Exhibit 10.4
LOAN AND SECURITY AGREEMENT
THIS AGREEMENT made this 17th day of September, 1999, by and between
XXXXXXXXXXXXX.XXX, INC., a Florida corporation (the "Borrower"), and SOUTHTRUST
BANK, NATIONAL ASSOCIATION, with its principal office in Birmingham, Alabama
(the "Bank").
RECITALS:
The Borrower has requested Bank to make available to Borrower a line of
credit aggregating up to One Million Dollars ($1,000,000) ("Loan"), and the Bank
is willing to make such credit facility available to the Borrower on the terms
and conditions hereinafter set forth and secured as provided in this Agreement.
NOW, THEREFORE, the Borrower and the Bank agree as follows:
ARTICLE 1
DEFINED TERMS; GENERAL MATTERS
1.1 Defined Terms. As used in this Loan and Security Agreement, the
following terms shall have the following meanings:
Account Debtor - any Person who is or may become obligated
under or on account of an Account.
Affiliate - any director or officer of Borrower or any Person
who, directly, indirectly or beneficially, owns five percent (5%) or more of the
capital stock of Borrower or any member of the immediate family of any such
officer, director or stockholder, or any corporation or other entity which is
controlled by, controls, or is under common control with the Borrower,
including, without limitation, the Guarantor.
Aggregate Loan Values - the lesser of (i) the sum of One
Million Dollars ($1,000,000); or (ii) the sum of the Loan Value of Accounts, and
the Loan Value of Inventory.
Agreement - this Loan and Security Agreement.
Applicable Laws - all laws, rules and regulations applicable
to the Person, conduct, transaction, covenant or Loan Document in question,
including, but not limited to, all applicable common law and equitable
principles; all provisions of all applicable state and federal constitutions,
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statutes, rules, regulations and order of governmental bodies; and all orders,
judgements and decrees of all courts and arbitrators.
Average Monthly Loan Balance - the amount obtained by adding
the unpaid balance of the Loan owing by Borrower to Bank at the end of each day
for each day during the month in question and by dividing such sum by the number
of days in such month.
Bank - SouthTrust Bank, National Association.
Base Rate - the rate of interest designated by the Bank
periodically as its Base Rate. The Base Rate is not necessarily the lowest
interest rate charged by the Bank.
Borrower - XXXXXXXXXXXXX.XXX, INC., a Florida corporation.
Borrower's Report - the certificate or report of Borrower
referred to in Section 2.1(c) of this Agreement.
Business Day - a day, other than Saturday, Sunday, or days on
which national banks located in Miami, Florida, are authorized by law to close.
Capital Expenditures - expenditures made or liabilities
incurred for the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than one
year, including the direct or indirect acquisition of such assets by way of
increased product or service charges, offset items or otherwise and the
principal portion of payments with respect to Capitalized Lease Obligations.
Capitalized Lease Obligations - any Debt represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Debt shall be
the capitalized amount of such obligations determined in accordance with GAAP.
Closing Date - the date of this Agreement. The Closing Date is
not necessarily the date of initial funding of the Loan and the execution and
delivery of this Agreement and acceptance hereof shall not be deemed a waiver by
Bank of any of the conditions to lending set forth in Article 3 hereof.
Collateral - collectively, the Borrower's Inventory, the other
property and interests described in Section 8.1 hereof and elsewhere in the Loan
Documents, and the proceeds and products of each, as the case may be.
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Collected Balance - the book balance in a bank account, minus
the aggregate amount of all checks and other items of payment in the process of
collection, said amount to be computed in accordance with the Bank's standard
practices.
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Commitment Period - shall mean that period during which Bank
is obligated to make advances under the Loan hereunder, as provided in Section
2.1 hereof. The Commitment Period shall commence upon satisfaction of the
conditions to lending set forth in Article 3 and shall continue until one (1)
year from the date hereof, unless sooner terminated according to the provisions
hereof.
Current Assets - at any date means the amount at which all of
the current assets of a Person would be properly classified as current assets
shown on a balance sheet at such date in accordance with GAAP except that
amounts due from Affiliates and Subsidiaries and investments in Affiliates and
Subsidiaries shall be excluded.
Current Liabilities - at any date means the amount at which
all of the current liabilities of a Person would be properly classified as
current liabilities on a balance sheet at such date in accordance with GAAP.
Debt - the sum of (i) indebtedness for borrowed money or for
the deferred purchase price of property or services, (ii) Capitalized Lease
Obligations, (iii) all other items which in accordance with GAAP would be
included in determining total liabilities as shown on a balance sheet of a
Person as at the date as of which Debt is to be determined.
Debt Service Coverage - a ratio in which the initial number is
the sum of the net income (after provision for federal and state taxes and
excluding any extraordinary income) of Borrower calculated based upon the 12
month period preceding the applicable date plus the interest expenses of the
Borrower for said period, plus the sum of non-cash expenses or allowances for
the Borrower for such period (including, without limitation, amortization or
write-down of intangible assets, depreciation, depletion, and deferred taxes and
expenses), and the second number is the sum of the current portion of the
long-term Debt of the Borrower as of the applicable date plus the interest
expenses of Borrower for the 12 month period preceding the applicable date.
Default Rate - the rate of interest provided in the Promissory
Note(s) at which the indebtedness represented thereby is to bear interest after
default by Borrower or the occurrence of an Event of Default, or if no such rate
is mentioned, a rate of interest equal to five percent (5%) in excess of the
rate that would otherwise be applicable, calculated daily and computed on the
actual days elapsed over a year of three hundred sixty (360) days (unless
reference to a 365 or a 366-day year is necessary in order not to exceed the
highest rate permitted by Applicable Law), said rate to change as and when the
Base Rate changes. Where the term "Default Rate" is applied to any indebtedness
or obligation other than that represented by a Promissory Note, it shall mean a
rate of interest equal to five percent (5%) in excess of the Base Rate
calculated in accordance with the preceding sentence.
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Eligible Inventory - Inventory valued at the lesser of cost or
current market value, all of which Inventory is, at any given time, (a) not
damaged or defective in any way; (b) not sold or segregated for sale and
reflected as an Account of Borrower; (c) not consigned Inventory; (d) not
inventory-in-transit or located in a place other than at the locations listed in
Section 5.10 of this Agreement; (e) not work-in-process Inventory; (f) not
constituting packaging materials and supplies; (g) not Inventory evidenced by
negotiable warehouse receipts or by non-negotiable warehouse receipts or
documents of title which have not been issued in the name of Bank; (h) not
subject to a document of title such as a warehouse receipt or xxxx of lading;
and (i) not Inventory deemed ineligible by Bank in its sole discretion.
Environmental Regulations - all federal, state and local laws,
rules, regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to the environment or to public health, safety and
environmental matters, or petroleum products, or radon radiation, or oil or
hazardous substances, including, but not limited to, the Resource Conversation
and Recovery Act, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Toxic Substances Control Act, the Clean Water Act,
the Clean Air Act, the River and Harbor Act, the Water Pollution Control Act,
the Marine Protection Research and Sanctuaries Act, the Deep-Water Port Act, the
Safe Drinking Water Act, the Superfund Amendments and Reauthorization Act of
1986, the Federal Insecticide, Fungicide and Rodenticide Act, the Mineral Lands
and Leasing Act, the Surface Mining Control and Reclamation Act, the Oil
Pollution Act of 1990, state and federal superlien and environmental cleanup
programs and laws, U.S. Department Transportation regulations, laws regulating
hazardous, radioactive and toxic materials and underground petroleum products
storage tanks, and all similar state, federal and local laws and regulations.
ERISA - the Employee Retirement Income Security Act of 1974
and all rules and regulations promulgated thereunder.
Event of Default - any one of the events enumerated in Section
10.1 hereof.
Fixed Charge Coverage - a fraction in which the numerator is
the sum of the net income of the Borrower (after provision for federal and state
taxes) for the 12 month period preceding the applicable date plus the interest,
lease and rental expenses of the Borrower for said period plus the sum of
non-cash expenses or allowances for such period (including, without limitation,
amortization or write down of intangible assets, the net addition or net
decrease in the loan loss reserves for customer Accounts, depreciation,
depletion, and deferred taxes and expenses) and the denominator is the sum of
the current portion of the long term Debt of Borrower as of the applicable date
plus the interest, lease and rental expenses for the 12 month period preceding
the applicable date.
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GAAP - generally accepted accounting principles in the United
States of America in effect from time to time consistently applied.
Guarantor - XXXX X. XXXXX.
Inventory - all inventory of whatever kind or nature of
Borrower, now owned or hereafter acquired by Borrower, and wherever located,
including, without limitation, all goods held for sale or lease or furnished or
to be furnished under contracts, and any raw materials, goods in transit, work
in process or finished goods, supplies, returned or repossessed goods, together
with all goods and materials used or consumed in Borrower's business.
Ledger Balance - the balance reflected on the books of the
Bank of the amounts deposited in the Special Collection Account as further
described in Section 4.2 of this Agreement.
Lien - any interest in property (real, personal or mixed, and
tangible or intangible) securing an obligation owed to, or a claim by, a Person
other than the owner of the property, whether such interest is based on the
common law, statute or contract, and including, but not limited to, the security
interest, security title or Lien arising from a security agreement, mortgage,
deed of trust, deed to secure debt, encumbrance, pledge, conditional sale or
trust receipt or a lease, consignment or bailment for security purposes. The
term "Lien" shall include covenants, conditions, restrictions, leases and other
encumbrances affecting any 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 or Loans - the loan in principal amounts of up to One
Million Dollars ($1,000,000) with respect to the Loan advanced by the Bank to
the Borrower from time to time and evidenced by the Note(s) described in Section
2.1 of this Agreement (and any substitutions therefor, extensions thereof, or
renewal thereof).
Loan Account - the loan account established on the books of
Bank pursuant to Section 2.1 hereof.
Loan Documents - this Agreement, the Note, the guaranty
agreements of Guarantor, and each and every mortgage, deed of trust, guarantee,
reimbursement agreement, credit agreement, loan agreement, note, security
agreement, financing statement or other instrument executed and delivered to
evidence the Loans or any other Obligation, to constitute collateral for the
Loan or any other Obligation, or to evidence security for the Loans or any other
Obligation, and any and all other agreements, instruments, and documents
heretofore, now or hereafter, executed by Borrower and delivered to Bank in
respect to the transactions contemplated by this Agreement.
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Loan Value of Inventory - an amount which is not more than
forty percent (40%) of Borrower's Eligible Inventory.
Maximum Rate - the maximum non-usurious rate of interest
permitted by Applicable Law that any time, or from time to time, may be
contracted for, taken, reserved, charged or received on the Debt in question or,
to the extent permitted by Applicable Law, under such Applicable Laws that may
hereafter be in effect and which allow a higher maximum non-usurious interest
rate than Applicable Laws now allow. Notwithstanding any other provision hereof,
the Maximum Rate shall be calculated on a daily basis (computed on the actual
number of days elapsed over a year of 365 or 366 days, as the case may be).
Multiemployer Plan - has the meaning set forth in Section
4001(a)(3) of ERISA.
Note(s) - each promissory note executed and delivered by
Borrower to Bank evidencing all or part of the Loans, as further described
hereinafter.
Obligations - all Loans and all other advances, debts,
liabilities, obligations, covenants and duties owing, arising, due or payable
from Borrower to Bank of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, whether arising under this
Agreement or any of the other Loan Documents or otherwise, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising
and however evidenced or acquired. The term includes, without limitation, all
interest, charges, expenses, fees, attorneys' fees and any other sums chargeable
to Borrower under any of the Loan Documents and all rights Bank may at any time
or times have to reimbursement in connection with any letter of credit or
guaranty issued for Borrower's benefit.
Overadvance - an advance by Bank hereunder or under any Note
when an Overadvance Condition exists or would result from the making of such
advance.
Overadvance Condition -at any date, a condition such that
the outstanding principal amount of the Loan on such date exceeds the Aggregate
Loan Values on such date.
Permitted Liens - any Lien of a kind specified in Section 7.2
of this Agreement.
Person - an individual, partnership, corporation, joint stock
company, firm, land trust, business trust, limited liability company, limited
liability partnership, unincorporated organization, or other business entity, or
a government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained
for employees of Borrower that is covered by Title IV of ERISA.
