EXHIBIT 99.1
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT ("Loan Agreement") is made and entered
into as of the ___ day of ___________, 2000, by and between FINANCIAL RESOURCES,
L.C., a Florida limited liability company, with its principal office at 000
Xxxxx Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxx000, Xxxxx, Xxxxxxx 00000 ("Lender") and
FINANCIAL XXX.XXX, INC, a Nevada corporation, with its principal office at 000
Xxxx Xxxxx, Xxxxx 000, Xxxxxxxxx Xxxxxxx, XX 00000 (the "Borrower").
RECITALS
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Borrower has requested that Lender extend certain credit facilities to
Borrower, consisting of a term loan in an aggregate principal amount up to
________________ ($_______ ) (the "Term Loan").
Borrower anticipates filing a voluntary petition in bankruptcy, but will be
unable to do so for several days. Borrower needs certain cash to operate its
business until it is able to file its bankruptcy petition. Lender is willing to
make the Term Loan to Borrower on a secured basis, and to undertake Borrower's
Debtor-in-possession financing in bankruptcy, but it would be unwilling to make
the Term Loan without the covenants herein contained.
Lender is prepared to extend the Term Loan to Borrower subject to the terms
and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender agree as
follows:
ARTICLE I DEFINITIONS
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1.1 DEFINED TERMS. In addition to terms defined elsewhere in this Loan
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Agreement, when used herein, the following terms shall have the following
meanings:
"ACCOUNT" means any right of Borrower, whether or not earned by
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performance, to payment for goods or other property sold or leased or for
services rendered that is not evidenced by an Instrument or Chattel Paper,
including without limitation:
(a) all presently owned and hereafter acquired receivables, including
all open accounts, contract rights, Note, drafts, acceptances, rental
receivables, installment payment obligations and other obligations for or rights
to the payment of money created by Borrower, or acquired by Borrower from
others;
(b) all cash and non-cash proceeds thereof, and all contracts,
documents, invoices and other instruments evidencing the same; and
(c) all collateral security therefor (including guaranties,
mortgages, or security interests) and all of Borrower's rights and remedies in
connection with the Accounts or in connection with any property sold or leased
which is represented thereby.
"ACCOUNT DEBTOR" means the Person who is obligated on an Account.
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"AUTHORIZED OFFICER" means any of the following officers of Borrower: Chief
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Executive Officer - Xxxxx Xxxxxxxxx, President - Xxxx Xxxxxxxxxx; Vice-President
- Xxxxx Xxxxxxx; or any other officer of Borrower designated from time to time
in writing by Borrower's Board of Directors as an "Authorized Officer".
"BANKING DAY" means that part of the day for dealings by and between banks,
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excluding Saturday, Sunday or a day in which commercial banks in Florida are
authorized to close.
"CHATTEL PAPER" means a writing or writings that evidence both a monetary
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obligation and a security interest in or a lease of specified goods.
"COLLATERAL" has the meaning given to such term in Section 3.1.
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"DAY" shall mean a calendar day, unless the context indicates otherwise.
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"DEFAULT RATE" shall mean the lesser of (i) the Prime Rate plus five and
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one-half percent (5.5%), or (ii) the highest rate of interest permitted from
time to time by applicable law.
"DOCUMENT" shall mean any now owned or hereafter acquired xxxx of lading,
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dock warrant, dock receipt, warehouse receipt or order for the delivery of
goods, and also any other document, whether negotiable or non-negotiable, that
in the regular course of business of financing is treated as adequately
evidencing that the Person in possession of it is entitled to receive, hold and
dispose of the document and the goods it covers.
"DOLLARS" and "$" shall mean lawful money of the United States of America.
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"DUE DATE" shall mean the date any payment of principal or interest is due
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and payable on the Loan or the Note.
"EQUIPMENT" means all goods (other than Inventory) used or bought for use
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primarily in the business of Borrower, wherever located, including, but not
limited to, machinery, furniture, furnishings, fixtures, leasehold improvements,
computers, parts (including spare parts and repair parts) and tools, together
with all fittings, accessories, accessions, additions, modifications,
improvements, equipment and special tools now or hereafter affixed to any or any
part of the foregoing or used in connection with any part of the foregoing and
all replacements of any part thereof.
"EVENT OF DEFAULT" means an event of default specified in Article VII of
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this Loan Agreement.
"FINANCING STATEMENT" means any financing statement permitted under the UCC
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or any other state law for the purpose of perfecting or continuing the Security
Interest.
"GENERAL INTANGIBLES" means any personal property of Borrower (including
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choses in action) other than goods, Accounts, Chattel Paper, Documents,
Instruments and money, including without
limitation, causes of action, trade names, trademarks, patents, source code,
object code, software, and licenses.
"INDEBTEDNESS" means all items of indebtedness, obligation, or liability,
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whether matured or unmatured, liquidated or unliquidated, direct or contingent,
joint or several, including, but not limited to, principal, interest, costs,
attorneys' fees (including in-house counsel fees), other fees, expenses and
credit obligations.
"INSTRUMENT" means a negotiable instrument or any other writing that
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evidences a right to payment of money and is not itself a security agreement or
lease and is of a type that is in ordinary course of business transferred by
delivery with any necessary endorsement or assignment.
"INTEREST RATE" means the Prime Rate plus three percent (3%), except when
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the Default Rate is in effect, but in no event to exceed the maximum rate
permitted by law.
