LOAN AND SECURITY AGREEMENT
BETWEEN
ENTREPRENEUR GROWTH CAPITAL LLC
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
AS LENDER
AND
ABLE ENERGY, INC., A DELAWARE CORPORATION
ABLE OIL COMPANY, A NEW JERSEY CORPORATION
ABLE ENERGY NEW YORK, INC., A NEW YORK CORPORATION
ABLE OIL MELBOURNE, INC., A FLORIDA CORPORATION
ABLE ENERGY TERMINAL, LLC, A NEW JERSEY LIMITED LIABILITY CO
ABLE PROPANE, LLC, A NEW JERSEY LIMITED LIABILITY COMPANY
000 XXXXX XXXX XXXX
XXXXXXXX, XX 00000
EACH A CO-BORROWER
This Loan and Security Agreement, made and entered into in New York, New
York, as of May ____, 2005 by and between ABLE ENERGY, INC., a Delaware
Corporation, ABLE OIL COMPANY, a New Jersey corporation, ABLE ENERGY NEW YORK,
INC., a New York Corporation, ABLE OIL MELBOURNE, INC., a Florida corporation,
ABLE ENERGY TERMINAL, LLC, a New Jersey limited liability company, and ABLE
PROPANE, LLC, a New Jersey limited liability company, each having a place of
business at 000 Xxxxx Xxxx Xxxx, Xxxxxxxx, XX 00000 (collectively, "BORROWER")
and ENTREPRENEUR GROWTH CAPITAL LLC, a Delaware limited liability company, with
a place of business located at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
("LENDER"). This Agreement sets forth the terms and conditions upon which Lender
may, in its sole and absolute discretion, make loans, advances and other
financial accommodations to or for the benefit of Borrower upon the security
referred to herein.
Section 1. DEFINED TERMS
1.1. All terms used herein which are defined in Article 1 or Article
9 of the Uniform Commercial Code (the "UCC") shall have the same meaning as
presently or as may hereafter be given therein unless otherwise defined in this
Agreement. All references to the plural shall also mean the singular.
1.2. "Account" or "Accounts" shall have the same meaning as contained
in Article 9 of the UCC and shall also include contract rights and general
intangibles related to Accounts, payment intangibles, instruments, and to all
proceeds thereof including, but not limited to, the proceeds of any insurance
thereon whether or not specifically assigned to Lender.
1.3. "Account Debtor" shall mean each debtor or obligor in any way
obligated on or in connection with any Account.
1.4. "Collateral" shall have the meaning set forth in Section 4.1
hereof.
1.5. "Collateral Management Fee" shall have the meaning set forth in
Section 3.8 hereof.
1.6. "Costs and Expenses" shall include, but not be limited to
commissions, fees, appraisal fees, taxes, title insurance premiums, internal and
external field examination expenses for routine and non-routine audits and field
examinations, filing, recording and search expenses, reasonable internal and
external attorney's fees and disbursements (as may be incurred with respect to
the effectuation of this Agreement or any claim of any nature or litigation
whatsoever arising out of or as a result of the interpretation of this Agreement
or the financing provided for hereunder, including, but not limited to, all fees
and expenses for the service and filing of papers, premiums on bonds and
undertakings, fees of marshals, sheriffs, custodians, auctioneers and others,
travel expenses and all court costs and collection charges), postage, wire
transfer fees, check dishonor fees and other out of pocket expenses arising out
of or relating to the negotiations, preparation, consummation, administration
and enforcement of this Agreement or any other agreement between Borrower and
Lender including, but not limited to any guaranty of the Obligations (as defined
herein).
1.7. "Eligible Accounts" shall mean Accounts created by Borrower in
the ordinary course of its business arising out of its sale of goods or
rendition of services to commercial Account Debtors , which are and at all times
shall continue to be acceptable to Lender in Lender's sole and absolute
discretion. Standards of eligibility may be fixed and revised from time to time
solely by Lender in Lender's exclusive judgment but in no case shall any Account
be considered eligible if: (i) the Account Debtor is a consumer or other
non-business entity; or (ii) the Account Debtor has failed to pay the account
within 60 days after the Invoice Date; or (iii) the Account Debtor's total
obligations to Borrower exceed 15% of Borrower's Eligible Accounts to the extent
of such excess; or (iv) the Account Debtor has failed to pay more than 25% of
all outstanding obligations owed by it to Borrower within 60 days of the Invoice
Date; or (v) the Account Debtor is a subsidiary or affiliate of the Borrower; or
(vi) the Account Debtor is the United States or any department, agency or
instrumentality thereof or any state, city or municipality of the United States;
or (vii) the Account Debtor is not a resident of the United States; or (viii)
the Account Debtor disputes liability or makes any claim with respect thereto,
or is subject to any insolvency or bankruptcy proceeding, or becomes insolvent,
fails or gives out of a material portion of its business; or (ix) the amount of
the Account consists of late charges or finance charges. In determining
eligibility, Lender may, but need not, rely on agings, reports and schedules of
Accounts furnished by Borrower but reliance by Lender thereon from time to time
shall not be deemed to limit its right to revise standards of eligibility at any
time without notice as to both Borrower's present and future Accounts.
NOTWITHSTANDING THE FOREGOING, LENDER MAY, IN LENDER'S REASONABLE BUSINESS
DISCRETION, DEEM ACCOUNTS DUE AND OWING FROM ACCOUNT DEBTOR
PRICE XXXXXX.XXX, INC., AN AFFILIATE OF BORROWER, AS ELIGIBLE ACCOUNTS UPON THE
TERMS AND CONDITIONS SET FORTH IN A CERTAIN SUPPLEMENTAL LETTER AGREEMENT
READING ELIGIBLE ACCOUNTS, THE TERMS OF WHICH ARE INCORPORATED HEREIN BY
REFERENCE.
1.8. "Eligible Inventory" means Inventory which Lender, in its
reasonable business discretion, deems Eligible Inventory, based on such
considerations as Lender may from time to time deem appropriate. Without
limiting the generality of the foregoing, no Inventory shall be Eligible
Inventory unless, in Lender's reasonable business discretion, such Inventory (i)
IS OWNED BY BORROWER AND IS LOCATED IN STORAGE TANKS OWNED BY BORROWER AT
BORROWER'S ROCKAWAY, NJ FACILITY; (ii) meets all standards imposed by any
governmental agency or authority; (iii) conforms in all respects to the
warranties and representations set forth herein; and (iv) is at all times
subject to Lender's duly perfected, first priority security interest. Eligible
Inventory shall be valued at the lower of cost or market price.
1.9. "Facility Fee" shall have the meaning set forth in Section 3.5
hereof.
1.10. "Inventory" means all present and future inventory in which
Borrower has any interest, including goods held for sale or lease or to be
furnished under a contract of service and all of Borrower's present and future
raw materials, work in process, finished goods, and packaging and shipping
materials, wherever located, including returned and reposed goods, and any
documents of title representing any of the above, and Borrower's books relating
to any of the foregoing. Unless otherwise stated, Inventory shall be valued at
the lower of Borrower's cost or market price.
1.11. "Line of Credit" as used herein is $1,750,000.00, PROVIDED,
HOWEVER, the maximum line of credit against Accounts is $1,250,000.00 (the
"ACCOUNTS LINE OF CREDIT") and the maximum line of credit against Inventory is
$500,000.00 (the "INVENTORY LINE OF CREDIT"), or such other amount as shall be
determined at Lender's reasonable business discretion.
1.12. "Minimum Monthly Interest Charge" shall have the meaning set
forth in Section 3.7 hereof.
1.13. "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less sales, excise or similar taxes, and less returns,
discounts, claims, credits, reserves (as determined by Lender in its sole
discretion) and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed.
