CHANGE IN TERMS OF AGREEMENT
Principal Amount: $3,500,000.00
Maturity: 04-15-2000
LOAN NO.: 11620
Collateral: 191
Officer: 125
Borrower: Fotoball USA, Inc. Lender: Scripps Bank
0000 Xxxxxx Xxxx Xxxxxxxxx Xxxxxxx
Xxx Xxxxx, XX 00000 0000 Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
DESCRIPTION OF EXISTING INDEBTEDNESS.
AS EVIDENCED BY:
PROMISSORY NOTE DATED DECEMBER 20, 1995 IN THE AMOUNT OF $1,000,000.00.
CHANGE IN TERMS AGREEMENT DATED NOVEMBER 13, 1996 IN THE AMOUNT OF
$2,000,000.00
CHANGE IN TERMS AGREEMENT DATED FEBRUARY 19, 1998 IN THE AMOUNT OF
$1,500,000.00
CHANGE IN TERMS AGREEMENT DATED AUGUST 20, 1998 INTHE AMOUNT OF
$2,000,000.00
DESCRIPTION OF COLLATERAL.
AS DESCRIBED IN:
COMMERICAL SECURITY AGREEMENT DATED DECEMBER 20, 1995.
DESCRIPTION OF CHANGE IN TERMS.
LOAN AGREEMENT DATED DECEMBER 28, 1998 SUPERCEDES ALL PRIOR LOAN AGREEMENTS.
LINE OF CREDIT IS INCREASED TO $3,500,000.00
EXTEND MATURITY DATE TO APRIL 15, 2000.
THE VARIANCE ON THIS NOTE IS CHANGED TO PRIME +.75% OVER THE INDEX
CONTINUING VALIDITY. Except as expressly changed by this Agreement, the
terms of the original obligation or obligations, including all agreements
evidenced or securing the obligation(s), remain unchanged and in full
force and effect. Consent by Xxxxxx to this Agreement does not waive
Xxxxxx's right to strict performance of the obligation(s) as changed,
nor obligate Lender to make any future change in terms. Nothing in this
Agreement will constitute a satisfaction of the obligation(s). It is the
intention of Lender to retain as liable parties all makers and endorsers
of the original obligation(s), including accommodation parties, unless a
party is expressly released by Xxxxxx in writing. Any maker or endorser,
including accommodation makers, will not be released by virtue of this
Agreement. If any person who signed the original obligation does not
sign this Agreement below, then all persons signing below acknowledge that
this Agreement is given conditionally, based on the representation to
Lender that the non-signing party consents to the changes and provisions
of this Agreement or otherwise will not be released by it. This waiver
applies not only to any initial extension, modification or release, but
also to all such subsequent actions.
PRIOR TO SIGNING THIS AGREEMENT, XXXXXXXX READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS AGREEMENT. XXXXXXXX AGREES TO THE TERMS OF THE
AGREEMENT AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE AGREEMENT
BORROWER: FOTOBALL U.S.A. INC.
By: /s/ XXXXX X. XXXXXXX
------------------------------------
XXXXX X. XXXXXXX, Vice President/CFO
DISBURSEMENT REQUEST AND AUTHORIZATION
Borrower: Fotoball USA, Inc. Lender: Scripps Bank
0000 Xxxxxx Xxxx Xxxxxxxxx Xxxxxxx
Xxx Xxxxx, XX 00000 0000 Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
LOAN TYPE. This is a Variable date (0.750% over Wall Street Journal
Prime Rate as published In the Money Rates section. When a range of rate
Is shown, the higher rate will be used., making an initial rate of
8.500%), Revolving Line of Credit Loan to a Corporation for
$3,000,000.00 due on April 15, 2000.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for:
--- Personal, Family, or Household Purposes or Personal Investment.
X Business (Including Real Estate Investment).
---
SPECIFIC PURPOSE. The specific purpose of this loan is: INCREASE LINE OF
CREDIT AND EXTEND MATURIITY DATE.
DISBURSEMENT INSTRUCTIONS. Xxxxxxxx understands that no loan proceeds
will be disbursed until all of Xxxxxx's conditions for making the loan
have been satisfied. Please disburse the loan proceeds of $3,500,000.00
as follows:
Undisbursed Funds: $2,800,000.00
Amount paid on Xxxxxxxx's account: $ 700,000.00
$700,000.00 Payment on
Loan # 11620 (RENEW) --------------
Note Principal: $3,500,000.00
CHARGES PAID IN CASH. Xxxxxxxx has paid or will pay in cash as agreed
the following charges:
Prepaid Finance Charges Paid In Cash: $ 2,000.00
$2,000.00 DOCUMENT FEE -------------
Total Charger Paid In Cash: $ 2,000.00
LOAN ADVANCE AGREEMENT CONDITION. UNDISBURSED FUNDS TO BE DISBURSED PER
LOAN ADVANCE AGREEMENT.
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, XXXXXXXX REPRESENTS
AND WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND
CORRECT AND THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER'S
FINANCIAL CONDITION AS DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL
STATEMENT TO XXXXXX. THIS AUTHORIZATION IS DATED DECEMBER 28, 1998.
BORROWER: FOTOBALL U.S.A. INC.
By: /s/ XXXXX X. XXXXXXX
------------------------------------
XXXXX X. XXXXXXX, Vice President/CFO
LOAN AGREEMENT
Borrower: FOTOBALL U.S.A. INC. Lender: Scripps Bank
0000 XXXXXX XXXX Corporate Lending
SAN XXXXX, XX 00000 0000 Xxxxxxx Xxxxx
Xxx Xxxxx. CA 92123
THIS LOAN AGREEMENT between FOTOBALL U.S.A. INC. ("Borrower") and
Scripps Bank ("Lender") is made and executed on the following terms and
conditions. Borrower has received prior commercial loans from Lender or
has applied to Lender for a commercial loan or loans and other financial
accommodations, including those which may be described on any exhibit or
schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations
from Lender to Borrower, are referred to in this Agreement Individually as
the "Loan" and collectively as the "Loans." Borrower understands and
agrees that: (a) in granting, renewing, or extending any Loan, Lender
is relying upon Borrower's representations, warranties, and agreements,
as set forth in this Agreement; (b) the granting, renewing, or extending
of any Loan by Lender at all times shall be subject to Xxxxxx's sole
judgment and discretion; and (c) all such Loans shall be and shall remain
subject to the following terms and conditions of this Agreement.
TERM. This Agreement shall be effective as of December 28, 1998, and
shall continue thereafter until all Indebtedness of Borrower to Lender
has been performed in full and the parties terminate this Agreement In
writing.
DEFINITIONS. The following words shall have the following meanings when
used in this Agreement. Terms not otherwise defined in this Agreement
shall have the meanings attributed to such terms in the Uniform
Commercial Code. All references to dollar amounts shall mean amounts in
lawful money of the United States of America.
Agreement. The word "Agreement" means this Loan Agreement, as this
Loan Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Loan
Agreement from time to time.
Account. The word "Account" means a trade account, account
receivable, or other right to payment for goods sold or services
rendered owing to Borrower (or to a third party grantor acceptable
to Lender).
Account Debtor. The words "Account Debtor" mean the person or
entity obligated upon an Account.
Advance. The word "Advance" means a disbursement of Loan funds
under this Agreement.
Borrower. The word "Borrower" means FOTOBALL U.S.A. INC.. The word
"Borrower" also includes, as applicable, all subsidiaries and
affiliates of Borrower as provided below in the paragraph titled
"Subsidiaries and Affiliates."
Borrowing Base. The words "Borrowing Base" mean, as determined by Lender
from time to time, the lesser of (a) $3,500,000.00; or (b) the sum of
(i) 80.000% of the aggregate amount of Eligible Accounts, plus (ii)
25.000% of the aggregate amount of Eligible Inventory.
Business Day. The words "Business Day" mean a day on which
commercial banks are open for business in the State of California.
CERCLA. The word "CERCLA" means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended.
