ACCOUNTS FINANCING AGREEMENT
[SECURITY AGREEMENT]
BETWEEN
CONGRESS FINANCIAL CORPORATION
0000 XXXXXX XX XXX XXXXXXXX
XXX XXXX, XXX XXXX 00000
AND
Eastco Industrial Safety Corp.
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(NAME OF CLIENT)
000 Xxxx 00xx Xxxxxx
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(STREET ADDRESS)
Xxxxxxxxxx Xxxxxxx, Xxx Xxxx 00000
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(CITY) (STATE)
[Logo] A CoreStates Company
October 1 1991
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen.
This Agreement states the terms and conditions upon which, effective as of
the date of acceptance by you, we may obtain loans and other financial
accommodations from you for our general corporate and business purposes upon the
security referred to herein. We shall be, if two or more in number, jointly and
severally bound hereunder. Reference is made to the Rider annexed hereto which
is incorporated herein. Asterisks used in this Agreement correspond to the
respective modifying terms provided in the Rider for the indicated Sections.
Section I. DEFINITIONS of this Agreement.
1.1. All terms used herein which are defined in Article I or Article 9 of
the Uniform Commercial Code ("UCC") shall have the meanings given therein.
unless otherwise defined in this Agreement and all references to the plural
herein shall also mean the singular.
1.2. "Accounts" shall mean all of our present and future accounts, contract
rights, general intangibles, chattel paper, documents and instruments, as such
terms are defined in the UCC, including, without limitation, all obligations for
the payment of money arising out of our sale, lease or other disposition of
goods or other property or rendition of services.
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. "Eligible Accounts" shall mean Accounts created by us in the ordinary
course of business arising out of our sale of goods or rendition of services,
which are and at all times shall continue to be acceptable to you in all
respects. Standards of eligibility may be fixed and revised from time to time
solely by you in your exclusive judgment. In determining eligibility, you may,
but need not, rely on agings, reports and schedules of Accounts furnished by us,
but reliance by you thereon from time to time shall not be deemed to limit your
right to revise standards of eligibility at any time as to both our present and
future Accounts. In general, an Account shall not be deemed eligible unless: (a)
the Account Debtor on such Account is and at all times continues to be
acceptable to you, (b) such Account complies in all respects with the
representations, covenants and warranties hereinafter set forth, and (c) no more
than 90 days have elapsed since the invoice date of such Account.
1.6. "Events of Default" shall have the meaning set forth in Section 8.1
hereof.
1.7. "Maximum Credit" shall mean the amount of 5,000,000.
1.8. "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 and allowances of any nature at any time issued,
owing, granted, outstanding, available or claimed.
1.9. "Obligations" shall mean any and all loans, indebtedness, liabilities
and obligations of any kind owing by us to you, 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 or extended, and whether arising directly or acquired from
others (including, without limitation, your participations or interests in our
obligations to others) and including, without limitation, your charges,
commissions, interest, expenses, costs and attorneys' fees chargeable to us in
connection wish all of the foregoing.
1.10. "Records" shall have the meaning see forth in Section 4.1(f) hereof.
1.11. "Renewal Date" shall have the meaning set forth in Section 9.1
hereof.
Section 2. LOANS.
2.1. You shall, in your discretion, make loans to us from time to time, at
our request, of up to .....eighty...............percent (........80...%) of the
Net Amount of Eligible Accounts (or such greater or lesser percentage thereof as
you shall in your sole discretion determine from time to time).
2.2 All loans shall be charged so a loan account in our name on your books.
You shall render to us each month a statement of our loan account which shall be
considered correct and deemed accepted by, and conclusively binding upon, us as
an account stated, except to the extent that you receive a written notice of any
specific exceptions by us thereto within thirty (30) days after the date of such
statement.
2.3. Except in your sole discretion, the outstanding aggregate principal
amount of all loans by you to us hereunder, under any supplement hereto or
evidenced by any promissory note, shall not exceed the Maximum Credit at any
time. Without limiting your right to demand payment of the Obligations, or any
portion thereof, in accordance with any other terms of this Agreement, or any
supplement hereto, in the event that the outstanding aggregate principal amount
of loans by you to us exceeds the Maximum Credit or the formula set forth in
Section 2.1 hereof, we shall remain liable therefor and the entire amount of
such excess(es) shall, at your option, become immediately due and payable, upon
your demand.
2.4. At your option all principal, interest, fees, commissions, costs,
expenses or other charges wish respect to this Agreement or any supplement
hereto (all of which shall be cumulative and not exclusive) and any and all
loans and advances by you so us may be charged directly to our account
maintained by you.
2.5. All loans shall be payable at your office specified above or at such
other place as you may hereafter designate from time to time and, at your option
and upon your request, we shall execute and deliver to you one or more
promissory notes in form and substance satisfactory to you to further evidence
such loans.
Section 3. INTEREST AND FEES.
3.1. Interest shall be payable by us to you on the first day of each month
upon the closing daily balances in our loan account for each day during the
immediately preceding month, at a rate equal to ......three.......percent
(....3....%) per annum in excess of the prime commercial interest rate
(presently..8..% per annum) from time to time publicly announced by Philadelphia
National Bank, incorporated as CoreStates Bank, NA., Philadelphia, Pennsylvania,
whether or not such announced rate is the best rate available at such bank. The
interest rate charged hereunder shall increase or decrease by an amount equal to
each increase or decrease, respectively, in said prime loan rate, effective on
the first day of the month after any change in said prime loan rate based on the
prime loan rate in effect on the last day of the month in which any such change
occurs. The rate of interest in effect hereunder on the date hereof, expressed
in terms of simple interest, is eleven percent (11%) per annum. In the event
that the outstanding aggregate principal amount of loans by you to us exceeds
the Maximum Credit or the formula set forth in Section 2.1 hereof or any other
formula or sublimit set forth in any supplement hereto, interest on the entire
amount of such excess(es) shall be payable at the rate set forth in Section 3.2
hereof (whether or not such excess(es)) arise or are made with or without your
knowledge or consent).
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3.2. On and after the date of any Event of Default or termination or
non-renewal hereof, interest on all outstanding unpaid Obligations shall accrue
at a rate equal to.....two.....percent (.....2....%) per annum in excess of the
pre-default rate set forth above from the date of such Event of Default or
termination or non-renewal, and all interest accruing hereunder shall thereafter
be payable on demand.
3.3. Interest shall be calculated on the basis of a 360-day year and shall
be included in each monthly statement of our loan account. You shall have the
right, at your option, to charge all interest to our loan account on the first
day of each month, and such interest shell be deemed so be paid by the first
amounts subsequently credited thereto.
3.4. In no event shall charges constitute interest, payable by us under
this Agreement, exceed the rate permitted under any applicable law or
regulation, and 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.
