Exhibit 4.1
LOAN AND SECURITY AGREEMENT
THIS AGREEMENT made as of February 24,2006 by and between Sovereign
Bank, with an office at 0000 Xxxxxxxxxx Xxxxxx, Xxxx Xxxxxxxx, XX 00000
(hereinafter referred to as the "Lender"), and Ranor, Inc., a corporation
organized under the State of Delaware ("Ranor") with its chief executive office,
principal place of business and mailing address at Xxx Xxxxx Xxxxx, Xxxxxxxxxxx,
XX 00000 (the "Borrower"). Borrower's liability hereunder shall be joint and
several.
SECTION 1. DEFINITIONS. As used herein:
1.1. Accounting Terms All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles in the United States and all financial data submitted pursuant to
this Loan Agreement shall be prepared in accordance with such principles.
1.2. Accounts - means "Accounts" as defined in the Uniform Commercial
Code.
1.3. Additional Collateral - means (a) all "Securities Entitlements,"
"Investment Property," "Financial Assets," Commercial Tort Claims and
"Documents" as those terms are defined in the Uniform Commercial Code as of the
date hereof, whether now existing or hereafter acquired or arising, (b) all
securities, bills of lading, dock warrants, dock receipts, warehouse receipts or
orders for the delivery of goods, and any other documents which in the regular
course of business or financing are treated as adequately evidencing that the
persons in possession of them are entitled to receive, hold, and dispose of the
goods they cover; (c) all motor vehicles whether now owned or hereafter acquired
by the Borrower, and all accessions and additions thereto, replacements
therefor, and substitutions therefor; (d) all "General Intangibles" as that term
is defined in the Uniform Commercial Code as of the date hereof, whether
presently owned or hereafter acquired, including, without limitation, Payment
Intangibles and Software (as those terms are defined in the Uniform Commercial
Code), all choses in action, causes of action, and all other intangible personal
property of the Borrower, including, without limitation, corporate or other
business records, inventions, designs, patents, patent applications, trademarks,
servicemarks, tradenames, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, tax refund claims, credit files, computer
programs, printouts and other computer materials and records, guaranty claims,
security interests or other property held by or granted to Borrower to secure
payment of any obligation of any obligor of Borrower and any and all of the
rights of Borrower of whatever nature under any and all contracts, agreements,
or leases (whether of real or personal property) to which the Borrower is or may
become a party, including without limitation all of the rights of Borrower to
enforce all of the provisions of, and to obtain payments or other performance
due under, all contracts, agreements, or leases; (e) all of Borrower's rights
(including rights as licensee and lessee) with respect to all computer hardware
and software and all rights with respect thereto including, any and all
licenses, options, warranties, service contracts, program services, test rights,
maintenance rights, support rights, improvement rights,
renewal rights and indemnifications, and any substitutions, replacements,
additions or model conversions of any of the foregoing, and further including
(i) computer and other electronic data processing hardware, including all
integrated computer systems, central processing units, memory units, display
terminals, printers, computer elements, card readers, tape drives, hard and soft
disk drives, cables, electrical supply hardware, generators, power equalizers,
accessories, peripheral devices and other related computer hardware, (ii) all
Software and all software programs designed for use on the computers and
electronic data processing hardware described in clause (i) above, including all
operating system software, utilities and application programs in any form
(source code and object code in magnetic tape, disk or hard copy format or any
other listings whatsoever (iii) any firmware associated with any of the
foregoing; and (iv) any documentation for hardware, Software and firmware
described in clauses (i), (ii) and (iii) above, including flow charts, logic
diagrams, manuals, specifications, training materials, charts and pseudo codes,
and (f) all monies, securities and other property of the Borrower, and the
proceeds thereof, now or hereafter held or received by or in transit to the
Lender whether for safekeeping, custody, pledge, transmission, collection or
otherwise, and also in and to any and all deposits, general or special, and
credits of the Borrower with, and any and all claims of the Borrower against,
the Bank now or at any time hereafter existing.
1.4. Additional Definitions Unless otherwise specifically defined
herein, all terms used in this Loan Agreement and in all documents referred to
herein and which have been defined in Articles 1, 2 or 9, Uniform Commercial
Code, shall be interpreted and construed in light of the sections, the
definitions, the "official comment", and the definitional and substantive
cross-references of the Uniform Commercial Code.
1.5. Affiliates - means any Person: (1) which directly or indirectly
Controls, or is Controlled by, or is under common Control with, the Borrower or
any subsidiary; (2) which directly or indirectly beneficially owns or holds any
class of voting stock of the Borrower or any subsidiary; or (3) the voting stock
of which is directly or indirectly beneficially owned or held by the Borrower or
any subsidiary.
1.6. Banking Day - means with respect to any date that is specified in
this Agreement, to be subject to adjustment in accordance with the applicable
Business Day Convention, (i) a day on which commercial lenders settle payments
in the Governing State, (ii) in any other case, any day on which Lender is not
required or authorized to close in the Governing State.
1.7. Business Day Convention - means the convention for adjusting any
relevant date if it would otherwise fall on a day that is not a Banking Day.
Reference to a payment date, when used in conjunction with the term "Business
Day Convention", shall mean that an adjustment will be made if the date would
otherwise fall on a day that is not a Banking Day so that the date will be the
first following day that is a Banking Day.
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1.8. Collateral - means all of Borrower's personal property, now owned
or hereafter acquired, including without limitation all Accounts, Health Care
Insurance Receivables, Letter-of-Credit Rights, Supporting Obligations,
Electronic Chattel Paper, Tangible Chattel Paper and Instruments, as these terms
are defined in the Uniform Commercial Code, together with all Inventory,
Equipment, Patents, Trademarks and Additional Collateral, as hereinafter
defined, and all products and proceeds of the foregoing including, without
limitation, proceeds of any insurance policies insuring any of the foregoing,
all as more particularly described on Schedule B.
1.9. Control - means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise.
1.10. Effective Date - means the date of execution of this Loan
Agreement.
1.11. Eligible Inventory - means Inventory (valued at the lesser of
cost to the Borrower or market value) which, on a date which a Borrowing Base
Certificate is submitted to Lender, meets the following requirements:
a. It is saleable through normal trade channels; and
b. It is owned by the Borrower and is not subject to any lien or
security interest whatsoever other than that of the Lender.
1.12. Eligible Accounts - means the net amount of those Accounts which
continually meet the following requirements:
a. The Account is due and payable not more than ninety (90) days
from the date of the invoice evidencing the account and is not more than thirty
(30) days past due;
b. The Account arose from the performance of services by the
Borrower which have been satisfactorily performed or from the absolute sale of
goods by the Borrower in which the Borrower had the sole and complete ownership
and the goods have been shipped or delivered to the account debtor, and the
Borrower or the Lender is in possession of shipping and delivery receipts
evidencing such shipment or delivery;
c. The Account is not subject to any prior or subsequent
assignment, claim, lien or security interest other than that of the Lender;
d. To the best of the Borrower's knowledge, the Account is not
subject to setoff, counterclaim, defense, allowance or adjustment other than
discounts for prompt payment shown on the invoice, or to dispute, objection or
complaint by the account debtor concerning its liability on the account, and the
goods, the sale of which gave rise to the account, have not been returned,
rejected, lost or damaged;
e. The Account arose in the ordinary course of business;
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f. To the best of the Borrower's knowledge, no petition or other
application for relief under the Bankruptcy Code or other insolvency law has
been filed with respect to the customer or account debtor; and the customer or
account debtor has not made an assignment for the benefit of creditors, become
insolvent, or suspended or terminated business; and the account debtor is
generally paying its debts as they become due;
g. Either the account debtor has its principal place of business
in the United States, or the account debtor has posted a letter of credit in
favor of the Borrower in an amount at least equal to the amount of the Account;
h. The Borrower does not have any net accounts payable in favor
of the account debtor;
i. The account debtor is not the Federal Government of the United
States of America or any entity affiliated, in any way, with the Borrower; and
j. The Lender has not notified the Borrower that, in the Lender's
sole discretion, the Account or account debtor is not acceptable to the Lender.
PROVIDED, all Accounts whether or not Eligible Accounts
constitute the Lender's collateral.
1.13. Equipment - means all Equipment, as that term is defined in the
Uniform Commercial Code as of the date hereof, of Borrower, whether presently
owned or hereafter acquired, and including, without limitation, machinery,
furniture, furnishings, and fixtures, and any and all goods used or bought for
use in or being used or for use in the conduct of Borrower's business and all
goods used or bought for use in Borrower's business which are not included
within the definition of Inventory, and all accessions and additions thereto,
replacements therefor, and substitutions therefor, supplies and motor vehicles,
now owned and hereafter acquired, present and future, by the Borrower of
whatsoever name, nature, kind or description, wherever located, and all
additions and accessions thereto and replacements or substitutions therefor, and
all proceeds thereof and all proceeds of any insurance thereon.
1.14. Governing State - means the Commonwealth of Massachusetts.
1.15. Guarantor - means any person, firm or corporation which has
guaranteed or endorsed or has agreed to act as surety for any of the
Obligations.
1.16. Inventory - means all "Inventory" as that term is defined in the
Uniform Commercial Code as of the date hereof, including, without limitation,
any and all goods, merchandise or other personal property, wheresoever located
and whether or not in transit, now owned or hereafter acquired by the Borrower,
which is or may at any time be held for sale or lease, or furnished or to be
furnished under any contract of service or held as raw materials, work in
process, supplies or materials used or consumed in the Borrower's business, and
all such property the sale or other disposition of which has given rise to
Accounts, Chattel Paper, Documents, or Instruments and which has been returned
to or repossessed or stopped in transit by the Borrower.
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1.17. Loan Agreement - means this Loan and Security Agreement, as the
same may hereafter be supplemented, modified or amended.
1.18. Maturity Date - shall have the meaning in the Note.
1.19. Note - means, collectively, the Revolving Note and the Term
Promissory Note as defined in Section 2 below.
1.20. Obligations - means all loans, advances, debts, liabilities,
obligations, covenants and duties owing by the Borrower to the Lender of every
kind and description (whether or not evidenced by any note or other instrument
and whether or not for the payment of money), direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, whether or
not such obligations are related to the transaction described in this Loan
Agreement, by class, or kind, or whether or not contemplated by the parties at
the time of the granting of this security interest, including without
limitation, all interest, fees, charges, expenses and attorneys' fees chargeable
to the Borrower or incurred by the Lender in connection with the Revolving Loan
or otherwise whether provided for herein or in any Supplemental Agreement.
1.21. Patents - means all of the Borrower's right, title and interest,
present and future, in and to (a) all letters patent of the United States or any
other country, all right, title and interest therein and thereto, and all
registrations and recordings thereof, including without limitation applications,
registrations and recordings in the United States Patent and Trademark Office or
in any similar office or agency of the United States and State thereof or any
other country or any political subdivision thereof, all whether now owned or
hereafter acquired by the Borrower; and (b) all reissues, continuations,
continuations-in-part or extensions thereof and all licenses thereof; and all
proceeds of the foregoing and all proceeds of any insurance on the foregoing.
1.22. Person - means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority, limited liability company, or other entity of whatever
nature.
1.23. Prime Rate - has the meaning provided in the Note.
1.24. Supplemental Agreements - means any and all agreements,
instruments, documents, security agreements, mortgages, financing statements,
and supplements thereto granting or intending to grant to the Lender any lien,
security interest, pledge, assignment or indemnification to secure the
Obligations, or entered into between the Borrower or Guarantor in favor of, or
with, and the Lender, at any time, for any purpose including, without
limitation, this Loan Agreement and the Note.
1.25. Termination Date - shall have the meaning in the Revolving Note.
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1.26. Trademarks - means all of the Borrower's right, title and
interest, present and future, in and to (a) all trademarks, trade names, trade
styles, service marks, prints and labels on which said trademarks, trade names,
trade styles and service marks have appeared or appear, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
right, title and interest therein and thereto, and all registrations and
recordings thereof, including without limitation applications, registrations and
recordings in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof, or any other country
or any political subdivision thereof, all whether now owned or hereafter
acquired by the Borrower; (b) all reissues, extensions or renewals thereof and
all licenses thereof; and (c) the goodwill of the business symbolized by each of
the Trademarks, and all customer lists and other records of the Borrower
relating to the distribution of products bearing the Trademarks; and all
proceeds of the foregoing and all proceeds of any insurance on the foregoing.
SECTION 2. TERMS OF BORROWING.
2.1. Revolving Loan. The Lender may loan to the Borrower, and the
Borrower may borrow from the Lender, from time to time (the "Revolving Loan"),
up to that amount (hereinafter referred to as the "Borrowing Base") which is the
lesser of:
a. The sum of:
(1) Seventy percent (70%) of the Borrower's Eligible Accounts;
AND
(2) Forty percent (40%) of the Borrower's Eligible Inventory;
OR
b. One Million Dollars ($1,000,000).