"INVENTORY" means all (a) goods, merchandise or personal property, wherever
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located, held for sale or lease by Borrower in the ordinary course of business
or to be furnished under contracts of service, (b) raw materials, (c) work in
process, (d) materials used or consumed in the Borrower's business, (e)
materials or supplies used or usable in manufacturing or processing, (f)
packaging and shipping materials, (g) inventory covered by a warehouse receipt,
xxxx of lading or other negotiable or non-negotiable Document and (h) returned
or repossessed merchandise, of Borrower.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien, or
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charge of any kind (including any agreement to give any of the foregoing, any
conditional sales or other title retention agreements, or any lease in the
nature thereof, and the filing of or agreement to give any financing statement
under the Uniform Commercial Code of any jurisdiction).
"LOAN AGREEMENT" means this Loan and Security Agreement, and all
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supplements, amendments, modifications or restatements hereof.
"LOAN DOCUMENTS" means this Loan Agreement, the Note, and the Financing
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Statements, together with all other agreements, documents and instruments
executed and delivered by Borrower to Lender in connection herewith.
"LOAN" means the Term Loan, as the context permits or requires, and all
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renewals, extensions, modifications or restatements thereof.
"MATURITY DATE" means, except as otherwise provided upon the occurrence of
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an Event of Default, 21 days following the funding of the Term Loan. It is the
intention of the parties that the Term Loan will be repaid from the proceeds of
the Debtor-in-possession financing for Borrower in bankruptcy.
"OBLIGATIONS" means all payment and performance duties, obligations and
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liabilities of any kind or nature of Borrower to Lender including, but not
limited to, (a) the indebtedness evidenced by the Note together with all accrued
but unpaid interest thereon, (b) all banking and loan fees, costs, expenses and
attorneys' and paralegals' fees and expenses for which Borrower may be liable,
and (c) all other payment and performance duties, obligations and liabilities of
Borrower to Lender, however and whenever incurred, acquired or evidenced,
whether primary or secondary, direct or indirect, absolute or contingent,
sole or joint and several, or due or to become due, including without
limitation, all such duties, obligations and liabilities of Borrower to Lender
under and pursuant to this Loan Agreement, the Note or any of the other Loan
Documents, and all renewals, extensions, modifications, amendments or
replacements of any thereof. The term "Obligations" shall include and continue
to include any Obligations which have been paid to Lender, which are
subsequently required to be turned-over or returned to Borrower or any other
Person for any reason.
"PERSON" means any natural person, corporation, division of a corporation,
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firm, partnership, association, trust, organization, Governmental Authority, or
any other entity, whether acting in an individual, fiduciary, or other capacity.
"PLACE OF BUSINESS" means any location in which Borrower undertakes its
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business, all as set forth in Schedule 5.17 attached hereto.
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"PRIME RATE" means the interest rate announced from time to time by Bank of
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America as the Prime Rate (which rate is only a benchmark, is purely
discretionary and is not necessarily the best or lowest rate charged borrowing
customers of any subsidiary bank of Bank of America), with any change in the
Prime Rate to be effective at 12:01 a.m. on the Day any such change in the Prime
Rate is announced by Bank of America.
"PRINCIPAL PLACE OF BUSINESS" means the principal place of business and the
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headquarters of Borrower at which all of its Records are kept, currently at the
address set forth in this preamble to this Loan Agreement.
"PROCEEDS" means whatever is received upon the sale, exchange, collection
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or other disposition of the Collateral, including without limitation, insurance
proceeds.
"RECORDS" means all books, correspondence, credit files, records, invoices
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and other papers and documents at any time evidencing or relating to all or any
part of the Collateral, including, without limitation, all tapes, cards,
computer runs, computer programs and other papers and documents in the
possession or control of Borrower or any computer bureau from time to time
acting for Borrower, and all rights in, to and under all policies of insurance,
including claims of rights to payments thereunder and proceeds therefrom,
including any credit insurance;
"SECURITY DOCUMENTS" means this Loan Agreement, and all other agreements,
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assignments, filings, financing statements, certificates of title, notices,
returns and other security instruments and records, however described or
denominated, now or hereafter created or existing, pledging or evidencing any
pledge of any property or assets, however described, to secure any or all of the
Obligations.
"SECURITY INTEREST" means the security interest in the Collateral granted
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by Borrower to Lender pursuant to Section 3.1.
"TERM COMMITMENT" means up to the maximum principal amount of $160,000.00
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subject, however, to the terms and conditions hereof.
"TERM LOAN" has the meaning given to such term in the Recitals hereto.
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"TERM NOTE" means the Term Promissory Note of even date herewith in the
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face amount of $_______.00 executed by Borrower in favor of Lender, and all
allonges thereto, and all renewals, extensions, modifications or replacements
thereof.
"TERM PERIOD" means the period during the term of the Term Loan, commencing
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on the date hereof and ending on the Maturity Date.
"UCC" means the Florida Uniform Commercial Code, Chapters 671 et seq.,
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Florida Statutes, as amended from time to time.
1.2 TERMS GENERALLY. The definitions in Section 1.1 shall apply equally
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to both the singular and plural forms of the terms defined. All references in
this Loan Agreement to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Loan Agreement unless the context requires otherwise. All terms contained
in this Loan Agreement (and which are not otherwise specifically defined herein)
shall have the meanings provided in the UCC to the extent the same are used or
defined therein.
ARTICLE II LOAN
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2.1 TERM LOAN.
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2.1.1 AMOUNT; TERMS. Upon the terms and provisions and subject
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to the conditions contained in this Loan Agreement, Lender agrees to lend to
Borrower on the date hereof the aggregate principal amount of the Term Loan, on
the terms and conditions set forth herein. The Term Loan shall be evidenced by
the Term Note, payable as provided in Section 2.7 and shall be secured by the
Collateral pursuant to Section 3.1.
2.1.2 NO REBORROWING. The Term Loan shall not revolve and, upon
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repayment of all or any part of the principal amount thereof, Borrower shall not
be entitled to reborrow thereunder.