3.5. if the average outstanding daily principal balance of all loans by you
to us under this Agreement or any supplement hereto in any calendar month shall
be less than the Maximum Credit, we shall pay to you on or before the tenth
(10th) day of the next succeeding calendar month an unused line fee equal to
one-half of one percent ( ...5...%) per annum upon the amount by which the
Maximum Credit exceeds the average outstanding daily principal balance of all
such loans in respect of such month.
3.6. *
3.7. *
Section 4. SECURITY INTEREST.
4.1. As security for the prompt performance, observance and payment in full
of all Obligations, we hereby grant to you a continuing security interest in, a
lien upon and a right of setoff against, and we hereby assign, transfer, pledge
and set over to you the following (which together with any of our other property
in which you may at any time have a security interest or lien, whether pursuant
to this Agreement or any supplement hereto, or otherwise, are herein
collectively referred to as the "Collateral"): All present and future (a)
Accounts; (b) moneys, securities and other property and the proceeds thereof.
now or hereafter held or received by, or in transit to, you from or for us,
whether for safekeeping, pledge, custody, transmission, collection or otherwise,
and all of our deposits (general or special), balances, sums and credits with
you at any time existing; (c) all of our right, title and interest, and all of
our rights, remedies, security and liens, in, to and in respect of the Accounts
and other Collateral, 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, guaranties 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; (d) all of our
right, title and interest in, to and in respect of all goods relating to, or
which by sale have resulted in, Accounts including, without limitation, all
goods described in invoices, documents, contracts or instruments with respect
to, or otherwise representing or evidencing, any Accounts or other Collateral,
including without limitation, all returned, reclaimed or repossessed goods; (e)
all deposit accounts; (f) all books, records, ledger cards, computer programs,
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 or containers in which the foregoing are stored ("Records"); (g) all
other general intangibles of every kind and description, including without
limitations, trade names and trademarks, and the goodwill of the business
symbolized thereby, patents, copyrights, licenses and Federal, State and local
tax refund claims of all kinds and (h) all proceeds of the foregoing, in any
form, including, without limitation, any claim against third parties for loss or
damage to or destruction of any or all of the foregoing.
4.2. We shall keep and maintain, at our cost and expense, satisfactory and
complete books and records of all Accounts, all payments received or credits
granted thereon, and all other dealings therewith. At such times as you may
request, we shall deliver to you all original documents evidencing the sale and
delivery of goods or the performance of services which created any Accounts,
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 you of each Account, in form and substance satisfactory to you and duly
executed by us, together with such other information as you may request. In no
event shall the making or the failure to make or the content of any schedule or
assignment or our failure to comply with the provisions hereof be deemed or
construed as a waiver, limitation or modification of your security interest in,
lien upon and assignment of the Collateral or our representations, warranties or
covenants under this Agreement or any supplement hereto.
Section 5. COLLECTION AND ADMINISTRATION.
5.1. Until our authority to do so is curtailed or terminated at any tune by
you, we shall, at our expense and on your behalf, collect, as your property and
in trust for you, all remittances and all amounts unpaid on Accounts, and we
shall not commingle such collections with our own funds. We shall on the day
received remit all such collections to you in the form received duly endorsed by
us for deposit with you, unless you shall direct us otherwise. All amounts
collected on Accounts when received by you shall be credited to our loan
account, after adding five (5) business days for collection, clearance and
transfer of remittances, conditional upon final payment to you.
5.2. You or your representatives shall at all times 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 our Records, to confirm and verify all Accounts, to
perform general audits and to do whatever else you deem necessary to protect
your interests. You may at any time remove from our premises or require us or
any accountants and auditors employed by us so deliver any Records and you may,
without cost or expense to you, use such of our personnel, supplies, computer
equipment and space at our places of business as may be reasonably necessary for
the handling of collections.
5.3. We shall immediately upon obtaining knowledge thereof report to you
all reclaimed, repossessed or resumed goods, Account Debtor claims and any other
matter affecting the value, enforceability or collectibility of Accounts. At
your request any goods reclaimed or repossessed by or returned to us will be set
aside, marked with your name and held by us for your account and subject to your
security interest. All claims and disputes relating to Accounts are to be
promptly adjusted within a reasonable time, at our own cost and expense. You
may, at your option, settle, adjust or compromise claims and disputes relating
to Accounts which are not adjusted by us within a reasonable time.
5.4. We shall, in the manner requested by you from time to time, direct
that all proceeds of Accounts, letters of credit, bankers' acceptances and other
proceeds of Collateral shall be payable to a lock box or post office box
designated by you and under your control and/or deposited into a blocked account
under your control and/or deposited into an account maintained in your name and
under your control and in connection therewith shall execute such lock box,
blocked account or other agreement as you in your sole discretion shall specify.
Section 6. REPRESENTATIONS. WARRANTIES AND COVENANTS.
We hereby represent, warrant and covenant to you the following (which shall
survive the execution and delivery of this Agreement), the truth and accuracy of
which, or compliance with, being a continuing condition of the making of loans
hereunder by you or under any supplement hereto:
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6.1. We are and shall be, with respect to all Collateral and all our
inventory now existing or hereafter acquired, the owner of such Collateral and
inventory free from any lien, security interest, claim or encumbrance of any
kind, except in your favor and as otherwise consented to in writing by you, and
we shall defend the same against the claims of all persons.
6.2. We will not directly or indirectly sell, lease, transfer, abandon or
otherwise dispose of all or any substantial portion of our property or assets or
consolidate or merge with or into any other entity or permit any other entity to
consolidate or merge with or into us. We will at all times preserve, renew and
keep in full force and effect our existence as a corporation arid the rights and
franchises with respect thereto and continue to engage in business of the same
type as we are engaged as of the date hereof. We shall give you thirty (30) days
prior written notice of any proposed change in our corporate name which notice
shall tee forth the new name.
6.3. Our Records and chief executive office are maintained at the address
referred to below. We shall not change such location without your prior written
consent and prior to making any such change, we agree to execute any additional
financing statements or other documents or notices which you may require.
6.4. We shall maintain our shipping forms, invoices and other related
documents in a form satisfactory to you and shall maintain our books, records
and accounts in accordance with generally accepted accounting principles
consistently applied. We agree to furnish you monthly with accounts receivable
agings, inventory reports (if requested by you), and interim financial
statements (including balance sheet, statement of income and surplus account,
and cash flow statements), and to furnish you, at any time or from time to time
with such other information regarding our business affairs and financial
condition as you may reasonably request, including, without limitation, balance
sheets, statements of profit and loss, financial statements, cash flow and other
projections, earnings forecasts, schedules, agings and reports. We hereby
irrevocably authorize and direct all accountants, auditors or other third
parties to deliver to you, at our expense, copies of our financial statements,
papers related thereto, and other accounting records of any nature in their
possession and to disclose to you any information they may have regarding our
business affairs and financial conditions. We shall furnish you with audited
financial statements on an annual basis certified by independent public
accountants selected by us and acceptable to you. All such statements and
information shall fairly present our financial condition as of the dates and the
results of our operations for the periods, for which the same are furnished. Any
documents, schedules, invoices or other papers delivered to you may be destroyed
or otherwise disposed of by you one (1) year after the date the same are
delivered to you, unless we make writtten request therefor and pay all expenses
attendant to their return, in which event you shall return same when your actual
or anticipated need therefor has ceased.