Nothing herein shall prohibit the Lender from lending in excess
of the Borrowing Base.
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2.2. Borrowing Base Report, Etc. For purposes of computing the
Borrowing Base, the Borrower shall furnish to the Lender the Borrowing Base
Certificate set forth on Exhibit 1 together with such other information adequate
to identify Accounts and Inventory at times and in form and substance as may be
required by the Lender, executed by a duly authorized representative of
Borrower, together with such certificates as the Lender may require from the
Borrower representing that no Event of Default has occurred and that the
Borrower knows of no event which, but for the passage of time or the giving of
notice, would create an Event of Default. From time to time, the Borrower shall
provide the Lender with schedules describing all Accounts created or acquired by
the Borrower and shall execute and deliver written assignments of such Accounts
to the Lender; provided, however, that the Borrower's failure to execute and
deliver such schedules and/or assignments shall not affect or limit the Lender's
security interest or other rights in and to any Collateral. Together with each
schedule, the Borrower shall, upon reasonable request of the Lender, furnish
copies of customers' invoices or the equivalent, and original shipping or
delivery receipts for all merchandise sold, and the Borrower warrants the
genuineness thereof. The Borrower further warrants that all Accounts are and
will be bona fide existing obligations created by the sale and delivery of
merchandise or the rendition of services to customers in the ordinary course of
business, free of liens, encumbrances and security interests and unconditionally
owed to the Borrower and, to the best of the Borrower's knowledge, without
defense, offset or counterclaim.
2.3. Repayment of the Revolving Loan. In the event the Revolving Loan
at any time exceeds the Borrowing Base, the Borrower will immediately, upon
notification thereof from the Lender, repay to the Lender the amount by which
the Revolving Loan exceeds the Borrowing Base. All advances under the Revolving
Loan shall be evidenced by the Promissory Note from Borrower to the order of
Lender of even date herewith in the Revolving Loan amount (the "Revolving Note")
or Borrower will, upon reasonable request of the Lender, execute a promissory
note evidencing the advance, such note to be in such form and to contain such
provisions as the Lender shall deem desirable. Each advance shall be recorded in
an account on the Lender's books in which shall also be recorded accrued
interest on advances, payments on such advances, and other appropriate debits
and credits as herein provided, and such account shall constitute prima facie
evidence of the information contained therein.
2.4. Interest on the Revolving Loan. Interest on the Revolving Loan
will be payable monthly in arrears on the first business day of each month,
commencing on the first business day of the month subsequent to the date of this
Loan Agreement, and will be charged to the Borrower upon any and all balances
due to the Lender at the rate or rates set forth in the Revolving Note, said
interest to be computed based upon average daily balances and upon a 360-day per
year basis for the actual number of days elapsed; provided, however, that at no
time shall said interest rate be more than the rate of interest permitted by the
law governing this Loan Agreement.
2.5. Collection of Accounts. Upon an Event of Default, Lender or its
designee may notify customers or account debtors that Accounts have been
assigned to the Lender or of the Lender's security interest therein and collect
them directly and charge the collection costs and expenses to the Borrower's
account. All such payments will be placed by the Lender into a cash collateral
account and, until credited to the Borrower's account as hereinafter set forth,
shall be held by the Lender as collateral for payment and/or performance of the
Borrower's Obligations to the Lender. After allowing two (2) Business Days for
collection of checks and other instruments, the Lender will credit (conditional
upon final collection) all such payments, or those made on account thereof, to
the Borrower's account.
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2.6. Returns, Credits, Etc. Any merchandise which is returned by a
customer or account debtor or otherwise recovered shall remain part of the
Lender's security. The Borrower shall notify the Lender promptly of all returns
and recoveries and, upon an Event of Default, deliver at Lender's request the
merchandise to the Lender. The Borrower shall also notify the Lender promptly of
all disputes and claims and settle or adjust them at no expense to the Lender,
but no discount, credit or allowance (other than in the ordinary course of the
Borrower's business) shall be granted to any customer or account debtor, and no
returns of merchandise (other than in the ordinary course of the Borrower's
business) shall be accepted by the Borrower without the Lender's consent. The
Lender may, after an Event of Default, settle or adjust disputes and claims
directly with customers or account debtors for amounts and upon terms which the
Lender considers advisable, and in all cases the Lender will credit the
Borrower's account with only the net amounts received by the Lender in payment
of Accounts.
2.7. Further Assurance. Upon the Lender's reasonable request, the
Borrower shall perform all other steps reasonably requested by the Lender to
create and maintain in the Lender's favor a valid first priority security
interest, assignment or lien in, of or on all Accounts and all other security
held by or for the Lender.
2.8. Power of Attorney. The Borrower appoints the Lender, or any person
whom the Lender may designate, as its attorney, with power, after an Event of
Default: to endorse the Borrower's name on any checks, notes, acceptances, money
orders, drafts or other forms of payment or security that may come into the
Lender's possession; to sign the Borrower's name on any invoice or xxxx of
lading relating to any Accounts, on notices of assignment, financing statements,
and other public records, on verifications of accounts and on notices to
customers; to notify the post office authorities to change the address for
delivery of the Borrower's mail to an address designated by the Lender; to send
requests for verification of Accounts to customers or account debtors; and to do
all things necessary to carry out this Loan Agreement. The Borrower ratifies and
approves all acts of the attorney. Neither the Lender nor the attorney will be
liable for any acts or omissions nor for any error of judgment or mistake of
fact or law. This power, being coupled with an interest, is irrevocable so long
as any Accounts assigned to the Lender or in which the Lender has a security
interest remain unpaid or until the Obligations have been fully satisfied. The
Lender may file one or more financing statement disclosing the Lender's security
interest without the Borrower's signature appearing thereon.
2.9. Termination. All outstanding balances under the Revolving Loan
shall be payable on the Termination Date. Notwithstanding the foregoing, should
either the Lender or the Borrower become insolvent or go out of business, the
other party shall have the right to terminate this Agreement at any time without
notice. Upon the effective date of termination, all Obligations, whether or not
incurred under this Loan Agreement or any Supplemental Agreement or otherwise,
shall become immediately due and payable without notice or demand.
Notwithstanding termination, until all Obligations have been fully satisfied,
the Lender shall retain its security interest in all existing Collateral and
that arising thereafter; the Borrower shall continue to assign Accounts to the
Lender and turn over all collections to the Lender; and, except for those
specific covenants and conditions dealing with the making of advances, all terms
and conditions of all agreements between the Borrower and the Lender shall
remain in full force and effect. Notwithstanding any of the foregoing to the
contrary, upon the occurrence of an Event of Default, the Lender may terminate
this Agreement immediately and without prior notice.
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2.10. Unused Line Fee. As further inducement for the Lender to enter
into this Loan Agreement, Borrower shall pay on the first day of each month
commencing February 1, 2006, a fee (the "Line Fee") equal to one-quarter percent
(0.25%) of the average daily unused portion of the Revolving Loan, for the
immediately prior month. Said average daily unused portion shall refer to that
amount which is equal to the difference between the maximum loan amount set
forth in Section 2.1(b) and the average daily outstanding balance of the
Revolving Loan for such month. The Line Fee will, at the option of the Lender,
be charged to the account of Borrower when due.
2.11. Term Loan. The Lender will make a loan to the Borrower in the
original principal amount of FOUR MILLION DOLLARS ($4,000,000) (the "Term Loan")
upon further terms and conditions and evidenced by the term promissory note of
even date herewith (the "Term Note").
2.12. Prepayment. Except as provided in the Note, the Loans may not be
prepaid.
2.13. Automatic Payment; Method of Payment. The Borrower hereby
authorizes the Lender to automatically deduct from Borrower's account numbered
_______any amount due under this Loan Agreement ("Automatic Payments"). If the
funds in said account are insufficient to advance funds to cover any payment,
Lender shall not be obligated to advance funds to cover the payment. At any time
and for any reason, Borrower or Lender may voluntarily terminate such Automatic
Payments. Whenever any payment to be made under this Loan Agreement shall be
stated to be due on a day other than a Banking Day, such charge shall be subject
to the Modified Following Business Day Convention and any such extension of time
shall in such case be included in the computation of the payment of accrued
interest.
2.14. Late Charge Fee. If a regularly scheduled payment is fifteen (15)
days or more late, Borrower will be charged 5.000% of the unpaid portion of the
regularly scheduled payment or $10.00, whichever is greater.
2.15. Conditions Precedent to Advances. The obligation of the Lender to
make the initial advance under the Revolving Loan and the Term Loan to the
Borrower is subject to the conditions precedent that the events or documents
required take place or be executed and delivered to the Lender have taken place
or have been executed and delivered to Lender, as the case may be, in form and
substance satisfactory to the Lender and its counsel. The obligation of the
Lender to make any subsequent advances or to issue any Letter of Credit is
subject to the conditions precedent that: (a) no event has occurred which with
the passage of time or the giving of notice or both would constitute an Event of
Default; (b) no Event of Default has occurred and is continuing; (c) the Lender
has, upon request, received a certificate signed by a duly authorized officer of
the Borrower stating that all representations and warranties contained in this
Loan Agreement are correct as though made on and as of the date of such
certificate; (d) the Lender has received such other approvals, opinions, or
documents as the Lender may reasonably request; and (e) there has been no
material adverse change in the financial condition of the Borrower since the
date of the latest financial statement delivered to the Lender.
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SECTION 3. COLLATERAL.
3.1. Security Interest. As security for payment and performance of the
Obligations, the Borrower hereby assigns and grants to the Lender a continuing
security interest in the Collateral. The Lender shall retain its security
interest in all Collateral, eligible and ineligible, until all Obligations have
been fully satisfied.
3.2. Possession of Collateral. Upon an Event of Default, the Lender
will have the right: (a) to take physical possession of the Collateral and to
maintain such possession on the Borrower's premises; and/or (b) to remove the
Collateral or any part thereof to such other places as the Lender may desire;
and/or (c) without removal, to render the Equipment unusable and to dispose of
the Collateral on the Borrower's premises. Upon an Event of Default, the
Borrower shall, upon the Lender's demand, assemble the Collateral and make it
available to the Lender at a place reasonably convenient to the Lender.
3.3. Location of Collateral. The Collateral is and will be owned by the
Borrower, free of all other liens and encumbrances (except as set forth in
Schedule A annexed hereto), and shall be kept by the Borrower at those locations
listed in Schedule A annexed hereto and the Borrower will not (without the
Lender's prior written approval) remove the Collateral therefrom, except for the
purposes of sale in the regular course of business.
3.4. Limitation on Disposition of Collateral. The Borrower will not
sell, exchange or otherwise dispose of the Collateral, other than finished goods
Inventory in the ordinary course of business, or any part thereof, or any
interest therein without the express written authorization of the Lender; in the
event of the sale, exchange or other disposition of the Collateral or any part
thereof or any interest therein (and no such sale, exchange or other disposition
is hereby otherwise authorized or consented to), the security interest of the
Lender shall nevertheless continue in said Collateral (including all proceeds,
cash and non-cash) notwithstanding said sale, exchange or other disposition; all
of said proceeds shall remain Collateral hereunder and shall be transferred and
paid over to the Lender immediately following said sale, exchange or other
disposition, and shall be applied at the option of the Lender to the payment of
the Obligations; and the receipt by the Lender of all or any of said proceeds
shall not be deemed or construed to be an authorization or consent of the Lender
to such sale, exchange or other disposition of said Collateral.
3.5. Further Assurances Re Inventory. The Borrower shall perform any
and all steps reasonably requested by the Lender to perfect the Lender's
security interest in the Inventory, such as leasing warehouses to the Lender or
the Lender's designee, placing and maintaining signs, appointing custodians,
executing and filing financing or continuation statements in form and substance
satisfactory to the Lender, maintaining stock records and transferring Inventory
to warehouses. If any Inventory is in the possession or control of any of the
Borrower's agents or processors, the Borrower shall notify such agents or
processors of the Lender's security interest therein, and, upon request,
instruct them to hold all such Inventory for the Lender's account and subject to
the Lender's instructions. A physical listing of all Inventory, wherever
located, shall be taken by the Borrower whenever reasonably requested by the
Lender, and a copy of each such physical listing shall be supplied to the
Lender. The Lender may examine and inspect the Inventory at any time during
normal business hours upon reasonable prior notice.
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3.6. Discharge of Liens. The Lender may, at its option, discharge any
taxes, liens, security interests or other encumbrances at any time levied or
placed on the Collateral, and the Lender may pay insurance premiums or procure
insurance and otherwise pay for the maintenance and preservation of the
Collateral and the Borrower will reimburse the Lender on demand for any payment
made or expense incurred by the Lender pursuant to the foregoing authority, with
interest at the highest rate provided in this Loan Agreement.
