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EXHIBIT 6.8
ASSET BASED
LOAN AND SECURITY AGREEMENT
AGREEMENT, DATED November 27, 1996, between Cable Link, Inc., an Ohio
corporation (Borrower), whose mailing address is 000 Xxxxxxx Xxxxxx, Xxxxxxxx,
XX 00000, and The Provident Bank (Bank), an Ohio banking corporation, whose
mailing address is 00 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, XX 00000.
1. Definitions. As used herein, the following terms, when initial
capital letters are used, shall have the respective meanings set forth below. In
addition, all terms defined in the Uniform Commercial Code as adopted in Ohio
shall have the meanings given therein unless otherwise defined herein.
1.1 Accounts shall mean all of Borrower's accounts (as that term is
defined in the Uniform Commercial Code), accounts receivable, chattel paper,
contract rights, documents and instruments, all other obligations or
indebtedness owed to Borrower from whatever source arising; all guaranties of
any of the foregoing and all security therefor; all of the right, title and
interest of Borrower in and with respect to the goods, services or other
property which gave rise to or which secure any of the foregoing and all
insurance policies and proceeds relating thereto; all of the foregoing whether
now owned by Borrower or hereafter acquired or in existence.
1.2 Affiliate shall mean any person, company or business entity
controlling, controlled by or under common control with, Borrower, whether such
common control is direct or indirect, and all of the partners, officers,
directors and shareholders of Borrower and such entities.
1.3 Cash Collateral Account shall mean that deposit account maintained
by Borrower at Bank into which all collections on the collateral shall be
deposited and over which Bank shall have the sole power of withdrawal.
1.4 Collateral shall mean (a) all of the Borrower's Accounts,
Equipment, General Intangibles, Inventory and all other items of personal
property now owned or hereafter acquired by the Borrower or in which the
Borrower has granted or may in the future grant a security interest to the Bank
hereunder or in any supplement hereto or otherwise; (b) all of the Borrower's
right, title and interest in and to all goods or other property represented by
or securing any of the Accounts, including all goods that may be reclaimed
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or repossessed from or returned by Debtors; (c) all of the Borrower's rights as
an unpaid seller, including stoppage in transit, detinue and reclamation; (d)
all additional amounts due to the Borrower from any Debtor, irrespective of
whether such additional amounts have been specifically assigned to the Bank; (e)
all guaranties, or other agreements or property securing or relating to any of
the items referred to in (a) above, or acquired for the purpose of securing and
enforcing any of such items; (f) all instruments, documents, securities, cash,
property, deposit accounts (including but not limited to deposits made to
Borrower's Cash Collateral Account), and the proceeds of any of the foregoing,
owned by the Borrower or in which it has an interest, which are now or may
hereafter be in the possession or control of the Bank or in transit by mail or
carrier to or from the Bank, or in possession of any third party acting on
behalf of Bank, without regard to whether Bank received same in pledge, for
safekeeping, as agent for collection or transmission or otherwise or whether
Bank had conditionally released the same; (g) all ledger sheets, files, records,
documents, blueprints, drawings and instruments (including, without limitation,
computer programs, tapes and related electronic data processing software)
evidencing an interest in or relating to the foregoing; and (h) all proceeds and
products of the collateral described above, including, without limitation, all
claims against third parties for damage to or loss or destruction of any of the
foregoing, including insurance proceeds, and accounts, contract rights, chattel
paper and general intangibles arising out of any sale, lease or other
disposition of any of the foregoing.
1.5 Debtor shall mean the account debtor with respect to any of the
Borrower's Accounts and/or the prospective purchaser with respect to any
contract right, and/or any party who enters into or proposes to enter into any
contract or other arrangement with the Borrower pursuant to which the Borrower
is to deliver any personal property or perform any service.
1.6 Eligible Inventory shall mean such of Borrower's Inventory as is
acceptable to Bank in its sole discretion and in which Bank shall have a
perfected first priority security interest.
1.7 Eligible Accounts shall mean such Accounts which are and at all
times shall continue to be acceptable to the Bank in all respects and in which
Bank shall have a perfected first priority security interest. Criteria for
eligibility shall be fixed and revised from time to time solely by the Bank in
its exclusive judgment. In general, an Account shall in no event be deemed to be
eligible unless (a) delivery of the merchandise or the rendition of services has
been completed; (b) no return, rejection or repossession has occurred; (c) such
merchandise or services have been finally accepted by the customer
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without dispute, offset, defense or counterclaims (d) such Account continues to
be in full conformity with the representations and warranties made by the
Borrower to the Bank with respect thereto; (e) no more than 90 days have
elapsed from the invoice date; and (f) the Bank is and continues to be
satisfied with the credit standing of the Debtor in relation to the amount of
credit extended. In general, Accounts due from any single Debtor shall in no
event be deemed to be eligible to the extent that such Accounts, in the
aggregate, exceed an amount equal to fifteen percent (15%) of the aggregate of
all Accounts at any time, and Accounts due from any affiliated group of Debtors
shall in no event be deemed to be eligible.