6.5. Each Eligible Account represents a valid and legally enforceable
indebtedness based upon an actual and bona fide sale and delivery of goods or
rendition of services in the ordinary course of our business which has been
finally accepted by the Account Debtor and for which the Account Debtor Is
unconditionally liable to make payment of the amount stated in each invoice,
document or instrument evidencing the Eligible Account in accordance with the
terms thereof, without offset, defense or counterclaim and will be paid in full
at maturity.
6.6. All statements made and all unpaid balances appearing in the invoices,
documents and instruments evidencing each Eligible 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 and each Account Debtor is solvent and
financially able to pay in full the Eligible Account when it matures. None of
the transactions underlying or giving rise so 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 duly
complied with.
6.7. We shall duly pay and discharge all taxes, assessments, contributions
and governmental charges upon or against us or our properties or assess prior to
the date on which penalties attach thereto. We shall be liable for any tax or
penalty imposed upon any transaction under this Agreement or any supplement
hereto or giving rise to the Accounts or any other Collateral or which you may
be required to withhold or pay for any reason and we agree to indemnify and hold
you harmless with respect thereto, and to repay to you on demand the amount
thereof, and until paid by us such amount shall be added to and deemed part of
your loans to us.
6.8. Except as otherwise disclosed * there it no present investigation by
any governmental agency pending or threatened against us and there is no action,
suit, proceeding or claim pending or threatened against us or our assets or
goodwill, or affecting any transactions contemplated by this Agreement, or any
supplement 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
us would result in any material adverse change in our business, properties,
assets, goodwill, or condition, financial or otherwise.
6.9. The execution, delivery and performance of this Agreement, any
supplement hereto, or any agreements, instruments and documents executed and
delivered in connection herewith, are within our corporate powers, have been
duly authorized are not in contravention of law or the terms of our Charter,
By-Laws or other incorporation papers, or of any indenture, agreement or
undertaking to which we are a party or by which we are bound.
6.10. We shall, at our 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, Uniform
Commercial Code financing statements or amendments or continuations thereof,
landlord's or mortgagee's waivers of liens and contents to the exercise by you
of all your rights and remedies hereunder, under any supplement hereto or
applicable law with respect to the Collateral, and do or cause to be done such
further acts as may be necessary or proper in your opinion to evidence, perfect,
maintain and enforce your security interest and the priority thereof in the
Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any supplement hereto. Where permitted by law, we hereby authorize
you to execute and file one or more Uniform Commercial Code financing statements
signed only by you.
Section 7. SPECIFIC POWERS.
7.1. We hereby constitute you and your agent and any designee, as our
attorney-in-fact, at our own cost amid 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) to receive, take,
endorse, assign, deliver, accept and deposit, in your or our name, any and all
checks, notes, drafts, remittances and other instruments and documents relating
to the Collateral; (b) on or after the occurrence of an Event of Default to
receive open and dispose of all mail addressed to us and to notify postal
authorities to change the address for delivery thereof to such address as you
may designate; (c) to transmit to Account Debtors notice of your interest
therein and to request from such Account Debtors at any time, in your or our
name or that of your designee, information concerning the Accounts and the
amounts owing thereon; (d) on or after the occurrence of an Event of Default, to
notify Account Debtors to make payment directly to you; (e) on or after the
occurrence of an Event of Default, to take or bring, in your or our name, all
steps, actions, suits or proceedings deemed by you necessary or desirable to
effect collection of the Collateral; and (f) so execute in our name and on our
behalf any UCC financing statements or amendments thereto. We hereby release you
and your officers, employees and designees, from any liability arising from any
act or acts under this Agreement or in furtherance thereof, whether of omission
or commission and whether based upon any error of judgment or mistake of law or
fact.
Section 8 EVENTS OF DEFAULT AND REMEDIES.
8.1. All Obligations shall be, at your option, immediately due and payable
without notice or demand (notwithstanding any deferred or installment payments
allowed, if any, by any instruments evidencing or relating to the Obligations)
and any provision of this Agreement or any
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supplement hereto, as to future loans and advances by you shall, at your option,
terminate forthwith, upon the termination or non-renewal of this Agreement or
upon the occurrence of any one or more of the following ("Events of Default"):
(a) if we shall fail to pay so you when due any amounts owing to you under any
Obligation, or shall breach any of the terms, covenants, conditions or
provisions of this Agreement, any supplement hereto or any other agreement
between you and us or between any other third person or entity and us, (by 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
guarantee, endorsement or other agreement of such person with, or in favor of,
you or any other third person or entity; (c) if any representation, warranty, or
statements of fact made to you at any time by us or on our behalf is false or
misleading in any material respect; (d) if we, or any guarantor endorser or
other person liable on the Obligations, shall become insolvent, fail to meet our
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 against us or them any action or proceeding for relief under
any bankruptcy law, or its judgment is rendered against us or them, or if we or
they suspend or discontinue doing business for any reason, or if a receiver,
custodian or trustee of any kind is appointed for us or them or any of our or
their respective properties; (e) if there shall be a material adverse change in
our business, assets or condition (financial or otherwise) from the date hereof;
(f) if there is any change in our majority control or ownership; or (g) if at
any time you shall, in your sole discretion,* consider the Obligations insecure
or any part of the Collateral unsafe, insecure or insufficient and we shall not
on your demand furnish other Collateral or make payment on account, satisfactory
to you.
8.2. Upon the occurrence of any Event of Default and at any time
thereafter, you shall have the right (in addition any other rights you may have
under this Agreement, any supplement hereto or otherwise) without further notice
to us, to appropriate, set off and apply to the payment of any or all of the
Obligations, any or all Collateral, in such manner as you shall in your sole
discretion determine, to enforce payment of any Collateral, to settle,
compromise or release in whole or in part, any amounts owing on the Collateral,
to prosecute any action, suit or proceeding with respect so 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 your or our name, to sell,
assign and deliver the Collateral (or any part thereof), as public or private
sale, as broker's board, for cash, upon credit or otherwise, at your sole option
and discretion, and you may bid or become purchaser at any such sale, if public,
free from any right of redemption which is hereby expressly waived.
8.3. In the event you seek to take possession of all or any portion of the
Collateral by judicial process, we irrevocably waive: (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 you retain possession and
not dispose of any Collateral until after trial or final judgment.
8.4. We agree that the giving of * days notice by you, sent by ordinary
mail, postage prepaid, to our address set forth below, 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 so be made, shall be deemed to be
reasonable notice thereof and we waive any other notice with respect thereto.