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Prohibited Transaction - any transaction set forth in Section
406 of ERISA or Section 4975 of the Internal Revenue Code of 1986.
Reportable Event - any of the events set forth in Section
4043(b) of ERISA.
Solvent - as to any Person, means such Person (i) owns
property, real, personal, and mixed, whose aggregate fair saleable value is
greater than the amount required to pay all of such Person's Debt (including
contingent debts), and (ii) is able to pay all of its Debt as such Debt matures
and (iii) has capital sufficient to carry on its business and transactions and
all business and transactions in which it is about to engage.
Special Collection Account - the bank account referred to in
Section 4.2 of this Agreement.
Subordinated Debt - the Debt of the Borrower owed to the
Guarantor or to any Affiliate which is fully subordinated to the Loan (including
principal, interest, and agreed charges) in a manner satisfactory to the Bank
(which may be either according to its terms or by separate agreement) and which
Debt arises from the Borrower's actual receipt of cash and not from "in kind" or
non cash consideration.
Subsidiary - any corporate entity or partnership, or other
business entity, controlling interest of which is owned by the Borrower.
Tangible Net Worth - the aggregate of the (a) par or stated
value of all outstanding capital stock; (b) capital surplus; and (c) retained
earnings, less (x) any surplus resulting from any write-up of assets subsequent
to the date of this Agreement; (y) the book value of all intangible assets of
Borrower, including, without limitation, any goodwill (including any amount,
however, designated, representing the excess of the purchase price paid for
assets or stock acquired over the value assigned thereto on the books of
Borrower), noncompetition agreement, consulting agreement, patents, trademarks,
trade names and copyrights, and (z) the amount paid for any treasury stock
reflected as a reduction of the capital surplus or retained earnings accounts.
1.2 Accounting Terms. All accounting terms used herein shall be
construed in accordance with GAAP.
1.3 Interpretation. The terms "herein", "hereof", and "hereunder", and
other words of similar import refer to this Agreement as a whole and not to any
particular section, paragraph or subdivision. Any pronouns used shall be deemed
to cover all genders. Whenever the singular or plural number is used herein, it
shall equally include the other. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references
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to any instruments or agreements, including, without limitation, references to
any of the Loan Documents shall include any and all modifications or amendments
thereto and any and all extensions or renewals thereof.
1.4 Uniform Commercial Code. All other terms contained in this
Agreement shall, unless otherwise defined herein or unless the context otherwise
indicates, have the meanings provided for by the Uniform Commercial Code of the
State of Florida.
ARTICLE 2
THE LOAN
2.1 The Loan.
(a) Subject to all terms set forth herein but only during the
Commitment Period and for so long as no Event of Default exists, Bank agrees,
from time to time and on the terms hereinafter set forth, to loan to Borrower,
when requested by Borrower, principal amounts aggregating up to the lesser of
(i) One Million Dollars ($1,000,000), pursuant to the Loan; or (ii) the
Aggregate Loan Values as determined by the Bank from the periodic reports
submitted by Borrower to the Bank. Within the aforesaid limits, the Borrower may
borrow, make payments, and reborrow under this Agreement, subject to the
provisions hereof.
(b) The obligation to repay the Loan shall be evidenced by one
or more notes payable to the order of the Bank and maturing upon the earlier to
occur of an Event of Default or the expiration of the Commitment Period. Amounts
due under the note(s) and otherwise under this Agreement and under the Loan
Documents shall be reflected in the Loan Account.
(c) Borrower shall submit a Borrower's Report in the form
attached hereto as Exhibit "A" (or in such other form as may be furnished by
Bank from time to time) on the date of this Agreement and at least monthly
thereafter during the term of this Agreement, which shall be delivered within
fifteen (15) days following the end of each month. Bank may, in its sole
discretion, require that each advance made under the Loan be effected by
Borrower's submitting (and the Bank's receiving) a Borrower's Report at least
one (1) banking day prior to the date Borrower desires the advance to be made.
Bank shall, if all the terms and provisions of this Agreement have been met,
including, without limitation, the absence of an Event of Default hereunder,
make such advances. Each such Borrower's Report shall be signed by an officer or
employee of Borrower authorized by Borrower to execute such reports, whose
name(s) shall be included in a certificate furnished to the Bank.
(d) At its discretion, Bank may make advances to Borrower
under the Loan without specific request by automatic advance based on
availability in accordance with procedures established by Bank. In addition, as
an accommodation to Borrower, Bank may permit telephonic
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requests for loans and electronic transmittal of instructions, authorizations,
agreements or reports to Bank by Borrower. Unless Borrower specifically directs
Bank in writing not to accept or act upon telephonic or electronic
communications from Borrower, Bank shall have no liability to Borrower for any
loss or damage suffered by Borrower as a result of Bank's honoring of any
requests, execution of any instructions, authorizations or agreements or
reliance on any reports communicated to Bank telephonically or electronically
and purporting to have been sent to Bank by Borrower and Bank shall have no duty
to verify the origin of any such communication or the authority of the person
sending it.
(e) If the outstanding principal amount of the Loan at any
time exceeds the lesser of One Million Dollars ($1,000,000) or the Aggregate
Loan Values as reflected on the Borrower's Report, the Borrower shall
immediately pay the Bank an amount equal to such excess as a payment on the
principal amount of the Loan. Without limiting the foregoing, which provision
may be enforced by Bank at any time and which provision, as well as the other
provisions hereof, may not under any circumstance be waived or altered by a
course of dealing or otherwise, insofar as Borrower may request and Bank may be
willing in its sole and absolute discretion to make Overadvances, Bank shall
enter such Overadvances as debits in the Loan Account. All Overadvances shall be
payable on demand, shall be secured by the Collateral and shall bear interest as
provided in this Agreement for Loans generally. Bank may in its sole discretion
honor any request (or deemed request) for an advance even though an Overadvance
Condition then exists, or would exist with the making of such advance, and
without regard to the existence of, and without waiving, any default or Event of
Default.
(f) Each borrowing under the Loan shall be effected by
crediting the amount thereof to the regular checking account of Borrower
maintained with the Bank or with another bank approved by the Bank.
(g) The principal amount of the Loan outstanding from time to
time hereunder shall bear interest at the per annum rate set forth in the Note.
Interest shall be paid to Bank on the amount of the Loan outstanding and shall
be payable monthly in arrears on the fifth (5th) day of each month beginning
with the month following the date hereof and continuing on the same day of each
month thereafter until the maturity date of each Note. Interest shall be
calculated based on a three hundred sixty (360)-day year (i.e., computed on the
actual number of days elapsed over a year of 360 days unless reference to a 365
or a 366-day year is necessary in order not to exceed the highest rate permitted
by Applicable Law). From and after the occurrence of an Event of Default, the
principal amount of the Loan outstanding from time to time shall, subject to the
provisions of the following subsection, bear interest at the Default Rate.
(h) Borrower acknowledges and agrees that the provisions
herein and in the Note relating to the Default Rate represent a fair and
reasonable estimate by Borrower and Bank of a fair average compensation for the
loss that may be sustained by Bank due to the failure of Borrower to
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make timely payments with respect to the Obligations and for the cost and
expenses that may be incurred by Bank by reason of the occurrence of an Event of
Default, the parties recognizing that the damages caused by such extra
administrative expenses and loss of the use of funds is impracticable or
extremely difficult to ascertain or estimate. Interest at the Default Rate based
upon monetary defaults shall be paid without prejudice to the rights of Bank to
collect any other amounts provided to be paid hereunder.
2.2 Loan Account. Bank shall enter disbursements hereunder or under the
Note as debits to the Loan Account and shall also record in the Loan Account all
payments made by Borrower and all proceeds of Collateral which are finally paid
to Bank, and may record therein, in accordance with customary accounting
practice, all charges and expenses properly chargeable to Borrower hereunder.
2.3 Prepayment. Borrower shall have the right to prepay the
indebtedness represented by the Note pursuant to the terms and provisions of the
Note.
2.4 Term. This Agreement shall remain in force and effect until the
Loan and the Obligations, and any renewals or extensions, and all interest
thereon and costs provided for herein with regard to either of them have been
indefeasibly paid or satisfied in full and until the Bank has no further
obligation to advance funds to the Borrower hereunder. Subject to the foregoing
sentence, Borrower shall have the right to terminate this Agreement prior to
expiration of the Commitment Period upon payment of all outstanding principal,
accrued interest and other charges owing under the terms of this Agreement. The
indemnities provided for in Article 11 shall survive the payment in full of the
Loan and the Obligations and the termination of this Agreement.
2.5 Use of Proceeds. Borrower shall use the proceeds of the Loan to
provide operating capital and no other purpose.
2.6 Payments. All sums paid to the Bank by Borrower hereunder shall be
paid directly to the Bank in immediately available funds no later than 2:00 p.m.
Miami, Florida, time on the date on which payment is due, except if such date is
not a Business Day such payment shall then be due on the first Business Day
after such date, but interest shall continue to accrue until the date payment is
received. Any payment received after 2:00 p.m. Miami, Florida, time shall be
deemed to have been received on the immediately following Business Day for all
purposes, including, without limitation, the accrual of interest on principal.
The Bank shall send Borrower statements of all amounts due hereunder, which
statements shall be considered correct and conclusively binding on the Borrower
unless the Borrower notifies the Bank to the contrary within ten (10) days of
its receipt of any statement which it deems to be incorrect. The Bank may, in
its sole discretion, (a) charge against any deposit account of the Borrower all
or any part of any amount due hereunder, including, without limitation, the fees
and expenses of the Bank to be paid by Borrower as provided for in Sections 12.1
through 12.3 of this Agreement, any advances made by Bank to protect the
Collateral, and any commitment or servicing fee due the Bank, and (b) advance to
Borrower, and charge to the Loan,
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a sum sufficient each month to pay all interest accrued on the Loan and fees and
expenses due under this Agreement, including, without limitation, the fees and
expenses of the Bank to be paid by Borrower as provided for in Sections 12.1
through 12.3 of this Agreement, any advances made by Bank to protect the
Collateral, and any commitment or servicing fee due the Bank, during or for the
immediately preceding month or any month prior. Borrower shall be deemed to have
requested an advance under the Loan upon the occurrence of an overdraft in any
of Borrower's checking accounts maintained with the Bank or another bank owned
by SouthTrust Corporation.
2.7 Application of Payments. Borrower irrevocably waives the right to
direct the application of any and all payments and collections at any time or
times hereafter received by Bank from or on behalf of Borrower or from any of
the Collateral, and Borrower does hereby irrevocably agree that Bank shall have
the continuing exclusive right to apply such payments and collections received
at any time or times hereafter by Bank or its agent against the Obligations, in
such manner as Bank may deem advisable, notwithstanding any entry by Bank upon
any of its books and records. If as the result of collections of Accounts or for
any other reason, a credit balance exists in the Loan Account, such credit
balance shall not accrue interest in favor of Borrower but shall be available to
Borrower at any time or times for so long as no Event of Default exists.
ARTICLE 3
CONDITIONS OF LENDING
Bank shall not be obligated to make the Loan, or any advance under the
Loan, unless at the time thereof the following conditions shall have been met:
3.1 Corporate Proceedings. All proper corporate proceedings shall have
been taken by Borrower to authorize this Agreement and the transactions
contemplated hereby.
3.2 Documentation. All instruments and proceedings in connection with
the transactions contemplated by this Agreement shall be satisfactory in form
and substance to Bank, and Bank shall have received on the date of this
Agreement copies of all documents, including records of corporate proceedings,
which it may have requested in connection therewith, including, without
limitation, certified copies of resolutions adopted by the Board of Directors of
the Borrower, certificates of good standing, and certified copies of the
Articles of Incorporation and By-Laws, and all amendments thereto, of the
Borrower.
3.3 Loan Documents. Bank shall have received executed copies of all
instruments evidencing security for the Loans and copies of the insurance
policies and related certificates of insurance referred to in Sections 6.1 and
9.6 of this Agreement.
3.4 No Default. No event shall have occurred or be continuing which
constitutes an Event of Default or which would constitute an Event of Default
with the giving of notice or the lapse of
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time or both; and neither the business nor assets nor the condition, financial
or otherwise, of Borrower shall have been adversely affected in any material
manner as the result of any fire, explosion, accident, strike, riot,
condemnation, act of God, or any other event or development.