1.8 Equipment shall mean all of Borrower's equipment (as that term is
defined in the Uniform Commercial Code), including, without limitation, all
furniture, fixtures, machinery and other equipment of any kind and all
substitutions and replacements thereof and accessories and parts therefor, all
whether now owned or hereafter acquired by Borrower.
1.9 Event of Default shall mean any event described in Section 10.1.
1.10 General Intangibles shall mean all of Borrower's general
intangibles (as that term is defined in the Uniform Commercial Code), including,
without limitation, all goodwill, patents, formulas, blueprints, proprietary
manufacturing processes, trademarks, trade names, licenses, franchises,
beneficial interests in trusts, joint venture interests, partnership interests,
rights to tax refunds, rights to insurance proceeds, causes of action, pension
plan overfundings, literary rights and other contractual rights of Borrower, all
whether now owned or hereafter acquired by Borrower.
1.11 Inventory shall mean all of Borrower's inventory (as that term is
defined in the Uniform Commercial Code), including, without limitation, all
goods, merchandise and other personal property which are held for sale or lease,
or are furnished or to be furnished under any contract of service by Borrower,
or are raw materials, work-in-progress, supplies or materials used or consumed
in Borrower's business, and all products thereof, and all substitutions,
replacements, additions and accessories thereto, all whether now owned or
hereafter acquired by Borrower; and all of Borrower's right, title and interest
in and to any leases or rental agreements for such inventory.
1.12 Loans shall have the meaning set forth in Section 2.1.
1.13 Maximum Loan Amount shall have the meaning set forth in Section
2.1.
1.14 Notes shall mean one or more promissory notes evidencing the Loans
pursuant to Section 2.2.
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1.15 Obligations shall mean, without limitation, all Loans (as
defined in Section 2) and all other debts, obligations, or liabilities of every
kind and description of Borrower to Bank, now due or to become due, direct or
indirect, absolute or contingent, presently existing or hereafter arising,
joint or several, secured or unsecured, whether for payment or performance,
regardless of how the same arise or by what instrument, agreement or book
account that may be evidenced, or whether evidenced by any instrument,
agreement or book account, including, without limitation, all loans (including
any loan by renewal or extension), all overdrafts, all guaranties, all bankers
acceptances, all agreements, all letters of credit issued by Bank for Borrower
and the applications relating thereto, all indebtedness of Borrower to Bank,
all undertakings to take or refrain from taking any action and all
indebtedness, liabilities and obligations owing from Borrower to others which
Bank may obtain by purchase, negotiation, discount, assignment or otherwise.
Obligations shall also include all interest and other charges chargeable to the
Borrower or due from the Borrower to the Bank from time to time and all costs
and expenses referred to in Section 11.
1.6 Permitted Liens shall mean the liens and interests in favor
of Bank granted in connection herewith and, to the extent reflected on
Borrower's books and records and not impairing the operations of Borrower or
any performance hereunder or contemplated hereby:
(i) liens arising by operation of law for taxes not yet due and
payable;
(ii) statutory liens of mechanics, materialmen, shippers and
warehousemen for services or materials for which payment is not yet due;
(iii) liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security;
(iv) liens, if any, specifically permitted by Bank from time to
time in writing; and
(v) the following if the validity or amount thereof is being
contested in good faith and by appropriate and lawful proceedings promptly
initiated and diligently conducted of which Borrower has given prior notice to
Bank and for which appropriate reserves (in Bank's reasonable judgment) have
been established and so long as levy and execution have been and continue to be
stayed: claims and liens for taxes due and payable and claims of mechanics,
materialmen, shippers, warehousemen, carriers and landlords.
2. Loans and Interest
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2.1 Loans. The Bank proposes to make loans to the Borrower in an
aggregate amount not to exceed the lesser of (i) $750,000 or (ii) the sum of (a)
the lessor $200,000 or 25% of the cost or market value, whichever is lower from
the date of this Agreement to 12-31-96; the lesser of $100,000 or 25% of cost or
market value whichever is lower from 01-01-97 to 03-31-97; and zero dollars from
04-01-97 and thereafter of Eligible Inventory, (b) 75% of the outstanding amount
of Eligible Accounts and (c) 100% of the balance of the Cash Collateral Account
(the lessor of (i) or (ii) being referred to hereinafter as the "Maximum Loan
Amount"). Should the outstanding amount of loans at any time exceed the Maximum
Loan Amount, Borrower shall on demand immediately repay such excess amount. All
such loans will be made from time to time in the absolute discretion of the
Bank, and neither this Agreement nor any loans or other action by the Bank shall
obligate the Bank to make further loans to the Borrower. Such loans may be made
in excess of the Maximum Loan Amount in the sole discretion of the Bank. All
loans shall be herein collectively called the "Loans".