3.7. Existence, Properties, Insurance. The Borrower will at all times
maintain, preserve and protect all franchises, patents, and trade names and
preserve all the remainder of its property used or useful in the conduct of its
business and keep the same in good condition and repair (normal wear and tear
and obsolescence excepted), and from time to time make, or cause to be made, all
needful and proper repairs, renewals, replacements, betterments and improvements
thereto, and will pay or cause to be paid, except when the same may be contested
in good faith, all rent due on premises where any property is held or may be
held, so that the business carried on in connection therewith may be
continuously conducted. The Borrower will have and maintain insurance at all
times with respect to all Collateral against risks of fire (including so-called
extended coverage), theft and such risks as the Lender may require containing
such terms, in such form, and for such periods, and written by such companies as
may be satisfactory to the Lender, such insurance to be payable to the Lender
and the Borrower as their interests may appear; each policy of liability
insurance shall name the Lender as an additional insured; each policy of
property casualty and business interruption insurance shall have a loss payee
endorsement providing:
a. That loss or damage, if any under the policy, shall be payable to
the Lender, as mortgagee and/or secured party, as its interests may appear;
b. That the insurance as to the interest of the Lender shall not be
invalidated by any act or neglect of the insured or owner of the property
described in said policy, nor by any foreclosure, or other proceeding, nor by
any change in the title of ownership of said property, nor by the occupation of
the premises where the property is located for purposes more hazardous than are
permitted by said policy;
c. That, if the policy is canceled at any time by the insurance
carrier, in such case the policy shall continue in force for the benefit of the
Lender for not less than thirty (30) days after written notice of cancellation
to the Lender from the insurance carrier; and
d. That the policy will not be reduced or canceled at the request of
the insured nor will said loss payee endorsement be amended or deleted without
thirty (30) days' prior written notice to the Lender from the insurance carrier.
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The Borrower will furnish the Lender with certificates or other evidence
satisfactory to the Lender of compliance with the foregoing insurance
provisions, and upon an Event of Default the Lender may act as attorney for the
Borrower in obtaining, adjusting, settling, and canceling such insurance and
receiving and endorsing any drafts. The Borrower hereby assigns to the Lender
any and all monies which may become due and payable under any policies of
property casualty insurance insuring the Collateral and business interruption
insurance, including return of unearned premiums, and hereby directs any
insurance company issuing any such policy to make payment directly to the Lender
and authorizes the Lender, at its option: (i) to apply such monies in payment on
account of any of the Obligations, whether or not due, and remit any surplus to
the Borrower; or (ii) to return said funds to the Borrower for the purpose of
replacement of the Collateral. The Borrower will also at all times maintain
necessary workmen's compensation insurance and such other insurance as may be
required by law or as may be reasonably required by the Lender.
SECTION 4. REPRESENTATIONS, WARRANTIES AND GENERAL COVENANTS
The Borrower hereby represents and warrants to the Lender (which
representations and warranties will survive the delivery of the Note and this
Agreement and the making of any advances and shall be deemed to be continuing
until the Note is fully paid and this Agreement is terminated) that, except as
set forth on Schedule A:
4.1. Organization and Qualification. The Borrower, if a legal entity,
(i) is and will continue to be duly organized and validly existing and in good
standing under the laws of its state of organization; (ii) has filed in all
locations required under the laws of each jurisdiction in which it does
business; (iii) is qualified and in good standing to do business in all other
jurisdictions in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary; (iv)
has the power to execute and deliver this Agreement, the Note, and all other
documents, instruments and agreements related hereto (the "Supplemental
Agreements") and to borrow hereunder. Borrower has all requisite permits,
authorizations, franchise agreements and licenses, without unusual restrictions
or limitations, to own, operate and lease its properties and to conduct the
business in which it is presently engaged, all of which are in full force and
effect.
4.2. No Legal Bar. The execution and delivery of this Loan Agreement
and compliance by the Borrower with any of the terms and provisions hereof or of
any of the other Supplemental Agreements will not, on the Effective Date,
violate any provision of any existing law or regulation or any writ or decree of
any court or governmental instrumentality, or any agreement or instrument to
which the Borrower is a party or which is binding upon it or its assets, and
will not result in the creation or imposition of any lien, security interest,
charge or encumbrance of any nature whatsoever upon or in any of its assets,
except as contemplated by this Loan Agreement; and no consent of any other
party, and no consent, license approval or authorization of or registration or
declaration with any governmental bureau or agency, is required in connection
with the execution, delivery, performance, validity and enforceability of this
Loan Agreement or any of the other Supplemental Agreements.
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4.3. Title, Liens and Encumbrances. The Borrower has good and
marketable title to all Collateral, and none of the Collateral is subject to any
pledge, lease, trust, bailment, lien, security interest, encumbrance, charge or
title retention or other security agreement or arrangement of any character
whatsoever other than as permitted in the Supplemental Agreements.
4.4. No Material Litigation. The Borrower represents that no material
litigation or administrative proceeding of or before any governmental body is
presently pending or, to the knowledge of the Borrower, threatened against the
Borrower or any of its property.
4.5. No Default. The Borrower is not, on the date hereof, in default
with respect to the payment or performance of any of its obligations or in the
performance of any covenants or conditions to be performed by it pursuant to the
terms and provisions of any indenture, agreement or instrument to which it is a
party or by which it may be bound and the Borrower has received no notice of
default thereunder.
4.6. Compliance with Laws. The Borrower has substantially complied with
and will continue to comply with all applicable statutes and regulations of the
United States of America, and all states, counties, municipalities and agencies
of any thereof with respect to (a) any restrictions, specifications or other
requirements pertaining to products which the Borrower manufactures and sells,
or to the services it performs; (b) the conduct of its business operations; (c)
the use, maintenance and operation of the real and personal properties owned or
leased by it in the operation of its business; and (d) if a legal entity, the
issued and outstanding equity interests of the Borrower and the disclosure of
material facts and information to its equity interestholders.
The Borrower shall indemnify the Lender and hold the Lender harmless
from and against all loss, liability, damage and expense, including reasonable
attorneys' fees, suffered or incurred by the Lender (i) under or on account of
any applicable local, state or federal laws or regulations, including the
assertion of any liens thereunder (the "Environmental Laws"); (ii) with respect
to any discharge, spillage, uncontrolled loss, seepage or filtration of oil or
petroleum or chemical, liquids or solid, liquid or gaseous products or hazardous
waste which, if contained or removed or mitigated by any applicable local, state
or federal agency or entity, would give rights to a lien (a "Spill") affecting
any real or personal property owned or leased by the Borrower, including any
loss of value of any such property as a result of such Spill; or (iii) with
respect to any other matter affecting the real or personal property owned or
leased by the Borrower and governed by the provisions of the Environmental Laws.
4.7. No Secondary Liabilities. There are no outstanding contracts or
agreements of guaranty or suretyship made by the Borrower, or to which it is a
party, or to which any of its assets are subject of any material nature.
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4.8. Taxes. The Borrower has filed or caused to be filed or obtained
extensions for the filing of, and will continue to file and cause to be filed,
all federal, state and local tax returns required by law to be filed, and has
paid and will continue to pay all taxes shown to be due and payable on said
returns or on any assessment made against it, except if being contested in good
faith and adequate provision has been made therefor on its books of account. No
claims are being asserted with respect to such taxes which are not reflected in
the financial statements which have been furnished by the Borrower to the
Lender.
4.9. Financial Condition. The Borrower has submitted to the Lender
various financial statements and information, and represents that all of said
financial information is true and correct to the best of the knowledge and
belief of the Borrower; that such financial information fairly presents the
financial condition and results of the operations of the Borrower as of the date
thereof and for the period indicated therein; that such financial statements
have been prepared in accordance with generally accepted accounting principles
and practices consistently maintained throughout the period involved; that, as
of the date of said financial information submitted, there were no material
unrealized or anticipated losses from any unfavorable commitments of the
Borrower; and that there has been no material adverse change in the business or
assets or in the condition, financial or otherwise, of the Borrower from that
set forth in said financial statements other than normal seasonal changes which
occur in the normal course and operation of the Borrower's business.
4.10. Representation Accuracy. No representation or warranty by the
Borrower contained in any certificate or other document furnished or to be
furnished by the Borrower pursuant hereto or in connection with the transactions
contemplated hereunder, contains, or at the time of delivery will contain, any
untrue statement of material fact or omits or will omit to state a material fact
necessary to make it not misleading.
4.11. Agreements re Equity Interests. Except as provided in the Stock
Purchase Agreement dated August 17, 2005, as amended, and except for the sale by
Borrower of real property contemporaneously with the closing of the initial
borrowing under this Agreement, the Borrower does not have any agreements
pertaining to the purchase or sale of its equity interests.
4.12. Collective Bargaining Agreements. The Borrower is not a party to
any collective bargaining agreements.
4.13. Pension Plans. To the extent that any present or future pension
plan of the Borrower is subject to state or federal statutes or regulations, the
Borrower represents and warrants that it shall at all times be in compliance
with said statutes and regulations and will furnish the Lender with copies of
such reports as it may be required to furnish under said statutes or
regulations.
4.14. Commercial Tort Claims. The Borrower shall promptly notify Lender
in writing upon incurring or otherwise obtaining a Commercial Tort Claim after
the date hereof against any third party and, upon Lender's reasonable request,
enter into an amendment to this Agreement and do such other acts and things
required by Lender to give Lender a security interest in such Commercial Tort
Claim.
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4.15. Other Collateral. Borrower shall promptly notify Lender in
writing upon acquiring or otherwise obtaining any Collateral after the date
hereof consisting of Deposit Accounts, Investment Property, Letter-of-Credit
Rights or Electronic Chattel Paper and, upon the reasonable request of Lender,
promptly execute such other documents, and do such other acts or things deemed
appropriate by Lender to deliver to Lender control with respect to such
Collateral; promptly notify Lender in writing upon acquiring or otherwise
obtaining any Collateral after the date hereof consisting of documents or other
instruments and, upon the reasonable request of Lender, will promptly execute
such other documents, and do such other acts or things deemed appropriate by
Lender to deliver to Lender possession of such Documents which are negotiable
and Instruments, and, with respect to non negotiable Documents, to have such
nonnegotiable Documents issued in the name of Lender; and with respect to
Collateral in the possession of a third party, other than Certificated
Securities and Goods covered by a Document and obtain an acknowledgment from the
third party that it is holding the collateral for the benefit of Lender.
4.16. Lien Perfection; Further Assurances. Borrower shall execute such
UCC-1 financing statements as may be required by the UCC and such other
instruments, assignments or documents as are necessary to perfect Lender's lien
upon any of the Collateral and shall take such other action as may be required
to perfect or to continue the perfection of Lender's lien upon the Collateral.
Unless prohibited by applicable law, Borrower hereby irrevocably authorizes
Lender to execute and/or file any such financing statements, including, without
limitation, financing statements that indicate the Collateral as all assets of
Borrower or words of similar effect, on Borrower's behalf. Borrower also hereby
ratifies its authorization for Lender to have filed in any jurisdiction any like
financing statements or amendments thereto it filed prior to the date hereof.
The parties agree that a photographic or other reproduction of this Agreement
shall be sufficient as a financing statement and may be filed in any appropriate
office in lieu thereof. At Lender's reasonable request, Borrower shall also
promptly execute or cause to be executed and shall deliver to Lender any and all
documents, instruments and agreements deemed necessary by Lender to give effect
to or carry out the terms or intent of the Supplemental Agreements. Borrower
shall further take such steps as the Lender may reasonably request for the
Lender (a) to obtain an acknowledgement, in form and substance reasonably
satisfactory to the Landlord, of any bailee having possession of any of the
Collateral that the bailee holds such Collateral for the Landlord, (b) to obtain
"control" of any Investment Property, Deposit Accounts, Letter-of-Credit Rights
or Electronic Chattel Paper (in accordance with provisions in Rev. xx.xx. 9-104,
9-105, 9-106 and 9-107 relating to what constitutes "control" for such items of
Collateral), with any agreements establishing control to be in form and
substance satisfactory to the Lender, and (c) otherwise to insure the continued
perfection and priority of the Lender's security interest in any of the
Collateral and of the preservation of its rights therein, whether in
anticipation and following the effectiveness of Revised Article 9 of the Uniform
Commercial Code in any jurisdiction.
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SECTION 5. NEGATIVE COVENANTS
So long as any Obligations of the Borrower to the Lender remain
outstanding and unpaid, and so long as Lender is committed to make loans and
other credit accommodations hereunder, the Borrower covenants and agrees as
follows, except as set forth on Schedule A:
5.1. Limitation on Liens. The Borrower shall not create, assume or
suffer to exist, any mortgage, pledge, encumbrance, lien, security interest or
charges of any kind upon any of its assets (other than statutory liens provided
same are paid within the time provided for payment without penalty or interest)
or equity interests, whether now owned or hereafter acquired.