3.5 Reports. Bank shall have received all reports and information from
Borrower called for under the Agreement as and when due.
3.6 Payment of Fees. Payment by Borrower of all fees and expenses
required by this Agreement.
3.7 Opinion of Counsel. Bank shall have received on the date of this
Agreement an opinion from counsel to Borrower satisfactory to Bank.
3.8 Incumbency Certificate. Bank shall have received an incumbency
certificate, dated as of the date of this Loan Agreement, executed by the
Secretary or Assistant Secretary of Borrower, which shall identify by name and
title and bear the signature of the officer of such Borrower authorized to sign
this Loan Agreement and the Note on behalf of the Borrower. The Bank shall be
entitled to rely upon such incumbency certificate in completing the transactions
contemplated herein or in any Loan Document and in all its other dealings with
Borrower.
3.9 Consents. Bank shall have received consents and agreements of the
landlords of each of the premises leased by Borrower on which the Collateral is
located as provided in Section 4.1 hereof, all in form satisfactory to Bank.
3.10 Lien Search. Bank shall have received a report from the Uniform
Commercial Code Division of the Florida Secretary of State indicating that there
are no Liens against that portion of the Collateral constituting personal
property except Permitted Liens.
3.11 Disbursement Authorization. Borrower shall have delivered to Bank
such disbursement authorizations, draw requests, and other documents and
writings as Bank shall have requested evidencing Borrower's request for
disbursement of funds.
3.12 Additional Documents. Bank shall have received such additional
legal opinions, certificates, proceedings, instruments and other documents as
the Bank or its counsel may reasonably request to evidence (i) compliance by the
Borrower with legal requirements, (ii) the truth and accuracy, as of the date of
this agreement, of the representations of the Borrower contained herein, and
(iii) the due performance or satisfaction by the Borrower, at or prior to the
date hereof, of all agreements required to be performed and all conditions
required to be satisfied by the Borrower pursuant hereto, including, without
limitation, all such matters as are listed on preliminary closing checklist
issued by Lender and furnished to Borrower.
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ARTICLE 4
SECURITY FOR LOAN AND SPECIAL COLLECTION ACCOUNT
4.1 Security. The Loan, the Note, and the Obligations shall be secured
by each of the following:
(a) A first priority security interest in Borrower's Inventory
and other properties and interests as provided for in Section 8.1, 8.1.0(6) and
other parts of Article 8 hereof;
(b) A first priority mortgage and security interest on that
certain real property and the improvements (including related fixtures,
equipment systems apparatus, building materials and components and other
personal property, and all rents, leases, proceeds, appurtenances and other
rights or benefits pertaining to the real property) located at 0000 X.X. 00xx
Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxx.
(c) The unconditional guarantee of Guarantor.
The Borrower agrees to execute and deliver, or cause
the execution and delivery of, such security agreements, deeds of trust,
mortgages, assignments, guaranties, consents, subordination agreements, and
financing statements as may be required by Bank to evidence such security, all
in form satisfactory to Bank, as well as such consents and agreements of the
landlords of each of the premises leased by Borrower on which the Collateral is
located, all in form satisfactory to Bank.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND GENERAL COVENANTS
Borrower represents, warrants and covenants to and with Bank, which
representations, warranties and covenants shall survive until the Obligations
are indefeasibly satisfied in full, that:
5.1 Organization and Qualification. The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida has the corporate power to own its properties and to carry on its
business as now being conducted; and is duly qualified to do business and is in
good standing in every jurisdiction in which the character of the properties
owned by it or in which the transaction of its business makes its qualification
necessary.
5.2 Corporate Power and Authorization. Borrower has full power and
authority to enter into this Agreement, to borrow hereunder, to execute and
deliver the Note and the other Loan Documents and to incur the obligations
provided for herein, all of which have been authorized by all proper and
necessary corporate action.
14
5.3 Enforceability. This Agreement and each of the other Loan Documents
constitute, and each Note when executed and delivered for value received will
constitute, a valid and legally binding obligation of Borrower enforceable in
accordance with their respective terms and will not violate, conflict with, or
constitute any default under any law, government regulation, Borrower's Articles
of Incorporation or By-Laws, or any other agreement or instrument binding upon
Borrower.
5.4 Pending Actions. Borrower is not a defendant, or a plaintiff
against whom a counterclaim or cross claim has been asserted, in any civil or
criminal action, suit or litigation, and no action or investigation is pending
or, so far as Borrower's officers and directors know, threatened before or by
any court or administrative agency which might result in any material adverse
change in the financial condition, operations or prospects of Borrower.
5.5 Financial Statements. The financial statements of Borrower dated
__________, 19___ (December 31, 1998, if not filled in), heretofore delivered to
Bank and all other financial statements and reports furnished by Borrower to
Bank are complete and correct and fairly present the financial condition of
Borrower and the results of its operations and transactions as of the dates and
for the periods referred to and have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved. There are no
liabilities, direct or indirect, fixed or contingent, of Borrower as of the date
of such financial statements which are not reflected therein or in the notes
thereto. Neither said financial statements nor any other financial statements,
reports, and information furnished by Borrower to Bank contains any untrue
statement of a material fact or omits a material fact necessary to make the
statements contained therein or herein not misleading. There is no fact which
Borrower has failed to disclose to Bank in writing which materially affects
adversely or, so far as Borrower can now foresee, will materially affect
adversely the Collateral, business, prospects, profits or condition (financial
or otherwise) of Borrower or the ability of Borrower to perform this agreement.
5.6 Title to Properties. Borrower has good and marketable title to all
of its assets, other than the Collateral, subject to no Lien, mortgage, pledge,
encumbrance, or charge of any kind except inchoate Liens arising by operation of
law for obligations which are not yet due and except for Permitted Liens.
Borrower enjoys peaceable and undisturbed possession under all leases under
which it is operating, and none of such leases contain any provisions which may
materially and adversely affect or impair the operations of the Borrower, and
all of such leases are valid and subsisting and in full force and effect.
5.7 Pension Plans. Except as set forth on Exhibit "E", Borrower has not
established and is not a party to any Plan or to any stock option or deferred
compensation plan or contract for the benefit of its employees or officers, any
pension, profit sharing or retirement plan, stock redemption agreement, or any
other agreement or arrangement with any officer, director or stockholder,
members of their families, or trusts for their benefit. Borrower is in
compliance with all applicable
15
provisions of ERISA. Neither Borrower nor any of its Subsidiaries has received
any notice to the effect that it is not in full compliance with any of the
requirements of ERISA and the regulations promulgated thereunder. No fact or
situation that could result in a material adverse change in the financial
condition of Borrower, including, but not limited to, any Reportable Event or
Prohibited Transaction, exists in connection with any Plan. Neither Borrower nor
any of its Subsidiaries has any withdrawal liability in connection with a
Multiemployer Plan.
5.8 Taxes. Borrower has filed all federal, state and local tax returns
which are required to be filed and has paid, or made adequate provision for the
payment of, all taxes which have or may become due pursuant to said returns or
to assessments received by Borrower, including, without limitation, all
applicable federal, state, and local employee withholding taxes.
5.9 Title to Collateral. Except for Permitted Liens, Borrower is, or as
to Collateral to be acquired after the date hereof will be, the sole owner of
the Collateral free from any adverse Liens, security interests or other
encumbrances. Borrower shall defend the Collateral against all claims and
demands of all other parties who at any time claim any interest in the
Collateral.
5.10 Place of Business. Borrower's chief executive office is located at
0000 X.X. 00xx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxx 00000. The Inventory and other
Collateral is and shall be located only at the locations listed on Exhibit "D"
to this Agreement. Except as indicated on said exhibit, the real estate
constituting each said location is owned by Borrower. With respect to locations
not owned by Borrower, said exhibit sets forth the name and address of each
landlord, the location of the property, and the remaining term of the lease.
Borrower has separately furnished to Bank true and correct copies of the lease
agreements for each said parcel.
5.11 Full Disclosure. All information furnished by Borrower to the Bank
concerning the Borrower, its financial condition, the Collateral, or otherwise
for the purpose of obtaining credit or an extension of credit, is, or will be at
the time the same is furnished, accurate and correct in all material respects
and complete insofar as completeness may be necessary to give the Bank a true
and accurate knowledge of the subject matter.
5.12 Borrower's Name. Other than the change from PetMed Express, Inc.,
Borrower has not changed its name or been known by any other name within the
last five (5) years, nor has it been the surviving corporation in a merger
effected within the last five (5) years. Borrower does not now use nor has it
ever used any trade or fictitious name in the conduct of its business.
5.13 Existing Debt. Borrower is not in default with respect to any of
its existing Debt or with respect to any material agreement to which Borrower is
a party.
5.14 Insolvency. Borrower is now and, after giving effect to the
transactions contemplated hereby, at all times will be, Solvent.
16
5.15 Subsidiaries. Borrower has no Subsidiaries.
5.16 Environmental Matters. Borrower is in compliance with all
Environmental Regulations and with all other federal, state and local laws and
regulations relating to the environment and pollution, including such laws and
regulations regulating hazardous, radioactive and toxic materials and
underground petroleum products storage tanks. No assessment, notice of (primary
or secondary) liability or notice of financial responsibility, and no notice of
any action, claim, investigation, proceeding, or inquiry to determine such
liability or responsibility, or the amount thereof, or to impose civil penalties
has been received by Borrower, and there are no facts, conditions or
circumstances known to Borrower which could result in any investigation or
inquiry if all such facts, conditions, and circumstances, if any, were fully
disclosed to the applicable governmental authority. Borrower has paid any
environmental excise taxes due and payable, including without limitation, those
imposed pursuant to Sections 4611, 4661, or 4681 of the Internal Revenue Code of
1986, as amended from time to time. Borrower has not obtained and is not
required to obtain any permits, licenses, or similar authorizations to
construct, occupy, operate or use any buildings, improvements, fixtures or
equipment in connection with its business by reason of any Environmental
Regulations. No oil, toxic or hazardous substances or solid wastes have been
disposed of or released by Borrower in connection with the operation of its
business and Borrower will not dispose of or release oil, toxic or hazardous
substances or solid wastes at any time in its operation of its business (the
terms "hazardous substance" and "release" shall have the meanings specified in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), and the terms "solid waste" and "disposal,"
"dispose" or "disposed" shall have the meanings specified in the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"), except that if such
acts are amended to broaden the meanings thereof, the broader meaning shall
apply herein).
5.17 This space is intentionally left blank.
5.18 Inventory. All Inventory has been produced, and during the term
hereof will be produced, in compliance with the requirements of the Federal Fair
Labor Standards Act. No Inventory is now, nor shall any Inventory at any time or
times hereafter be, stored with a bailee, warehouseman or similar party without
Bank's prior written consent and, if Bank gives such consent, Borrower will
concurrently therewith cause any such bailee, warehouseman, or similar party to
issue and deliver to Bank, in form and substance acceptable to Bank, warehouse
receipts therefor in Bank's name. No Inventory is or will be consigned to any
Person without Bank's prior written consent, and, if such consent is given,
Borrower shall, prior to the delivery of any Inventory on consignment, (i)
provide Bank with all consignment agreements to be used in connection with any
consigned inventory, all of which shall be acceptable to Bank, (ii) prepare,
execute and file appropriate financing statements with respect to any such
consigned inventory, showing Bank as assignee, (iii) conduct a search of all
filings made against the consignee in all jurisdictions in which any
17
consigned Inventory is to be located and deliver to Bank copies of the results
of all such searches,(iv) notify, in writing, all the creditors of the consignee
which are or may be holders of Liens in the Inventory to be consigned that
Borrower expects to deliver certain inventory to the consignee, all of which
inventory shall be described in such notice by item or type, and (v) do all such
other things and acts as may be necessary or desirable to fully perfect on a
first priority basis Bank's security interest in said Inventory.
5.19 Labor Relations. Neither Borrower nor any of its Subsidiaries is a
party to any collective bargaining agreement, and there are no material
grievances, disputes or controversies with any union or any other organization
of Borrower's employees, or threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization.
