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Exhibit 10.10
[LOGO]
LOAN AND SECURITY AGREEMENT
AUTOMOTIVE ONE PARTS STORES, INC.
000 XXXX XXXXXX XXXXXX
XXXXXXX, XXXXXXX 00000
00-0000000
BORROWER FED ID TAX NO.
$4,000,000
CREDIT LIMIT
JANUARY ___, 1998
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CORPORATE FINANCE
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TABLE OF CONTENTS
1. DEFINITIONS.................................................... 1
1.1 Defined Terms................................... 1
1.2 Other Terms..................................... 6
2. LOANS; INTEREST RATE AND OTHER CHARGES......................... 6
2.1 Total Facility.................................. 6
2.2 Loans........................................... 6
2.3 Overlines; Overadvances......................... 6
2.4 [Intentionally Deleted]......................... 6
2.5 Loan Account.................................... 6
2.6 Interest; Fees.................................. 6
2.7 Default Interest Rate........................... 6
2.8 Examination Fee................................. 7
2.9 Excess Interest................................. 7
2.10 Principal Payments; Proceeds of Collateral..... 8
2.11 Application of Collateral...................... 9
2.12 Application of Payments........................ 9
2.13 Notification of Closing...................................... 9
3. SECURITY....................................................... 9
3.1 Security Interest in the Collateral............. 9
3.2 Perfection and Protection of Security Interest.. 10
3.3 Preservation of Collateral...................... 10
3.4 Insurance....................................... 10
3.5 Collateral Reporting; Inventory................ 10
3.6 Receivables..................................... 11
3.7 Equipment....................................... 11
3.8 Other Liens; No Disposition of Collateral..... 11
3.9 Collateral Security............................. 12
4. CONDITIONS OF CLOSING.......................................... 12
4.1 Initial Advance................................. 12
4.2 Subsequent Advances............................. 15
5. REPRESENTATIONS AND WARRANTIES................................. 15
Borrower represents and warrants that:.............. 15
5.1 Due Organization................................ 15
5.2 Other Names..................................... 16
5.3 Due Authorization............................... 16
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5.4 Binding Obligation.............................. 16
5.5 Intangible Property............................. 16
5.6 Capital......................................... 16
5.7 Material Litigation............................. 16
5.8 Title; Security Interests of FINOVA............. 16
5.9 Restrictive Agreements; Labor Contracts......... 16
5.10 Laws........................................... 16
5.11 Consents....................................... 16
5.12 Defaults....................................... 16
5.13 Financial Condition............................ 17
5.14 ERISA.......................................... 17
5.15 Taxes.......................................... 17
5.16 Locations; Federal Tax ID No................... 17
5.17 Business Relationships......................... 17
5.18 Reaffirmations................................. 17
6. COVENANTS...................................................... 17
6.1 Affirmative Covenants........................... 17
6.1.1 Taxes......................................... 17
6.1.2 Notice of Litigation.......................... 17
6.1.3 ERISA......................................... 17
6.1.4 Change in Location............................ 18
6.1.5 Corporate Existence........................... 18
6.1.6 Labor Disputes................................ 18
6.1.7 Violations of Law............................. 18
6.1.8 Defaults...................................... 18
6.1.9 Capital Expenditures.......................... 18
6.1.10 Books and Records............................ 18
6.1.11 Leases; Warehouse Agreements................. 18
6.1.12 Additional Documents......................... 18
6.1.13 Financial Covenants.......................... 18
6.2 Negative Covenants.............................. 18
6.2.1 Mergers....................................... 18
6.2.2 Loans......................................... 18
6.2.3 Dividends..................................... 19
6.2.4 Adverse Transactions.......................... 19
6.2.5 Indebtedness of Others........................ 19
6.2.6 Repurchase.................................... 19
6.2.7 Name.......................................... 19
6.2.8 Prepayment.................................... 19
6.2.9 Capital Expenditure........................... 19
6.2.10 Compensation................................. 19
6.2.11 Indebtedness................................. 19
6.2.12 Affiliate Transactions....................... 19
6.2.13 Nature of Business........................... 19
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6.2.14 FINOVA's Name................................. 19
6.2.15 Margin Security.............................. 19
6.2.16 Real Property................................ 20
6.2.17 A.P.S. Supply Agreement...................... 20
7. DEFAULT AND REMEDIES............................................ 20
7.1 Events of Default..................................... 20
7.2 Remedies.............................................. 21
7.3 Standards for Determining Commercial Reasonableness... 22
8. EXPENSES AND INDEMNITIES........................................ 22
8.1 Expenses.............................................. 22
8.2 Environmental Matters................................ 22
9. MISCELLANEOUS................................................... 22
9.1 Examination of Records; Financial Reporting......... 22
9.2 Term; Termination..................................... 23
9.3 Recourse to Security; Certain Waivers................. 23
9.4 No Waiver by FINOVA................................... 23
9.5 Binding on Successor and Assigns...................... 24
9.6 Severability.......................................... 24
9.7 Amendments; Assignments............................... 24
9.8 Integration........................................... 24
9.9 Survival.............................................. 24
9.10 Evidence of Obligations.............................. 24
9.11 Loan Requests........................................ 24
9.12 Notices.............................................. 24
9.13 Brokerage Fees....................................... 24
9.14 Disclosure........................................... 24
9.15 Publicity............................................ 25
9.16 Captions............................................. 25
9.17 Injunctive Relief.................................... 25
9.18 Counterparts; Facsimile Execution.................... 25
9.19 Construction......................................... 25
9.20 Time of Essence...................................... 25
9.21 Limitation of Actions................................ 25
9.22 Liability............................................ 25
9.23 Notice of Breach by FINOVA........................... 25
9.24 Application of Insurance Proceeds.................... 26
9.25 Power of Attorney................................... 26
9.26 Governing Law; Waivers............................... 26
9.27 MUTUAL WAIVER OF RIGHT TO JURY TRIAL................. 26
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THIS LOAN AND SECURITY AGREEMENT (collectively with the Schedule to Loan
Agreement (the "SCHEDULE") attached hereto, the "AGREEMENT") dated the date set
forth on the cover page, is entered into by and between the borrower named on
the cover page (jointly and severally, the "Borrower"), whose address is set
forth on the cover page and FINOVA CAPITAL CORPORATION ("FINOVA"), whose
address is 000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000.
1. DEFINITIONS.
1.1 Defined Terms. As used in this Agreement, the following terms have
the definitions set forth below:
"ADA" has the meaning set forth in Section 4.1(z) hereof.
"Additional Sums" has the meaning set forth in Section 2.9(a) hereof.
"Affiliate" means any Person controlling, controlled by or under common
control with Borrower. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause direction
of the management and policies of any Person, whether through ownership of
common or preferred stock or other equity interests, by contract or otherwise.
Without limiting the generality of the foregoing, each of the following shall
be an Affiliate: any officer, director, employee or other agent of Borrower,
any shareholder, member or subsidiary of Borrower, and any other Person with
whom or which Borrower has common shareholders, officers or directors.
"Agreement" has the meaning set forth in the preamble.
"Applicable Usury Law" has the meaning set forth in Section 2.9(b) hereof.
"Assignment of Life Insurance" has the meaning set forth in Section 4.1(u)
hereof.
"Blocked Account" has the meaning set forth in Section 2.10(c) hereof.
"Business Day" means any day on which commercial banks in both Los
Angeles, California and Phoenix, Arizona are open for business.
"Capital Expenditures" means all expenditures made and liabilities
incurred for the acquisition of any fixed asset or improvement, replacement,
substitution or addition thereto which has a useful life of more than one year
and including, without limitation, those arising in connection with Capital
Leases.
"Capital Lease" means any lease of property by Borrower that, in
accordance with GAAP, should be capitalized for financial reporting purposes
and reflected as a liability on the balance sheet of Borrower.
"Change of Control" means any of the following: (i) the sale, lease,
transfer, conveyance or other disposition of, in one or a series of related
transactions, of all or substantially all of the assets of Borrower to any
person (as such term is used in Section 13(d)(3) of the Securities Exchange Act
of 1940) (each an "Acquiring Person"), (ii) the adoption of a plan relating to
the liquidation or dissolution of Borrower, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" becomes the "beneficial owner" (as each
such term is defined in Rule 13d-3 and Rule 13d-5 under the Securities Exchange
Act of 1940), directly or indirectly, of more than 25.0% of the voting Stock of
Borrower, other than Xxxxxx X. Xxxxxx III, or (iv) during any period of twelve
consecutive calendar months, individuals who at the beginning of such period
constituted the board of directors of Borrower (together with any new directors
whose election by the board of directors of Borrower or whose nomination for
election by the stockholders of Borrower was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason other than death or disability to
constitute a majority of the directors then in office.
"Closing Fee" has the meaning set forth in the Schedule.
"Closing Date" means the date of the initial advance made by FINOVA
pursuant to this Agreement.
"Code" means the Uniform Commercial Code as adopted and in effect in the
State of Arizona from time to time.
"Collateral" has the meaning set forth in Section 3.1 hereof.
"Collateral Monitoring Fee" has the meaning set forth in the Schedule.
"Current Assets" at any date means the amount at which the current assets
of Borrower would be shown on a balance sheet of Borrower as at such date,
prepared in accordance with GAAP, provided that amounts due from Affiliates and
investments in Affiliates shall be excluded therefrom.
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"Current Liabilities" at any date means the amount at which the current
liabilities of Borrower would be shown on a balance sheet of Borrower as at
such date, prepared in accordance with GAAP.
"Deposit Accounts" has the meaning set forth in Section 9105 of the Code.
"Dominion Account" has the meaning set forth in Section 2.10(c) hereof.
"Earnings Before Interest, Taxes, Depreciation and Amortization" for any
fiscal period of Borrower means the net income of Borrower for such fiscal
period, plus interest expense, depreciation and amortization and provision for
income taxes for such fiscal period, and minus non-recurring miscellaneous
income and expenses, all calculated in accordance with GAAP.
"Eligible Inventory" means Inventory which FINOVA, in its Permitted
Discretion, deems Eligible Inventory, based on such considerations as FINOVA
may from time to time deem appropriate. Without limiting the generality of the
foregoing, no Inventory shall be Eligible Inventory unless, in FINOVA's
Permitted Discretion, such Inventory (i) consists of raw materials and finished
goods, in good, new and salable condition which are not obsolete, defective, or
otherwise unmerchantable; (ii) are not comprised of work in process, packaging
materials, supplies, returned cores or items for which, in FINOVA's discretion,
a supply in excess of that which is expected to be sold within a two-year
period in the ordinary course of Borrower's business exists, but only to the
extent of such excess; (iii) meets all standards imposed by any governmental
agency or authority; (iv) conforms in all respects to the warranties and
representations set forth herein; (v) is at all times subject to FINOVA's duly
perfected, first priority security interest; and (vi) is situated at a location
in compliance with Section 5.16 hereof.
"Eligible Receivables" means Receivables arising in the ordinary course of
Borrower's business from the sale of goods or rendition of services, which
FINOVA, in its Permitted Discretion, shall deem eligible based on such
considerations as FINOVA may from time to time deem appropriate. Without
limiting the foregoing, a Receivable shall not be deemed to be an Eligible
Receivable if (i) the account debtor has failed to pay the Receivable within a
period of the earlier to occur of ninety (90) days after invoice date and sixty
(60) days past the stated due date, in either case to the extent of any amount
remaining unpaid after such period; (ii) the account debtor has failed to pay
more than 25% of all outstanding Receivables owed by it to Borrower within
ninety (90) days after invoice date; (iii) the account debtor is an Affiliate
of Borrower; (iv) the goods relating thereto are placed on consignment,
guaranteed sale, "xxxx and hold," "COD" or other terms pursuant to which
payment by the account debtor may be conditional; (v) the account debtor is not
located in the United States, unless the Receivable is supported by a letter of
credit or other form of guaranty or security, in each case in form and
substance satisfactory to FINOVA; (vi) the account debtor is the United States
or any department, agency or instrumentality thereof or any State, city or
municipality of the United States; (vii) Borrower is or may become liable to
the account debtor for goods sold or services rendered by the account debtor to
Borrower; (viii) the account debtor's total obligations to Borrower exceed 15%
of all Eligible Receivables, to the extent of such excess; (ix) the account
debtor disputes liability or makes any claim with respect thereto (up to the
amount of such liability or claim), or is subject to any insolvency or
bankruptcy proceeding, or becomes insolvent, fails or goes out of a material
portion of its business; (x) the amount thereof consists of late charges or
finance charges; (xi) the amount thereof consists of a credit balance more than
sixty (60) days past due; (xii) the face amount thereof exceeds $3,000, unless
accompanied by evidence of shipment of the goods relating thereto satisfactory
to FINOVA in its Permitted Discretion; (xiii) the invoice constitutes a
progress billing on a project not yet completed, except that the final billing
at such time as the matter has been completed and delivered to the customer may
be deemed an Eligible Receivable; or (xiv) the amount thereof is not yet
represented by an invoice or xxxx issued in the name of the applicable account
debtor.
"Equipment" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
"ERISA Affiliate" means each trade or business (whether or not
incorporated and whether or not foreign) which is or may hereafter become a
member of a group of which Borrower is a member and which is treated as a
single employer under ERISA Section 4001(b)(1), or IRC Section 414.
"Event of Default" means any of the events set forth in Section 7.1 of
this Agreement.
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"Examination Fee" has the meaning set forth in the Schedule.
"Excess Availability" means, as of the date of determination thereof, the
amount by which the average daily total principal balance of the Revolving
Credit Loans facility which Borrower would be permitted to have outstanding
over the prior 30 days, based on the formulas and reserves set forth in the
Schedule, exceeds the sum of the Receivable Loans and the Inventory Loans then
actually outstanding, such excess then being reduced by an amount necessary to
provide for the payment of all accounts payable of Borrower which are more than
30 days past due date and all book overdrafts.
"FINOVA Affiliate" has the meaning set forth in Section 9.22 hereof.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time as set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Boards which are applicable to the circumstances
as of the date of determination consistently applied, except that, for the
financial covenants set forth in this Agreement, GAAP shall be determined on
the basis of such principles in effect on the date hereof and consistent with
those used in the preparation of the audited financial statements delivered to
Lender prior to the date hereof.
"General Intangibles" means all general intangibles of Borrower, whether
now owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, Deposit Accounts, inventions, designs, drawings, blueprints,
Trademarks, Licenses and Patents, names, trade secrets, goodwill, copyrights,
registrations, licenses, franchises, customer lists, security and other
deposits, rights in all litigation presently or hereafter pending for any cause
or claim (whether in contract, tort or otherwise), and all judgments now or
hereafter arising therefrom, all claims of Borrower against FINOVA, rights to
purchase or sell real or personal property, rights as a licensor or licensee of
any kind, royalties, telephone numbers, proprietary information, purchase
orders, and all insurance policies and claims (including without limitation
credit, liability, property and other insurance) tax refunds and claims,
computer programs, discs, tapes and tape files, claims under guaranties,
security interests or other security held by or granted to Borrower to secure
payment of any of the Receivables by an account debtor, all rights to
indemnification and all other intangible property of every kind and nature
(other than Receivables).
"Guarantor(s)" shall mean any Person which at any time guaranties all or
any portion of the Obligations owing to FINOVA under the Loan Documents.