Cash Flow. The words "Cash Flow" mean net income after taxes, and
exclusive of extraordinary gains and income, plus depreciation and
Amortization.
Collateral. The word "Collateral" means and includes without
limitation all property and assets granted as collateral security
for a Loan, whether real or personal property, whether granted
directly or indirectly, whether granted now or in the future, and
whether granted in the form of a security interest, mortgage, deed
of trust, assignment, pledge, chattel mortgage, chattel trust,
factor's lien, equipment trust, conditional sale, trust receipt
lien, charge, lien or title retention contract, lease or
consignment intended as a security device, or any other security or
lien interest whatsoever, whether created by law, contract, or
otherwise. The word "Collateral" includes without limitation all
collateral described below in the section titled "COLLATERAL."
Debt. The word "Debt" means all of Borrower's liabilities excluding
Subordinated Debt.
Eligible Accounts. The words "Eligible Accounts" mean, at any time,
all of Borrower's Accounts which contain selling terms and
conditions acceptable to Lender. The net amount of any Eligible
Account against which Borrower may borrow shall exclude all
returns, discounts, credits, and offsets of any nature. Unless
otherwise agreed to by Xxxxxx in writing, Eligible Accounts do not
include:
(a) Accounts with respect to which the Account Debtor is an
officer, an employee or agent of Xxxxxxxx.
(b) Accounts with respect to which the Account Debtor is a
subsidiary of, or affiliated with or related to Borrower or
its shareholders, officers, or directors.
(c) Accounts with respect to which goods are placed on
consignment, guaranteed sale, or other terms by reason of
which the payment by the Account Debtor may be conditional.
(d) Accounts with respect to which the Account Debtor is not a resident
of the United States, except to the extent such Accounts w
supported by Insurance, bonds or other assurances satisfactory to
Lender.
(e) Accounts with respect to which Borrower is or may become
liable to the Account Debtor for goods sold or services
rendered by the Account Debtor to Borrower.
(f) Accounts which are subject to dispute, counterclaim, or
setoff.
(g) Accounts with respect to which the goods have not been
shipped or delivered, or the services have not been rendered,
to the Account Debtor.
(h) Accounts with respect to which Xxxxxx, in its sole
discretion, deems the creditworthiness or financial condition
of the Account Debtor to be unsatisfactory.
(i) Accounts of any Account Debtor who has filed or has had filed
against it a petition In bankruptcy or an application for relief under
my provision of any state or federal bankruptcy, Insolvency, or debtor-
in-relief acts; or who has had appointed a trustee, custodian, or
receiver for the assets of such Account Debtor; or who has made an
assignment for the benefit of creditors or has become insolvent or falls
generally to pay its debts (Including its payrolls) as such debts become
due.
(j) Accounts with respect to which the Account Debtor Is the United
States government or any department or agency of the United States.
(k) Accounts which have not been paid in full within 90 DAYS from the
invoice date.
(l) MINUS ALL CONTRA, FOREIGN, BANKRUPT, DIRECT FEDERAL GOVERNMENT
AGENCY ACCOUNTS.
Eligible Inventory. The words "Eligible Inventory" mean, at any time,
all of Borrower's Inventory as defined below except:
(a) Inventory which is not owned by Borrower free end clear of all security
interests, liens, encumbrances, and claims of third parties.
(b) Inventory which Lender, in its sole discretion, deems to be obsolete,
unsalable, damaged, defective, or unfit for further processing.
ERISA. The word "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
Event of Default. The words "Event of Default" mean and include
without limitation any of the Events of Default set forth below in
the section titled "EVENTS OF DEFAULT."
Expiration Date. The words "Expiration Date" mean the date of
termination of Xxxxxx's commitment to lend under this Agreement.
Grantor. The word "Grantor" means and includes without limitation
each and all of the persons or entities granting a Security
Interest in any Collateral for the Indebtedness, including without
limitation all Borrowers granting such a Security Interest.
Guarantor. The word "Guarantor" means and includes without
limitation each and all of the guarantors, sureties, and
accommodation parties in connection with any Indebtedness.
Indebtedness. The word "Indebtedness" means and includes without
limitation all Loans, together with all other obligations, debts
and liabilities of Borrower to Lender, or any one or more of them,
as well as all claims by Lender against Borrower, or any one or
more of them; whether now or hereafter existing, voluntary or
involuntary, due or not due, absolute or contingent, liquidated or
unliquidated; whether Borrower may be liable individually or
jointly with others; whether Borrower may be obligated as a
guarantor, surety, or otherwise; whether recovery upon such
Indebtedness may be or hereafter may become barred by any statute
of limitations; and whether such Indebtedness may be or hereafter
may become otherwise unenforceable.
Inventory. The word "Inventory" means all of Borrower's raw every kind
and description, and goods held for sale or lease or furnished under
contracts of service in which Borrower now has or hereafter, acquires any
right, whether held by Borrower or others, and all documents of tile,
warehouse receipts, bills of lading, and all other documents
every typo covering all or any part of the foreging. Inventory includes
inventory temporarily out of Xxxxxxxx's custody or possession and all
returns on Accounts.
Lender. The word "Lender" means Scripps Bank, its successors and
assigns.
Line of Credit. The words "Line of Credit" mean the credit facility
described in the Section titled "LINE OF CREDIT" below.
Liquid Assets. The words "Liquid Assets" mean Borrower's cash on
hand plus Borrower's readily marketable securities.
Loan. The word "Loan" or "Loans" means and includes without
limitation any and all commercial loans and financial
accommodations from Lender to Borrower, whether now or hereafter
existing, and however evidenced, including without limitation those
loans and financial accommodations described herein or described on
any exhibit or schedule attached to this Agreement from time to
time.
Note. The word "Note" means and includes without limitation
Borrower's promissory note or notes, if any, evidencing Borrower's
Loan obligations in favor of Lender, as well as any substitute,
replacement or refinancing note or notes therefor.
Related Documents. The words "Related Documents" mean and include
without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security
agreements, mortgages, deeds of trust, and all other instruments,
agreements and documents, whether now or hereafter existing,
executed in connection with the Indebtedness.
Security Agreement. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants,
arrangements, understandings or other agreements, whether created
by law, contract, or otherwise, evidencing, governing,
representing, or creating a Security Interest.
Security Interest. The words "Security Interest" mean and include
without limitation any type of collateral security, whether in the
form of a lien, charge, mortgage, deed of trust, assignment,
pledge, chattel mortgage, chattel trust, factor's lien, equipment
trust, conditional sale, trust receipt, lien or title retention
contract, lease or consignment intended as a security device, or
any other security or lien interest whatsoever, whether created by
law, contract, or otherwise.
XXXX. The word "XXXX" means the Superfund Amendments and
Reauthorization Act of 1986 as now or hereafter amended.
Subordinated Debt. The words "Subordinated Debt" mean indebtedness
and liabilities of Borrower which have been subordinated by written
agreement to indebtedness owed by Borrower to Lender in form and
substance acceptable to Lender.
Tangible Net Worth. The words "Tangible Net Worth" mean Borrower's
total assets excluding all intangible assets (i.e., goodwill,
trademarks patents, copyrights, organizational expenses, and
similar intangible items, but including leaseholds and leasehold
improvements) less total Debt.
Working Capital. The words "Working Capital" mean Borrower's
current assets, excluding prepaid expenses, less Borrower's current
liabilities.
LINE OF CREDIT. Xxxxxx agrees to make Advances to Borrower from time to
time from the date of this Agreement to the Expiration Date, provided
the aggregate amount of such Advances outstanding at any time does not
exceed the Borrowing Base. Within the foregoing limits, Borrower may borrow,
partially or wholly prepay, and reborrow under this Agreement as follows.
Conditions Precedent to Each Advance. Xxxxxx's obligation to make
any Advance to or for the account of Borrower under this Agreement
is subject to the following conditions precedent, with all
documents, instruments, opinions, reports, and other items required
under this Agreement to be in form and substance satisfactory to
Lender:
(a) Lender shall have received evidence that this Agreement
and all Related Documents have been duly authorized, executed,
and delivered by Xxxxxxxx to Lender.
