BANC OF AMERICA COMMERCIAL FUNDING LOAN AND SECURITY AGREEMENT
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement (as it may be amended, this
"AGREEMENT") is entered into on March 22, 2000 between BANC OF AMERICA
COMMERCIAL FINANCE CORPORATION, THROUGH ITS COMMERCIAL FUNDING DIVISION
("LENDER"), having an address at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000 and URBAN JUICE & SODA COMPANY LTD., a Wyoming corporation, and XXXXX SODA
CO. (USA) INC., a Washington corporation (collectively, "BORROWER"), whose chief
executive offices are located at 0000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxxx X0X 0X0 and 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000
(collectively, "BORROWER'S ADDRESS"). All references to Borrower shall mean each
of them, jointly and severally, individually and collectively, and the
successors and assigns of each. The Schedules to this Agreement are an integral
part of this Agreement and are incorporated herein by reference. Terms used, but
not defined elsewhere, in this Agreement are defined in Schedule B.
1. LOANS AND CREDIT ACCOMMODATIONS.
1.1 AMOUNT. Subject to the terms and conditions contained in this
Agreement, Lender will:
(a) REVOLVING LOANS AND CREDIT ACCOMMODATIONS. From time to time
during the Term at Borrower's request, make revolving loans to Borrower
("REVOLVING LOANS"), and make letters of credit, bankers acceptances and other
credit accommodations ("CREDIT ACCOMMODATIONS") available to Borrower, in each
case to the extent that there is sufficient Availability at the time of such
request to cover, dollar for dollar, the requested Revolving Loan or Credit
Accommodation; PROVIDED, that after giving effect to such Revolving Loan or
Credit Accommodation, (x) the outstanding balance of all monetary Obligations
(INCLUDING the principal balance of any Term Loan and, solely for the purpose of
determining compliance with this provision, the Credit Accommodation Balance)
will not exceed the Maximum Facility Amount set forth in Section 1(a) of
Schedule A and (y) none of the other Loan Limits set forth in Section 1 of
Schedule A will be exceeded. For this purpose, "AVAILABILITY" means:
(i) the aggregate amount of Eligible Accounts (less
maximum existing or asserted taxes, discounts, credits and allowances)
multiplied by the Accounts Advance Rate set forth in Section 1(b)(i) of
Schedule A but not to exceed the Accounts Sublimit set forth in Section
1(c) of Schedule A;
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PLUS
(ii) the lower of cost or market value of Eligible
Inventory multiplied by the Inventory Advance Rate(s) set forth in
Section 1(b)(ii) of Schedule A, but not to exceed the Inventory
Sublimit(s) set forth in Section 1(d) of Schedule A;
MINUS
(iii)all Reserves which Lender has established pursuant to
Section 1.2 (including those to be established in connection with the
requested Revolving Loan or Credit Accommodation);
MINUS
(iv) the outstanding balance of all of the monetary
Obligations (EXCLUDING the Credit Accommodation Balance and the
principal balance of the Term Loan); and
PLUS
(v) the Overadvance Amount, if any, set forth in Section
1(g) of Schedule A.
(b) TERM LOAN. On the date of this Agreement, make (i) an advance
to Borrower computed with respect to the value of Borrower's Eligible Equipment
(the ("EQUIPMENT ADVANCE") in the principal amount, if any, set forth in Section
2(a)(i) of Schedule A, and (ii) an advance to Borrower computed with respect to
the value of Borrower's Eligible Real Property (the "REAL PROPERTY ADVANCE") in
the principal amount, if any, set forth in Section 2(a)(ii) of Schedule A. The
Equipment Advance and the Real Property Advance are collectively referred to as
the "TERM LOAN."
1.2 RESERVES. Lender may from time to time establish and revise such
reserves as Lender deems appropriate in its sole discretion ("RESERVES") to
reflect (i) events, conditions, contingencies or risks which affect or may
affect (A) the Collateral or its value, or the security interests and other
rights of Lender in the Collateral or (B) the assets, business or prospects of
Borrower or any Obligor, (ii) Lender's good faith concern that any Collateral
report or financial information furnished by or on behalf of Borrower or any
Obligor to Lender is or may have been incomplete, inaccurate or misleading in
any material respect, (iii) any fact or circumstance which Lender determines in
good faith constitutes, or could constitute, a Default or Event of Default or
(iv) any other events or circumstances which Lender determines in good faith
make the establishment or revision of a Reserve prudent. Without limiting the
foregoing, Lender shall (x) in the case of each Credit Accommodation issued for
the purchase of Inventory (a) which meets the criteria for Eligible Inventory
set forth in clauses (i), (ii), (iii), (v) and (vi) of the definition of
Eligible Inventory, (b) which is or will be in transit to one of the locations
set forth in Section 9(d) of Schedule A, (c) which is fully insured in a manner
satisfactory to Lender and (d) with respect to which Lender is in
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possession of all bills of lading and all other documentation which Lender has
requested, all in form and substance satisfactory to Lender in its sole
discretion, establish a Reserve equal to the cost of such Inventory (plus all
duties, freight, taxes, insurance, costs and other charges and expenses relating
to such Credit Accommodation or such Eligible Inventory) multiplied by a
percentage equal to 100% minus the Inventory Advance Rate applicable to Eligible
Inventory and (y) in the case of any other Credit Accommodation issued for any
purpose, establish a Reserve equal to the full amount of such Credit
Accommodation plus all costs and other charges and expenses relating to such
Credit Accommodation. In addition, (x) Lender shall establish a permanent
Reserve in the amount set forth in Section 1(f) of Schedule A, and (y) if the
outstanding principal balance of the Term Loan advance with respect to Eligible
Equipment exceeds the percentage set forth in Section 2(a)(i) of Schedule A of
the appraised value of such Eligible Equipment, Lender may establish an
additional Reserve in the amount of such excess (and, for this purpose, if
payments of principal on the Term Loan advances against Eligible Equipment and
Real Property are not calculated separately, payments of principal of the Term
Loan made by Borrower shall be deemed to apply to the Term Loan advance with
respect to Eligible Equipment and Real Property, respectively, in proportion to
the original principal amounts of such advances). Lender may, in its discretion,
establish and revise Reserves by deducting them in determining Availability or
by reclassifying Eligible Accounts or Eligible Inventory as ineligible. In no
event shall the establishment of a Reserve in respect of a particular actual or
contingent liability obligate Lender to make advances hereunder to pay such
liability or otherwise obligate Lender with respect thereto.
1.3 OTHER PROVISIONS APPLICABLE TO CREDIT ACCOMMODATIONS. Lender may, in
its sole discretion and on terms and conditions acceptable to Lender, make
Credit Accommodations available to Borrower either by issuing them, or by
causing other financial institutions to issue them supported by Lender's
guaranty or indemnification; PROVIDED, that after giving effect to each Credit
Accommodation, the Credit Accommodation Balance will not exceed the Credit
Accommodation Limit set forth in Section 1(e) of Schedule A. Any amounts paid by
Lender in respect of a Credit Accommodation will be treated for all purposes as
a Revolving Loan which shall be secured by the Collateral and bear interest, and
be payable, in the same manner as a Revolving Loan. Borrower agrees to execute
all documentation required by Lender or the issuer of any Credit Accommodation
in connection with any such Credit Accommodation.
1.4 REPAYMENT. Accrued interest on all monetary Obligations shall be
payable on the first day of each month. Principal of the Term Loan shall be
repaid as set forth in Section 2(b) of Schedule A. If at any time any of the
Loan Limits are exceeded, Borrower will immediately pay to Lender such amounts
(or provide cash collateral to Lender with respect to the Credit Accommodation
Balance in the manner set forth in Section 7.3), as shall cause Borrower to be
in full compliance with all of the Loan Limits. Notwithstanding the foregoing,
Lender may, in its sole discretion, make or permit Revolving Loans, the Term
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Loan, any Credit Accommodations or any other monetary Obligations to be in
excess of any of the Loan Limits; PROVIDED, that Borrower shall, upon Lender's
demand, pay to Lender such amounts as shall cause Borrower to be in full
compliance with all of the Loan Limits. All unpaid monetary Obligations shall be
payable in full on the Maturity Date (as defined in Section 7.1) or, if earlier,
the date of any early termination pursuant to Section 7.2.
1.5 MINIMUM BORROWING. Subject to the terms and conditions of this
Agreement, Borrower agrees to (i) borrow sufficient amounts to cause the
outstanding principal balance of the Loans to equal or exceed, at all times
prior to the Maturity Date, the Minimum Loan Amount set forth in Section 4 of
Schedule A and (ii) maintain Availability sufficient to enable Borrower to do
so. However, Lender shall not be obligated to loan Borrower the Minimum Loan
Amount other than in accordance with all of the terms and conditions of this
Agreement.
1.6 JOINT AND SEVERAL LIABILITY. The liability of each Borrower for all
amounts due to Lender under this Agreement shall be joint and several regardless
of which Borrower actually receives Loans or other extensions of credit
hereunder or the amount of such Loans received or the manner in which Lender
accounts for such Loans or other extensions of credit or on its books and
records. Each Borrower's Obligations with respect to Revolving Loans made to it,
and related fees, costs and expenses, and each Borrower's Obligations arising as
a result of the joint and several liability of each Borrower hereunder, with
respect to Revolving Loans and made to the other Borrowers hereunder, together
with the related fees, costs and expenses, shall be separate and distinct
obligations, all of which are primary obligations of each Borrower.
Each Borrower's Obligations arising as a result of the joint and
several liability of the Borrower hereunder with respect to Loans or other
extensions of credit made to the other Borrower hereunder shall, to the fullest
extent permitted by law, be unconditional irrespective of (i) the validity,
enforceability, avoidance or subordination of the Obligations of the other
Borrower or of any promissory note or other document evidencing all or any part
of the Obligations of the other Borrower, (ii) the absence of any attempt to
collect the Obligations from the other Borrower, any other guarantor, or any
other security therefor, or the absence of any other action to enforce the same,
(iii) the waiver, consent, extension, forbearance or granting of any indulgence
by Lender with respect to any provision of any instrument evidencing the
Obligations of the other Borrower, or any part thereof, or any other agreement
now or hereafter executed by the other Borrower and delivered to Lender, (iv)
the failure by Lender to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or collateral for the
Obligations of the other Borrower, (v) Lender's election, in any proceeding
instituted under the Bankruptcy Code, of the application of Section 1111(b)(2)
of the Bankruptcy Code, (vi) any borrowing or grant of a security interest by
the other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy
Code, (vii) the disallowance of all or any portion of Lender's claim(s) for
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repayment of the Obligations of the other Borrower under Section 502 of the
Bankruptcy Code, or (viii) any other circumstance which might constitute a legal
or equitable discharge or defense of a guarantor or of the other Borrower. With
respect to each Borrower's Obligations arising as a result of the joint and
several liability of the Borrowers hereunder with respect to Loans or other
extensions of credit made to the other Borrowers hereunder, such Borrower
waives, until the Obligations shall have been indefeasibly paid in full and the
Loan Agreement shall have been terminated, any right to enforce any right of
subrogation or any remedy which Lender now has or may hereafter have against any
Borrower, any endorser of any guarantor of all or any part of the Obligations,
and any benefit of, and any right to participate in, any security or collateral
given to Lender to secure payment of the Obligations or any other liability of
the Borrowers to Lender, whether any such right arises by way of suretyship or
otherwise. Borrowers hereby further waive, to the fullest extent permitted by
law, all suretyship or similar defense in respect of Lender and the transactions
contemplated herein.
Upon any Event of Default, Lender may, at its sole election, proceed
directly and at once, without notice, against any Borrower to collect and
recover the full amount, or any portion of the Obligations, without first
proceeding against any other Borrower or any other person, or against any
security or collateral for the Obligations. Each Borrower consents and agrees
that Lender shall not be under any obligation to marshal any assets in favor of
such Borrower or against or in payment of any or all of the Obligations.
1.7 ADMINISTRATION OF REVOLVING LOANS AND COLLATERAL ON A POOLED BASIS
(a) All Revolving Loans made or advanced to either Borrower pursuant to
this Agreement from time to time may (but need not) be deposited in the general
corporate account of Xxxxx Soda Co. (USA) Inc. All such deposits shall
constitute the discharge, pro tanto, of Lender's obligation to the Borrower
under this Agreement, or an advance to either Xxxxx Soda Co. (USA) Inc. or Urban
Juice & Soda Company Ltd. of that amount, as the case may be.
(b) All Collateral assigned to Lender pursuant to this Agreement may
(but need not) be handled by Lender in a single account on Lender's books in the
name of Xxxxx Soda Co. (USA) Inc. without any attempted differentiation based
upon the true original ownership thereof.
(c) Lender may accept the instructions or other communications of
either Xxxxx Soda Co. (USA) Inc. or Urban Juice & Soda Company Ltd. in
connection with the advances, Revolving Loans and the Collateral under the
Agreement with the same effect as if given by both Borrowers.
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2. INTEREST AND FEES.
2.1 INTEREST. All Loans and other monetary Obligations shall bear
interest at the Interest Rate(s) set forth in Section 3 of Schedule A, except
where expressly set forth to the contrary in this Agreement or another Loan
Document; PROVIDED, that after the occurrence of an Event of Default, all Loans
and other monetary Obligations shall, at Lender's option, bear interest at a
rate per annum equal to two percent (2%) in excess of the rate otherwise
applicable thereto (the "DEFAULT RATE") until paid in full (notwithstanding the
entry of any judgment against Borrower or the exercise of any other right or
remedy by Lender), and all such interest shall be payable on demand. Changes in
the Interest Rate shall be effective as of the date of any change in the Prime
Rate. Notwithstanding anything to the contrary contained in this Agreement, the
aggregate of all amounts deemed to be interest hereunder and charged or
collected by Lender is not intended to exceed the highest rate permissible under
any applicable law, but if it should, such interest shall automatically be
reduced to the extent necessary to comply with applicable law and Lender will
refund to Borrower any such excess interest received by Lender.
