pledgor to the Bank; (iii) any of
the foregoing when put in transit to the Bank; (iv) in the case of
securities and closely held capital stock, Pledged Collateral shall
include, without limitation, all shares of any class of the capital
stock of the issuer which shall be issued or distributed (by way of
stock dividends or otherwise) or sold by the issuer to the Pledgor at
any time or times after the date of this Agreement or which shall be
purchased or otherwise acquired by or on behalf of the Pledgor from the
issuer or from any other person or persons at any time or times after
the date of this Agreement; all dividends of every kind which shall
become and be due and payable or distributable on or in respect of all
or any of the securities and closely held capital stock; all payments
of every kind whatever which shall become and be due and payable or
distributable on account of the purchase, redemption,
-20-
repurchase or other retirement of all or any of the securities and
closely held capital stock; all other distributions of every kind
(including. without limitation, all capital distributions) which shall
become and be due and payable or distributable on or in respect of the
securities and closely held capital stock; and (v) all proceeds of the
foregoing, including, without limitation, the roll-over or reinvested
proceeds of the foregoing. Any delivery or transfer of any of the
Pledged Collateral to an agent or custodian designated by the Bank
shall be deemed a delivery or transfer to the Bank.
2. Security Interest. The Pledgor hereby pledges, hypothecates, and
impresses the Pledged Collateral with a lien, and grants to the Bank a
security interest in the Pledged Collateral, to secure the punctual
payment and performance of all the Liabilities.
3. Pledgor's Additional Obligations. The Pledgor agrees that: (l) any
distribution in kind received by the Pledgor from any party for or on
account of the Pledgor Collateral, including distributions of stock as
a divided or split of any of the Pledged Collateral, shall be
immediately delivered to the Bank in the form received with any
required endorsement; (2) additional collateral in form and kind
satisfactory to the Bank will be deposited by the Pledgor with the Bank
if the Bank at any time deems the Pledged Collateral insufficient or
unsatisfactory; (3) any note or other instrument executed and delivered
to the Pledgor by any party to evidence any obligation of such party
with respect to the Pledged Collateral shall be immediately delivered
with any required endorsement to the Bank. All such items shall be held
by the Bank in accordance with the terms of this Pledge Agreement. The
Pledgor agrees to pay the Bank on demand all reasonable fees, costs and
expenses incurred by the Bank in connection with the administration of
this Pledge Agreement, including, without limitation, overnight courier
fees, lien search fees, and filing and recording fees. The Pledgor
agrees to execute and deliver to the Bank and/or third parties
designated by the Bank such additional documents, notices, requests and
other instruments as the Bank deems necessary or advisable to protect
the Bank's rights under this Pledge Agreement.
4. Certain Rights and Duties of Bank. The Pledgor acknowledges that the
Bank has no duty of any type with respect to the Pledged Collateral
except for the use of due care in safekeeping any of the Pledged
Collateral actually in the physical custody of the Bank; prior to the
occurrence of any event of default described in the succeeding
paragraph ("Event of Default") the Bank's rights with respect to the
Pledged Collateral shall be limited to the Bank's rights as a secured
party and pledgee and the right to perfect its security interest,
preserve, enforce and protect the lien granted hereunder and its
interest in the Pledged Collateral; and the Bank may sell, assign or
grant participations in any of the Liabilities and any of the Pledged
Collateral and that the Bank's purchaser, assignee or participant shall
have the same rights and privileges with respect to such Liabilities
and Pledged Collateral as the Pledgor grants to the Bank under this
Pledge Agreement. With respect to any Pledged Collateral with a stated
maturity date (including, without limitation, certificates of deposit
and other term accounts), the Bank is authorized and directed, upon
maturity, to roll-over and reinvest such Pledged Collateral in a
similar investment, with such tenor and interest rate or yield as the
Bank, in its discretion, deems to be reflective of prevailing market
conditions. The Bank may, but shall not be obligated
-21-
to, at any time, before or after the occurrence of any Event of
Default, transfer the Pledged Collateral into or out of its own name or
that of its nominee, and the Bank or its nominee may receive any and
all interest, income and any distributions thereon, and hold the same
as Pledged Collateral, or apply the same to the Liabilities, whether or
not an event of default has occurred. Prior to the occurrence of any
Event of Default, the Bank agrees that it will not vote any Pledged
Collateral constituting securities or closely held capital stock.