"Indebtedness" means all of Borrower's present and future obligations,
liabilities, debts, claims and indebtedness, contingent, fixed or otherwise,
however evidenced, created, incurred, acquired, owing or arising, whether under
written or oral agreement, operation of law or otherwise, and includes, without
limiting the foregoing (i) the Obligations, (ii) obligations and liabilities of
any Person secured by a lien, claim, encumbrance or security interest upon
property owned by Borrower, even though Borrower has not assumed or become
liable therefor, (iii) obligations and liabilities created or arising under any
lease (including Capital Leases) or conditional sales contract or other title
retention agreement with respect to property used or acquired by Borrower, even
though the rights and remedies of the lessor, seller or lender are limited to
repossession, (iv) all unfunded pension fund obligations and liabilities and
(v) deferred taxes.
"Initial Term" has the meaning set forth on the Schedule.
"Insurance Collateral" has the meaning set forth in Section 4.1(u) hereof.
"Inventory" means all of Borrower's now owned and hereafter acquired
goods, merchandise or other personal property, wherever located, to be
furnished under any contract of service or held for sale or lease, all raw
materials, work in process, finished goods and materials and supplies of any
kind, nature or description which are or might be used or consumed in
Borrower's business or used in connection with the manufacture, packing,
shipping, advertising, selling or finishing of such goods, merchandise or other
personal property, and all documents of title or other documents representing
them.
"Inventory Loans" has the meaning set forth in the Schedule.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"Life Insurance Policy" has the meaning set forth in Section 4.1(u)
hereof.
"Loans" has the meaning set forth in Section 2.2 hereof.
"Loan Documents" means, collectively, this Agreement, any note or notes
executed by Borrower and payable to FINOVA, and any other present or future
agreement entered into in connection with this
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Agreement, together with all alterations, amendments, changes, extensions,
modifications, refinancings, refundings, renewals, replacements, restatements,
or supplements, of or to any of the foregoing.
"Loan Party" means Borrower, each Guarantor, each Subordinating Creditor
and each other party (other than FINOVA) to any Loan Document.
"Loan Reserves" means, as of any date of determination, such amounts as
FINOVA may from time to time establish and revise in good faith reducing the
amount of Revolving Credit Loans which would otherwise be available to Borrower
under the lending formula(s) provided in the Schedule: (a) to reflect events,
conditions, contingencies or risks which, as determined by FINOVA in good
faith, do or may affect either (i) the Collateral or any other property which
is security for the Obligations or its value, (ii) the assets, business or
prospects of Borrower or any Guarantor or (iii) the security interests and
other rights of FINOVA in the Collateral (including the enforceability,
perfection and priority thereof) or (b) to reflect FINOVA's good faith belief
that any collateral report or financial information furnished by or on behalf
of Borrower or any Guarantor to FINOVA is or may have been incomplete,
inaccurate or misleading in any material respect or (c) in respect of any state
of facts which FINOVA determines in good faith constitutes an Event of Default
or may, with notice or passage of time or both, constitute an Event of
Default."
"Loan Year" means each twelve month period commencing on the Closing Date.
"Maximum Interest Rate" has the meaning set forth in Section 2.9(c)
hereof.
"Minimum Interest Charge" has the meaning set forth in the Schedule.
"Multiemployer Plan" means a "multiemployer plan" as defined in ERISA
Sections 3(37) or 4001(a)(3) or IRC Section 414(f) which covers employees of
Borrower or any ERISA Affiliate.
"Net Sale Proceeds" has the meaning set forth in Section 3.8 hereof.
"Obligations" means all present and future loans, advances, debts,
liabilities, obligations, covenants, duties and indebtedness at any time owing
by Borrower to FINOVA, whether evidenced by this Agreement, any note or other
instrument or document, whether arising from an extension of credit, opening of
a letter of credit, banker's acceptance, loan, guaranty, indemnification or
otherwise, whether direct or indirect (including, without limitation, those
acquired by assignment and any participation by FINOVA in Borrower's debts
owing to others), absolute or contingent, due or to become due, including,
without limitation, all interest, charges, expenses, fees, attorney's fees,
expert witness fees, Examination Fee, Collateral Monitoring Fee, Closing Fee,
Facility Fee, Termination Fee, Minimum Interest Charge and any other sums
chargeable to Borrower hereunder or under any other agreement with FINOVA.
"Operating Cash Flow/Actual" means, for any period, Borrower's net income
or loss (excluding the effect of any extraordinary gains or losses), determined
in accordance with GAAP, plus or minus each of the following items, to the
extent deducted from or added to the revenues of Borrower in the calculation of
net income or loss: (i) depreciation; (ii) amortization and other non-cash
charges; (iii) interest expense paid or accrued; and (iv) total federal and
state income tax expense determined as the accrued liability of Borrower in
respect of such period, regardless of what portion of such expense has actually
been paid by Borrower during such period, and after deduction for each of (a)
federal and state income taxes, to the extent actually paid during such period;
(b) any non-cash income; and (c) all actual Capital Expenditures made during
such period and not financed.
"Overadvance" has the meaning set forth in Section 2.3.
"Overline" has the meaning set forth in Section 2.3.
"PBGC" means the Pension Benefit Guarantee Corporation.
"Permitted Discretion" means FINOVA's judgment exercised in good faith
based upon its consideration of any factor which FINOVA believes in good faith:
(i) will or could adversely affect the value of any Collateral, the
enforceability or priority of FINOVA's liens thereon or the amount which FINOVA
would be likely to receive (after giving consideration to delays in payment and
costs of enforcement) in the liquidation of such Collateral; (ii) suggests that
any collateral report or financial information delivered to FINOVA by any
Person on behalf of the Borrower is incomplete, inaccurate or misleading in any
material respect; (iii) materially increases the likelihood of a bankruptcy,
reorganization or other insolvency proceeding involving the Borrower, any Loan
Party or any of the Collateral, or (iv) creates or reasonably could be expected
to create an Event of Default. In exercising such judgment, FINOVA may
consider such factors already included in or tested by the definition of
Eligible Receivables or Eligible Inventory, as well as any of the following:
(i) the financial and business climate of the Borrower's industry and general
macroeconomic conditions, (ii) changes in
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collection history and dilution with respect to the Receivables, (iii) changes
in demand for, and pricing of, Inventory, (iv) changes in any concentration of
risk with respect to Receivables and/or Inventory, and (v) any other factors
that change the credit risk of lending to the Borrower on the security of the
Receivables and Inventory. The burden of establishing lack of good faith
hereunder shall be on the Borrower.
"Permitted Encumbrance" means each of the liens, mortgages and other
security interests set forth on the Schedule.
"Permitted Senior Indebtedness" has the meaning set forth in the Schedule.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, government, or any agency or political division thereof, or
any other entity.
"Plan" means any plan described in ERISA Section 3(2) maintained for
employees of Borrower or any ERISA Affiliate, other than a Multiemployer Plan.
"Prepared Financials" means the balance sheets of Borrower as of the date
set forth in the Schedule in the section entitled 'Reporting Requirements' ,
and as of each subsequent date on which audited balance sheets are delivered to
FINOVA from time to time hereunder, and the related statements of operations,
changes in stockholder's equity and changes in cash flow for the periods ended
on such dates.
"Prime Rate" has the meaning set forth in the Schedule.
"Prohibited Transaction" means any transaction described in Section 406 of
ERISA which is not exempt by reason of Section 408 of ERISA, and any
transaction described in Section 4975(c) of the IRC which is not exempt by
reason of Section 4975(c)(2) of the IRC.
"Receivable Loans" has the meaning set forth on the Schedule.
"Receivables" means all of Borrower's now owned and hereafter acquired
accounts (whether or not earned by performance), proceeds of any letters of
credit naming Borrower as beneficiary, contract rights, chattel paper,
instruments, documents and all other forms of obligations at any time owing to
Borrower, all guaranties and other security therefor, whether secured or
unsecured, all merchandise returned to or repossessed by Borrower, and all
rights of stoppage in transit and all other rights or remedies of an unpaid
vendor, lienor or secured party.
"Renewal Term" has the meaning set forth on the Schedule.
"Registration Statement" means Borrower's Form SB-2 Registration Statement
filed with the Securities and Exchange Commission in connection with the
planned initial public offering of its common stock and certain warrants
together with all amendments thereto filed prior to the Closing Date.
"Reportable Event" means a reportable event described in Section 4043 of
ERISA or the regulations thereunder, a withdrawal from a Plan described in
Section 4063 of ERISA, or a cessation of operations described in Section
4068(f) of ERISA.
"Revolving Credit Loans" has the meaning set forth in the Schedule.
"Revolving Credit Limit" has the meaning set forth in the Schedule.
"Revolving Interest Rate" has the meaning set forth in the Schedule.
"Schedule" has the meaning set forth in the preamble.
"Senior Contractual Debt Service" means, for any period, the sum of
payments made or required to be made by Borrower during such period for (i)
interest only payments due on the Revolving Credit Loans facility plus the
Collateral Monitoring Fee and the Unused Line Fee, and (ii) principal and
interest payments due on the Permitted Senior Indebtedness.
"Start Date" has the meaning set forth in the Schedule.
"Subordinated Debt" means liabilities of Borrower the repayment of which
is subordinated, to the payment and performance of the Obligations, pursuant to
a subordination agreement acceptable to FINOVA in its sole discretion.
"Subordinating Creditor" has the meaning set forth in the Schedule.
"Termination Fee" has the meaning set forth in Section 9.2(d) hereof.
"Total Contractual Debt Service" means, for any period, the sum of
payments made (or, as to clause (i) of this sentence, required to be made) by
Borrower during such period for (i) Senior Contractual Debt Service, and (ii)
interest and scheduled principal payments due on any and all other Indebtedness
of Borrower, including without limitation any Subordinated Indebtedness.
"Total Facility" has the meaning set forth in Section 2.1 hereof.
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"Trademarks, Copyrights, Licenses and Patents" means all of Borrower's
right, title and interest in and to, whether now owned or hereafter acquired:
(i) trademarks, trademark registrations, trade names, trade name registrations,
and trademark or trade name applications, including without limitation such as
are listed on the Schedule attached hereto and made a part hereof, as the same
may be amended from time to time, and (a) renewals thereof, (b) all income,
royalties, damages and payments now and hereafter due and/or payable with
respect thereto, including without limitation, damages and payments for past or
future infringements thereof, (c) the right to xxx for past, present and future
infringements thereof, (d) all rights corresponding thereto throughout the
world, and (e) the goodwill of the business operated by Borrower connected with
and symbolized by any trademarks or trade names; (ii) copyrights, copyright
registrations and copyright applications, including without limitation such as
are listed on the Schedule attached hereto and made a part hereof, as the same
may be amended from time to time, and (a) renewals thereof, (b) all income,
royalties, damages and payments now and hereafter due and/or payable with
respect thereto, including without limitation, damages and payments for past or
future infringements thereof, (c) the right to xxx for past, present and future
infringements thereof, and (d) all rights corresponding thereto throughout the
world; (iii) license agreements, including without limitation such as are
listed on the Schedule attached hereto and made a part hereof, and the right to
prepare for sale, sell and advertise for sale any Inventory now or hereafter
owned by Borrower and now or hereafter covered by such licenses; and (iv)
patents and patent applications, registered or pending, including without
limitation such as are listed on the Schedule attached hereto, together with
all income, royalties, shop rights, damages and payments thereto, the right to
xxx for infringements thereof, and all rights thereto throughout the world and
all reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof.
"Unused Line Fee" has the meaning set forth in the Schedule.
1.2 Other Terms. All accounting terms used in this Agreement, unless
otherwise indicated, shall have the meanings given to such terms in accordance
with GAAP. All other terms contained in this Agreement, unless otherwise
indicated, shall have the meanings provided by the Code, to the extent such
terms are defined therein.
2. LOANS; INTEREST RATE AND OTHER CHARGES.
2.1 Total Facility. Upon the terms and conditions set forth herein and
provided that no Event of Default or event which, with the giving of notice or
the passage of time, or both, would constitute an Event of Default, shall have
occurred and be continuing, FINOVA shall, upon Borrower's request, make
advances to Borrower from time to time in an aggregate outstanding principal
amount not to exceed the Total Facility amount (the "TOTAL FACILITY") set forth
on the Schedule hereto, subject to deduction of reserves for accrued interest
and such other reserves as FINOVA deems proper from time to time, and less
amounts FINOVA may be obligated to pay in the future on behalf of Borrower.
The Schedule is an integral part of this Agreement and all references to
"herein", "herewith" and words of similar import shall for all purposes be
deemed to include the Schedule.
2.2 Loans. Advances under the Total Facility ("LOANS" and individually, a
"LOAN") shall be comprised of the amounts shown on the Schedule.
2.3 Overlines; Overadvances. If at any time or for any reason the
outstanding amount of advances extended or issued pursuant hereto exceeds any
of the dollar limitations ("OVERLINE") or percentage limitations
("OVERADVANCE") in the Schedule, then Borrower shall, upon FINOVA's demand,
immediately pay to FINOVA, in cash, the full amount of such Overline or
Overadvance which, at FINOVA's option, may be applied to reduce the outstanding
principal balance of the Loans. Without limiting Borrower's obligation to
repay to FINOVA on demand the amount of any Overline or Overadvance, Borrower
agrees to pay FINOVA interest on the outstanding principal amount of any
Overline or Overadvance, on demand, at the rate set forth on the Schedule and
applicable to the Revolving Credit Loans.
2.4 [Intentionally Deleted].
2.5 Loan Account. All advances made hereunder shall be added to and
deemed part of the Obligations when made. FINOVA may from time to time charge
all Obligations of Borrower to Borrower's loan account with FINOVA.
2.6 Interest; Fees. Borrower shall pay FINOVA interest on the daily
outstanding balance of the Obligations at the per annum rate set forth on the
Schedule. Borrower shall also pay FINOVA the fees set forth on the Schedule.
2.7 Default Interest Rate. Upon the occurrence and during the continuation
of an Event of Default, Borrower shall pay FINOVA interest on the daily
outstanding balance of the Obligations at a rate per annum which is four
percent (4%) in excess of the rate which would otherwise be applicable thereto
pursuant to the Schedule.
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2.8 Examination Fee. Borrower agrees to pay to FINOVA the Examination Fee
in the amount set forth on the Schedule in connection with each audit or
examination of Borrower performed by FINOVA prior to or after the date hereof.
The parties hereto acknowledge and agree that the initial Examination Fee
described on the Schedule for the audit and examination performed prior to
closing has been fully earned by FINOVA and has been paid in full from the
deposit previously provided to FINOVA by Borrower.
2.9 Excess Interest.
(a) The contracted for rate of interest of the loan contemplated hereby,
without limitation, shall consist of the following: (i) the interest rate set
forth on the Schedule, calculated and applied to the principal balance of the
Obligations in accordance with the provisions of this Agreement; (ii) interest
after an Event of Default, calculated and applied to the amount of the
Obligations in accordance with the provisions hereof; and (iii) all Additional
Sums (as herein defined), if any. Borrower agrees to pay an effective
contracted for rate of interest which is the sum of the above-referenced
elements. The Examination Fee, attorneys fees, expert witness fees, letter of
credit fees, collateral monitoring fees, closing fees, facility fees,
Termination Fees, Minimum Interest Charges, other charges, goods, things in
action or any other sums or things of value paid or payable by Borrower
(collectively, the "ADDITIONAL SUMS"), whether pursuant to this Agreement or
any other documents or instruments in any way pertaining to this lending
transaction, or otherwise with respect to this lending transaction, that under
any applicable law may be deemed to be interest with respect to this lending
transaction, for the purpose of any applicable law that may limit the maximum
amount of interest to be charged with respect to this lending transaction,
shall be payable by Borrower as, and shall be deemed to be, additional interest
and for such purposes only, the agreed upon and "contracted for rate of
interest" of this lending transaction shall be deemed to be increased by the
rate of interest resulting from the inclusion of the Additional Sums.