2.2 FEES AND WARRANTS. Borrower shall pay Lender the following fees, and
issue Lender the following warrants, which are in addition to all interest and
other sums payable by Borrower to Lender under this Agreement, and are not
refundable:
(a) CLOSING FEE. A closing fee in the amount set forth in Section
6(a) of Schedule A, which shall be deemed to be fully earned as of, and payable
on, the date hereof.
(b) FACILITY FEES. (i) A facility fee for the Initial Term in the
amount set forth in Section 6(b)(i) of Schedule A, which shall be fully earned
as of the date of this Agreement, and shall be payable in two equal installments
on each anniversary of this Agreement during the Initial Term, and (ii) a
facility fee for each Renewal Term in the amount set forth in Section 6(b)(ii)
of Schedule A, which shall be fully earned as of the first day of such Renewal
Term, and shall be payable in equal three installments on the first day of such
Renewal Term and on each anniversary thereof during such Renewal Term.
(c) SERVICING FEE. A monthly servicing fee in the amount set
forth in Section 6(c) of Schedule A, in consideration of Lender's administration
and other services for each month (or part thereof), which shall be fully earned
as of, and payable in advance on, the date of this Agreement and on the first
day of each month thereafter so long as any of the Obligations are outstanding.
(d) UNUSED LINE FEE. An unused line fee at a rate equal to the
percentage per annum set forth in Section 6(d) of Schedule A of the amount by
which the Maximum Facility Amount exceeds the average daily outstanding
principal balance of the Loans and the Credit Accommodation Balance during the
immediately preceding month (or part
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thereof), which fee shall be payable, in arrears, on the first day of each
month so long as any of the Obligations are outstanding and on the Maturity
Date.
(e) MINIMUM BORROWING FEE. A minimum borrowing fee equal to
the excess, if any, of (i) interest which would have been payable in respect
of each period set forth in Section 6(e)(i) of Schedule A if, at all times
during such period, the principal balance of the Loans was equal to the
Minimum Loan Amount over (ii) the actual interest payable in respect of such
period, which fee shall be fully earned as of the last day of such period and
payable on the date set forth in Section 6(e)(ii) of Schedule A and on the
Maturity Date, commencing with the immediately following period.
(f) SUCCESS FEE. A success fee in the amount set forth in
Section 6(f) of Schedule A, which shall be fully earned as of the date of
this Agreement and payable as set forth in Section 6(f) of Schedule A.
(g) WARRANTS. Warrants to acquire the capital stock of URBAN
JUICE & SODA COMPANY LTD., a Wyoming corporation, as summarized in Section
6(g) of Schedule A and as more fully set forth in a separate warrant
agreement executed by Borrower contemporaneously with this Agreement.
(h) CREDIT ACCOMMODATION FEES. All of the fees relating to Credit
Accommodations set forth in Section 6(i) of Schedule A.
2.3 COMPUTATION OF INTEREST AND FEES. All interest and fees shall be
calculated daily on the closing balances in the Loan Account based on the actual
number of days elapsed in a year of 360 days. For purposes of calculating
interest and fees, if the outstanding daily principal balance of the Revolving
Loans is a credit balance, such balance shall be deemed to be zero.
2.4 LOAN ACCOUNT; MONTHLY ACCOUNTINGS. Lender shall maintain a loan
account for Borrower reflecting all advances, charges, expenses and payments
made pursuant to this Agreement (the "LOAN ACCOUNT"), and shall provide Borrower
with a monthly accounting reflecting the activity in the Loan Account. Each
accounting shall be deemed correct, accurate and binding on Borrower and an
account stated (except for reverses and reapplications of payments made and
corrections of errors discovered by Lender), unless Borrower notifies Lender in
writing to the contrary within sixty days after such account is rendered,
describing the nature of any alleged errors or omissions. However, Lender's
failure to maintain the Loan Account or to provide any such accounting shall not
affect the legality or binding nature of any of the Obligations. Interest, fees
and other monetary Obligations due and owing under this Agreement (including
fees and other amounts paid by Lender to issuers of Credit Accommodations) may,
in Lender's discretion, be charged to the Loan Account, and will thereafter be
deemed to be Revolving Loans and will bear interest at the same rate as other
Revolving Loans.
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3. SECURITY INTEREST.
3.1 To secure the full payment and performance of all of the
Obligations, Borrower hereby grants to Lender a continuing security interest in
all of Borrower's property and interests in property, whether tangible or
intangible, now owned or in existence or hereafter acquired or arising, wherever
located, including Borrower's interest in all of the following, whether or not
eligible for lending purposes: (i) all Accounts, Chattel Paper, Instruments,
Documents, Goods (including Inventory, Equipment, farm products and consumer
goods), Investment Property, General Intangibles, Deposit Accounts and money,
(ii) all proceeds and products of all of the foregoing (including proceeds of
any insurance policies, proceeds of proceeds and claims against third parties
for loss or any destruction of any of the foregoing) and (iii) all books and
records relating to any of the foregoing.
4. ADMINISTRATION.
4.1 LOCK BOXES AND BLOCKED ACCOUNTS. Borrower will, at its expense,
establish (and revise from time to time as Lender may require) collection
procedures acceptable to Lender, in Lender's sole discretion, for the collection
of checks, wire transfers and other proceeds of Accounts ("ACCOUNT PROCEEDS"),
which may include (i) directing all Account Debtors to send all such proceeds
directly to a post office box designated by Lender either in the name of
Borrower (but as to which Lender has exclusive access) or, at Lender's option,
in the name of Lender (a "LOCK BOX") or (ii) depositing all Account Proceeds
received by Borrower into one or more bank accounts maintained in Lender's name
(each, a "BLOCKED ACCOUNT"), under an arrangement acceptable to Lender with a
depository bank acceptable to Lender, pursuant to which all funds deposited into
each Blocked Account are to be transferred to Lender in such manner, and with
such frequency, as Lender shall specify or (iii) a combination of the foregoing.
Borrower agrees to execute, and to cause its depository banks to execute, such
Lock Box and Blocked Account agreements and other documentation as Lender shall
require from time to time in connection with the foregoing.
4.2 REMITTANCE OF PROCEEDS. Except as provided in Section 4.1, all
proceeds arising from the sale or other disposition of any Collateral shall be
delivered, in kind, by Borrower to Lender in the original form in which received
by Borrower not later than the following Business Day after receipt by Borrower.
Until so delivered to Lender, Borrower shall hold such proceeds separate and
apart from Borrower's other funds and property in an express trust for Lender.
Nothing in this Section 4.2 shall limit the restrictions on disposition of
Collateral set forth elsewhere in this Agreement.
4.3 APPLICATION OF PAYMENTS. Lender may, in its sole discretion, apply,
reverse and re-apply all cash and non-cash proceeds of Collateral or other
payments received with respect to the Obligations, in such order and manner as
Lender shall determine, whether or not the Obligations are due, and whether
before or after the occurrence of a Default or an Event of Default. For purposes
of determining Availability, such amounts will be credited to
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the Loan Account and the Collateral balances to which they relate upon Lender's
receipt of advice from Lender's Bank (set forth in Section 11 of Schedule A)
that such items have been credited to Lender's account at Lender's Bank (or upon
Lender's deposit thereof at Lender's Bank in the case of payments received by
Lender in kind), in each case subject to final payment and collection. However,
for purposes of computing interest on the Obligations, such items shall be
deemed applied by Lender three Business Days after Lender's receipt of advice of
deposit thereof at Lender's Bank.
4.4 NOTIFICATION; VERIFICATION. Lender or its designee may, from time to
time, whether or not a Default or Event of Default has occurred: (i) verify
directly with the Account Debtors the validity, amount and other matters
relating to the Accounts and Chattel Paper, by means of mail, telephone or
otherwise, either in the name of Borrower or Lender or such other name as Lender
may choose; (ii) notify Account Debtors that Lender has a security interest in
the Accounts and that payment thereof is to be made directly to Lender; and
(iii) demand, collect or enforce payment of any Accounts and Chattel Paper (but
without any duty to do so).
4.5 POWER OF ATTORNEY. Borrower hereby grants to Lender an irrevocable
power of attorney, coupled with an interest, authorizing and permitting Lender
(acting through any of its officers, employees, attorneys or agents), at any
time (whether or not a Default or Event of Default has occurred and is
continuing, except as expressly provided below), at Lender's option, but without
obligation, with or without notice to Borrower, and at Borrower's expense, to do
any or all of the following, in Borrower's name or otherwise: (i) execute on
behalf of Borrower any documents that Lender may, in its sole discretion, deem
advisable in order to perfect and maintain Lender's security interests in the
Collateral, to exercise a right of Borrower or Lender, or to fully consummate
all the transactions contemplated by this Agreement and the other Loan Documents
(including such financing statements and continuation financing statements, and
amendments thereto, as Lender shall deem necessary or appropriate) and to file
as a financing statement any copy of this Agreement or any financing statement
signed by Borrower; (ii) execute on behalf of Borrower any document exercising,
transferring or assigning any option to purchase, sell or otherwise dispose of
or lease (as lessor or lessee) any real or personal property which is part of
the Collateral or in which Lender has an interest; (iii) execute on behalf of
Borrower any invoices relating to any Accounts, any draft against any Account
Debtor, any proof of claim in bankruptcy, any notice of Lien or claim, and any
assignment or satisfaction of mechanic's, materialman's or other Lien; (iv)
execute on behalf of Borrower any notice to any Account Debtor; (v) receive and
otherwise take control in any manner of any cash or non-cash items of payment or
proceeds of Collateral; (vi) endorse Borrower's name on all checks and other
forms of remittances received by Lender; (vii) pay, contest or settle any Lien,
charge, encumbrance, security interest and adverse claim in or to any of the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (viii) after the occurrence of a Default or
Event of Default, grant extensions of time to pay,
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compromise claims relating to, and settle Accounts, Chattel Paper and General
Intangibles for less than face value and execute all releases and other
documents in connection therewith; (ix) pay any sums required on account of
Borrower's taxes or to secure the release of any Liens therefor; (x) pay any
amounts necessary to obtain, or maintain in effect, any of the insurance
described in Section 5.12; (xi) settle and adjust, and give releases of, any
insurance claim that relates to any of the Collateral and obtain payment
therefor; (xii) instruct any third party having custody or control of any
Collateral or books or records belonging to, or relating to, Borrower to give
Lender the same rights of access and other rights with respect thereto as Lender
has under this Agreement; and (xiii) after the occurrence of a Default or Event
of Default, change the address for delivery of Borrower's mail and receive and
open all mail addressed to Borrower. Any and all sums paid, and any and all
costs, expenses, liabilities, obligations and reasonable attorneys' fees
incurred, by Lender with respect to the foregoing shall be added to and become
part of the Obligations, shall be payable on demand, and shall bear interest at
a rate equal to the highest interest rate applicable to any of the Obligations.
Borrower agrees that Lender's rights under the foregoing power of attorney or
any of Lender's other rights under this Agreement or the other Loan Documents
shall not be construed to indicate that Lender is in control of the business,
management or properties of Borrower.
4.6 DISPUTES. Borrower shall promptly notify Lender of all disputes or
claims relating to Accounts and Chattel Paper. Borrower will not, without
Lender's prior written consent, compromise or settle any Account or Chattel
Paper for less than the full amount thereof, grant any extension of time of
payment of any Account or Chattel Paper, release (in whole or in part) any
Account Debtor or other person liable for the payment of any Account or Chattel
Paper or grant any credits, discounts, allowances, deductions, return
authorizations or the like with respect to any Account or Chattel Paper; except
that prior to the occurrence of an Event of Default, Borrower may take any of
such actions in the ordinary course of its business, PROVIDED that Borrower
promptly reports the same to Lender.
4.7 INVOICES. At Lender's request, Borrower will cause all invoices and
statements which it sends to Account Debtors or other third parties to be
marked, in a manner satisfactory to Lender, to reflect Lender's security
interest therein.
4.8 INVENTORY.
(A)RETURNS. Provided that no Event of Default has occurred and is
continuing, if any Account Debtor returns any Inventory to Borrower in the
ordinary course of its business, Borrower will promptly determine the reason for
such return and promptly issue a credit memorandum to the Account Debtor in the
appropriate amount (sending a copy to Lender). After the occurrence of an Event
of Default, Borrower will not accept any return without Lender's prior written
consent. Regardless of whether an Event of Default has occurred, Borrower will
(i) hold the returned Inventory in trust for Lender; (ii) segregate all returned
Inventory from all of Borrower's other property; (iii) conspicuously label the
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returned Inventory as Lender's property; and (iv) immediately notify Lender of
the return of such Inventory, specifying the reason for such return, the
location and condition of the returned Inventory and, at Lender's request,
deliver such returned Inventory to Lender at an address specified by Lender.
(b) OTHER COVENANTS. Borrower will not, without Lender's prior
written consent, (i) store any Inventory with any warehouseman or other third
party other than as set forth in Section 9(d) of Schedule A or (ii) sell any
Inventory on a sale-or-return, guaranteed sale, consignment, or other contingent
basis. All of the Inventory produced in the United States has been produced only
in accordance with the Fair Labor Standards Act of 1938 and all rules,
regulations and orders promulgated thereunder.