(b) Xxxxxx shall have received such opinions of counsel,
supplemental opinions, and documents as Xxxxxx may request.
(c) The security interests in the Collateral shall have been
duly authorized, created, and perfected with first lien
priority and shall be in full force and effect.
(d) All guaranties required by Lender for the Line of Credit
shall have been executed by each Guarantor, delivered to
Lender, and be in full force and effect.
(e) Lender, at its option and for its sole benefit, shall have
conducted an audit of Borrower's Accounts, Inventory, books,
records, and operations, and Lender shall be satisfied as to
their condition.
(f) Borrower shall have paid to Lender all fees, costs, and
expenses specified in this Agreement and the Related Documents
as are then due and payable.
(g) There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under
this Agreement, and Borrower shall have delivered to Lender
the compliance certificate called for in the paragraph below
titled "Compliance Certificate."
Making Loan Advances. Advances under the Line of Credit may be
requested either orally or in writing by authorized persons. Lender
may, but need not, require that all oral requests be confirmed in
writing. Each Advance shall be conclusively deemed to have been
made at the request of and for the benefit of Borrower (a) when
credited to any deposit account of Xxxxxxxx maintained with Lender
or (b) when advanced in accordance with the instructions of an
authorized person. Lender, at its option, may set a cutoff time,
after which all requests for Advances will be treated as having
been requested on the next succeeding Business Day.
Mandatory Loan Repayments. If at any time the aggregate principal
amount of the outstanding Advances shall exceed the applicable
Borrowing Base, Borrower, immediately upon written or oral notice
from Lender, shall pay to Lender an amount equal to the difference
between the outstanding principal balance of the Advances and the
Borrowing Base. On the Expiration Date, Borrower shall pay to
Lender in full the aggregate unpaid principal amount of all
Advances then outstanding and all accrued unpaid interest, together
with all other applicable fees, costs and charges, if any, not yet paid.
Loan Account. Lender shall maintain on its books a record of
account in which Lender shall make entries for each Advance and
such other debits and credits as shall be appropriate in connection
with the credit facility. Lender shall provide Borrower with
periodic statements of Xxxxxxxx's account, which statements shall
be considered to be correct and conclusively binding on Borrower
unless Borrower notifies Lender to the contrary within thirty (30)
days after Xxxxxxxx's receipt of any such statement which Borrower
deems to be incorrect.
COLLATERAL. To secure payment of the Line of Credit and performance of
all other Loans, obligations and duties owed by Borrower to Lender,
Borrower (and others, if required) shall grant to Lender Security
Interests in such property and assets as Lender may require (the
"Collateral"), including without limitation Borrower's present and future
Accounts, general intangibles, and Inventory. Lender's Security Interests
in the Collateral shall be continuing liens and shall include the
proceeds and products of the Collateral, including without limitation the
proceeds of any insurance. With respect to the Collateral, Xxxxxxxx
agrees and represents and warrants to Xxxxxx:
Perfection of Security Interests. Xxxxxxxx agrees to execute such
financing statements and to take whatever other actions are
requested by Xxxxxx to perfect and continue Xxxxxx's Security
Interests in the Collateral. Upon request of Xxxxxx, Xxxxxxxx will
deliver to Lender any and all of the documents evidencing or
constituting the Collateral, and Borrower will note Xxxxxx's
interest upon any and all chattel paper if not delivered to Lender
for possession by Xxxxxx. Contemporaneous with the execution of
this Agreement, Xxxxxxxx will execute one or more UCC financing
statements and any similar statements as may be required by
applicable law, and will file such financing statements and all
such similar statements in the appropriate location or locations.
Borrower hereby appoints Xxxxxx as its irrevocable attorney-in-fact
for the purpose of executing any documents necessary to perfect or
to continue any Security Interest. Lender may at any time, and
without further authorization from Borrower, file a carbon,
photograph, facsimile, or other reproduction of any financing
statement for use as a financing statement. Borrower will reimburse
Lender for all expenses for the perfection, termination, and the
continuation of the perfection of Xxxxxx's security interest in the
Collateral. Borrower promptly will notify Lender of any change in
Xxxxxxxx's name including any change to the assumed business names
of Xxxxxxxx. Borrower also promptly will notify Lender of any
change in Borrower's Social Security Number or Employer
Identification Number. Xxxxxxxx further agrees to notify Xxxxxx in
writing prior to any change in address or location of Xxxxxxxx's
principal governance office or should Borrower merge or consolidate
with any other entity.
Collateral Records. Borrower does now and at all times hereafter
shall, keep correct and accurate records of the Collateral, all of
which records shall be available to Lender or Xxxxxx's
representative upon demand for inspection and copying at any
reasonable time. With respect to the Accounts, Xxxxxxxx agrees to
keep and maintain such records as Lender may require, including
without limitation information concerning Eligible Accounts and
Account balances and agings. With respect to the Inventory,
Xxxxxxxx agrees to keep and maintain such records as Lender may
require, including without limitation information concerning
Eligible Inventory and records itemizing and describing the kind,
type, quality, and quantity of Inventory, Borrower's Inventory
costs and selling prices, and the daily withdrawals and additions
to Inventory.
Collateral Schedules. Concurrently with the execution and delivery
of this Agreement, Borrower shall execute and deliver to Lender
schedules of Accounts and Inventory and Eligible Accounts and
Eligible Inventory, in form and substance satisfactory to the
Lender. Thereafter and at such frequency as Lender shall require,
Borrower shall execute and deliver to Lender such supplemental
schedules of Eligible Accounts and Eligible Inventory and such
other matters and information relating to the Accounts and
Inventory as Lender may request.
Representations and Warranties Concerning Accounts. With respect to
the Accounts, Borrower represents warrants to Lender: (a) Each
Account represented by Borrower to be an Eligible Account for
purposes of this Agreement conforms to the requirements of the
definition of an Eligible Account; (b) All Account information
listed on schedules delivered to Lender will be true and correct,
subject to immaterial variance, and (c) Lender, its assigns, or
agents shall have the right at any time and at Borrower's expense
to inspect, examine, and audit Xxxxxxxx's records and to confirm
with Account Debtors the accuracy of such Accounts.
Representations and Warranties Concerning Inventory. With respect to the
Inventory, Borrower represents and warrants to Lender: (a) All
Inventory represented by Borrower to be Eligible Inventory for purposes
of this Agreement conforms to the requirements of the definition of
Eligible Inventory; (b) All Inventory values listed on schedules
delivered to Lender will be true and correct, subject to immaterial
variance; (c) The value of the Inventory will be determined on a
consistent accounting basis; (d) Except as agreed to the contrary by
Xxxxxx in writing, all Eligible Inventory is now and at all times
hereafter will be in Borrower's physical possession end shall not be
held by others on consignment, sale on approval, or sale or return; (e)
Except as reflected in the Inventory schedules delivered to Lender, all
Eligible Inventory is now and at all times hereafter will be of good and
merchantable quality, free from defects; (f) Eligible Inventory is not now
and will not at any time hereafter be stored with a bailee, warehouseman, or
similar party without Lender's prior written consent, and, in such event,
Borrower will concurrently at the time of bailment cause
any such bailee, warehouseman, or similar party to issue and deliver to
Lender in form acceptable to Lender, warehouse receipts in Lender's
name evidencing the storage of Inventory; and (g) Lender, Its assigns,
or agents shall have the right at any time and at Borrower's expense to
inspect and examine, the Inventory and to check and 1~1 the same M to
quality, quantity, value, and condition.