(b) It is the intent of the parties to comply with the usury laws of the
State of Arizona (the "APPLICABLE USURY LAW"). Accordingly, it is agreed that
notwithstanding any provisions to the contrary in this Agreement, or in any of
the documents securing payment hereof or otherwise relating hereto, in no event
shall this Agreement or such documents require the payment or permit the
collection of interest in excess of the maximum contract rate permitted by the
Applicable Usury Law (the "MAXIMUM INTEREST RATE"). In the event (a) any such
excess of interest otherwise would be contracted for, charged or received from
Borrower or otherwise in connection with the loan evidenced hereby, or (b) the
maturity of the Obligations is accelerated in whole or in part, or (c) all or
part of the Obligations shall be prepaid, so that under any of such
circumstances the amount of interest contracted for, shared or received in
connection with the loan evidenced hereby, would exceed the Maximum Interest
Rate, then in any such event (1) the provisions of this paragraph shall govern
and control, (2) neither Borrower nor any other Person now or hereafter liable
for the payment of the Obligations shall be obligated to pay the amount of such
interest to the extent that it is in excess of the Maximum Interest Rate, (3)
any such excess which may have been collected shall be either applied as a
credit against the then unpaid principal amount of the Obligations or refunded
to Borrower, at FINOVA's option, and (4) the effective rate of interest shall
be automatically reduced to the Maximum Interest Rate. It is further agreed,
without limiting the generality of the foregoing, that to the extent permitted
by the Applicable Usury Law; (x) all calculations of interest which are made
for the purpose of determining whether such rate would exceed the Maximum
Interest Rate shall be made by amortizing, prorating, allocating and spreading
during the period of the full stated term of the loan evidenced hereby, all
interest at any time contracted for, charged or received from Borrower or
otherwise in connection with such loan; and (y) in the event that the effective
rate of interest on the loan should at any time exceed the Maximum Interest
Rate, such excess interest that would otherwise have been collected had there
been no ceiling imposed by the Applicable Usury Law shall be paid to FINOVA
from time to time, if and when the effective interest rate on the loan
otherwise falls below the Maximum Interest Rate, to the extent that interest
paid to the date of calculation does not exceed the Maximum Interest Rate,
until the entire amount of interest which would otherwise have been collected
had there been no ceiling imposed by the Applicable Usury Law has been paid in
full. Borrower further agrees that should the Maximum Interest Rate be
increased at any time hereafter because of a change in the Applicable Usury
Law, then to the extent not prohibited by the Applicable Usury Law, such
increases shall apply to all indebtedness evidenced hereby regardless of when
incurred; but, again to the extent not prohibited by the Applicable Usury Law,
should the Maximum Interest Rate be decreased because of a change in the
Applicable Usury Law, such decreases shall not apply to the indebtedness
evidenced hereby regardless of when incurred.
2.10 Principal Payments; Proceeds of Collateral.
(a) Principal Payments. Except where evidenced by notes or other
instruments issued or made
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by Borrower to FINOVA specifically containing payment provisions which are in
conflict with this Section 2.10 (in which event the conflicting provisions of
said notes or other instruments shall govern and control), that portion of the
Obligations consisting of principal payable on account of Loans shall be
payable by Borrower to FINOVA immediately upon the earliest of (i) the receipt
by FINOVA or Borrower of any proceeds of any of the Collateral, to the extent
of said proceeds (or Net Sale Proceeds, in the case of dispositions of
Collateral with the consent of FINOVA pursuant to Section 3.8 hereto), (ii) the
occurrence of an Event of Default in consequence of which FINOVA elects to
accelerate the maturity and payment of such loans, or (iii) any termination of
this Agreement pursuant to Section 9.2 hereof; provided, however, that any
Overadvance or Overline shall be payable on demand pursuant to the provisions
of Section 2.3 hereof.
(b) Collections. Until FINOVA notifies Borrower to the contrary, Borrower
may make collection of all Receivables for FINOVA by directing all account
debtors and other third parties to remit all payments owing to Borrower to the
lockbox established in connection with the Blocked Account. In the event
Borrower shall nevertheless directly receive any payments or other financial
proceeds of any Collateral, Borrower shall receive all payments as trustee of
FINOVA and immediately deliver all payments to FINOVA in their original form as
set forth below, duly endorsed in blank or cause the same to be deposited into
a Blocked Account Dominion Account. FINOVA or its designee may, at any time,
notify account debtors that the Receivables have been assigned to FINOVA and of
FINOVA's security interest therein, and may collect the Receivables directly
and charge the collection costs and expenses to Borrower's loan account.
Borrower agrees that, in computing the charges under this Agreement, all items
of payment shall be deemed applied by FINOVA on account of the Obligations
three (3) Business Days after receipt by FINOVA of good funds which have been
finally credited to FINOVA's account, whether such funds are received directly
from Borrower or from the Blocked Account bank or the Dominion Account bank,
pursuant to Section 2.10(c) hereof, and this provision shall apply regardless
of the amount of the Obligations outstanding or whether any Obligations are
outstanding; provided, that if any such good funds are received after 12:00
p.m. noon (New York time) on any Business Day or at any time on any day not
constituting a Business Day, such funds shall be deemed received on the
immediately following Business Day. FINOVA is not, however, required to credit
Borrower's account for the amount of any item of payment which is
unsatisfactory to FINOVA in its Permitted Discretion and FINOVA may charge
Borrower's loan account for the amount of any item of payment which is returned
to FINOVA unpaid.
(c) Establishment of a Lockbox Account or Dominion Account. Unless
Borrower shall be otherwise directed by FINOVA in writing, Borrower shall cause
all proceeds of Collateral to be deposited into a lockbox account, or such
other "blocked account" as FINOVA may require (each, a "BLOCKED ACCOUNT")
pursuant to an arrangement with such bank as may be selected by Borrower and be
acceptable to FINOVA which proceeds, unless otherwise provided herein, shall be
applied in payment of the Obligations in such order as FINOVA determines in its
sole discretion. Borrower shall issue to any such bank an irrevocable letter
of instruction directing said bank to transfer such funds so deposited to
FINOVA, either to any account maintained by FINOVA at said bank or by wire
transfer to appropriate account(s) of FINOVA. All funds deposited in a Blocked
Account shall immediately become the sole property of FINOVA and Borrower shall
obtain the agreement by such bank to waive any offset rights against the funds
so deposited. FINOVA assumes no responsibility for any Blocked Account
arrangement, including without limitation, any claim of accord and satisfaction
or release with respect to deposits accepted by any bank thereunder.
Alternatively, FINOVA may establish depository accounts in the name of FINOVA
at a bank or banks for the deposit of such funds (each, a "DOMINION ACCOUNT")
and Borrower shall deposit all proceeds of Receivables and all cash proceeds of
any sale of Inventory or, to the extent permitted herein, Equipment or cause
same to be deposited, in kind, in such Dominion Accounts of FINOVA in lieu of
depositing same to Blocked Accounts, and, unless otherwise provided herein, all
such funds shall be applied by FINOVA to the Obligations in such order as
FINOVA determines in its sole discretion.
(d) Payments Without Deductions. Borrower shall pay principal, interest,
and all other amounts payable hereunder, or under any other Loan Document,
without any deduction whatsoever, including, but not limited to, any deduction
for any setoff or counterclaim.
(e) Collection Days Upon Repayment. In the event Borrower repays the
Obligations in full at any time hereafter, such payment in full shall be
credited (conditioned upon final collection) to Borrower's loan account three
(3) Business Days after FINOVA's receipt thereof.
(f) Monthly Accountings. FINOVA shall provide Borrower monthly with an
account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated
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(except for reverses and reapplications of payments made and corrections of
errors discovered by FINOVA), unless Borrower notifies FINOVA in writing to the
contrary within thirty (30) days after each account is rendered, describing the
nature of any alleged errors or admissions.
2.11 Application of Collateral. Except as otherwise provided herein,
FINOVA shall have the continuing and exclusive right to apply or reverse and
re-apply any and all payments to any portion of the Obligations in such order
and manner as FINOVA shall determine in its sole discretion. To the extent
that Borrower makes a payment or FINOVA receives any payment or proceeds of the
Collateral for Borrower's benefit which is subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, debtor in possession, receiver or any other party under any bankruptcy
law, common law or equitable cause, or otherwise, then, to such extent, the
Obligations or part thereof intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by FINOVA.
2.12 Application of Payments. The amount of all payments or amounts
received by FINOVA with respect to the Loan shall be applied to the extent
applicable under this Agreement: (i) first, to accrued interest through the
date of such payment, including any Default Interest; (ii) then, to any late
fees, overdue risk assessments, Examination Fee and expenses, collection fees
and expenses and any other fees and expenses due to FINOVA hereunder; and (iii)
last, the remaining balance, if any, to the unpaid principal balance of the
Loan; provided however, while an Event of Default exists under this Agreement,
or under any other Loan Document, each payment hereunder shall be (x) held as
cash collateral to secure Obligations relating to any contingent obligations
arising under the Loan Documents and/or (y) applied to amounts owed to FINOVA
by Borrower as FINOVA in its sole discretion may determine. In calculating
interest and applying payments as set forth above: (a) interest shall be
calculated and collected through the date a payment is actually applied by
FINOVA under the terms of this Agreement; (b) interest on the outstanding
balance shall be charged during any grace period permitted hereunder; (c) at
the end of each month, all accrued and unpaid interest and other charges
provided for hereunder shall be added to the principal balance of the Loan; and
(d) to the extent that Borrower makes a payment or FINOVA receives any payment
or proceeds of the Collateral for Borrower's benefit that is subsequently
invalidated, set aside or required to be repaid to any other Person, then, to
such extent, the Obligations intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by FINOVA and
FINOVA may adjust the Loan balances as FINOVA, in its sole discretion, deems
appropriate under the circumstances.
2.13 Notification of Closing. Borrower shall provide FINOVA with at least
forty-eight (48) hours prior written notice of the Closing Date, to enable
FINOVA to arrange for the availability of funds. In the event the closing does
not take place on the date specified in Borrower's notice to FINOVA, other than
through the fault of FINOVA, Borrower agrees to reimburse FINOVA for FINOVA's
costs to maintain the necessary funds available for the closing, at the Term
Interest Rate with respect to the amount specified in the Schedule, and at the
Revolving Interest Rate with respect to an amount equal to the initial advance
under the Revolving Credit Loans facility which is to be made on the Closing
Date, for the number of days which elapse between the date specified in
Borrower's notice and the date upon which the closing actually occurs (which
number of days shall not include the date specified in Borrower's notice, but
shall include the Closing Date).
3. SECURITY.
3.1 Security Interest in the Collateral. To secure the payment and
performance of the Obligations when due, Borrower hereby grants to FINOVA a
first priority security interest (subject only to Permitted Encumbrances) in
all of Borrower's now owned or hereafter acquired or arising Inventory,
Equipment, Receivables, life insurance policies and the proceeds thereof,
Trademarks, Copyrights, Licenses and Patents, Investment Property (as defined
in Section 9-115 of the Code), General Intangibles, including, without
limitation, all of Borrower's Deposit Accounts, money, any and all property now
or at any time hereafter in FINOVA's possession (including claims and credit
balances), and all real properties owned by Borrower listed on Exhibit 3.1
hereto, and all proceeds (including proceeds of any insurance policies,
proceeds of proceeds and claims against third parties), all products and all
books and records and computer data related to any of the foregoing (all of the
foregoing, together with all other property in which FINOVA may be granted a
lien or security interest, is referred to herein, collectively, as the
"COLLATERAL").
3.2 Perfection and Protection of Security Interest. Borrower shall, at
its expense, take all actions requested by FINOVA at any time to perfect,
maintain, protect and enforce FINOVA's first priority security interest and
other rights in the Collateral and the priority thereof from time to time,
including, without limitation, (i) executing and filing financing or
continuation statements and amendments thereof and executing and delivering
such documents and titles in connection with
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motor vehicles as FINOVA shall require, all in form and substance satisfactory
to FINOVA, (ii) maintaining a perpetual inventory and complete and accurate
stock records, (iii) delivering to FINOVA warehouse receipts covering any
portion of the Collateral located in warehouses and for which warehouse
receipts are issued, and transferring Inventory to warehouses designated by
FINOVA, (iv) placing notations on Borrower's books of account to disclose
FINOVA's security interest therein and (v) delivering to FINOVA all letters of
credit on which Borrower is named beneficiary. FINOVA may file, without
Borrower's signature, one or more financing statements disclosing FINOVA's
security interest under this Agreement. Borrower agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement. If any Collateral
is at any time in the possession or control of any warehouseman, bailee or any
of Borrower's agents or processors, Borrower shall notify such Person of
FINOVA's security interest in such Collateral and, upon FINOVA's request,
instruct them to hold all such Collateral for FINOVA's account subject to
FINOVA's instructions. From time to time, Borrower shall, upon FINOVA's
request, execute and deliver confirmatory written instruments pledging the
Collateral to FINOVA, but Borrower's failure to do so shall not affect or limit
FINOVA's security interest or other rights in and to the Collateral. Until the
Obligations have been fully satisfied and FINOVA's obligation to make further
advances hereunder has terminated, FINOVA's security interest in the Collateral
shall continue in full force and effect.
3.3 Preservation of Collateral. FINOVA may, in its Permitted Discretion,
at any time discharge any lien or encumbrance on the Collateral or bond the
same, pay any insurance, maintain guards, pay any service bureau, obtain any
record or take any other action to preserve the Collateral and charge the cost
thereof to Borrower's loan account as an Obligation.
3.4 Insurance. Borrower will maintain and deliver evidence to FINOVA of
such insurance as is required by FINOVA, written by insurers, in amounts, and
with lender's loss payee, additional insured, and other endorsements,
satisfactory to FINOVA. All premiums with respect to such insurance shall be
paid by Borrower as and when due. Accurate and certified copies of the
policies shall be delivered by Borrower to FINOVA. If Borrower fails to comply
with this Section, FINOVA may (but shall not be required to) procure such
insurance and endorsements at Borrower's expense and charge the cost thereof to
Borrower's loan account as an Obligation.
3.5 Collateral Reporting; Inventory.
(a) Invoices. Borrower shall not re-date any invoice or sale from the
original date thereof or make sales on extended terms beyond those customary in
Borrower's industry, or otherwise extend or modify the term of any Receivable.
If Borrower becomes aware of any matter affecting any Receivable, including
information affecting the credit of the account debtor thereon, Borrower shall
promptly notify FINOVA in writing.
(b) Instruments. In the event any Receivable is or becomes evidenced by a
promissory note, trade acceptance or any other instrument for the payment of
money, Borrower shall immediately deliver such instrument to FINOVA
appropriately endorsed to FINOVA and, regardless of the form of any
presentment, demand, notice of dishonor, protest and notice of protest with
respect thereto, Borrower shall remain liable thereon until such instrument is
paid in full.
(c) Physical Inventory. Borrower shall conduct a physical count of the
Inventory at such intervals as FINOVA requests and promptly supply FINOVA with
a copy of such accounts accompanied by a report of the value (calculated at the
lower of cost or market value on a first in, first out basis) of the Inventory
and such additional information with respect to the Inventory as FINOVA may
request from time to time.