4.9 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times, and on
one Business Day's notice, prior to the occurrence of a Default or an Event of
Default, and at any time and with or without notice after the occurrence of a
Default or an Event of Default, Lender or its agents shall have the right to
inspect the Collateral, and the right to examine and copy Borrower's books and
records. Lender shall take reasonable steps to keep confidential all information
obtained in any such inspection or examination, but Lender shall have the right
to disclose any such information to its auditors, regulatory agencies, attorneys
and participants, and pursuant to any subpoena or other legal process. Borrower
agrees to give Lender access to any or all of Borrower's premises to enable
Lender to conduct such inspections and examinations. Such inspections and
examinations shall be at Borrower's expense and the charge therefor shall be
$750 per person per day (or such higher amount as shall represent Lender's then
current standard charge), plus reasonable out-of-pocket expenses. Lender may, at
Borrower's expense, use Borrower's personnel, computer and other equipment,
programs, printed output and computer readable media, supplies and premises for
the collection, sale or other disposition of Collateral to the extent Lender, in
its sole discretion, deems appropriate. Borrower hereby irrevocably authorizes
all accountants and third parties to disclose and deliver to Lender, at
Borrower's expense, all financial information, books and records, work papers,
management reports and other information in their possession regarding Borrower.
Borrower will not enter into any agreement with any accounting firm, service
bureau or third party to store Borrower's books or records at any location other
than Borrower's Address without first obtaining Lender's written consent (which
consent may be conditioned upon such accounting firm, service bureau or other
third party agreeing to give Lender the same rights with respect to access to
books and records and related rights as Lender has under this Agreement).
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5. REPRESENTATIONS, WARRANTIES AND COVENANTS.
To induce Lender to enter into this Agreement, Borrower represents,
warrants and covenants as follows (it being understood that (i) each such
representation and warranty will be deemed remade as of the date on which each
Loan is made and each Credit Accommodation is provided and shall not be affected
by any knowledge of, or any investigation by, Lender, and (ii) the accuracy of
each such representation, warranty and covenant will be a condition to each Loan
and Credit Accommodation):
5.1 EXISTENCE AND AUTHORITY. Borrower is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation. Borrower is qualified and licensed to do business in
all jurisdictions in which any failure to do so would have a material adverse
effect on Borrower. The execution, delivery and performance by Borrower of this
Agreement and all of the other Loan Documents have been duly and validly
authorized, do not violate Borrower's articles or certificate of incorporation,
by-laws or other organizational documents, or any law or any agreement or
instrument or any court order which is binding upon Borrower or its property, do
not constitute grounds for acceleration of any indebtedness or obligation under
any agreement or instrument which is binding upon Borrower or its property, and
do not require the consent of any Person. This Agreement and such other Loan
Documents have been duly executed and delivered by, and are enforceable against,
Borrower, and all other Obligors who have signed them, in accordance with their
respective terms. Sections 9(g) and 9(h) of Schedule A set forth the ownership
of Borrower and the names and ownership of Borrower's Subsidiaries as of the
date of this Agreement.
5.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in the
heading to this Agreement is its correct and complete legal name as of the date
hereof. Listed in Sections 9(a), 9(b) and 9(c) of Schedule A are all prior names
of Borrower and all of Borrower's present and prior trade names. Borrower shall
give Lender at least thirty days' prior written notice before changing its name
or doing business under any other name. Borrower has complied with all laws
relating to the conduct of business under a fictitious business name. Borrower
represents and warrants that (i) each trade name does not refer to another
corporation or other legal entity; (ii) all Accounts invoiced under any such
trade names are owned exclusively by Borrower and are subject to the security
interest of Lender and the other terms of this Agreement and (iii) all schedules
of Accounts, including any sales made or services rendered using any trade name
shall show Borrower's name as assignor.
5.3 TITLE TO COLLATERAL; PERMITTED LIENS. Borrower has good and
marketable title to the Collateral. The Collateral now is and will remain free
and clear of any and all liens, charges, security interests, encumbrances and
adverse claims, except for Permitted Liens. Lender now has, and will continue to
have, a first-priority perfected and enforceable security interest in all of the
Collateral, subject only to the Permitted Liens, and Borrower will at all times
defend Lender and the Collateral against all claims of others. None of the
Collateral
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which is Equipment is or will be affixed to any real property in such a manner,
or with such intent, as to become a fixture. Except for leases or subleases as
to which Borrower has delivered to Lender a landlord's waiver in form and
substance satisfactory to Lender, Borrower is not a lessee or sublessee under
any real property lease or sublease pursuant to which the lessor or sublessor
may obtain any rights in any of the Collateral, and no such lease or sublease
now prohibits, restrains, impairs or conditions, or will prohibit, restrain,
impair or condition, Borrower's right to remove any Collateral from the
premises. Whenever any Collateral is located upon premises in which any third
party has an interest (whether as owner, mortgagee, beneficiary under a deed of
trust, lien or otherwise), Borrower shall, whenever requested by Lender, cause
each such third party to execute and deliver to Lender, in form and substance
acceptable to Lender, such waivers and subordinations as Lender shall specify,
so as to ensure that Lender's rights in the Collateral are, and will continue to
be, superior to the rights of any such third party. Borrower will keep in full
force and effect, and will comply with all the terms of, any lease of real
property where any of the Collateral now or in the future may be located.
5.4 ACCOUNTS AND CHATTEL PAPER. As of each date reported by Borrower,
all Accounts which Borrower has reported to Lender as being Eligible Accounts
comply in all respects with the criteria for eligibility established by Lender
and in effect at such time. All Accounts and Chattel Paper are genuine and in
all respects what they purport to be, arise out of a completed, bona fide and
unconditional and non-contingent sale and delivery of goods or rendition of
services by Borrower in the ordinary course of its business and in accordance
with the terms and conditions of all purchase orders, contracts or other
documents relating thereto, each Account Debtor thereunder had the capacity to
contract at the time any contract or other document giving rise to such Accounts
and Chattel Paper were executed, and the transactions giving rise to such
Accounts and Chattel Paper comply with all applicable laws and governmental
rules and regulations.
5.5 INVESTMENT PROPERTY. Borrower will take any and all actions required
or requested by Lender, from time to time, to (i) cause Lender to obtain
exclusive control of any Investment Property in a manner acceptable to Lender
and (ii) obtain from any issuers of Investment Property and such other Persons
as Lender shall specify, for the benefit of Lender, written confirmation of
Lender's exclusive control over such Investment Property and take such other
actions as Lender may request to perfect Lender's security interest in such
Investment Property. For purposes of this Section 5.5, Lender shall have
exclusive control of Investment Property if (A) such Investment Property
consists of certificated securities and Borrower delivers such certificated
securities to Lender (with appropriate endorsements if such certificated
securities are in registered form); (B) such Investment Property consists
of uncertificated securities and either (x) Borrower delivers such
uncertificated securities to Lender or (y) the issuer thereof agrees, pursuant
to documentation in form and substance satisfactory to Lender, that it will
comply with instructions originated by Lender without further consent by
Borrower, and (C) such Investment Property consists
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of security entitlements and either (x) Lender becomes the entitlement holder
thereof or (y) the appropriate securities intermediary agrees, pursuant to
documentation in form and substance satisfactory to Lender, that it will
comply with entitlement orders originated by Lender without further consent
by Borrower.
5.6 PLACE OF BUSINESS; LOCATION OF COLLATERAL. Borrower's Address is
Borrower's chief executive office and the location of its books and records. In
addition, except as provided in the immediately following sentence, Borrower has
places of business and Collateral located only at the locations set forth on
Sections 9(d) and 9(e) of Schedule A. Borrower will give Lender at least thirty
days' prior written notice before opening any additional place of business,
changing its chief executive office or the location of its books and records, or
moving any of the Collateral to a location other than Borrower's Address or one
of the locations set forth in Sections 9(d) and 9(e) of Schedule A, and will
execute and deliver all financing statements and other agreements, instruments
and documents which Lender shall require as a result thereof.
5.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial
statements delivered to Lender by or on behalf of Borrower have been prepared in
conformity with GAAP and completely and fairly reflect the financial condition
of Borrower, at the times and for the periods therein stated. Between the last
date covered by any such financial statement provided to Lender and the date
hereof (or, with respect to the remaking of this representation in connection
with the making of any Loan or the providing of any Credit Accommodation, the
date such Loan is made or such Credit Accommodation is provided), there has been
no material adverse change in the financial condition or business of Borrower.
Borrower is solvent and able to pay its debts as they come due, and has
sufficient capital to carry on its business as now conducted and as proposed to
be conducted. All schedules, reports and other information and documentation
delivered by Borrower to Lender with respect to the Collateral are, or will be,
when delivered, true, correct and complete as of the date delivered or the date
specified therein.
5.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has timely
filed all tax returns and reports required by applicable law, has timely paid
all applicable taxes, assessments, deposits and contributions owing by Borrower
and will timely pay all such items in the future as they became due and payable.
In addition, Borrower will pay any and all taxes, including, without limitation,
withholding taxes which may be imposed upon Lender on account of Borrower's or
Borrower's Affiliates' operations in Canada. Borrower may, however, defer
payment of any contested taxes; PROVIDED, that Borrower (i) in good faith
contests Borrower's obligation to pay such taxes by appropriate proceedings
promptly and diligently instituted and conducted; (ii) notifies Lender in
writing of the commencement of, and any material development in, the
proceedings; (iii) posts bonds or takes any other steps required to keep the
contested taxes from becoming a Lien upon any of the Collateral and (iv)
maintains adequate reserves therefor in conformity with GAAP. Borrower is
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unaware of any claims or adjustments proposed for any of Borrower's prior tax
years which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid, and shall continue to pay, all amounts necessary to
fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not withdrawn from
participation in, permitted partial or complete termination of, or permitted the
occurrence of any other event with respect to, any such plan which could result
in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or any other governmental agency.
5.9 COMPLIANCE WITH LAWS. Borrower has complied in all material respects
with all provisions of all applicable laws and regulations, including those
relating to Borrower's ownership of real or personal property, the conduct and
licensing of Borrower's business, the payment and withholding of taxes, ERISA
and other employee matters, safety and environmental matters.
5.10 LITIGATION. Section 9(f) of Schedule A discloses all claims,
proceedings, litigation or investigations pending or (to the best of Borrower's
knowledge) threatened against Borrower. There is no claim, suit, litigation,
proceeding or investigation pending or (to the best of Borrower's knowledge)
threatened by or against or affecting Borrower in any court or before any
governmental agency (or any basis therefor known to Borrower) which may result,
either separately or in the aggregate, in any material adverse change in the
financial condition or business of Borrower, or in any material impairment in
the ability of Borrower to carry on its business in substantially the same
manner as it is now being conducted. Borrower will promptly inform Lender in
writing of any claim, proceeding, litigation or investigation in the future
threatened or instituted by or against Borrower.
5.11 USE OF PROCEEDS. All proceeds of all Loans will be used solely for
lawful business purposes.
5.12 INSURANCE. Borrower will at all times carry property, liability and
other insurance, with insurers acceptable to Lender, in such form and amounts,
and with such deductibles and other provisions, as Lender shall require, and
Borrower will provide evidence of such insurance to Lender, so that Lender is
satisfied that such insurance is, at all times, in full force and effect. Each
property insurance policy shall name Lender as loss payee and shall contain a
lender's loss payable endorsement in form acceptable to Lender, each liability
insurance policy shall name Lender as an additional insured, and each business
interruption insurance policy shall be collaterally assigned to Lender, all in
form and substance satisfactory to Lender. All policies of insurance shall
provide that they may not be cancelled or changed without at least thirty days'
prior written notice to Lender, shall contain breach of warranty coverage, and
shall otherwise be in form and substance satisfactory to Lender. Upon receipt of
the proceeds of any such insurance, Lender shall apply such proceeds in
reduction of the Obligations as Lender shall determine in its sole discretion.
Borrower will promptly deliver to Lender copies of all reports made to insurance
companies.
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5.13 FINANCIAL AND COLLATERAL REPORTS. Borrower has kept and will keep
adequate records and books of account with respect to its business activities
and the Collateral in which proper entries are made in accordance with GAAP
reflecting all its financial transactions, and will cause to be prepared and
furnished to Lender the following (all to be prepared in accordance with GAAP,
unless Borrower's certified public accountants concur in any change therein and
such change is disclosed to Lender):
(a) COLLATERAL REPORTS. On or before the fifteenth day of each
month, an aging of Borrower's Accounts, Chattel Paper and notes receivable, and
weekly Inventory reports, all in such form, and together with such additional
certificates, schedules and other information with respect to the Collateral or
the business of Borrower or any Obligor, as Lender shall request; PROVIDED, that
Borrower's failure to execute and deliver the same shall not affect or limit
Lender's security interests and other rights in any of the Accounts, nor shall
Lender's failure to advance or lend against a specific Account affect or limit
Lender's security interest and other rights therein. Together with each such
schedule, Borrower shall furnish Lender with copies (or, at Lender's request,
originals) of all contracts, orders, invoices, and other similar documents, and
all original shipping instructions, delivery receipts, bills of lading, and
other evidence of delivery, for any goods the sale or disposition of which gave
rise to such Accounts, and Borrower warrants the genuineness of all of the
foregoing. In addition, Borrower shall deliver to Lender the originals of all
Instruments, Chattel Paper, security agreements, guaranties and other documents
and property evidencing or securing any Accounts, immediately upon receipt
thereof and in the same form as received, with all necessary endorsements.
Lender may destroy or otherwise dispose of all documents, schedules and other
papers delivered to Lender pursuant to this Agreement (other than originals of
Instruments, Chattel Paper, security agreements, guaranties and other documents
and property evidencing or securing any Accounts) six months after Lender
receives them, unless Borrower requests their return in writing in advance and
arranges for their return to Borrower at Borrower's expense.