5.20 Trade Relations. There exists no actual or threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship between Borrower and any customer or any group of customers whose
purchases individually or in the aggregate are material to the business of
Borrower, or with any material supplier, and there exists no present condition
or state of facts or circumstances which would materially affect adversely
Borrower or prevent Borrower from conducting such business after the
consummation of the transaction contemplated by this Agreement in substantially
the same manner in which it has heretofore been conducted.
5.21 Partnerships. Borrower is not a partner or joint venturer with any
other Person or a participant in any business enterprise other than its own for
which it is generally liable, nor does Borrower have any contingent liabilities
of any description other than as indicated in the financial statements
heretofore delivered to Bank.
5.22 Surety Obligations. Borrower is not obligated as guarantor, surety
or indemnitor under any indemnity, guaranty, surety or similar bond or other
contract issued or entered into any agreement to assure payment, performance or
completion of performance of any undertaking or obligation of any Person.
5.23 No Approval. No authorization or approval or other action by, and
no notice to or filing with, any federal, state, or local government body,
agency, or authority is required for the due execution, delivery, and
performance by Borrower of this Agreement, the Note, or the Loan Documents.
5.24 Racketeering. Borrower is not engaged in any activity that might
constitute a pattern of racketeering activity or in any other conduct that might
subject all or a material portion of Borrower's assets to forfeiture.
5.25 Patents, Trademarks, Copyrights and Licenses. Borrower owns or
possesses all the patents, trademarks, service marks, trade names, copyrights
and licenses necessary for the present
18
and planned future conduct of its business without any known conflict with the
rights of others. All patents, trademarks, service marks, trade names,
copyrights, licenses and other similar rights owned or used by Borrower are
listed on Exhibit "F" attached hereto and made a part hereof. Where said patents
are not owned outright by Borrower, said exhibit lists the owner thereof and
identifies the license or other agreement pursuant to which they are used by
Borrower.
5.26 Representations True. No representation or warranty by the
Borrower contained herein or in any certificate or other document furnished by
the Borrower pursuant hereto contains any untrue statement of material fact or
omits to state a material fact necessary to make such representation or warranty
not misleading in light of the circumstances under which it was made.
ARTICLE 6
GENERAL COVENANTS
Borrower agrees and covenants that until the Obligations have been
indefeasibly paid in full and until the Bank has no further obligation to make
advances under the Loan, Borrower shall:
6.1 Insurance. Maintain insurance with insurance companies satisfactory
to Bank on such of its properties, in such amounts and against such risks as is
customarily maintained in similar businesses operating in the same vicinity, and
shall file with Bank upon request, from time to time, a detailed list of the
insurance then in effect, stating the names of the insurance companies, the
amounts and rates of the insurance, dates of expiration thereof, and the
properties and risks covered thereby, and, within ten (10) days after notice in
writing from Bank, shall obtain such additional insurance as Bank may reasonably
request. All such policies shall name the Bank as a named insured and provide
that any losses payable thereunder shall (pursuant to loss payable clauses, in
form and content acceptable to the Bank, to be attached to each policy) be
payable to the Bank, and provide that the insurance provided thereby, as to the
interest of the Bank, shall not be invalidated by any act or neglect of the
Borrower, nor by the commencing of any proceedings by or against the Borrower in
bankruptcy, insolvency, receivership or any other proceedings for the relief of
a debtor, nor by any foreclosure, repossession or other proceedings relating to
the property insured, nor by any occupation of such property or the use of such
property for purposes more hazardous than permitted in the policy. Borrower
hereby assigns to the Bank all right to receive proceeds, directs any insurer to
pay all proceeds directly to the Bank, and authorizes the Bank to endorse any
check or draft for such proceeds and apply the same toward satisfaction of the
Obligations. The Borrower shall furnish to the Bank insurance certificates, in
form and substance satisfactory to the Bank, evidencing compliance by it with
the terms of this Section and, upon the request of the Bank at any time, the
Borrower shall furnish the Bank with photostatic copies of the policies required
by the terms of this Section. The Borrower will cause each insurer under each of
the policies to agree (either by endorsement upon such policy or by letter
addressed to the Bank) to give the Bank at least ten (10) days prior written
notice of the cancellation of such policies in whole or in part or the lapse of
any coverage thereunder. Borrower agrees that it will not take any action or
fail to take any action which
19
action or inaction would result in the invalidation of any insurance policy
required hereunder. At least ten (10) days prior to the date the premiums on
each such policy or policies shall become due and payable, the Borrower shall
furnish to the Bank evidence of the payment of such premiums. Borrower shall
furnish to the Bank such evidence of insurance as Bank may require.
6.2 Corporate Existence; Qualification. Maintain its corporate
existence and, in each jurisdiction in which the character of the property owned
by it or in which the transaction of its business makes its qualification
necessary, maintain good standing.
6.3 Taxes. During each fiscal year, accrue all current tax liabilities
of all kinds, all required withholding of income taxes of employees, all
required old age and unemployment contributions, all required payments to
employee benefit plans, and pay the same when they become due.
6.4 Compliance with Laws. Comply with all Applicable Laws, including,
without limitation, Environmental Regulations, and pay all taxes, assessments,
charges, claims for labor, supplies, rent, and other obligations. Specifically,
Borrower shall pay when due all taxes and assessments upon the Collateral, this
Agreement, the Note, or any Loan Document, including, without limitation, any
stamp taxes or intangibles taxes imposed by virtue of the transactions outlined
herein.
6.5 Annual Financial Statements. (i) Within sixty (60) days after the
close of each fiscal year, furnish Bank with annual company-prepared financial
statements of Borrower; and (ii) within one hundred twenty (120) days after the
close of each fiscal year furnish Bank with annual audited financial statements
consisting of balance sheets, operating statements and such other statements as
Bank may reasonably request, for the period(s) involved, prepared in accordance
with GAAP consistently applied for the period involved and for the preceding
fiscal year and certified as correct by independent certified public accountants
acceptable to the Bank. At the time of furnishing said financial statements,
Borrower shall furnish Bank with (a) a certificate from the President and the
chief financial officer of Borrower stating that they have reviewed this
Agreement and the affairs of the Borrower and that to the best of their
knowledge and belief they are unaware of the occurrence of an event which
constitutes an Event of Default hereunder or which would constitute such an
Event of Default with the giving of notice or the lapse of time or both, and, if
so, stating the facts with respect thereto, said certificate to be in the form
of Exhibit "G" hereto, and (b) a letter from such independent certified public
accountants stating that the Bank may rely on such financial statements and
their opinion with respect thereto. All such financial statements shall be on
both a consolidated and a consolidating basis for each entity constituting
Borrower.
6.6 Interim Financial Statements. Within forty-five (45) days after the
close of each calendar quarter, furnish Bank with unaudited quarterly and
year-to-date financial statements of Borrower, consisting of balance sheets and
operating statements and a listing of all contingent liabilities of the Borrower
for the periods involved and such other statements as Bank may request, prepared
in accordance with GAAP applied on a basis consistent with the financial
statement(s) previously
20
furnished to Bank, taken from the books and records of Borrower, and certified
as correct by the chief financial officer of Borrower. At the time of furnishing
such financial statements, Borrower shall furnish Bank with a certificate from
the President or chief financial officer of Borrower stating that he has
reviewed this Agreement and the affairs of the Borrower and that to the best of
his knowledge and belief he is unaware of the occurrence of an event which
constitutes an Event of Default hereunder or which would constitute such an
Event of Default with the giving of notice or the lapse of time or both, and if
so, stating the facts with respect thereto. Said certificate shall further
confirm that Borrower was at the time of issuance of said financial statement
and has at all times since been Solvent. All such financial statements shall be
on both a consolidated basis and a consolidating basis for each entity
constituting Borrower. Unless otherwise specified by Bank, said certificate
shall be in the form of Exhibit "G" hereto. In addition, Borrower shall furnish
to Bank within ten (10) days after the same are filed: (i) all federal and state
tax returns and informational reports; and (ii) Borrower's 10Q and 10K.
6.7 Visits and Inspections. Permit persons designated by Bank to
inspect any and all of the property and corporate and financial books and
records of Borrower and to discuss its affairs with its officers and employees
at such reasonable times as Bank shall request and furnish Bank with such
miscellaneous information as it may request.
6.8 Payments on Note. Duly and punctually pay the principal and
interest on the Note, in accordance with the terms of this Agreement and of the
Note, and pay all other Debt of Borrower reflected on the financial statements
delivered to Bank and referred to in Section VARIABLE( Ref459545921 ~ hereof and
all other Debt incurred after the date hereof in accordance with the terms of
such Debt, it being understood, however, that this Section shall not be deemed
to permit any Debt in violation of the provisions of Sections 7.1 and 7.2
hereof.
6.9 Conduct of Business. Conduct its business as now conducted and do
all things necessary to preserve, renew and keep in full force and effect its
rights, privileges and franchises necessary to continue its business.
6.10 Maintenance of Properties. Keep its properties in good repair,
working order and condition, reasonable wear and tear excepted, and from time to
time make all needed and proper repairs, renewals, replacements, additions, and
improvements thereto and comply with the provisions of all leases to which it is
a party or under which it occupies property so as to prevent any loss or
forfeiture thereof or thereunder.
6.11 Additional Documents. Join the Bank in executing any security
agreements, assignments, consents, financing statements or other instruments, in
form satisfactory to the Bank, as the Bank may from time to time request in
connection with the Collateral and the other security for the Loan referred to
in Section VARIABLE( Ref459545983 ~ hereof.
21
6.12 Notice to Bank. Immediately notify the Bank of (i) any event
causing a loss or depreciation in value of the Collateral in excess of Ten
Thousand Dollars ($10,000) in the aggregate and the amount of such loss or
depreciation, (ii) if Borrower becomes aware of the occurrence of any Event of
Default or of any fact, condition or event that, with the giving of notice or
passage of time, or both, could become an Event of Default or of the failure of
the Borrower to observe any of its undertakings hereunder, or (iii) any lawsuit
involving Borrower which could result in liability in excess of Twenty-Five
Thousand Dollars ($25,000) in the aggregate.
6.13 Collateral Reports. Furnish to Bank at least monthly within
fifteen (15) days following the end of each month, a detailed inventory report,
all in form and substance, and containing such detail and information, as Bank
shall request, and furnish to Bank copies of all physical inventory listings
when prepared by Borrower.
6.14 Subordination of Debt. Provide Bank with a debt subordination
agreement, in form and substance satisfactory to Bank, executed by Borrower and
any Person who is an officer, director, shareholder or Affiliate of Borrower to
whom Borrower is or hereafter becomes indebted, subordinating in right of
payment and claim all of Debt owed by Borrower to any said Person and any future
advances thereon to the full and final payment of the Obligations.
6.15 Collection of Accounts. Diligently pursue collection of all
Accounts and other amounts due Borrower by others, including Affiliates of
Borrower.
6.16 Landlord and Storage Agreements. Provide Bank with copies of all
agreements between Borrower and any landlord or warehouseman which owns any
premises at which any inventory or other Collateral may, from time to time, be
kept.
6.17 Auditors; Insurance Representatives and Agents. Furnish the Bank
with a copy of each letter written to the Borrower by its independent certified
public accountant concerning internal controls and management review immediately
upon receipt of same and any comments made by the Borrower with respect thereto
and permit Bank to communicate directly with said accountants and with
Borrower's insurance representatives and agents regarding the financial affairs
and condition of Borrower, the books and records of Borrower, and insurance
matters pertaining to Borrower's business.
6.18 ERISA Compliance. (i) At all times make prompt payment of
contributions required to meet the minimum funding standards set forth in ERISA
with respect to each Plan; (ii) promptly after the filing thereof, furnish to
Bank copies of an annual report required to be filed pursuant to ERISA in
connection with each Plan and any other employee benefit plan of it and its
Affiliates; (iii) notify Bank as soon as practicable of any Reportable Event and
of any additional act or condition arising in connection with any Plan which
Borrower believes might constitute grounds for the termination thereof by the
Pension Benefit Guaranty Corporation or for the appointment by the
22
appropriate United States district court of a trustee to administer the Plan;
and (iv) furnish to Bank, promptly upon Bank's request therefor, such additional
information concerning any Plan or any other such employee benefit plan as may
be reasonably requested.