(d) Returns. For so long as no Event of Default has occurred and is
continuing and subject to the provisions of Section 3.6(b), if any account
debtor returns any Inventory to Borrower in the ordinary course of its
business, Borrower shall promptly determine the reason for such return and
promptly issue a credit memorandum to the account debtor (sending a copy to
FINOVA) in the appropriate amount. In the event any attempted return occurs
after the occurrence of any Event of Default, Borrower shall (i) hold the
returned Inventory in trust for FINOVA, (ii) segregate all returned Inventory
from all of Borrower's other property, (iii) conspicuously label the returned
Inventory as FINOVA's property, and (iv) immediately notify FINOVA of the
return of any Inventory, specifying the reason for such return, the location
and condition of the returned Inventory, and on FINOVA's request deliver such
returned Inventory to FINOVA.
(e) Borrower shall not consign any Inventory.
3.6 Receivables.
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(a) Eligibility. (i) Borrower represents and warrants that each
Receivable covers and shall cover a bona fide sale or lease and delivery by it
of goods or the rendition by it of services in the ordinary course of its
business, and shall be for a liquidated amount and FINOVA's security interest
shall not be subject to any offset, deduction, counterclaim, rights of return
or cancellation, lien or other condition. If any representation or warranty
herein is breached as to any Receivable or any Receivable ceases to be an
Eligible Receivable for any reason other than payment thereof, then FINOVA may,
in addition to its other rights hereunder, designate any and all Receivables
owing by that account debtor as not Eligible Receivables; provided, that FINOVA
shall in any such event retain its security interest in all Receivables,
whether or not Eligible Receivables, until the Obligations have been fully
satisfied and FINOVA's obligation to provide loans hereunder has terminated.
(ii) FINOVA at any time shall be entitled to (i) establish and increase or
decrease reserves against Eligible Receivables and Eligible Inventory, (ii)
reduce the advance rates in the Schedule or restore such advance rates to any
level equal to or below the advance rates set forth in the Schedule or (iii)
impose additional restrictions (or eliminate the same) to the standards of
eligibility set forth in the definitions of "Eligible Receivables" and
"Eligible Inventory," in the exercise of its Permitted Discretion. FINOVA may
but shall not be required to rely on the schedules an/or reports delivered to
FINOVA in connection herewith in determining the then eligibility of
Receivables and Inventory. Reliance thereon by FINOVA from time to time shall
not be deemed to limit the right of FINOVA to revise advance rates or standards
of eligibility as provided above.
(b) Disputes. Borrower shall notify FINOVA promptly of all disputes or
claims and settle or adjust such disputes or claims at no expense to FINOVA,
but no discount, credit or allowance shall be granted to any account debtor and
no returns of merchandise shall be accepted by Borrower without FINOVA's
consent, except for discounts, credits and allowances made or given in the
ordinary course of Borrower's business. FINOVA may, at any time after the
occurrence of an Event of Default, settle or adjust disputes or claims directly
with account debtors for amounts and upon terms which FINOVA considers
advisable in its reasonable credit judgment and, in all cases, FINOVA shall
credit Borrower's loan account with only the net amounts received by FINOVA in
payment of any Receivables.
3.7 Equipment. Borrower shall keep and maintain the Equipment in good
operating condition and repair and make all necessary replacements thereto to
maintain and preserve the value and operating efficiency thereof at all times
consistent with Borrower's past practice, ordinary wear and tear excepted.
Borrower shall not permit any item of Equipment to become a fixture (other than
a trade fixture) to real estate or an accession to other property.
3.8 Other Liens; No Disposition of Collateral. Borrower represents,
warrants and covenants that except for FINOVA's security interest, Permitted
Encumbrances, and such other liens, claims and encumbrances as may be permitted
by FINOVA in its sole discretion from time to time in writing, (a) all
Collateral is and shall continue to be owned by it free and clear of all liens,
claims and encumbrances whatsoever and (b) Borrower shall not, without FINOVA's
prior written approval, sell, encumber or dispose of or permit the sale,
encumbrance or disposal of any Collateral or all or any substantial part of any
of its other assets (or any interest of Borrower therein), except for the sale
of Inventory in the ordinary course of Borrower's business. In the event
FINOVA gives any such prior written approval with respect to any such sale of
Collateral, the same may be conditioned on the sale price being equal to, or
greater than, an amount acceptable to FINOVA. The proceeds of any such sales
of Collateral, net of customary and reasonable costs and expenses of sale owing
by Borrower, ("NET SALE PROCEEDS") shall be remitted to FINOVA pursuant to this
Agreement for application to the Obligations.
3.9 Collateral Security. The Obligations shall constitute one loan
secured by the Collateral. FINOVA may, in its sole discretion, (i) exchange,
waive or release any of the Collateral, (ii) apply Collateral and direct the
order or manner of sale thereof as it may determine, and (iii) after providing
Borrower notice of the occurrence of an Event of Default, settle, compromise,
enforce, collect or otherwise liquidate any Collateral in any manner without
affecting its right to take any other action with respect to any other
Collateral.
4. CONDITIONS OF CLOSING.
4.1 Initial Advance. The obligation of FINOVA to make the initial advance
hereunder is subject to the fulfillment, to the satisfaction of FINOVA and its
counsel, of each of the following conditions on or prior to the date set forth
on the Schedule:
(a) Loan Documents. FINOVA shall have received each of the following Loan
Documents: (i) the Agreement fully and properly executed by Borrower; (ii)
promissory notes in such amounts and on such terms and conditions as FINOVA
shall specify, executed by Borrower; (iii) Validity and Support Agreements
executed by the applicable parties; (iv) such security agreements,
intellectual property assignments, pledge
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agreements, mortgages and deeds of trust as FINOVA may require with respect to
this Agreement, executed by each of the parties thereto and, if applicable,
duly acknowledged for recording or filing in the appropriate governmental
offices; (v) Subordination Agreements in form and substance acceptable to
FINOVA, executed by each of the Subordinating Creditors, together with copies
of all instruments subject thereto showing a legend indicating such
subordination; (vi) such Blocked Account or Dominion Account agreements as it
shall determine; and (vii) such other documents, instruments and agreements
in connection herewith as FINOVA shall require, executed, certified and/or
acknowledged by such parties as FINOVA shall designate;
(b) Minimum Excess Availability. Borrower shall have Excess Availability
under the Revolving Credit Loans facility of not less than the amount specified
in the Schedule, after giving effect to the initial advance hereunder and after
giving effect to any applicable Loan Reserves against borrowing availability
under the Revolving Credit Loans.
(c) Terminations by Existing Lender. Borrower's existing lender(s) shall
have executed and delivered UCC termination statements and other documentation
evidencing the termination of its liens and security interests in the assets of
Borrower or a subordination agreement in form and substance satisfactory to
FINOVA in its sole discretion;
(d) Charter Documents. FINOVA shall have received copies of Borrower's
By-laws and Articles or Certificate of Incorporation, as amended, modified, or
supplemented to the Closing Date, certified by the Secretary of Borrower;
(e) Good Standing. FINOVA shall have received a certificate of corporate
status with respect to Borrower, dated within ten (10) days of the Closing
Date, by the Secretary of State of the state of incorporation of Borrower,
which certificate shall indicate that Borrower is in good standing in such
state;
(f) Foreign Qualification. FINOVA shall have received certificates of
corporate status with respect to Borrower and each other Loan Party, each dated
within ten (10) days of the Closing Date, issued by the Secretary of State of
each state in which such party's failure to be duly qualified or licensed would
have a material adverse effect on its financial condition or assets, indicating
that such party is in good standing;
(g) Authorizing Resolutions and Incumbency. FINOVA shall have received a
certificate from the Secretary of Borrower attesting to (i) the adoption of
resolutions of Borrower's Board of Directors, and shareholders or members if
necessary, authorizing the borrowing of money from FINOVA and execution and
delivery of this Agreement and the other Loan Documents to which Borrower is a
party, and authorizing specific officers of Borrower to execute same, and (ii)
the authenticity of original specimen signatures of such officers;
(h) Insurance. FINOVA shall have received the insurance certificates and
certified copies of policies required by Section 3.4 hereof, in form and
substance satisfactory to FINOVA and its counsel, together with an additional
insured endorsement in favor of FINOVA with respect to all liability policies
and a lender's loss payable endorsement in favor of FINOVA with respect to all
casualty and business interruption policies, each in form and substance
acceptable to FINOVA and its counsel;
(i) Title Insurance. FINOVA shall have received binding commitments to
issue such title insurance with respect to Collateral which is comprised of
real property as it shall determine;
(j) Searches; Certificates of Title. FINOVA shall have received searches
reflecting the filing of its financing statements and fixture filings in such
jurisdictions as it shall determine, and shall have received certificates of
title with respect to the Collateral which shall have been duly executed in a
manner sufficient to perfect all of the security interests granted to FINOVA;
(k) Landlord, Bailee and Mortgagee Waivers. FINOVA shall have received
landlord, bailee and/or mortgagee waivers from the lessors, bailees and/or
mortgagees of all locations where any Collateral is located;
(l) Fees. Borrower shall have paid all fees payable by it on the Closing
Date pursuant to this Agreement;
(m) Opinion of Counsel. FINOVA shall have received an opinion of
Borrower's counsel covering such matters as FINOVA shall determine in its sole
discretion;
(n) Officer Certificate. FINOVA shall have received a certificate of the
President and the Chief Financial Officer or similar official of Borrower,
attesting to the accuracy of each of the representations and warranties of
Borrower set forth in this Agreement and the fulfillment of all conditions
precedent to the initial advance hereunder;
(o) Solvency Certificate. If requested, FINOVA shall have received a
signed certificate of the Borrower's duly elected Chief Financial Officer
concerning the solvency and financial condition of Borrower, on FINOVA's
standard form;
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(p) Blocked Account. The Blocked Account referred to in Section 2.10(c)
hereof shall have been established to the satisfaction of FINOVA in its sole
discretion;
(q) Environmental Assessment. If required by FINOVA, Borrower shall have
caused a Phase I Environmental Assessment to be conducted on the property or
properties owned or occupied by Borrower, all at Borrower's own expense and the
results of such assessment(s) shall have been in form and substance
satisfactory to FINOVA in its sole discretion. Such assessment(s) shall have
included, in FINOVA's discretion, core samplings, and shall have been conducted
by an environmental engineer acceptable to FINOVA;
(r) Environmental Certificate. FINOVA shall have received an
Environmental Certificate from Borrower, in form and substance satisfactory to
FINOVA in its discretion, with respect to all locations of Collateral;
(s) Search and References. FINOVA shall have received and approved the
results of UCC, tax lien, litigation, judgment, and bankruptcy searches
regarding Borrower and such members of the senior management of Borrower as
FINOVA shall determine and shall have received satisfactory customer, vendor
and credit reference checks on Borrower.
(t) Initial Public Offering. Borrower shall have successfully completed
an initial public offering of its common stock and warrants and received net
cash proceeds of not less than $6,000,000 after payment of all expenses and
fees related thereto, including all amounts payable to Borrower's underwriters.
(u) Life Insurance. FINOVA shall require that Borrower maintain a life
insurance policy on the life of the persons specified in the Schedule in an
amount specified in the Schedule (the "LIFE INSURANCE POLICY"). The Life
Insurance Policy shall be collaterally assigned to FINOVA (pursuant to an
assignment in form satisfactory to FINOVA, hereinafter referred to as the
"ASSIGNMENT OF LIFE INSURANCE") and be accepted and acknowledged in writing by
the applicable insurer or its authorized representative. Borrower hereby
grants to FINOVA a security interest in the Life Insurance Policy, all
replacements thereof, any supplementary contract issued in connection
therewith, and all proceeds of the foregoing (including without limitation, the
beneficiary's interest therein, collectively referred to as the "INSURANCE
COLLATERAL") to secure Borrower's payment and performance of all the
Obligations. The insurer under the Life Insurance Policy and the terms and
conditions of the Life Insurance Policy are subject to the approval of FINOVA.
The original of the policy evidencing the Life Insurance Policy, signed by an
authorized insurance company representative, shall be delivered to FINOVA at
the closing together with a duly executed Collateral Assignment of Life
Insurance which has been accepted and acknowledged in writing by the applicable
insurer or its authorized representative. The Life Insurance Policy shall
require the insurer to provide FINOVA with thirty (30) days advance written
notice of any cancellation and/or any material change in coverage. Borrower
warrants and represents that it is and will be (throughout the entire term of
the Loan) the owner and beneficiary of the Life Insurance Policy.
Notwithstanding anything herein to the contrary, upon the maturity of the Life
Insurance Policy or upon the death of the individual insured, the proceeds of
the Life Insurance Policy shall be paid directly to FINOVA, shall (at the
option of FINOVA) be treated as a prepayment and, if treated as a prepayment,
shall be applied in order against (a) all of Borrower's Obligations, other than
as set forth in the remaining subsections of this paragraph, (b) all costs and
expenses of FINOVA in connection with such prepayment, (c) accrued interest,
and (d) the unpaid principal balance of the Loans in such manner as FINOVA
shall elect. No prepayment premium or Termination Fee shall be due and owing
in connection with such prepayment. To the extent that the proceeds of said
Life Insurance Policy exceed the amount of Borrower's Obligations, any such
excess shall be paid by FINOVA directly to Borrower. Notwithstanding anything
to the contrary herein, the obligations, undertakings and representations of
Borrower under this Section 4.1(u) shall survive the Closing Date and shall be
a continuing obligation and agreement of Borrower hereunder.
(v) No Material Adverse Changes. Prior to the Closing Date, there shall
have occurred no material adverse change in the financial condition of Borrower
from that shown on the financial statements for Borrower set forth in the
Registration Statement. At the closing, Borrower shall deliver to FINOVA an
officer's certification confirming that Borrower is unaware of the existence of
any such material adverse change in Borrower's financial condition.
(w) Material Agreements. FINOVA shall have received, reviewed and
approved all material agreements to which Borrower shall be a party, including
without limitation, Borrower's product purchasing agreement with A.P.S., Inc.
(x) Projections. Borrower shall submit cash flow projections and pro
forma balance sheet with adjusting entries (i) showing that the proposed
financing will provide sufficient funds for the Borrower's projected working
capital needs, and (ii) showing: (1) that the Borrower will have reasonably
sufficient capital for the conduct of its business following the initial
funding, and
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(2) that the Borrower will not incur debts beyond its ability to pay such debts
as they mature.
(y) Opinions. To the extent any Person other than Borrower shall be
parties to the Loan Documents, FINOVA reserves the right to require
satisfactory opinions of counsel for each such Person concerning the proper
organization of such Person and the due authorization, execution, delivery,
enforceability, validity and binding effect of the Loan Documents to which such
Person is a party. Each such opinion of counsel shall confirm, to the
satisfaction of FINOVA, that the opinion is being delivered to FINOVA at the
instruction of the party represented by such counsel, that FINOVA is entitled
to rely on such opinion and that for purposes of such reliance, FINOVA is
deemed to be in privity with the opining counsel.
(z) ADA Compliance. If necessary, as of the Closing Date, Borrower shall
be in compliance with the Americans with Disabilities Act of 1990 ("ADA"), or,
if any renovations of Borrower's facilities or modifications of Borrower's
employment practices shall be required to bring them into compliance with the
ADA, review and approval by FINOVA of Borrower's proposed plan to come into
such compliance. Borrower shall deliver representations and warranties to
FINOVA concerning Borrower's compliance with the ADA, and no evidence shall
have come to the attention of FINOVA indicating that Borrower is not in
compliance with the ADA (except to the extent that FINOVA has reviewed and
approved Borrower's plan to come into compliance).
(aa) Subordination and Intercreditor Agreements. FINOVA and each
Subordinating Creditor shall have entered into a Subordination Agreement, in
form and substance satisfactory to FINOVA.