2.2 Evidence of Loans. The Loans shall be evidenced by one or more
promissory notes the "Notes") in form satisfactory to Bank and shall bear
interest on the daily outstanding balance thereof at the rate set forth in such
Notes. In case of any change in law or governmental rules, regulations,
guidelines or orders (or any interpretations thereof) or the introduction of new
laws, regulations or guidelines, which require Bank to reserve for unfunded
credit commitments, Bank may charge Borrower an additional fee which will
compensate Bank for such requirements.
2.3 Loan Payments. All payments of interest, principal and all other
amounts owing hereunder or under the Notes shall be made by the Borrower to the
Bank in immediately available funds at its principal office in Cincinnati, Ohio
or at such other place as the Bank may designate in writing, at such times as
shall be set forth herein or in the Notes or if not so set forth, such amounts
shall be payable on demand. Borrower hereby authorizes Bank, at Bank's option,
to charge any account or charge or increase any Loan balance of Borrower at Bank
for the payment or repayment of any interest or principal of the Loans or any
fees, charges or other amounts due to Bank hereunder.
3. Grant of Security Interest. To secure the payment and performance
of all of the Obligations, as herein defined, the Borrower hereby grants to the
Bank a continuing security interest in and assigns to the Bank all of the
Collateral.
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4. Representations and Warranties. The Borrower hereby represents and
warrants to the Bank that:
4.1 (a) Organization and Authority. The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
its incorporation and has the corporate power and authority to conduct its
business as now conducted and as proposed to be conducted while this Agreement
is in effect; (b) the execution and delivery of this Agreement and the Notes and
the performance of the transactions contemplated hereby and thereby are within
the corporate authority of the Borrower and have been duly authorized by all
proper and necessary corporate action; (c) the execution and delivery of this
Agreement and the Notes and the performance of the transactions contemplated
hereby and thereby will not violate or contravene any provisions of law or the
articles of incorporation or bylaws of the Borrower, or result in a breach or
default in respect of the terms of any other agreement to which the Borrower is
a party or by which it is bound, which breach or default would result in the
creation, imposition or enforcement of any lien against any of the Collateral,
or would have a material adverse effect on the conduct of the Borrower's
business as it is now being conducted and proposed to be conducted while this
Agreement is in effect, or would otherwise impair the value of the security
interest granted to the Bank hereunder; and (d) the Borrower is duly qualified
as a foreign corporation and is in good standing and duly authorized to do
business in every jurisdiction where the nature of its properties or the conduct
of its business requires such qualification and authorization.
4.2 Binding Effect of Documents. This Agreement and the Notes are legal
and binding obligations of the Borrower enforceable in accordance with their
terms.
4.3 Government Consent. The execution and delivery of this Agreement
and the Notes and the performance of the transactions contemplated hereby and
thereby do not require any approval or consent of any governmental agency or
authority, or of any other party.
4.4 Financial Statements. The Borrower has delivered to the Bank copies
of its consolidated and consolidating financial statements as of and for the
year or other period ending December 31, 1995, prepared by Coopers & Xxxxxxx,
CPAs. All of these financial statements are true and correct, are in accordance
with the respective books of account and records of the Borrower and its
subsidiaries (if any) and have been prepared in accordance with generally
accepted accounting principles applied on a basis
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consistent with prior periods, and accurately present the financial condition of
the Borrower and it subsidiaries (if any) and their assets and liabilities and
the results of its operations as at such date.
4.5 No Change in Financial Condition. Since the ending date of the
financial statement described in Section 4.4, there has been no change in the
assets, liabilities, financial condition or operation of the Borrower, other
than changes in the ordinary course of business, the effect of which have not,
individually or in the aggregate, been materially adverse.
4.6 No Other Liabilities. Except to the extent reflected in the
financial statements described in Section 4.4, the Borrower, as of the date of
this Agreement, does not know or have reasonable grounds to know of any basis
for the assertion against it of any liabilities or obligations of any nature,
direct or indirect, accrued, absolute or contingent, including, without
limitation, liabilities for taxes then due or to become due whether incurred in
respect of or measured by the income of the Borrower for any period prior to the
date of this Agreement or arising out of transactions entered into, or any state
of facts existing prior thereto.
4.7 Taxes. The Borrower has filed all federal, state, local and other
tax returns and reports required to be filed by it and such returns and reports
are true and correct. The Borrower has paid all taxes, assessments and other
governmental charges lawfully levied or imposed on or against it or its
properties, other than those presently payable without penalty or interest.
4.8 No Litigation. There is no litigation or proceeding or
governmental investigation pending or, to the knowledge of the Borrower,
threatened against or relating to the Borrower, its properties or business
which is not reflected in the financial statements described in Section 4.4.