8.5. The net cash proceeds resulting from the exercise of any of the
foregoing rights or remedies shall be applied by you to the payment of the
Obligations in such order as you may elect, and we shall remain liable to you
for any deficiency. Without limiting the generality of the foregoing, if you
enter into any credit transaction, directly or indirectly, in connection with
the disposition of any Collateral, you shall have the option, at any time, in
your sole discretion, to reduce the Obligations by the principal amount of such
credit transaction or to defer the reduction thereof until actual receipt by you
of cash or other immediately available funds in connection therewith.
8.6. 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 you may have under the UCC or
other applicable law. You shall have the right, in your sole 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.
8.7. No act, failure or delay by you shall constitute a waiver of any of
your rights and remedies. No single or partial waiver by you of any provision of
this Agreement or any supplement hereto, or breach or default thereunder, or of
any right or remedy which you 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.
8.8. We waive 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). You may, at all times, proceed directly against us
to enforce payment of the Obligations and shall not be required to take any
action of any kind to preserve, collect or protect your or our rights in the
Collateral.
Section 9. EFFECTIVE DATE: TERMINATION; COSTS.
9.1. This Agreement shall become effective upon acceptance by you and shall
continue in full force and effect for a term ending two (2) years from the date
hereof (the "Renewal Date") and from year to year thereafter, unless sooner
terminated pursuant to the terms hereof; provided that, we hereby agree that you
may, at your option extend the Renewal Date to three (3) years from the date
hereof by giving to us notice at least sixty (60) days prior to the date of the
second anniversary of this Agreement. Either party may terminate this Agreement
on the Renewal Date or on the anniversary of the Renewal Date in any year by
giving the other party at least sixty (60) days prior written notice by
registered or certified mail, return receipt requested, and, in addition, you
shall have the right to terminate this Agreement immediately at any time upon
the occurrence of an Event of Default. No termination of this Agreement,
however, shall relieve or discharge us of our duties, obligations and covenants
hereunder until all Obligations have been paid in (full, and your continuing
security interest in the Collateral shall remain in effect until such
Obligations have been fully discharged.
9.2. If you terminate this Agreement upon the occurrence of an Event of
Default or at our request, in view of the impracticability and extreme
difficulty of ascertaining actual damages and by mutual agreement of the parties
as to a reasonable calculation of your lost profits as a result thereof, we
hereby agree that we shall pay so you, upon the effective date of such
termination, an early termination fee in an amount equal to: (a) * percent of
the Maximum Credit if such termination occurs on or prior to the first
anniversary of this Agreement; (b) two (2%) percent of the Maximum Credit if
such termination occurs after she first anniversary of this Agreement but on or
prior to the second anniversary of this Agreement; or (c) one (1%) percent of
the Maximum Credit if you have exercised your option as provided in paragraph
9.1 above and such termination occurs after the second anniversary of this
Agreement but prior to the third anniversary of this Agreement. Such termination
fee shall be presumed to be the amount of damages sustained by said early
termination and we agree that it is reasonable under the circumstances currently
existing. The early termination fee provided for in this paragraph 9.2 shall be
deemed included in the Obligations,
9.3. This Agreement, any supplement hereto, and any agreements, instruments
or documents delivered or to be delivered in connection herewith represent our
entire agreement and understanding concerning the subject matter hereof and
thereof, and supersede all other prior and contemporaneous agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, offers, contracts, whether oral or written.
9.4. No provision hereof shall be modified or amended orally or by course
of conduct but only by a written instrument expressly referring hereto signed by
both parties.
9.5. Upon your request we shell pay to you, or reimburse you for, all sums,
costs and expenses which you may pay or incur in connection with or related to
the negotiation, preparation, consummation, administration and enforcement of
this Agreement, any supplement hereto, and
-4-
all other agreements, instruments and documents in connection herewith and
therewith and the transactions contemplated hereunder and thereunder, together
with any amendments, supplements, consents or modifications which may be
hereafter made or entered into in respect hereof or thereof, and all efforts
made to defend, protect or enforce the security interest granted herein or
therein or in enforcing payment of the Obilagations, including without
limitation, appraisal fees, filing fees and taxes, title insurance premiums,
recording taxes, expenses for searches, expenses heretofore incurred by you and
from time to time hereafter during the course of periodic field examinations of
the Collateral and our operations, *wire transfer fees, check dishonor fees, the
fees and disbursements of counsel to you, all fees and expenses for the service
and filing of papers, premiums on bonds and undertakings, fees of marshalls,
sheriffs, custodians, auctioneers and others, travel expenses and all court
costs and collection charges, all of which shall be part of the Obligations and
shall accrue interest after demand thereof at a rate equal to the highest rate
then payable on any of the Obligations.
Section 10. NOTICES.
10.1. All notices, requests and demands to or upon the respective parties
hereto telex, telegram or facsimile, immediately upon sending; if by Federal
Express, Express Mail or any other overnight delivery service, one (1) day after
dispatch; and if mailed by certified mail, return receipt requested, five (5)
days after mailing. All notices, requests and demands are to be given or made to
the respective parties at the address (or to such other addresses as either
party may designate by notice in accordance with the provisions of this
paragraph) set forth herein.
Section 1l. WAIVER OF JURY TRIAL; JURISDICTION; CHOICE OF LAW
11.1. We and you 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 hereto, the Obligations, the Collateral or any such other
transaction. We hereby waive rights of setoff and rights to interpose
counterclaims in the xxxxx of any litigation with respect to any matter
connected with this Agreement, any supplement hereto, the Obligations, the
Collateral or any other transaction between the parties and we hereby
irrevocably consent and submit to the non-exclusive jurisdiction of the Supreme
Court of the State of New York and 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.
11.2. In any such litigation we waive personal service of any summons,
complaint or other process and agree that service thereof may be made by
certified or registered mail directed to us at our address set forth below.
Within thirty (30) days after such mailing, we shall appear in answer to such
summons, complaint or other process, failing which we shall be deemed in default
and judgment may be entered by you against us for the amount of the claim and
other relief requested therein.
11.3. This Agreement and all transactions thereunder shall be deemed to be
by and interpreted in accordance with the laws of that State. If any part or
provision applicable law or regulation, such part or provision shall be
severable without affecting the validity of any other part or provision of this
Agreement.
Very truly yours,
EASTCO INDUSTRIAL SAFETY CORP.
-------------------------------------------
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: V.P. Finance
-------------------------------------
Address:
000 Xxxx 00xx Xxxxxx
-------------------------------------------
Xxxxxxxxxx Xxxxxxx, Xxx Xxxx 00000
-------------------------------------------
Accepted at New York, New York
as of October 1, 1991
CONGRESS FINANCIAL CORPORATION
By: /s/ [ILLEGIBLE]
-------------------------
Title: Vice President
------------------------
-5-
RIDER
TO
ACCOUNTS FINANCING AGREEMENT [SECURITY AGREEMENT]
between
Congress Financial Corporation
and
Eastco Industrial Safety Corp.