(b) ANNUAL STATEMENTS. Not later than ninety days after the close
of each fiscal year of Borrower, unqualified (except for a qualification for a
change in accounting principles with which the accountant concurs) audited
financial statements of Borrower and its Subsidiaries as of the end of such
year, on a consolidated and consolidating basis, certified by a firm of
independent certified public accountants of recognized standing selected by
Borrower but acceptable to Lender, together with a copy of any management letter
issued in connection therewith and a letter from such accountants acknowledging
that Lender is relying on such financial statements;
(c) INTERIM STATEMENTS. Not later than twenty days after the end
of each month hereafter, including the last month of Borrower's fiscal year,
unaudited interim financial statements of Borrower and its Subsidiaries as of
the end of such month and of the portion of Borrower's fiscal year then elapsed,
on a consolidated and consolidating basis,
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certified by the principal financial officer of Borrower as prepared in
accordance with GAAP and fairly presenting the consolidated financial position
and results of operations of Borrower and its Subsidiaries for such month and
period subject only to changes from audit and year-end adjustments and except
that such statements need not contain notes;
(d) PROJECTIONS, ETC. Such business projections, Availability
projections, business plans, budgets and cash flow statements for Borrower and
its Subsidiaries as Lender shall request from time to time;
(e) SHAREHOLDER REPORTS, ETC. Promptly after the sending or
filing thereof, as the case may be, copies of any proxy statements, financial
statements or reports which Borrower has made available to its shareholders and
copies of any regular, periodic and special reports or registration statements
which Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any national
securities exchange;
(f) ERISA REPORTS. Upon request by Lender, copies of any annual
report to be filed pursuant to the requirements of ERISA in connection with each
plan subject thereto; and
(g) OTHER INFORMATION. Such other data and information (financial
and otherwise) as Lender, from time to time, may reasonably request, bearing
upon or related to the Collateral or Borrower's and each of its Subsidiary's
financial condition or results of operations.
5.14 LITIGATION COOPERATION. Should any third-party suit or proceeding
be instituted by or against Lender with respect to any Collateral or in any
manner relating to Borrower, Borrower shall, without expense to Lender, make
available Borrower and its officers, employees and agents, and Borrower's books
and records, without charge, to the extent that Lender may deem them reasonably
necessary in order to prosecute or defend any such suit or proceeding.
5.15 MAINTENANCE OF COLLATERAL, ETC. Borrower will maintain all of its
Equipment in good working condition, ordinary wear and tear excepted, and
Borrower will not use the Collateral for any unlawful purpose. Borrower will
immediately advise Lender in writing of any material loss or damage to the
Collateral and of any investigation, action, suit, proceeding or claim relating
to the Collateral or which may result in an adverse impact upon Borrower's
business, assets or financial condition.
5.16 NOTIFICATION OF CHANGES. Borrower will promptly notify Lender in
writing of any change in its officers or directors, the opening of any new bank
account or other deposit account, or any material adverse change in the business
or financial affairs of Borrower or the existence of any circumstance which
would make any representation or warranty of
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Borrower untrue in any material respect or constitute a material breach of any
covenant of Borrower.
5.17 FURTHER ASSURANCES. Borrower agrees, at its expense, to take all
actions, and execute or cause to be executed and delivered to Lender all
promissory notes, security agreements, agreements with landlords, mortgagees and
processors and other bailees, subordination and intercreditor agreements and
other agreements, instruments and documents as Lender may request from time to
time, to perfect and maintain Lender's security interests in the Collateral and
to fully effectuate the transactions contemplated by this Agreement.
5.18 NEGATIVE COVENANTS. Except as set forth in Section 13 of Schedule
A, Borrower will not, without Lender's prior written consent, (i) merge or
consolidate with another Person, form any new Subsidiary or acquire any interest
in any Person; (ii) acquire any assets except in the ordinary course of business
and as otherwise permitted by this Agreement and the other Loan Documents; (iii)
enter into any transaction outside the ordinary course of business; (iv) sell or
transfer any Collateral or other assets, except that Borrower may sell finished
goods Inventory in the ordinary course of its business; (v) make any loans to,
or investments in, any Affiliate or other Person in the form of money or other
assets; (vi) incur any debt outside the ordinary course of business; (vii)
guaranty or otherwise become liable with respect to the obligations of another
party or entity; (viii) pay or declare any dividends or other distributions on
Borrower's stock, if Borrower is a corporation (except for dividends payable
solely in capital stock of Borrower) or with respect to any equity interests, if
Borrower is not a corporation; (ix) redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of Borrower's capital stock or other equity
interests; (x) make any change in Borrower's capital structure; (xi) dissolve or
elect to dissolve; (xii) pay any principal or interest on any indebtedness owing
to an Affiliate, (xiii) enter into any transaction with an Affiliate other than
on arms-length terms; or (xiv) agree to do any of the foregoing.
5.19 FINANCIAL COVENANTS.
(a) CAPITAL EXPENDITURES. Borrower will not expend or commit to
expend, directly or indirectly, for capital expenditures (including capital
lease obligations) in excess of the amount set forth in Section 8(a) of Schedule
A as the Capital Expenditure Limitation in any fiscal year.
(b) NET WORTH. Borrower will at all times maintain a net worth of
at least the amount set forth in Section 8(b) of Schedule A.
(c) TANGIBLE NET WORTH. Borrower will at all times maintain a
minimum tangible net worth of at least the amount set forth in Section 8(c) of
Schedule A.
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(d) WORKING CAPITAL. Borrower will at all times maintain working
capital of at least the amount set forth in Section 8(d) of Schedule A.
(e) NET LOSSES. Borrower will not permit its cumulative net loss
to exceed the amount set forth in Section 8(e) of Schedule A.
(f) NET INCOME. Borrower will not permit its cumulative net
income to be less than the amount set forth in Section 8(f) of Schedule A.
(g) LEVERAGE. Borrower will not permit the ratio of its total
liabilities to its net worth to exceed, at any time, the ratio set forth in
Section 8(g) of Schedule A.
(h) OTHER FINANCIAL COVENANTS. Borrower will comply with any
additional financial covenants set forth in Section 8(j) of Schedule A.
5.20 YEAR 2000 COMPLIANCE REPRESENTATION. Borrower has (i) initiated a
review and assessment of all areas within its and each of its Subsidiaries'
business and operations (including those affected by suppliers and vendors) that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Borrower or any of its Subsidiaries (or its
suppliers and vendors) may be unable to recognize and perform properly
date-sensitive functions involving certain dated prior to and any date after
December 31, 1999), (ii) developed a plan and timeline for addressing the Year
2000 Problem on a timely basis, and (iii) to date, reasonably believes that all
computer applications (including those of its suppliers and vendors) that are
material to its or any of its Subsidiaries' business and operations will on a
timely basis be able to perform properly date-sensitive functions for all dates
before and after January 1, 2000 (that is, be "Year 2000 compliant"), except to
the extent that a failure to do so could not reasonably be expected to have a
material adverse effect on Borrower's business or on the condition or value of
the Collateral ("Material Adverse Effect").
6. RELEASE AND INDEMNITY.
6.1 RELEASE. Borrower hereby releases Lender and its Affiliates and
their respective directors, officers, employees, attorneys and agents and any
other Person affiliated with or representing Lender (the "RELEASED PARTIES")
from any and all liability arising from acts or omissions under or pursuant to
this Agreement, whether based on errors of judgment or mistake of law or fact,
except for those arising from willful misconduct. However, in no circumstance
will any of the Released Parties be liable for lost profits or other special or
consequential damages. Such release is made on the date hereof and remade upon
each request for a Loan or Credit Accommodation by Borrower. Without limiting
the foregoing:
(a) Lender shall not be liable for (i) any shortage or
discrepancy in, damage to, or loss or destruction of, any goods, the sale or
other disposition of which gave
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rise to an Account; (ii) any error, act, omission, or delay of any kind
occurring in the settlement, failure to settle, collection or failure to collect
any Account; (iii) settling any Account in good faith for less than the full
amount thereof; or (iv) any of Borrower's obligations under any contract or
agreement giving rise to an Account; and
(b) In connection with Credit Accommodations or any underlying
transaction, Lender shall not be responsible for the conformity of any goods to
the documents presented, the validity or genuineness of any documents, delay,
default or fraud by Borrower, shippers and/or any other Person. Borrower agrees
that any action taken by Lender, if taken in good faith, or any action taken by
an issuer of any Credit Accommodation, under or in connection with any Credit
Accommodation, shall be binding on Borrower and shall not create any resulting
liability to Lender. In furtherance thereof, Lender shall have the full right
and authority to clear and resolve any questions of non-compliance of documents,
to give any instructions as to acceptance or rejection of any documents or
goods, to execute for Borrower's account any and all applications for steamship
or airway guaranties, indemnities or delivery orders, to grant any extensions of
the maturity of, time of payment for, or time of presentation of, any drafts,
acceptances or documents, and to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the Credit Accommodations or applications and other documentation pertaining
thereto.
6.2 INDEMNITY. Borrower hereby agrees to indemnify the Released Parties
and hold them harmless from and against any and all claims, debts, liabilities,
demands, obligations, actions, causes of action, penalties, costs and expenses
(including attorneys' fees), of every nature, character and description, which
the Released Parties may sustain or incur based upon or arising out of any of
the transactions contemplated by this Agreement or the other Loan Documents or
any of the Obligations, including any transactions or occurrences relating to
the issuance of any Credit Accommodation, the Collateral relating thereto, any
drafts thereunder and any errors or omissions relating thereto (including any
loss or claim due to any action or inaction taken by the issuer of any Credit
Accommodation) (and for this purpose any charges to Lender by any issuer of
Credit Accommodations shall be conclusive as to their appropriateness and may be
charged to the Loan Account), or any other matter, cause or thing whatsoever
occurred, done, omitted or suffered to be done by Lender relating to Borrower or
the Obligations (except any such amounts sustained or incurred as the result of
the willful misconduct of the Released Parties). Notwithstanding any provision
in this Agreement to the contrary, the indemnity agreement set forth in this
Section shall survive any termination of this Agreement.
7. TERM.
7.1 MATURITY DATE. LENDER'S OBLIGATION TO MAKE LOANS AND TO PROVIDE
CREDIT ACCOMMODATIONS UNDER THIS AGREEMENT SHALL INITIALLY CONTINUE IN EFFECT
UNTIL THE INITIAL MATURITY DATE SET
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FORTH IN SECTION 7 OF SCHEDULE A (THE "INITIAL TERM"); PROVIDED, THAT SUCH DATE
SHALL AUTOMATICALLY BE EXTENDED (THE INITIAL MATURITY DATE, AS IT MAY BE SO
EXTENDED, BEING REFERRED TO AS THE "MATURITY DATE") FOR SUCCESSIVE ADDITIONAL
TERMS OF THREE YEARS EACH (EACH A "RENEWAL TERM"), UNLESS ONE PARTY GIVES
WRITTEN NOTICE TO THE OTHER, NOT LESS THAN SIXTY DAYS PRIOR TO THE MATURITY
DATE, THAT SUCH PARTY ELECTS NOT TO EXTEND THE MATURITY DATE. THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS AND LENDER'S SECURITY INTERESTS IN AND LIENS UPON THE
COLLATERAL, AND ALL REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER
CONTAINED HEREIN AND THEREIN, SHALL REMAIN IN FULL FORCE AND EFFECT AFTER THE
MATURITY DATE UNTIL ALL OF THE MONETARY OBLIGATIONS ARE INDEFEASIBLY PAID IN
FULL.
7.2 EARLY TERMINATION. Lender's obligation to make Loans and to provide
Credit Accommodations under this Agreement may be terminated prior to the
Maturity Date as follows: (i) by Borrower, effective thirty business days after
written notice of termination is given to Lender or (ii) by Lender at any time
after the occurrence of an Event of Default, without notice, effective
immediately; PROVIDED, that if any Affiliate of Borrower is also a party to a
financing arrangement with Lender, no such early termination shall be effective
unless such Affiliate simultaneously terminates its financing arrangement with
Lender. If so terminated under this Section 7.2, Borrower shall pay to Lender
(i) an early termination fee (the "EARLY TERMINATION FEE") in the amount set
forth in Section 6(h) of Schedule A plus (ii) any earned but unpaid Facility
Fee. Such fee shall be due and payable on the effective date of termination and
thereafter shall bear interest at a rate equal to the highest rate applicable to
any of the Obligations. In addition, if Borrower so terminates and repays the
Obligations without having provided Lender with at least thirty days' prior
written notice thereof, an additional amount equal to thirty days of interest at
the applicable Interest Rate(s), based on the average outstanding amount of the
Obligations for the six month period immediately preceding the date of
termination.
7.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay in full all Obligations,
whether or not all or any part of such Obligations are otherwise then due and
payable. Without limiting the generality of the foregoing, if, on the Maturity
Date or on any earlier effective date of termination, there are any outstanding
Credit Accommodations, then on such date Borrower shall provide to Lender cash
collateral in an amount equal to 110% of the Credit Accommodation Balance to
secure all of the Obligations (including estimated attorneys' fees and other
expenses) relating to said Credit Accommodations or such greater percentage or
amount as Lender reasonably deems appropriate, pursuant to a cash pledge
agreement in form and substance satisfactory to Lender.
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7.4 EFFECT OF TERMINATION. No termination shall affect or impair any
right or remedy of Lender or relieve Borrower of any of the Obligations until
all of the monetary Obligations have been indefeasibly paid in full. Upon
indefeasible payment and performance in full of all of the monetary Obligations
(and the provision of cash collateral with respect to any Credit Accommodation
Balance as required by Section 7.3) and termination of this Agreement, Lender
shall promptly deliver to Borrower termination statements, requests for
reconveyances and such other documents as may be reasonably required to
terminate Lender's security interests in the Collateral.