4.9 Compliance with Laws. The Borrower is not, to its knowledge, in
violation of or default under any statute, regulation, license, permit, order,
writ, injunction or decree of any government, governmental department,
commission, board, bureau, agency, instrumentality or court, which violation or
default would have a material adverse effect on the business, properties or
condition, financial or otherwise, of the Borrower.
4.10 No Default. The Borrower is not, to its knowledge, in default
under a material order, writ, judgment, injunction, decree, indenture,
agreement, lease or other instrument or contract, which default would have a
material adverse effect on the business, properties or condition, financial or
otherwise, of the Borrower, or in the performance of any covenants or conditions
respecting any of its indebtedness,
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and no holder of any indebtedness of the Borrower has given notice of any
asserted default thereunder, and no liquidation or dissolution of the Borrower
and no receivership, insolvency, bankruptcy, reorganization or other similar
proceedings relative to the Borrower or its properties is pending or, to the
knowledge of the Borrower, is threatened against Borrower.
4.11 Location of Collateral. The Borrower maintains places of business
and owns collateral only at 000 Xxxxxxx Xxxxxx, Xxxxxxxx, XX 00000 and maintains
its books of account and records, including all records concerning Collateral,
only at 000 Xxxxxxx Xxxxxx, Xxxxxxxx, XX 00000. The Borrower maintains its chief
executive office at 000 Xxxxxxx Xxxxxx, Xxxxxxxx, XX 00000.
4.12 Title to Collateral. With respect to the Collateral, at the time
the Collateral becomes subject to the Bank's security interest, the Borrower is
and at all times will be the sole owner of and have good and marketable title
to the Collateral, free from all liens, encumbrances and security interests in
favor of any person other than the Bank except Permitted Liens, and has full
right and power to grant the Bank a security interest therein. All information
furnished to Bank concerning the Collateral is and will be complete, accurate
and correct in all material respects when furnished.
4.13 Rights of Borrower to Accounts. As to each and every Account (a)
it is a bona fide existing obligation, valid and enforceable against the Debtor
for a sum certain for sales of goods shipped or delivered, or goods leased, or
services rendered in the ordinary course of business; (b) all supporting
documents, instruments, chattel paper and other evidence of indebtedness, if
any, delivered to the Bank are complete and correct and valid and enforceable in
accordance with their terms, and all signatures and endorsements that appear
thereon are genuine, and all signatories and endorsers have full capacity to
contract; (c) the Debtor is liable for and will make payment of the amount
expressed in such Account according to its terms; (d) it will be subject to no
discount, allowance or special terms of payment without the prior approval of
the Bank; (e) it is subject to no dispute, defense or offset, real or claimed;
(f) it is not subject to any prohibition or limitation upon assignment; (g) the
Borrower has full right and power to grant the Bank a security interest therein
and the security interest granted in such Account to the Bank in Section 3
hereof, when perfected, will be a valid first security interest which will inure
to the benefit of the Bank without further action. The warranties set out herein
shall be deemed to have been made with respect to each and every Account now
owned or hereafter acquired by the Borrower.
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4.14 Rights of Borrower in Inventory. The Inventory (a) is and will be
of good and merchantable quality, free from defects and (b) none of the
inventory is or will be stored with a bailee without the prior written consent
of Bank.
4.15 Employee Benefit Plans. Other than as set forth on Schedule 4.15
hereto, Borrower has no Plans which are subject to regulation under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Borrower has not
received any notice to the effect that it is not in full compliance with any of
the requirements of ERISA, and no fact or situation, including but not limited
to any "Reportable Event," or "Prohibited Transaction," as such terms are
defined in ERISA, exists which is or could in any way be construed as a
violation of ERISA in connection with any Plan. Borrower has complied with all
applicable provisions of ERISA, including minimum funding requirements, has made
all filings required to be made by Borrower or any of its Plans (now or at any
time in the past maintained) under ERISA, has not applied for any extensions of
time in which to make contributions to any Plan maintained (nor or at any time
in the past) by it or to which it is, or has been, required to contribute, has
timely made all contributions and paid all premiums required to be paid to the
Pension Benefit Guaranty Corporation, and no matters are presently pending
before the United States Labor Department or the Internal Revenue Service
concerning any Plan maintained (now or at any time in the past) by Borrower to
which it is or was required to contribute. Each employee pension benefit plan
(as defined in Section 3(2) of ERISA) maintained by Borrower is qualified and
tax exempt under the Internal Revenue Code. Borrower has never had any
obligation or liability with respect to a multi-employer plan as defined in
Section 3(37) of ERISA.