1.14. "Net Amount of Eligible Inventory" shall mean the gross amount
of Eligible Inventory less estimated sales, excise or similar taxes on the sale
price, and less returns, discounts, claims, credits, reserves (as determined by
Lender in its reasonable business discretion) and allowances of any nature at
any time issued, owing, granted, outstanding, available or claimed.
1.15. "Obligations" shall mean any and all loans, advances,
accommodations, indebtedness, liabilities, Costs and Expenses and all
obligations of every kind and nature owing by Borrower to Lender, however
evidenced, whether as principal, guarantor or otherwise, whether arising under
this Agreement, any supplement hereto, or otherwise, whether now existing or
hereafter arising, whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured, original, renewed, modified or extended, and whether
arising directly or acquired from others (including, without limitation,
wherever applicable, Lender's participations or interests in Borrower's
obligations to others) and including, without limitation, Lender's charges, of
whatever nature, commissions, interest, expenses, costs and attorneys' fees, all
of which are chargeable to Borrower in connection with any of the foregoing.
Section 2. LOANS AND ADVANCES
2.1. (a) Lender shall from time to time (but not more frequently
than five times per week unless Lender consents), in its reasonable business
discretion, make loans, advances and other financial accommodations to or for
the benefit of Borrower of up to eighty-five percent (85%) of the Net Amount of
Eligible Accounts, not to exceed the Accounts Line of Credit.
(b) Lender shall from time to time (but not more frequently
than once a week unless Lender consents), in its reasonable business discretion,
make loans, advances and other financial accommodations to or for the benefit of
Borrower of up to thirty percent (30%) of the Net Amount of Eligible Inventory,
not to exceed the Inventory Line of Credit.
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2.2. All Obligations shall be charged to an account in the Borrower's
name as maintained on Lender's books. Lender shall render to Borrower a monthly
statement of its account which statement shall be deemed correct, accepted by,
and conclusively binding upon Borrower as an account stated, except to the
extent that Borrower shall deliver to Lender written notice of any specific
exceptions thereto within twenty (20) days after the date such statement is
rendered.
2.3. All principal, interest, fees, commissions, charges, Costs and
Expenses incurred with or in respect of this Agreement or any supplement or
amendment hereto (all of which shall be cumulative and not exclusive) and any
and all Obligations shall be charged to Borrower's account as maintained by
Lender.
2.4. All Obligations shall be payable such place as Lender may
hereafter designate from time to time. If requested, Borrower shall execute and
deliver to Lender one or more promissory notes in form and substance
satisfactory to Lender to further evidence the Obligations.
Section 3. INTEREST AND FEES
3.1. Interest shall be payable by Borrower to Lender (a) on loans and
advances against Accounts, at the rate equal to the highest prime rate in effect
during each month as generally reported by Citibank, N.A. (the "PRIME RATE")
PLUS 4% per annum (the "Accounts Interest Rate"), but the Accounts Interest Rate
shall never be more than 24% or the maximum permitted by law; and (b) on loans
and advances against Inventory, at the rate equal to the highest Prime Rate in
effect during each month PLUS 4% per annum (the "INVENTORY INTEREST RATE") but
the Inventory Interest Rate shall never be more than 24% or the maximum amount
permitted by law (the Accounts Interest Rate and the Inventory Interest Rate is
collectively referred to as the "INTEREST RATE" as applicable). The Interest
Rate shall be calculated based on a three hundred sixty (360) day year for the
actual number of days elapsed and shall be charged to Borrower on all
Obligations. All interest and fees charged or chargeable to Borrower shall be
deemed as an additional advance and shall become part of the Obligations.
3.2. In the event any amount to be advanced or charged to the
Borrower under this Agreement and any other agreement between the parties hereto
exceeds the amount available to Borrower pursuant to any percentage or sublimit
set forth in this Agreement (hereinafter sometimes referred to as an
"OVERADVANCE") on any day in any month, the Interest Rate charged to the
Borrower for that month on the Overadvance shall be at a rate of 18% per annum
without regard as to whether any such Overadvance is made with or without
Lender's knowledge or consent.
3.3. Borrower agrees that upon the occurrence of any Event of Default
(whether caused by the Borrower, an Account Debtor or others) and the expiration
of any applicable cure period, the Interest Rate on all Obligations shall
immediately convert to the rate of 24% per annum (the "DEFAULT RATE OF
INTEREST") and all interest accruing hereunder together with all Obligations
shall thereafter be payable upon demand.
3.4. In no event shall the Interest Rate or the Default Rate of
Interest exceed the highest rate permitted under any applicable law or
regulation. If any part or provision of this Agreement is in contravention of
any such law or regulation, such part or provision shall be deemed amended to
conform thereto , and any payments of interest made in excess of such highest
rate permitted, if any, shall be deemed to be payments of principal Obligations,
to the extent of such excess.
3.5. Borrower shall pay Lender an annual Facility Fee in an amount
equal to two percent (2%) of the Line of Credit. The Facility Fee is payable
upon the execution and delivery of this Agreement and upon each annual
anniversary date of this Agreement until such time as this Agreement has been
terminated in accordance with its terms. In the event the Line of Credit is
increased after Borrower paid the annual Facility Fee but prior to any annual
anniversary date of this Agreement, the Facility Fee shall also be paid on such
increase in the Line of Credit. If applicable, the initial Facility Fee payment
shall include the pro-rata amount for the final, partial month of the first
contract year, calculated by multiplying the Facility Fee percent by the Line of
Credit, dividing by 360 and multiplied by the number of days from the date that
is one year from the date of this Agreement to the last day of the month that is
one year from the date of this Agreement.
3.6. Borrower shall pay Lender a fee in the amount of $1,000.00 per
day for each person performing a field examination of the Borrower's books and
records ("EXAMINATION FEE"), such Examination Fee to be in addition to all other
Costs and Expenses incurred by Lender with regard to each
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such field examination, all of which shall be deemed part of the Obligations.
3.7. Borrower shall pay Lender a Minimum Monthly Interest Charge in
an amount equal to the difference between (a) $11,000.00 per month and (b) the
actual amount of interest charged to the Borrower on the Obligations that month.
The Minimum Monthly Interest Charge, if applicable, shall be charged to
Borrower's loan account in arrears on the first day of each month.
3.8. Borrower shall pay Lender a monthly Collateral Management Fee in
an amount equal to one quarter of one percent (0.25%) of the Line of Credit. The
Collateral Management Fee shall be charged to Borrower's loan account, in
arrears, on the first day of each month.
3.9. (a) Borrower shall pay Lender $10.00 for each advance in the
form of a check deposited into Borrower's bank account by Lender, (b) in the
event the Borrower shall require a wire transfer of funds or certified funds,
Borrower shall pay Lender a service fee for such wire transfer funds or
certified funds of $35.00 per wire or certified check; and (c) service charges
of $50.00 each shall be made for the issuance of checks to third parties,
processing bank returned items, each issuance of a check in excess of two per
week, advances of less than $5,000.00 and $1.00 per page for lists of "past due"
or ineligible accounts. Services arising from the notification of the Borrower's
Account Debtors to make payments directly to Lender or to an address specified
by Lender after an occurrence of an Event of Default and the expiration of any
applicable cure period shall be charged to Borrower's account at the rate of
three quarters of one percent (.75%) of the face amount of the invoices
underlying the notification.
3.10. Borrower shall pay Lender, on the closing date, a documentation
fee not to exceed $15,000.00 based upon the time expended in conducting due
diligence, reviewing documents and negotiating and preparing this Agreement and
the ancillary documents, in addition to all out of pocket expenses related to
the initial audit and field examination and public records searches and filings.