2.1.3 USE OF PROCEEDS. The proceeds of the Term Loan shall be
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used solely to enable Borrower to meet payroll obligations and other obligations
to certain vendors whose continuing provision of goods and services is critical
to the Borrower's operations.
2.2 INTEREST ON THE NOTE. The Note shall bear interest from the date
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thereof on the unpaid principal balance thereof from time to time outstanding at
the Interest Rate. From and after the Due Date, interest shall accrue on the
unpaid principal balance of the Loan and on all accrued but unpaid interest
thereon, at the Default Rate. Such interest shall continue to accrue until the
date of payment in full of all principal and accrued but unpaid interest thereon
and shall be due and payable on demand from time to time by Lender and upon the
date of payment of the unpaid principal balance of the Loan or such defaulted
payment.
2.3 METHOD OF PREPAYMENT. Borrower may at any time prepay all or any
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part of the principal amount of the Loan outstanding. Each prepayment other
than full payment shall be made on a Banking Day in immediately available funds.
Any prepayment made by Borrower shall be applied first to accrued interest and
then to the principal balance of the Loan.
2.4 CALCULATION OF INTEREST/FEES. Any interest or fees due on or with
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respect to the Loan or any other Obligations shall be calculated on the basis of
a year containing 360 days for the actual number of days elapsed. The interest
due on any date for payment of interest hereunder shall be that interest to the
extent accrued as of midnight on the last Day immediately prior to that interest
payment date. Notwithstanding anything herein or in any Loan Document to the
contrary, the sum of all interest and all other amounts deemed interest under
Florida or other applicable law which may be collected by Lender hereunder shall
not exceed the maximum lawful interest rate permitted by such law from time to
time. Lender and Borrower intend and agree that under no circumstance shall
Borrower be required to pay interest on the Loan or on any other Obligations at
a rate in excess of the maximum interest rate permitted by applicable law from
time to time, and in the event any such interest is received or charged by
Lender in excess of that rate, Borrower shall be entitled to an immediate refund
of any such excess interest by a credit to and payment toward the unpaid balance
of the Loan (such credit to be considered to have been made at the time of the
payment of the excess interest) with any excess interest not so credited to be
immediately paid to Borrower by Lender.
2.5 FEES. Borrower shall pay to Lender a transaction fee in an amount
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equal to the sum of Lender's attorneys' fees incident to the closing of the
Loan, plus all costs and expenses involved in the closing of the Loan including,
but not limited to, costs and expenses of Lender's attorneys (not to exceed
$5,000.00).
2.6 PLACE OF PAYMENT. All payments by Borrower under the Loan Documents
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shall be made to Lender at 000 Xxxxx Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxx,
Xxxxxxx 00000, in Dollars and in immediately available funds.
2.7 PAYMENT OF NOTE. Borrower shall pay the Note together with interest
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at the Interest Rate on the Maturity Date.
2.8 APPLICATION OF PAYMENTS. All payments made on the Note shall be
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applied first to interest accrued to the date of payment and next to the unpaid
principal balance; provided, however, if an Event of Default occurs, payments
shall be applied first to any reasonable costs or expenses, including reasonable
attorneys fees, that Lender may incur in exercising its rights under the Loan
Documents, as Lender may determine.
2.9 PAYMENT OF OBLIGATIONS. Any time any of the Obligations are due and
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payable under the Loan Documents (whether by acceleration or otherwise), Lender
shall be entitled to immediate payment of such Obligations.
ARTICLE III COLLATERAL AND GRANT OF SECURITY INTERESTS
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3.1 GRANT OF SECURITY INTEREST. To secure payment and performance of
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all of the Obligations, Borrower hereby grants to Lender a continuing first
priority Security Interest in and to all of Borrower's right, title and interest
in and to all personal property of Borrower, whether now owned or existing or
hereafter acquired, wherever now or hereafter located (all such property is
hereinafter referred to collectively as the "Collateral"), including, but not
limited to:
(a) All Accounts;
(b) All Inventory;
(c) All Equipment;
(d) All Documents;
(e) All Instruments;
(f) All Chattel Paper;
(g) All General Intangibles, including without limitation
intellectual property, franchise rights, trade names, patents, trademarks, and
copyrights;
(h) All cash and cash equivalents;
(i) Any and all balances, credits, deposits (general or special,
time or demand, provisional or final), accounts or monies of or in the name of
Borrower now or hereafter with Lender or any other financial institution and any
and all property of every kind or description of or in the name of Borrower now
or hereafter, for any reason or purpose whatsoever, in the possession or control
of, or in transit to, or standing to Borrower's credit on the books of, Lender,
any agent or bailee for Lender.
(j) To the extent not encumbered above, all of the right, title and
interest of Borrower in and to the goods or other property represented by or
securing Accounts, Chattel Paper and Instruments;
(k) All rights, remedies, title and interest in, to and in respect
of the Collateral, including without limitation (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of Borrower as an
unpaid vendor, lienor or secured party, including stoppage in transit, replevin,
repossession and reclamation, and in and to any returned, repossessed or
reclaimed goods, (iii) deposits by and property of Account Debtors or other
Persons securing the obligations of Account Debtors and (iv) rights, remedies
and payments arising from any legal proceedings initiated by Borrower;
(l) All interests of Borrower in any leases;
(m) All Records;
(n) All products of and all replacements, substitutions, additions
or accessions to or for any of the foregoing; and
(o) All Proceeds of all of the foregoing.
3.2 COLLATERAL COVENANTS.
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3.2.1 GENERAL. (a) The Collateral shall be and remain free and
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clear of all Liens whatsoever, other than the lien of a bank in Borrower's
deposit accounts, as provided by Fla. Stat. (S)674.2101, as amended.