This Rider sets forth modifying terms to the respective indicated Sections
of the Agreement corresponding to the asterisks in such Sections of the
Agreement.
Section 3.6 * We shall pay to you an annual servicing fee in an amount
equal to $6,000 per year payable in installments of $l,500
each simultaneously with the execution hereof and on the
first day of each consecutive three (3) month period
hereafter, during the term, including all renewal terms, ot
this Agreement or so long as any of the Obligations are
outstanding.
Section 3.7 * We shall pay to you a closing fee in an amount equal to
$75,000, which closing fee shall be fully earned as of the
date hereof and shall be payable simultaneously with the
execution hereof.
Section 5.1 * two (2) business days for federal funds wire transfers and
** any other form of payment, with respect to the
Section 6.8 * on Exhibit A attached hereto
Section 8.1 * reasonably
Section 8.4 * ten (10)
Section 9.2 * three (3%)
Section 9.5 * plus a charge of $500 per person per day for your field
examiners (in addition to reimbursement of their expenses)
COVENANTS SUPPLEMENT TO ACCOUNTS FINANCING AGREEMENT
(SECURITY AGREEMENT]
as of October 1, 1991
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
This Covenants Supplement ("Supp1ement") is a supplement to the Accounts
Financing Agreement [Security Agreement] between Eastco Industrial Safety Corp.
("Borrower", as hereinafter further defined) and Congress Financial Corporation
("Congress", as hereinafter further defined) dated of even date herewith (the
"Accounts Agreement"). This Supp1ement is (a) hereby incorporated into the
Accounts Agreement, (b) made a part thereof and (c) subject to the terms,
conditions, covenants and warranties thereof. All terms (including capitalized
terms) used herein shall have the meanings ascribed to them respectively in the
Accounts Agreement or the other supplements thereto, as the case may be, unless
otherwise defiled in this Supplement.
Section 1. ADDITIONAL DEFINITION
1.1 For purposes of this Agreement, the following terms shall have the
respective meanings given to them as follows:
"Affiliate" shall mean, with respect to a specified Person, any other
Person (a) who, directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, or (b)
who is a director, officer, shareholder or employee of such Person.
"Borrower" shall mean Eastco Industrial Safety Corp., a New York
corporation, and its successors and assigns.
"Borrower" shall mean Congress Financial Corporation, a California
corporation, and its successors and assigns. Any other terms used in any of the
other Financing Agreements to identify Congress including the terms "Secured
Party", "you", "your", "we"' or "our", as the case may be, shall have the same
meaning as "Congress" set forth herein
"Consolidated Tangible Net Worth" shall mean, as to any Person, at any
time, in accordance with GAAP, on a consolidated basis with such Person's
Subsidiaries, the amount equal to the
difference between: (a) the aggregate net book value of all assets of such
Person and its Subsidiaries (excluding the book value of good will), calculating
the book value of inventory for this purpose on a first-in-first-out basis,
after deducting from such book values all appropriate reserves (including all
reserves for doubtful receivables, bad debts, obsolescence, depreciation and
amortization) and (b) the total aggregate Indebtedness of such Person and its
Subsidiaries (including tax and other proper accruals).
"Consolidated Working Capital" shall mean, as to any Person, at any time,
on a consolidated basis with such Person's Subsidiaries', the amount equal to
the difference between: (a) the aggregate net book value of all assets of such
Person and its Subsidiaries, calculating the book value of inventory for this
purpose on a first-in-first-out basis, after deducting from such book values all
appropriate reserves, which would, in accordance with GAAP, be classified as
current assets and (b) all Indebtedness of such Person and its Subsidiaries
which would, in accordance with GAAP, be classified as current liabilities;
provided, that, the aggregate principal amount of the then outstanding
Obligations to Congress shall not be considered current liabilities for purposes
of this calculation.
"Financing Agreements" shall mean all agreements, documents and instruments
entered into by Congress with, or delivered to Congress by, Borrower (as such
agreements, documents or instruments now exist or may hereafter be amended,
modified supplemented, extended, renewed, restated or replaced), including,
without limitation: (a) the Accounts Agreement and all supplements thereto
including this Supplement, (b) the Guarantees, and (c) any other documents
instruments, agreements supplementary guarantees and/or security agreements
and/or other collateral documents now or hereafter delivered to Congress by
Borrower or any guarantor in connection with or related to the Financing
Agreements, the Obligations or the Collateral.
"GAAP" shall mean generally accepted accounting principles as in effect on
the date hereof consistently applied.
"Guarantees" shall mean, individually and collectively, each Guarantee and
Waiver now or hereafter executed by any party in favor of Congress with respect
to the Obligations of the Borrower now or hereafter outstanding to Congress, as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
"Indebtedness" shall mean as to any Person, all items which, in accordance
with GAAP, would be included in determining total liabilities shown on the
liability side of its balance sheet as at the date such Indebtedness is to be
calculated.
-2-
"Norstar" shall mean Norstar Bank, a New York banking corporation, and its
successors and assigns.
"Person" shall mean any individual, sole proprietorship, partnership,
corporation (including a business trust), unincorporated association, joint
stock corporation, trust, joint venture, association, organization or other
entity or government or any agency or instrumentality or political subdivision
thereof.
"Subsidiary" shall, mean any corporation, association or organization,
active or inactive, as to which more than fifty (50%) percent of the outstanding
voting stock or shares shall now or hereafter be owned or controlled, directly
or indirectly by a Person, any Subsidiary of such P9son, or any Subsidiary
thereof.
1.2 All accounting terms not specifically defined herein shall be construed
in accordance with GAAP, except as otherwise stated herein.
1.3 The words "hereof", "herein", "hereunder", "this Supplement" and words
of similar import when used in this Supplement shall refer to this Supplement as
a whole and not to any particular provision of this Supplement, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.4 All terms not specifically defined herein which are defined in Uniform
Commercial Code currently in effect in the State of New York shall have the
meanings as defined in such Uniform Commercial Code.
1.5 For purposes of this Supplement, unless the context otherwise requires,
all other terms hereinbefore or hereinafter defined, including but not limited
to those terms defined in the recitals hereto, shall have the meanings therein
assigned to such terms. All references to Borrower and other Persons set forth
herein shall include their respective successors and assigns. All references to
any other term in the plural shall include the singular and all references to
any term in the singular shall include the plural.
Section 2. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
In addition to the representations, warranties and covenants contained in
the other Financing Agreements, Borrower hereby represents, warrants and
covenants to Congress the following, the truth and accuracy of which are, and
compliance with being, a continuing condition of the making of loans, advances
and other financial accommodations to Borrower by Congress under the Financing
Agreements:
-3-
2.1. Subsidiaries.
(a) Borrower does not have any Subsidiaries as of the date hereof except
as set forth on Exhibit 2.1 annexed hereto.