6.19 Bank Accounts. Maintain its principal bank accounts with the Bank
or another bank designated by the Bank.
6.20 Business Records. Keep, and cause each Subsidiary to keep,
adequate records and books of account with respect to its business activities in
which proper entries are made in accordance with GAAP reflecting all its
financial transactions.
6.21 Financial Covenants. Maintain at all times that this Agreement is
in effect the following: (i) a minimum working capital of at least Two Million
Dollars ($2,000,000.00); (ii) a ratio of Bank Debt to Adjusted Net Worth of not
more than 2.0:1; and (iii) Fixed Charge Coverage of not less than 3.0:1
ARTICLE 7
NEGATIVE COVENANTS
Until the Obligations have been indefeasibly repaid and satisfied in
full and until the Bank has no further obligation to make advances under the
Loan, without the prior written consent of Bank (which consent shall be in the
Bank's sole discretion, acting reasonably), the Borrower shall not:
7.1 Indebtedness. Except as permitted or contemplated by this
Agreement, create, incur, assume or suffer to exist any Debt or obligation for
money borrowed, or guarantee, or endorse, or otherwise be or become contingently
liable in connection with the obligations of any Person (including, without
limitation, any Affiliate), except
7.1.1 Indebtedness for taxes not at the time due and payable
or which are being actively contested in good faith by appropriate proceedings
and against which reserves deemed adequate by Bank have been established by
Borrower, but only if the non-payment of such taxes being contested does not
result in a Lien upon any property of Borrower that has priority over the Lien
held by Bank;
7.1.2 Contingent liabilities arising out of the endorsement of
negotiable instruments in the ordinary course of collection or similar
transactions in the ordinary course of business;
7.1.3 Accounts payable to trade creditors which are not aged
more than one hundred twenty (120) days from billing date and current operating
expenses (other than for borrowed money) which are not more than sixty (60) days
past due, in each case incurred in the ordinary course of business and paid
within such time period, unless the same are actively being contested in good
faith
23
and by appropriate and lawful proceedings and Borrower shall have set aside such
reserves, if any, with respect thereto as have been recommended by independent
public accountants;
7.1.4 Debt to third parties for purchase money borrowing
incurred in connection with the purchase of capital assets used in the business
of Borrower not to exceed One Hundred Thousand Dollars ($100,000.00) during any
fiscal year of Borrower; and
7.1.5 Debt for money borrowed from the Bank.
7.2 Liens and Security Interests. Create, incur, assume, or suffer to
exist any mortgage, security deed, deed of trust, security interest, pledge,
encumbrance, Lien or charge of any kind (including charges on property purchased
under conditional sales or other title-retention agreements) on any of its
property or assets, now owned or hereafter acquired, except for the following
(all of which are referred to herein as "Permitted Liens"):
10.1.1 Liens for taxes not yet due or which are being
contested in good faith by appropriate proceeding and against which reserves
deemed adequate by Bank have been set up (excluding any Lien imposed pursuant to
any of the provisions of ERISA);
10.1.2 Other Liens, charges and encumbrances incidental to the
conduct of its business or the ownership of its property and assets and created
by operation of law;
10.1.3 Purchase money Liens and encumbrances created to secure
the indebtedness permitted by Section VARIABLE( Ref459607378 ~ hereof;
10.1.4 Liens, charges and encumbrances in favor of the Bank;
and
10.1.5 Liens, charges and encumbrances reflected on Exhibit
"C" to this Agreement.
7.3 Dividends and Distributions. Declare any dividends on any shares of
any class of its capital stock, or apply any of its property or assets to the
purchase, redemption or other retirement of, or set apart any sum for the
payment of any dividends on, or for the purchase, retirement of, or make any
other distribution by reduction of capital or otherwise in respect of, any
shares of any class of capital stock of the Borrower; provided, however, that
during such time as Borrower maintains an effective election to be taxed under
the provisions of Chapter "S" of the Internal Revenue Code of 1978, as amended,
Borrower shall be entitled to distribute to its shareholders in each year an
amount not to exceed that portion of the federal income tax liability incurred
by each said shareholder on income tax returns for the prior year which resulted
from its holdings of shares in Borrower.
7.4 Affiliate Transactions. Purchase, acquire or lease property from,
or sell, transfer or lease
24
any inventory, materials, goods, equipment, assets, rights or property to, any
Affiliate of Borrower, except in the ordinary course of Borrower's business and
under terms and conditions which would apply if disinterested parties were
involved.
7.5 Financing Statements. Permit any financing statement (except Bank's
financing statements) to be on file with respect to the Collateral.
7.6 Location of Collateral. Change the locations at which the
Collateral is maintained; change the name, identity, or corporate structure of
Borrower; adopt or make use of any fictitious or trade name not disclosed
elsewhere in this Agreement; or change the location of its chief executive
office.
7.7 Destruction of Collateral. Waste or destroy the Collateral or use
it in violation of any statute or ordinance.
7.8 Merger or Consolidation. Enter into any merger or consolidation or
acquire all or substantially all of the assets of any Person; or sell, lease, or
otherwise dispose of any of its assets in an aggregate amount exceeding Two
Hundred Fifty Thousand Dollars ($250,000.00) during any fiscal year, except
sales in the ordinary course of its business without the prior written consent
of the Bank, which consent shall not be unreasonably withheld.
7.9 Loans or Advances. Make loans or make advances or pay any
management or similar fees to any Person.
7.10 Capital Expenditures. Make any Capital Expenditures in any fiscal
year exceeding a total of Two Hundred Fifty Thousand Dollars ($250,000.00) in
the aggregate.
7.11 Acquisitions. Purchase or acquire the obligations or stock of or
any other interest in any Person, except direct obligations of the United States
of America or certificates of deposit or other investments issued by the Bank or
by any bank designated in writing by the Bank.
7.12 Prepayment of Debt. Prepay any Debt in excess of $50,000 in the
aggregate except Debt to the Bank; provided, however, the Borrower may take
ordinary trade discounts on purchases made in the ordinary course of business.
7.13 Lease Transactions. Enter into any sale and lease-back
arrangement, either directly or indirectly.
7.14 Amendments. Amend any instrument evidencing a Permitted Lien or
the indebtedness secured thereby.
25
7.15 Salaries. Increase the salary and fringe benefits of any officer
or director or shareholder or any Affiliate of any officer or director or
shareholder of Borrower by more than twenty-five (25%) in any fiscal year from
the amount paid in the previous fiscal year.
7.16 Deposit of Funds. This space is intentionally left blank.
7.17 Adverse Transactions. Enter into any transaction, or permit any
Subsidiary to enter into any transaction, which materially and adversely affects
or may materially and adversely affect the Collateral or Borrower's ability to
repay the Obligations or permit or agree to any material extension, compromise
or settlement or make any change or modification of any kind or nature with
respect to any Account, including any of the terms relating thereto, other than
discounts and allowances in the ordinary course of business.
7.18 Subsidiary Acquisitions. Hereafter create any Subsidiary and
divest itself of any material assets by transferring them to any Subsidiary.
7.19 Subsidiary Divestitures. Transfer, sell, pledge, encumber or
otherwise assign any shares of stock or other interest in any Subsidiary or
permit any Subsidiary to sell or otherwise dispose of all of substantially all
of its assets.
7.20 Partnerships or Joint Ventures. Become or agree to become a
general or limited partner in any general or limited partnership or a joint
venturer in any joint venture.
7.21 Subordinated Debt. Make any payment (principal or interest) with
respect to Subordinated Debt, or with respect to any Debt that would be
Subordinated Debt but for the absence of a subordination agreement in effect
with respect thereto, except that Borrower shall be entitled to make payments
with respect to such Debt to the extent provided in any subordination agreement
in effect with respect thereto, but only during such time as no default or Event
of Default exists hereunder.
ARTICLE 8
GRANT OF SECURITY INTEREST.
8.1 Security Interest. As security for the payment of the Loan and
including any extensions or renewals or changes in form of the Loan, any
Overadvances, and any other Debt of Borrower to the Bank, and all costs and
expenses of collection thereof, including, without limitation, attorneys' fees,
Borrower hereby assigns to Bank and grants to Bank a security interest in and
Lien upon the following:
(a) All of Borrower's Inventory;
26
(b) All of proceeds and products, as the case may be, of
Borrower's Inventory.
(c) All monies and other property of any kind, real, personal,
or mixed, and tangible or intangible, now or at any time or times hereafter, in
the possession or under the control of Bank or a bailee of Bank;
(d) All accessions to, substitutions for and all replacements,
products and cash and non-cash proceeds of (a) through (c) above, including,
without limitation, proceeds of and unearned premiums with respect to insurance
policies insuring any of the Collateral;
(e) All books and records (including, without limitation,
customer lists, credit files, magnetic, digital and laser tapes and disks,
electronic and computer storage media, computer programs, print-outs, and other
computer materials and records) of Borrower pertaining to any of VARIABLE(
Ref459607841 ~ through VARIABLE( Ref459607857 ~ above.
(f) Mortgage upon that certain real property, and all
Improvements thereon, located at 0000 X.X. 00xx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxx.
8.2 Sale of Inventory. Until the occurrence of an Event of Default
hereunder or until expiration of the Commitment Period, whichever occurs first,
Borrower may use and dispose of the Inventory in the ordinary course of business
where such is not inconsistent with this Agreement, provided that the ordinary
course of business does not include a transfer in partial or total satisfaction
of Debt nor a transfer (other than a sale on terms and conditions which would
apply if disinterested parties were involved) to an Affiliate of Borrower.
8.3 This space is intentionally left blank.
8.4 This space is intentionally left blank.
8.5 This space is intentionally left blank.
8.6 This space is intentionally left blank.
8.7 This space is intentionally left blank.
8.8 Lease of Records. Borrower hereby leases to the Bank, and the Bank
hires from Borrower, for a term which shall be effective so long as the Loans or
other Obligations secured hereby are owing to the Bank by Borrower and until the
Bank has no further obligation under the Agreement, all of Borrower's present
and future computer printouts, magnetic, digital and laser tapes and disks,
computer and electronic storage media, computer software programs, trial balance
records, ledgers and cabinets in which they are located, reflected or
maintained, in any
27
way relating to the Collateral, and all present and future supporting evidence
and documents relating thereto in the form of written applications, credit
information, account cards, payment records, trial balances, correspondence,
delivery receipts, certificates and the like, as well as the past and current
information stored in computer software programs for and on Borrower's behalf by
third parties. Borrower, if requested by Bank, agrees to legend all of the
foregoing to indicate the lease thereof to the Bank. If an Event of Default
occurs, then, in addition to all of the other rights and remedies of the Bank
herein, the Bank will have the right forthwith or at any time thereafter to
remove from Borrower's premises all of the foregoing and keep and retain the
same in Bank's possession until the Loans and other Obligations secured hereby
shall have been fully paid and discharged and the Bank has no further obligation
under the Agreement. The provisions of this Section shall not be deemed to
diminish or contravene the security interest of the Bank in the Borrower's
General Intangibles or in the property, materials, and interests described in
this Section but shall be deemed to be in addition to any rights the Bank may
have with respect to the Borrower's grant of a security interest in its General
Intangibles to the Bank.
8.9 License of Rights. Bank is hereby granted a license or other right
to use, without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks and advertising matter or any
property of a similar nature as it pertains to the Collateral, in advertising
for sale and in selling any Collateral, and Borrower's rights under all licenses
and all franchise agreements shall inure to Bank's benefit.