The documentation fee and all other Costs and Expenses related to the closing of
this Agreement shall deducted from any deposits remitted by Borrower to Lender,
then, to the extent required, be charged to Borrower's loan account as provided
in Section 3.12 below.
3.11. Notwithstanding anything to the contrary contained in this
Agreement, any payment of interest and fees which individually or collectively
might be deemed to be in excess of the highest rate permitted by law shall be
credited against Borrower's Obligations as principal repayments of loans and
advances made hereunder by Lender to Borrower.
3.12. Lender is authorized to charge the Borrower's loan account on
the first day of each month as follows: (a) all Costs and Expenses; (b) interest
on Borrower's monthly average loan balance (inclusive of all advances made
pursuant to paragraph 2.1 of this Agreement together with all costs and expenses
charged to Borrower's account); (c) letter of credit, guaranty or acceptance
fees (collectively, "LC Fees"), if any, and (d) all fees and other charges
provided in this Agreement.
Section 4. GRANTING PROVISIONS
4.1. As security for the prompt performance, observance and payment
in full of all Obligations, Borrower hereby grants to Lender a continuing
security interest in, lien upon and right of setoff against, and Borrower hereby
assigns, transfers, pledges and sets over to Lender the following assets of
Borrower whether now owned or hereafter acquired, all of which are herein
collectively referred to as the "COLLATERAL" including but not limited to: (a)
all of Borrower's now existing and hereafter created and/or acquired Accounts,
including the proceeds thereof, now or hereafter held or received by, or in
transit to, Lender from or for Borrower, or for the account of Borrower, whether
for safekeeping, pledge, custody, transmission, collection or otherwise, and all
of Borrower's deposits (general or special) including, but not limited to
security deposits, balances, sums and credits with Lender at any time existing
or with a third party for the Borrower's account; (b) all of Borrower's present
and future right, title and interest, and all of Borrower's present and future
rights, remedies, security and liens, in, to and in respect of the Accounts,
including, without limitation, rights of stoppage in transit, replevin,
repossession and reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, guarantees or other contracts of suretyship with
respect to the Accounts, deposits or other security for the obligation of any
Account Debtor, and credit and other insurance; (c) all of Borrower's present
and future deposit accounts; (d) all of Borrower's present and future books,
records, ledger cards, computer programs including all software and data
contained in or by any computer whether in the
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possession of the Borrower or any other party including, but not limited to any
and all source and object codes used or owned by Borrower and any and all
hardware peripherals which the Borrower may now or hereafter use and apply or
acquire in connection with its business, discs, tapes, and tape files, internet
access lines, web page, web sites and other property and general intangibles
evidencing or relating to the Accounts and any other Collateral or any Account
Debtor, together with the file cabinets, containers, tapes or disks, in which
the foregoing are stored ("RECORDS"); (e) all of Borrower's presently owned or
hereafter acquired Inventory, including but not limited to, returned and/or
reclaimed goods; (f) all other of Borrower's present and future general
intangibles as defined in Article 9 of the UCC and shall also include without
limitation, customer lists, payment intangibles, trade names and trademarks,
service marks, trade secrets, and the goodwill of the business symbolized
thereby, licenses, permits and Federal, State and local tax refund claims,
leases, rents and insurance claims of all kinds; (g) all of Borrower's right,
title and interest in and to any and all assets, personal property and
collateral owned by third parties and all of Borrower's right, title and
interest in and to all liens, encumbrances and security interests of Borrower in
the assets, personal property and collateral of third parties; and (h) all
proceeds of the foregoing as defined in Article 9 of the UCC, in any form, and
shall also include cash proceeds, noncash proceeds, all claims against third
parties for loss or damage to or destruction of any or all of the foregoing. The
security interests granted herein shall remain effective whether or not the
Collateral covered thereby is acceptable to Lender or deemed by it to be
ineligible for the purposes of any loans or advances contemplated under this
Agreement.
4.2. Borrower shall deliver to Lender a duplicate and/or original
invoice, and all original documents evidencing the delivery of goods or the
performance of services with regard to each Account, including but not limited
to all original contracts, orders, invoices, bills of lading, warehouse
receipts, delivery tickets and shipping receipts, together with schedules
describing the Accounts and/or written confirmatory assignments to Lender of
each Account, in form and substance satisfactory to Lender and duly executed by
Borrower, together with such other information as Lender may request. In no
event shall the making (or the failure to make) of any schedule or assignment or
the content of any schedule or assignment or Borrower's failure to comply with
the provisions hereof be deemed or construed as a waiver, limitation or
modification of Lender's security interest in, lien upon and assignment of the
Collateral or Borrower's representations, warranties or covenants under this
Agreement or any supplement or amendment hereto.
Section 5. ENFORCEMENT OF RIGHTS IN AND TO COLLATERAL
5.1(a) BORROWER SHALL INSTRUCT ITS ACCOUNT DEBTORS TO DIRECT THEIR
PAYMENTS AS FOLLOWS:
NAME OF BORROWER
X.X. XXX 000
XXXXXXXX, XX 00000
Borrower shall cause all proceeds of Collateral to be deposited into the deposit
account associated with the foregoing mailing address or other blocked account
as Lender may require, each of which shall be assigned to Lender. Lender may at
any time and from time to time direct Borrower to collect and deliver to Lender
in their original form on the same date as the date of the actual receipt
thereof, all checks, drafts, notes, acceptances, cash, wire transfers and any
other evidences of payment, direct Borrower to cause all proceeds of Collateral
to be deposited into the deposit account associated with the foregoing address
or other blocked account as Lender may require or take any other action Lender
may require. Lender shall not, however, be required to credit Borrower's account
for the amount of any item of payment which is unsatisfactory to Lender, in
Lender's reasonable business discretion, and Lender may charge Borrower's loan
account for the amount of any item of payment which is returned to Lender
unpaid.
(b) In computing interest on the Obligations, all checks,
wire transfers and other items of payment received by Lender (including proceeds
of Accounts and payment of the Obligations in full) shall be deemed applied by
Lender on account of the Obligations on the day such payment is received or, if
received after 00xxxx Xxx Xxxx, XX time, the next business day. However, Lender
shall be entitled to charge Borrower's account four (4) business days of
"clearance" or "float" at the rates set forth in Section 3.1 above, and all
checks, wire transfers and other items received by Lender, regardless of whether
such four (4) business days of clearance or float actually occur, and shall be
deemed to be the equivalent of charging four (4) business days of interest on
such collections. This across-the-board four (4) business days clearance or
float charge on all collections is acknowledged by the parties to
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constitute an integral aspect of the pricing of Lender's financing to Borrower.
5.2. Lender or Lender's representatives shall at all times during
reasonable business hours have free access to and right of inspection of the
Collateral and have full access to and the right to examine and make copies of
Borrower's Records, to confirm and verify all Accounts, to perform general
audits and field examinations and to do whatever else Lender deems necessary to
protect Lender's interests. Lender may at any time remove from Borrower's
premises or require Borrower or its accountants or auditors to deliver copies of
any Records to Lender or, upon an Event of Default and the expiration of any
applicable cure period, originals of said Records. Lender may, at Borrower's
cost and expense, use any of Borrower's personnel, supplies, computer equipment
(including all computer programs, software and data) and space at Borrower's
places of business or at any other place as Lender may designate, as may be
reasonably necessary for the handling of collections.