8. EVENTS OF DEFAULT AND REMEDIES.
8.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an "EVENT OF DEFAULT" under this Agreement, and Borrower shall
give Lender immediate written notice thereof: (i) if any warranty,
representation, statement, report or certificate made or delivered to Lender by
Borrower or any of Borrower's officers, employees or agents is untrue or
misleading; (ii) if Borrower fails to pay when due any principal or interest on
any Loan or any other monetary Obligation; (iii) if Borrower breaches any
covenant or obligation contained in this Agreement or any other Loan Document or
fails to perform any other non-monetary Obligation; (iv) if any levy,
assessment, attachment, seizure, lien or encumbrance (other than a Permitted
Lien) is made or permitted to exist on all or any part of the Collateral; (v) if
one or more judgments aggregating in excess of $25,000, or any injunction or
attachment, is obtained against Borrower or any Obligor which remains unstayed
for more than ten days or is enforced; (vi) the occurrence of any default under
any financing agreement, security agreement or other agreement, instrument or
document executed and delivered by (A) Borrower with, or in favor of, any Person
other than Lender or (B) Borrower or any Affiliate of Borrower with, or in favor
of, Lender or any Affiliate of Lender; (vii) the dissolution, death, termination
of existence in good standing, insolvency or business failure or suspension or
cessation of business as usual of Borrower or any Obligor (or of any general
partner of Borrower or any Obligor if it is a partnership) or the appointment of
a receiver, trustee or custodian for all or any part of the property of, or an
assignment for the benefit of creditors by Borrower or any Obligor, or the
commencement of any proceeding by Borrower or any Obligor under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect, or if Borrower makes or sends a notice of a bulk transfer or
calls a meeting of its creditors; (viii) the commencement of any proceeding
against Borrower or any Obligor under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect; (ix) the actual or
attempted revocation or termination of, or limitation or denial of liability
upon, any guaranty of the Obligations, or any security document securing the
Obligations, by any Obligor; (x) if Borrower makes any payment on account of any
indebtedness or obligation which has been subordinated to the Obligations other
than as permitted in the applicable subordination agreement, or if any
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Person who has subordinated such indebtedness or obligations attempts to limit
or terminate its subordination agreement; (xi) if there is any actual or
threatened indictment of Borrower or any Obligor under any criminal statute or
commencement or threatened commencement of criminal or civil proceedings against
Borrower or any Obligor, pursuant to which the potential penalties or remedies
sought or available include forfeiture of any property of Borrower or such
Obligor; (xii) if there is a change in the record or beneficial ownership of an
aggregate of more than 20% of the outstanding shares of stock of Xxxxx Soda Co.
(USA) Inc. (or partnership or membership interests if it is a partnership or
limited liability company), in one or more transactions, compared to the
ownership of outstanding shares of stock (or partnership or membership
interests) of Borrower as of the date hereof, without the prior written consent
of Lender; (xiii) if there is any change in the chief executive officer, or
chief financial officer of Borrower, without prior written consent of Lender;
(xiv) if an Event of Default occurs under any Loan and Security Agreement
between Lender and an Affiliate of Borrower; or (xv) if Lender determines in
good faith that the Collateral is insufficient to fully secure the Obligations
or that the prospect of payment of performance of the Obligations is impaired.
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8.2 REMEDIES. Upon the occurrence of any Default, and at any time
thereafter, Lender, at its option, may cease making Loans or otherwise extending
credit to Borrower under this Agreement or any other Loan Document. Upon the
occurrence of any Event of Default, and at any time thereafter, Lender, at its
option, and without notice or demand of any kind (all of which are hereby
expressly waived by Borrower), may do any one or more of the following: (i)
cease making Loans or otherwise extending credit to Borrower under this
Agreement or any other Loan Document; (ii) accelerate and declare all or any
part of the Obligations to be immediately due, payable and performable,
notwithstanding any deferred or installment payments allowed by any instrument
evidencing or relating to any of the Obligations; (iii) take possession of any
or all of the Collateral wherever it may be found, and for that purpose Borrower
hereby authorizes Lender, without judicial process, to enter onto any of
Borrower's premises without interference to search for, take possession of,
keep, store, or remove any of the Collateral, and remain (or cause a custodian
to remain) on the premises in exclusive control thereof, without charge for so
long as Lender deems it reasonably necessary in order to complete the
enforcement of its rights under this Agreement or any other agreement; PROVIDED,
that if Lender seeks to take possession of any of the Collateral by court
process, Borrower hereby irrevocably waives (A) any bond and any surety or
security relating thereto required by law as an incident to such possession, (B)
any demand for possession prior to the commencement of any suit or action to
recover possession thereof and (C) any requirement that Lender retain possession
of, and not dispose of, any such Collateral until after trial or final judgment;
(iv) require Borrower to assemble any or all of the Collateral and make it
available to Lender at one or more places designated by Lender which are
reasonably convenient to Lender and Borrower, and to remove the Collateral to
such locations as Lender may deem advisable; (v) complete the processing,
manufacturing or repair of any Collateral prior to a disposition thereof and,
for such purpose and for the purpose of removal, Lender shall have the right to
use Borrower's premises, vehicles and other Equipment and all other property
without charge; (vi) sell, lease or otherwise dispose of any of the Collateral,
in its condition at the time Lender obtains possession of it or after further
manufacturing, processing or repair, at one or more public or private sales, in
lots or in bulk, for cash, exchange or other property, or on credit (a "SALE"),
and to adjourn any such Sale from time to time without notice other than oral
announcement at the time scheduled for Sale (and, in connection therewith, (A)
Lender shall have the right to conduct such Sale on Borrower's premises without
charge, for such times as Lender deems reasonable, on Lender's premises, or
elsewhere, and the Collateral need not be located at the place of Sale; (B)
Lender may directly or through any of its Affiliates purchase or lease any of
the Collateral at any such public disposition, and if permissible under
applicable law, at any private disposition and (C) any Sale of Collateral shall
not relieve Borrower of any liability Borrower may have if any Collateral is
defective as to title, physical condition or otherwise at the time of sale);
(vii) demand payment of and collect any Accounts, Chattel Paper, Instruments and
General Intangibles included in the Collateral and, in connection therewith,
Borrower irrevocably authorizes Lender to endorse or sign Borrower's name on all
collections, receipts, Instruments and other documents, to take possession of
and open mail
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BANC OF AMERICA COMMERCIAL FUNDING LOAN AND SECURITY AGREEMENT
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addressed to Borrower and remove therefrom payments made with respect to any
item of Collateral or proceeds thereof and, in Lender's sole discretion, to
grant extensions of time to pay, compromise claims and settle Accounts, General
Intangibles and the like for less than face value; and (viii) demand and receive
possession of any of Borrower's federal and state income tax returns and the
books and records utilized in the preparation thereof or relating thereto. In
addition to the foregoing remedies, upon the occurrence of any Event of Default
resulting from a breach of any of the financial covenants set forth in Section
5.19, Lender may, at its option, upon not less than ten days' prior notice to
Borrower, reduce any or all of the Advance Rates set forth in Section 1(b) of
Schedule A to the extent Lender, in its sole discretion, deems appropriate. In
addition to the rights and remedies set forth above, Lender shall have all the
other rights and remedies accorded a secured party after default under the UCC
and under all other applicable laws, and under any other Loan Document, and all
of such rights and remedies are cumulative and non-exclusive. Exercise or
partial exercise by Lender of one or more of its rights or remedies shall not be
deemed an election or bar Lender from subsequent exercise or partial exercise of
any other rights or remedies. The failure or delay of Lender to exercise any
rights or remedies shall not operate as a waiver thereof, but all rights and
remedies shall continue in full force and effect until all of the Obligations
have been fully paid and performed. If notice of any sale or other disposition
of Collateral is required by law, notice at least seven days prior to the sale
designating the time and place of sale in the case of a public sale or the time
after which any private sale or other disposition is to be made shall be deemed
to be reasonable notice, and Borrower waives any other notice. If any Collateral
is sold or leased by Lender on credit terms or for future delivery, the
Obligations shall not be reduced as a result thereof until payment is collected
by Lender.
8.3 APPLICATION OF PROCEEDS. Subject to any application required by law,
all proceeds realized as the result of any Sale shall be applied by Lender to
the Obligations in such order as Lender shall determine in its sole discretion.
Any surplus shall be paid to Borrower or other persons legally entitled thereto;
but Borrower shall remain liable to Lender for any deficiency. If Lender, in its
sole discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any Sale, Lender shall have the option,
exercisable at any time, in its sole discretion, of either reducing the
Obligations by the principal amount of the purchase price or deferring the
reduction of the Obligations until the actual receipt by Lender of the cash
therefor.
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9. GENERAL PROVISIONS.
9.1 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally, by reputable private delivery
service, by regular first-class mail or certified mail return receipt requested,
addressed to Lender or Borrower at the address shown in the heading to this
Agreement, or by facsimile to the facsimile number shown in Section 9(i) of
Schedule A, or at any other address (or to any other facsimile number)
designated in writing by one party to the other party in the manner prescribed
in this Section 9.1. All notices shall be deemed to have been given when
received or when delivery is refused by the recipient.
9.2 SEVERABILITY. If any provision of this Agreement, or the application
thereof to any party or circumstance, is held to be void or unenforceable by any
court of competent jurisdiction, such defect shall not affect the remainder of
this Agreement, which shall continue in full force and effect.
9.3 INTEGRATION. This Agreement and the other Loan Documents represent
the final, entire and complete agreement between Borrower and Lender and
supersede all prior and contemporaneous negotiations, oral representations and
agreements, all of which are merged and integrated into this Agreement. THERE
ARE NO ORAL UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES
WHICH ARE NOT SET FORTH IN THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
9.4 WAIVERS. The failure of Lender at any time or times to require
Borrower to strictly comply with any of the provisions of this Agreement or any
other Loan Documents shall not waive or diminish any right of Lender later to
demand and receive strict compliance therewith. Any waiver of any default shall
not waive or affect any other default, whether prior or subsequent, and whether
or not similar. None of the provisions of this Agreement or any other Loan
Document shall be deemed to have been waived by any act or knowledge of Lender
or its agents or employees, but only by a specific written waiver signed by an
authorized officer of Lender and delivered to Borrower. Borrower waives demand,
protest, notice of protest and notice of default or dishonor, notice of payment
and nonpayment, release, compromise, settlement, extension or renewal of any
commercial paper, Instrument, Account, General Intangible, Document, Chattel
Paper, Investment Property or guaranty at any time held by Lender on which
Borrower is or may in any way be liable, and notice of any action taken by
Lender, unless expressly required by this Agreement, and notice of acceptance
hereof.
9.5 AMENDMENT. The terms and provisions of this Agreement may not be
amended or modified except in a writing executed by Borrower and a duly
authorized officer of Lender.
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9.6 TIME OF ESSENCE. Time is of the essence in the performance by
Borrower of each and every obligation under this Agreement and the other Loan
Documents.
9.7 ATTORNEYS FEES AND COSTS. Borrower shall reimburse Lender for all
reasonable attorneys' and paralegals' fees (including in-house attorneys and
paralegals employed by Lender) and all filing, recording, search, title
insurance, appraisal, audit, and other costs incurred by Lender, pursuant to, in
connection with, or relating to this Agreement, including all reasonable
attorneys' fees and costs Lender incurs to prepare and negotiate this Agreement
and the other Loan Documents; to obtain legal advice in connection with this
Agreement and the other Loan Documents or Borrower or any Obligor; to administer
this Agreement and the other Loan Documents (including the cost of periodic
financing statement, tax lien and other searches conducted by Lender); to
enforce, or seek to enforce, any of its rights; prosecute actions against, or
defend actions by, Account Debtors; to commence, intervene in, or defend any
action or proceeding; to initiate any complaint to be relieved of the automatic
stay in bankruptcy; to file or prosecute any probate claim, bankruptcy claim,
third-party claim, or other claim; to examine, audit, copy, and inspect any of
the Collateral or any of Borrower's books and records; to protect, obtain
possession of, lease, dispose of, or otherwise enforce Lender's security
interests in, the Collateral; and to otherwise represent Lender in any
litigation relating to Borrower. If either Lender or Borrower files any lawsuit
against the other predicated on a breach of this Agreement, the prevailing party
in such action shall be entitled to recover its reasonable costs and attorneys'
fees, including reasonable attorneys' fees and costs incurred in the enforcement
of, execution upon or defense of any order, decree, award or judgment. All
attorneys' fees and costs to which Lender may be entitled pursuant to this
Section shall immediately become part of the Obligations, shall be due on
demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations.
9.8 BENEFIT OF AGREEMENT; ASSIGNABILITY. The provisions of this
Agreement shall be binding upon and inure to the benefit of the respective
successors, assigns, heirs, beneficiaries and representatives of Borrower and
Lender; PROVIDED, that Borrower may not assign or transfer any of its rights
under this Agreement without the prior written consent of Lender, and any
prohibited assignment shall be void. No consent by Lender to any assignment
shall release Borrower from its liability for any of the Obligations. Lender
shall have the right to assign all or any of its rights and obligations under
the Loan Documents, and to sell participating interests therein, to one or more
other Persons, and Borrower agrees to execute all agreements, instruments and
documents requested by Lender in connection with each such assignment and
participation.
9.9 HEADINGS; CONSTRUCTION. Section and subsection headings are used in
this Agreement only for convenience. Borrower and Lender acknowledge that the
headings may not describe completely the subject matter of the applicable
Sections or subsections, and the headings shall not be used in any manner to
construe, limit, define or interpret any term or
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BANC OF AMERICA COMMERCIAL FUNDING LOAN AND SECURITY AGREEMENT
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provision of this Agreement. This Agreement has been fully reviewed and
negotiated between the parties and no uncertainty or ambiguity in any term or
provision of this Agreement shall be construed strictly against Lender or
Borrower under any rule of construction or otherwise.