(b) To the extent any of the Collateral is tangible personal
property, Borrower shall cause to be maintained on the Collateral hazard
insurance in an amount at least equal to the replacement cost thereof with an
insurance company and on a form acceptable to Lender.,
(c) Borrower shall defend the Collateral against the claims and
demands of all Persons at any time claiming the same or any interest therein.
(d) There is not now and shall not be filed in the future in any
jurisdiction any financing statement listing any Person other than Lender as a
secured party covering any or all of the Collateral.
3.2.2 ACCOUNTS COVENANTS.
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(a) At any time that an Event of Default exists or has occurred and
is continuing, Lender shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with Account
Debtors or grant any credits, discounts or allowances with respect thereto.
(b) Lender shall have the right at any time any time that an Event of
Default exists or has occurred and is continuing, in Lender's name or in the
name of a nominee of Lender, (i) to verify the validity, amount or any other
matter relating to any Account or other Collateral, by mail, telephone,
facsimile transmission or otherwise, (ii) to endorse in Borrower's name and to
collect any Chattel Paper, Instruments, checks, Note, drafts or other items of
Payment tendered to or received by Lender in payment of any Account or other
obligation owing to Borrower, (iii) to notify, either in Lender's name or
Borrower's name, and/or to require Borrower to notify, any Account Debtor or
other Person obligated under or in respect of any Collateral of the fact of the
Security Interest and of the collateral assignment thereof to Lender, and (iv)
to direct, either in Lender's name or Borrower's name, and/or to require
Borrower to direct, any Account Debtor or other Person obligated under or in
respect of any Collateral, to make payment directly to Lender of any amounts due
or to become due thereunder or with respect thereto.
(c) Lender may, at any time or times on or after an Event of Default,
(i) extend the time of payment of, compromise, settle or adjust for cash,
credit, return of merchandise or otherwise, and upon any terms or conditions,
any and all Accounts or other obligations included in the Collateral and thereby
discharge or release the Account Debtor or any other party or parties in any way
liable for payment thereof without affecting any of the Obligations, (ii)
demand, collect or enforce payment of any Accounts or such other obligations,
but without any duty to do so, and Lender shall not be liable for its failure to
collect or enforce the payment thereof nor for the negligence of its agents or
attorneys with respect thereto and (iii) take whatever other action Lender may
deem necessary or desirable for the protection of its interest. At any time on
or after an Event of Default, at Lender's request, all invoices and statements
sent to any Account Debtor shall state that the Accounts and such other
obligations have been assigned to Lender and are payable directly and only to
Lender and Borrower shall deliver to Lender such originals of documents
evidencing the sale and delivery of goods or the performance of services giving
rise to any Accounts as Lender may require.
3.2.3 EQUIPMENT COVENANTS. Borrower shall not remove any
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Equipment from a
Place of Business, except to the extent necessary to have any Equipment repaired
or maintained in the ordinary course of the business of Borrower or to move
Equipment directly from one Place of Business to another Place of Business.
3.2.4 POWER OF ATTORNEY. Borrower hereby irrevocably designates
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and appoints Lender (and all persons designated by Lender) as Borrower's true
and lawful attorney-in-fact, and authorizes Lender, in Borrower's or Lender's
name, to: (a) at any time on or after an Event of Default (i) demand payment on
Accounts or other proceeds of Inventory or other Collateral, (ii) enforce
payment of Accounts by legal proceedings or otherwise, (iii) exercise all of
Borrower's rights and remedies to collect any Account or other Collateral, (iv)
sell or assign any Account upon such terms, for such amount and at such time or
times as the Lender deems advisable, (v) settle, adjust, compromise, extend or
renew an Accounts, (vi) discharge and release any Account, (vii) prepare, file
and sign Borrower's name on any proof of claim in bankruptcy or other similar
document against an Account Debtor, (viii) notify the post office authorities to
change the address for delivery of Borrower's mail to an address designated by
Lender, and open and dispose of all mail addressed to Borrower, (ix) do all acts
and things which are necessary, in Lender's determination, to fulfill Borrower's
obligations under this Loan Agreement and the other Loan Documents (x) take
control in any manner of any item of payment or proceeds thereof, (xi) have
access to any lockbox or postal box into which Borrower's mail is deposited,
(xii) endorse Borrower's name upon any items of payment or proceeds thereof and
deposit the same in the Lender's account for application to the Obligations,
(xv) endorse Borrower's name upon any Chattel Paper, Document, Instrument,
invoice, or similar document or agreement relating to any Account or any goods
pertaining thereto or any other Collateral, (x) sign Borrower's name on any
verification of Accounts and notice thereof to Account Debtors and (b) at any
time to execute in Borrower's name and file any UCC financing statements or
amendments thereto. Borrower hereby releases Lender and its officers, employees
and designees from any liabilities arising from any act or acts under this power
of attorney and in furtherance thereof, whether of omission or commission,
except as a result of Lender's own gross negligence or wilful misconduct as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction. This power of attorney, being coupled with an interest, is
irrevocable until either: (i) all of the Obligations are paid and performed in
full, or (ii) this Loan Agreement is terminated, whichever shall last occur.
Borrower expressly waives presentment, demand, notice of dishonor and protest of
all instruments and any other notice to which it might it otherwise be entitled.
3.2.5 LENDER'S RIGHT TO CURE. Lender may, at its option, (a)
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cure any default by Borrower under any agreement with a third party or pay or
bond on appeal any judgment entered against Borrower, (b) discharge taxes or
Liens at any time levied on or existing with respect to the Collateral and (c)
pay any amount, incur any reasonable expense or perform any act which, in
Lender's judgment, is necessary or appropriate to preserve, protect, insure or
maintain the Collateral and the rights of Lender with respect thereto. Lender
may add any amounts so expended to the Obligations and charge Borrower's account
therefor, such amounts to be repayable by Borrower on demand. Lender shall be
under no obligation to effect such cure, payment or bonding and shall not, by
doing so, be deemed to have assumed any obligation or liability of Borrower.