(bb) Asset Appraisal. Borrower shall have provided to FINOVA, at
Borrower's sole cost and expense, an asset appraisal of all Borrower's fixed
assets, real estate and rolling stock upon which FINOVA shall be granted a
first priority lien and security interest, which appraisal must be acceptable
to FINOVA, in its sole discretion, in all respects.
(cc) Taxes. FINOVA shall be satisfied that upon giving effect to the
initial public offering contemplated by the Registration Statement and the
application of proceeds therefrom, all due but unpaid tax obligations owing by
Borrower to any governmental authority (including all interest, penalties, and
related expenses accruing with respect thereto) shall be satisfied in full.
(dd) APS and Xxxxxx Debt. FINOVA shall be satisfied that upon giving
effect to the initial public offering contemplated by the Registration
Statement, the application of proceeds therefrom and the application of the
proceeds from the initial advance hereunder, all amounts due to under
Borrower's existing credit facilities with A.P.S., Inc. and its affiliates and
all outstanding loans owing to Xxxxxx X. Xxxxxx III shall be paid in full and
all obligations of, and Liens granted by, Borrower thereunder shall be
terminated and released.
(ee) Application of IPO Proceeds. FINOVA shall have received and deemed
acceptable a written accounting of the application of the proceeds of the
initial public offering contemplated by the Registration Statement and shall be
satisfied that Borrower has received the proceeds of such initial public
offering.
(ff) Transaction Costs. Borrower shall provide to FINOVA a complete,
itemized summary of all transaction costs paid or incurred by any Person in
connection with the making of the Loan and the consummation of the initial
public offering contemplated by the Registration Statement, which transaction
costs shall not exceed the amount set forth in the Schedule, as well as
appropriate documentation evidencing such costs and the payment thereof. All
such information must be acceptable to FINOVA, in FINOVA's sole discretion,
exercised in good faith.
(gg) Schedule Conditions. Borrower shall have complied with all
additional conditions precedent as set forth in the Schedule attached hereto.
(hh) Other Matters. All other documents and legal matters in connection
with the transactions contemplated by this Agreement shall have been delivered,
executed and recorded and shall be in form and substance satisfactory to FINOVA
and its counsel including, without limitation, each of the items listed on the
Closing Checklist attached as EXHIBIT 4.1 hereto.
4.2 Subsequent Advances. The obligation of FINOVA to make any advance
hereunder (including the initial advance) shall be subject to the further
conditions precedent that, on and as of the date of such advance: (a) the
representations and warranties of Borrower set forth in this Agreement shall be
accurate, before and after giving effect to such advance or issuance and to the
application of any proceeds thereof; (b) no Event of Default and no event
which, with notice or passage of time or both, would constitute an Event of
Default has occurred and is continuing, or would result from such advance or
issuance or from the application of any proceeds thereof; (c) no material
adverse change has occurred in the Borrower's business, operations, financial
condition, in the condition of the Collateral or other assets of Borrower or in
the prospect of repayment of the Obligations; and (d) FINOVA shall have
received such
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other approvals, opinions or documents as FINOVA shall reasonably request.
5. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants that:
5.1 Due Organization. It is a corporation duly organized, validly
existing and in good standing under the laws of the State set forth on the
Schedule, is qualified and authorized to do business and is in good standing in
all states in which such qualification and good standing are necessary in order
for it to conduct its business and own its property, and has all requisite
power and authority to conduct its business as presently conducted, to own its
property and to execute and deliver each of the Loan Documents to which it is a
party and perform all of its Obligations thereunder, and has not taken any
steps to wind-up, dissolve or otherwise liquidate its assets;
5.2 Other Names. Borrower has not, during the preceding five (5) years,
been known by or used any other corporate or fictitious name except as set
forth on the Schedule, nor has Borrower been the surviving corporation of a
merger or consolidation or acquired all or substantially all of the assets of
any Person during such time;
5.3 Due Authorization. The execution, delivery and performance by
Borrower of the Loan Documents to which it is a party have been authorized by
all necessary corporate action and do not and shall not constitute a violation
of any applicable law or of Borrower's Articles or Certificate of Incorporation
or By-Laws or any other document, agreement or instrument to which Borrower is
a party or by which Borrower or its assets are bound;
5.4 Binding Obligation. Each of the Loan Documents to which Borrower is a
party is the legal, valid and binding obligation of Borrower enforceable
against Borrower in accordance with its terms;
5.5 Intangible Property. Borrower possesses adequate assets, licenses,
patents, patent applications, copyrights, trademarks, trademark applications
and trade names for the present and planned future conduct of its business
without any known conflict with the rights of others, and each is valid and has
been duly registered or filed with the appropriate governmental authorities;
each of Borrower's patents, patent applications, copyrights, trademarks and
trademark applications which have been registered or filed with any
governmental authority (including the U.S. Patent and Trademark Office and the
Library of Congress) are listed by name, date and filing number on the
Schedule;
5.6 Capital. Borrower has capital sufficient to conduct its business, is
able to pay its debts as they mature, and owns property having a fair salable
value greater than the amount required to pay all of its debts (including
contingent debts);
5.7 Material Litigation. Borrower has no pending or overtly threatened
litigation, actions or proceedings which would materially and adversely affect
its business, assets, operations, prospects or condition, financial or
otherwise, or the Collateral or any of FINOVA's interests therein;
5.8 Title; Security Interests of FINOVA. Borrower has good, indefeasible
and merchantable title to the Collateral and, upon the execution and delivery
of the Loan Documents, the filing of UCC-1 Financing Statements, delivery of
the certificate(s) evidencing any pledged securities, the filing of any
collateral assignments or security agreements regarding Borrower, Trademarks,
Copyrights, Licenses and/or Patents, if any, with the appropriate governmental
offices and the recording of any mortgages or deeds of trust with respect to
real property, in each case in the appropriate offices, this Agreement and such
documents shall create valid and perfected first priority liens in the
Collateral, subject only to Permitted Encumbrances;
5.9 Restrictive Agreements; Labor Contracts. Borrower is not a party or
subject to any contract or subject to any charge, corporate restriction,
judgment, decree or order materially and adversely affecting its business,
assets, operations, prospects or condition, financial or otherwise, or which
restricts its right or ability to incur Indebtedness, and it is not party to
any labor dispute. In addition, no labor contract is scheduled to expire
during the Initial Term of this Agreement, except as disclosed to FINOVA in
writing prior to the date hereof;
5.10 Laws. Borrower is not in violation of any applicable statute,
regulation, ordinance or any order of any court, tribunal or governmental
agency, in any respect materially and adversely affecting the Collateral or its
business, assets, operations, prospects or condition, financial or otherwise;
5.11 Consents. Borrower has obtained or caused to be obtained or issued
any required consent of a governmental agency or other Person in connection
with the financing contemplated hereby;
5.12 Defaults. Borrower is not in default with respect to any note,
indenture, loan agreement, mortgage, lease, deed or other agreement to which it
is a party or by which it or its assets are bound, nor has any event
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occurred which, with the giving of notice or the lapse of time, or both, would
cause such a default;
5.13 Financial Condition. The Prepared Financials fairly present
Borrower's financial condition and results of operations and those of such
other Persons described therein as of the date thereof in accordance with GAAP;
there are no material omissions from the Prepared Financials or other facts or
circumstances not reflected in the Prepared Financials; and there has been no
material and adverse change in such financial condition or operations since the
date of the initial Prepared Financials delivered to FINOVA hereunder;
5.14 ERISA. None of Borrower, any ERISA Affiliate, or any Plan is or has
been in violation of any of the provisions of ERISA, any of the qualification
requirements of IRC Section 401(a) or any of the published interpretations
thereunder, nor has Borrower or any ERISA Affiliate received any notice to such
effect. No notice of intent to terminate a Plan has been filed under Section
4041 of ERISA, nor has any Plan been terminated under ERISA. The PBGC has not
instituted proceedings to terminate, or appointed a trustee to administer, a
Plan. No lien upon the assets of Borrower has arisen with respect to a Plan. No
prohibited transaction or Reportable Event has occurred with respect to a Plan.
Neither Borrower nor any ERISA Affiliate has incurred any withdrawal liability
with respect to any Multiemployer Plan. Borrower and each ERISA Affiliate have
made all contributions required to be made by them to any Plan or Multiemployer
Plan when due. There is no accumulated funding deficiency in any Plan, whether
or not waived;
5.15 Taxes. Borrower has filed all tax returns and such other reports as
it is required by law to file and has paid or made adequate provision for the
payment on or prior to the date when due of all taxes, assessments and similar
charges that are due and payable;
5.16 Locations; Federal Tax ID No. Borrower's chief executive office and
the offices and locations where it keeps the Collateral (except for Inventory
in transit) are at the locations set forth on the Schedule, except to the
extent that such locations may have been changed after notice to FINOVA in
accordance with Section 6.4 hereof; Borrower's federal tax identification
number is as shown on the Schedule;
5.17 Business Relationships. 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 and
adversely affect Borrower or prevent Borrower from conducting such business
after the consummation of the transactions contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted; and
5.18 Reaffirmations. Each request for a loan made by Borrower pursuant to
this Agreement shall constitute (i) an automatic representation and warranty by
Borrower to FINOVA that there does not then exist any Event of Default and (ii)
a reaffirmation as of the date of said request of all of the representations
and warranties of Borrower contained in this Agreement and the other Loan
Documents.
6. COVENANTS.
6.1 AFFIRMATIVE COVENANTS. Borrower covenants that, so long as any
Obligation remains outstanding and this Agreement is in effect, it shall:
6.1.1 Taxes. File all tax returns and pay or make adequate provision for
the payment of all taxes, assessments and other charges on or prior to the date
when due;
6.1.2 Notice of Litigation. Promptly notify FINOVA in writing of any
litigation, suit or administrative proceeding which may materially and
adversely affect the Collateral or Borrower's business, assets, operations,
prospects or condition, financial or otherwise, whether or not the claim is
covered by insurance;
6.1.3 ERISA. Notify FINOVA in writing (i) promptly upon the occurrence of
any event described in Paragraph 4043 of ERISA, other than a termination,
partial termination or merger of a Plan or a transfer of a Plan's assets and
(ii) prior to any termination, partial termination or merger of a Plan or a
transfer of a Plan's assets;
6.1.4 Change in Location. Notify FINOVA in writing forty-five (45) days
prior to any change in the location of Borrower's chief executive office or the
location of any Collateral, or Borrower's opening or closing of any other place
of business;
6.1.5 Corporate Existence. Maintain its corporate existence and its
qualification to do business and good standing in all states necessary for the
conduct of its business and the ownership of its property and maintain adequate
assets, licenses, patents, copyrights, trademarks and trade names for the
conduct of its business;
6.1.6 Labor Disputes. Promptly notify FINOVA in writing of any labor
dispute to which
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Borrower is or may become subject and the expiration of any labor contract to
which Borrower is a party or bound;
6.1.7 Violations of Law. Promptly notify FINOVA in writing of any
violation of any law, statute, regulation or ordinance of any governmental
entity, or of any agency thereof, applicable to Borrower which may materially
and adversely affect the Collateral or Borrower's business, assets, prospects,
operations or condition, financial or otherwise;
6.1.8 Defaults. Notify FINOVA in writing within five (5) Business Days of
Borrower's default under any note, indenture, loan agreement, mortgage, lease
or other agreement to which Borrower is a party or by which Borrower is bound,
or of any other default under any Indebtedness of Borrower;
6.1.9 Capital Expenditures. Promptly notify FINOVA in writing of the
making of any Capital Expenditure materially affecting Borrower's business,
assets, prospects, operations or condition, financial or otherwise, except to
the extent permitted in the Schedule;
6.1.10 Books and Records. 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 of its financial transactions;
6.1.11 Leases; Warehouse Agreements. Provide FINOVA with (i) copies of
all agreements between Borrower and any landlord, warehouseman or bailee which
owns any premises at which any Collateral may, from time to time, be located
(whether for processing, storage or otherwise), and (ii) without limiting the
landlord, bailee and/or mortgagee waivers to be provided pursuant to Section
4.1(j) hereof, additional landlord, bailee and/or mortgagee waivers in form
acceptable to FINOVA with respect to all locations where any Collateral is
hereafter located;
6.1.12 Additional Documents. At FINOVA's request, promptly execute or
cause to be executed and delivered to FINOVA any and all documents, instruments
or agreements deemed necessary by FINOVA to facilitate the collection of the
Obligations or the Collateral or otherwise to give effect to or carry out the
terms or intent of this Agreement or any of the other Loan Documents. Without
limiting the generality of the foregoing, if any of the Receivables with a face
value in excess of $1,000 arises out of a contract with the United States of
America or any department, agency, subdivision or instrumentality thereof,
Borrower shall promptly notify FINOVA of such fact in writing and shall execute
any instruments and take any other action required or requested by FINOVA to
comply with the provisions of the Federal Assignment of Claims Act;
6.1.13 Financial Covenants. Comply with the financial covenants set forth
on the Schedule; and
6.1.14 Chief Financial Officer. Engage a new Chief Financial Officer
within 180 days following the Closing Date and continue to employ a Chief
Financial Officer at all times thereafter.
6.2 NEGATIVE COVENANTS. Without FINOVA's prior written consent, which
consent FINOVA may withhold in its sole discretion, so long as any Obligation
remains outstanding and this Agreement is in effect, Borrower shall not:
6.2.1 Mergers. Merge or consolidate with or acquire any other Person, or
make any other material change in its capital structure or in its business or
operations which might adversely affect the repayment of the Obligations;
6.2.2 Loans. Make advances, loans or extensions of credit to, or invest in,
any Person, except for loans or cash advances to employees which are
permitted in the Schedule;
6.2.3 Dividends. Declare or pay cash dividends upon any of its stock or
distribute any of its property or redeem, retire, purchase or acquire
directly or indirectly any of its stock;
6.2.4 Adverse Transactions. Enter into any transaction which materially and
adversely affects the Collateral or its ability to repay the Obligations
in full as and when due;
6.2.5 Indebtedness of Others. Guarantee or become directly or
contingently liable for the Indebtedness of any Person, except by endorsement
of instruments for deposit and except for the existing guarantees made by
Borrower prior to the date hereof, if any, which are set forth in the Schedule;
6.2.6 Repurchase. Make a sale to any customer on a xxxx-and-hold,
guaranteed sale, sale and return, sale on approval, consignment, or any other
repurchase or return basis (other than return rights normally provided to
retail and wholesale customers in the ordinary course of Borrower's business
provided such returns occasioned by such return rights do not exceed $1,000 in
any five (5) Business Day period with respect to any particular customer);
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6.2.7 Name. Use any corporate or fictitious name other than its corporate
name as set forth in its Articles or Certificate of Incorporation on the date
hereof or as set forth on the Schedule;
6.2.8 Prepayment. Prepay any Indebtedness other than trade payables and
other than the Obligations;
6.2.9 Capital Expenditure. Make or incur any Capital Expenditure if,
after giving effect thereto, the aggregate amount of all Capital Expenditures
by Borrower in any fiscal year would exceed the amount set forth on the
Schedule;
6.2.10 Compensation. Pay total compensation, including salaries,
withdrawals, fees, bonuses, commissions, drawing accounts and other payments,
whether directly or indirectly, in money or otherwise, during any fiscal year
to all of Borrower's executives, officers and directors (or any relative
thereof) in an amount in excess of the amount set forth on the Schedule;
6.2.11 Indebtedness. Create, incur, assume or permit to exist any
Indebtedness (including Indebtedness in connection with Capital Leases) in
excess of the amount set forth on the Schedule, other than (i) the Obligations,
(ii) trade payables and other contractual obligations to suppliers and
customers incurred in the ordinary course of business, and (iii) other
Indebtedness existing on the date of this Agreement and reflected in the
Prepared Financials (except Indebtedness paid on the date of this Agreement
from proceeds of the initial advances hereunder), and (iv) Subordinated Debt;
6.2.12 Affiliate Transactions. Except as set forth below, sell, transfer,
distribute or pay any money or property to any Affiliate, or invest in (by
capital contribution or otherwise) or purchase or repurchase any stock or
Indebtedness, or any property, of any Affiliate, or become liable on any
guaranty of the indebtedness, dividends or other obligations of any Affiliate.