9.10 GOVERNING LAW; CONSENT TO FORUM, ETC. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED, AND SHALL BE DEEMED TO HAVE BEEN MADE, IN
CHICAGO, ILLINOIS, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF SUCH STATE. BORROWER HEREBY CONSENTS AND AGREES THAT THE STATE AND
FEDERAL COURTS IN CHICAGO, ILLINOIS OR THE STATE IN WHICH ANY OF THE COLLATERAL
IS LOCATED SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS AGREEMENT, ANY
OTHER LOAN DOCUMENTS OR ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE
TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. BORROWER ALSO AGREES THAT
ANY CLAIM OR DISPUTE BROUGHT BY BORROWER AGAINST LENDER PURSUANT TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY MATTER ARISING OUT OF THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT EXCLUSIVELY IN THE STATE AND FEDERAL
COURTS OF XXXX COUNTY. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE IN THE MANNER
AND SHALL BE DEEMED RECEIVED AS SET FORTH IN SECTION 9.1 FOR NOTICES, TO THE
EXTENT PERMITTED BY LAW. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE THE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
9.11 WAIVER OF JURY TRIAL, ETC. BORROWER WAIVES (i) THE RIGHT TO TRIAL
BY JURY (WHICH LENDER ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL OR ANY CONDUCT, ACTS OR OMISSIONS OF LENDER OR
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BORROWER OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR
AGENTS OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR BORROWER, WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE; (ii) THE RIGHT TO INTERPOSE ANY CLAIMS,
DEDUCTIONS, SETOFFS OR COUNTERCLAIMS OF ANY KIND IN ANY ACTION OR PROCEEDING
INSTITUTED BY LENDER WITH RESPECT TO THE LOAN DOCUMENTS OR ANY MATTER RELATING
THERETO, EXCEPT FOR COMPULSORY COUNTERCLAIMS; (iii) NOTICE PRIOR TO LENDER'S
TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF
LENDER'S REMEDIES AND (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND
EXEMPTION LAWS. BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL
INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS RELYING
UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS
LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
IN WITNESS WHEREOF, Borrower and Lender have signed this Agreement as of
the date set forth in the heading.
BORROWER: LENDER:
URBAN JUICE & SODA COMPANY LTD. BANC OF AMERICA COMMERCIAL FINANCE
CORPORATION, THROUGH ITS
COMMERCIAL FUNDING DIVISION
By /s/ Xxxxxxxx Cue By /s/ X.X. Xxxxxx
Its Chief Financial Officer Its Authorized Signatory
XXXXX SODA CO. (USA) INC.
By /s/ Xxxxxxxx Cue
Its Chief Financial Officer
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STATE OF WASHINGTON )
) ss.
County of Xxxxxx )
I certify that I know or have satisfactory evidence that Xxxxxxxx Cue
is the person who appeared before me, and said person acknowledged that he
signed this instrument, on oath, stated that he was authorized to execute the
instrument and acknowledged it as the CFO of URBAN JUICE & SODA COMPANY LTD., to
be the free and voluntary act of such party for the uses and purposes mentioned
in the instrument.
DATED: March 17, 2000.
/s/ Xxxxxxx X. Xxxxxxxxx
NOTARY PUBLIC
Printed Name: Xxxxxxx X. Xxxxxxxxx
My appointment expires: 0-00-00
XXXXX XX XXXXXXXXXX )
) ss.
County of Xxxxxx )
I certify that I know or have satisfactory evidence that Xxxxxxxx Cue
is the person who appeared before me, and said person acknowledged that he
signed this instrument, on oath, stated that he was authorized to execute the
instrument and acknowledged it as the CFO of XXXXX SODA CO. (USA) INC., to be
the free and voluntary act of such party for the uses and purposes mentioned in
the instrument.
DATED: March 17, 2000.
/s/ Xxxxxxx X. Xxxxxxxxx
NOTARY PUBLIC
Printed Name: Xxxxxxx X. Xxxxxxxxx
My appointment expires: 5-20-00
45
SCHEDULE A
DESCRIPTION OF CERTAIN TERMS
This Schedule is an integral part of the Loan and Security Agreement
between URBAN JUICE & SODA COMPANY LTD., a Wyoming corporation, XXXXX SODA CO.
(USA) INC., a Washington corporation, and BANC OF AMERICA COMMERCIAL FINANCE
CORPORATION, THROUGH ITS COMMERCIAL FUNDING DIVISION (the "AGREEMENT").
1. Loan Limits for Revolving Loans:
(a) Maximum Facility
Amount: $3,000,000.00
(b) Advance Rates: -0-
(i) Accounts Advance 80%; PROVIDED, THAT IF THE DILUTION
Rate: PERCENTAGE EXCEEDS 8%, SUCH ADVANCE
RATE WILL BE REDUCED BY THE NUMBER OF
FULL OR PARTIAL PERCENTAGE POINTS OF SUCH EXCESS
(ii) Inventory
Advance Rate(s):
(A) Finished goods: 55%
(B) Raw materials: 55%
(C) Work in process: N/A
46
(c) Accounts Sublimit: N/A
(d) Inventory Sublimit(s):
(i) Overall sublimit on THE LESSER OF $1,250,000.00 AND 100% OF ADVANCES
advances against AGAINST ACCOUNTS.
Eligible Inventory
(ii) Sublimit on advances N/A
against finished
goods
(iii) Sublimit on advances N/A
against work in
process
(e) Credit
Accommodation N/A
Limit:
(f) Permanent Reserve
Amount: N/A
(g) Overadvance Amount: N/A
45
2. Loan Limits for Term
Loan:
(a) Principal Amount:
(i) Equipment Advance N/A
(ii) Real Property Advance: N/A
(b) Repayment Schedule:
(i) Equipment Advance: N/A
(ii) Real Property N/A
Advance:
3. Interest Rates:
(a) Revolving Loans: 1.5% PER ANNUM IN EXCESS OF THE PRIME RATE
(b) Term Loan: N/A
4. Minimum Loan Amount: $1,000,000.00
5. Maximum Days:
(a) Maximum days after original
INVOICE DATE for Eligible
Accounts: 90 DAYS
(b) Maximum days after original
INVOICE DUE DATE for
Eligible Accounts: 60 DAYS
47
6. Fees:
(a) Closing Fee: $22,500.00
(b) Facility Fee:
(i) Initial Term: 1.5% OF THE MAXIMUM FACILITY
(ii) Renewal Term(s): 2.25% OF THE MAXIMUM FACILITY
(c) Servicing Fee: N/A
(d) Unused Line Fee: N/A
(e) Minimum Borrowing Fee:
(i) Applicable period: EACH YEAR
(ii) Date payable: EACH ANNIVERSARY OF THE DATE OF THE AGREEMENT
(f) Success Fee: N/A
(g) Warrant: WARRANT TO ACQUIRE 25,000 SHARES OF URBAN JUICE & SODA
COMPANY LTD., A WYOMING CORPORATION, AT 105% OF ITS
VALUE ON THE CLOSING DATE, EXERCISABLE WITHIN TWO YEARS
AFTER THE CLOSING DATE. THE WARRANT PRICE IS TO BE SET
AS OF THE CLOSING DATE. THE WARRANTS ARE TO ISSUE
WITHIN 30 DAYS OF THE CLOSING DATE IN FORM APPROVED BY
THE CANADIAN VENTURE EXCHANGE AND ACCEPTABLE TO LENDER
IN ALL OTHER RESPECTS. FAILURE OF THE WARRANTS TO ISSUE
AS PROVIDED HEREUNDER WILL CONSTITUTE AN EVENT OF
DEFAULT.
48
(h) Early Termination 3% OF THE MAXIMUM FACILITY AMOUNT IF TERMINATED DURING
Fee: THE FIRST YEAR OF THE TERM, 2% OF THE MAXIMUM FACILITY
AMOUNT IF TERMINATED DURING THE SECOND YEAR OF THE
TERM, AND 1% OF THE MAXIMUM FACILITY AMOUNT IF
TERMINATED THEREAFTER AND PRIOR TO THE MATURITY DATE;
PROVIDED, HOWEVER, NO EARLY TERMINATION FEE WILL BE DUE
IF THE OBLIGATIONS ARE PAID IN FULL FROM PROCEEDS OF A
LOAN OBTAINED BY BORROWER FROM BANK OF AMERICA, N.A.
(i) Fees for letters of credit
and other Credit
Accommodations (or guaranties
thereof by Lender): N/A
7. Initial Maturity Date: MARCH 22, 2002
8. Financial Covenants:
(a) Capital Expenditure
Limitation: N/A
(b) Minimum Net Worth
Requirement: N/A
(c) Minimum Tangible
Net Worth: N/A
(d) Minimum Working Capital: N/A
(e) Maximum Cumulative Net Loss: N/A
(f) Minimum Cumulative Net N/A
Income:
49
(g) Maximum Leverage
Ratio: N/A
(h) Limitation on
Purchase Money
Security Interests: N/A
(i) Limitation on
Equipment Leases: N/A
(j) Additional Financial N/A
Covenants:
9. Borrower Information:
(a) Prior Names of 2072 INVESTMENTS LTD.
Borrower:
REPUBLIC MANUFACTURING CORPORATION
INTERNATIONAL REPUBLIC AIRCRAFT MANUFACTURING
CORPORATION
URBAN JUICE AND SODA (USA) INC.
(b) Prior Trade Names of
Borrower: NONE.
(c) Existing Trade Names of SEE ATTACHED SCHEDULE "C"
Borrower:
50
(d) Inventory Locations: 0000 XXXXXXX XXX
XXXXX, X.X.
XXXXXX X0X 0X0
0000 XXXXXXXXXX XXXXXX
XXXXXXX, X.X.
XXXXXX X0X 0X0
000 XXXXXXX XXXX
XXXX, XX 00000
0000-X XXXXXXX XXX. X.
XXXXXXXX, XXXXXXX
XXXXXX X0X 0X0
0000 XXXXX XXXXX XXXXXX
X.X. XXX 0000
XXXXXXXXXXXXX, XX 00000-0000
0000 XXXX XXXX
XX. XXXXX, XX 00000
0000 XXXX XXX XXX. 00
X.X. XXX 000
XXXXXXXXX, XX 00000-0000
00 XXXXXXXX XXX.
XXXXXXXXXX, XXXXXXX
XXXXXX X0X 0X0
0000 XXXXXX XXXX
XXXXX, X.X.
XXXXXX X0X0X0
(e) Other Locations: N/A
(f) Litigation: URBAN JUICE & SODA CO. LTD. V. GIVAUDAN ROURE FLAVOR
CORP. AND TASTEMAKER CANADA, INC.
51
(g) Ownership of Borrower: URBAN JUICE & SODA COMPANY LTD., PUBLICLY TRADED
XXXXX SODA CO. (USA) INC. (100% OWNED BY URBAN XXXXX &
SODA COMPANY LTD.)
(h) Subsidiaries (and ownership WAZU PRODUCTS LTD.
thereof): (100% OWNED BY URBAN JUICE & SODA COMPANY LTD.)
(i) Facsimile Numbers:
Borrower: (000) 000-0000
Lender: (000) 000-0000
10. Description of Real
Property: N/A
11. Lender's Bank: BANK ONE, N.A.
12. Other Covenants: N/A
13. Exceptions to Negative
Covenants: N/A
52
IN WITNESS WHEREOF, Borrower and Lender have signed this Schedule A as
of the date set forth in the heading to the Agreement.
BORROWER: LENDER:
URBAN JUICE & SODA COMPANY LTD. BANC OF AMERICA COMMERCIAL FINANCE
CORPORATION, THROUGH ITS
COMMERCIAL FUNDING DIVISION
By /s/ Xxxxxxxx Cue
Its Chief Financial Officer By /s/ X. X. Xxxxxx
Its Authorized Signatory
XXXXX SODA CO. (USA) INC.
By /s/ Xxxxxxxx Cue
Its Chief Financial Officer
53
SCHEDULE B
DEFINITIONS
This Schedule is an integral part of the Loan and Security Agreement
between URBAN JUICE & SODA COMPANY LTD., a Wyoming corporation, XXXXX SODA CO.
(USA) INC., a Washington corporation, and BANC OF AMERICA COMMERCIAL FINANCE
CORPORATION, THROUGH ITS COMMERCIAL FUNDING DIVISION (the "AGREEMENT").
As used in the Agreement, the following terms have the following
meanings:
"ACCOUNT" means any right to payment for Goods sold or leased or
for services rendered which is not evidenced by an Instrument or Chattel Paper,
whether or not it has been earned by performance.
"ACCOUNT DEBTOR" means the obligor on an Account or Chattel
Paper.
"ACCOUNT PROCEEDS" has the meaning set forth in Section 4.1.
"AFFILIATE" means, with respect to any Person, a relative,
partner, shareholder, member, manager, director, officer, or employee of such
Person, any parent or subsidiary of such Person, or any Person controlling,
controlled by or under common control with such Person or any other Person
affiliated, directly or indirectly, by virtue of family membership, ownership,
management or otherwise.
"AGREEMENT" and "THIS AGREEMENT" mean the Loan and Security
Agreement of which this Schedule B is a part and the Schedules thereto.
"AVAILABILITY" has the meaning set forth in Section 1.1(a)
"BANKRUPTCY CODE" means the United States Bankruptcy Code (11
U.S.C. Section 101 ET SEQ.).
"BLOCKED ACCOUNT" has the meaning set forth in Section 4.1.
"BORROWER" has the meaning set forth in the heading to the
Agreement.
"BORROWER'S ADDRESS" has the meaning set forth in the heading to
the Agreement.
"BUSINESS DAY" means a day other than a Saturday or Sunday or
any other day on which Lender or banks in Chicago, Illinois are authorized to
close.
"CHATTEL PAPER" has the meaning set forth in the UCC.
53
"COLLATERAL" means all property and interests in property in or
upon which a security interest or other Lien is granted pursuant to this
Agreement or the other Loan Documents.
"CREDIT ACCOMMODATION" has the meaning set forth in Section
1.1(a).