(b) Borrower shall not form or acquire any additional Subsidiaries
without the prior written consent of Congress, which consent shall not be
unreasonably withheld. In the event Congress so consents, promptly upon such
formation or acquisition, Borrower shall execute and deliver, or shall cause any
such Subsidiary to execute and deliver to Congress, in form and substance
satisfactory to Congress and its counsel: (i) an absolute and unconditional
guarantee of payment of any and all present and future Obligations of Borrower
to Congress, (ii) a general security agreement granting to Congress a first and
only lien (except as otherwise consented to by Congress) upon all of such
Subsidiary's assets, (iii) related Uniform Commercial Code Financing Statements,
and (iv) such other agreements, documents and instruments as Congress may
require, including, but not limited to, supplements and amendments hereto and
other loan agreements or instruments evidencing indebtedness of such new
Subsidiary to Congress.
2.2. Indebtedness. Borrower shall not, and shall not permit any Subsidiary
of Borrower to, create, incur, assume or permit to exist, contingently or
otherwise, any Indebtedness, except:
(a) Indebtedness to Congress;
(b) Indebtedness consisting of unsecured current liabilities incurred in
the ordinary course of its business which are not past their original or
extended due dates;
(c) Indebtedness incurred in the ordinary course of their respective
businesses secured only by liens permitted under Section 2.3(b) and 2.3(c)
hereof;
(d) Indebtedness of Borrower to Norstar in the principal amount
outstanding as of the date hereof of $500,000, which Indebtedness is and shall
be subject and subordinate to the Obligations to Congress pursuant to the terms
of that certain Intercreditor Agreement between Congress and Norstar dated on or
about the date hereof: provided, that: (i) Borrower complies with the terms of
such Intercreditor Agreement and (ii) Borrower shall furnish to Congress all
notices, demands or other materials concerning such Indebtedness, either
received by it in connection therewith promptly after receipt thereof, or sent
by it in connection therewith concurrently with the sending thereof, as the case
may be; and
-4-
(e) Indebtedness existing on the date hereof which is described on
Exhibit 2.2(e) hereto; provided that: (i) Borrower and its Subsidiaries may only
make regulary scheduled payments of principal and interest in respect of such
Indebtedness as set forth in Exhibit 2.2(e); (ii) Borrower and its Subsidiaries
shall not, directly or indirectly, (A) make any prepayments or other
non-mandatory payments in respect of such Indebtedness or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otheerwise deposit or invest any sums for such purpose, or (C) amend, modify,
alter or change the terms of such Indebtedness or any agreement or instrument
related thereto (except as specifically permitted in Section 2.2 of the
Intercreditor Agreement between Norstar and Congress referred to above); and
(iii) Borrower and its Subsidiaries shall furnish to Congress all notices,
demands or other materials concerning such Indebtedness, after receipt thereof
or sent by any of them concurrently with the sending thereof, as the case may
be.
2.3. Limitation on Liens. Borrower shall not, and shall not permit any
Subsidiary of Borrower to, create or suffer to exist any mortgage, pledge,
security interest, lien, encumbrance, defect in title or restriction upon the
use of its real or personal properties, whether now owned or hereafter acquired,
except:
(a) the liens or securi4y interests in favor of Congress;
(b) tax, mechanics and other like statutory liens arising in the ordinary
course of the Borrower's or any of its Subsidiaries' respective businesses to
the extent (1) such liens secure Indebtedness which is not overdue or (ii) until
foreclosure or similar proceedings shall have been commenced, such liens secure
Indebtedness relating to claims or liabilities which are being contested in good
faith by appropriate proceedings diligently pursued available to Borrower or its
Subsidiaries prior to the commencement of foreclosure or other similar
proceedings and are adequately escrowed for or reserved against in Congress'
sole judgment, reasonably applied;
(c) purchase money mortgages or other purchase money liens or security
interests upon any specific fixed assets hereafter acquired, or mortgages, liens
or security interests existing on any such future fixed assets at the time of
acquisition thereof (including, without limitation, capitalized or finance
leases) or in connection with the refinancing of existing purchase money
mortgages or other purchase money liens or, security interests (inc1uding,
without limitation, existing capitalized or finance leases) with respect to
specific fixed assets, provided, that, (i) no such purchase money or other
mortgage, lien or security interest (or capitalized or finance lease, as the
case may be) with respect to specific future fixed assets or as refinanced shall
extend to or cover any other
-5-
property, other than the specific fixed assets so acquired or refinanced subject
to such mortgage, lien or security interest (or lease) and the proceeds thereof,
(ii) such mortgage, lien or security interest secures the obligation. to pay the
purchase price of such specific fixed assets only (or the obligations under the
capitalized or finance lease), and (iii) the principal amount secured thereby
shall not exceed one hundred (100%) percent of the cost of the fixed assets so
acquired or subject to such mortgage, lien or security in crest (or lease);
(d) the existing liens, encumbrances or security interests set forth on
Exhibit 2.3(d) hereto.
2.4. Loans, Investments, Guarantees, Etc. Borrower shall not, and shall not
permit any Subsidiary of Borrower to, directly or indirectly, make any loans or
advance money or property to any Person, or invest in (by capital contribution,
dividend or otherwise) or purchase or repurchase the stock or Indebtedness or
all or a substantial part of the assets or property of any Person, or guarantee,
assume, endorse, or otherwise become responsible for (directly or indirectly)
the Indebtedness, performance, obligations or dividends of any Person or agree
to do any of the foregoing, except:
(a) guarantees by any SubsIdiary of Borrower of the Obligations in favor
of Congress;
(b) the existing guarantees by certain Subsidiaries of Borrower of
obligations of Borrower in favor of Norstar;
(c) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(d) after written notice thereof to Congress, investments in the
following instruments, which shall be pledged and delivered to Congress upon
Congress' request, (1) marketable obligations issued or guaranteed by the United
States of America or an instrumentality or agency thereof, maturing not more
than one (1) year after the date of acqisition thereof, (ii) certificates of
deposit or other obligations maturing not more than one (1) year after the date
of acquisition thereof issued by any bank or trust company organized under the
laws of and located in the United States of America or any State thereof. and
having capital, surplus and undivided profits of at least $100,000,000, and
(iii) open market commercial paper with a maturity not in excess of two hundred
seventy (270) days from the date of acquisition thereof which have the highest
credit rating by either Standard & Poor's Corporation or Xxxxx'x Investors
Service, Inc.; and
(e) any Subsidiary of Borrower may make loans to Borrower.
-6-
2.5. Transactions with Affilliates. Borrower shall not, and shall not
permit any Subsidiary of Borrower to, directly or indirectly:
(a) purchase, acquire or lease any property or receive any services from,
or sell, transer or lease any property to, any Affiliate of the Borrower or any
Subsidiary of the Borrower or any agent or employee of the Borrower or any
Subsidiary of the Borrower, except on prices (including commissions) and terms
no less favorable than would have beep obtained in an arm's length transaction
with a, non-affiliated Person; or
(b) make any payment of management fees or of the principal amount of or
interest on any Indebtedness for borrowed money owing to any Affiliate of the
Borrower.