Any payment made or other action taken by Lender under this Section shall be
without prejudice to any right to assert an Event of Default hereunder and to
proceed accordingly.
3.2.6 ACCESS TO PREMISES. From time to time as requested by
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Lender, at the cost and expense of Borrower (a) Lender or its designee shall
have complete access to all of Borrower's premises during normal business hours
and after notice to Borrower, or at any time and without notice to Borrower
on or after an Event of Default, for the purposes of inspecting, verifying and
auditing the Collateral and all of Borrower's books and records related thereto;
and (b) Borrower shall promptly furnish to Lender such copies of such books and
records or extracts therefrom as Lender may reasonably request; and (c) use
during normal business hours such of Borrower's personnel, equipment, supplies
and premises as may be reasonably necessary for the foregoing.
ARTICLE IV CONDITIONS PRECEDENT. The obligation of Lender to disburse the
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proceeds of the Term Loan to Borrower is subject to the condition precedent
that: Lender shall have received all of the following, all in form and substance
satisfactory to Lender:
4.1 LOAN DOCUMENTS. Each of the Loan Documents fully executed by
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each of the parties thereto, and the Loan and all Loan Documents shall
constitute valid and binding obligations of Borrower, enforceable against
Borrower, and all its successors and assigns, including any bankruptcy trustee
or examiner, in accordance with their terms. The Security Interest will be a
valid, enforceable, perfected (to the extent capable of perfection by filing),
unavoidable first priority security interest, in all personal property of
Borrower.
4.2 RESOLUTIONS. Certified Resolutions of the Board of Directors of
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Borrower authorizing the execution and delivery of this Loan Agreement and the
other Loan Documents as well as performance by Borrower hereunder and under the
other Loan Documents, shall be delivered to Lender.
4.3 CERTIFICATE OF INCUMBENCY. A Certificate of Incumbency showing the
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names and offices of the officers of Borrower authorized to execute this Loan
Agreement and the other Loan Documents as well as of each Person identified as
an Authorized Officer, shall be delivered to Lender.
4.4 UCC SEARCHES. UCC search results demonstrating to Lender's
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satisfaction that Lender is being granted a first priority security interest in
and lien on the Collateral and other personal property securing the Obligations
shall be delivered to Lender.
ARTICLE V REPRESENTATIONS AND WARRANTIES
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Borrower represents and warrants to Lender as follows:
5.1 CORPORATE EXISTENCE AND POWER; NAME; CHIEF EXECUTIVE OFFICE;
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INVENTORY AND EQUIPMENT LOCATIONS. Borrower is a corporation duly incorporated,
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validly existing and in good standing under the laws of the State of Nevada.
Borrower has all requisite power and authority, corporate or otherwise, to
conduct its business, to own its properties and to execute and deliver, and to
perform all of its obligations under, the Loan Documents. During its corporate
existence, Borrower has done business solely under the names of
XxxxxxxxxXxx.xxx, Inc. and Axxess, Inc. The chief executive office and
principal place of business of Borrower is located at 000 Xxxx Xxxxx, Xxxxx 000,
Xxxxxxxxx Xxxxxxx, XX 00000, and all Records are kept at that location. All
Inventory and Equipment is located at that location or at one of the other
Places of Business.
5.2 AUTHORIZATION OF LOAN, ETC. The execution, delivery and performance
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of the Loan Documents by Borrower (a) have been duly authorized by all requisite
corporate action (no shareholder action being required pursuant to applicable
law).
5.3 TITLE TO ASSETS. Except for the Security Interest granted to Lender
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hereunder, Borrower has good and marketable title to all of its property and
assets free and clear of all other Liens.
5.4 LEGAL AGREEMENTS. This Loan Agreement and the other Loan Documents,
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upon execution by the respective parties, will constitute the legal, valid and
binding obligations of Borrower, enforceable in accordance with their respective
terms.
5.5 PATENTS; LICENSES; INTELLECTUAL PROPERTY. Borrower owns or has
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sufficient rights to use in all patents, trademarks, trade names, copyrights,
and other intellectual property necessary to own and operate its business as
heretofore operated by it without conflict with the rights of other Persons.
5.6 PLACES OF BUSINESS; INVENTORY LOCATIONS. Set forth on Schedule 5.6
--------------------------------------- ------------
is a complete and accurate list of the addresses of each Place of Business.
5.7 STATEMENTS. All statements, written or oral, which Borrower has
----------
made or provided to Lender in connection with any Loan Document (except to the
extent that any such statements constitute projections), taken as a whole,
contain no untrue statement of a material fact.
ARTICLE VI COVENANTS
--------------------
Borrower covenants, for so long as any of the principal amount of or
interest on the Note is outstanding and unpaid or any duty or obligation of the
Borrower hereunder or under any of the other Obligations remains unpaid or
unperformed as follows:
6.1 AFFIRMATIVE COVENANTS. Borrower shall, at its cost and expense,
---------------------
execute, acknowledge and deliver and cause to be executed, acknowledged and
delivered, to Lender all financing statements, security agreements, assumptions
and continuance statements, and take all such other action as Lender may from
time to time request for the purpose of further assuring to Lender the security
for the Obligations provided for, or intended to be provided for, in this Loan
Agreement and the other Loan Documents and to confirm the Obligations. Further,
to the extent Borrower acquires from time to time any additional property within
the definition of the term "Collateral," Borrower shall upon demand execute and
delivery to Lender such documents as are necessary to grant to Lender a valid
and perfected first priority security interest in such property, except for the
lien of a bank in Borrower's deposit accounts as provided by Fla. Stat
(S)674.2101, as amended.