5.3. All credits issued by Borrower, claims or disputes of Account
Debtors whether or not accepted by Borrower or given an allowance of any nature
shall be reported by Borrower to Lender at least weekly. Each such report shall
be accompanied by copies of all documentation provided to Borrower in support of
all credits, claims and disputes. Borrower shall immediately upon obtaining
knowledge thereof report to Lender all reclaimed, repossessed and returned
goods, Account Debtor claims and any other matter affecting the value,
enforceability or collectability of Accounts. At Lender's request, any goods
reclaimed or repossessed by or returned to Borrower will be held by Borrower (at
Borrower's place of business or at such other place as Lender may designate) for
Lender's account and subject to Lender's security interest.
5.4 All claims and disputes relating to Accounts shall be adjusted
within a reasonable time at Borrower's own cost and expense.
5.5. Lender is authorized and empowered at any time, upon the
occurrence of an Event of Default and the expiration of any applicable cure
period, to compromise or extend the time for payment of any Account, for such
amounts and upon such terms as Lender may, in its sole discretion determine and
to accept the return of the merchandise represented by any Account, all without
notice to or consent by Borrower, and without discharging or affecting
Borrower's Obligations hereunder to any extent, and Borrower will, upon demand,
pay to Lender the amount of any allowance given or authorized by Lender
hereunder. Lender shall have the right (in addition to its other rights
hereunder or otherwise), upon the occurrence of an Event of Default and the
expiration of any applicable cure period, and without notice to Borrower, to
appropriate, set off and apply to the payment of any or all of the Obligations,
any portion or all of the Collateral, in such manner as Lender shall in Lender's
reasonable business discretion determine, to enforce payment of any Collateral,
to settle, compromise or release in whole or in part, any amounts owing on any
Collateral, to prosecute any action, suit or proceeding with respect to the
Collateral, to extend the time of payment of any and all Collateral, to make
allowances and adjustments with respect thereto, to issue credits in Lender's or
Borrower's name, to sell, assign and deliver the Collateral (or any part
thereof) at public or private sale, for cash, upon credit or otherwise at
Lender's sole option and discretion, and Lender may bid or become purchaser at
any such sale, free from any right of redemption which is hereby expressly
waived. Any public or private sale of the Collateral shall be deemed reasonable
to the extent Borrower shall have received written notice of such sale at least
five (5) days prior to its occurrence and shall not have delivered written
objection to Lender.
SECTION 6. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents, warrants and covenants to Lender the
following (which shall survive the execution and delivery of this Agreement),
the truth and accuracy of which, and continuing compliance with, being a
continuing condition of the making of all loans and advances hereunder by Lender
or under any supplement or amendment hereto:
6.1. Borrower is and shall be the owner of or has other rights in the
Collateral free and clear of all liens, security interests, claims and
encumbrances of every kind and nature, except in Lender's favor or as otherwise
consented to in writing by Lender, and Borrower shall indemnify and defend
Lender from and against all cost, loss and expense with regard to the same. None
of Borrower's Accounts nor any of its inventory has been previously sold or
assigned to any person, firm or corporation and will not be sold or assigned,
other than to Lender, at any time during the term of this Agreement without
first obtaining Lender's consent in writing. Borrower shall not execute any
security agreement or UCC financing statement in
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favor of any other party or borrow against the security of any corporate asset,
including but not limited to the Collateral, without first obtaining Lender's
consent in writing.
6.2. (a) Without first obtaining Lender's consent in writing
Borrower will not directly or indirectly sell, lease, transfer, abandon or
otherwise dispose of all or any portion of Borrower's property or assets (except
in the ordinary course of business) or consolidate or merge with or into any
other entity or permit any other entity to consolidate or merge with or into
Borrower, except with respect to the pending acquisition, consolidation and/or
merger of and/or with All American Plazas, Inc., for which Lender hereby
consents; PROVIDED, Borrower notifies Lender at least five (5) days prior to the
closing date and further provides Lender a reasonable opportunity to review all
transaction documents associated therewith to ensure Lender's security interest
in the Collateral shall not be adversely effected. Borrower agrees that it shall
execute any and all further documentation deemed reasonably necessary by Lender
and its counsel to protect Lender's interest in the Collateral and to effectuate
the transactions contemplated by this Agreement;
(b) That Schedule 6.2 annexed hereto and incorporated herein
by reference sets forth the Borrower's exact legal name, the Borrower's type of
organization, the jurisdiction in which Borrower was organized, the Borrower's
organizational identification number or accurately states that the Borrower has
none, the Borrower's place of business or if more than one, its chief executive
office as well as all other locations including the Borrower's mailing address
if different, the address of every location or place of business previously
maintained by the Borrower during the past five years and the location at which,
or person or entity with which, any of the collateral has been previously held
at any time during the past twelve months;
(c) Borrower is in good standing as a corporation or other
legal entity, validly existing under the laws of its state of incorporation or
organization, and will preserve, renew and keep in full force and effect
Borrower's existence and good standing as a corporation or other legal entity
and its rights and franchises with respect thereto and will not change its state
of incorporation or organization;
(d) Borrower shall obtain and preserve, renew and keep in
full force and effect Borrower's authority to do business in all jurisdictions
where the Borrower now or hereafter does business;
(e) Borrower will continue to engage in a business of the
same type as Borrower is engaged as of the date hereof;
(f) Borrower will give Lender thirty (30) days prior written
notice of any proposed change in Borrower's legal name which notice shall set
forth the new name; and
(g) Borrower will give Lender thirty (30) days prior written
notice of any use of any corporate name or tradename in addition to those names
set forth on the annexed Schedule 6.2.
6.3. Borrower's Records and principal executive office are maintained
at the address referred to herein. Borrower shall not change such location
without Lender's prior written consent, which consent shall not be unreasonably
withheld, and prior to making any such change, Borrower agrees to execute any
additional financing statements or other documents or notices which Lender may
require.
6.4. (a) Borrower shall maintain its shipping forms, invoices and
other related documents in a form satisfactory to Lender and shall maintain its
books, records and accounts in accordance with generally accepted accounting
principles consistently applied. Borrower agrees to furnish Lender monthly with
original invoices, copies of invoices, purchase orders for each invoice, time
sheets (when available), shipping documents (when available), accounts
receivable agings, together with reconciliation and recap sheets, accounts
payable agings and inventory reports (if requested by Lender).
(b) Borrower shall furnish to Lender, as soon as available,
but in any event not later than ninety days (90) after the close of each fiscal
year, Borrower's reviewed financial statements for such fiscal year (including
balance sheets, statements of income and loss, statements of cash flow and
statements of shareholders' equity), and the accompanying notes thereto, setting
forth in each case, in comparative form, figures for the previous fiscal year,
all in reasonable detail, fairly representing the financial position and the
results of Borrower's operations as at the date thereof and for the fiscal year
then ended and prepared in accordance with generally accepted accounting
principles consistently applied. Such reviewed statements shall be examined in
accordance with generally accepted auditing practices
7
and certified by independent certified public accountants selected by Borrower
and acceptable to Lender.
(c) Borrower shall also furnish to Lender, as Lender may
reasonably request, quarterly or monthly unaudited financial statements
(including balance sheets, statements of income and loss, statements of cash
flows and statements of shareholders' equity) and the accompanying notes
thereto, all in reasonable detail, fairly presenting the financial position and
results of Borrower's operation as at the date thereof and for such period
prepared in accordance with generally accepted accounting principles
consistently applied and such other information with respect to your business,
operations and condition (financial and otherwise) as Lender may from time to
time reasonably request. Such financial statements shall be certified for
accuracy by Borrower's chief financial officer.
(d) Borrower hereby irrevocably authorizes and directs all
accountants, auditors and any other third parties to deliver to Lender, at
Borrower's expense, copies of Borrower's consolidating financial statements,
papers related thereto, and other accounting records of any kind or nature in
their possession and to disclose to Lender any information they may have
regarding Borrower's business affairs and financial condition.