Notification Basis. Xxxxxxxx agrees and understands that this Loan
shall be on a notification basis pursuant to which Lender shall
directly collect and receive all proceeds and payments from the
Accounts in which Xxxxxx has a security interest. In order to
facilitate the foregoing, Xxxxxxxx agrees to deliver to Xxxxxx,
upon demand, any and all of Xxxxxxxx's records, ledger sheets,
payment cards, and other documentation, in the form requested by
Xxxxxx, with regard to the Accounts. Xxxxxxxx further agrees that
Xxxxxx shall have the right to notify each Account Debtor, pay such
proceeds and payments directly to Lender, and to do any and all
other things as Lender may deem to be necessary and appropriate,
within its sole discretion, to carry out the terms and intent of
this Agreement. Lender shall have the further right, where
appropriate and within Xxxxxx's sole discretion, to file suit,
either in its own name or in the name of Borrower, to collect any
and all such Accounts. Xxxxxxxx further agrees that Xxxxxx may take
such other actions, either in Xxxxxxxx's name or Xxxxxx's name, as
Lender may deem appropriate within its sole judgment, with regard
to collection and payment of the Accounts, without affecting the
liability of Borrower under this Agreement or on the Indebtedness.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Lender, as of the date of this Agreement, as of the date of each
disbursement of Loan proceeds, as of the date of any renewal, extension
or modification of any Loan, and at all times any indebtedness exists:
Organization. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of California
and is validly existing and in good standing in all states in which
Borrower is doing business. Borrower has the full power and authority to
own its properties and to transact the businesses in which it is
presently engaged or presently proposes to engage. Borrower also is duly
qualified as a foreign corporation and is in good standing in all states
in which the failure to so qualify would have a material adverse effect
on its businesses or financial condition.
Authorization. The execution, delivery, and performance of this Agreement
and all Related Documents by Borrower, to the extent to be executed,
delivered or performed by Borrower, have been duly authorized by all
necessary action by Borrower; do not require the consent or approval of
any other person, regulatory authority or governmental body; and do not
conflict with, result in a violation of, or constitute a default under
(a) any provision of its articles of incorporation or organization, or
bylaws, or any agreement or other instrument binding upon Borrower or
(b) any law, governmental regulation, court decree, or order applicable to
Borrower.
Financial Information. Each financial statement of Xxxxxxxx supplied to
Lender truly and completely disclosed Xxxxxxxx's financial condition as
of the date of the statement, and there has been no material adverse
change in Borrower's financial condition subsequent to the date of the
most recent financial statement supplied to Lender. Borrower has no
material contingent obligations except as disclosed in such financial
statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Xxxxxxxx when delivered will
constitute, legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.
Properties. Except for Permitted Liens, Xxxxxxxx owns and has good title
to all of Borrower's properties free and clear of all Security Interests
and has not executed any security documents or financing statements
relating to such properties. All of Xxxxxxxx's properties are titled in
Borrower's legal name, and Xxxxxxxx has not used, or filed a financing
statement under, any other name for at least the last five (5) years.
Hazardous Substances. The terms "hazardous waste" "hazardous substance,"
"disposal," "release," and "threatened release," as used in this
Agreement, shall have the same meanings as set forth in the "CERCLA,"
"XXXX," the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the
California Health and Safety Code, Section 25100, et seq., or other
applicable state or Federal laws, rules, or regulations adopted pursuant
to any of the foregoing. Except as disclosed to and acknowledged by
Xxxxxx in writing, Xxxxxxxx represents and warrants that: (a) During the
period of Xxxxxxxx's ownership of the(a) During the period of Borrower's
ownership of the properties, there has been no use, generation, manufacture,
storage, treatment, disposal, release or threatened release of any hazardous
waste or substance by any person on, under, about or from my of the
properties. (b) Borrower her no knowledge of, or reason to believe that there
has been (i) any use, generation, manufacture, storage, treatment, disposal,
release, or threatened release of any hazardous waste or substance on, under,
about or from the properties by my prior owners or occupants of any of the
properties, or (ii) any actual or threatened litigation or claims of any kind
by any person relating to such matters. (c) Neither Borrower nor any tenant,
contractor, agent or other authorized user of any of the properties shall we,
generate, manufacture, store, treat, dispose of, or release any hazardous
waste or substance on, under, about or from any of the properties; and any
such activity shall be conducted in compliance with all applicable federal,
state, and local laws, regulations, and ordinances, including without
limitation those laws, regulations and ordinances described above.
Borrower authorizes Xxxxxx and its agents to enter upon the properties to
make such Inspections and tests err Lender may deem appropriate to determine
compliance of the properties with this section of the Agreement. Any
inspections or tests made by Lender shall be at Borrower's expense and
for Lender's purposes only and shall not be construed to create my
responsibility or liability on the part of Lender to Borrower or to any
other person. The representations and warranties contained herein are
based on Borrower's due diligence in investigating the properties for
hazardous waste and hazardous substances. Borrower hereby (a) releases and
waives any future claims against Lender for Indemnity or contribution in the
event Borrower becomes liable for cleanup or other costs under any such laws,
end (b) agrees to indemnify and hold harmless Lender against any and all
claims, losses, liabilities, damages, penalties, and expense which
Lender may directly or indirectly sustain or suffer resulting from a breach
of this section of the Agreement or as a consequence of any use,
generation, manufacture, storage, disposal, release or threatened
release of a hazardous waste or substance on the properties. The
provisions of this section of the Agreement, including the obligation to
indemnify, shall survive the payment of the Indebtedness and the
termination or expiration of this Agreement and shall not be affected by
Lender's acquisition of any interest In any of the properties, whether
by foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid
taxes) against Borrower Is pending or threatened, and no other event has
occurred which may materially adversely affect Borrower's financial
condition or properties, other than litigation, claims, or other events,
if any, that have been disclosed to and acknowledged by Xxxxxx in
writing.
Taxes. To the best of Xxxxxxxx's knowledge, all tax returns and reports
of Borrower that are or were required to be filed, have been filed, and
all taxes, assessments and other governmental charges have been paid in
full, except those presently being or to be contested by Borrower in
good faith in the ordinary course of business and for which adequate
reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in
writing, Xxxxxxxx has not entered into or granted any Security
Agreements, or permitted the filing or attachment of any Security
Interests on or affecting any of the Collateral directly or indirectly
securing repayment of Borrower's Loan and Note, that would be prior or
that may in any way be superior to Xxxxxx's Security Interests and
rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements
directly or indirectly securing repayment of Borrower's Loan and Note
and all of the Related Documents are binding upon Borrower as well as upon
Xxxxxxxx's successors, representatives and assigns, and are legally
enforceable In accordance with their respective terms.
Commercial Purposes. Borrower intends to use the Loan proceeds solely
for business or commercial related purposes.
Employee Benefit Plans. Each employee benefit plan as to which Borrower
may have any liability complies in all material respects with all
applicable requirements of law and regulations, and (i) no Reportable
Event nor Prohibited Transaction (as defined in ERISA) has occurred with
respect to any such plan, (ii) Borrower has not withdrawn from any such
plan or initiated steps to do so, (iii) no steps have been taken to
terminate any such plan, and (iv) there are no unfunded liabilities
other than those previously disclosed to Lender in writing.
Investment Company Act. Borrower is not an "investment company" or a
company "controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended.
Public Utility Holding Company Act. Borrower is not a "holding company",
or a "subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company",
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
Regulations G, T and U. Borrower is not engaged principally, or as one
of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulations G, T and U of the Board of Governors of the Federal Reserve
System).
Location of Xxxxxxxx's Offices and Records. Borrower's place of business, or
Xxxxxxxx's Chief executive office, if Borrower has more than one place of
business, is located at 0000 XXXXXX XXXX, XXX XXXXX, XX 00000. Unless
Borrower has designated otherwise in writing this location is also the
office or offices where Borrower keeps its records concerning the
Collateral.
Year 2000. All software utilized by Borrower in the conduct of Xxxxxxxx's
business will record, store, process, and present calendar dates hang
on or after January 1, 2000, and all information pertaining to such
calendar dates, in the same manner and with the same functionality as
this software does respecting calendar dates telling on or before
December 31, 1999. Further, Borrower warrants and represents that the
software or shall have all appropriate capabilities and compatibility
for operation and for handling century-aware or year 2000 compliant data.
Borrower also warrants and represents that the data-related user interface
functions, data-fields, and data-related program instructions and
functions of the software include the indication of the century.