6.2 NEGATIVE COVENANTS.
------------------
6.2.1 SALE OF ASSETS. Borrower shall not sell, lease, assign,
--------------
transfer, or otherwise dispose of all or a substantial part of its assets
(whether in one transaction or in a series of transactions) to any Person unless
the Obligations shall be paid in full.
6.2.2 DIVIDENDS; CAPITAL STOCK. Borrower shall not declare or
------------------------
pay, directly or indirectly, any dividends or make any other distribution or
payment, whether in cash, property, securities or a combination thereof, with
respect to (whether by reduction of capital or otherwise) any shares of capital
stock (or any options, warrants, rights or other equity securities or agreements
relating to any capital stock), or set apart any sum for the aforesaid purposes.
6.2.3 CONSOLIDATION AND MERGER; ASSET ACQUISITION. Borrower
-------------------------------------------
shall not consolidate with or merge into any Person, or permit any other Person
to merge into it, or acquire (in a transaction analogous in purpose or effect to
a consolidation or merger) all or substantially all the assets of any other
Person.
6.2.4 PRINCIPAL PLACE OF BUSINESS; NAME. Borrower shall not
---------------------------------
transfer its Principal Place of Business, or move, relocate, close, or sell any
other Place of Business. Borrower shall not permit any tangible Collateral or
any records pertaining to the Collateral to be located in any state or area in
which, in the event of such location, a financing statement covering such
Collateral would be required to be, but has not in fact been, filed in order to
perfect the Security Interest. Borrower shall not change its name.
6.2.5 SALARIES. Borrower shall not pay excessive or
--------
unreasonable salaries, bonuses, commissions, consultant fees or other
compensation; or increase the salary, bonus, commissions, consultant fees, or
other compensation of any director, officer, or consultant, or any member of
their families.
6.2.6 CHANGE IN MANAGEMENT. Borrower shall not replace or
--------------------
terminate any officer of Borrower without prior notice to and consent of Lender.
6.2.7 NO DISTRIBUTION. Except compensation and benefits (e.g.,
---------------
medical and retirement) and expense reimbursements paid in the ordinary course
of business, Borrower shall not make payments of indebtedness or other
distributions to officers or shareholders.
ARTICLE VII EVENTS OF DEFAULT; RIGHTS AND REMEDIES
-------------------------------------------------
7.1 EVENTS OF DEFAULT. The occurrence of any of the following events
-----------------
shall constitute an "Event of Default":
7.1.1 MONETARY DEFAULT. If Borrower shall default in any
----------------
payment of (i) the principal of or interest on the Loan or (ii) any of the other
Obligations (after three (3) days' written notice) on the Due Date thereof,
whether at maturity, by acceleration or otherwise; or
7.1.2 NON-MONETARY DEFAULT. If Borrower shall default in the
--------------------
performance of or compliance with any term or covenant contained in this Loan
Agreement, other than a term or covenant a default in the performance of which
or non-compliance with which is elsewhere specifically dealt with under this
Article VII; or
7.1.3 INVALIDITY ASSERTION. If Borrower in any pleading filed
--------------------
in any court asserts that any material provision in any of the Loan Documents is
invalid or not binding on Borrower; or
7.1.4 TERMINATION, ETC. OF SECURITY INTEREST. Except for the
--------------------------------------
termination of the Security Interest upon payment and performance in full of all
of the Obligations as provided herein, if the Security Interest shall terminate
or otherwise cease for any reason to be in full force and effect.
7.2 RIGHTS AND REMEDIES. Upon the occurrence of an Event of Default,
-------------------
and at any time thereafter during the continuance of such event, Lender may take
any or all of the following actions, at
the same or different times, all of which are cumulative and nonexclusive:
(a) declare the Obligations to be forthwith due and payable,
whereupon the same shall become and be forthwith due and payable, without
presentment, demand, protest, notice of acceleration, notice of intent to
accelerate or other notice of any kind, all of which are hereby expressly
waived, anything in this Loan Agreement to the contrary notwithstanding;
(b) request Borrower to assemble at its expense the Collateral and
make it available to Lender at a convenient place acceptable to Lender and, upon
making of said request, Borrower shall promptly comply with said request;
(c) give notice to and make demand upon all Account Debtors to make
payments directly to Lender on all Accounts;
(d) seize and take possession of the Collateral and dispose of same
under the UCC or otherwise (or to have a receiver appointed for such purpose)
and, in such case, if any notice is required under applicable law the giving of
five (5) Banking Days written notice to Borrower at its address set forth herein
shall constitute reasonable notice to Borrower; provided, however, Lender shall
not by virtue of this Loan Agreement be obligated to give any such notice to
Borrower, and Borrower expressly authorizes Lender to enter upon all property
owned by Borrower for the purpose of taking into custody and seizing any and all
of the Collateral;
(e) exercise any and all rights or remedies contained in this Loan
Agreement or any Loan Document; and
(f) exercise any and all rights and remedies available to Lender
under the UCC and any other applicable law.
7.3 APPLICATION OF PROCEEDS ON DEFAULT. Upon the occurrence of an Event
----------------------------------
of Default, all Proceeds shall be applied to the outstanding Obligations, at the
Lender's sole and absolute discretion, without any marshalling of assets (i)
first to the expenses of retaking and preparing the Collateral for sale,
including expenses of sale, (ii) next to other costs and attorneys' fees
incurred by Lender in exercising its rights under this Loan Agreement or any of
the other Loan Documents, and (iii) next to the payment of interest, fees and
principal due on the Obligations, in such order as Lender may determine. Should
any deficiency result after disposition of the Collateral, Borrower shall remain
liable for any deficiency. Any amounts remaining after such payment in full
shall be remitted to Borrower.