5. Events of Default; Remedies. Upon occurrence of any event of default
under any instrument evidencing any of the Liabilities or of any of the
following events: (1) default in the payment or performance of any
other of the obligations or liabilities of the Pledgor under any
agreement between the Bank and Pledgor; (2) the Pledgor, if a business
entity, discontinues business operations at any of the Pledgor's
locations; (3) the Pledgor is generally unable to pay debts as they
become due or the Bank deems itself insecure; (4) the Pledgor makes a
general assignment for the benefit of creditors; (5) the entry of a
decree, order or order for relief by a court having jurisdiction of a
case initiated by or against the Pledgor under the federal bankruptcy
code or any other federal or state laws pursuant to which a receiver,
liquidator, assignee, custodian, trustee, sequestrator, debtor in
possession, examiner or other similar official, is appointed for the
Pledgor or any of the Pledgor's property, with or without consent, for
any purpose whatsoever; (6) a substantial part of the property of the
Pledgor is taken by attachment, execution or any other form of legal
process; (7) the assertion of any levy, seizure or attachment on the
Pledged Collateral; or (8) death of an individual Pledgor or
dissolution or termination of legal existence of a corporate, limited
liability company, partnership or trust Pledgor; then the Bank, with or
without notice to the Pledgor and without demand for additional
collateral, may (a) transfer the Pledged Collateral into the name of
the Bank or its nominee and vote any Pledged Collateral constituting
securities or closely held capital stock; (b) sell at public or private
sale any or all of the Pledged Collateral, which the Bank may purchase
free from any right of redemption; or (c) at its discretion in its own
name or in the name of the Pledgor take any action for the collection
of the Pledged Collateral, including the filing of a proof of claim in
insolvency proceedings, and may receive the proceeds thereof and
execute releases therefor. After deducting is expenses, including
reasonable attorney's fees (which may include costs allocated by the
Bank's internal law department), incurred in the sale or collection of
the Pledged Collateral, the Bank shall apply the proceeds to the
Liabilities and shall account to the Pledgor for any surplus. The
Pledgor agrees that the Bank has no obligation to sell or otherwise
liquidate the Pledged Collateral in any particular order or to apply
the proceeds thereof to any particular portion of the Liabilities. The
Pledgor further agrees that after the occurrence of an event of
default, the Bank shall have no obligation to vote any Pledged
Collateral constituting securities or closely held capital stock.
6. Power of Attorney, Etc. The Pledgor hereby irrevocably constitutes and
appoints the Bank the true and lawful attorney-in-fact for and on
behalf of the Pledgor with full power of substitution and revocation in
its own name or in the name of the Pledgor, from time to time in the
bank's discretion, to take any action and to execute any instrument
which the Bank may deem necessary or advisable to confirm, perfect,
preserve, enforce or protect the pledge of the security interest as
herein contemplated, including, without limitation,
-22-
to indorse in favor of the Bank any of the Pledged Collateral; cause
the transfer of any of the Pledged Collateral in such name as the Bank
may direct; cause the issuance of certificates for book-entry and/or
uncertificated securities; renew, extend or roll over any Pledged
Collateral; to receive, endorse and collect the Pledged Collateral made
payable to the Pledgor representing any dividend, interest payment or
other distribution in respect of the Pledged Collateral or any part
thereof and to give full discharge for the same; to execute, deliver
and record any and all financing statements, continuation statements,
assignments, proofs of claim, powers of attorney, leases, discharges or
other instruments or agreements which the Bank in its sole discretion
may deem necessary or advisable to perfect, preserve, enforce or
protect the lien granted hereunder and its interest in the Pledged
Collateral and to carry out the purposes of this Pledge Agreement,
including but without limiting the generality of the foregoing, any and
all proofs of claim in bankruptcy or other insolvency proceedings of
the Pledgor with the right to collect and apply to the Liabilities all
distributions and dividends made on account of the Pledged Collateral.