Information. All Information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender
will be, true and accurate in every material respect on the date as of
which such information is dated or certified; and none of such
information is or will be incomplete by omitting to state any material
fact necessary to make such information not misleading.
Claims and Defenses. There are no defenses or counterclaims, offsets or
other adverse claims, demands or actions of any kind, personal or
otherwise, that Borrower, Grantor, or any Guarantor could assert with
respect to the Note, Loan, Indebtedness, this Agreement, or the Related
Documents.
Survival of Representations and Warranties. Xxxxxxxx understands and
agrees that Xxxxxx, without independent investigation, is relying upon
the above representations and warranties in extending Loan Advances to
Borrower. Xxxxxxxx further agrees that the foregoing representations and
warranties shall be continuing in nature and shall remain in full force
and effect until such time as Borrower's Indebtedness shall be paid in
full, or until this Agreement shall be terminated in the manner provided
above, whichever is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Xxxxxx that,
while this Agreement is in effect, Borrower will:
Litigation. Promptly inform Xxxxxx in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings
or similar actions affecting Borrower or any Guarantor which could
materially affect the financial condition of Borrower or the financial
condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis,
and permit Xxxxxx to examine and audit Xxxxxxxx's books and records at
all reasonable times.
Financial Statements. Furnish Lender with, as soon as available, but in
no event later than one hundred twenty (120) days after the end of each
fiscal year, Xxxxxxxx's balance sheet and income statement for the year
ended, audited by a certified public accountant satisfactory to Lender,
and, as soon as available, but in no event later then forty five (45) days
after the end of each month, Xxxxxxxx's balance sheet and profit and loss
statement for the period ended, prepared and certified as correct to the
best knowledge end belief by Xxxxxxxx's chief financial officer or other
officer or person acceptable to Xxxxxx. All financial reports required
to be provided under the Agreement shall be prepared in accordance with
generally accepted accounting principles, applied on a consistent basis,
and certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Xxxxxxxx's financial condition and business
operations as Lender may request from time to time.
Financial Covenants and Ratios. Comply with the following covenants and
ratios:
Tangible Net Worth. Maintain a minimum Tangible Net Worth of not less
than $5,000,000.00.
Net Worth Ratio. Maintain a ratio of Total Liabilities to Tangible Net
Worth of less than 1.00 to 1.00.
Current Ratio. Maintain a ratio of Current Assets to Current Liabilities
in excess of 1.25 to 1.00. Except as provided above, all computations
made to determine compliance with the requirements contained in this
paragraph shall be made in accordance with generally accepted accounting
principles, applied on a consistent basis, and certified by Borrower as
being true and correct.
Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect
to Borrower's properties and operations, in form, amounts, coverages and
with insurance companies reasonably acceptable to Lender. Borrower, upon
request of Xxxxxx, will deliver to Lender from time to time the policies
or certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without
at least ten (10) days' prior written notice to Lender. Each insurance
policy also shall include an endorsement providing that coverage in
favor of Lender will not be impaired in any way by any act, omission or
default of Borrower or any other person. In connection with all policies
covering assets in which Lender holds or is offered a security interest for
the Loans, Borrower will provide Lender with such loss payable or other
endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request including without limitation the following: (a) the
name of the insurer; (b) the risks insured; (c) the amount of the policy;
(d) the properties insured, (e) the then current property values on the
basis of which insurance has been obtained, and the manner of determining
those values; and (f) the expiration date of the policy. In addition,
upon request of Lender (however not more often than annually), Borrower
will have an independent appraiser satisfactory to Lender determine, as
applicable, the actual cash value or replacement cost of any Collateral.
The cost of such appraisal shall be paid by Borrower.
Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for Xxxxxxxx's business
operations, unless specifically consented to the contrary by Xxxxxx in
writing.
Taxes, Charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessment, tax, governmental charges, levies and liens, of every kind
and nature, imposed upon Borrower or its properties, income, or profits,
prior to the date on which penalties would attach, and all lawful claims
that, if unpaid, might become a lien or charge upon any of Borrower's
properties, income, or profits. Provided however, Xxxxxxxx will not be
required to pay and discharge any such assessment, tax, charge, xxxx,
xxxx or claim so long as (a) the legality of the same shall be contested
in good faith by appropriate proceedings, and (b) Borrower shall have
established on its books adequate reserves with respect to such contested
assessment, tax, charge, levy, lien, or claim in accordance with
generally accepted accounting practices. Xxxxxxxx, upon demand of Lender,
will furnish to Lender evidence of payment of the assessments, taxes,
charges, levies, liens and claims and will authorize the appropriate
governmental official to deliver to Lender at any time a written
statement of any assessments, taxes, charges, levies, liens and claims
against Xxxxxxxx's properties, income, or profits.
Performance. Perform and comply with all terms, conditions, and
provisions set forth in this Agreement and in the Related Documents in a
timely manner, and promptly notify Xxxxxx if Xxxxxxxx learns of the
occurrence of any event which constitutes an Event of Default under this
Agreement or under any of the Related Documents.
Operations. Maintain executive and management personnel with
substantially the same qualifications and experience as the present
executive and management personnel; provide written notice to Lender of
any change in executive and management personnel; conduct its business
affairs in a reasonable and prudent manner and in compliance with all
applicable federal, state and municipal laws, ordinances, rules and
regulations respecting its properties, charters, businesses and
operations, including without limitation, compliance with the Americans
With Disabilities Act and with all minimum funding standards and other
requirements of ERISA and other laws applicable to Borrower's employee
benefit plans.
Inspection. Permit employees or agents of Lender at any reasonable time
to inspect any and all Collateral for the Loan or Loans and Xxxxxxxx's
other properties and to examine or audit Xxxxxxxx's books, accounts, and
records and to make copies and memoranda of Xxxxxxxx's books, accounts,
and records. If Borrower now or at any time hereafter maintains any
records (including without limitation computer generated records and
computer software programs for the generation of such records) in the
possession of a third party, Borrower, upon request of Xxxxxx, shall
notify such party to permit Lender free access to such records at all
reasonable times and to provide Lender with copies of any records it may
request, all at Borrower's expense.
Compliance Certificate. Unless waived in writing by Xxxxxx, provide
Lender at least annually and at the time of each disbursement of Loan
proceeds with a certificate executed by Xxxxxxxx's chief financial
officer, or other officer or person acceptable to Lender, certifying that
the representations and warranties set forth in this Agreement are true
and correct as of the date of the certificate and further certifying
that, as of the date of the certificate, no Event of Default exists under
this Agreement.
Environmental Compliance and Reports. Borrower shall comply in all
respects with all environmental protection federal, state and local laws,
statutes, regulations and ordinances; not cause or permit to exist, as a
result of an intentional or unintentional action or omission on its part
or on the part of any third party, on property owned and/or occupied by
Borrower, any environmental activity where damage may result to the
environment, unless such environmental activity is pursuant to and in
compliance with the conditions of a permit issued by the appropriate
federal, state or local governmental authorities; shall furnish to Lender
promptly and in any event within thirty (30) days after receipt thereof a
copy of any notice, summons, lien, citation, directive, letter or other
communication from any governmental agency or instrumentality concerning
any intentional or unintentional action or omission on Borrower's part in
connection with any environmental activity whether or not there is damage
to the environment and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such
promissory notes, mortgages, deeds of trust, security agreements,
financing statements, instruments, documents and other agreements as
Lender or its attorneys may reasonably request to evidence and secure
the Loans and to perfect all Security Interests.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while
this Agreement is in effect, Borrower shall not, without the prior
written consent of Lender:
Indebtedness and Liens. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (b) sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of Borrower's
assets, or (c) sell with recourse any of Borrower's accounts, except to
Lender.