6.5 Lender shall have the right to request and receive from the
Borrower's agents, employees, attorneys and accountants all information
pertaining to the Borrower which Lender may reasonably request, and such persons
are hereby authorized and directed by the Borrower to furnish such information,
subject to applicable laws regarding privileged communications.
6.6. Each Account represents a valid and legally enforceable
indebtedness based upon a bona fide sale and delivery of goods or rendition of
services usually dealt in by Borrower in the ordinary course of its business
which has been finally accepted by the Account Debtor. Each Account is and will
be for a liquidated amount maturing as stated in the invoice rendered to the
Account Debtor who is unconditionally liable to make payment at maturity of the
amount stated in each invoice, document or instrument evidencing the Account in
accordance with the terms thereof, without offset, defense, deduction,
counterclaim, discount or condition. Every assigned Account, and any evidence of
indebtedness with respect thereto shall be paid in full at maturity. If any
Account is not paid in full at maturity, the amount of such unpaid Account
(whether in whole or in part) may be charged against and deducted from any
advance then or thereafter made by Lender to Borrower or, in the event Borrower
then has no borrowing availability, Borrower shall pay Lender, upon demand, the
full amount remaining unpaid thereon. Such payment or deduction shall not
constitute a reassignment, and Lender may retain the Account as collateral for
all Obligations of Borrower to Lender until the same have been fully satisfied.
6.7. All statements made and all unpaid balances appearing in the
invoices, documents and instruments evidencing each Account are true and correct
and are in all respects what they purport to be and all signatures and
endorsements that appear thereon are genuine and all signatories and endorsers
have full capacity to contract. To the best of Borrower's knowledge, each
Account Debtor is solvent and financially able to pay in full each Account when
it matures. None of the transactions underlying or giving rise to any Account
shall violate any state or federal laws or regulations, and all documents
relating to the Accounts shall be legally sufficient under such laws or
regulations and shall be legally enforceable in accordance with their terms and
all recording, filing and other requirements of giving public notice under any
applicable law have been and shall be duly complied with.
6.8. Borrower is solvent and will so remain. Borrower's federal,
state and local taxes of every kind and nature, including, but not limited to
employment taxes, are current, and there are no pending tax audits or
examinations with respect to Borrower's federal, state or local tax returns.
6.9. Borrower shall duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets prior to the date on which penalties attach thereto. Borrower shall be
liable for all taxes and penalties imposed upon any transaction under this
Agreement or any supplement or amendment hereto or giving rise to the Accounts
or any other Collateral or which Lender may be required to withhold or pay for
any reason. Borrower agrees to indemnify and hold Lender harmless with respect
thereto, and to repay to Lender on demand the amount thereof, and until paid by
Borrower such amounts shall be added to and included in Borrower's Obligations.
6.10. There is no investigation by any state, federal or local agency
pending or threatened
8
against Borrower and there is no action, suit, proceeding or claim pending or
threatened against Borrower or Borrower's assets or goodwill or affecting any
transactions contemplated by this Agreement, or any supplement or amendment
hereto, or any agreements, instruments or documents delivered in connection
herewith or therewith before any court, arbitrator, or governmental or
administrative body or agency which if adversely determined with respect to
Borrower would result in any material adverse change in Borrower's business,
properties, assets, goodwill or condition, financial or otherwise.
6.11. The execution, delivery and performance of this Agreement, any
supplement or amendment hereto, or any agreements, instruments and documents
executed and delivered in connection herewith, are within Borrower's corporate
powers, have been duly authorized, are not in contravention of law or the terms
of Borrower's charter, by-laws or other incorporation papers, or of any
indenture, agreement or undertaking to which Borrower is a party or by which
Borrower is bound.
6.12. Borrower shall keep and maintain, at its sole cost and expense,
satisfactory and complete Records including records of all Accounts, all
payments received and credits granted thereon, and all other dealings therewith.
Upon the sale of goods or the rendering of services, Borrower shall make
appropriate entries in its books and records disclosing such assignments of
Accounts to Lender, and shall execute and deliver all papers and instruments,
and do all things necessary to effectuate this Agreement and facilitate the
collection of the Accounts. Lender is hereby vested with all of Borrower's
rights, securities and guarantees with respect to each Account, including the
right of stoppage in transit. Notwithstanding the failure of Borrower to execute
and deliver such written assignment as aforesaid, each Account created by
Borrower shall be deemed assigned to Lender and shall become its property.
6.13. INTENTIONALLY OMITTED.
6.14. All monies, Accounts and other property of Borrower which may
come into Lender's possession in any manner, and all sums to the credit of
Borrower may be retained by Lender and applied to the Obligations or any of the
Borrower's obligations owing to Lender's parent, any of its subsidiaries or any
of its affiliates. Borrower's obligations as set forth in the preceding sentence
shall remain applicable and enforceable as against Borrower should Lender be
merged into or with any other entity, including, but not limited to, its parent
corporation. Borrower absolutely and unconditionally guarantees and grants a
security interest to Lender in and to all of its Collateral to secure any and
all Obligations (including but not limited to all obligations of any entity
which is a parent, subsidiary or affiliate of Borrower, whether arising under
this Agreement or otherwise, and whether or not then due and however created)
which Borrower may at any time owe to Lender or its parent, any of its
subsidiaries or any of its affiliates.
6.15. INTENTIONALLY OMITTED
6.16. Borrower shall, at Borrower's expense, duly execute and deliver,
or shall cause to be duly executed and delivered, such further agreements,
instruments and documents, including, without limitation, additional security
agreements, mortgages, deeds of trust, deeds to secure debt, collateral
assignments, UCC financing statements or amendments and continuations thereof,
landlord's or mortgagee's waivers of liens and consents to the exercise by
Lender of all of its rights and remedies hereunder, under any supplement or
amendment hereto, or applicable law with respect to the Collateral. In addition,
Borrower shall do or cause to be done such further acts as may be necessary or
proper, in Lender's opinion, to evidence, perfect, maintain and enforce its
security interest and the priority thereof in and to the Collateral and to
otherwise effect the provisions and purposes of this Agreement or any supplement
or amendment hereto. Borrower hereby authorizes Lender to execute and file UCC
financing statements in order to perfect the security interests granted to
Lender under this Agreement or otherwise.
6.17. Borrower shall, at Borrower's expense, maintain insurance
covering the Collateral in such amounts and with such insurance companies as may
be acceptable to Lender in its sole and absolute discretion. Borrower shall have
Lender named as loss payee and additional insured on all such insurance
policies. In the event Borrower shall fail to maintain insurance acceptable to
Lender, Lender without notice, may obtain such insurance in the name of the
Borrower and charge Borrower's account with the costs and expenses of such
insurance. All expenses incurred by Lender with regard to such insurance
policies shall be deemed part of the Obligations.
6.18. The Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation G issued
by the Board of
9
Governors of the Federal Reserve System), and no proceeds of any loan or
advances made by Lender to Borrower pursuant to Section 2.1 will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock, or in any manner which might cause
such loan or advance or the application of such proceeds to violate (or require
any regulatory filing under) Regulation G, Regulation U, or Regulation X of the
Board of Governors of the Federal Reserve System, in each case as in effect on
the date or dates of such loan or advance and such use of proceeds. Further, no
proceeds of any loan or advance will be used to acquire any security of a class
which is registered pursuant to Section 12 of the Securities Exchange Act of
1934.