The rights and powers conferred on the Bank by the Pledgor are
expressly declared to be coupled with an interest and shall be
irrevocable until all the Liabilities are paid and performed in full. A
carbon, photographic, or other reproduction of a security agreement
(including this Pledge Agreement) or a financing statement is
sufficient as a financing statement. The powers conferred on the Bank
hereunder are solely to protect the interests of the Bank in the
Pledged Collateral and shall not impose any duty upon the Bank to
exercise any such powers. The Bank shall be accountable only for
amounts that it actually receives as a result of the exercise of such
powers, and neither it nor any of its officers, directors, employees or
agents shall be responsible to the Pledgor for any act or failure to
act, except for its own willful misconduct taken or omitted in bad
faith.
7. Miscellaneous. This Pledge Agreement and The Pledged Collateral shall
not be in any way affected by the extension of time or renewal of any
of the Liabilities, the modification in any manner or the taking or
release in whole or in part of any security therefor or the obligations
of any endorsers, sureties, guarantors or other parties or the granting
of any other indulgences to the Borrower or to the Pledgor. No
termination of this Pledge Agreement shall be effective in any event
until the Bank in its discretion determines that the Liabilities of the
Borrower covered by this Pledge Agreement have been satisfied in full.
8. Notices. Except as otherwise specifically provided for herein, any
notice, demand or communication hereunder shall be given in writing
(including facsimile transmission or telex) and mailed or delivered to
each party at its address set forth below, or, as to each party, at
such other address as shall be designated by such party by a prior
notice to the other party in accordance with the terms of this
provision. Any notice to the Bank shall be sent as follows: Fleet
National Bank, 0000 Xxxxxxx Xxxx XX UT 38101R, Xxxx Xxxxxx, XX 00000,
Attention Central Documentation. Any notice to the Pledgor shall be
sent to the address(es) as referenced below. All notices hereunder
shall be effective upon the earliest to occur of (i) five (5) business
days after such notice is mailed, by registered or certified mail,
postage prepaid (return receipt requested), (ii) upon delivery by hand
(iii) upon delivery if delivered by overnight courier (such delivery to
be evidenced by the courier's records), and (iv) in the case of any
notice or communication by telex or telecopy, on the date when sent.
-23-
9. Joint and Several Obligations; Construction. If more than one Pledgor
has signed this Pledge Agreement, the obligations of the Pledgor are
joint and several. The term "Pledgor" and all pronouns referring
thereto as used herein shall be construed in the masculine, feminine,
neuter or singular or plural as the context may require.
10. Choice of Law. This Pledge Agreement is executed under and shall be
construed in accordance with the local laws (excluding the conflict of
laws rules, so-called) of the State of New York.
11. Successors and Assigns. This Pledge Agreement shall inure to the
benefit of the Bank and its successors and assigns and shall bind the
Pledgor and the successors, representatives and heirs of the Pledgor.
This Pledge Agreement has been executed under seal by the Pledgor and the Bank
in duplicate original as of the 23rd day of September, 2003.
WITNESS XXXXXXXXXXXXX.XXX, INC.
/s/: Xxxxxxxxx Xxxxxx By: /s/: Xxxxxx X. Xxxxx
--------------------------------- -----------------------------------
Name: Xxxxxx X. Xxxxx
Title: CEO
Address: 000 Xxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
By:
--------------------------------- ----------------------------------
Name:
Title:
Address:
-------------------------------
Fleet National Bank
By: /s/: Xxxxx X. Xxxxx
-----------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
-24-
EXHIBIT A
(Description of Pledged Collateral)
Other
ASSIGNMENT OF A FLEET MONEY MARKET ACCOUNT # [DELETED], IN THE NAME OF
XXXXXXXXXXXX.XXX, INC., AS SUCH ASSIGNMENT IS EXTENDED, MODIFIED OR REPLACED
FROM TIME TO TIME.