2.6. Dividends. Borrower shall not, and shall not permit any Subsidiary of
Borrower to, direct1y or indirectly, during any fiscal year, commencing with the
current fiscal year, declare or pay any dividends on account of any shares of
any class of capital stock of the Borrower or its Subsidiaries now or hereafter
outstanding, or set aside or otherwise deposit or invest any sums for such
purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of
any class of capital stock (or set aside or otherwise deposit or invest any sums
for such purpose) or apply or set apart any sums, or make any other distribution
(by reduction of capita1 or otherwise) in respect of any such shares or agree to
do any of the foregoing, except that any Subsidiary of Borrower may dec1are and
pay dividends to Borrower on account of any shares of any class of capital stock
of such Subsidiary which such Subsidiary is legally entitled to declare or pay.
2.7. Consolidated Tangible Net Worth. Borrower and its Subsidiaries shall,
at all times, until all obligations have been indefeasibly paid in full,
maintain a Consolidated Tangible Net Worth of Five Hundred Thousand Dollars
($500,000);
2.8. Consolidated Working Capital. Borrower and its Subsidiaries shall, at
all times, untill all Obligations have been indefeasibly paid in full, maintain
a Consolidated working Capital of not less than Three Million Five Hundred
Thousand Dollars ($3,500,000).
2.9. Tradestyles. Some of Borrowers invoices may from time to time be
rendered to customers under the tradestyles listed on Exhibit 2.9 annexed hereto
(which, together with any new tradestyles used after the date hereof are
referred to collectively as the "Tradestyles" and individually, as a
"Tradestyle"). As to the Tradestyles used by it, and the related Accounts, the
Borrower hereby agrees that:
-7-
(a) Each Tradestyle is a trade name and style (and not an independent
corporation or other legal entity) by which Borrower may identify and sell or
Lease certain of its goods or services and conduct a portion of its business;
(b) All Accounts and proceeds thereof (including any returned
merchandise) which arise from the sale or lease of goods or rendition of
services invoiced under the Tradestyle shall be owned solely by Borrower and
shall be subject to the security interests of Congress and other terms of this
Agreement.
(c) All assignments or confirmatory schedules of Accounts or chattel
paper delivered to Congress by Borrower, whether in the name of any of the
Tradestyles or Borrower, shall be executed by Borrower as owner of such assigned
Accounts or chattel paper, as the case may be; and
(d) New Tradestyles may be used by Borrower, but only if (i) Congress is
given at least thirty (30) days prior written notice of the intended use of any
new Tradestyle, which notice shall set forth the proposed new Tradestyle, and
the intended user(s) thereof and (ii) such supplemental financing statements as
Congress shall request shall be executed and delivered by the intended user(s)
for filing by Congress prior to the use of such new Tradestyle.
Very truly yours,
EASTCO INDUSTRIAL SAFETY CORP.
By: [ILLEGIBLE]
----------------------------------
Title: V.P. Finance
----------------------------------
ACCEPTED:
CONGRESS FINANCIAL CORPORATION
By: /s/ [ILLEGIBLE]
Title: Vice President
-8-
[LOGO A CORESTATES COMPANY]
as of October 1, 1991
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx XXxx 00000
Re: Inventory Loans
-------------------
Gentlemen:
Reference is made to the Accounts Financing Agreement [Security Agreement]
between us, dated as of October 1, 1991, as from time to time amended and
supplemented (the "Accounts Agreement").
Reference is also made to the Supplement to the Accounts Agreement, between
us, dated as of October 1, 1991, as from time to time amended and supplemented
(the "Supplement").
This agreement is (a) hereby incorporated into the Accounts Agreement and
Supplement (b) made a part thereof and (c) subject to the other terms,
conditions, covenants and warranties thereof. All terms (including) capitalized
terms) used herein shall have the meanings ascribed to them respectively in the
Accounts Agreement and Supplement, unless otherwise defined herein.
1. As used herein:
a. "Eligible Inventory" shall mean and include Inventory
consisting of first quality finished goods held for resale in the
ordinary course of our business and raw materials for such
finished goods, which are located at our premises and acceptable
to you in all respects. General criteria for Eligible Inventory
may be established and revised from time to time by you in
exclusive judgment. In determining such acceptability you may, but
need not, rely on reports and schedules of Inventory furnished to
you by us, but reliance thereon by you from time to time shall not
be deemed to limit your right to revise standards of eligibility
at any time. In general, except in sole discretion, Eligible
Inventory shall not include work in process, components which are
not part of finished goods, spare parts, packaging and shipping
materials, supplies used or consumed in our business, Inventory at
the premises of third parties or subject to a security interest or
lien in favor of any third party, xxxx and hold goods, Inventory
which is not subject to your perfected security interest, returned
and/or defective goods, "seconds" and Inventory purchased on
consignment.
b. "Value" shall mean cost or market price, as determined by you,
whichever is lower.
2. In addition to loans which may be made by you to us, pursuant to
Section 2 of the Accounts Agreement, you shall, in your sole
discretion, make loans to us from time to time, at our request, of
up to the following percentages of Value of the following
categories of Eligible Inventory (or such greater or lesser
percentages thereof as you shall, in your sole discretion,
determine from time to time):
fifty percent (50%) of E1igib1e Inventory consisting
of raw materials and finished goods
3. Except in your sole discretion, the outstanding aggregate
principal amount of loans by you to us hereunder shall not exceed,
at any time, the lower of (a) the aggregate amount of the above
percentages of Value of Eligible Inventory or (b) $2,500,000.
4. All loans made by you, interest thereon and other sums owed by us
to you hereunder shall be payable and evidenced as provided in
Sections 2 and 3 of the Accounts Agreement. Without limiting your
right to demand payment of the Obligations, or any portion
thereof, in accordance with any other terms of the Accounts
Agreement and Supplement, in the event that the outstanding
aggregate principal amount of loans by you to us hereunder exceeds
such limit, we shall remain liable therefor and the entire amount
of such excess(es) shall, at your option, become immediately due
and payable, upon your demand.
Very truly yours,
EASTCO INDUSTRIAL SAFETY CORP.
----------------------------------
By: /s/ [ILLEGIBLE]
----------------------------------
Title: V.P. Finance
----------------------------------
INVENTORY AND EQUIPMENT SECURITY AGREEMENT
SUPPLEMENT TO ACCOUNTS FINANCING AGREEMENT
[SECURITY AGREEMENT]
Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
This Inventory and Equipment Security Agreement ("Supplement") is a
supplement to the Accounts Financing Agreement (Security Agreement] between us,
dated as of October 1, 1991 (the "Agreement"). This Supplement is (a) hereby
incorporated into the Agreement, (b) made a part thereof and (c) subject to the
other terms, conditions. covenants and warranties thereof. All terms (including
capitalized terms) used herein shall have the meanings ascribed to them
respectively in the Agreement, unless otherwise defined in this Supplement.