Continuity of Operations. (a) Engage in any business activities
substantially different than those in which Borrower is presently
engaged, (b) cease operations, liquidate, merge, transfer, acquire or
consolidate with any other entity, change ownership, change its name,
dissolve or transfer or sell Collateral out of the ordinary course of
business, (c) pay any dividends on Borrower's stock (other than
dividends payable in its stock), provided, however that notwithstanding the
foregoing, but only so long as no Event of Default has occurred and is
continuing or would result from the payment of dividends, if Borrower is
a "Subchapter S Corporation" (as defined in the Internal Revenue Code of
1986, as amended), Borrower may pay cash dividends on its stock to its
shareholders from time to time in amounts necessary to enable the
shareholders to pay income taxes and make estimated income tax payments
to satisfy their liabilities under federal and state law which arise
solely from their status as Shareholders of a Subchapter S Corporation
because of their ownership of shares of stock of Borrower, or (d)
purchase or retire any of Borrower's outstanding shares or alter or
amend Borrower's capital structure.
Loans, Acquisitions and Guaranties. (a) Loan, invest in or advance money
or assets, (b) purchase, create or acquire any Interest in any other
enterprise or entity, or (c) incur any obligation as surety or guarantor
other than in the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any
Loan to Borrower, whether under this Agreement or under any other
agreement, Lender shall have no obligation to make Loan Advances or to
disburse Loan proceeds if: (a) Borrower or any Guarantor is in default
under the terms of this Agreement or any of the Related Documents or any
other agreement that Borrower or any Guarantor has with Lender; (b)
Borrower or any Guarantor becomes insolvent, files a petition in
bankruptcy or similar proceedings, or is adjudged a bankrupt; (c) there
occurs a material adverse change in Borrower's financial condition, in
the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; (d) any Guarantor seeks, claims or
otherwise attempts to limit, modify or revoke such Guarantor's guaranty
of the Loan or any other loan with Lender; or (e) Lender in good xxxxx
xxxxx itself insecure, even though no Event of Default shall have
occurred.
COVENANTS C CONDITIONS.
1. BORROWER TO MAINTAIN TTS PRIMARY BANKING RELATIONSHIP WITH BANK.
THIS.MEANS THE MAJORITY OF DEPOSIT ACCOUNTS, BALANCES AND LOANS. IF THE
BORROWER FAILS TO MEET THIS CONDITION, BANK MAY, AT ITS SOLE DISCRETION,
INCREASE THE RATE CHARGED ON ALL OF THE BORROWER'S INDEBTEDNESS BY UP TO
5% OR MAY DECLARE ALL INDEBTEDNESS OWED BY BORROWER TO BANK, IMMEDIATELY
DUE AND PAYABLE.
2. BORROWER WILL PROVIDE BANK WITH A COMPANY PREPARED FINANCIAL
STATEMENT FOR EACH MONTH END, TO BE RECEIVED NO LATER THAN 45 DAYS AFTER
MONTH END.
3. BORROWER WILL PROVIDE BANK WITH FISCAL YEAR END CPA AUDITED FINANICAL
STATEMENT WITHIN 120 DAYS OF FISCAL YEAR END.
4. BORROWER WILL PROVIDE BANK WITH A COPY OF ITS IRS RETURN CONCURRENT
WITH FILING.
5. TOTAL ADVANCES ARE RESTRICTED TO 80% OF ELIGIBLE ACCOUNTS RECEIVABLE,
PLUS 25% OF ELIGIBLE INVENTORY TO A MAXIMUM INVENTORY ADVANCE OF
$1,000,000.00. ELIGIBLE ACCOUNTS RECEIVABLE ARE DEFINED AS THOSE
ACCOUNTS AGED LESS THAN 90 DAYS AGED MINUS ALL CONTRA, FOREIGN,
BANKRUPT, DIRECT FEDERAL GOVERNMENT AGENCY ACCOUNTS AND AS FURTHER
DEFINED ELSEWHERE IN THIS LOAN AGREEMENT. ELIGIBLE INVENTORY IS DEFINED
AS RAW MATERIALS AND FINISHED GOODS, LESS THE ENTIRE ALLOWANCE FOR
INVENTORY RESERVE. ADVANCES AGAINST INVENTORY ARE FUTHER SUBJECT TO
APPROVAL BY BANK. EACH ADVANCE AGAINST INVENTORY MUST BE REOUESTED WITH
A REASON FOR THE ADVANCE, AND APPROVED BY THE BANK.
6. AN EXECUTED BORROWING BASE CERTIFICATE (COLLATERAL SCHEDULE) IS
REOUIRED FOR EACH ADVANCE.
7. BORROWER TO PROVIDE BANK WITH A MONTH END AGING OF ACCOUNTS
RECEIVABLE AND ACCOUNTS PAYABLE ON A MONTHLY BASIS, WITHIN 20 DAYS OF
EACH MONTH END.
8. BORROWER AUTHORIZES BANK OR TTS AGENT, TO CONDUCT ACCOUNTS RECEIVABLE
AUDTTS, AND OTHER SUNDRY FINANCIAL AUDITS AT BORROWER'S PLACE OF
BUSINESS AS BANK DEEMS NECESSARY. XXXXXXXX AGREES TO PAY THE COST OF
SUCH AUDITS AND AUTHORIZES BANK TO XXXXX XXXXXXXX'S ACCOUNTS TO PAY FOR
SAID AUDITS.
9. BORROWER TO PROVIDE BANK A COPY OF ITS 10-Q STATEMENTS, AND TTS 10K
STATEMENTS, CONCURRENTLY WITH FILING.
10. BORROWER TO PROVIDE BANK WITH A LISTING OF ACCOUNTS RECEIVABLES,
INCLUDING NAME, ADDRESS AND TELEPHONE NUMBER FOR EACH ACCOUNT, WHENEVER
REOUESTED BY BANK.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory
security interest in, and hereby assigns, conveys, delivers, pledges,
and transfers to Lender all Borrower's right, title and interest in and to,
Xxxxxxxx's accounts with Lender (whether checking, savings, or some
other account), including without limitation all accounts held jointly with
someone else and all accounts Borrower may open in the future, excluding
however all IRA and Xxxxx accounts, and all trust accounts for which the
grant of a security interest would be prohibited by law. Xxxxxxxx
authorizes Xxxxxx, to the extent permitted by applicable law, to charge
or setoff all sums owing on the Indebtedness against any and all such
accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:
Default on Indebtedness. Failure of Borrower to make any payment when
due on the Loans.
Other Defaults. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents, or
failure of Borrower to comply with or to perform any other term,
obligation, covenant or condition contained in any other agreement
between Lender and Borrower.
Default In Favor of Third Parties. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor
or person that may materially affect any of Borrower's property or
Borrower's or any Grantor's ability to repay the Loans or perform their
respective obligations under this Agreement or any of the Related
Documents.
False Statement. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under
this Agreement or the Related Documents is false or misleading in any
material respect at the time made or furnished, or becomes false or
misleading at any time thereafter.
Detective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of
any Security Agreement to create a valid and perfected Security Interest) at
any time and for any reason.
Insolvency. The dissolution or termination of Xxxxxxxx's existence as a
going business, the insolvency of Xxxxxxxx, the appointment of a receiver
for any part of Xxxxxxxx's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against
Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by Judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower, any
creditor of any Grantor against any collateral securing the Indebtedness,
or by any governmental agency. This includes a garnishment, attachment,
or levy on or of any of Borrower's deposit accounts with Lender. However,
this Event of Default shall not apply if there is a good faith dispute
by Borrower or Grantor, as the case may be, as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding, and if Borrower or Grantor gives Xxxxxx written
notice of the creditor or forfeiture proceeding and furnishes reserves
or a surety bond for the creditor or forfeiture proceeding satisfactory to
Lender.
Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor
dies or becomes incompetent, or revokes or disputes the validity of, or
liability under, any Guaranty of the Indebtedness. Lender, at its
option, may, but shall not be required to, permit the Guarantor's estate to
assume unconditionally the obligations arising under the guaranty in a
manner satisfactory to Lender, and, in doing so, cure the Event of
Default.
Change In Ownership. Any change In ownership of twenty-five percent
(25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Xxxxxx believes the prospect of payment or performance of
the Indebtedness is impaired.
Insecurity. Lender, in good faith, deems itself insecure.