Notwithstanding the foregoing, Borrower may pay compensation permitted by
Section 6.2.10 to employees who are Affiliates and, if no Event of Default has
occurred, Borrower may (i) engage in transactions with Affiliates in the normal
course of business, in amounts and upon terms which are fully disclosed to
FINOVA and which are no less favorable to Borrower than would be obtainable in
a comparable arm's length transaction with a Person who is not an Affiliate,
and (ii) make payments to a Subordinating Creditor that is an Affiliate,
subject to and only to the extent expressly permitted in the Subordination
Agreement between such Subordinating Creditor and FINOVA;
6.2.13 Nature of Business. Enter into any new business or make any
material change in any of Borrower's business objectives, purposes or
operations;
6.2.14 FINOVA's Name. Use the name of FINOVA in connection with any of
Borrower's business or activities, except in connection with internal business
matters or as required in dealings with governmental agencies and financial
institutions or with trade creditors of Borrower, solely for credit reference
purposes; or
6.2.15 Margin Security. Borrower will not (and has not in the past)
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation G or Regulation U issued by the Board of Governors of
the Federal Reserve System), and no proceeds of any Loan or other advance will
be used to purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any margin stock, or in any manner which
might cause such Loan or other advance or the application of such proceeds to
violate (or require any regulatory filing under) Regulation G, Regulation T,
Regulation U, Regulation X or any other regulation of the Board of Governors of
the Federal Reserve System, in each case as in effect on the date or dates of
such Loan or other advance and such use of proceeds. Further, no proceeds of
any Loan or other advance will be used to acquire any security of a class which
is registered pursuant to Section 12 of the Securities Exchange Act of 1934.
6.2.16 Real Property. Purchase or acquire any real property without
FINOVA's prior written consent, a condition of which consent shall include
delivery of appropriate environmental reports and analysis, in form and
substance satisfactory to FINOVA and its counsel.
6.2.17 Supply Agreement. Permit the product purchasing agreement with
A.P.S., Inc. to be terminated prior to its stated term or to be amended or
otherwise modified in any respect on terms materially less favorable to
Borrower than the terms existing as of the Closing Date (after giving effect to
the repayment of indebtedness owing to A.P.S., Inc. and its Affiliates with the
proceeds of Borrower's initial public offering pursuant to the Registration
Statement) unless, in the case of any such termination, Borrower obtains a new
supply agreement on terms and conditions and with an alternate vendor deemed
acceptable by FINOVA within 10 days of the date of such termination.
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7. DEFAULT AND REMEDIES.
7.1 Events of Default. Any one or more of the following events shall
constitute an Event of Default under this Agreement:
(a) Borrower fails to pay when due and payable any portion of the
Obligations at stated maturity, upon acceleration or otherwise;
(b) Borrower or any other Loan Party fails or neglects to perform, keep,
or observe any Obligation including, but not limited to, any term, provision,
condition, covenant or agreement contained in any Loan Document to which
Borrower or such other Loan Party is a party; provided that Borrower's failure
to timely comply with the provisions of (1) Section 9.1(b)(iv) and 9.1(b)(v)
which relate to the delivery of monthly or annual financial statements, (2)
Section 6.1.3 with regard to the provision of notice regarding certain ERISA
matters, (3) Section 6.1.4 with regard to prior notice of changes in location,
or (4) Section 6.1.11 with regard to providing copies of certain agreements and
waivers regarding warehouse, bailee and/or leased locations shall not, in the
case of any of items (1)-(4) above, constitute an Event of Default under this
clause (b) unless the same remains unremedied or uncured for a period of 10
days after the initial occurrence of such noncompliance; provided further that
in the event the Borrower fails to comply with the financial covenant for the
"Current Ratio " described in Section 6.1.13 of the Schedule, Borrower shall
have fifteen (15) days to cure such failure to the satisfaction of FINOVA in
its sole discretion before such noncompliance results in an Event of Default
under this clause (b);
(c) Any material adverse change occurs in Borrower's business, assets,
operations, prospects or condition, financial or otherwise;
(d) The prospect of repayment of any portion of the Obligations or the
value or priority of FINOVA's security interest in the Collateral is materially
impaired;
(e) Any portion of Borrower's assets is seized, attached, subjected to a
writ or distress warrant, is levied upon or comes into the possession of any
judicial officer;
(f) Borrower shall generally not pay its debts as they become due or shall
enter into any agreement (whether written or oral), or offer to enter into any
agreement, with all or a significant number of its creditors regarding any
moratorium or other indulgence with respect to its debts or the participation
of such creditors or their representatives in the supervision, management or
control of the business of Borrower;
(g) Any bankruptcy or other insolvency proceeding is commenced by
Borrower, or any such proceeding is commenced against Borrower and remains
undischarged or unstayed for forty-five (45) days;
(h) Any notice of lien, levy or assessment is filed of record with respect
to any of Borrower's assets;
(i) Any judgments are entered against Borrower in an aggregate amount
exceeding $25,000 in any fiscal year;
(j) Any default shall occur under (i) any material agreement between
Borrower and any third party including, without limitation, any default which
would result in a right by such third party to accelerate the maturity of any
Indebtedness of Borrower to such third party, or (ii) any Subordinated Debt;
(k) Any representation or warranty made or deemed to be made by Borrower,
any Affiliate or any other Loan Party in any Loan Document or any other
statement, document or report made or delivered to FINOVA in connection
therewith shall prove to have been misleading in any material respect;
(l) Any Guarantor dies, terminates or attempts to terminate its Guaranty
or any security therefor or becomes subject to any bankruptcy or other
insolvency proceeding;
(m) Any Prohibited Transaction or Reportable Event shall occur with
respect to a Plan which could have a material adverse effect on the financial
condition of Borrower; any lien upon the assets of Borrower in connection with
any Plan shall arise; Borrower or any of its ERISA Affiliates shall fail to
make full payment when due of all amounts which Borrower or any of its ERISA
Affiliates may be required to pay to any Plan or any Multiemployer Plan as one
or more contributions thereto; Borrower or any of its ERISA Affiliates creates
or permits the creation of any accumulated funding deficiency, whether or not
waived; or
(n) Any Change of Control shall occur.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, FINOVA RESERVES THE RIGHT
TO CEASE MAKING ANY LOANS DURING ANY CURE PERIOD STATED ABOVE, AND THEREAFTER
IF AN EVENT OF DEFAULT HAS OCCURRED.
7.2 Remedies. Upon the occurrence of an Event of Default, FINOVA may, at
its option and in its sole discretion and in addition to all of its other
rights under the Loan Documents, cease making Loans, terminate this Agreement
and/or declare all of the Obligations to be immediately payable in full.
Borrower
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agrees that FINOVA shall also have all of its rights and remedies under
applicable law, including, without limitation, the default rights and remedies
of a secured party under the Code, and upon the occurrence of an Event of
Default Borrower hereby consents to the appointment of a receiver by FINOVA in
any action initiated by FINOVA pursuant to this Agreement and to the
jurisdiction and venue set forth in Section 9.25 hereof, and Borrower waives
notice and posting of a bond in connection therewith. Further, FINOVA may, at
any time, take possession of the Collateral and keep it on Borrower's premises,
at no cost to FINOVA, or remove any part of it to such other place(s) as FINOVA
may desire, or Borrower shall, upon FINOVA's demand, at Borrower's sole cost,
assemble the Collateral and make it available to FINOVA at a place reasonably
convenient to FINOVA. FINOVA may sell and deliver any Collateral at public or
private sales, for cash, upon credit or otherwise, at such prices and upon such
terms as FINOVA deems advisable, at FINOVA's discretion, and may, if FINOVA
deems it reasonable, postpone or adjourn any sale of the Collateral by an
announcement at the time and place of sale or of such postponed or adjourned
sale without giving a new notice of sale. Borrower agrees that FINOVA has no
obligation to preserve rights to the Collateral or xxxxxxxx any Collateral for
the benefit of any Person. FINOVA is hereby granted a license or other right
to use, without charge, Borrower's labels, patents, copyrights, name, trade
secrets, trade names, trademarks and advertising matter, or any similar
property, in completing production, advertising or selling any Collateral and
Borrower's rights under all licenses and all franchise agreements shall inure
to FINOVA's benefit. Any requirement of reasonable notice shall be met if such
notice is mailed postage prepaid to Borrower at its address set forth in the
heading to this Agreement at least five (5) days before sale or other
disposition. The proceeds of sale shall be applied, first, to all attorneys
fees and other expenses of sale, and second, to the Obligations in such order
as FINOVA shall elect, in its sole discretion. FINOVA shall return any excess
to Borrower and Borrower shall remain liable for any deficiency to the fullest
extent permitted by law.
7.3 Standards for Determining Commercial Reasonableness. Borrower and
FINOVA agree that the following conduct by FINOVA with respect to any
disposition of Collateral shall conclusively be deemed commercially reasonable
(but other conduct by FINOVA, including, but not limited to, FINOVA's use in
its sole discretion of other or different times, places and manners of noticing
and conducting any disposition of Collateral shall not be deemed unreasonable):
Any public or private disposition: (i) as to which on no later than the fifth
calendar day prior thereto written notice thereof is mailed or personally
delivered to Borrower and, with respect to any public disposition, on no later
than the fifth calendar day prior thereto notice thereof describing in general
non-specific terms, the Collateral to be disposed of is published once in a
newspaper of general circulation in the county where the sale is to be
conducted (provided that no notice of any public or private disposition need be
given to the Borrower or published if the Collateral is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market); (ii) which is conducted at any place designated by FINOVA, with or
without the Collateral being present; and (iii) which commences at any time
between 8:00 a.m. and 5:00 p.m. Without limiting the generality of the
foregoing, Borrower expressly agrees that, with respect to any disposition of
accounts, instruments and general intangibles, it shall be commercially
reasonable for FINOVA to direct any prospective purchaser thereof to ascertain
directly from Borrower any and all information concerning the same, including,
but not limited to, the terms of payment, aging and delinquency, if any, the
financial condition of any obligor or account debtor thereon or guarantor
thereof, and any collateral therefor.
8. EXPENSES AND INDEMNITIES
8.1 Expenses. Borrower covenants that, so long as any Obligation remains
outstanding and this Agreement remains in effect, it shall promptly reimburse
FINOVA for all costs, fees and expenses incurred by FINOVA in connection with
the negotiation, preparation, execution, delivery, administration and
enforcement of each of the Loan Documents, including, but not limited to, the
attorneys' and paralegals' fees of in-house and outside counsel, expert witness
fees, lien, title search and insurance fees, appraisal fees, all charges and
expenses incurred in connection with any and all environmental reports and
environmental remediation activities, and all other costs, expenses, taxes and
filing or recording fees payable in connection with the transactions
contemplated by this Agreement, including without limitation all such costs,
fees and expenses as FINOVA shall incur or for which FINOVA shall become
obligated in connection with (i) any inspection or verification of the
Collateral, (ii) any proceeding relating to the Loan Documents or the
Collateral, (iii) actions taken with respect to the Collateral and FINOVA's
security interest therein, including, without limitation, the defense or
prosecution of any action involving FINOVA and Borrower or any third party,
(iv) enforcement of any of FINOVA's rights and remedies with respect to the
Obligations or Collateral and (v) consultation with FINOVA's attorneys and
participation in any workout, bankruptcy or other insolvency or other
proceeding involving any Loan Party or any Affiliate, whether or not suit is
filed or the issues
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are peculiar to federal bankruptcy or state insolvency laws. Borrower shall
also pay all FINOVA charges in connection with bank wire transfers, forwarding
of loan proceeds, deposits of checks and other items of payment, returned
checks, establishment and maintenance of lockboxes and other Blocked Accounts,
and all other bank and administrative matters, in accordance with FINOVA's
schedule of bank and administrative fees and charges in effect from time to
time.
8.2 Environmental Matters.
The Environmental Certificate dated on or about the date of this Agreement
is incorporated herein for all purposes as if fully stated in this Agreement.
9. MISCELLANEOUS.
9.1 Examination of Records; Financial Reporting.
(a) Examinations. FINOVA shall at all reasonable times have full access
to and the right to examine, audit, make abstracts and copies from and inspect
Borrower's records, files, books of account and all other documents,
instruments and agreements relating to the Collateral and the right to check,
test and appraise the Collateral. Borrower shall deliver to FINOVA any
instrument necessary for FINOVA to obtain records from any service bureau
maintaining records for Borrower. All instruments and certificates prepared by
Borrower showing the value of any of the Collateral shall be accompanied, upon
FINOVA's request, by copies of related purchase orders and invoices. FINOVA
may, at any time after the occurrence of an Event of Default, remove from
Borrower's premises Borrower's books and records (or copies thereof) or require
Borrower to deliver such books and records or copies to FINOVA. FINOVA may,
without expense to FINOVA, use such of Borrower's personnel, supplies and
premises as may be reasonably necessary for maintaining or enforcing FINOVA's
security interest.
(b) Reporting Requirements. Borrower shall furnish FINOVA, upon request,
such information and statements as FINOVA shall request from time to time
regarding Borrower's business affairs, financial condition and the results of
its operations. Without limiting the generality of the foregoing, Borrower
shall provide FINOVA with: (i) FINOVA's standard form collateral and loan
report, daily, and upon FINOVA's request, copies of sales journals, cash
receipt journals, and deposit slips; (ii) upon FINOVA's request, copies of
sales invoices, customer statements and credit memoranda issued, remittance
advices and reports; (iii) copies of shipping and delivery documents, upon
request; (iv) on or prior to the date set forth on the Schedule, monthly agings
(aged from invoice date) and reconciliations of Receivables (with listings of
concentrated accounts), payables reports, inventory reports, compliance
certificates and unaudited financial statements with respect to the prior month
prepared on a basis consistent with such statements prepared in prior months
and otherwise in accordance with GAAP; (v) audited annual consolidated and
consolidating financial statements, prepared in accordance with GAAP applied on
a basis consistent with the most recent Prepared Financials provided to FINOVA
by Borrower, including balance sheets, income and cash flow statements,
accompanied by the unqualified report thereon of independent certified public
accountants acceptable to FINOVA, as soon as available, and in any event,
within ninety (90) days after the end of each of Borrower's fiscal years; and
(vi) such certificates relating to the foregoing as FINOVA may request,
including, without limitation, a monthly certificate from the president and the
chief financial officer of Borrower showing Borrower's compliance with each of
the financial covenants set forth in this Agreement, and stating whether any
Event of Default has occurred or event which, with giving of notice or the
passage of time, or both, would constitute an Event of Default, and if so, the
steps being taken to prevent or cure such Event of Default. All reports or
financial statements submitted by Borrower shall be in reasonable detail and
shall be certified by the principal financial officer of Borrower as being
complete and correct.
(c) Guarantor's Financial Statements and Tax Returns. To the extent any
Guarantor shall hereafter exist, Borrower shall cause each of the Guarantors to
deliver to FINOVA such Guarantor's annual financial statement (in form
acceptable to FINOVA) and a copy of such Guarantor's federal income tax return
with respect to the corresponding year, in each case on the date when such tax
return is due or, if earlier, on the date when available.