4.16 Accuracy of Representations. No representation or warranty by or
with respect to the Borrower contained herein or in any certificate or other
document furnished by the Borrower pursuant hereto contains any untrue statement
of a material fact or omits to state a material fact necessary to make such
representation or warranty not misleading in light of the circumstances under
which it was made.
4.17 Representations as Inducement to Bank. The foregoing
representations and warranties are made by the Borrower with the knowledge and
intention that the Bank will rely thereon, and shall survive the execution and
delivery of this Agreement and the making of all Loans hereunder. The receipt of
Borrower of each Loan advance shall constitute a representation and warranty by
Borrower that the representations and warranties of Borrower contained in this
Section 4 are true and correct as of the date
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of such Loan advance, except to the extent such representations and warranties
expressly relate to an earlier date.
5. Affirmative Covenants. The Borrower covenants and agrees that until
all of the Obligations have been paid in full, unless the Bank shall otherwise
consent in writing, it shall and shall cause each of its subsidiaries to:
5.1 Books and Records. Maintain complete and accurate books of account
and records pertaining to the Collateral and the operations of the Borrower, and
all such books of account and records shall be kept and maintained at the
location specified in Section 4.11. The Borrower shall not move such books of
account and records or change its chief executive office without giving the Bank
at least 30 days prior written notice. Prior to moving any of such books of
account and records or changing the location of its chief executive office, the
Borrower shall execute and deliver to the Bank financing statements satisfactory
to the Bank. All such books of account and records and all financial statements
and reports furnished to the Bank shall be maintained and prepared in accordance
with generally accepted accounting principles applied on a basis consistent with
prior periods.
5.2 Access to Information. Grant the Bank, or its representatives, full
and complete access to the Collateral and to all books of account, records,
correspondence and other papers relating to the Collateral during normal
business hours and the right to inspect, examine, verify and make abstracts from
the copies of such books of account, records, correspondence and other papers,
and to investigate such other records, activities and business of the Borrower
as they may deem necessary or appropriate at the time.
5.3 Evidence of Accounts. Upon the creation of Accounts, or from time
to time as the Bank may require, deliver to the Bank schedules of all
outstanding Accounts. Such schedules shall be in form satisfactory to the Bank
and shall show the age of such Accounts in intervals of not more than 30 days,
and contain such other information and be accompanied by such supporting
documents as the Bank may from time to time prescribe. The Borrower shall also
deliver to the Bank copies of Debtor's invoices, evidences of shipment or
delivery and such other schedules and information as the Bank may reasonably
request. The items to be provided under this Section are to be prepared and
delivered to the Bank from time to time solely for its convenience in
maintaining records of the Collateral and the Borrower's failure
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to give any of such items to the Bank shall not affect, terminate, modify or
otherwise limit the Bank's security interest granted herein.
5.4 Financial Information. Deliver to the Bank not more than 90 days
after the close of each fiscal year of the Borrower, or within such further time
as the Bank may permit, consolidated and consolidating audited financial
statements for Borrower and its subsidiaries, including a balance sheet and
related profit and loss statement, prepared in accordance with generally
accepted accounting principles by independent certified public accountants
acceptable to the Bank, who shall give their unqualified opinion with respect
thereto.
5.5 Other Information. Furnish to the Bank such other financial and
business information and reports in form and substance satisfactory to the Bank
as and when the Bank may from time to time request.
5.6 Maintenance of Existence and Licenses. While this Agreement remains
in effect and until the Obligations have been paid in full, (a) maintain its
corporate existence in good standing; (b) make no change in the nature or
character of its business or engage in any business in which it was not engaged
on the date of this Agreement; (c) maintain and keep in full force and effect
all licenses and permits necessary to the proper conduct of its business and (d)
at the request of the Bank, qualify as a foreign corporation and obtain all
requisite licenses and permits in each state (other than the state of its
incorporation) where the Borrower does business.
5.7 Maintenance and Insurance of Properties. Maintain and keep all of
its properties, real and personal, in good working order, condition and repair
and insure and keep insured all such properties at all times against loss of
damage by fire, theft, and such other risks and hazards as are customarily
insured against by corporations in similar circumstances, or as the Bank may
specify from time to time, with insurers and in amounts acceptable to the Bank.
If the Borrower fails to do so, the Bank may obtain such insurance and charge
the cost thereof to the Borrower's account and add it to the Obligations. The
Borrower agrees that, if any loss should occur, the proceeds of all such
insurance policies may be applied to the payment of all or any part of the
Obligations, as the Bank may direct. Bank shall be named loss payee on such
insurance policies to the extent that such policies insure the Collateral. All
policies shall provide for at least 10 days prior written notice of cancellation
to the Bank. Borrower shall deliver at least annually to Bank, or sooner if
requested by Bank, certificates of insurance evidencing Borrower's
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compliance herewith. Bank or Bank's designated agent is hereby irrevocably
constituted and appointed Borrower's attorney-in-fact to (either in the name of
Borrower or in the name of Bank) make adjustments of all insurance losses, sign
all applications, releases and other papers necessary for the collection of any
such loss, make settlements and endorse and collect all instruments payable to
Borrower or issued in connection therewith.