Right to Cure. If any default, other than a Default on Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been
given a notice of a similar default within the preceding twelve (12)
months, it may be cured (and no Event of Default will have occurred) if
Borrower or Grantor, as the case may be, after receiving written notice
from Lender demanding cure of such default: (a) cures the default within
fifteen (15) days; or (b) if the cure requires more than fifteen (15)
days, immediately initiates steps which Xxxxxx deems in Xxxxxx's sole
discretion to be sufficient to cure the default and thereafter continues
and completes all reasonable and necessary steps sufficient to produce
compliance as soon as reasonably practical.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur,
except where otherwise provided in this Agreement or the Related
Documents, all commitments and obligations of Lender under this
Agreement or the Related Documents or any other agreement immediately will
terminate (including any obligation to make Loan Advances or
disbursements), and, at Lender's option, all Indebtedness immediately
will become due and payable, all without notice of any kind to Borrower,
except that in the case of an Event of Default of the type described in
the "Insolvency" subsection above, such acceleration shall be automatic
and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in
equity, or otherwise. Except as may be prohibited by applicable law, all
of Lender's rights and remedies shall be cumulative and may be exercised
singularly or concurrently. Election by Xxxxxx to pursue any remedy
shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Borrower or
of any Grantor shall not affect Xxxxxx's right to declare a default and to
exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a
part of this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment
to this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted
by Lender In the State of California. It there is a lawsuit, Xxxxxxxx
agrees upon Xxxxxx's request to submit to the jurisdiction of the courts
of San Diego County, the State of California. This Agreement shall be
governed by and construed in accordance with the laws of the State of
California.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the
provisions of this Agreement.
Consent to Loan Participation. Xxxxxxxx agrees and consents to Xxxxxx's
sale or transfer, whether now or later, of one or more participation
interests in the Loans to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any
other matter relating to the Loan, and Borrower hereby waives any rights
to privacy it may have with respect to such matters. Borrower additionally
waives any and all notices of sale of participation interests, as well as
all notices of any repurchase of such participation interests. Xxxxxxxx
also agrees that the purchasers of any such participation interests will
be considered as the absolute owners of such interests in the Loans and
will have all the rights granted under the participation agreement
or agreements governing the sale of such participation interests.
Borrower further waives all rights of offset or counterclaim that it
may have now or later against Lender or against any purchaser of such
a participation interest and unconditionally agrees that either Lender
or such purchaser may enforce Xxxxxxxx's obligation under the Loans
irrespective of the failure or insolvency of any holder of any interest
in the Loans. Xxxxxxxx further agrees that the purchaser of any such
participation interests may enforce its interests irrespective of any
personal claims or defenses that Borrower may have against Xxxxxx.
Borrower Information. Borrower consents to the release of information on
or about Borrower by Xxxxxx in accordance with any court order, law or
regulation and in response to credit inquiries concerning Borrower.
Non-Liability of Lender. The relationship between Xxxxxxxx and Xxxxxx is
a debtor and creditor relationship and not fiduciary in nature, nor is
the relationship to be construed as creating any partnership or joint
venture between Xxxxxx and Borrower. Borrower is exercising its own
judgment with respect to Xxxxxxxx's business. All information supplied
to Lender is for Xxxxxx's protection only and no other party is entitled to
rely on such information. There is no duty for Lender to review, inspect,
supervise, or inform Borrower of any matter with respect to Xxxxxxxx's
business. Xxxxxx and Borrower intend that Lender may reasonably rely on
all information supplied by Borrower to Lender, together with all
representations and warranties given by Borrower to Lender, without
investigation or confirmation by Xxxxxx and that any investigation or
failure to investigate will not diminish Xxxxxx's right to so rely.
Notice of Xxxxxx's Breach. Xxxxxxxx must notify Lender in writing of any
breach of this Agreement or the Related Documents by Xxxxxx and any other
claim, cause of action or offset against Lender within thirty (30) days
after the occurrence of such breach or after the accrual of such claim
cause of action or offset. Borrower waives any claim, cause of action or
offset for which notice is not given in accordance with this paragraph.
Xxxxxx is entitled to rely on any failure to give such notice.
Borrower Indemnification. Borrower shall indemnify and hold Lender
harmless from and against all claims, costs, expenses, losses, damages,
and liabilities of any kind, including but not limited to attorneys' fees
and expenses, arising out of any matter relating directly or indirectly
to the Indebtedness, whether resulting from internal disputes of the
Borrower, disputes between Borrower and any Guarantor, or whether
involving any third parties, or out of any other matter whatsoever
related to this Agreement or the Related Documents, but excluding any
claim or liability which arises as a direct result of Xxxxxx's gross
negligence or willful misconduct. This indemnity shall survive full
repayment and satisfaction of the Indebtedness and termination of this
Agreement.
Counterparts. This Agreement may be executed in multiple counterparts,
each of which, when so executed, shall be deemed an original, but all
such counterparts, taken together, shall constitute one and the same
Agreement.
Costs and Expenses. Xxxxxxxx agrees to pay upon demand all of Xxxxxx's
expenses, including without limitation attorneys' fees, incurred in
connection with the preparation, execution, enforcement, modification and
collection of this Agreement or in connection with the Loans made
pursuant to this Agreement. Xxxxxx may pay someone else to help collect
the Loans and to enforce this Agreement, and Borrower will pay that
amount. This includes, subject to any limits under applicable law,
Xxxxxx's attorneys' fees and Xxxxxx's legal expenses, whether or not
there is a lawsuit, including attorneys' fees for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Xxxxxxxx
also will pay any court costs, in addition to all other sums provided by
law.
Notices. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimilie(unless otherwise
required by law), and shall be effective when actually delivered or
when deposited with a nationally recognized overnight courier or
deposited in the United States mail, first class, postage prepaid,
addressed to the party to whom the notice is to be given
at the address shown above. Any party may change its address for notices
under this Agreement by giving formal written notice to the other
parties, specifying that the purpose of the notice is to change the
party's address. To the extent permitted by applicable law, if there is
more than one Borrower, notice to any Borrower will constitute notice to
all Borrowers. For notice purposes, Borrower will keep Lender informed
at all times of Xxxxxxxx's current address(es).
Severability. If a court of competent jurisdiction finds any provision
of this Agreement to be invalid or unenforceable as to any person or
circumstance, such funding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending
provision cannot be so modified, it shall be stricken and all other
provisions of this Agreement in all other respects shall remain valid
and enforceable.
Subsidiaries and Affiliates of Borrower. To the extent the context of
any provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower"
as used herein shall include all subsidiaries and affiliates of
Borrower. Notwithstanding the foregoing however, under no circumstances
shall this Agreement be construed to require Lender to make any Loan or
other financial accommodation to any subsidiary or affiliate of Borrower.
Successors and Assigns. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure
to the benefit of Lender, its successors and assigns. Borrower shall
not, however, have the right to assign its rights under this Agreement or
any interest therein, without the prior written consent of Lender.
Survival. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Xxxxxx and will survive the making of the Loan and
delivery to Lender of the Related Documents, regardless of any
investigation made by Xxxxxx or on Xxxxxx's behalf.
Time Is of the Essence. Time is of the essence in the performance of
this Agreement.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Xxxxxx.
No delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Xxxxxx
of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Xxxxxx, nor any course of dealing between Xxxxxx and Borrower, or
between Lender and any Grantor, shall constitute a waiver of any of Lender's
rights or of any obligations of Borrower or of any Grantor as to any
future transactions. Whenever the consent of Lender is required under
this Agreement, the granting of such consent by Lender in any instance
shall not constitute continuing consent in subsequent instances where
such consent is required, and in all cases such consent may be granted
or withheld in the sole discretion of Lender.
XXXXXXXX ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN
AGREEMENT, AND XXXXXXXX AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS
OF DECEMBER 28, 1998.