5.2. Limitation on Advances and Investments. The Borrower shall not
make or suffer to exist any advances or loans to, or any investments in (by
transfers or property, contributions to capital, purchase of stock or securities
or evidence of indebtedness, acquisition of assets or business or otherwise) any
Person other than the securities of the United States of America and other
investments as may be offered by the Lender.
5.3. Limitation on Other Borrowing. The Borrower shall not incur,
create, assume or permit to exist any indebtedness or liability outside of the
ordinary course of the Borrower's business on account of deposits or advances or
any indebtedness or liability for borrowed money, or any other indebtedness or
liability evidenced by notes, bonds, debentures or similar obligations or
incorporated in any lease or license agreement, except as referred to in or
permitted by this Loan Agreement; provided, however, that Borrower shall be
permitted to incur purchase money indebtedness for the purchase of capital
assets in an amount not to exceed $500,000.
5.4. Limitation on Dividends and Distributions. Borrower shall not
declare or pay any dividend or distribution (whether in cash, property or
otherwise) unless Borrower is current on all debt payments to the Lender or no
Event of Default has occurred.
5.5. Limitation on Issuance or Acquisition of Equity Interest. If a
legal entity, Borrower shall not issue any additional equity interests (except
to existing holders), or redeem, retire, purchase or otherwise acquire for value
any equity interests.
5.6. Limitation on Fundamental Changes. The Borrower shall not convey,
sell, lease or otherwise dispose of all or substantially all of its property,
assets or business; enter into any transaction not in the usual course of
business and, if a legal entity, (i) make any change in its capital structure or
in any of its business objectives, purposes and operations which might in any
way adversely affect the ability of the Borrower to repay the Obligations, (ii)
merge or consolidate with or into any other firm or corporation or, without
Lender's approval not to be unreasonably withheld or delayed, change its name or
(iii) permit a transfer of more than 10% of its equity interests without the
prior written consent of the Lender. Lender acknowledges that Borrower is
transferring certain real property contemporaneously with the closing of the
initial borrowing under this Agreement.
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5.7. Limitation on Disposition of Assets. The Borrower shall not, other
than in the ordinary course of business, sell, exchange or otherwise dispose of
any of its assets, or any part thereof or any interest therein, without the
express written authorization of the Lender.
5.8. Limitation on Contingent Liabilities. The Borrower shall not
become liable as guarantor, surety, endorser or otherwise for, or agree to
purchase, repurchase or assume, any obligation of any Person, except for
endorsement of commercial paper for deposit, collection, or discount in the
ordinary course of business.
5.9. Limitation on Acquisition of Affiliates. The Borrower shall not
acquire, directly or indirectly, any Affiliates without the prior written
consent of the Lender, not to be unreasonably withheld.
5.10. Financial Covenants. The Borrower hereby covenants that it shall
not:
(a) Capital Expenditures. Directly or indirectly make or commit to make
any Capital Expenditure; provided, however, that so long as no Event of Default
exists at the time thereof or after giving effect thereto, Borrower may make
Capital Expenditures in the ordinary course of business and not exceeding
$500,000 per year.
(b) Fixed Charge Coverage Ratio. Permit Earnings Available for Fixed
Charges to be less than 120% of Fixed Charges for the quarter ending June 30,
2006 building to a rolling four (4) quarter basis, tested at the end of each
fiscal quarter.
(c) Interest Coverage. Permit its Interest Coverage Ratio to be less
than 2:1 as at the end of each fiscal quarter.
For the purpose of this Section 5.10 the following definitions shall apply
(terms not otherwise defined herein shall have the meaning ascribed to them
under GAAP):
"Capital Expenditures" - for any period, the sum of (i) all expenditures
that, in accordance with GAAP, are required to be included in land, property,
plant or equipment or similar fixed asset account (whether involving real or
personal property) and (ii) Capital Lease Obligations incurred during such
period (excluding renewals of Capital Leases).
"Capital Lease" - any lease of property by Borrower, as lessee, that, in
accordance with GAAP, would be capitalized on a balance sheet.
"Capital Lease Obligations" - the aggregate capitalized amount of the
obligations of Borrower under all Capital Leases.
"Earnings Available for Fixed Charges" - for any period, EBIT plus all
amounts deducted in computing net income in respect of depreciation and
amortization, less dividends and distributions less non-financed Capital
Expenditures less cash taxes paid.
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"EBIT" means the total of (i) net earnings of Borrower plus (ii) all
amounts deducted in computing such net income in respect of (a) interest expense
on indebtedness and (b) taxes based upon or measured by income, as each such
item is determined in accordance with GAAP.
"Fixed Charges" - for any period, the aggregate amount of Borrower's
interest expense plus current maturities of long term debt (including
subordinated debt and Capital Lease Obligations) during such period.
"GAAP" - means generally accepted accounting principles in the United
States of America, as in effect on the date of the preparation and delivery of
the financial statements described in Section 6 and consistently followed,
without giving effect to any subsequent changes other than changes consented to
in writing by the Lender.
"Interest Coverage Ratio" means for any period, the ratio of EBIT to
Borrower's current interest payments due during such period on Indebtedness for
borrowed money.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as any of the
Obligations shall remain outstanding, and so long as the Lender is committed to
make loans and other credit accommodations hereunder, except as set forth on
Schedule A the Borrower will perform and observe each and all of the covenants
and agreements herein set forth.
6.1. Payments Under this Loan Agreement, Etc. The Borrower will make
punctual payment of all monies and will faithfully and fully keep and perform
all of the terms, conditions, covenants and agreements contained on the
Borrower's part to be paid, kept or performed hereunder, and will be bound in
all respects as debtor under this Loan Agreement; and will make punctual payment
of all monies and will faithfully and fully keep and perform all of the terms,
conditions, covenants and agreements on its part to be paid, kept or performed
under the terms of any lease or mortgage of the premises where Borrower
operates, and will promptly notify the Lender in the event of any default on the
part of the Borrower or receipt by the Borrower of any notice of alleged default
under any such lease or mortgage. The Borrower will pay and discharge at or
before their maturity all taxes, assessments, rents, claims, debts and charges.
6.2. Information, Access to Books and Inspection. The Borrower will
furnish to the Lender such information regarding the business affairs and
financial condition of the Borrower as the Lender may reasonably request, and
upon reasonable notice to Borrower give any representative of the Lender access
during normal business hours to, and permit such representative to examine and
copy, and make extracts from, any and all books, records and documents in the
possession of the Borrower relating to its affairs and to inspect any of the
properties of the Borrower.
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6.3. Existence, Properties and Insurance. The Borrower will do or cause
to be done all things necessary to preserve and keep in full force and effect
the legal existence of Borrower and its rights and franchises, and comply with
all laws applicable thereto; at all times maintain, preserve and protect all
franchises, patents, and trade names and preserve all the remainder of its
property used or useful in the conduct of its business and keep the same in good
condition and repair (normal wear and tear and obsolescence excepted), and from
time to time make, or cause to be made, all needful and proper repairs,
renewals, replacements, betterments and improvements thereto, and will pay or
cause to be paid, except when the same may be contested in good faith, all rent
due on premises where any property is held or may be held, so that the business
carried on in connection therewith may be continuously conducted. The Borrower
will have and maintain insurance at all times with respect to its properties
against risks of fire (including so-called extended coverage), theft and such
risks as the Lender may require containing such terms, in such form, and for
such periods, and written by such companies as may be satisfactory to the
Lender. The Borrower will furnish the Lender with certificates or other evidence
satisfactory to the Lender of compliance with the foregoing insurance
provisions. The Borrower will also at all times maintain necessary workmen's
compensation insurance and such other insurance as may be required by law or as
may be reasonably required by the Lender.
6.4. Notices of Default and Governmental Orders. The Borrower will
promptly give notice in writing to the Lender of the occurrence of any event
which constitutes or which with notice or lapse of time, or both, would
constitute an Event of Default; of any court or governmental orders, notices,
claims, investigations, litigation and proceedings affecting the Borrower, and
of any dispute which may exist between the Borrower, and any governmental
regulatory body or any other party, which, if decided adversely against the
Borrower, would have a material adverse effect on the Borrower's financial and
operating conditions and would prevent the Borrower to operate its business as
presently operated.
6.5. Financial Statements. The Borrower agrees to furnish to the Lender
the following financial information:
(a) Annual Statement. on or before 90 days after the end of its fiscal
year, its annual financial statement audited by a firm of certified public
accountants in scope and with exceptions acceptable to the Lender, accompanied
by a certificate by such accountant and by an officer of the Borrower that to
the best of their knowledge no default exists under this Loan Agreement, or
under any indenture pursuant to which any other indebtedness of the Borrower is
outstanding, and that all the terms of this Loan Agreement have been fully
performed, or if to the knowledge of either of them, any of the terms of this
Loan Agreement have not been fully performed, such certificate shall specify the
nature of the default and the steps taken by the Borrower to correct such
default.
(b) Quarterly Certificate. on or before forty-five (45) days after the
end of each quarter, a quarterly compliance certificate;
(c) Monthly Statements. on or before fifteen (15) days of month end a
financial statement for the preceding month in form satisfactory to the Lender,
and a monthly borrowing base certificate in the form attached as Exhibit 1; and
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(d) Other Information. promptly after the Lender's request, such other
information as the Lender may, from time to time, reasonably request.
The foregoing shall be certified to the Lender as correct by an authorized
representative of the Borrower. Such financial statements shall consist of
balance sheets, income statements and supporting information, including without
limitation, leases, schedule and pledge status of liquid assets, schedule of
debt maturities, schedule of contingent liabilities, and cash flow schedules for
income producing property. The financial statements shall fairly and
consistently represent Borrower's financial condition.
Whether requested or not, the Borrower will furnish to the Lender
promptly upon receipt thereof copies of any and all management letters and
financial statements submitted to the Borrower by its accountants and copies of
all regular statements and all regular or periodic financial reports which the
Borrower is or may be required to file with the Securities and Exchange
Commission.
(e) Field Exams. Lender may cause commercial finance field examinations
to be completed semi-annually, at Borrower's sole cost and expense.
6.6. Solvency. The Borrower hereby represents to the Lender that it is
solvent and is generally paying its debts as such debts become due.
6.7. F.I.C.A. and Withholding Taxes. Upon request of the Lender, the
Borrower will furnish the Lender with proof satisfactory to the Lender of the
payment or deposit of F.I.C.A. and withholding taxes required of the Borrower by
applicable law. Should the Borrower fail to make any such payment or deposit or
furnish such proof within a reasonable time, the Lender may, in the Lender's
sole and absolute discretion, and without notice to the Borrower: (a) make
payment of the same or any part thereof; or (b) set up such reserves in the
Borrower's account as the Lender may deem necessary to satisfy the liability
therefor. Each amount so deposited or paid by the Lender shall constitute an
advance under the Revolving Loan, payable on demand, and shall be secured by all
the Collateral held by the Lender. Nothing herein contained shall obligate the
Lender to make such deposit or payment or set up such reserve, or to ascertain
whether such deposit payments are being made by Borrower, nor shall the making
of one or more such deposits or payments or the setting up of any such reserve
constitute: (i) an agreement on the Lender's part to take any further or similar
action; or (ii) a waiver of any default by the Borrower under the terms hereof
or of any other agreements between the Borrower and the Lender. Upon the
expiration or termination of this Loan Agreement or transactions hereunder, the
Lender shall retain its security interest in all the Collateral held by the
Lender until the Borrower shall have paid or discharged all such F.I.C.A. and
tax obligations accrued to the date of such expiration or termination, or shall
have supplied to the Lender evidence satisfactory to the Lender that due
provisions have been made therefor.
6.8 Cash Flow Recapture. Borrower shall be required to utilize 50% of
the excess cash flow of Ranor Inc. above the required 1.2X Fixed Charge Coverage
Ratio to be applied to payments due on the Term Loan in the inverse order of
maturity. Such amount shall be due on or before April 1, 2007 for the period
ending March 31, 2007, and annually on July 1 of each year thereafter.