7.4 FINANCING STATEMENTS; DIRECT PAYMENTS; CONFIRMATION OF ACCOUNTS AND
-------------------------------------------------------------------
AUDIT RIGHTS. Borrower hereby authorizes Lender to file UCC financing
------------
statements and any amendments thereto or continuations thereof and any other
appropriate security documents or instruments and to give any notices necessary
or desirable to perfect the Security Interest, in all cases without the
signatures of Borrower or with the signature by Lender as attorney-in-fact for
Borrower. Lender will provide Borrower with notice simultaneously with any such
filings made or notices given by Lender; however, failure by Lender to provide
such notice to Borrower shall not affect the validity of such filings or
notices. Borrower further authorizes Lender upon the occurrence of an Event of
Default, to notify any Account Debtors that all sums payable to Borrower,
relating to the Collateral shall be paid directly to Lender and to confirm with
any Account Debtors the amounts payable by them to Borrower with regard
to the Collateral.
ARTICLE VIII MISCELLANEOUS
--------------------------
8.1 WAIVER AND AMENDMENT. No provision of this Loan Agreement or any
--------------------
Loan Document or writing contemplated hereby can be waived, modified, amended,
abridged, supplemented or terminated, except by a writing executed by Lender.
No delay or failure by Lender to exercise any right or remedy shall be a waiver
thereof, nor shall any single or partial exercise by Lender of any right or
remedy preclude any other exercise thereof or the exercise of any other right or
remedy. All rights and remedies of Lender under this Loan Agreement and any
other writing are cumulative and not exclusive.
8.2 COSTS AND EXPENSES. Borrower shall pay, or shall reimburse Lender
------------------
for, and shall indemnify and save Lender harmless against liability for the
payment of all reasonable legal fees and expenses (whether incurred at trial, on
rehearing, retrial or appeal, in any bankruptcy proceeding or otherwise) of
counsel to Lender, in connection with enforcement of this Loan Agreement, the
Note or any of the other Loan Documents, provided Lender is the prevailing
party.
8.3 ADDRESSES. All notices, requests, demands and other communications
---------
provided for under this Loan Agreement and the writings contemplated by this
Loan Agreement shall be in writing and shall be delivered in person, deposited
in the mail postage prepaid, via overnight courier or by facsimile addressed as
follows:
If to Borrower:
--------------
XxxxxxxxxXxx.Xxx, Inc.
000 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Fax No. (000) 000-0000
Attention: Xxxxx Xxxxxxxxx, CEO
With a copy to:
--------------
Xxxx Xxxxxxxx, Esq.
Holland & Knight, LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax No. (000) 000-0000
If to Lender:
------------
Financial Resources, L.C.
000 Xxxxx Xxxxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Fax No. (000) 000-0000
Attention: Xxxxx Xxxxxxxx
With a copy to:
--------------
Xxxxxxxx Xxxx Xxxxxx, Esquire
000 Xxxxx Xxxxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Fax No. (000) 000-0000
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section. All such notices, requests, demands and other communications
shall be effective when actually delivered, deposited in the mail or with
overnight courier service or faxed.
8.4 BINDING EFFECT AND ASSIGNMENT. This Loan Agreement and the other
-----------------------------
writings contemplated by this Loan Agreement shall be binding upon and inure to
the benefit of the parties hereto and thereto and their respective successors
and assigns including, but not limited to, any bankruptcy trustees or examiners,
except that Borrower shall have no right to assign any of its rights hereunder
or thereunder or any interest herein or therein without the prior written
consent of Lender. If any provision or application of this Loan Agreement, the
Note or any other writing contemplated hereby is held unlawful or unenforceable
in any respect, such illegality or unenforceability shall not affect the other
provisions or applications which can be given effect, and this Loan Agreement
and such writings shall be construed as if the unlawful or unenforceable
provision or application had never been contained herein or therein or
prescribed hereby or thereby.
8.5 NO THIRD PARTY BENEFICIARIES. The parties intend that this Loan
----------------------------
Agreement is solely for their benefit and no Person not a party hereto shall
have any rights or privileges under this Loan Agreement whatsoever either as a
third party beneficiary or otherwise.
8.6 PRIOR AGREEMENTS. This Loan Agreement represents the entire
----------------
agreement of the parties with regard to the subject matter hereof and the terms
of any letters and other documentation entered into between Borrower and Lender
prior to the execution of this Loan Agreement which relate to Advances shall be
replaced by the terms of this Loan Agreement.
8.7 TERM. This Loan Agreement and the rights and privileges granted
----
hereunder to Lender, including without limitation, the Security Interest, shall
continue and remain in full force and effect until all of the Obligations have
been paid and performed in full. At such time as each of the foregoing
conditions has been met, Lender shall execute a termination statement in regard
to any Financing Statement filed by Lender. Until each of the conditions set
forth above regarding the term of this Loan Agreement has been met, the Security
Interest shall continue to secure all of the Obligations.
8.8 SURVIVAL OF AGREEMENT, REPRESENTATIONS AND WARRANTIES, ETC. All
----------------------------------------------------------
warranties, representations and covenants made herein by Borrower or in any
certificate or other instrument delivered by it or on its behalf in connection
with this Loan Agreement shall be considered to have been relied upon by Lender
and shall survive and shall continue in full force and effect so long as any
amount
due or to become due hereunder is outstanding and unpaid. All statements
in any such certificate or other instrument shall constitute representations and
warranties by Borrower.
8.9 HEADINGS. Article and Section headings in this Loan Agreement are
--------
for convenience of reference only, and shall not constitute a part of this Loan
Agreement for any other purpose or a limitation of the scope of the particular
Articles or Sections to which they refer.
8.10 SEVERABILITY. Any provision of this Loan Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.11 EXECUTION IN COUNTERPARTS. This Loan Agreement may be executed in
-------------------------
any number of counterparts, each of which shall constitute an original, but all
of which taken together shall constitute one and the same instrument.