8.10 Attorney-in-Fact. Following an Event of Default, Borrower
irrevocably designates, makes, constitutes and appoints Bank (and all Persons
designated by Bank) as Borrower's true and lawful attorney (and agent-in-fact)
and Bank, or Bank's agent, may, without notice to Borrower and in either
Borrower's or Bank's name, but at the cost and expense of Borrower:
10.1.1 At such time or times hereafter as Bank or said agent,
in its sole discretion, may determine, endorse Borrower's name on any checks,
notes, acceptances, drafts, money orders or any other evidence of payment or
proceeds of the Collateral which come into the possession of Bank or under
Bank's control; and
10.1.2 At such time or times as Bank or its agent in its sole
discretion may determine: (i) this space is intentionally left blank; (ii)
settle, adjust, compromise, discharge or release any of the Collateral; (iii)
sell or collect any of the other Collateral upon such terms, and for such
amounts and at such time or times as Bank deems advisable; (iv) take possession,
in any manner, of any item of payment or proceeds relating to any Collateral and
apply the same to the Obligations; (v) prepare, file and sign Borrower's name to
a proof of claim in bankruptcy or similar document against any Collateral or to
any notice of lien, assignment or satisfaction of lien or similar document in
connection with any of the Collateral; (vi) receive, open and dispose of all
mail addressed to Borrower and to notify postal authorities to change the
address for delivery
28
thereof to such address as Bank may designate; (vii) endorse the name of
Borrower upon any of the items of payment or proceeds relating to any Collateral
and deposit the same to the account of Bank or any other bank on account of the
Obligations; (viii) endorse the name of Borrower upon any chattel paper,
document, instrument, invoice, freight xxxx, xxxx of lading or similar document
or agreement relating to the Inventory and any other Collateral; (ix) this space
is intentionally left blank; (x) use the information recorded on or contained in
any data processing equipment and computer hardware and software relating to the
Inventory, and any other Collateral and to which Borrower has access; (xi) make
and adjust claims under policies of insurance; and (xii) for and in the name of
Borrower to give instructions and direct any bank or financial institution in
which proceeds of the Collateral are deposited to turn over said proceeds to
Bank; and (xiii) do all other acts and things necessary, in Bank's
determination, to fulfill Borrower's obligations under this Agreement.
ARTICLE 9
ADDITIONAL REPRESENTATIONS, COVENANTS, AND
AGREEMENTS RELATING TO COLLATERAL
9.1 This space is intentionally left blank.
9.2 This space is intentionally left blank.
9.3 Affirmation of Representations. Each request for a loan or advance
made by Borrower pursuant to this Agreement or any of the other Loan Documents
shall constitute (i) an automatic representation and warranty by Borrower to
Bank that there does not then exist any default or Event of Default and (ii) a
reaffirmation as of the date of said request that all of the representations and
warranties of Borrower contained in this Agreement and the other Loan Documents
are true in all material respects except for any changes in the nature of
Borrower's business or operations that would render the information contained in
any exhibit attached hereto either inaccurate or incomplete, so long as Bank has
consented to such changes or such changes are expressly permitted by this
Agreement.
9.4 Waivers. Borrower hereby releases and waives any and all actions,
claims, causes of action, demands and suits which it may ever have against the
Bank as a result of any possession, collection, settlement, compromise or sale
by Bank of any of the Collateral upon the occurrence of an Event of Default
hereunder, notwithstanding the effect of such possession, collection,
settlement, compromise or sale upon the business of Borrower. Said waiver shall
include all causes of action and claims which may result from the exercise of
the power of attorney conferred upon Bank in Section 8.10. The failure at any
time or times hereafter to require strict performance by Borrower of any of the
provisions, warranties, terms and conditions contained in this Agreement or any
other agreement, document or instrument now or hereafter executed by Borrower,
and delivered to the Bank, shall not waive, affect, or diminish any right of the
Bank thereafter to demand strict
29
compliance and performance therewith and with respect to any other provisions,
warranties, terms and conditions contained in such agreements, documents or
instruments, and any waiver of default shall not waive or affect any other
default, whether prior or subsequent thereto, and whether the same are of a
different type. None of the warranties, conditions, provisions and terms
contained in the Agreement or any other agreement, document or instrument now or
hereafter executed by Borrower and delivered to the Bank shall be deemed to have
been waived by any act or knowledge of the Bank, its agents, representatives,
officers or employees, but only by an instrument in writing signed by an officer
of the Bank and directed to the Borrower specifying such waiver.
9.5 Discharge of Taxes and Liens. At its option, the Bank may discharge
taxes, Liens, security interests or other encumbrances at any time levied or
placed on the Collateral and may pay for the maintenance and preservation of the
Collateral. Borrower agrees to reimburse the Bank, on demand, for any payment
made or expense incurred by Bank pursuant to the foregoing authorization,
including, without limitation, attorney's fees.
9.6 Insurance. Without limiting any other provision hereof, Borrower
will keep the Collateral insured in amounts equal to its full insurable value,
with companies, and against such risks as may be satisfactory to the Bank.
Borrower will pay the costs of all such insurance and deliver policies
evidencing such insurance to the Bank with mortgagee loss payable clauses in
favor of the Bank. Borrower hereby assigns to the Bank all right to receive
proceeds, directs any insurer to pay all proceeds directly to the Bank, and
authorizes the Bank to endorse any check or draft for such proceeds and apply
the same toward satisfaction of the Loans and other Obligations secured hereby.
9.7 Complete Records; Inspection Rights. Borrower will at all times
keep accurate and complete records of the Collateral, and the Bank or its agents
shall have the right to call at Borrower's place or places of business at
intervals to be determined by Bank, upon reasonable notice and during Borrower's
regular business hours, and without hindrance or delay, to inspect and examine
the Inventory and the Equipment and to inspect, audit, check, and make abstracts
from the books, records, journals, orders, receipts, computer printouts,
correspondence and other data relating to the Collateral or to any other
transactions between the parties hereto. If requested by Bank, Borrower agrees
to make its books, records, journals, orders, receipts, computer printouts,
correspondence, and other data relating to the Collateral available at the
Bank's main office for inspection, audit and checking by the Bank or its agents.
9.8 U.C.C. Financing Statement. The Borrower agrees that a carbon,
photographic or other reproduction of this Agreement or of a signed financing
statement with respect to the Collateral shall be sufficient as a financing
statement and may be filed as such by the Bank.
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ARTICLE 10
EVENTS OF DEFAULT; CERTAIN REMEDIES
10.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default hereunder:
10.1.1 Payment Default. If Borrower shall fail to make any
payment of any installment of principal or interest on the Note when and as the
same shall become due and payable, whether at stated maturity, upon expiration
of the Commitment Period, by declaration, upon acceleration, or otherwise; or
10.1.2 Fees and Expenses. If Borrower shall fail to pay when
due any expense, fee or charge provided for in this Agreement and such failure
shall continue for a period of ten (10) days; or
10.1.3 Other Defaults. If Borrower shall fail for a period of
fifteen (15) days to perform, keep, or observe any covenant, agreement or
provision of any of the following Sections of this Agreement: 6.4, 6.9, 6.10,
6.11, 6.14, 6.17, 6.18, 6.20, and 6.21; or if Borrower shall fail or neglect to
perform, keep or observe, or shall default with respect to, any other covenant,
agreement or provision contained in this Agreement (other than a covenant,
agreement or provision a default in the performance of which is dealt with
specifically elsewhere in this Section 10.1); or
10.1.4 Representations False. If any warranty, representation,
or other statement made or furnished to Bank by or on behalf of Borrower or any
Guarantor or in any of the Loan Documents proves to be false or misleading in
any material respect when made or furnished; or
10.1.5 Financial Difficulties. If the Borrower shall be
involved in financial difficulties as evidenced -
(a) by its admission in writing of its inability to
pay its debts generally as they become due or of its ceasing to be Solvent;
(b) by its filing a petition in bankruptcy or for
reorganization or for the adoption of an arrangement under the U.S. Bankruptcy
Code (as now or in the future amended) or any similar law regarding debtors
rights and remedies or an admission seeking the relief therein provided;
(c) by its making a general assignment for the
benefit of its creditors;
(d) by its consenting to the appointment of a
receiver for all or a substantial part of its property;
(e) by its being adjudicated a bankrupt;
31
(f) by the entry of a court order appointing a
receiver or trustee for all or a substantial part of its property without its
consent, which order shall not be vacated, set aside or stayed within ninety
(90) days from the date of entry; or
(g) by the assumption of custody or sequestration by
a court of competent jurisdiction of all or substantially all of its property,
which custody or sequestration shall not be suspended or terminated within sixty
(60) days from its inception; or
10.1.6 ERISA. If a Reportable Event shall occur which Bank, in
its sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if Borrower is in "default" (as defined in Section 4219(C) (5)
of ERISA) with respect to payments to a Multiemployer Plan resulting from
Borrower's complete or partial withdrawal from such Plan; or
10.1.7 Cancellation of Guaranty. If the cancellation,
termination or limitation of any guaranty of Borrower's obligations under this
Agreement or the Loans shall occur, or if any such guarantor shall be in default
under or breach the terms of any guaranty agreement between the Bank and such
guarantor; or if any such guarantor should die; or if any subordination
agreement executed by any creditor of Borrower or of any such guarantor in favor
of the Bank should be canceled, terminated, or breached; or if any Guarantor's
financial condition as represented in the last personal financial statement
delivered to and received by Bank is substantially impaired; or
10.1.8 Default on Other Obligations. If Borrower shall default
in payment of more than Ten Thousand Dollars ($10,000.00) in the aggregate due
on any Debt of Borrower to others or if Borrower or any Guarantor shall default
under any loan or security agreement with others or under any material lease
involving a payment of more than Two Thousand Five Hundred ($2,500) in the
aggregate and any such default shall not be cured within thirty (30) days after
written notice to Borrower or Guarantor from Bank or any holder; or
10.1.9 Judgments. If a final judgment for the payment of money
in excess of Ten Thousand Dollars ($10,000.00) in the aggregate shall be
rendered against the Borrower and the same shall remain undischarged for a
period of thirty (30) days during which execution shall not be effectively
stayed, unless such judgment is fully covered by collectible insurance; or
10.1.10 Actions. If Borrower or any Guarantor shall be
criminally indicted or convicted under any law that could lead to a forfeiture
of any property of the Borrower or such Guarantor; or
32
10.1.11 Uninsured Losses; Unauthorized Dispositions. Any
material loss, theft, damage or destruction not fully covered by insurance (as
required by this Agreement and subject to such deductibles as Bank shall have
agreed to in writing), or sale, lease or encumbrance of any of the Collateral or
the making of any levy, seizure, or attachment thereof or thereon except in all
cases as may be specifically permitted by other provisions of this Agreement; or
10.1.12 Adverse Changes. There shall occur any material
adverse change in the financial condition or business prospects of Borrower or
any Guarantor; or
10.1.13 Collateral. If a creditor of Borrower shall obtain
possession of any of the Collateral by any legal means; or
10.1.14 Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of Borrower for a period which
significantly affects Borrower's capacity to continue its business, on a
profitable basis; or Borrower shall suffer the loss or revocation of any license
or permit now held or hereafter acquired by Borrower which is necessary to the
continued or lawful operation of its business; or Borrower shall be enjoined,
restrained or in any way prevented by court, governmental or administrative
order from conducting all or any material part of its business affairs; or any
material lease or agreement pursuant to which Borrower leases, uses or occupies
any of its properties shall be canceled or terminated prior to the expiration of
its stated term; or any part of the Collateral shall be taken through
condemnation or the value of such properties shall be impaired through
condemnation; or
10.1.15 Bank Insecurity. Bank shall reasonably and in good
xxxxx xxxx itself insecure; or
10.1.16 Change in Control. If any of the present executive
officers of Borrower should resign or be removed or if there occurs a transfer,
assignment, sale, pledge or hypothecation of the stock of the Borrower whereby
Xxxx X. Xxxxx does not own and control at least fifteen percent (15%) of the
stock of the Borrower; or
10.1.17 Life Insurance Policy. If the premiums are not paid on
any life insurance policy required to be maintained by the Borrower hereunder or
such life insurance policy is otherwise canceled or terminated or if the
assignment thereof to the Bank is terminated in any manner; or
10.1.18 Subordination Agreements. If a breach or default shall
occur with respect to any subordination agreement executed by any creditor of
Borrower (including any Affiliate), or if any said agreement shall otherwise
terminate or cease to have legal effect; or
10.1.19 Other Documents. If a default or event of default or
breach occurs
33
under any Loan Document (other than the breaches enumerated in Sections
VARIABLE( Ref459608503 ~ through VARIABLE( Ref459608520 ~), or under or with
respect to any of the Obligations, or under any other note, evidence of
indebtedness, loan agreement, security agreement, guaranty, pledge, mortgage,
assignment, or security document executed by Borrower and delivered to the Bank.