BORROWER: FOTOBALL U.S.A. INC.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------
XXXXX X. XXXXXXX, Vice President
LENDER:
Scripps Bank
CORPORATE RESOLUTION TO BORROW
Borrower: FOTOBALL U.S.A. INC. Lender: Scripps Bank
0000 XXXXXX XXXX Corporate Lending
SAN DIEGO, CA 92123 0000 Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
I, the undersigned Secretary or Assistant Secretary of FOTOBALL U.S.A.
INC. (the "Corporation"), HEREBY CERTIFY that the Corporation is
organized and existing under and by virtue of the laws of the State of
California as a corporation for profit, with its principal office at
0000 XXXXXX XXXX, XXX XXXXX, XX 00000, and is duly authorized to transact
business in the State of California.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation,
duly called and held on December 28, 1998 at which a quorum was present
and voting, or by other duly authorized corporate action in lieu of a
meeting, the following resolutions were adopted:
BE IT RESOLVED, that any one (1) of the following named officers,
employees. or agents of this Corporation, whose actual signatures are
shown below:
NAME POSITION ACTUAL SIGNATURE
/s/ Xxxxx X. Xxxxxxxx
----------------------------------
XXXXX X. XXXXXXX Vice President/CFO
acting for and on behalf of the Corporation and as its act and deed be,
and he or she hereby is, authorized and empowered:
Borrow Money. To borrow from time to time from Scripps Bank ("Lender"),
on such terms as may be agreed upon between the Corporation and Lender,
such sum or sums of money as in his or her judgment should be borrowed
however, not exceeding at any one time the amount of Three Million Five
Hundred Thousand & 00/100 Dollars (S3,500.000.00), in addition to such
sum or sums of money as may be currently borrowed by the Corporation
from Lender.
Execute Notes. To execute and deliver to Lender the promissory note or
notes, or other evidence of credit accommodations and/or revision
agreement or other evidence of obligation of the Corporation, on
Lender's forms, at such rates of interest and on such terms as may be agreed
upon, evidencing the sums of money so borrowed or any indebtedness of the
Corporation to Lender, and also to execute and deliver to Lender one or
more renewals, extensions, modifications, refinancing, consolidations,
or substitutions for one or more of the notes, any portion of the notes, or
any other evidence of credit accommodations.
Grant Security. To mortgage, pledge, transfer, endorse, hypothecate, or
otherwise encumber and deliver to Lender, as security for the payment of
any loans or credit accommodations so obtained, any promissory notes so
executed (including any amendments to or modifications, renewals and
extensions of such promissory notes), or any other or further
indebtedness of the Corporation to Lender at any time owing, however the
same may be evidenced, any property now or hereafter belonging to the
Corporation or in which the Corporation now or hereafter may have an
interest including without limitation all real property and all personal
property (tangible or intangible) of the Corporation. Such property may
be mortgaged, pledged, transferred, endorsed, hypothecated, or encumbered
at the time such loans are obtained or such indebtedness is incurred, or
at any other time or times, and may be either in addition to or in lieu
of any property theretofore mortgaged, pledged, transferred, endorsed,
hypothecated, or encumbered.
Execute Security Documents. To execute and deliver to Lender the forms
of mortgage, deed of trust, pledge agreement, hypothecation agreement, and
other security agreements and financing statements which may be required
by Lender, and which shall evidence the terms and conditions under and
pursuant to which such liens and encumbrances, or any of them, are given;
and also to execute and deliver to Lender any other written instruments,
any chattel paper, or any other collateral, of any kind or nature, which
Lender may deem necessary or proper in connection with or pertaining to
the giving of the liens and encumbrances.
Negotiate Items. To draw, endorse, and discount with Lender all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation in which the Corporation may
have an interest, and either to receive cash for the same or to cause
such proceeds to be credited to the account of the Corporation with
Xxxxxx, or to cause such other disposition of the proceeds derived
therefrom as they may deem advisable.
Further Acts. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder,
and in all cases, to do and perform such other acts and things, to pay
any and all fees and costs, and to execute and deliver such other
documents and agreements as he or she may in his or her discretion deem
reasonably necessary or proper in order to carry into effect the
provisions of these Resolutions. The following person or persons
currently are authorized to request advances and authorize payments under
the line of credit until Xxxxxx receives written notice of revocation of
their authority: XXXXX X. XXXXXXX, Vice President/CFO.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to
these Resolutions and performed prior to the passage of these Resolutions
are hereby ratified and approved, that these Resolutions shall remain in
full force and effect and Lender may rely on these Resolutions until
written notice of his or her revocation shall have been delivered to and
received by Xxxxxx. Any such notice shall not affect any of the
Corporation's agreements or commitments in effect at the time notice is
given.
BE IT FURTHER RESOLVED, that the Corporation will notify Lender in
writing at Lender's address shown above (or such other addresses as
Lender may designate from time to time) prior to any (a) change in the
name of the Corporation, (b) change in the assumed business name(s) of
the Corporation, (c) change in the management of the Corporation, (d)
change in the authorized signer(s), (e) conversion of the Corporation to
a new or different type of business entity, or (f) change in any other
aspect of the Corporation that directly or indirectly relates to any
agreements between the Corporation and Lender. No change in the name of
the Corporation will take effect until after Xxxxxx has been notified.
I FURTHER CERTIFY that at a special meeting of the shareholders of the
Corporation, duly called and held (or by consent of the shareholders in
accordance with the laws of the State of California), not less than the
required percentage of shareholders adopted or consented to all the
Resolutions set forth above.
I FURTHER CERTIFY that the officer, employee, or agent named above is
duly elected, appointed, or employed by or for the Corporation, as the
case may be, and occupies the position set opposite the name; that the
foregoing Resolutions now stand of record on the books of the
Corporation; and that the Resolutions are in full force and effect and
have not been modified or revoked in any manner whatsoever. The
Corporation has no corporate seal, and therefore, no seal is affixed to
this certificate.
IN TESTIMONY WHEREOF, I have hereunto set my hand on December 28, 1998
and attest that the signatures set opposite the names listed above are
their genuine signatures.
CERTIFIED AND ATTESTED BY:
/s/ Xxxxx X, Xxxxx
AGREEMENT TO PROVIDE INSURANCE
Borrower: FOTOBALL U.S.A. INC. Lender: Scripps Bank
0000 XXXXXX XXXX Corporate Lending
SAN DIEGO, CA 92123 0000 Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
INSURANCE REQUIREMENTS. FOTOBALL U.S.A., INC. ("Grantor) understands
that insurance coverage is required in connection with the extending of
a loan or the providing of other financial accommodations to Grantor by
Xxxxxx. These requirements are set forth in the security documents. The
following minimum insurance coverages must be provided on the following
described collateral (the Collateral"):
Collateral: All Inventory, Equipment and Fixtures.
Type. All risks, including fire, then and liability.
Amount. Full insurable value.
Basis. Replacement value.
Endorsements. Xxxxxx's loss payable clause with stipulation
that coverage will not be cancelled or diminished without a
minimum of ten (10) days' prior written notice to Lender.
Deductibles. $500.00.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance
company Grantor may choose that is reasonably acceptable to Lender.
Xxxxxxx understands that credit may not be denied solely because
insurance was not purchased through Lender.
INSURANCE MAILING ADDRESS. All documents and other materials relating to
insurance for this loan should be mailed, delivered or directed to the
following address:
SCRIPPS BANK - NOTE DEPARTMENT
P.O. BOX 420790
SAN DIEGO, CA 92142
(000) 000-0000
FAILURE TO PROVIDE INSURANCE. Xxxxxxx agrees to deliver to Lender, ten
(10) days from the date of this Agreement, evidence of the required
insurance as provided above, with an effective date of December 28,
1998, or earlier.
AUTHORITION. For purposes of insurance coverage on the Collateral,
Grantor authorizes Lender to provide to any person (Including my
insurance agent or company) all information Lender deems appropriate,
whether regarding the Collateral, the loan or other financial
accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO
PROVIDE INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
DECEMBER 28, 1998.
GRANTOR:
FOTOBALL U.S.A., INC.
/S/ Xxxxx X. Xxxxxxxx
----------------------
XXXXX X. XXXXXXXX
President/Chief Financial Officer