"CREDIT ACCOMMODATION BALANCE" means the sum of (i) the
aggregate undrawn face amount of all outstanding Credit Accommodations and (ii)
all interest, fees and costs due or, in Lender's estimation, likely to become
due in connection therewith.
"DEFAULT" means any event which with notice or passage of time,
or both, would constitute an Event of Default.
"DEFAULT RATE" has the meaning set forth in Section 2.1.
"DEPOSIT ACCOUNT" has the meaning set forth in the UCC.
"DILUTION PERCENTAGE" means the gross amount of all returns,
allowances, discounts, credits, write-offs and similar items relating to
Borrower's Accounts computed as a percentage of Borrower's gross sales,
calculated on a ninety (90) day rolling average.
"DOCUMENT" has the meaning set forth in the UCC.
"EARLY TERMINATION FEE" has the meaning set forth in Section
7.2.
"ELIGIBLE ACCOUNT" means, at any time of determination, an
Account of Borrower or Borrower's Canadian affiliate, WAZU PRODUCTS LTD.
("WAZU") which satisfies the general criteria set forth below and which is
otherwise acceptable to Lender (PROVIDED, that Lender may, in its sole
discretion, change the general criteria for acceptability of Eligible Accounts
upon at least fifteen days' prior notice to Borrower). An Account shall be
deemed to meet the current general criteria if (i) neither the Account Debtor
nor any of its Affiliates is an Affiliate, creditor or supplier of Borrower or
WAZU; (ii) it does not remain unpaid more than the earlier to occur of (A) the
number of days after the original INVOICE DATE set forth in Section 5(a) of
Schedule A or (B) the number of days after the original INVOICE DUE DATE set
forth in Section 5(b) of Schedule A; (iii) the Account Debtor or its Affiliates
are not past due on other Accounts owing to Borrower and WAZU comprising more
than 25% of all of the Accounts owing to Borrower and WAZU by such Account
Debtor or its Affiliates; (iv) all Accounts owing by the Account Debtor or its
Affiliates do not represent more than 20% of all otherwise Eligible Accounts
(PROVIDED, that Accounts which are deemed to be ineligible solely by reason of
this clause (iv) shall be considered Eligible Accounts to the extent of the
amount thereof which does not exceed 20% of all otherwise Eligible Accounts);
(v) no covenant, representation or warranty contained in this Agreement with
respect to such Account (including any of the representations set forth in
Section 5.4) has been breached; (vi) the Account is not subject to any contra
relationship, counterclaim, dispute or set-off (PROVIDED, that Accounts which
are deemed to be ineligible solely by reason of this clause (vi) shall be
considered
54
Eligible Accounts to the extent of the amount thereof which is not affected
by such contra relationships, counterclaims, disputes or set-offs); (vii) the
Account Debtor's chief executive office or principal place of business is
located in the United States or Provinces of Canada which have adopted the
Personal Property Security Act or a similar act, unless (A) the sale is fully
backed by a letter of credit, guaranty or acceptance acceptable to Lender in
its sole discretion, and if backed by a letter of credit, such letter of
credit has been issued or confirmed by a bank satisfactory to Lender, is
sufficient to cover such Account, and if required by Lender, the original of
such letter of credit has been delivered to Lender or Lender's agent and the
issuer thereof notified of the assignment of the proceeds of such letter of
credit to Lender or (B) such Account is subject to credit insurance payable
to Lender issued by an insurer and on terms and in an amount acceptable to
Lender; (viii) it is absolutely owing to Borrower or WAZU and does not arise
from a sale on a xxxx-and-hold, guarantied sale, sale-or-return,
sale-on-approval, consignment, retainage or any other repurchase or return
basis or consist of progress xxxxxxxx; (ix) Lender shall have verified the
Account in a manner satisfactory to Lender; (x) the Account Debtor is not the
United States of America or any state or political subdivision (or any
department, agency or instrumentality thereof), unless Borrower has complied
with the Assignment of Claims Act of 1940 (31 U.S.C. Section 203 et seq.) or
other applicable similar state or local law in a manner satisfactory to
Lender; (xi) it is at all times subject to Lender's duly perfected, first
priority security interest and to no other Lien that is not a Permitted Lien,
and the goods giving rise to such Account (A) were not, at the time of sale,
subject to any Lien except Permitted Liens and (B) have been delivered to and
accepted by the Account Debtor, or the services giving rise to such Account
have been performed by Borrower or WAZU and accepted by the Account Debtor;
(xii) the Account is not evidenced by Chattel Paper or an Instrument of any
kind and has not been reduced to judgment; (xiii) the Account Debtor's total
indebtedness to Borrower or WAZU does not exceed the amount of any credit
limit established by Borrower, WAZU, or Lender and the Account Debtor is
otherwise deemed to be creditworthy by Lender (PROVIDED, that Accounts which
are deemed to be ineligible solely by reason of this clause (xiii) shall be
considered Eligible Accounts to the extent the amount of such Accounts does
not exceed the lower of such credit limits); (xiv) there are no facts or
circumstances existing, or which could reasonably be anticipated to occur,
which might result in any adverse change in the Account Debtor's financial
condition or impair or delay the collectibility of all or any portion of such
Account; (xv) Lender has been furnished with all documents and other
information pertaining to such Account which Lender has requested, or which
Borrower or WAZU is obligated to deliver to Lender, pursuant to this
Agreement; (xvi) Borrower or WAZU has not made an agreement with the Account
Debtor to extend the time of payment thereof beyond the time periods set
forth in clause (ii) above; and (xvii) Borrower has not posted a surety or
other bond in respect of the contract under which such Account arose.
"ELIGIBLE EQUIPMENT" means, at any time of determination,
Equipment owned by Borrower which Lender, in its sole discretion, deems to be
eligible for borrowing purposes.
55
"ELIGIBLE INVENTORY" means, at any time of determination,
Inventory owned by Borrower or WAZU (other than packaging materials and
supplies) which satisfies the general criteria set forth below and which is
otherwise acceptable to Lender (PROVIDED, that Lender may, in its sole
discretion, change the general criteria for acceptability of Eligible Inventory
upon at least fifteen days' prior written notice to Borrower). Inventory shall
be deemed to meet the current general criteria if (i) it consists of raw
materials or finished goods that is readily marketable in its current form; (ii)
it is in good, new and saleable condition; (iii) it is not slow-moving,
obsolete, unmerchantable, returned or repossessed; (iv) it is not in the
possession of a processor, consignee or bailee, or located on premises leased or
subleased to Borrower or WAZU, or on premises subject to a mortgage in favor of
a Person other than Lender, unless such processor, consignee, bailee or
mortgagee or the lessor or sublessor of such premises, as the case may be, has
executed and delivered all documentation which Lender shall require to evidence
the subordination or other limitation or extinguishment of such Person's rights
with respect to such Inventory and Lender's right to gain access thereto; (v) it
meets all standards imposed by any governmental agency or authority; (vi) it
conforms in all respects to any covenants, warranties and representations set
forth in the Agreement; (vii) it is at all times subject to Lender's duly
perfected, first priority security interest and no other Lien except a Permitted
Lien; and (viii) it is situated at an Inventory Location listed in Section 9(d)
of Schedule A or other location of which Lender has been notified as required by
Section 5.6.
"ELIGIBLE REAL PROPERTY" means, at any time of determination,
Real Property owned by Borrower which Lender, in its sole discretion, deems to
be eligible for borrowing purposes.
"EQUIPMENT" means all Goods which are used or bought for use
primarily in business (including farming or a profession) or by a Person who is
a non-profit organization or governmental subdivision or agency and which are
not Inventory, farm products or consumer goods, including all machinery, molds,
machine tools, motors, furniture, equipment, furnishings, fixtures, trade
fixtures, motor vehicles, tools, parts, dies and jigs, and all attachments,
accessories, accessions, replacements, substitutions, additions or improvements
to, or spare parts for, any of the foregoing.
"EQUIPMENT ADVANCE" has the meaning set forth in Section 1.1(b).
"ERISA" means the Employee Retirement Income Security Act of
1974 and all rules, regulations and orders promulgated thereunder.
"EVENT OF DEFAULT" has the meaning set forth in Section 8.1.
"GAAP" means generally accepted accounting principles as in
effect from time to time, consistently applied.
"GENERAL INTANGIBLES" has the meaning set forth in the UCC, and
includes all books and records pertaining to the Collateral and other business
and financial records in the
56
possession of Borrower or any other Person, inventions, designs, drawings,
blueprints, patents, patent applications, trademarks, trademark applications
(other than "intent to use" applications until a verified statement of use is
filed with respect to such applications) and the goodwill of the business
symbolized thereby, names, trade names, trade secrets, goodwill, copyrights,
registrations, licenses, franchises, customer lists, security and other
deposits, causes of action and other rights in all litigation presently or
hereafter pending for any cause or claim (whether in contract, tort or
otherwise), and all judgments now or hereafter arising therefrom, rights to
purchase or sell real or personal property, rights as a licensor or licensee of
any kind, royalties, telephone numbers, internet addresses, proprietary
information, purchase orders, and all insurance policies and claims (including
life insurance, key man insurance, credit insurance, liability insurance,
property insurance and other insurance), tax refunds and claims, letters of
credit, banker's acceptances and guaranties, computer programs, discs, tapes and
tape files in the possession of Borrower or any other Person, claims under
guaranties, security interests or other security held by or granted to Borrower,
all rights to indemnification and all other intangible property of every kind
and nature.
"GOODS" means all things which are movable at the time the
security interest attaches or which are fixtures (other than money, Documents,
Instruments, Investment Property, Accounts, Chattel Paper, General Intangibles,
or minerals or the like (including oil and gas) before extraction), including
standing timber which is to be cut and removed under a conveyance or contract
for sale, the unborn young of animals, and growing crops.
"INITIAL TERM" has the meaning set forth in Section 7.1.
"INSTRUMENT" has the meaning set forth in the UCC.
"INVENTORY" means all Goods held for sale or lease or furnished
or to be furnished under contracts of service, including all raw materials, work
in process, finished goods, goods in transit and materials and supplies which
are or might be used or consumed in a business or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such Goods,
and all products of the foregoing, and shall include interests in goods
represented by Accounts, returned, reclaimed or repossessed goods and rights as
an unpaid vendor.
"INVESTMENT PROPERTY" shall mean all of Borrower's securities,
whether certificated or uncertificated, securities entitlements, securities
accounts, commodity contracts and commodity accounts.
"LENDER" has the meaning set forth in the heading to the
Agreement.
"LIEN" means any interest in property securing an obligation
owed to, or a claim by, a Person other than the owner of the property, whether
such interest is based on common law, statute or contract, including rights of
sellers under conditional sales contracts or title retention agreements and
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting
57
property. For the purpose of this Agreement, Borrower shall be deemed to be the
owner of any property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the property has
been retained by or vested in some other Person for security purposes.
"LOAN ACCOUNT" has the meaning set forth in Section 2.4.
"LOAN DOCUMENTS" means the Agreement and all notes, guaranties,
security agreements, certificates, landlord's agreements, Lock Box and Blocked
Account agreements and all other agreements, documents and instruments now or
hereafter executed or delivered by Borrower or any Obligor in connection with,
or to evidence the transactions contemplated by, this Agreement.
"LOAN LIMITS" means, collectively, the Availability limits and
all other limits on the amount of Loans and Credit Accommodations set forth in
this Agreement.
"LOANS" means, collectively, the Revolving Loans and any Term
Loan.
"LOCK BOX" has the meaning set forth in Section 4.1.
"MATERIAL ADVERSE EFFECT" has the meaning set forth in
Section 5.20.
"MATURITY DATE" has the meaning set forth in Section 7.1.
"OBLIGATIONS" means all present and future Loans, advances,
debts, liabilities, obligations, guaranties, covenants, duties and indebtedness
at any time owing by Borrower to Lender, whether evidenced by this Agreement or
any other Loan Document, whether arising from an extension of credit, opening of
a Credit Accommodation, guaranty, indemnification or otherwise (including all
fees, costs and other amounts which may be owing to issuers of Credit
Accommodations and all taxes, duties, freight, insurance, costs and other
expenses, costs or amounts payable in connection with Credit Accommodations or
the underlying goods), whether direct or indirect (including those acquired by
assignment and any participation by Lender in Borrower's indebtedness owing to
others), whether absolute or contingent, whether due or to become due, and
whether arising before or after the commencement of a proceeding under the
Bankruptcy Code or any similar statute, including all interest, charges,
expenses, fees, attorney's fees, expert witness fees, audit fees, letter of
credit fees, loan fees, Early Termination Fees, Minimum Borrowing Fees and any
other sums chargeable to Borrower under this Agreement or under any other Loan
Document.
"OBLIGOR" means any guarantor, endorser, acceptor, surety or
other person liable on, or with respect to, the Obligations or who is the owner
of any property which is security for the Obligations, other than Borrower.
"PERMITTED LIENS" means: (i) purchase money security interests
in specific items of Equipment in an aggregate amount not to exceed the limit
set forth in Section 8(h) of
58
Schedule A; (ii) leases of specific items of Equipment in an aggregate amount
not to exceed the limit set forth in Section 8(i) of Schedule A; (iii) Liens for
taxes not yet due and payable; (iv) additional Liens which are fully subordinate
to the security interests of Lender and are consented to in writing by Lender;
(v) security interests being terminated concurrently with the execution of this
Agreement; (vi) Liens of materialmen, mechanics, warehousemen or carriers
arising in the ordinary course of business and securing obligations which are
not delinquent; (vii) Liens incurred in connection with the extension, renewal
or refinancing of the indebtedness secured by Liens of the type described in
clause (i) or (ii) above; PROVIDED, that any extension, renewal or replacement
Lien is limited to the property encumbered by the existing Lien and the
principal amount of the indebtedness being extended, renewed or refinanced does
not increase; (viii) Liens in favor of customs and revenue authorities which
secure payment of customs duties in connection with the importation of goods;
and (ix) security deposits posted in connection with real property leases or
subleases. Lender will have the right to require, as a condition to its consent
under clause (iv) above, that the holder of the additional Lien sign an
intercreditor agreement in form and substance satisfactory to Lender, in its
sole discretion, acknowledging that the Lien is subordinate to the security
interests of Lender, and agreeing not to take any action to enforce its
subordinate Lien so long as any Obligations remain outstanding, and that
Borrower agree that any uncured default in any obligation secured by the
subordinate Lien shall also constitute an Event of Default under this Agreement.