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SECTION 7. DEFAULT
7.1. Events of Default. The occurrence of any one or more of the
following events or conditions shall constitute an "Event of Default" under this
Loan Agreement:
a. Borrower's failure to make any payment of principal or interest
or any other sums within fifteen (15) days of the date when due on any of the
Obligations.
b. Any warranty or representation or other statement made or
furnished to the Lender by or on behalf of the Borrower or Guarantor herein or
in any document or instrument furnished in connection herewith proves to have
been false or misleading in any material respect when made or furnished.
c. Breach of or failure in the due observance or performance of
any covenant, condition or agreement on the part of the Borrower to be observed
or performed pursuant to this Loan Agreement (other than those to be observed or
performed pursuant to Section 5 and other than those specifically listed in this
Section 7.1) and the failure to cure (if curable) any such breach or failure
within fifteen (15) days after receipt of written notice thereof from the Lender
to the Borrower.
d. Breach of or failure in the due observance or performance of
any covenant, condition or agreement on the part of the Borrower to be observed
or performed pursuant to Section 5 and the failure to cure (if curable) any such
breach or failure within fifteen (15) days after receipt of written notice
thereof from the Lender to the Borrower.
e. Breach of or failure in the due observance or performance of
any covenant, condition or agreement on the part of the Borrower to be observed
or performed pursuant to any Supplemental Agreements or breach by Borrower or
any Guarantor of any other agreement with Lender beyond the expiration of any
grace or cure periods provided therein.
f. A judgment or judgments for the payment of money in excess of
$50,000 shall be rendered against the Borrower or any Guarantor, and any such
judgment shall remain unsatisfied and in effect for any period of thirty (30)
consecutive days without a stay of execution; or
g. The Borrower or any Guarantor shall (1) apply for or consent to
the appointment of a receiver, trustee or liquidator of all or a substantial
part of any of its assets; (2) be unable, or admit in writing its inability, to
pay its debts as they mature; (3) file or permit the filing of any petition,
case arrangement, reorganization, or the like under any insolvency or bankruptcy
law, or the adjudication of it as a bankrupt, or the making of an assignment for
the benefit of creditors or the consenting to any form or arrangement for the
satisfaction, settlement or delay of debt or the appointment of a receiver for
all or any part of its properties; or (4) any action shall be taken by the
Borrower or any Guarantor for the purpose of effecting any of the foregoing; or
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h. An order, judgment or decree shall be entered, or a case shall
be commenced, against the Borrower or any Guarantor, without its application,
approval or consent by any court of competent jurisdiction, approving a petition
or permitting the commencement of a case seeking reorganization or liquidation
of the Borrower or any Guarantor or appointing a receiver, trustee or liquidator
of the Borrower or any Guarantor, or of all or a substantial part of the assets
of the Borrower or any Guarantor, and Borrower or any Guarantor, by any act,
indicate its approval thereof, consent thereto, or acquiescence therein, or such
order, judgment, decree or case shall continue unstayed and in effect for any
period of thirty (30) consecutive days or an order for relief in connection
therewith shall be entered; or
i. If the Borrower or any Guarantor shall dissolve or liquidate,
or be dissolved or liquidated, or cease to legally exist, or merge or
consolidate, or be merged or consolidated with or into any other corporation; or
j. If Borrower or any Guarantor who is a natural person shall die;
or
k. Failure by the Borrower or by any Guarantor to pay any other
indebtedness or obligation in excess of $50,000, or if any such other
indebtedness or obligation which is not subject to a bonafide dispute shall be
accelerated, or if there exists any event of default under any instrument,
document or agreement governing, evidencing or securing such other indebtedness
or obligation which is not subject to a bonafide dispute; or
l. Substantial loss, theft, damage, or destruction of the
collateral provided to the Lender pursuant to this Loan Agreement, and not
covered by insurance in any material respect.
m. Termination by any party thereto of the loan arrangement
provided pursuant to Section 2 of this Agreement.
n. The occurrence of any material adverse change in the financial
and/or operation condition of the Borrower or any Guarantor.
o. If at any time, the Lender believes in good faith that there is
such a material adverse change in the condition or affairs (financial or
otherwise) of the Borrower or any Guarantor as the Lender believes in good faith
impairs the Lender's security (if any) or increases its risk.
7.2. Acceleration. Upon and after an Event of Default, the entire
unpaid balance owed under this Loan Agreement, or any note or other documents
evidencing the same, plus any other Obligations, shall, at the option of the
Lender, upon written notice from Lender, immediately become due and payable
without presentment, demand, protest, notice of protest, or other notice of
dishonor of any kind, all of which are hereby expressly waived by the Borrower,
and Lender shall immediately be entitled to exercise all of its rights and
remedies hereunder, under the Supplemental Agreements and under applicable law.
-22-
SECTION 8. MISCELLANEOUS PROVISIONS
8.1. Setoff. Borrower hereby grants to Lender a lien, security interest
and a right of setoff as security for all of the Obligations, upon and against
all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Lender or any entity under the
control of Lender, or in transit to any of them. At any time, without demand or
notice, Lender may set off the same or any part thereof and apply the same to
any liability or obligation of Borrower even though unmatured and regardless of
the adequacy of any other collateral securing the Obligations. ANY AND ALL
RIGHTS TO REQUIRE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER,
ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. Lender shall not be
required to marshal any present or future security for, or guarantees of, the
Obligations or to resort to any such security or guarantee in any particular
order and the Borrower waives to the fullest extent that it lawfully can, (a)
any right it might have to require the Lender to pursue any particular remedy
before proceeding against the Lender and (b) any right to the benefit of, or to
direct the application of the proceeds of any collateral until the Obligations
are paid in full.
8.2. Waiver of Right to Trial by Jury and Consent to Jurisdiction.
BORROWER AND LENDER MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER DOCUMENTS
CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR LENDER TO ACCEPT THIS
AGREEMENT.
Borrower hereby agrees that the following courts:
State Court - Any state or local court of the Governing State
Federal Court - United States District Court for the District of
Governing State
-23-
shall have exclusive jurisdiction to hear and determine any claims or disputes
between Borrower and Lender pertaining directly or indirectly to this Agreement
or to any matter arising in connection with this Agreement. Borrower expressly
submits and consents in advance to such jurisdiction in any action or proceeding
commenced in such courts, hereby waiving personal service of the summons and
complaint, or other process or papers issued therein, and agreeing that service
of such summons and complaint, or other process or papers, may be made by
registered or certified mail addressed to Borrower at the address set forth
herein. Should Borrower fail to appear or answer any summons, complaint, process
or papers so served within thirty (30) days after the mailing thereof, it shall
be deemed in default and an order and/or judgment may be entered against it as
demanded or prayed for in such summons, complaint, process or papers. The
exclusive choice of forum set forth herein shall not be deemed to preclude the
enforcement of any judgment obtained in such forum or the taking of any action
under this Agreement to enforce the same in any appropriate jurisdiction.
8.3. No Waiver. No course of dealing between the Borrower and the
Lender and no failure to exercise or delay in exercising on the part of the
Lender any right, power or privilege under the terms of this Loan Agreement or
under the terms of any other agreements, instruments or other documents between
the Lender and the Borrower shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder or
thereunder preclude any other or further privilege. The rights and remedies
provided herein and in any other agreement are cumulative and not exclusive or
in derogation of any rights or remedies provided herein, therein, by law or
otherwise.
8.4. Survival of Agreements. All agreements, representations and
warranties made herein, in any agreement and in any statements, notices,
invoices, certificates, schedules, documents or other instruments delivered to
the Lender in connection with this Loan Agreement or any other agreement shall
survive the making of the loans and advances hereunder.
8.5. Rights of Assignee. All rights of the Lender in, to and under this
Loan Agreement shall pass to and may be exercised by any assignee thereof. The
Borrower agrees that, in the event of an assignment of this Loan Agreement and
notice of such assignment to the Borrower, the liability of the Borrower to a
holder for value of this Loan Agreement shall be immediate and absolute and not
affected by any actions of the Lender; and that the Borrower will not set up any
claim against the Lender as a defense, counterclaim or setoff to any action for
the unpaid balance owed under this Loan Agreement or for possession, brought by
said holder.
8.6. Binding Effect. All rights and obligations of the Lender hereunder
shall inure to the benefit of and be binding upon its successors and assigns,
and all the obligations of the Borrower contained in this Loan Agreement shall
bind the successors, heirs and assigns of the Borrower. If the Borrower consists
of more than one party , all of the obligations, covenants, representations and
warranties of the Borrower contained in this Loan Agreement shall be the joint
and several obligations of the parties constituting the "Borrower".
8.7. Entire Agreement. This Loan Agreement and the Supplemental
Agreements constitute the entire agreement of the parties and may not be amended
orally.
8.8. Governing Law. This Loan Agreement shall be governed and construed
in accordance with the laws of the Governing State, including its conflict of
laws principles.
-24-
8.9. Payments. Acceptance of any check, draft or money order tendered
in payment of any of the Obligations is conditioned upon and subject to receipt
of final payment in cash.
8.10. Schedules. All schedules referred to herein and annexed hereto
are hereby incorporated into this Loan Agreement and made a part hereof.
8.11. Counsel Fees and Expenses. The Borrower agrees to pay all
reasonable counsel fees and expenses, including recording and filing fees,
incurred by the Lender in connection with the financing of any kind and
character hereafter incurred by the Lender, whether in connection with efforts
to collect the Obligations, or in the enforcement or defense of any of the
provisions of this Loan Agreement; or negotiations regarding and consultation
concerning this Loan Agreement or any Supplemental Agreement, or preparation
therefor, or the financing extended thereunder; or the defense of any
proceedings involving any claims made or threatened against or arising out of
this Loan Agreement or any Supplemental Agreement, or the financing extended
thereunder, or which the Lender may hereafter incur in protecting, enforcing,
increasing or releasing any security held by the Lender or any Obligation or any
provision of this Loan Agreement or any Supplemental Agreement. Borrower's
obligation to pay such counsel fees and expenses of the Lender shall exist
whether or not proceedings are instituted or legal appearances are made in any
court on behalf of the Lender.
8.12. Lender Advances. The Lender may, in its sole and absolute
discretion upon five (5) business days written notice, pay any amount which the
Borrower has failed to pay or perform any act which the Borrower has failed to
perform under this Loan Agreement. In such event the costs, disbursements,
expenses and reasonable counsel fees thereof, together with interest thereon
from the date the expense is paid or incurred, at the highest interest rate
allowed under this Loan Agreement shall be (i) added to the Obligations, (ii)
payable on demand to the Lender and (iii) secured by the Collateral. Nothing
herein contained shall obligate the Lender to make such payments nor shall the
making of one or more such payments constitute (i) an agreement on the Lender's
part to take any further or similar action; or (ii) a waiver of any Event of
Default under this Loan Agreement.
8.13. Descriptive Headings. The descriptive headings of the several
sections of this Loan Agreement are inserted for convenience only and shall not
be deemed to affect the meaning or construction of any of the provisions hereof.
8.14. Notices. Except as otherwise specified herein, any written notice
required or permitted by this Loan Agreement may be delivered by depositing it
in the U.S. mail, first class, postage prepaid, or by any national overnight
courier, charges prepaid, addressed to the Borrower or the Lender at the
addresses set forth at the beginning of this Loan Agreement.
8.15. Severability. If any provision of this Loan Agreement or
application thereof to any person or circumstance shall to any extent be
invalid, the remainder of this Loan Agreement or the application of such
provision to persons, entities or circumstances other than those as to which it
is held invalid, shall not be affected thereby and each provision of this Loan
Agreement shall be valid and enforceable to the fullest extent permitted by law.
-25-
8.16. Third Party Purchaser. Lender shall have the unrestricted right
at any time or from time to time, and without Borrower's (or any Guarantor's)
consent, to sell, assign, endorse, or transfer all or any portion of its rights
and obligations hereunder to one or more banks or other entities (each, an
"Assignee") and, Borrower (and each Guarantor) agrees that it shall execute, or
cause to be executed such documents including without limitation, amendments to
this Agreement and to any other documents, instruments and agreements executed
in connection herewith as Lender shall deem necessary to effect the foregoing.
In addition, at the reasonable request of Lender and any such Assignee, Borrower
shall issue one or more new promissory notes, as applicable, to any such
Assignee and, if Lender has retained any of its rights and obligations hereunder
following such assignment, to Lender, which new promissory notes shall be issued
in replacement of, but not in discharge of, the liability evidenced by the note
held by Lender prior to such assignment and shall reflect the amount of the
respective commitments and loans held by such Assignee and Lender after giving
effect to such assignment. Upon the execution and delivery of appropriate
assignment documentation, amendments and any other documentation required by
Lender in connection with such assignment, and the payment by Assignee of the
purchase price agreed to by Lender and such Assignee, such Assignee shall be a
party to this Agreement and shall have all of the rights and obligations of
Lender hereunder (and under any and all other guaranties, documents, instruments
and agreements executed in connection herewith) to the extent that such rights
and obligations have been assigned by Lender pursuant to the assignment
documentation between Lender and Assignee, and Lender shall be released from its
obligation hereunder and thereunder to a corresponding extent.
8.17. Participation. Lender shall have the unrestricted right at any
time and from time to time, and without the consent of or notice to Borrower (or
any Guarantor), but without increased cost to Borrower, to grant to one or more
institutions or other persons (each a "Participant") participating interests in
Lender's obligations to lend hereunder and/or any or all of the loans held by
Lender hereunder. In the event of any such grant by Lender of a participating
interest to a Participant, whether or not upon notice to Borrower, Lender shall
remain responsible for the performance of its obligations hereunder and Borrower
shall continue to deal solely and directly with Lender in connection with
Lender's rights and obligations hereunder. Lender shall furnish any information
concerning Borrower in its possession from time to time to any prospective
assignees and Participants, provided that Lender shall require any such
prospective assignee or Participant to maintain the confidentiality of such
information.