5.8 Liability Insurance. At all times, maintain in full force and
effect such liability insurance with respect to its activities and business
interruption and other insurance as may be reasonably required by Bank, such
insurance to be provided by insurer(s) acceptable to Bank, and if requested by
Bank, such insurance shall name Bank as an additional insured. Borrower shall
deliver at least annually to Bank, or sooner if requested by Bank, certificates
of insurance evidencing Borrower's compliance herewith.
5.9 Notice of Certain Events. Give prompt notice in writing to the
Bank of any Event of Default hereunder, or of any condition which with the
passage of time or the giving of notice or both would give rise to an Event of
Default, and of any development, financial or otherwise, which would materially
adversely affect its business, properties or affairs or the ability of the
Borrower to perform its obligations under this Agreement or the Notes.
5.10 Payment of Taxes. Pay all taxes, assessments or governmental
charges lawfully levied or imposed on or against it and its properties prior to
the date when such taxes, assessments or charges shall become delinquent, unless
the Borrower shall contest the validity thereof in good faith and shall post any
bond or other security required by applicable law or by the Bank against the
payment thereof.
5.11 Dealings in Inventory. With respect to the Inventory (a) sell or
dispose of the Inventory only to buyers in the ordinary course of business, (b)
immediately notify the Bank of any change in location of any of the Inventory
and, prior to any such change, execute and deliver to the Bank such financing
statements satisfactory to the Bank as the Bank may request and (c) report, in
form satisfactory to the Bank and with such frequency as determined by the Bank,
such information as the Bank may request regarding the Inventory.
5.12 Claims Against Borrower. Immediately upon learning thereof, report
to the Bank any reclamation, return or repossession of goods, any claim or
dispute asserted by any Debtor or other obligor, and any other matters affecting
the value and enforceability or collectibility of any of the Collateral. In
addition, the Borrower shall, at its sole cost and expense (including attorneys'
fees), settle any and all such
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claims and disputes and indemnify and protect the Bank against any liability,
loss or expense arising therefrom or out of any such reclamation, return or
repossession of goods, provided, however, if the Bank shall so elect, it shall
have the right at all times to settle, compromise adjust or litigate all claims
or disputes directly with the Debtor or other obligor upon such terms and
conditions as it deems advisable and charge all costs and expenses thereof
(including attorneys' fees) to the Borrower's account and add them to the
Obligations.
5.13 Defense of Collateral. Defend the Collateral against all claims
and demands of all persons at any time claiming the same or any interest therein
and pay all costs and expenses (including attorneys' fees) incurred in
connection with such defense.
5.14 Financing Statements. At the request of the Bank, execute and
deliver such financing statements, documents and instruments, and perform all
other acts as the Bank deems necessary or desirable, to carry out and perform
the intent and purpose of this Agreement, and pay, upon demand, all expenses
(including attorneys' fees) incurred by the Bank in connection therewith. A
photocopy of this Agreement shall be sufficient as a financing statement and may
be filed in any appropriate office in lieu thereof.
5.15 Maintenance of Bank Accounts. At Bank's option, maintain all of
its depository accounts with Bank, including without limitation, all demand
deposit, lock box, time deposit, concentration and zero balance accounts.
6. Negative Covenants. The Borrower covenants and agrees that until
the Obligations have been paid in full, unless the Bank shall consent in
advance in writing, it shall not and shall not permit any subsidiary to:
6.1 Sale of Assets or Merger. Discontinue its business or liquidate,
sell, transfer, assign or otherwise dispose of a material part of its assets or
of the Collateral, by sale, merger, consolidation or otherwise, provided,
however, that it may sell in the ordinary course of business and for a full
consideration in money or money's worth, any product, merchandise or service
produced, marketed or furnished by it.
6.2 Liens and Encumbrances. Sell, assign, pledge, grant or suffer to
exist a security interest, lien, mortgage or other encumbrance on any of the
Collateral to any person other than the Bank, or permit
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any lien, encumbrance or security interest to attach to any of the Collateral,
except in favor of the Bank and except Permitted Liens.
6.3 Contingent Liabilities. Endorse, guarantee or become surety for
the obligations of any person, firm or corporation, except that the Borrower
may endorse checks and negotiable instruments for collection or deposit in the
ordinary course of business.
6.4 Loans. Make any loans to or repay any existing loans made to it by
its Affiliates.
6.5 Distributions. Declare or pay any dividends or make any other
payments on its capital stock, redeem, repurchase or retire any of its capital
stock, or make any other distribution to its stockholders.
6.6 Dealings with Accounts. Compromise or discount any Account except
for ordinary trade discounts or allowances for prompt payment.