"PERSON" means any individual, sole proprietorship, partnership,
joint venture, limited liability company, trust, unincorporated organization,
association, corporation, government or any agency or political division
thereof, or any other entity.
"PRIME RATE" means, at any given time, the prime rate as quoted
in THE WALL STREET JOURNAL as the base rate on corporate loans posted as of such
time by at least 75% of the nation's 30 largest banks (which rate is not
necessarily the lowest rate offered by such banks).
"REAL PROPERTY" means the real property described in Section
10 of Schedule A.
"REAL PROPERTY ADVANCE" has the meaning set forth in Section
1.1(b).
"RELEASED PARTIES" has the meaning set forth in Section 6.1.
"RENEWAL TERM" has the meaning set forth in Section 7.1.
"RESERVES" has the meaning set forth in Section 1.2.
"REVOLVING LOANS" has the meaning set forth in Section 1.1(a).
"SALE" has the meaning set forth in Section 8.2.
59
"SUBSIDIARY" means any corporation or other entity of which a
Person owns, directly or indirectly, through one or more intermediaries, more
than 50% of the capital stock or other equity interest at the time of
determination.
"TERM" means the period commencing on the date of this Agreement
and ending on the Maturity Date.
"TERM LOAN" has the meaning set forth in Section 1.1(b).
"UCC" means, at any given time, the Uniform Commercial Code as
adopted and in effect at such time in the State of Illinois.
All accounting terms used in this Agreement, unless otherwise indicated,
shall have the meanings given to such terms in accordance with GAAP. All other
terms contained in this Agreement, unless otherwise indicated, shall have the
meanings provided by the UCC, to the extent such terms are defined therein. The
term "INCLUDING," whenever used in this Agreement, shall mean "including but not
limited to." The singular form of any term shall include the plural form, and
vice versa, when the context so requires. References to Sections, subsections
and Schedules are to Sections and subsections of, and Schedules to, this
Agreement. All references to agreements and statutes shall include all
amendments thereto and successor statutes in the case of statutes.
IN WITNESS WHEREOF, Borrower and Lender have signed this Schedule B as
of the date set forth in the heading to the Agreement.
BORROWER: LENDER:
URBAN JUICE & SODA COMPANY LTD. BANC OF AMERICA COMMERCIAL FINANCE
CORPORATION, THROUGH ITS
COMMERCIAL FUNDING DIVISION
By /s/ Xxxxxxxx Cue
Its Chief Financial Officer By /s/ Xxxxxxx. X. Xxxxxx
Its Authorized Signatory
XXXXX SODA CO. (USA) INC.
By /s/ Xxxxxxxx Cue
Its Chief Financial Officer
60
SCHEDULE "C"
URBAN JUICE & SODA COMPANY, LTD.
TRADEMARK APPLICATIONS/ISSUANCES
AND TRADE NAMES
UNITED STATES TRADEMARKS
----------------------------- ------------------------------------------------------------- --------------------------
REGISTRATION NO. TRADEMARK REGISTRATION DATE
----------------------------- ------------------------------------------------------------- --------------------------
2115636 Urban Juice & Soda 11/25/97
----------------------------- ------------------------------------------------------------- --------------------------
2115637 Urban Juice & Soda Co. and Design 11/25/97
----------------------------- ------------------------------------------------------------- --------------------------
2291508 Slim Xxxxx 11/09/99
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Slim Xxxxx and Design
----------------------------- ------------------------------------------------------------- --------------------------
2217493 Wazu 01/12/99
----------------------------- ------------------------------------------------------------- --------------------------
2217492 Wet Yourself 01/12/99
----------------------------- ------------------------------------------------------------- --------------------------
2178918 J and Design 08/04/98
----------------------------- ------------------------------------------------------------- --------------------------
2118528 Xxxxx Soda Co. 12/02/97
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Xxxxx Soda Co. and Design
(label - silver on black)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Xxxxx Soda Co. and Design
(label - black on silver)
----------------------------- ------------------------------------------------------------- --------------------------
2102694 Wazu and Design 10/07/97
----------------------------- ------------------------------------------------------------- --------------------------
2093428 I've Got a Xxxxx for a Xxxxx 09/02/97
----------------------------- ------------------------------------------------------------- --------------------------
Serial # 75-818366 Urban Juice & Soda Company Ltd. Drawing 10/12/99
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Xxxxx Whoop Ass
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Whoop Ass Energy Drink and Design
----------------------------- ------------------------------------------------------------- --------------------------
Applied For My Xxxxx
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Method and Apparatus for Creating and Ordering Customized
Branded Merchandise Over a Computer Network
(My Xxxxx)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For XXX.XXXXXXX.XXX
----------------------------- ------------------------------------------------------------- --------------------------
Serial # 75-759465 Pink 07/26/99
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Xxxxx Whoop Ass
----------------------------- ------------------------------------------------------------- --------------------------
Serial # 75-605504 Image is Nothing Cash and Sex are Everything 12/15/98
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Jonesin' For
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Jonesin'
----------------------------- ------------------------------------------------------------- --------------------------
Applied For I'm Jonesin'
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Jonesing For
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Jonesing
----------------------------- ------------------------------------------------------------- --------------------------
Applied For I'm Jonesing
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Natural Xxxxx
----------------------------- ------------------------------------------------------------- --------------------------
61
----------------------------- ------------------------------------------------------------- --------------------------
Applied For XXX.XXXXXXXXX.XXX
----------------------------- ------------------------------------------------------------- --------------------------
62
UNITED STATES TRADEMARKS (CONTINUED)
----------------------------- ------------------------------------------------------------- --------------------------
REGISTRATION NO. TRADEMARK REGISTRATION DATE
----------------------------- ------------------------------------------------------------- --------------------------
Applied For XXX.XXXXXXX.XXX
----------------------------- ------------------------------------------------------------- --------------------------
Applied For XXX.XXXXXXX.XXX
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Whoop Ass Energy Drink & Oval Design
(color claim)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Whoop Ass Boy
(color claim)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Whoop Ass Boy
(no color claim)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Fufu Xxxxx Soda
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Spiked Xxxxx (alcoholic)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Spiked Xxxxx (non-alcoholic)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Wazoom
----------------------------- ------------------------------------------------------------- --------------------------
Applied For I've Got a Xxxxx for a Soda
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Go There
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Wamoo
----------------------------- ------------------------------------------------------------- --------------------------
Applied For It May Not Be Your Thing
----------------------------- ------------------------------------------------------------- --------------------------
ARGENTINA TRADEMARKS
----------------------------- ------------------------------------------------------------- --------------------------
REGISTRATION NO. TRADEMARK REGISTRATION DATE
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Xxxxx Soda Co.
----------------------------- ------------------------------------------------------------- --------------------------
CANADA TRADEMARKS
----------------------------- ------------------------------------------------------------- --------------------------
REGISTRATION NO. TRADEMARK REGISTRATION DATE
----------------------------- ------------------------------------------------------------- --------------------------
Registered Display Case
----------------------------- ------------------------------------------------------------- --------------------------
Registered Drink it or Dehydrate
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Fufu Xxxxx Soda
----------------------------- ------------------------------------------------------------- --------------------------
Registered Go There
----------------------------- ------------------------------------------------------------- --------------------------
Applied For I'm Jonesin'
----------------------------- ------------------------------------------------------------- --------------------------
Applied For I'm Jonesing
----------------------------- ------------------------------------------------------------- --------------------------
Registered I've got a Xxxxx for a Xxxxx
----------------------------- ------------------------------------------------------------- --------------------------
Registered I've got a Xxxxx for a Soda
----------------------------- ------------------------------------------------------------- --------------------------
63
CANADA TRADEMARKS (CONTINUED)
----------------------------- ------------------------------------------------------------- --------------------------
REGISTRATION NO. TRADEMARK REGISTRATION DATE
----------------------------- ------------------------------------------------------------- --------------------------
Registered It May Not Be Your Thing
----------------------------- ------------------------------------------------------------- --------------------------
Registered J & Design
----------------------------- ------------------------------------------------------------- --------------------------
Registered Xxxxx Soda Company
----------------------------- ------------------------------------------------------------- --------------------------
Registered Xxxxx Soda Co.
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Xxxxx Soda Co. and Design
(label - black on silver)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Xxxxx Soda Co. and Design
(label - silver on black)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Xxxxx Soda Co. and Design (label)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Xxxxx Whoopass
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Jonesin'
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Jonesin' For
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Jonesing
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Jonesing For
----------------------------- ------------------------------------------------------------- --------------------------
Applied For My Xxxxx
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Natural Xxxxx
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Natural Xxxxx and Design (Label)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Pink
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Slim Xxxxx
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Slim Xxxxx and Design (Label)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Spiked Xxxxx (alcoholic)
----------------------------- ------------------------------------------------------------- --------------------------
Registered Spiked Xxxxx (non-alcoholic)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Trade Dress
----------------------------- ------------------------------------------------------------- --------------------------
Registered Urban Juice & Soda Co.
----------------------------- ------------------------------------------------------------- --------------------------
Registered Urban Juice & Soda Co. and Design
----------------------------- ------------------------------------------------------------- --------------------------
Registered Wamoo
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Wazoom
----------------------------- ------------------------------------------------------------- --------------------------
Registered Wazu
----------------------------- ------------------------------------------------------------- --------------------------
Registered Wazu and Design
----------------------------- ------------------------------------------------------------- --------------------------
Registered Wet Yourself
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Whoop Ass Boy Design (colour claim)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Whoop Ass Boy Design (no colour claim)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Whoop Ass Energy Drink (oval design)
(no colour claim)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Whoop Ass Energy Drink
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Whoop Ass Energy Drink and Design
(can label)
----------------------------- ------------------------------------------------------------- --------------------------
Registered XXX.XXXXXXXXX.XXX
----------------------------- ------------------------------------------------------------- --------------------------
64
CANADA TRADEMARKS (CONTINUED)
----------------------------- ------------------------------------------------------------- --------------------------
Applied For XXX.XXXXXXX.XXX
----------------------------- ------------------------------------------------------------- --------------------------
EUROPEAN UNION TRADEMARKS
----------------------------- ------------------------------------------------------------- --------------------------
REGISTRATION NO. TRADEMARK REGISTRATION DATE
----------------------------- ------------------------------------------------------------- --------------------------
Registered Xxxxx Soda Co.
----------------------------- ------------------------------------------------------------- --------------------------
GERMANY TRADEMARKS
----------------------------- ------------------------------------------------------------- --------------------------
REGISTRATION NO. TRADEMARK REGISTRATION DATE
----------------------------- ------------------------------------------------------------- --------------------------
Registered Xxxxx Soda Co.
----------------------------- ------------------------------------------------------------- --------------------------
Registered Wazu
----------------------------- ------------------------------------------------------------- --------------------------
INDONESIA TRADEMARKS
----------------------------- ------------------------------------------------------------- --------------------------
REGISTRATION NO. TRADEMARK REGISTRATION DATE
----------------------------- ------------------------------------------------------------- --------------------------
Registered Xxxxx Soda Co.
----------------------------- ------------------------------------------------------------- --------------------------
Registered Spiked Xxxxx
----------------------------- ------------------------------------------------------------- --------------------------
Registered Wazu
----------------------------- ------------------------------------------------------------- --------------------------
JAPAN TRADEMARKS
----------------------------- ------------------------------------------------------------- --------------------------
REGISTRATION NO. TRADEMARK REGISTRATION DATE
----------------------------- ------------------------------------------------------------- --------------------------
Registered Xxxxx Soda Co.
----------------------------- ------------------------------------------------------------- --------------------------
Registered Spiked Xxxxx
----------------------------- ------------------------------------------------------------- --------------------------
Registered Wazu
----------------------------- ------------------------------------------------------------- --------------------------
MALAYSIA TRADEMARKS
----------------------------- ------------------------------------------------------------- --------------------------
REGISTRATION NO. TRADEMARK REGISTRATION DATE
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Xxxxx Soda Co.
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Wazu
----------------------------- ------------------------------------------------------------- --------------------------
65
PHILIPPINES TRADEMARK
---------------------------- ------------------------------------------------------------- --------------------------
REGISTRATION NO. TRADEMARK REGISTRATION DATE
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Jone Soda Co.
----------------------------- ------------------------------------------------------------- --------------------------
SINGAPORE TRADEMARKS
----------------------------- ------------------------------------------------------------- --------------------------
REGISTRATION NO. TRADEMARK REGISTRATION DATE
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Xxxxx Soda Co.
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Spiked Xxxxx
----------------------------- ------------------------------------------------------------- --------------------------
Applied For Wazu
----------------------------- ------------------------------------------------------------- --------------------------
U.K. TRADEMARKS
----------------------------- ------------------------------------------------------------- --------------------------
REGISTRATION NO. TRADEMARK REGISTRATION DATE
----------------------------- ------------------------------------------------------------- --------------------------
Registered Xxxxx Soda Co.
----------------------------- ------------------------------------------------------------- --------------------------
Registered Xxxxx Soda Co. and Design
----------------------------- ------------------------------------------------------------- --------------------------
Registered Spiked Xxxxx
----------------------------- ------------------------------------------------------------- --------------------------
Registered Wazu
----------------------------- ------------------------------------------------------------- --------------------------
66