8.18. Replacement Documents. Upon receipt of an affidavit of an officer
of Lender as to the loss, theft, destruction or mutilation of the Note or any
other security document(s) which is not of public record and, in the case of any
such loss, theft, destruction or mutilation, upon surrender and cancellation of
such Note or other document(s), the Borrower will issue, in lieu thereof, a
replacement Note or other document(s) in the same principal amount thereof and
otherwise of like tenor.
-26-
8.19. Federal Reserve. Lender may at any time pledge, endorse, assign,
or transfer all or any portion of its rights under the Loan Documents including
any portion of the Note to any of the twelve (12) Federal Reserve Banks
organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No
such pledge or enforcement thereof shall release Lender from its obligations
under any of the Loan Documents.
-27-
IN WITNESS WHEREOF, the parties have caused this Loan Agreement to be
duly executed and delivered by the proper and duly authorized officers as of the
date and year first above written.
SOVEREIGN BANK
By:
---------------------------------
Xxxxxxxxxxx X. Xxxxxx
Its Senior Vice President
Duly Authorized
BORROWER
RANOR, INC.
By:
---------------------------------
Its
Duly Authorized
The foregoing has been read and consented to by the following Guarantor:
XXXXXXXXXX HOLDINGS II, INC.
By:
---------------------------------
Its
Duly Authorized
-28-
Schedule A
Disclosures
Schedule B
COLLATERAL
All personal property now owned or hereafter acquired by the Debtor, wherever
located, including, without limitation:
All "Accounts," "Chattel Paper," "Instruments," "Health-Care-Insurance
Receivables," "Letter of Credit Rights," "Payment Intangibles," "Software,"
"Supporting Obligations," "Electronic Chattel Paper," "Commercial Tort Claims"
and "Tangible Chattel Paper," as those terms are defined in the UCC as of the
date hereof, whether now owned or hereafter acquired by Debtor;
All "Inventory" as that term is defined in the UCC as of the date hereof,
including, without limitation, any and all goods, merchandise or other personal
property, wheresoever located and whether or not in transit, now owned or
hereafter acquired by the Debtor, which is or may at any time be held for sale
or lease, or furnished or to be furnished under any contract of service or held
as raw materials, work in process, supplies or materials used or consumed in the
Debtor's business, and all such property the sale or other disposition of which
has given rise to Accounts, Chattel Paper, Documents, or Instruments and which
has been returned to or repossessed or stopped in transit by the Debtor;
All "Securities Entitlements," "Investment Property," "Financial Assets,"
"Documents" as those terms are defined in the UCC, whether now existing or
hereafter acquired or arising.
All bills of lading, dock warrants, dock receipts, warehouse receipts or orders
for the delivery of goods, and any other documents which in the regular course
of business or financing are treated as adequately evidencing that the persons
in possession of them are entitled to receive, hold, and dispose of the goods
they cover;
All "Equipment," as that term is defined in the UCC, of Debtor, whether
presently owned or hereafter acquired, and including, without limitation,
machinery, furniture, furnishings, and fixtures, and any and all goods used or
bought for use in or being used or for use in the conduct of Debtor's business
and all goods used or bought for use in Debtor's business which are not included
within the definition of Inventory, and all accessions and additions thereto,
replacements therefor, and substitutions therefor.
All "Motor Vehicles" whether now owned or hereafter acquired by the Debtor, and
all accessions and additions thereto, replacements therefor, and substitutions
therefor.
All "General Intangibles" as that term is defined in the UCC as of the date
hereof, whether presently owned or hereafter acquired, including, without
limitation, all choses in action, causes of action, and all other intangible
personal property of the Debtor, including, without limitation, corporate or
other business records, inventions, designs, patents, patent applications,
trademarks, service marks, tradenames, trade secrets, goodwill, copyrights,
registrations, licenses, franchises, customer lists, tax refund claims, credit
files, computer programs, printouts and other computer materials and records,
guaranty claims, security interests or other property held by or granted to
Debtor to secure payment of any obligation of any obligor of Debtor and any and
all of the rights of Debtor of whatever nature under any and all contracts,
agreements, or leases (whether of real or personal property) to which the Debtor
is or may become a party, including without limitation all of the rights of
Debtor to enforce all of the provisions of, and to obtain payments or other
performance due under, all contracts, agreements, or leases;
All monies, securities and other property of the Debtor, and the proceeds
thereof, now or hereafter held or received by or in transit to the Bank whether
for safekeeping, custody, pledge, transmission, collection or otherwise, and
also in and to any and all deposits, general or special, and credits of the
Debtor with, and any and all claims of the Debtor against, the Bank now or at
any time hereafter existing;
All of Debtor's rights (including rights as licensee and lessee) with respect to
all computer hardware and software and all rights with respect thereto
including, any and all licenses, options, warranties, service contracts, program
services, test rights, maintenance rights, support rights, improvement rights,
renewal rights and indemnifications, and any substitutions, replacements,
additions or model conversions of any of the foregoing, and further including
(i) computer and other electronic data processing hardware, including all
integrated computer systems, central processing units, memory units, display
terminals, printers, computer elements, card readers, tape drives, hard and soft
disk drives, cables, electrical supply hardware, generators, power equalizers,
accessories, peripheral devices and other related computer hardware, (ii) all
Software and all software programs designed for use on the computers and
electronic data processing hardware described in clause (i) above, including all
operating system software, utilities and application programs in any form
(source code and object code in magnetic tape, disk or hard copy format or any
other listings whatsoever (iii) any firmware associated with any of the
foregoing; and (iv) any documentation for hardware, Software and firmware
described in clauses (i), (ii) and (iii) above, including flow charts, logic
diagrams, manuals, specifications, training materials, charts and pseudo codes;
and
All products and proceeds of the foregoing, including, without limitation,
proceeds of any insurance policies insuring any of the foregoing.
All references to the UCC shall refer to the Uniform Commercial Code in effect
in the state applicable to the Collateral, as the same may be revised.
Exhibit 1
Borrowing Base Certificate
[GRAPHIC OMITTED]
Date: 0/0/00
Borrowing Base Certificate - DRAFT - Number: XX-OO
Pursuant to its Security Agreement with
Sovereign Bank,
the undersigned hereby certifies to Sovereign Bank as of the above
date the following:
-----------------------------------------------------------------------------------------------------------------------------
From line 1 of Collateral Update or 0/0/00
line D of BBC dated:
------------------
Previous accounts receivable: 0.00 (A)
--------------------
Additions to accounts receivable:
Date Sales Misc. Additions
---- ----- ---------------
0/0/00 0.00 0.00
-------------------- -------------- ------------------
0/0/00 0.00 0.00
-------------------- -------------- ------------------
Total: 0.00 + 0.00 = 0.00 (B)
-------------- ------------------ --------------------
Reductions to accounts receivable:
Date Collections Credit Memos Other Reductions
---- ----------- ------------ ----------------
0/0/00 ( 0.00 ) ( 0.00 ) 0.00 )
(
-------------------- -------------- ------------------ --------------------
0/0/00 ( 0.00 ) ( 0.00 ) 0.00 )
(
-------------------- -------------- ------------------ --------------------
Total: ( 0.00 ) + ( 0.00 ) + ( 0.00 ) = ( 0.00 ) (C)
-------------- ------------------ -------------------- --------------------
New accounts receivable (lines A+B-C): 0.00 (D)
--------------------
From Collateral Update dated: 0/0/00
--------------------
Ineligible accounts receivable ( 0.00 ) (E)
(line 2):
--------------------
Eligible accounts receivable (line D- 0.00 (F)
line E):
--------------------
Accounts receivable advance rate: 0 % (G)
-----
Accounts receivable availability (line 0.00 (H)
F times line G):
--------------------
From Collateral Update dated: 0/0/00
--------------------
Inventory availability (line 8): 0.00 (I)
--------------------
Letters of Credit, other reserves and/or holdbacks (line ( 0.00 ) (J)
9):
--------------------
Other availability (line 10+11): 0.00 (K)
--------------------
Net Available Borrowing Base (lines 0.00 (L)
H+I-J+K):
--------------------
-----------------------------------------------------------------------------------------------------------------------------
From line 13 of Collateral Update or line Q 0/0/00
of BBC dated: --------------------
Beginning 0.00 (M)
loan balance:
--------------------
Less: Deposits/collections/paydowns since
last BBC:
Date Amount Date Amount
---- ------ ---- ------
0/0/00 ( 0.00 ) 0/0/00 ( 0.00 )
-------------------- -------------- ------------------ --------------------
0/0/00 ( 0.00 ) 0/0/00 ( 0.00 )
-------------------- -------------- ------------------ --------------------
Total: ( 0.00 ) + ( 0.00 ) = ( 0.00 ) (N)
-------------- -------------------- --------------------
Plus: Interest and other charges applied to the 0.00 (O)
loan:
--------------------
Plus: Principal amount of additional borrowing now desired, if any: 0.00 (P)
--------------------
New loan balance (lines M-N+O+P) not to exceed
either
Line 0.00 or net available borrowing base (line L): Overline! (Q)
limit of
-------------- --------------------
Available for future borrowings (line Overline! (R)
L-line Q):
--------------------
-----------------------------------------------------------------------------------------------------------------------------
Prepared by: xxxxxxxxxxxxxxxxxxxx for: xxxxxxxxx
xxxxxxxxxx xxxxxxxxxx xxxx
------------------------------------------------- ---------------------------------------------
Name/Position Borrower
[GRAPHIC OMITTED] Date: 0/0/00
Collateral Update Certificate - DRAFT - Number: XX-OO
Pursuant to its Security Agreement with Sovereign Bank,
the undersigned hereby certifies to Sovereign Bank
as of the above date the following:
--------------------------------------------------------------------------------------------------------------------------
Per accounts receivable aging dated: 0/0/00
-------------------
Total 0.00 (1)
Accounts
Receivable:
--------------------
--------------------
Accounts more than 0 days from xxxxxxxxxxxxx 0.00
Ineligibles:
------ ------------------------- --------------------
Intercompany accounts + 0.00
--------------------
Government accounts + 0.00
--------------------
Contra accounts + 0.00
--------------------
Foreign Accounts + 0.00
--------------------
0 % Cross aging + 0.00
exclusion
----- --------------------
xxxxxxxxxx xxxxx xx + 0.00
------------------------------ --------------------
xxxxxxxxxx xxxxx xx + 0.00
------------------------------ --------------------
Total ineligible 0.00 (2)
accounts receivable:
--------------------
Eligible accounts receivable (line 0.00 (3)
1-line 2):
--------------------
Accounts receivable 0 % (4)
advance rate:
-----
Accounts receivable availability (line 0.00 (5)
3 times line 4):
--------------------
Inventory as 0/0/00
of: -------------------
Gross Adv Inventory
Inventory Type Amount Ineligible % Cap Availability
----------------------------------------- -------------------------------------------- --------------------
xxx xxxx xx 0.00 0.00 0 0.00 0.00
----------------------------------------- -------------------------------------------- --------------------
xxx xxxx xx 0.00 0.00 0 0.00 + 0.00
----------------------------------------- -------------------------------------------- --------------------
xxx xxxx xx 0.00 0.00 0 0.00 + 0.00
----------------------------------------- -------------------------------------------- --------------------
xxx xxxx xx 0.00 0.00 0 0.00 + 0.00
----------------------------------------- -------------------------------------------- --------------------
xxx xxxx xx 0.00 0.00 0 0.00 + 0.00
----------------------------------------- -------------------------------------------- --------------------
Total of inventory 0.00 (6)
availability by type:
--------------------
Availability cap on aggregate 0.00 (7)
inventory, if any:
--------------------
Inventory availability (line 6, not to 0.00 (8)
exceed line 7):
--------------------
Letters of credit, other reserves ( 0.00 ) (9)
and/or holdbacks:
--------------------
Other xxx x xxxxxx 0.00 (10)
availability: xxxxxx xxxx
-------------------------------------------------- --------------------
Other xxx x xxxxxx 0.00 (11)
availability: xxxxxx xxxx
-------------------------------------------------- --------------------
Net available borrowing base (line 0.00 (12)
5+8-9+10+11):
--------------------
--------------------------------------------------------------------------------------------------------------------------
Loan Balance not to
exceed either
Line 0.00 or net available 0.00 (13)
limit borrowing base (line
of: 12):
------------------- --------------------
Available for future borrowings (line Overline! (14)
12-line 13):
--------------------
--------------------------------------------------------------------------------------------------------------------------
Prepared by: xxxxxxxxxxxxxxxxxxxx for: xxxxxxxxx
xxxxxxxxxx xxxxxxxxxx xxxx
------------------------------------------------- --------------------------------------------
Name/Position Borrower
[GRAPHIC OMITTED] Date: 0/0/00
Accounts Receivable & Loan Reconciliation - DRAFT - Number: XX-OO
Pursuant to its Security Agreement with
Sovereign Bank,
the undersigned hereby certifies to Sovereign Bank as of the above
date the following:
----------------------------------------------------------------------------------------------------------------------------
Activity for the 0/0/00 to: 0/0/00
period from:
-------------------- --------------------
BBCs from: XX-00 to: XX-00
-------------------- --------------------
A/R Reconciliation:
Ending Accounts Receivable Balance (from line D 0.00 (I)
of the last BBC of the period):
--------------------
Additions (reductions) to accounts
receivable reported on BBCs
subsequent to the last BBC in the
period but relating to the period:
BBC# Description Amount
---- ----------- ------
XX-00 xxxxxxxxxx 0.00
xxxxxxxxx xxx
-------------------- -------------------------------------------- --------------------
XX-00 xxxxxxxxxx + 0.00
xxxxxxxxx xxx
-------------------- -------------------------------------------- --------------------
XX-00 xxxxxxxxxx - ( 0.00 )
xxxxxxxxx xxx
-------------------- -------------------------------------------- --------------------
XX-00 xxxxxxxxxx - ( 0.00 ) = 0.00 (II)
xxxxxxxxx xxx
-------------------- -------------------------------------------- -------------------- --------------------
Adjusted end-of-period accounts receivable balance (Line I+II): 0.00 (III)
--------------------
End-of-period accounts receivable per 0/0/00 0.00 (IV)
aging dated:
-------------------- --------------------
Variance between line III and line IV: 0.00 (V)
--------------------
Explain: xxxxx xxxx xx
xxxxxxxxxxx xxx
-----------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Loan Activity:
Ending loan balance (from line Q of the last 0.00 (VI)
BBC of the period):
--------------------
Additions (reductions) to the loan
balance reported on BBCs subsequent
to the last BBC in the period but
relating to the period:
BBC# Description Amount
---- ----------- ------
XX-00 xxxxxxxxxx 0.00
xxxxxxxxx xxx
-------------------- -------------------------------------------- --------------------
XX-00 xxxxxxxxxx + 0.00
xxxxxxxxx xxx
-------------------- -------------------------------------------- --------------------
XX-00 xxxxxxxxxx - ( 0.00 )
xxxxxxxxx xxx
-------------------- -------------------------------------------- --------------------
XX-00 xxxxxxxxxx - ( 0.00 ) = 0.00 (VII)
xxxxxxxxx xxx
-------------------- -------------------------------------------- -------------------- --------------------
Adjusted end-of-period loan balance (line VI+line VII): 0.00(VIII)
--------------------
End-of-period loan balance from company accounting records: 0.00 (IX)
--------------------
Variance between line IX and line X: 0.00 (X)
--------------------
Explain: xxxxx xxxx xx
xxxxxxxxxxx xxx
-----------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Prepared by: xxxxxxxxxxxxxxxxxxxx for: xxxxxxxxx
xxxxxxxxxx xxxxxxxxxx xxxx
------------------------------------------------ ---------------------------------------------
Name/Position Borrower
TERM PROMISSORY NOTE
FOR VALUE RECEIVED, on March 1, 2013 (the "Maturity Date"), RANOR, INC.,
a Delaware corporation, each with its chief executive office and principal place
of business at Xxx Xxxxx Xxxxx, Xxxxxxxxxxx, XX 00000 ("Borrower") promises to
pay to the order of SOVEREIGN BANK, (hereinafter called "Lender") at its offices
at 0000 Xxxxxxxxxx Xxxxxx, Xxxx Xxxxxxxx, XX 00000 or at such other place as the
holder of this note may from time to time designate in writing, the principal
sum of FOUR MILLION DOLLARS ($4,000,000), in lawful money of the United States
with interest at the rate or rates set forth below, until fully paid. Borrower
further agrees to pay all taxes levied or assessed upon said principal sum
against any holder of this Note and all costs, including reasonable attorneys'
fees incurred in the collection, defense, preservation, enforcement or
protection of this Note or any guaranty hereof in the foreclosure of any
mortgage or security interest now or hereafter securing the same or in any
proceedings to otherwise enforce or protect this Note or any guaranty hereof or
any security therefor. Interest on this Note shall be computed on the basis of a
year of three hundred sixty (360) days and actual days elapsed.
(1) INTEREST RATE/PAYMENTS.
(a) Principal Plus Interest. Payments of principal shall be made in
twenty-eight (28) successive quarterly installments as follows:
Twenty-Seven (27) equal successive quarterly installments in the
amount of ONE HUNDRED FORTY-TWO THOUSAND EIGHT HUNDRED FIFTY-SEVEN AND 14/100THS
DOLLARS ($142,857.14) commencing June 1, 2006 and continuing on the first day of
each successive calendar quarter thereafter, with the final and twenty-eighth
(28th) installment being due and payable on the Maturity Date, said installment
being an amount equal to the balance of all unpaid principal and accrued
interest.
(b) Interest Rates, Payment of Interest. So long as no Event of Default
(hereafter defined) has occurred and subject to the terms hereof, principal
outstanding hereunder shall bear interest at a fixed rate of nine (9%) percent
per annum (herein the "Fixed Rate") through and including February 28, 2011, and
thereafter at a variable rate (the "Variable Rate") equal to the Prime Rate
(hereinafter defined) plus one and one-half percent (1.5%) per annum. Interest
on all amounts outstanding at the Variable Rate and Fixed Rate shall be payable
quarterly beginning June 1, 2006, and continuing thereafter on the first Banking
Day of each succeeding quarter until the principal balance shall be paid in
full.
(c) Automatic Payments. Borrower hereby authorizes Lender to
automatically deduct from Borrower's account at Lender the amount of any loan
payment ("Automatic Payments"). If the funds in the account are insufficient to
cover any payment, Lender shall not be obligated to advance funds to cover the
payment. At any time and for any reason, Borrower or Lender may voluntarily
terminate Automatic Payments. The Lender shall record on the books and records
of the Lender an appropriate notation evidencing each repayment on account of
the principal hereof and the amount of interest paid; and the Borrower
authorizes the Lender to maintain such records or make such notations and agrees
that the amount shown on the books and records as outstanding from time to time
shall constitute the amount owing to the Lender pursuant to this Note, absent
manifest error.
(d) Cash Flow Recapture. Borrower shall also pay the amounts required
under Section 6.7 of the Loan Agreement.
(2) DEFAULT RATE. To the extent allowed by applicable law, after the
occurrence of any Event of Default, after maturity or after judgement has been
rendered on this Note, all outstanding principal and unpaid interest shall bear,
until paid, interest at a rate per annum equal to two (2%) percentage points
greater than that which would otherwise be applicable (the "Default Rate").
(3) LATE CHARGE. If a regularly scheduled payment is fifteen (15) days
or more late, Borrower will be charged 5.000% of the unpaid portion of the
regularly scheduled payment or $10.00, whichever is greater.
(4) EXPENSES. Borrower further promises to pay to the Lender, as
incurred, and as an additional part of the unpaid principal balance, all costs,
expenses and reasonable attorneys' fees incurred (i) in the protection,
modification, collection, defense or enforcement of all or part of this Note or
any guaranty hereof, or (ii) in the foreclosure or enforcement of any mortgage
or security interest which may now or hereafter secure either the debt hereunder
or any guaranty thereof, or (iii) with respect to any action taken to protect,
defend, modify or sustain the lien of any such mortgage or security agreement,
or (iv) with respect to any litigation or controversy arising from or connected
with this Note or any mortgage or security agreement or collateral which may now
or hereafter secure this Note, or (v) with respect to any act to protect defend,
modify, enforce or release any of its rights or remedies with regard to, or
otherwise effect collection of, any collateral which may now or in the future
secure this Note or with regard to or against Borrower or any endorser,
guarantor or surety of this Note.
(5) DEFINITIONS. (a) "Fixed Rate" shall have the meaning set forth in
Paragraph 1(b) hereof.
(b) "Governing State" shall mean the state where Lender's offices are
located as set forth in the first paragraph of this Note.
(c) "Loan Documents" shall mean any and all agreements, instruments,
documents, security agreements, mortgages, financing statements, and supplements
thereto and relating to the Loan, or entered into between the Borrower or
Guarantor (hereafter defined) in favor of, or with, the Lender, at any time, for
any purpose.
(d) "Maturity Date" shall have the meaning set forth in the first
paragraph of this Note.
(e) "Obligations" shall mean all loans, advances, debts, liabilities,
obligations, covenants and duties owing by the Borrower to the Lender of every
kind and description (whether or not evidenced by any note or other instrument
and whether or not for the payment of money), direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, whether or
not such obligations are related to the transaction described in this Loan
Agreement, by class, or kind, or whether or not contemplated by the parties at
the time of the granting of this security interest, including without
limitation, all interest, fees, charges, expenses and attorneys' fees chargeable
to the Borrower or incurred by the Lender in connection with the Borrower's
account whether provided for herein or in any Loan Document.
(f) The term "Prime Rate" means the variable per annum rate of interest
so designated from time to time by the Lender as its prime rate. The Prime Rate
is a reference rate and does not necessarily represent the lowest or best rate
being charged to any customer. The rate of interest hereunder shall change
simultaneously and automatically, without further notice, upon the Lender's
determination and designation from time to time of the Prime Rate. The Lender's
determination and designation from time to time of the Prime Rate shall not in
any way preclude the Lender from making loans to other borrowers at rates that
are higher or lower than or different from the referenced rate.
(g) "Variable Rate" shall have the meaning set forth in paragraph 1(b)
hereof.
(6) OPTIONAL PREPAYMENT. Borrower may prepay the outstanding
indebtedness due hereunder in whole, or in part, if no Event of Default then
exists and any applicable Prepayment Consideration (as defined below) is
tendered with each prepayment. The "Prepayment Consideration" shall be in the
first year of this Loan, three (3%) percent of the principal amount prepaid; in
the second year of this Loan, two (2%) percent of the principal amount prepaid;
in the third year of this Loan, one (1%) percent of the principal amount
prepaid. After the third full year of this Loan, no Prepayment Consideration is
due. No Prepayment Consideration shall be due if the prepayment is solely as a
result of application of insurance or condemnation proceeds from a casualty or
condemnation action against Borrower's assets.
Prepayment Consideration shall be due on any payment of principal that
is paid prior to the date upon which it is scheduled to be due, including an
involuntary early payment, such as by reason of operation of law, condemnation,
casualty or acceleration of the Loan upon an Event of Default or by reason of
liquidation of the Borrower by a receiver or otherwise. Borrower recognizes that
Lender will incur substantial additional costs and expenses including loss of
yield and anticipated profitability in the event of a prepayment of the Loan (or
a portion thereof) and that the Prepayment Consideration compensates Lender for
such costs and expenses. Borrower acknowledges that the Prepayment Consideration
is bargained for consideration and not a penalty.
All such prepayment amounts shall be applied first to fees and expenses
then due hereunder, then to interest on the unpaid principal balance accrued to
the date of prepayment and last to the principal balance then due hereunder.
(7) DEFAULT. The happening of any of the following events or conditions
shall constitute an "Event of Default" under this Note:
1. Failure to make any payment of principal or interest or any sum due
under this Note within fifteen (15) days of the date when the same shall be due
and payable; or
2. Default by the Borrower in the payment or performance of any
obligation on its part to be paid or performed, or breached by the Borrower of
any representation, warranty, term, covenant or condition of or under any
agreements between the Lender and the Borrower including, without limitation,
any default or Event of Default under that certain Loan and Security Agreement
dated of even date herewith, as the same may be amended, modified, extended or
restated or in any documents or instruments referred to in said agreements, and
without limitation any default or Event of Default under that certain Revolving
Promissory Note given by Borrower to Lender of even date herewith as the same
may be amended, modified extended or restated.
Upon and after an Event of Default, the availability of advances
hereunder shall, at the option of the Lender, be deemed to be automatically
terminated and, at its option, the whole of said indebtedness, both principal
and interest, and including any other sums which may become due under this Note,
shall, at the option of the holder of this Note, immediately become due and
payable without presentment, demand, protest, notice of protest, or other notice
of dishonor of any kind, all of which are hereby expressly waived by the
Borrower.
(8) WAIVERS, CONSENT TO JURISDICTION. The Borrower agrees that no delay
or failure on the part of the holder in exercising any power, privilege, remedy,
option or right hereunder shall operate as a waiver thereof or of any other
power, privilege, remedy or right; nor shall any single or partial exercise of
any power, privilege, remedy, option or right hereunder preclude any other or
future exercise thereof or the exercise of any other power, privilege, remedy,
option or right. The rights and remedies expressed herein are cumulative, and
may be enforced successively, alternately, or concurrently and are not exclusive
of any rights or remedies which holder may or would otherwise have under the
provisions of all applicable laws, and under the provisions of all agreements
between the Borrower and the Lender.