6.7 Investments. Change its name or consolidate or merge with any
other corporation or acquire or purchase any equity interest in any other
entity, including shares of stock of other corporations, or acquire or purchase
any assets or assume any obligations of any other entity the value of which
exceeds 25% of the Borrower's Eligible Accounts (whether in one transaction or
in a series of transactions), except that Borrower is permitted to own notes
and other receivables acquired in the ordinary course of business.
6.8 Change in Management or Business. Change its management or make
any material change in any of its business objectives, purposes and operations
which might in any way adversely affect the repayment of the Loans.
6.9 Change in Ownership. Permit to occur a change in record or
beneficial ownership of voting stock of Borrower which Bank, in its sole
discretion, deems material with respect to the control over Borrower.
6.10 Transaction with Affiliates. Enter into, or be a party to, any
transaction with any of Borrower's Affiliates, except in the ordinary course of
business, pursuant to the reasonable requirements of Borrower's business, and
upon fair and reasonable terms which are fully disclosed to Bank and are no less
favorable to Borrower than Borrower could obtain in a comparable arm's length
transaction with a person not an Affiliate of Borrower.
6.11 Indebtedness. Directly or indirectly create, incur, assume,
guarantee or be or remain liable with respect to any indebtedness, except for
(a) the Obligations, (b) any existing indebtedness disclosed in
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the financial statements referenced in Section 4.4 hereof, (c) any purchase
money indebtedness not to exceed $50,000 per year and (d) any other indebtedness
to which Bank has consented in writing, except for testing equipment purchased
from Hewlett-Packard.
7. Collection of Collateral and Notice of Assignment
7.1 Collections on Collateral. So long as the Bank does not request
that the Debtors on the Collateral be notified of the consignment thereof to
Bank or that all collections be directed to a lock box at Bank, Borrower may
make collections on the Collateral. All collections on the Collateral shall be
the property of the Bank, shall be held in trust for the Bank by the Borrower
and shall not be commingled with the Borrower's other funds or be deposited in
any bank account of the Borrower (except for the Cash Collateral Account), or
used in any manner except to pay the Obligations. Borrower shall immediately
deposit all collections on the Collateral in the Cash Collateral Account of
Borrower maintained at Bank for that purpose, over which the Bank alone shall
have the sole power of withdrawal. On a daily basis, Bank will apply all or part
of the collected balance of the Cash Collateral Account against the Obligations,
the amount, order and method of such application to be in the sole discretion of
Bank. In no event shall Bank be obligated to apply any funds deposited in the
Cash Collateral Account before the second business day after the day of deposit.
Any part of the collected balance in the Cash Collateral Account which the Bank
elects not to apply to Borrower's obligations may be paid over and deposited by
Bank to the Borrower's commercial account. The crediting of items deposited in
the Cash Collateral Account to the reduction of the Obligations shall be
conditioned upon final payment of the item and if any item is not so paid, the
amount of any credit given for it may be charged to the Obligations or to any
other deposit account of the Borrower whether or not the item is returned.
7.2 Notice of Assignment. The Bank shall have the right at any time to
notify Debtors of its security interest in the Accounts and to require payments
to be made directly to the Bank. Upon request of the Bank at any time, Borrower
will so notify the account debtors and will indicate on all xxxxxxxx to the
account debtors that the Accounts are payable to the Bank. To facilitate direct
collection, the Borrower hereby appoints the Bank and any officer or employee of
the Bank, as the Bank may from time to time designate, as attorney-in-fact for
the Borrower to (a) receive, open and dispose of all mail addressed to the
Borrower and take therefrom any payments on or proceeds of Accounts; (b) take
over the Borrower's post office boxes or make other arrangements, in which the
Borrower shall cooperate, to receive the
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Borrower's mail, including notifying the post office authorities to change the
address for delivery of mail addressed to the Borrower to such address as the
Bank shall designate; (c) endorse the name of the Borrower in favor of the Bank
upon any and all checks, drafts, money orders, notes, acceptances or other
evidences of payment or Collateral that may come into the Bank's possession; (d)
sign and endorse the name of the Borrower on any invoice or xxxx of lading
relating to any of the Accounts, on verifications of Accounts sent to any
Debtor, to drafts against Debtors, to assignments of Accounts and to notices to
Debtors; and (e) do all acts and things necessary to carry out this Agreement,
including signing the name of the Borrower on any instruments required by law in
connection with the transactions contemplated hereby and on financing statements
as permitted by the Uniform Commercial Code. The Borrower hereby ratifies and
approves all acts of such attorneys-in-fact, and neither the Bank nor any other
such attorney-in-fact shall be liable for any acts of commission or omission, or
for any error of judgment or mistake of fact or law. This power, being coupled
with an interest, is irrevocable so long as any of the Obligations remain
unsatisfied.