8.12 TIME OF THE ESSENCE. Time is of the essence of this Loan
-------------------
Agreement, the Note and the other Loan Documents.
8.13 PROHIBITION ON DIP FUNDING. Lender and Borrower have agreed on
--------------------------
the essential terms of a Debtor-in-possession funding for Borrower, which is
anticipated to be in the amount of four million Dollars ($4,000,000.00). Unless
Lender and Borrower are unable to obtain Bankruptcy Court approval of the
Debtor-in-possession funding for Borrower, Borrower agrees that it will not seek
Debtor-in-possession financing from any other source, nor will it solicit the
approval of the Bankruptcy Court for any alternative Debtor-in-possession
financing. The parties acknowledge that this Loan would not be made in the
absence of this covenant.
8.14 CONSTRUCTION OF AGREEMENT. If in the event it is ever necessary to
-------------------------
construe this Loan Agreement, it will be construed without giving any effect as
to which party drafted this Loan Agreement, the parties having agreed that each
party, with the benefit of counsel, has reviewed and participated in the
preparation of this Loan Agreement.
8.15 GOVERNING LAW. This Loan Agreement and the other loan Documents
-------------
shall be governed by and construed in accordance with the laws of the State of
Florida.
IN WITNESS WHEREOF, the parties have executed this Loan Agreement on the
date first above written.
XXXXXXXXXXXX.XXX, INC.
By:_____________________________
Xxxxx Xxxxxxxxx, CEO
FINANCIAL RESOURCES, L.C.
By:_____________________________
Xxxxxxxx Xxxx Xxxxxx, Manager
TERM NOTE
---------
DATE OF NOTE: __________ ___, 2000
PRINCIPAL AMOUNT: $__________
TERM PERIOD: As defined and set forth in the Loan Agreement
referred to below.
MATURITY DATE: As defined and set forth in the Loan Agreement
referred to below.
INTEREST RATE: A variable rate of interest equal to the Prime
Rate (as defined in the Loan Agreement referred to
below) plus 3%
MAKER: XxxxxxxxxXxx.Xxx, Inc.
MAKER'S ADDRESS: 000 Xxxx Xxxxx, Xxxxx 000
Xxxxxxxxx Xxxxxxx, XX 00000
PAYEE: Financial Resources, L.C.
PAYEE'S ADDRESS: 000 Xxxxx Xxxxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
FOR VALUE RECEIVED, the undersigned (the "Maker") does hereby covenant and
promise to pay to the order of the Payee or to its successors and assigns, at
the Payee's Address or at such other place as the Payee may designate to the
Maker in writing from time to time, in legal tender of the United States, the
Principal Amount, as advanced by the Payee on the date hereof pursuant to that
certain Loan and Security Agreement of even date herewith between the Maker and
the Payee (together with any amendments, modifications, supplements or
restatements thereof, the "Loan Agreement," the capitalized terms used herein
and not otherwise defined herein having the meanings given to such terms in said
Loan Agreement), together with interest from the date hereof computed at the
Interest Rate on the unpaid balance of the Principal Amount at the times and in
the amounts set forth herein.
1. REQUIRED PAYMENTS. During the term hereof, principal and all accrued
-----------------
interest will be paid on the Maturity Date, as defined in the Loan Agreement
2. DEFAULT. The occurrence of any Event of Default under the Loan Agreement
-------
as referenced above shall constitute a condition of default under this Note:
3. COSTS OF COLLECTION. The Maker agrees that it shall pay all costs,
-------------------
expenses and
reasonable attorneys' fees, incurred by the Payee in connection with the
collection of this Note, including fees and costs incurred in arbitration,
litigation, and appeals. The Maker specifically agrees that in the event of any
bankruptcy of the Maker, the Payee shall be entitled to recover all its expenses
and reasonable attorneys' fees incurred by the Payee in connection with the
collection of this Note in any bankruptcy proceeding.
4. INTEREST/DEFAULT INTEREST, ETC. Interest under this Note is computed on
------------------------------
the basis of a 360 day year for the actual number of days elapsed. This Note and
all sums due hereunder shall bear interest at the Default Rate from the date
when any payment of the principal and accrued interest under this Note shall be
due and payable. Notwithstanding any term, condition, obligation or provision
herein to the contrary, it is the expressed intent of the Payee that no
interest, consideration or charge in excess of that permitted in the State of
Florida may be accrued, charged or taken or become payable hereunder. In the
event it is hereafter determined that the Payee of this Note has taken, charged
or reserved interest in excess of that permitted under Florida law, whether due
to prepayment, acceleration or otherwise, such excess shall be refunded to the
Maker or credited against the sums due the Payee hereunder.
5. COLLATERAL. This Note is secured, inter alia, by the Collateral. The
---------- ----- ----
Payee shall not be obligated to enforce payment hereof out of any collateral
securing this Note. Upon default, the Payee shall have all rights and remedies
provided in the Loan Agreement.
6. AMENDMENTS TO NOTE. This Note may not be changed orally, but only by an
------------------
agreement in writing, signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
7. WAIVER OF PRESENTMENT, ETC. Maker hereby waives presentment for payment,
--------------------------
demand, protest, notice of protest and notice of dishonor.
8. LAW GOVERNING. The provisions of this Note shall be construed and
-------------
interpreted in accordance with, and all rights and obligations of the parties
hereunder governed by, the laws of the State of Florida.
9. PREPAYMENT. This Note may be prepaid in whole or in part as set forth in
----------
the Loan Agreement.
MAKER:
XXXXXXXXXXXX.XXX, INC.
By:___________________________
Name: Xxxxx Xxxxxxxxx, CEO
(CORPORATE SEAL)