10.1.20 Cross-Default. A default by the Borrower or the
Guarantor under any agreement between Borrower and/or Guarantor and Bank shall
constitute a default under the Loan and a default under the Loan shall
constitute a default under any other agreement between Borrower and Guarantor.
Without limiting the generality of the foregoing, a default under the term loan
in the original principal amount of One Million Six Hundred Eighty Thousand
Dollars ($1,680,000.00) between Borrower and Bank ("Term Loan") shall constitute
a default by the Borrower hereunder and a default hereunder shall constitute a
default under the Term Loan.
10.1.21 If Xxxx Xxxxx, M.D. fails to remain actively involved
in the senior management of Borrower and the Borrower has not provided a
substitute satisfactory to the Bank within ninety (90) days, as determined in
the Bank's sole discretion.
The Borrower agrees that default under any Loan Document shall
constitute default with respect to all Loan Documents and vice versa.
10.2 Remedies. Upon or at any time after the occurrence of any one or
more of the foregoing Events of Default, Bank or the holder of the Note(s) may
at its option (i) proceed to protect and enforce its rights by suit in equity,
action at law and/or the appropriate proceeding either for specific performance
of any covenant or condition contained in the Note(s) or in any Loan Document,
(ii) terminate the Commitment Period and cease disbursing advances the Loan,
and/or (iii) declare the unpaid balance of the Loan and Note(s) together with
all accrued interest to be forthwith due and payable, and thereupon such balance
shall become so due and payable without presentation, protest or further demand
or notice of any kind, all of which are hereby expressly waived.
Without limiting the foregoing, upon the occurrence of any
Event of Default, and at any time thereafter, Bank shall have the rights and
remedies of a secured party under the Uniform Commercial Code in addition to the
rights and remedies provided herein or in any other instrument or paper executed
by Borrower. The Bank may require the Borrower to assemble the Equipment and the
Inventory and to make the same available to the Bank at a place to be designated
by the Bank which is reasonably convenient to both parties. Unless the
Collateral is perishable or threatens to decline speedily in value, or is of a
style customarily sold on a recognized market, the Bank will give Borrower
reasonable notice of the time after which any private sale or other intended
disposition thereof is to be made. The requirement of reasonable notice shall be
met if such notice is mailed postage prepaid to the Borrower at least five (5)
days before the time of such sale or disposition. The
34
Borrower shall pay the Bank on demand any and all expenses, including legal
expenses and reasonable attorneys' fees, incurred or paid by the Bank in
protecting or enforcing the Loans and all other Obligations secured hereby and
other rights of the Bank hereunder, including its right to take possession of
the Collateral.
The Bank shall not be liable for failure to collect the
Accounts or to enforce any contract rights or for any action or omission on the
part of the Bank, its officers, agents and employees, except willful misconduct.
No remedy herein conferred upon, or reserved to, the Bank is intended to be
exclusive of any other remedy or remedies, including those of any note or other
evidence of Debt held by the Bank, and each and every remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing in law or in equity. Exercise or omission to exercise any
right of the Bank shall not affect any subsequent right of the Bank to exercise
the same.
Borrower waives notice prior to Bank's taking possession or
control of any of the Collateral or any bond or security that might be required
by any court prior to allowing Bank to exercise any of Bank's remedies,
including, without limitation, the issuance of an immediate writ of possession.
The Borrower agrees that the Bank may apply the net proceeds
received from the Collateral among the Loans and the Obligations toward
satisfaction of the same in its sole discretion. Any such proceeds remaining
after satisfaction in full of the Loans, the Obligations, and the other
obligations and liabilities of the Borrower to the Bank shall be distributed as
required by Applicable Laws.
10.3 Right of Set-Off. Upon and after the occurrence of any Event of
Default, Bank may, and is hereby authorized by Borrower, at any time and from
time to time, to the fullest extent permitted by Applicable Laws, and without
advance notice to Borrower (any such notice being expressly waived by Borrower),
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and any other indebtedness at any time
owing by Bank to, or for the credit or the account of, Borrower against any or
all of the Loans and Obligations and other liabilities and obligations of
Borrower now or hereafter existing whether or not such obligations have matured
and irrespective of whether Bank has exercised any other rights that it has or
may have with respect to such Loans and Obligations and other liabilities and
obligations, including, without limitation, any acceleration rights. The
aforesaid right of set-off may be exercised by Bank against Borrower or against
any trustee in bankruptcy, debtor in possession, assignee for the benefit of the
creditors, receiver, or execution, judgment or attachment creditor of Borrower,
notwithstanding the fact that such right of set-off shall not have been
exercised by Bank prior to the making, filing or issuance, or service upon Bank
of, or of notice of, any such petition; assignment for the benefit of creditors;
appointment or application for the appointment of a receiver; or issuance of
execution, subpoena, order or warrant. Bank agrees to notify Borrower after any
such set-off and
35
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of Bank under this Section
are in addition to the other rights and remedies (including, without limitation,
other rights of setoff) which Bank may have.
10.4 Cross Default. So long as there are no amounts outstanding under
the Loan, then an Event of Default under this Agreement shall not constitute a
default under any other loan between Borrower and Bank; provided, however, if
there is an Event of Default hereunder: (i) Bank shall have no obligation to
make any additional advances under the Loan; and (ii) if there are any amounts
outstanding under the Loan, then an Event of Default under this Agreement shall
constitute a default under any other loan between Borrower and Bank.
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification. Borrower agrees to defend, indemnify and hold
harmless the Bank, its directors, officers, employees, accountants, attorneys,
and agents, (the "Indemnitees") from and against any and all claims, demands,
judgments, damages, actions, causes of action, injuries, orders, penalties,
costs and expenses (including attorneys' fees and costs of court) of any kind
whatsoever arising out of or relating to any breach or default by Borrower or
any other Person (including any Guarantor) under this Agreement or any Loan
Document or the failure of Borrower to observe, perform or discharge Borrower's
duties hereunder or thereunder. Without limiting the generality of the
foregoing, Borrower's obligation to indemnify Bank shall include indemnity from
any and all claims, demands, judgments, damages, actions, causes of action,
injuries, orders, penalties, costs and expenses arising out of or in connection
with the activities of the Borrower, its predecessors in interest, third parties
who have trespassed on Borrower's property, or parties in a contractual
relationship with Borrower, whether or not occasioned wholly or in part by any
condition, accident or event caused by an act or omission of the Indemnitees,
which: (a) arise out of the actual, alleged or threatened discharge, dispersal,
release, storage, treatment, generation, disposal, or escape of radioactive
materials, radioactivity, pollutants or other toxic or hazardous substances,
including any solid, liquid, gaseous, or thermal irritant or contaminant,
including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste
(including materials to be recycled, reconditioned or reclaimed); or (b)
actually or allegedly arise out of the use, specification, or inclusion of any
product, material, or process containing chemicals or radioactive material, the
failure to detect the existence or proportion of chemicals or radioactive
material in the soil, air, surface water or groundwater, or the performance or
failure to perform the abatement of any pollution source or the replacement or
removal of any soil, water, surface water, or groundwater containing chemicals
or radioactive material; or (C) arises out of or relates to breach by Borrower
of any of the provisions of Section 5.16 hereof relating to Environmental
Regulations. In addition, Borrower will indemnify and hold Bank harmless from
and against any liability, claim, cost or expense incurred by Bank or imposed
against Bank for any stamp tax, intangible tax, or other tax, fee or charge
imposed by any governmental entity arising out of or relating to the Note(s) or
this Agreement or the transactions anticipated herein.
36
ARTICLE 12
COSTS AND EXPENSES; MISCELLANEOUS
12.1 Costs of Preparation; Brokers Fees. Borrower shall bear all
expenses of the Bank in connection with the Loans and with the investigation,
review and approval of this transaction, the preparation of the Agreement and
the Loan Documents, and the issuance and delivery of the Note(s) to Bank and
also in connection with any amendment or modification thereto, and the
administration thereof, including, without limitation, (i) all legal fees,
expenses and disbursements and other actual third-party expense reimbursements
incurred or sustained by Bank in connection with this transaction, (ii) all
travel, appraisal, audit, search and filing fees incurred or sustained by Bank
in connection with this transaction or the administration of the Loans; (iii)
all recording and filing fees, intangibles taxes, documentary and revenue
stamps, other taxes or other expenses and charges payable in connection with
this Agreement, the Note or any Loan Document and (iv) all costs, expenses,
(including fees and expenses of outside consultants), related to the
administration of this Agreement or any of the other Loan Documents and the
transactions contemplated hereby and thereby and/or periodic audits and
appraisals performed by Bank. The Borrower agrees to indemnify and save Bank
harmless against all broker's and finder's fees, if any.
12.2 Other Costs and Expenses. If, at any time or times hereafter,
whether before or after the occurrence of an Event of Default, the Bank employs
counsel to advise or provide other representation with respect to this Agreement
or any Loan Document, or to collect the balance of the Loans, or to take any
action in or with respect to any suit or proceeding relating to this Agreement
or any of the Loan Documents, or to protect, collect, or liquidate the
Collateral or to attempt to enforce any security interest or Lien granted to the
Bank by Borrower; then in any such events, all of the reasonable attorneys' fees
arising from such services, and any expenses, costs and charges relating
thereto, shall constitute additional obligations of Borrower payable on demand
of the Bank.
12.3 Legal Counsel. Borrower acknowledges and agrees that legal counsel
to Bank does not represent Borrower as Borrower's attorney, that Borrower has
retained (or has had an opportunity to retain) counsel of its own choice and has
not and will not rely upon any advice from Bank's counsel. In no event shall
Borrower's reimbursement of expenses pursuant to this Agreement (even if
effected by payment directly by Borrower to Bank's counsel) be deemed to
establish any attorney-client relationship between Borrower and Bank's counsel.
12.4 Audit Fees. During the term of this Agreement, Borrower shall pay
Bank a field examination fee for each examination performed at any of Borrower's
places of business by Bank's field examination staff. The foregoing examination
shall not be conducted more frequently than semi-annually unless an Event of
Default shall exist.
37
12.5 No Waiver. No waiver of any Event of Default hereunder, and no
waiver of any default or Event of Default under any other Loan Document shall
extend to or shall affect any subsequent or other then existing default or shall
impair any rights, remedies or powers of Bank. No delay or omission of Bank or
any subsequent holder of the Note to exercise any right, remedy, power or
privilege hereunder after the occurrence of such default or Event of Default
shall be construed as a waiver of any such default, or acquiescence therein.
12.6 Headings. Except for the definitions set forth in VARIABLE(
Ref459547155 ~, the headings of the articles, sections, paragraphs and
subdivisions of this Agreement are for convenience of reference only, are not to
be considered a part hereof, and shall not limit or otherwise affect any of the
terms hereof.
12.7 Marshaling of Assets; Payments Set Aside. Bank shall be under no
obligation to marshal any assets or securities in favor of Borrower or any
Guarantor or any other Person or against or in payment of any or all of the
Obligations. To the extent that sum credited against the Obligations is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such recovery, the Obligations or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
12.8 Survival of Covenants. All covenants, agreements, representations
and warranties made herein and in certificates or reports delivered pursuant
hereto shall be deemed to have been material and relied on by Bank,
notwithstanding any investigation made by or on behalf of Bank, and shall
survive the execution and delivery to Bank of any Note or Loan Document.
12.9 Addresses. Any notice or demand which by any provision of this
Agreement is required or provided to be given shall be deemed to have been
sufficiently given or served for all purposes by (i) being delivered in person
to the party to whom the notice or demand is directed or (ii) by being sent as
first class mail, postage prepaid, in either event to the following address: If
to Borrower, 0000 X.X. 00xx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxx 00000; or if any
other address shall at any time be designated by Borrower in writing to the
holders of record of the Note at the time of such designation to such other
address; and if to Bank, Xxx Xxxx Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx,
Attention: Xxxxx Xxxx; or if any other address shall at any time be designated
in writing to Borrower, to such other address. Notwithstanding the foregoing, no
notice shall be effective as to Bank until actually received by Bank. Any
written notice that is not sent in conformity with the provisions hereof shall
nevertheless be effective on the date that such notice is actually received by
the noticed party.