Section 1. ADDITIONAL SECURITY INTEREST.
As additional security for the prompt performance, observance and payment
in full of all Obligations, we hereby grant to you a continuing security
interest in, a lien upon, and a right of setoff against, and we hereby assign,
transfer, pledge and set over to you the followIng (which is and shall be deemed
part of the Collateral as defined and used in the Agreement):
1.1. All raw materials, work in process, finished goods, and all other
inventory of whatever kind or nature, wherever located, whether now owned or
hereafter existing or acquired by us ("Inventory"), including without
limitation, all wrapping. packaging. advertising, shipping materials, and all
other goods consumed in our business, all labels and other devices, names or
marks affixed or to be affixed thereto for purposes of selling or of identifying
the same or the seller or manufacturer thereof and all of our right, title and
interest therein and thereto;
1.2. All equipment, machinery. computers and computer hardware, vehicles,
tools, dies, jigs, furniture, trade fixtures and fixtures; all attachments,
accessions and property now or hereafter affixed thereto or used in connection
therewith, substitutions and replacements thereof. wherever located, whether now
owned or hereafter acquired by us ("Equipment"), including without limitation,
all equipment listed on any Schedule A annexed hereto and made a part hereof;
1.3. All books, records, documents, other property and general intangibles
at any time relating to the inventory and the Equipment: and
1.4. All products and proceeds of the foregoing, in any form. including,
without limitation, insurance proceeds and any claims against third parties for
loss or damage to or destruction of any or all of the foregoing.
Section 2. ADDITIONAL REPRESENTATIONS. WARRANTIES AND COVENANTS.
We hereby represent, warrant and covenant to you the following (which shall
survive she execution and delivery of this Supplement), the truth and accuracy
of which, and compliance with, being a continuing condition of the making of
loans by you under the Agreement or any other supplement thereto:
2.1. We are and shall be, with respect to the Equipment, the owner of such
Equipment free from any lien, security interest, claim and encumbrance of any
kind, except in your favor and as set forth on Schedule B, if any, annexed
hereto and made a part hereof.
2.2. The only locations of any Collateral are those addresses listed on
Schedule C annexed hereto and made a part hereof. Schedule C sets forth the
owner and/or operator of the premises at such addresses for all locations which
we do not own and operate and all mortgages. if any, with respect to the
premises. We shall not remove any Collateral from such locations, without your
prior written consent, except for sales of Inventory in the ordinary course of
our business.
2.3. We shall at all times maintain, with financially sound and reputable
insurers, casualty and hazard insurance with respect to the Collateral for not
less than its full market value and against all risks to which it may be
exposed. All such insurance policies shall be in such form, substance, amounts
and coverage as may be satisfactory to you and shall provide for ten (10) days'
minimum prior cancellation notice in writing to you. You may act as attorney for
us in obtaining, adjusting, settling, amending and cancelling such insurance. We
shall promptly (a) obtain endorsements to all existing and future insurance
policies with respect to the Collateral specifying that the proceeds of such
insurance shall be payable to you and us as our interests may appear and further
specifying that you shall be paid regardless of any act, omission or breach of
warranty by us, (b) deliver to you an original executed copy of, or executed
certificate of the insurance carrier with respect to, such endorcement and, at
your request, the original or a certified duplicate copy of the underlying
insurance policy, and (c) deliver to you such other evidence which is
satisfactory to you of compliance with the provisions hereof.
2.4. We shall promptly notify you in writing of the details of any loss,
damage, investigation, action, suit, proceeding or claim relating to the
Collateral or which would result in any material adverse change in our business,
properties, assets goodwill or condition, financial or otherwise.
2.5. At your option, you may apply any insurance monies received at any
time to the cost of repairs to or replacement for the Inventory and/or Equipment
and/or to payment of any of the Obligations, whether or not due, in any order
and in such manner as you in your sole discretion, may determine.
2.6. Upon your request, at any time and from time to time, *we shall, at
our sole cost and expense, execute and deliver to you written reports or
appraisals as to the Inventory and Equipment listing all items and categories
thereof, describing the condition of same and setting forth the value thereof
(the lower of cost or market value of the Inventory and the lower of net cost
less depreciation, fair market value and/or liquidation value of the Equipment),
in such form as in satisfactory, to you.
2.7. We shall, at our own expense, keep the Equipment in first class order,
repair. running and marketable condition.
2.8. We shall (a) use, store and maintain the Inventory and the Equipment
with all reasonable care and caution, and (b) use the Inventory and Equipment
for lawful purposes only and in conformity with applicable laws, ordinances and
regulations. *but not more often than two (2) times per fiscal year, provided
there is not an Event of Default.
2.9. All inventory shall be produced in accordance with the requirements of
the Federal Fair Labor Standards Act of 1938, as amended and all rules,
regulations and orders related thereto.
2.10. The Inventory and the Equipment are and shall be used in our business
and not for personal, family, household or farming use.
2.11. The Equipment is now and shall remain personal property and we shall
not permit any of the Equipment to be or become a part of or affixed to real
property without (a) prior written notice to you and your written consent and
(b) first making all arrangements, and delivering or causing to be delivered to
you, such agreements and other documentation requested by you for the protection
and preservation of your security interest, and liens, in form and satisfactory
to you, including, without limitation, waivers and subordination agreements by
any landlords or mortgagees of statutory and non-statutory liens and rights of
distraint.
2.12. We assume all responsibility and liability arising from or relating
to the use, sale or other disposition of the Inventory and the Equipment.
Section 3. ADDITIONAL REMEDIES.
Upon the occurrence of an Event of Default and at any time thereafter, you
shall have the right (in addition to any other rights you may have under the
Agreement, this Supplement or otherwise), without notice to us at any time and
from time to time, in your discretion, with or without judicial process or she
aid or assistance of others and without cost to you:
3.1. To enter upon any premises on or in which any of the Inventory or
Equipment may be located and, without resistance or interference by us, take
possession of the Inventory and the Equipment;
3.2. To complete processing, manufacturing and repair of all or any portion
of the Inventory;
3.3. To sell, foreclose or otherwise dispose of any part or all of the
inventory and the Equipment on or in any of our premises or premises of any
other party
3.4. To require us, at our expense, to assemble and make available to you
any part or all of the Inventory and the Equipment at any place and time
designated by you; and
3.5. To remove any or all of the Inventory and the Equipment from any
premises on or in which the same may be located, for the purpose of effecting
the sale, foreclosure or other disposition thereof or for any other purpose (and
if any of the Inventory or the Equipment consists of motor vehicles, you may use
our registrations and license plates).
IN WITNESS WHEREOF we have caused these presents to be duly executed as of
the 1st day of October 1991.
EASTCO NOUSTRIAL TY CORP.
By: /s/ [ILLEGIBLE]
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Title: V.P. Finance
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SCHEDULE A
LIST AND DESCRIPTION OP EQUIPMENT
[INTENTIONALLY DELETED]