6.19. Any loan at any time received by the Borrower from Lender shall
not be used directly or indirectly other than in the Borrower's business; it
shall not, directly or indirectly, pay any dividend on its stock other than a
dividend payable in shares of its own stock; it shall not, directly or
indirectly, make any loan to, or pay any claim other than for current
remuneration or current reimbursable expense payable to any person controlling,
controlled by or under common control with the Borrower, and it shall, on
demand, obtain and deliver to Lender subordinations in form and substance
satisfactory to Lender of all claims of controlling and controlled persons
consistent with the foregoing.
6.20. The Borrower shall immediately notify Lender in a writing signed
by the Borrower of any commercial tort claims it holds or acquires such writing
shall set forth the details and grant Lender a security interest in and to any
commercial tort claims it holds or acquires and in the proceeds thereof, such
writing to be satisfactory to Lender in form and substance.
Section 7. ADDITIONAL POWERS
7.1. Lender shall have the right at any time in its reasonable
business discretion, upon the occurrence of an Event of Default and the
expiration of any applicable cure period: (a) to notify Account Debtors that
Borrower's Accounts have been assigned to and are payable to Lender; and (b) to
collect any and all Accounts directly in its own name and charge all of its
collection costs and expenses including, but not limited to, its legal expenses
to the Borrower's account as part of the Obligations. In the event collection of
the Borrower's Accounts or the liquidation of the Borrower's inventory or other
Collateral falls upon Lender consequent to the occurrence of an Event of Default
and the expiration of any applicable cure period, the Borrower shall pay Lender
15% of the amount collected by Lender.
7.2. Borrower hereby appoints Lender or Lender's designee as
Borrower's attorney-in-fact, at Borrower's own cost and expense, to exercise at
any time all or any of the following powers which, being coupled with an
interest, shall be irrevocable until all Obligations have been paid in full: (a)
upon the occurrence of an Event of Default and the expiration of any applicable
cure period, to redirect, receive, open and dispose of all mail addressed to
Borrower and to notify postal authorities to change the address for delivery
thereof to such address as Lender may designate; (b) to execute and file in
Borrower's name financing statements and amendments under the UCC; (c) to
receive, take, endorse, assign, deliver, accept and deposit, in Lender's or
Borrower's name, any and all checks, notes, drafts, acceptances, money orders,
remittances or other evidences of payment of money or Collateral which may come
into Lender's possession; (d) to sign Borrower's name on any drafts against
Account Debtors, assignments and verifications of Accounts; (e) to transmit to
Account Debtors notice of Lender's interest therein and to request from such
Account Debtors at any time, in Lender's or Borrower's name or that of Lender's
designee, information concerning the Accounts and the amounts owing thereon; (f)
upon the occurrence of an Event of Default and the expiration of any applicable
cure period, to notify Account Debtors to make payment directly to Lender; (g)
to take or bring, in Lender's or Borrower's name, and in Lender's sole and
absolute discretion all steps, actions, suits or proceedings deemed necessary or
desirable by Lender to effect collection of the Collateral; and (h) to do all
other acts and things necessary to carry out this Agreement. Borrower hereby
releases Lender and Lender's officers, employees and designees, from all
liability arising
10
from any act or acts under this Agreement or in furtherance thereof, whether by
omission or commission, and whether based upon any error of judgment or mistake
of law or fact.
Section 8. EVENTS OF DEFAULT
8.1. All Obligations shall be, at Lender's option, immediately due
and payable without notice or demand and the provision of this Agreement (or any
supplement or amendment hereto) as to future loans and advances to or for the
benefit of Borrower shall, at Lender's option, terminate forthwith upon the
occurrence of any one or more of the following events of default (the "EVENTS OF
DEFAULT"): (a) if Borrower shall fail to pay Lender when due any amounts owing
to Lender under any Obligation and such payment default continues for five (5)
days after notice by Lender, (b) if Borrower shall breach any of the terms,
covenants, conditions or provisions of this Agreement (other than payment
defaults), any supplement or amendment hereto or any other agreement between
Borrower and Lender and, to the extent curable, such breach continues for
fifteen days (15) days after notice by Lender; (c) if any guarantor, endorser or
other person liable on the Obligations shall terminate or breach any of the
terms, covenants, conditions or provisions of any guaranty, endorsement or other
agreement of such person with, or in favor of Lender and Borrower does not
provide a substitute guarantor, endorser or other person acceptable to Lender,
in Lender's reasonable business discretion, within thirty (30) days of such
breach or termination; (d) if any representation, warranty, or statement of fact
made to Lender at any time by Borrower or on Borrower's behalf is false or
misleading; (e) if Borrower, or any guarantor, endorser or other person liable
on the Obligations shall become insolvent, fail to meet its or their debts as
they mature, call a meeting of creditors or have a creditors' committee
appointed, make an assignment for the benefit of creditors, commence or have
commenced by or against Borrower or any guarantor, endorser or other person
liable on the Obligations any action or proceeding for relief under any
bankruptcy law, or if a judgment is entered against Borrower or any guarantor,
endorser or other person liable on the Obligations (which has not been bonded or
otherwise secured) or if Borrower or any guarantor, endorser or other person
liable on the Obligations suspends or discontinues doing business for any
reason, or if a receiver, custodian or trustee of any kind is appointed with
regard to any property of Borrower or guarantor, endorser or other person liable
on the Obligations; (f) if, in Lender's reasonable business discretion, there
shall be a material adverse change in Borrower's business, assets or condition
(financial or otherwise) from the date hereof, and Borrower has failed to cure
or failed to satisfy Lender's concerns within thirty (30) days after notice by
Lender; (g) if there is any change in Borrower's majority control or ownership;
(h) a fraudulent conversion of any part of the Collateral; or (i) any guarantor
dies and Borrower fails to provide a substitute guarantor acceptable to Lender,
in Lender's reasonable business discretion, within twenty (20) days of such
occurrence
8.2. In the event Lender seeks to take possession of all or any
portion of the Collateral by judicial process (including, but not limited to,
Lender obtaining an order of attachment, a temporary restraining order, a
preliminary or permanent injunction or otherwise) against the Borrower or with
regard to the Collateral, Borrower irrevocably waives: (a) the posting of any
bond, surety or security with respect thereto which might otherwise be required,
(b) any demand for possession prior to the commencement of any suit or action to
recover the Collateral, and (c) any requirement that Lender retain possession
and not dispose of any Collateral until after trial or final judgment.
8.3. Borrower agrees that the giving of five (5) days' notice by
Lender, sent by ordinary mail, postage prepaid, to Borrower's address set forth
herein, designating the place and time of any public sale or of the time after
which any private sale or other intended disposition of the Collateral is to be
made, shall be deemed to be reasonable notice thereof and Borrower waives any
other notice with respect thereto. Lender may sell the Collateral without giving
any warranties as to the Collateral. Lender may specifically disclaim any
warranties of title or the like without affecting the commercial reasonableness
of the sale of any of the Collateral.
8.4. The net cash proceeds resulting from the exercise of any of
Lender's rights or remedies under this Agreement, under the UCC or otherwise,
shall be applied by Lender to the payment of the Obligations in such order as
Lender may elect, and Borrower shall remain liable to Lender for any deficiency.
Without limiting the generality of the foregoing, if Lender enters into any
credit transaction, directly or indirectly, in connection with the disposition
of any Collateral, Lender shall have the option, at any time, in Lender's sole
and absolute discretion, to reduce the Obligations by the amount of such credit
transaction or any part thereof or to defer the reduction thereof until actual
receipt by Lender of cash in connection therewith.
11
8.5. The enumeration of the foregoing rights and remedies is not
intended to be exclusive, and such rights and remedies are in addition to and
not by way of limitation of any other rights or remedies Lender may have under
the UCC or other applicable law. Lender shall have the right, in Lender's sole
and absolute discretion, to determine which rights and remedies, and in which
order any of the same, are to be exercised, and to determine which Collateral is
to be proceeded against and in which order, and the exercise of any right or
remedy shall not preclude the exercise of any others, all of which shall be
cumulative.