9.2 Term; Termination.
(a) Term. The Initial Term of the Revolving Credit Loans facility and the
obligation of FINOVA to made advances with respect thereto in accordance with
this Agreement shall be as set forth on the Schedule, and the Revolving Credit
Loans facility and this Agreement shall be automatically renewed for one or
more Renewal Term(s) as set forth in the Schedule, unless earlier terminated as
provided herein.
(b) Prior Notice. Each party shall have the right to terminate this
Agreement effective at the end of the Initial Term or at the end of any Renewal
Term by giving the other party written notice not less than thirty
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(30) days prior to the effective date of such termination, by registered or
certified mail.
(c) Payment in Full. Upon the effective date of termination, the
Obligations shall become immediately due and payable in full in cash.
(d) Early Termination; Termination Fee. In addition to the procedure set
forth in Section 9.2(b), Borrower may terminate this Agreement at any time but
only upon thirty (30) days' prior written notice and prepayment of the
Obligations. Upon any such early termination by Borrower or any termination of
this Agreement by FINOVA upon the occurrence of an Event of Default, then, and
in any such event, Borrower shall pay to FINOVA upon the effective date of such
termination a fee (the "TERMINATION FEE") in an amount equal to the amount
shown on the Schedule.
9.3 Recourse to Security; Certain Waivers. All Obligations shall be
payable by Borrower as provided for herein and, in full, at the termination of
this Agreement; recourse to security shall not be required at any time.
Borrower waives presentment and protest of any instrument and notice thereof,
notice of default and, to the extent permitted by applicable law, all other
notices to which Borrower might otherwise be entitled.
9.4 No Waiver by FINOVA. Neither FINOVA's failure to exercise any right,
remedy or option under this Agreement, any supplement, the Loan Documents or
other agreement between FINOVA and Borrower nor any delay by FINOVA in
exercising the same shall operate as a waiver. No waiver by FINOVA shall be
effective unless in writing and then only to the extent stated. No waiver by
FINOVA shall affect its right to require strict performance of this Agreement.
FINOVA's rights and remedies shall be cumulative and not exclusive.
9.5 Binding on Successor and Assigns. All terms, conditions, promises,
covenants, provisions and warranties shall inure to the benefit of and bind
FINOVA's and Borrower's respective representatives, successors and assigns.
9.6 Severability. If any provision of this Agreement shall be prohibited
or invalid under applicable law, it shall be ineffective only to such extent,
without invalidating the remainder of this Agreement.
9.7 Amendments; Assignments. This Agreement may not be modified, altered
or amended, except by an agreement in writing signed by Borrower and FINOVA.
Borrower may not sell, assign or transfer any interest in this Agreement or any
other Loan Document, or any portion thereof, including, without limitation, any
of Borrower's rights, title, interests, remedies, powers and duties hereunder
or thereunder. Borrower hereby consents to FINOVA's participation, sale,
assignment, transfer or other disposition, at any time or times hereafter, of
this Agreement and any of the other Loan Documents, or of any portion hereof or
thereof, including, without limitation, FINOVA's rights, title, interests,
remedies, powers and duties hereunder or thereunder. In connection therewith,
FINOVA may disclose all documents and information which FINOVA now or hereafter
may have relating to Borrower or Borrower's business. To the extent that
FINOVA assigns its rights and obligations hereunder to a third party, FINOVA
shall thereafter be released from such assigned obligations to Borrower and
such assignment shall effect a novation between Borrower and such third party.
9.8 Integration. This Agreement, together with the Schedule (which is a
part hereof) and the other Loan Documents, reflect the entire understanding of
the parties with respect to the transactions contemplated hereby.
9.9 Survival. All of the representations and warranties of Borrower
contained in this Agreement shall survive the execution, delivery and
acceptance of this Agreement by the parties. No termination of this Agreement
or of any guaranty of the Obligations shall affect or impair the powers,
obligations, duties, rights, representations, warranties or liabilities of the
parties hereto and all shall survive such termination.
9.10 Evidence of Obligations. Each Obligation may, in FINOVA's
discretion, be evidenced by notes or other instruments issued or made by
Borrower to FINOVA. If not so evidenced, such Obligation shall be evidenced
solely by entries upon FINOVA's books and records.
9.11 Loan Requests. Each oral or written request for a loan by any Person
who purports to be any employee, officer or authorized agent of Borrower shall
be made to FINOVA on or prior to 11:00 a.m., New York time, on the Business Day
on which the proceeds thereof are requested to be paid to Borrower and shall be
conclusively presumed to be made by a Person authorized by Borrower to do so
and the crediting of a loan to Borrower's operating account shall conclusively
establish Borrower's obligation to repay such loan. Unless and until Borrower
otherwise directs FINOVA in writing, all loans shall be wired to Borrower's
operating account set forth on the Schedule.
9.12 Notices. Any notice required hereunder shall be in writing and
addressed to the Borrower and FINOVA at their addresses set forth at the
beginning of this Agreement. Notices hereunder shall be deemed
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received on the earlier of receipt, whether by mail, personal delivery,
facsimile, or otherwise, or upon deposit in the United States mail, postage
prepaid.
9.13 Brokerage Fees. Except fees owing to Xxxxxxx Xxxxx & Co., Inc.,
Borrower represents and warrants to FINOVA that, with respect to the financing
transaction herein contemplated, no Person is entitled to any brokerage fee or
other commission, and Borrower agrees to indemnify and hold FINOVA harmless
against any and all such claims (other than in respect of fees due to Xxxxxxx
Xxxxx & Co., Inc. which shall be payable by FINOVA).
9.14 Disclosure. No representation or warranty made by Borrower in this
Agreement, or in any financial statement, report, certificate or any other
document furnished in connection herewith contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to
Borrower or which reasonably should be known to Borrower which Borrower has not
disclosed to FINOVA in writing with respect to the transactions contemplated by
this Agreement which materially and adversely affects the business, assets,
operations, prospects or condition (financial or otherwise), of Borrower.
9.15 Publicity. FINOVA is hereby authorized to issue appropriate press
releases and to cause a tombstone to be published announcing the consummation
of this transaction and the aggregate amount thereof.
9.16 Captions. The Section titles contained in this Agreement are without
substantive meaning and are not part of this Agreement.
9.17 Injunctive Relief. Borrower recognizes that, in the event Borrower
fails to perform, observe or discharge any of its Obligations under this
Agreement, any remedy at law may prove to be inadequate relief to FINOVA.
Therefore, FINOVA, if it so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
9.18 Counterparts; Facsimile Execution. This Agreement may be executed in
one or more counterparts, each of which taken together shall constitute one and
the same instrument, admissible into evidence. Delivery of an executed
counterpart of this Agreement by telefacsimile shall be equally as effective as
delivery of a manually executed counterpart of this Agreement. Any party
delivering an executed counterpart of this Agreement by telefacsimile shall
also deliver a manually executed counterpart of this Agreement, but the failure
to deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement.
9.19 Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of this Agreement or any
amendments or exhibits hereto.
9.20 Time of Essence. Time is of the essence for the performance by
Borrower of the Obligations set forth in this Agreement.
9.21 Limitation of Actions. Borrower agrees that any claim or cause of
action by Borrower against FINOVA, or any of FINOVA's directors, officers,
employees, agents, accountants or attorneys, based upon, arising from, or
relating to this Agreement, or any other present or future agreement, or any
other transaction contemplated hereby or thereby or relating hereto or thereto,
or any other matter, cause or thing whatsoever, whether or not relating hereto
or thereto, occurred, done, omitted or suffered to be done by FINOVA, or by
FINOVA's directors, officers, employees, agents, accountants or attorneys,
whether sounding in contract or in tort or otherwise, shall be barred unless
asserted by Borrower by the commencement of an action or proceeding in a court
of competent jurisdiction by the filing of a complaint within one year after
the first act, occurrence or omission upon which such claim or cause of action,
or any part thereof, is based and service of a summons and complaint on an
officer of FINOVA or any other Person authorized to accept service of process
on behalf of FINOVA, within 30 days thereafter. Borrower agrees that such
one-year period of time is a reasonable and sufficient time for Borrower to
investigate and act upon any such claim or cause of action. The one-year
period provided herein shall not be waived, tolled, or extended except by a
specific written agreement of FINOVA. This provision shall survive any
termination of this Loan Agreement or any other agreement.
9.22 Liability. Neither FINOVA nor any FINOVA Affiliate shall be liable
for any indirect, special, incidental or consequential damages in connection
with any breach of contract, tort or other wrong relating to this Agreement or
the Obligations or the establishment, administration or collection thereof
(including without limitation damages for loss of profits, business
interruption, or the like), whether such damages are foreseeable or
unforeseeable, even if FINOVA has been advised of the possibility of such
damages. Neither FINOVA, nor any FINOVA Affiliate shall be liable for any
claims, demands, losses or damages, of any kind whatsoever, made, claimed,
incurred or suffered by the
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Borrower through the ordinary negligence of FINOVA, or any FINOVA Affiliate.
"FINOVA AFFILIATE" shall mean FINOVA's directors, officers, employees, agents,
attorneys or any other Person or entity affiliated with or representing FINOVA.
9.23 Notice of Breach by FINOVA. Borrower agrees to give FINOVA written
notice of (i) any action or inaction by FINOVA or any attorney of FINOVA in
connection with any Loan Documents that may be actionable against FINOVA or any
attorney of FINOVA or (ii) any defense to the payment of the Obligations for
any reason, including, but not limited to, commission of a tort or violation of
any contractual duty or duty implied by law. Borrower agrees that unless such
notice is fully given as promptly as possible (and in any event within thirty
(30) days) after Borrower has knowledge, or with the exercise of reasonable
diligence should have had knowledge, of any such action, inaction or defense,
Borrower shall not assert, and Borrower shall be deemed to have waived, any
claim or defense arising therefrom.
9.24 Application of Insurance Proceeds. The net proceeds of any casualty
insurance insuring the Collateral, after deducting all costs and expenses
(including attorneys' fees) of collection, shall be applied, at FINOVA's
option, either toward replacing or restoring the Collateral, in a manner and on
terms satisfactory to FINOVA, or toward payment of the Obligations. Any
proceeds applied to the payment of Obligations shall be applied in such manner
as FINOVA may elect. In no event shall such application relieve Borrower from
payment in full of all installments of principal and interest which thereafter
become due in the order of maturity thereof.
9.25 Power of Attorney. Borrower appoints FINOVA and its designees as
Borrower's attorney, with the power to endorse Borrower's name on any checks,
notes, acceptances, money orders or other forms of payment or security that
come into FINOVA's possession; to sign Borrower's name on any invoice or xxxx
of lading relating to any Receivable, on drafts against customers, on
assignments of Receivables, on notices of assignment, financing statements and
other public records, on verifications of accounts and on notices to customers
or account debtors; to send requests for verification of Receivables to
customers or account debtors; after the occurrence of any Event of Default, to
notify the post office authorities to change the address for delivery of
Borrower's mail to an address designated by FINOVA and to open and dispose of
all mail addressed to Borrower; and to do all other things FINOVA deems
necessary or desirable to carry out the terms of this Agreement. Borrower
hereby ratifies and approves all acts of such attorney. Neither FINOVA nor any
of its designees shall be liable for any acts or omissions nor for any error of
judgment or mistake of fact or law while acting as Borrower's attorney. This
power, being coupled with an interest, is irrevocable until the Obligations
have been fully satisfied and FINOVA's obligation to provide loans hereunder
shall have terminated
9.26 GOVERNING LAW; WAIVERS. THIS AGREEMENT, INCLUDING WITHOUT LIMITATION
ENFORCEMENT OF THE OBLIGATIONS, SHALL BE INTERPRETED IN ACCORDANCE WITH THE
INTERNAL LAWS (AND NOT THE CONFLICT OF LAWS RULES) OF THE STATE OF ARIZONA
GOVERNING CONTRACTS TO BE PERFORMED ENTIRELY WITHIN SUCH STATE. BORROWER
HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF MARICOPA IN THE STATE OF ARIZONA OR, AT THE SOLE
OPTION OF FINOVA, IN ANY OTHER COURT IN WHICH FINOVA SHALL INITIATE LEGAL OR
EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER
IN CONTROVERSY. BORROWER WAIVES ANY OBJECTION OF FORUM NON CONVENIENS AND
VENUE. BORROWER FURTHER WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON
IT, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE IN THE MANNER SET
FORTH IN SECTION 9.12 HEREOF FOR THE GIVING OF NOTICE. BORROWER FURTHER WAIVES
ANY RIGHT IT MAY OTHERWISE HAVE TO COLLATERALLY ATTACK ANY JUDGMENT ENTERED
AGAINST IT.
9.27 MUTUAL WAIVER OF RIGHT TO JURY TRIAL. FINOVA and Borrower each
hereby waives the right to trial by jury in any action or proceeding based
upon, arising out of, or in any way relating to: (i) this Agreement; (ii) any
other present or future instrument or agreement between FINOVA and Borrower; or
(iii) any conduct, acts or omissions of FINOVA or Borrower or any of their
directors, officers, employees, agents, attorneys or any other persons
affiliated with FINOVA or Borrower; in each of the foregoing cases, whether
sounding in contract or tort or otherwise.
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AUTOMOTIVE ONE PARTS STORES, INC.
FED. TAX ID #00-0000000
BY_______________________________
PRESIDENT OR VICE PRESIDENT
FINOVA:
FINOVA CAPITAL CORPORATION
BY_______________________________
TITLE______________________________
[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]
30
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: AUTOMOTIVE ONE PARTS STORES, INC.
ADDRESS: 000 XXXX XXXXXX XXXXXX
XXXXXXX, XXXXXXX 00000
DATE: JANUARY _____, 1998
This Schedule forms an integral part of the Loan and Security Agreement between
the above Borrower and FINOVA Capital Corporation dated the above date, and all
references herein and therein to "this Agreement" shall be deemed to refer to
said Agreement and to this Schedule.
DEFINITIONS (SECTION 1):
"Permitted Senior Indebtedness" means the indebtedness listed on Schedule
1.1(a) hereto.
"Subordinating Creditor" means _________________________________________
TOTAL FACILITY (SECTION 2.1):
$4,000,000
LOANS (SECTION 2.2):
REVOLVING CREDIT LOANS: A revolving line of credit
consisting of loans against Borrower's Eligible Receivables
("RECEIVABLE LOANS") and against Borrower's Eligible
Inventory ("INVENTORY LOANS") (the Receivable Loans and the
Inventory Loans shall be collectively referred to as the
"REVOLVING CREDIT LOANS") in an aggregate outstanding
principal amount not to exceed the lesser of (a) or (b)
below:
(a) Four Million Dollars ($4,000,000) (the "REVOLVING
CREDIT LIMIT"), less any Loan Reserves, or
(b) the sum of
(i) an amount equal to 70% of the net amount of
Eligible Receivables; plus
(ii) an amount equal to 50% of the value of
Borrower's Eligible Inventory, calculated at the lower
of cost or market value and determined on a first-in,
first-out basis, less
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(iii) any Loan Reserves.