12.10 Venue and Jurisdiction. Borrower agrees that any legal action
brought by the Bank
38
to collect the Loans or any Obligation or to assert any claim against Borrower
under any Loan Document, or any part thereof, may be brought in any court in
Broward County, Florida, waives its right to object to any such action on
grounds it is brought in the improper venue, and irrevocably consents that any
legal action or proceeding against it under, arising out of, or in any manner
relating to the Loans, the Obligations, or any Loan Document may be brought in
the Circuit Court of Broward County, Florida or in any other Circuit Court of
the State of Florida or in the U.S. District Court for the Southern District of
Florida. Borrower, by the execution of this Agreement, expressly and irrevocably
assents and submits to the personal jurisdiction of any such court in any such
action or proceeding. Borrower consents to the service of process relating to
any such action or proceeding by mail to the address set forth in this
Agreement.
12.11 Continuing Obligation; Benefits. This Agreement, and each and
every provision hereof, is a continuing obligation and shall (i) be binding upon
the Borrower and the Bank, their successors and assigns, and (ii) inure to the
benefit of and be enforceable by the Borrower and Bank and their successors and
assigns; provided, that the Borrower may not assign all or any part of this
Agreement without the prior written consent of Bank, which consent may be
granted or withheld in the sole discretion of Bank.
12.12 Controlling Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida; provided,
however, that if any of the Collateral shall be located in any jurisdiction
other than Florida, the laws of such jurisdiction shall govern the method,
manner and procedure for foreclosure of Bank's lien upon such Collateral and the
enforcement of Bank's other remedies in respect of such Collateral to the extent
that the laws of such jurisdiction are different from or inconsistent with the
laws of Florida.
12.13 Standard of Review. Any document, writing or instrument required
or permitted to be delivered to Bank under this Agreement shall be deemed
satisfactory only if approved by Bank in the exercise of its sole discretion,
and any act or approval permitted to be done by Bank under this Agreement shall
be in Bank's sole discretion. Where in this Agreement reference is made to
Bank's "discretion", or "sole discretion", said reference shall mean that with
respect to the matter so designated, Bank shall have the absolute right to make
decision with respect thereto and shall not be subject to any standard of good
faith, fair dealing, reasonableness, or any other standard implied by any court
or imposed by law, it being the intention of the parties that the decision of
the Bank with respect to said matter shall be absolutely final and binding.
12.14 Participation. Borrower acknowledges that Bank may, at its
option, sell participation interests in the Loans to participating banks. The
amounts of any such participations shall be determined solely by the Bank.
Borrower agrees with each present and future participant in the Loans, the names
and addresses of which will be furnished to Borrower, that if an Event of
Default should occur, each present and future participant shall have all of the
rights and remedies of Bank with respect to any deposit due from any participant
to Borrower. The execution by a participant
39
of a participation agreement with Bank, and the execution by Borrower of this
Agreement, regardless of the order of execution, shall evidence an agreement
between Borrower and said participant in accordance with the terms of this
Section.
12.15 Miscellaneous. This Agreement and the instruments and agreements
referred to herein or called for hereby supersede and incorporate all
representations, promises, and statements, oral or written, made by the Bank in
connection with the Loans. This Agreement may not be varied, altered, or amended
except by a written instrument executed by an authorized officer of the Bank.
This Agreement may be executed in any number of counterparts, each of which,
when executed and delivered, shall be an original, but such counterparts shall
together constitute one and the same instrument. Any provision in this Agreement
which may be unenforceable or invalid under any law shall be ineffective to the
extent of such unenforceability or invalidity without affecting the
enforceability or validity of any other provisions hereof.
12.16 Joint and Several Liability. All obligations of each Person named
as Borrower shall be joint and several obligations of all such Persons. Each
representation, warranty and covenant shall be deemed true and/or complied with,
as the case may be, only (i) if true or complied with respect to each separate
entity constituting a Borrower taken on its own without reference to the other
Borrower entities, and (ii) if true or complied with respect to all entities
constituting Borrower taken as a whole.
12.17 General Waivers. To the fullest extent permitted by Applicable
Law, Borrower waives (i) presentment, demand and protest and notice of
presentment, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Bank on which Borrower may in any way be liable; (ii) notice prior
to Bank's taking possession or control of any of the Collateral or any bond or
security which might be required by any court prior to allowing Bank to exercise
any of Bank's remedies, including the issuance of an immediate writ of
possession; (iii) the benefit of all valuation, appraisement and exemption laws;
(iv) any right Borrower may have upon payment in full of the Obligations to
require Bank to terminate its security interest in the Collateral until the
execution by Borrower of an agreement indemnifying Bank from any loss or damage
Bank may incur as the result of dishonored checks or other items of payment
received by Bank from Borrower or any Account Debtor and applied to the
Obligations; and (v) notice of Bank's acceptance hereof or of any Loan Document.
12.18 Maximum Interest. Regardless of any provision contained in this
Agreement or any of the Loan Documents, in no event shall the aggregate of all
amounts that are contracted for, charged or collected pursuant to the terms of
this Agreement, the Note or any of the Loan Documents, and that are deemed
interest under Applicable Law, exceed the Maximum Rate. No provision of this
Agreement or in any of the Loan Documents or the exercise by Bank of any right
hereunder or under any Loan Document or the prepayment by Borrower of any of the
Obligations
40
or the occurrence of any contingency whatsoever, shall entitle Bank to charge or
receive, or to require Borrower to pay, interest or any amounts deemed interest
by Applicable Law (such amounts being referred to herein collectively as
"Interest") in excess of the Maximum Rate, and all provisions hereof or in any
Loan Document which may purport to require Borrower to pay Interest exceeding
the Maximum Rate shall be without binding force or effect to the extent only of
the excess of Interest over such Maximum Rate. Any Interest charged or received
in excess of the Maximum Rate ("Excess"), shall be conclusively presumed to be
the result of an accident and bona fide error, and shall, to the extent received
by Bank, at the option of Bank, either be applied to reduce the principal amount
of the Obligations or returned to Borrower. The right to accelerate the maturity
of any of the Obligations does not include the right to accelerate unaccrued
interest, and no such interest will be collected by Bank. All monies paid to
Bank hereunder or under any of the Loan Documents shall be subject to any rebate
of unearned interest as and to the extent required by Applicable Law. By the
execution of this Agreement, Borrower covenants that (i) the credit or return of
any Excess shall constitute the acceptance by Borrower of such Excess, and (ii)
Borrower shall not seek or pursue any other remedy, legal or equitable, against
Bank, based in whole or in part upon contracting for, charging or receiving any
Interest in excess of the Maximum Rate. For the purpose of determining whether
or not any Excess has been contracted for, charged or received by Bank, all
interest at any time contracted for, charged or received from Borrower in
connection with this Agreement shall, to the extent permitted by Applicable Law,
be amortized, prorated, allocated and spread in equal parts throughout the full
term of the Obligations. Borrower and Bank shall, to the maximum extent
permitted under Applicable Law, (i) characterize any non-principal payment as an
expense, fee or premium rather than as Interest; and (ii) exclude voluntary
prepayments and the effects thereof. The provisions of this Section shall be
deemed to be incorporated into the Note and each Loan Document (whether or not
any provision of this Section is referred to therein).
12.19 Year 2000 Compliance. The 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 dates 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, implemented that plan in accordance with
that timetable. The Borrower 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 Material Adverse Effect.
12.20 Waiver of Right to Trial by Jury. Borrower and Bank hereby waive
any right to trial by jury on any claim, counterclaim, setoff, demand, action or
cause of action (a) arising out of or in any way pertaining or relating to this
Agreement, the Note, the Loan Documents, or any other
41
instrument, document or agreement executed or delivered in connection with this
agreement; or (b) in any way connected with or pertaining or related to or
incidental to any dealings of the parties hereto with respect to this agreement,
the Note, the Loan Documents, or any other instrument, document or agreement
executed or delivered in connection herewith or in connection with the
transactions related thereto or contemplated thereby or the exercise of either
party's rights and remedies thereunder, in all of the foregoing cases whether
now existing or hereafter arising, and whether sounding in contract, tort or
otherwise. Borrower and Bank agree that either or both of them may file a copy
of this paragraph with any court as written evidence of the knowing, voluntary
and bargained agreement between the parties irrevocably to waive trial by jury,
and that any dispute or controversy whatsoever between them shall instead be
tried in a court of competent jurisdiction by a judge sitting without a jury.
IN WITNESS WHEREOF, each of the Borrower and the Bank has caused this
instrument to be executed by its duly authorized officer and the Borrower has
caused its seal to be affixed as of the date first above written.
BORROWER:
XXXXXXXXXXXXX.XXX, INC.,
a Florida corporation
By: /s/ Xxxx Xxxxx, M.D. (SEAL)
Name: Xxxx Xxxxx
Attest: Title: Pres/CEO
BANK:
SOUTHTRUST BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxx Xxxx
Name: Xxxxx Xxxx
Title: Vice President
42
STATE OF FLORIDA )
) SS:
COUNTY OF BROWARD )
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to take
acknowledgments, the foregoing instrument was acknowledged before me by Xxxx
Xxxxx, the President of XXXXXXXXXXXXX.XXX, INC., a Florida corporation, freely
and voluntarily under authority duly vested in him/her by said corporation and
that the seal affixed thereto is the true corporate seal of said corporation.
He/She is personally known to me or who has produced ______________________ as
identification.
WITNESS my hand and official seal in the County and State last
aforesaid this 17th day of September, 1999.
/s Xxxxxxx X. Xxxxxxxxxxxx
Notary Public
------------------------------------------------
Typed, printed or stamped name of Notary Public
My Commission Expires:
STATE OF FLORIDA )
) SS:
COUNTY OF BROWARD )
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to take
acknowledgments, the foregoing instrument was acknowledged before me by Xxxxx
Xxxx, the Vice President of SOUTHTRUST BANK, National Association, a national
banking association, freely and voluntarily under authority duly vested in
him/her by said banking association. He/She is personally known to me or who has
produced ______________________ as identification.
WITNESS my hand and official seal in the County and State last
aforesaid this 17th day of September, 1999.
/s/ Xxxxxxx X. Xxxxxxxxxxxx
------------------------------------------------
Notary Public
Typed, printed or stamped name of Notary Public
My Commission Expires:
43
EXHIBIT "A"
BORROWER'S REPORT
45
EXHIBIT B
BLANK
46
EXHIBIT "C"
LIENS AND ENCUMBRANCES
NONE
47
EXHIBIT "D"
COLLATERAL LOCATIONS AND OWNERSHIP INFORMATION
Location Name and Address of Landlord
-------- ----------------------------
48
EXHIBIT "E"
PENSION PLANS
NONE
49
EXHIBIT "F"
INTELLECTUAL PROPERTY RIGHTS
50
EXHIBIT "G"
COMPLIANCE CERTIFICATE
SouthTrust Bank, National Association
Xxx Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Date of Report: , 1999
For Month or Quarter Ended: , 1999
The undersigned officer(s) of _______________________________ (the
"Borrower"), do hereby certify to you as follows:
(1) We have reviewed the provisions of the Loan and Security Agreement
between Borrower and you, dated as of , 1999 (the "Loan Agreement"), and
we have caused to be made under our supervision a review of the activities of
Borrower during the above-referenced period with a view toward determining
whether Borrower has kept, observed, performed, and fulfilled all of its
obligations under the Loan Agreement. Capitalized terms used herein but not
otherwise defined herein shall have the meanings set forth in the Loan
Agreement. To the best of our knowledge, Borrower has kept, observed, performed,
and fulfilled each and every undertaking contained in the Loan Agreement and is
not at this time in default in the observance or performance of any of the terms
or conditions of the Loan Agreement, and no Event of Default has occurred and is
continuing, and no event has occurred and is continuing that, with the giving of
notice or the passage of time or both, would be an Event of Default, except as
follows: . Without limiting the generality of the foregoing, Borrower is
Solvent as of the date hereof.
(2) We further certify to you that no material adverse change has
occurred in either the financial condition or the business of Borrower since the
date of the Loan Agreement and that all representations and warranties set forth
within the Loan Agreement are true as of the date hereof.
(3) During the period noted above, Borrower has not changed its name,
its place of business, principal executive office, or has been surviving
corporation in a merger, nor has it changed the places where the Collateral is
located.
Executed this ____ day of ___________________, 1999.
Print Name:
ON BEHALF OF:
("Borrower")