8.6. No act, failure or delay by Lender shall constitute a waiver of
any of its rights or remedies. No single or partial waiver by Lender of any
provision of this Agreement or any supplement or amendment hereto, or breach or
default thereunder, or of any right or remedy which Lender may have shall
operate as a waiver of any other provision, breach, default, right or remedy or
of the same provision, breach, default, right or remedy on a future occasion.
8.7. Borrower waives presentment, notice of dishonor, protest and
notice of protest of all instruments included in or evidencing any of the
Obligations or the Collateral and any and all notices or demands whatsoever
(except as expressly provided herein). Lender may, at all times, proceed
directly against Borrower to enforce payment of the Obligations and shall not be
required to take any action of any kind to preserve, collect or protect Lender's
or Borrower's rights in the Collateral.
Section 9. MISCELLANEOUS
9.1. This Agreement shall become effective upon acceptance by Lender
and shall continue in full force and effect for a term ending on the last
business day of the month, two (2) years from the date hereof (the "RENEWAL
DATE") and shall automatically renew from year to year thereafter until
terminated pursuant to the terms hereof.. In addition to Lender's right to
declare this Agreement immediately terminated at any time upon the occurrence of
an Event of Default and the expiration of any applicable cure period, Lender may
terminate this Agreement on the Renewal Date or on the anniversary of the
Renewal Date in any year by giving Borrower at least thirty (30) days prior
written notice of such termination by registered or certified mail, return
receipt requested. Borrower may terminate this Agreement on the Renewal Date or
on the anniversary of the Renewal Date in any year by giving Lender at least
ninety (90) days prior written notice of such termination by registered or
certified mail, return receipt requested. No termination of this Agreement,
however, shall relieve or discharge Borrower of Borrower's duties, obligations
and covenants hereunder until all Obligations have been paid in full and
Lender's continuing security interest in and to the Collateral shall remain in
effect until all such Obligations have been fully discharged.
9.2. If Lender terminates this Agreement upon the occurrence of an
Event of Default and the expiration of any applicable cure period, or if
Borrower terminates this Agreement as to future transactions other than on the
Renewal Date or any anniversary of the Renewal Date, in view of the
impracticality and extreme difficulty in ascertaining Lender's actual damages
and by mutual agreement of the parties as to a reasonable calculation of
Lender's lost profits as a result thereof, Borrower hereby agrees that it shall
immediately pay to Lender by wire transfer, certified check or bank cashier's
check, Borrower's entire Obligations owing thereunder, plus liquidated damages
of an amount equal to the total of the Minimum Monthly Charges for the months
remaining until the Renewal Date or the next anniversary of the Renewal Date, as
applicable, as provided for in this Agreement, not to exceed $87,500.00. Prior
to its actual receipt of payment as aforesaid, Lender shall be free to exercise,
without limitation, all of its right under this Agreement or under any other
agreement it may then have with Borrower. Borrower's default of any provision
under this Agreement may be considered and construed at the sole option of
Lender, as a termination of this Agreement by Borrower. The liquidated damages
provided for in this paragraph 9.2 shall be deemed included in the Obligations
and shall be presumed to be the amount of damages sustained by Lender due to the
Borrower's early termination and Borrower agrees that such damages are
reasonable and appropriate under the circumstances currently existing.
9.3. This Agreement, and any supplement or amendment hereto and any
agreements, instruments or documents delivered or to be delivered in connection
herewith, constitute the entire agreement and understanding between Lender and
Borrower concerning the subject matter hereof and thereof and as such supersedes
all other prior or contemporaneous agreements, understandings, negotiations and
discussions, representations, warranties, commitments, offers, contracts,
whether written or oral, all of which are merged into this Agreement. Lender and
Borrower agree that neither party shall be bound by anything not expressed
herein, nor shall this Agreement be modified orally.
12
9.4. All amendments to and modifications of this Agreement shall be
in writing and signed by Borrower and Lender, which requirement shall not be
modified by oral agreement or by course of conduct.
9.5. All notices, requests, demands and other communications under
this Agreement shall be in writing and will be personally served, telecopied or
sent by overnight courier service or United States mail and will be deemed to
have been given: (i) if delivered in person, when delivered; (ii) if delivered
by telecopy, on the date of transmission if transmitted on a business day before
4:00 p.m. New York time or, if not, on the next succeeding business day; (iii)
if delivered by overnight courier, the following business day after depositing
with such courier, properly addressed; or (iv) if by U.S. Mail, four (4)
business days after depositing in the United States mail, with postage prepaid
and properly addressed. All notices, requests and demands are to be given or
made to the respective parties at the addresses set forth herein or at such
other addresses as either party may designate in writing by notice in accordance
with the provisions of this paragraph. All notices to Lender must be addressed
to the attention of: Portfolio Manager.
9.6. Borrower and Lender each hereby waive all rights to a trial by
jury in any action or proceeding of any kind arising out of or relating to this
Agreement, any supplement or amendment hereto, the Obligations, the Collateral
or any such other transaction. Borrower hereby waives all of its rights of
setoff and rights to interpose any defenses and/or counterclaims in the event of
any litigation with respect to any matter connected with this Agreement, any
supplement or amendment hereto, the Obligations, the Collateral or any other
transaction between the parties. Borrower hereby irrevocably consents and
submits to the jurisdiction and venue of the Supreme Court of the State of New
York (without regard to any choice of law rules) or the United States District
Court for the Southern District of New York in connection with any action or
proceeding of any kind arising out of or relating to this Agreement, any
supplement hereto, the Obligations, the Collateral or any such other
transaction. Borrower agrees that any action brought by it against Lender
whether with regard to this Agreement or otherwise shall be subject to the
exclusive jurisdiction and venue of the Supreme Court of the State of New York
(without regard to any choice of law rules), County of New York or the United
States District Court for the Southern District of New York.
9.7. In any litigation brought by Lender, Borrower waives personal
service of any summons, complaint or other process and agrees that service
thereof may be made by certified or registered mail directed to Borrower at
Borrower's address set forth below and service so made shall be complete two (2)
days after the same shall have been posted. Within twenty (20) days after such
mailing, Borrower shall appear and answer such summons, complaint or other
process, failing which Borrower shall be deemed in default and judgment may be
entered by Lender against Borrower for the amount of the claim and for any other
relief requested therein.
9.8. The Borrowers hereby appoint ABLE ENERGY, INC. as the
"DISBURSING AGENT" to the Borrowers as it is in the best interest and
convenience of the Borrowers that all Loans and advances made by Lender pursuant
to this Agreement be made only to the Disbursing Agent rather than to each of
the Borrowers individually. Accordingly, the Disbursing Agent shall be the sole
entity entitled to receive the funds advanced by Lender under this Agreement and
the Disbursing Agent shall make disbursements to the Borrowers as reasonably
requested by each Borrower to conduct its respective business. Moreover, the
Disbursing Agent and each Borrower agrees and authorizes Disbursing Agent and
Lender to receive all collections and other proceeds into the deposit account or
other account assigned to and/or controlled by Lender in accordance with Section
5.1 of this Agreement. All of the proceeds received into the deposit account
assigned to or controlled by Lender will be credited by Lender to the Disbursing
Agent's account and the Disbursing Agent shall have the sole authority to
further credit any such collections to each Borrower, individually. Each
Borrower hereby irrevocably waives any claim it may have against Lender and
hereby indemnifies and holds Lender harmless from and against all damages,
losses, claims, demands, liabilities, obligations, actions and causes of action
whatsoever which such Borrower may have against Lender which may arise as a
result of advances being made by Lender solely to the Disbursing Agent and/or
collections being credited by Lender solely the Disbursing Agent's account with
Lender.