The Borrower hereby waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note. The Borrower hereby assents to
any extension or postponement of the time of payment or any other indulgence, to
the addition or release of any party or person primarily or secondarily liable,
and to the addition, release and/or substitution of all or any portion of any
collateral now or hereafter securing this Note.
Borrower shall not be obligated to pay and Lender shall not collect
interest at a rate higher than the maximum permitted by law or the maximum that
will not subject Lender to any civil or criminal penalties. If, because of the
acceleration of maturity the payment of interest in advance or any other reason,
Borrower is required, under the provisions of any Loan Document or otherwise, to
pay interest at a rate in excess of such maximum rate, the rate of interest
under such provisions shall immediately and automatically be reduced to such
maximum rate and any payment made in excess of such maximum rate shall be
applied to principal outstanding hereunder or, if required by applicable law,
shall be returned to Borrower.
This Note is subject to and secured by the collateral set forth in the
Loan Agreement which, inter alia, contains waivers and consents of the Borrower
including, without limitation, waivers of jury trial, setoff rights and Lender's
right to sell all or portions of the loan evidenced hereby.
This Note shall be governed by and construed in accordance with the laws
of the Governing State.
Dated: February ___, 2006.
RANOR, INC.
By:
------------------------------------
Its duly authorized
----------------
REVOLVING PROMISSORY NOTE
FOR VALUE RECEIVED, RANOR, INC., a Delaware corporation, with its chief
executive office and principal place of business at Xxx Xxxxx Xxxxx,
Xxxxxxxxxxx, XX 00000 (hereinafter called "Borrower") promises to pay to the
order of SOVEREIGN BANK, (hereinafter called "Lender") at its offices at 0000
Xxxxxxxxxx Xxxxxx, Xxxx Xxxxxxxx, XX 00000 or at such other place as the holder
of this note may from time to time designate in writing, the principal sum of
ONE MILLION DOLLARS ($1,000,000.00), or the aggregate unpaid principal amount of
all advances made by the Lender to the Borrower under terms hereinafter set
forth, whichever is less (the "Commitment Amount"), in lawful money of the
United States, to pay interest on each advance at the rate set forth below, and
to pay all taxes levied or assessed upon said principal sum against any holder
of this Note and all costs, including reasonable attorneys' fees incurred in the
collection, defense, preservation, enforcement or protection of this Note or any
guaranty hereof, in the foreclosure of any mortgage or security interest now or
hereafter securing the same or in any proceedings to otherwise enforce or
protect this Note or any guaranty hereof or any security therefor. Interest on
this Note shall be computed on the basis of a year of three hundred sixty (360)
days and actual days elapsed. All advances shall be due and payable as set forth
herein, but if not sooner paid, this note and all amounts due hereunder shall be
due and payable on June 30, 2007 (the "Termination Date").
(1) ADVANCES, NOTICE OF BORROWING. When the Borrower desires to borrow
hereunder, it shall give the Lender one (1) days' written notice specifying the
date of the proposed borrowing (which shall be a Banking Day (hereafter
defined)), and the amount to be borrowed. Any such notice shall be irrevocable
and shall be subject to Section 2(c) hereof. If any advance is made, the Lender
shall record on the books and records of the Lender an appropriate notation
evidencing such advance, each repayment on account of the principal thereof and
the amount of interest paid; and the Borrower authorizes the Lender to maintain
such records or make such notations and agrees that the amount shown on the
books and records as outstanding from time to time shall constitute the amount
owing to the Lender pursuant to this Note, absent manifest error. Each Variable
Rate Advance shall be due and payable on the Termination Date. Unless an Event
of Default has occurred the Borrower may borrow, repay and reborrow; and
provided, further, that all outstanding principal plus accrued and unpaid
interest shall be paid in full on the Termination Date.
(2) INTEREST RATE/PAYMENTS.
(a) Interest Rates, Payment of Interest. So long as no Event of Default
(hereafter defined) has occurred and subject to the terms hereof, each advance
hereunder shall bear interest at a rate per annum (the "Variable Rate") equal to
the Prime Rate (as hereafter defined) plus one and one-half (1.5%) percent
(herein a "Variable Rate Advance"). Interest on all Variable Rate Advances shall
be payable monthly beginning on the first Banking Day of the month following the
date of this Note, and continuing thereafter on the first Banking Day of each
succeeding month until the principal balance shall be paid in full.
(b) Automatic Payments. Borrower hereby authorizes Lender to
automatically deduct from Borrower's account numbered [_______________] the
amount of any loan payment ("Automatic Payments"). If the funds in the account
are insufficient to cover any payment, Lender shall not be obligated to advance
funds to cover the payment. At any time and for any reason, Borrower or Lender
may voluntarily terminate Automatic Payments. If any advance is made, the Lender
shall record on the books and records of the Lender an appropriate notation
evidencing any advance, each repayment on account of the principal thereof and
the amount of interest paid; and the Borrower authorizes the Lender to maintain
such records or make such notations and agrees that the amount shown on the
books and records as outstanding from time to time shall constitute the amount
owing to the Lender pursuant to this Note, absent manifest error.
(3) DEFAULT RATE. To the extent allowed by applicable law, after the
occurrence of any Event of Default, after maturity or after judgement has been
rendered on this Note, Borrower's right to select pricing options shall cease
(if applicable) and all outstanding principal and unpaid interest shall bear,
until paid, interest at a rate per annum equal to two (2%) percentage points
greater than that which would otherwise be applicable (the "Default Rate").
Where Borrower would, but for the application of the preceding sentence, have
had the right to elect among interest rate options, the "Default Rate" shall
mean the Variable Rate plus two (2%) percentage points.
(4) LATE CHARGE. If a regularly scheduled payment is fifteen (15) days
or more late, Borrower will be charged 5.000% of the unpaid portion of the
regularly scheduled payment or $10.00, whichever is greater.
(5) EXPENSES. Borrower further promises to pay to the Lender, as
incurred, and as an additional part of the unpaid principal balance, all costs,
expenses and reasonable attorneys' fees incurred (i) in the protection,
modification, collection, defense or enforcement of all or part of this Note or
any guaranty hereof as provided in the Loan Agreement, or (ii) in the
foreclosure or enforcement of any mortgage or security interest which may now or
hereafter secure either the debt hereunder or any guaranty thereof, or (iii)
with respect to any action taken to protect, defend, modify or sustain the lien
of any such mortgage or security agreement, or (iv) with respect to any
litigation or controversy arising from or connected with this Note or any
mortgage or security agreement or collateral which may now or hereafter secure
this Note, or (v) as a consequence of any default by Borrower to complete a
borrowing or (vi) with respect to any act to protect defend, modify, enforce or
release any of its rights or remedies with regard to, or otherwise effect
collection of, any collateral which may now or in the future secure this Note or
with regard to or against Borrower or any endorser, guarantor or surety of this
Note.
(6) DEFINITIONS. (a) "Banking Day" shall mean with respect to Variable
Rate Advances, any day other than a day on which commercial lenders in the
Governing State are required or permitted by law to close.
(b) "Governing State" shall mean the state where Lender's offices are
located as set forth in the first paragraph of this Note.
(c) "Loan Documents" shall mean any and all agreements, instruments,
documents, security agreements, mortgages, financing statements, and supplements
thereto and relating to the Loan, or entered into between the Borrower or
Guarantor (hereafter defined) in favor of, or with, the Lender, at any time, for
any purpose.
(d) "Obligations" shall mean all loans, advances, debts, liabilities,
obligations, covenants and duties owing by the Borrower to the Lender of every
kind and description (whether or not evidenced by any note or other instrument
and whether or not for the payment of money), direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, whether or
not such obligations are related to the transaction described in this Loan
Agreement, by class, or kind, or whether or not contemplated by the parties at
the time of the granting of this security interest, including without
limitation, all interest, fees, charges, expenses and attorneys' fees chargeable
to the Borrower or incurred by the Lender in connection with the Borrower's
account whether provided for herein or in any Loan Document.
(e) The term "Prime Rate" means the variable per annum rate of interest
so designated from time to time by the Lender as its prime rate. The Prime Rate
is a reference rate and does not necessarily represent the lowest or best rate
being charged to any customer. The rate of interest hereunder shall change
simultaneously and automatically, without further notice, upon the Lender's
determination and designation from time to time of the Prime Rate. The Lender's
determination and designation from time to time of the Prime Rate shall not in
any way preclude the Lender from making loans to other borrowers at rates that
are higher or lower than or different from the referenced rate.
(f) "Variable Rate Advance" shall have the meaning set forth in
paragraph 2(a) hereof.
(9) PREPAYMENT. The Borrower shall be required to prepay ON DEMAND all
advances made under this Note to the extent the aggregate of all such advances
exceeds the amounts permitted hereunder. In addition the Borrower shall pay, if
applicable, charges incurred pursuant to the terms hereof.
All payments will be applied first to the payment of late charges, then
to accrued and unpaid interest due and owing and the balance on account of the
unpaid principal of this Note.
Borrower may terminate the Revolving Loan evidenced by this Note at any
time provided the applicable Prepayment Consideration (as defined below) is
tendered at termination. The "Prepayment Consideration" shall be (a) during the
first year of this loan, three (3%) percent of Commitment Amount; and (b) during
the second year of this loan, two (2%) percent of the Commitment Amount.
(10) DEFAULT. The happening of any of the following events or conditions
shall constitute an "Event of Default" under this Note:
1. Failure to make any payment of principal or interest or any sum due
under this Note within fifteen (15) days of the date when the same shall be due
and payable; or
2. Default by the Borrower in the payment or performance of any
obligation on its part to be paid or performed, or breached by the Borrower of
any representation, warranty, term, covenant or condition of or under any
agreements between the Lender and the Borrower including, without limitation,
any default or Event of Default under that certain Loan and Security Agreement
dated of even date herewith, as the same may be amended, modified, extended or
restated or in any documents or instruments referred to in said agreements, and
without limitation any default or Event of Default under that certain Term
Promissory Note given by Borrower to Lender of even date herewith as the same
may be amended, modified extended or restated.
3. Termination of this loan and line of credit for any reason prior to
the Termination Date.
Upon and after an Event of Default, the availability of advances
hereunder shall, at the option of the Lender, be deemed to be automatically
terminated and, at its option, the whole of said indebtedness, both principal
and interest, and including any other sums which may become due under this Note,
shall, at the option of the holder of this Note, immediately become due and
payable without presentment, demand, protest, notice of protest, or other notice
of dishonor of any kind, all of which are hereby expressly waived by the
Borrower.
(12) WAIVERS, CONSENT TO JURISDICTION. The Borrower agrees that no delay
or failure on the part of the holder in exercising any power, privilege, remedy,
option or right hereunder shall operate as a waiver thereof or of any other
power, privilege, remedy or right; nor shall any single or partial exercise of
any power, privilege, remedy, option or right hereunder preclude any other or
future exercise thereof or the exercise of any other power, privilege, remedy,
option or right. The rights and remedies expressed herein are cumulative, and
may be enforced successively, alternately, or concurrently and are not exclusive
of any rights or remedies which holder may or would otherwise have under the
provisions of all applicable laws, and under the provisions of all agreements
between the Borrower and the Lender.
The Borrower hereby waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note. The Borrower hereby assents to
any extension or postponement of the time of payment or any other indulgence, to
the addition or release of any party or person primarily or secondarily liable,
and to the addition, release and/or substitution of all or any portion of any
collateral now or hereafter securing this Note.
Borrower shall not be obligated to pay and Lender shall not collect
interest at a rate higher than the maximum permitted by law or the maximum that
will not subject Lender to any civil or criminal penalties. If, because of the
acceleration of maturity the payment of interest in advance or any other reason,
Borrower is required, under the provisions of any Loan Document or otherwise, to
pay interest at a rate in excess of such maximum rate, the rate of interest
under such provisions shall immediately and automatically be reduced to such
maximum rate and any payment made in excess of such maximum rate shall be
applied to principal outstanding hereunder or, if required by applicable law,
shall be returned to Borrower.
Upon receipt of an affidavit of an officer of Lender as to the loss,
theft, destruction or mutilation of the Note or any other security document(s)
which is not of public record and, in the case of any such loss, theft,
destruction or mutilation, upon surrender and cancellation of such Note or other
document(s), the Borrower will issue, in lieu thereof, a replacement Note or
other document(s) in the same principal amount thereof and otherwise of like
tenor.
This Note is subject to and secured by the collateral set forth in the
Loan Agreement which, inter alia, contains waivers and consents of the Borrower
including, without limitation, waivers of jury trial, setoff rights and Lender's
right to sell all or portions of the loan evidenced hereby.
This Note shall be governed by and construed in accordance with the laws
of the Governing State.
Dated: February ____, 2006.
RANOR, INC.
By:
---------------------------
Its
---------------------------
Duly Authorized