INTEREST AND FEES (SECTION 2.6):
Revolving Interest Rate. Borrower shall pay FINOVA interest
on the daily outstanding balance of Borrower's Revolving
Credit Loans at a per annum rate of 2.0% in excess of the
rate of interest announced publicly by Citibank, N.A., (or
any successor thereto), from time to time as its "prime
rate" (the " PRIME RATE") which may not be such
institution's lowest rate. The interest rate chargeable
hereunder in respect of the Revolving Credit Loans (herein,
the "REVOLVING INTEREST RATE") shall be increased or
decreased, as the case may be, without notice or demand of
any kind, upon the announcement of any change in the Prime
Rate. Each change in the Prime Rate shall be effective
hereunder on the first day following the announcement of
such change. Interest charges and all other fees and charges
herein shall be computed on the basis of a year of 360 days
and actual days elapsed and shall be payable to FINOVA in
arrears on the first day of each month.
Minimum Interest Charge. With respect to each calendar
month or portion thereof during the term of this Agreement
(excluding the calendar month in which this Agreement is
executed), Borrower shall also pay FINOVA, on the first day
of the next month, as a minimum charge, the amount by which
accrued interest pursuant to the Revolving Interest Rate
section above for such month or portion thereof is less than
$15,000 (the "MINIMUM INTEREST CHARGE"). Notwithstanding
the occurrence of any Event of Default hereunder or
termination of this Agreement by FINOVA as a result thereof,
the Minimum Interest Charge shall be paid by Borrower for
the unexpired portion of the Initial Term or any Renewal
Term of this Agreement.
Closing Fee. At or before the closing of this transaction,
Borrower shall pay to FINOVA a closing fee in an amount
equal to 1.5% of the Total Facility less the portion of the
commitment fee previously paid by Borrower pursuant to the
Commitment letter dated November 25, 1997 ("CLOSING FEE"),
which shall be deemed fully earned on the date such payment
is due.
Unused Line Fee. With respect to each fiscal quarter, or
portion thereof during the term of this Agreement, Borrower
shall unconditionally pay to FINOVA a fee equal to one-half
of one percent (0.50%) per annum of the difference between
the Revolving Credit Limit and the average daily outstanding
balance of the Revolving Credit Loans during such quarter,
or portion thereof ("UNUSED LINE FEE"), which fee shall be
calculated and payable quarterly, in arrears, and shall be
due and payable, commencing on the first Business Day of
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the Borrower's first fiscal quarter following the Closing
Date and continuing on the first Business Day of each fiscal
quarter thereafter.
Examination Fee. Borrower agrees to pay to FINOVA an
examination fee in the amount of $600 per person per day in
connection with each audit or examination of Borrower
performed by FINOVA prior to or after the date hereof, plus
all costs and expenses incurred in connection therewith (the
"EXAMINATION FEE"). Such examinations shall be performed no
less frequently than on a quarterly basis. Without limiting
the generality of the foregoing, Borrower shall pay to
FINOVA an initial Examination Fee in an amount equal to $600
per person per day, plus all costs and expenses incurred in
connection therewith. Such initial Examination Fee shall be
deemed fully earned at the time of payment and due and
payable upon the closing of this transaction, and shall be
deducted from any good faith deposit paid by Borrower to
FINOVA prior to the date of this Agreement.
NOTIFICATION OF CLOSING (SECTION 2.13):
The amount for purposes of Section 2.13 shall be $4,000,000.
CONDITIONS OF CLOSING (SECTION 4.1):
The obligation of FINOVA to make the initial advance
hereunder is subject to the fulfillment, to the satisfaction
of FINOVA and its counsel, of each of the following
conditions, in addition to the conditions set forth in
Sections 4.1 and 4.2 above:
(a) Minimum Excess Availability (Section 4.1(c)). Minimum
Excess Availability shall not be less than $500,000 after
reserving from loan availability an amount equal to accounts
payable outstanding thirty (30) days or more from their
originally scheduled due date.
(b) Life Insurance (Section 4.1(u)). Life insurance
policies shall be maintained on the following individuals
and at the following amounts:
Xxxxxx X. Xxxxxx III, of not less than $1,000,000.
(c) No Material Adverse Change (Section 4.1(v)). Further,
no material adverse change has occurred in the Borrower's
business, operations, financial condition, or assets or in
the prospect of repayment of the Obligations since the date
of the latest financial statements for Borrower set forth in
the Registration Statement.
(d) Validity and Support Agreements. Xxxxxx X. Xxxxxx III
shall have delivered a Validity and Support Agreement in
favor of FINOVA, and in form and substance satisfactory to
FINOVA.
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(e) Transaction Costs (Section 4.1(gg)). Transaction Costs
for the initial public offering and the closing of the
refinancing contemplated thereby and by this Agreement shall
not to exceed $_________.
Borrower shall cause the conditions precedent set forth in
Section 4.1 of this Agreement and set forth above in this
Schedule to be satisfied, and shall provide evidence to
FINOVA that all such conditions precedent have been
satisfied, on or before the earlier of (i) a date not later
than five (5) Business Days following the successful
completion of the initial public offering contemplated by
the Registration Statement and (ii) February 28, 1998.
BORROWER INFORMATION:
Borrower's State of Incorporation (Section 5.1): Florida
Borrower's copyrights, patents trademarks, and licenses (Section 5.5): None.
Fictitious Names/Prior Corporate Names in last 5 years (Section 5.2):
Prior Corporate Names: NONE
Fictitious Names: NONE
Borrower Locations (Section 5.16). See Exhibit 5.16 hereto.
Borrower's Federal Tax Identification Number (Section 5.16): 00-0000000
Permitted Encumbrances (Section 1.1): See Exhibit 1.1(a) hereto.
FINANCIAL COVENANTS (SECTION 6.1.13):
Borrower shall comply with all of the following
covenants. Compliance shall be determined as of the end
of each month or quarter (as determined by FINOVA in its
sole discretion), except as otherwise specifically
provided below:
Current Ratio Borrower shall maintain a ratio of Current Assets to
Current Liabilities of not less than 1.3 to 1.0.
EBITDA. Borrower shall maintain Earnings Before Interest, Taxes,
Depreciation and Amortization of not less than (i) One
Hundred Twenty Five Thousand Dollars ($125,000) in each
fiscal quarter of Borrower commencing with the Fiscal
Quarter ending March 31, 1998, and (ii) Five Hundred
Thousand Dollars ($500,000) for each Fiscal Year of
Borrower commencing with the Fiscal Year ending December
31, 1998.
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Senior Debt Service
Coverage Ratio As of the last day of each calendar quarter ended March
31, June 30, September 30 or December 31, Borrower's
Operating Cash Flow/Actual for the consecutive 12-month
period ending as of such last day must be at least 1.70
times the amount necessary to meet Borrower's Senior
Contractual Debt Service for such 12-month period;
provided however, that, with respect to the
calculations set forth herein for the period from the
Closing Date through September 30, 1998, Borrower's
Operating Cash Flow/Actual and Senior Contractual Debt
Service shall be determined beginning as of January 1,
1998 (the "START DATE") and be measured as follows: (x)
the time period from the Start Date through March 31,
1998, shall be for such amounts for such period, (y)
the time period from the Start Date through June 30,
1998, shall be for such amounts for such period, and
(z) the time period from the Start Date through
September 30, 1998, shall be for such amounts for such
period; and, provided further, that all such
determinations shall be made on a consolidated basis.
Total Debt Service
Coverage Ratio As of the last day of each calendar quarter ended March
31, June 30, September 30 or December 31, Borrower's
Operating Cash Flow/Actual for the consecutive 12-month
period ending as of such last day must be at least 1.1
times the amount necessary to meet Borrower's Total
Contractual Debt Service for such 12-month period;
provided however, that, with respect to the
calculations set forth herein for the period from the
Closing Date through September 30, 1998, Borrower's
Operating Cash Flow/Actual and Total Contractual Debt
Service shall be determined beginning as of the Start
Date and be measured as follows: (x) the time period
from the Start Date through March 31, 1998, shall be
for such amounts for such period, (y) the time period
from the Start Date through June 30, 1998, shall be for
such amounts for such period, and (z) the time period
from the Start Date through September 30, 1998, shall
be for such amounts for such period; and, provided
further, that all such determinations shall be made on
a consolidated basis.
NEGATIVE COVENANTS (SECTION 6.2):
Employee Advances: Borrower shall not make any loans or advances to
Employees except in the ordinary course of business and
consistent with past practices of Borrower in an
aggregate amount not exceeding at any time $5,000.
Existing Guaranties: None.
Capital
Expenditures: Borrower shall not make or incur any Capital
Expenditure if, after giving effect thereto, the
aggregate amount of all Capital Expenditures by
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Borrower in any fiscal year (beginning with the fiscal
year commencing January 1, 1998) would exceed $100,000
(excluding from such amount any Capital Expenditure
which has been (i) leased from a third party pursuant
to a capital lease or (ii) financed by a third party on
an unsecured basis or a purchase money security
interest basis provided that any liens securing any
such third party lease or financing arrangement such
repayment are limited solely to the asset being
financed and the Indebtedness and Financial covenants
set forth herein are not violated
Compensation: Borrower shall not pay total compensation, including
salaries, withdrawals, fees, bonuses, commissions,
drawing accounts and other payments, whether directly
or indirectly, in money or otherwise, during any fiscal
year to (i) Xxxxxx X. Xxxxxx III in an amount in excess
of that set forth in the Registration Statement
(provided that in no event shall the aggregate cash
bonus amounts exceed 115% of the base salary of such
Person without FINOVA's prior written consent) or (ii)
to any of Borrower's other executives, officers and
directors (or any relative thereof) in an amount in
excess of 115% of such total compensation paid in the
immediately preceding fiscal year.
Indebtedness: Borrower shall not create, incur, assume or permit to
exist any Indebtedness (including Indebtedness in
connection with Capital Leases and any purchase money
security interest financings) in excess of $100,000
other than (i) the Obligations, (ii) trade payables and
other contractual obligations to suppliers and
customers incurred in the ordinary course of business
and (iii) other Indebtedness existing on the date of
this Agreement and reflected in Exhibit 6.2(a) attached
hereto (other than Indebtedness paid on the date of
this Agreement from proceeds of the initial advances
hereunder).
REPORTING REQUIREMENTS (SECTION 9.1):
1. Borrower shall provide FINOVA with monthly agings aged
by invoice date and reconciliations of Receivables
within ten (10) days after the end of each month.
2. Borrower shall provide FINOVA with monthly accounts
payable agings aged by invoice date, outstanding or
held check registers and inventory certificates within
ten (10) days after the end of each month.
3. Borrower shall provide FINOVA with monthly perpetual
inventory reports for the Inventory valued on a
first-in, first-out basis at the lower of cost or
market (in accordance with GAAP) or such other
inventory reports as are reasonably requested by
FINOVA, all within ten (10) days after the end of each
month.
4. Borrower shall provide FINOVA with monthly unaudited
financial statements within thirty (30) days after the
end of each month.
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5. Borrower shall provide FINOVA with audited consolidated
and consolidating fiscal financial statements within
one hundred twenty (120) days after the end of each
fiscal year, as more specifically described in Section
9.1(b) hereof, and with an opinion issued by a
Certified Public Accountant which is acceptable to
FINOVA.
6. Borrower shall provide FINOVA with annual operating
budgets (including income statements, balance sheets
and cash flow statements, by month) for the upcoming
fiscal year of Borrower within thirty (30) days prior
to the end of each fiscal year of Borrower.
7. Borrower's balance sheets for purposes of the
definition of Prepared Financials shall be as of
October 31, 1997.
8. Borrower shall, promptly upon their becoming available,
provide FINOVA with copies of (i) all financial
statements, reports, notices and proxy statements made
publicly available by Borrower to its security holders
including all 10Q and 10K Reports; (ii) all regular and
periodic reports and all registration statements and
prospectuses, if any, filed by Borrower with any
securities exchange or with the Securities and Exchange
Commission or any governmental or private regulatory
authority; and (iii) all press releases and other
statements made available by Borrower to the public
concerning material changes or developments in the
business of any such Person;
9. Borrower shall, within five (5) Business Days after
receipt thereof by Borrower, provide FINOVA with copies
of all management letters, exception reports or similar
letters or reports received by Borrower from its
independent certified public accounts.
TERM (SECTION 9.2):
The initial term of this Agreement shall be two (2) year(s)
from the date hereof (the "INITIAL TERM") and shall be
automatically renewed for successive periods of one (1) year
each (each, a "RENEWAL TERM"), unless earlier terminated as
provided in Section 7 or 9.2 above or elsewhere in this
Agreement.
TERMINATION FEE (SECTION 9.2):
Revolving Credit Loans Facility. The Termination Fee
applicable to the Revolving Credit Loans facility provided
for in Section 9.2(d) shall be an amount equal to the
following percentage of the average daily outstanding
balance of the Obligations for the 180-day period (or lesser
period if applicable) preceding the date of termination:
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(i) three percent (3%), if such early termination occurs on
or prior to the first anniversary of the date of this
Agreement;
(ii) one percent (1%), if such early termination occurs
after the first anniversary of the date of this Agreement;
provided that in the event such facility is terminated at
the option of Borrower in connection with a refinancing
provided by Xxxxxxx Xxxxx & Co., Inc. or an Affiliate
thereof at any time after the first anniversary of this
Agreement, the Termination Fee shall be waived.
DISBURSEMENT (SECTION 9.11):
Unless and until Borrower otherwise directs FINOVA in
writing, all loans shall be wired to Borrower's following
operating account:
________________________________________________________
________________________________________________________
ADDITIONAL PROVISIONS:
1. Eligible Unencumbered Property. Following the occurrence
of any Event of Default, Borrower shall promptly, upon FINOVA's
request therefor, duly execute and deliver, or cause to be duly
executed and delivered, to FINOVA (a) a mortgage or deed of trust in
form and substance acceptable to FINOVA (a "MORTGAGE") with respect
to any or all real property owned by Borrower not then subject to a
lien in favor of FINOVA or subject to an agreement with a third
party holding a lien thereon prohibiting the grant of a subordinate
lien to another party (an "ELIGIBLE UNENCUMBERED PROPERTY") together
with (a) a title insurance policy, current as-built survey, zoning
letters and certificates of occupancy, in each case satisfactory in
form and substance to FINOVA; (b) evidence that counterparts of the
Mortgage have been recorded in all places to the extent necessary or
desirable, in the judgment of FINOVA, to create a valid and
enforceable first priority lien (subject to Permitted Encumbrances)
on such Eligible Unencumbered Property in favor of FINOVA for the
benefit of itself and Lenders (or in favor of such other trustee as
may be required or desired under local law); and (c) an opinion of
counsel in each state in which such Eligible Unencumbered Property
is located in form and substance and from counsel satisfactory to
FINOVA.
2. Vehicle Titles. Within 30 days following the Closing Date,
FINOVA shall have received original certificates of title for each
of the vehicles specified in Exhibit 4.1(j) hereto issued by the
relevant state agency properly noting FINOVA as the first and only
lien holder thereupon.
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FINOVA:
BORROWER: FINOVA CAPITAL
AUTOMOTIVE ONE PARTS STORES, INC. CORPORATION
BY_______________________________ BY_______________________________
PRESIDENT OR VICE PRESIDENT TITLE_____________________________
[SIGNATURE PAGE TO SCHEDULE TO LOAN AND SECURITY AGREEMENT]
39
STATE OF )
) ss.
COUNTY OF )
BEFORE ME, a Notary Public, in and for said county and state, personally
appeared the above-named Automotive One Parts Stores, Inc., a Florida
corporation, by _______________________________, its _______________________,
who acknowledged that he/she did sign the foregoing agreement and that the same
is his/her free act and deed and the free act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal at
__________, __________ this ___ day of __________, 1997.
___________________________________
Notary Public
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EXHIBIT 5.16
BORROWER'S LOCATIONS
A. LOCATION OF COLLATERAL
----------------------
B. OTHER OWNED REAL PROPERTIES
---------------------------