9.9. This Agreement and all transactions hereunder are deemed to be
consummated in the State of New York and shall be governed by and interpreted in
accordance with the substantive and procedural laws of the State of New York
(without regard to any choice
13
of law rules). If any part or provision of this Agreement shall be determined to
be invalid or in contravention of any applicable law or regulation of the
controlling jurisdiction, such part or provision shall be severed without
affecting the validity of any other part or provision of this Agreement.
9.10 Lender may issue press releases and cause a tombstone to be
published announcing the consummation of this transaction and the aggregate
amount thereof at Lender's sole cost and expense and upon the prior written
consent of Borrower.
9.11. This Agreement shall inure to and be binding upon the parties
hereto and their successors and assigns.
THIS SPACE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS
14
ABLE ENERGY, INC. ABLE OIL COMPANY
a Delaware Corporation a New Jersey Corporation
By: By:
------------------------------ ------------------------------
Name: XXXXXXXXXXX XXXXXX Name: XXXXXXXXXXX XXXXXX
------------------------------ ------------------------------
Title: PRESIDENT Title: PRESIDENT
------------------------------ ------------------------------
Federal Taxpayer Identification Federal Taxpayer Identification
Number __________________ Number __________________
ABLE ENERGY NEW YORK, INC. ABLE OIL MELBOURNE, INC.
a New York Corporation a Florida Corporation
By: By:
------------------------------ ------------------------------
Name: XXXXXXXXXXX XXXXXX Name: XXXXXXXXXXX XXXXXX
------------------------------ ------------------------------
Title: PRESIDENT Title: PRESIDENT
------------------------------ ------------------------------
Federal Taxpayer Identification Federal Taxpayer Identification
Number __________________ Number __________________
ABLE PROPANE, LLC ABLE ENERGY TERMINAL, LLC
a New Jersey limited liability a New Jersey limited liability
company company
By: Able Energy, Inc. By: ____________________
Its: Sole Member and Manager Its: Sole Member and Manager
By: By:
------------------------------ ------------------------------
Name: XXXXXXXXXXX XXXXXX Name: XXXXXXXXXXX XXXXXX
------------------------------ ------------------------------
Title: PRESIDENT Title: PRESIDENT
------------------------------ ------------------------------
Federal Taxpayer Identification Federal Taxpayer Identification
Number __________________ Number __________________
ACCEPTED:
ENTREPRENEUR GROWTH CAPITAL LLC
By:
--------------------------------
Xxxx Xxxxxx, President
SCHEDULE 6.2
The Borrower hereby certifies, with reference to that certain that Loan
and Security Agreement dated as of May ____, 2005 (terms defined in such Loan
and Security Agreement having the same meanings herein as specified therein),
between the Borrower and Lender, to the Lender as follows:
1. NAME. The exact legal name of the Borrower as that name appears
on its Certificate of Incorporation is as follows:
ABLE ENERGY, INC.
ABLE OIL COMPANY
ABLE ENERGY NEW YORK, INC.
ABLE OIL MELBOURNE, INC.
ABLE ENERGY TERMINAL, LLC
ABLE PROPANE, LLC
2. OTHER IDENTIFYING FACTORS.
(a) The following is the mailing address of the Borrower:
000 Xxxxx Xxxx Xxxx, Xxxxxxxx, XX 00000
(b) If different from its mailing address, the Borrower's place of
business or, if more than one, its chief executive office is located at the
following address:
ADDRESS COUNTY STATE
(c) All other places of businesses of Borrower:
ADDRESS COUNTY STATE
(d) The following is the type of organization of the Borrower:
ABLE ENERGY, INC. a Delaware Corporation
ABLE OIL COMPANY a New Jersey Corporation
ABLE ENERGY NEW YORK, INC. a New York Corporation
ABLE OIL MELBOURNE, INC. a Florida corporation
ABLE ENERGY TERMINAL, LLC a New Jersey limited liability company
ABLE PROPANE, LLC a New Jersey limited liability company
(e) The following is the jurisdiction of the Borrower's
organization:
ABLE ENERGY, INC. a Delaware Corporation
ABLE OIL COMPANY a New Jersey Corporation
ABLE ENERGY NEW YORK, INC. a New York Corporation
ABLE OIL MELBOURNE, INC. a Florida corporation
ABLE ENERGY TERMINAL, LLC a New Jersey limited liability company
ABLE PROPANE, LLC a New Jersey limited liability company
(f) The following is the Borrower's state issued organizational
identification number (state "None" if the state does not issue such a number):
3. OTHER NAMES, ETC.
(a) The following is a list of all other names (including trade
names or similar appellations) used by the Borrower, or any other business or
organization to which the Borrower became the successor by merger,
consolidation, acquisition, change in form, change in corporate name, nature or
jurisdiction of organization or otherwise, now or at any time during the past
five years:
(b) Attached hereto as Exhibit "A" is the information required in
Section 2 of this Schedule for any other business or organization to which the
Borrower became the successor by merger, consolidation, acquisition, change in
form, change in corporate name, nature or jurisdiction of organization or
otherwise, now or at any time during the past five years including but limited
to exact legal name, mailing address, address of chief executive office, address
of all other locations, state of organization, state issued organizational
identification number and description of merger, consolidation, acquisition or
change in form:
4. OTHER CURRENT LOCATIONS.
(a) The following are all other locations in the United States of
America in which the Borrower maintains any books or records relating to any of
the Collateral consisting of accounts, instruments, chattel paper, general
intangibles or mobile goods:
(b) The following are all other places of business of the Borrower
in the United States of America:
ADDRESS COUNTY STATE
(c) The following are all other locations in the United States of
America where any of the Collateral consisting of inventory or equipment is
located:
ADDRESS COUNTY STATE
(d) The following are the names and addresses of all persons or
entities other than the Borrower, such as lessees, consignees, warehousemen or
purchasers of chattel paper, which have possession or are intended to have
possession of any of the Collateral including but not limited to instruments,
chattel paper, inventory or equipment:
NAME MAILING ADDRESS COUNTY STATE
(e) The following are all other locations outside the United States
of America in which the Borrower does business or where any of the Collateral is
located:
5. PRIOR LOCATIONS.
(a) Set forth below is the information required with respect to each
location or place of business previously maintained by the Borrower at any time
during the past five years:
ADDRESS COUNTY STATE
(b) Set forth below is the information required with respect to each
location or place of business previously maintained by the Borrower during the
past four months:
ADDRESS COUNTY STATE
(c) Set forth below is the information required by with respect to
each other location at which, or other person or entity with which, any of the
Collateral consisting of inventory or equipment has been previously held at any
time during the past twelve months:
NAME ADDRESS COUNTY STATE
6. FIXTURES. Attached hereto as Exhibit "B" is the information
required by UCC ss.9-502(b) or former UCC ss.9-402(5) of each state in which any
of the Collateral consisting of fixtures are or are to be located and the name
and address of each real estate recording office where a mortgage on the real
estate on which such fixtures are or are to be located would be recorded.
7. UNUSUAL TRANSACTIONS. Except for those purchases, acquisitions
and other transactions described on Exhibit "A" attached hereto, all of the
Collateral has been originated by the Borrower in the ordinary course of the
Borrower's business or consists of goods which have been acquired by the
Borrower in the ordinary course from a person in the business of selling goods
of that kind.
IN WITNESS WHEREOF, we have hereunto signed this Certificate on May
____, 2005.
___________________________________________
Xxxxxxxxxxx Xxxxxx