7.3 Enforcement of Accounts. The Bank shall not, under any
circumstances, be liable for any error or omission or delay of any kind
occurring in the settlement, collection or payment of any Accounts or any
instruments received in payment thereof or for any damage resulting therefrom.
The Bank may, without notice to or consent from the Borrower, xxx upon or
otherwise collect, extend the time of payment of, or compromise or settle for
cash, credit or otherwise, upon any terms, any of the Accounts or any
securities, instruments or insurance applicable thereto and/or release the
obligator thereon. The Bank is authorized to accept the return of the goods
represented by any of the Accounts, without notice to or consent by the
Borrower, or without discharging or any way affecting the Obligations hereunder.
7.4 Returned or Rejected Goods. Upon receipt of any returned or
rejected goods the Borrower shall immediately issue and deliver a credit memo to
the Bank with respect thereto. Or, at the Bank's election, the Borrower shall
set aside such goods, xxxx them in the Bank's name and hold them in trust for
the Bank at the Borrower's expense, and, upon request, shall pay the Bank the
sales price thereof. If the Bank shall request the Borrower to pay the sales
price of such goods and the Borrower fails to forthwith pay the sales price to
the Bank, the Bank may take possession of such goods and sell or cause the goods
to be sold, at public or private sale, at such prices, to such purchasers and
upon such terms as
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the Bank deems advisable. The Borrower shall remain liable to the Bank for any
deficiency and shall pay the costs and expenses of such sale, including
reasonable attorneys' fees.
7.5 Limitation of Bank's Liability. The Bank shall not be liable for
or prejudiced by any loss, depreciation or other damage to Accounts or other
Collateral unless caused by the Bank's willful and malicious act, and the Bank
shall have no duty to take any action to preserve or collect any Account or
other Collateral.
7.6 Verification of Accounts. The Bank may confirm and verify all
Accounts in any reasonable manner at any time. Bank shall have no obligation to
disclose or discuss with Borrower the names or identities of any customers from
whom the Bank obtains or requests information as to Accounts. Borrower agrees to
cooperate with Bank in the confirmation and verification of any Accounts, or
reconciling any discrepancy between those amounts verified by the Bank and
information provided to the Bank by the Borrower.
8. Service Charges. In addition to the principal and interest on the
Loans and the reimbursement of expenses to Bank pursuant to this Agreement, the
Borrower shall pay to the Bank a monthly service charge for the services
provided by Bank in connection with this Agreement in the amount of $250.00,
which service charge may be increased or decreased in the sole discretion of
Bank upon 30 days prior written notice to Borrower.
9. One General Obligation: Cross Collateral. All loans and advances
by Bank to Borrower under this Agreement and under all other agreements
constitute one loan, and all indebtedness and obligations of Borrower to Bank
under this and under all other agreements, present and future, constitute one
general obligation secured by the Collateral and security held and to be held
by Bank hereunder and by virtue of all other assignments and security
agreements between Borrower and Bank now and hereafter existing. It is
expressly understood and agreed that all of the rights of Bank contained in
this Agreement shall likewise apply insofar as applicable to any modification
of or supplement to this Agreement and to any other agreements, present and
future, between Bank and Borrower.
10. Events of Default and Remedies.
10.1 Event of Default. If the Loans are due on a specific date (e.g.
not due on demand), the following shall constitute Events of Default under this
Agreement, it being agreed that time is of the essence hereof: (a) failure of
the Borrower to pay when due any of the Obligations; (b) failure of the
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Borrower to observe or perform any covenant contained in this Agreement or in
any other agreement between the Borrower and the Bank; (c) any representation or
warranty at any time made by the Borrower to the Bank orally or in this
Agreement or in any other agreement between the Borrower and the Bank, or in any
document or instrument delivered to the Bank pursuant to this Agreement or any
such other agreement is, or becomes, untrue or misleading in any material
respect; (d) acceleration of the maturity of any of the Obligations; (e)
Borrower shall be in default or breach under any material obligation for the
payment of borrowed money or for the payment of rent under any lease agreement
covering real or personal property; (f) failure of the Borrower or any
guarantor, after request by the Bank, to furnish financial information or to
permit the inspection of its books of account and records; (g) suspension by the
Borrower or any guarantor of the operation of its present business, or the
insolvency of the Borrower or any guarantor, or the inability of the Borrower or
any guarantor to meet its debts as they mature, or its admission in writing to
such effect, or its calling any meeting of all or any of its creditors or
committing any act of bankruptcy, or the filing by or against the Borrower or
any guarantor of any petition under any provision of the Bankruptcy Act, as
amended, or the entry of any judgment or filing of any lien against the Borrower
or any guarantor; (h) there shall occur any material adverse change in the
Borrower's condition or affairs (financial or otherwise) or in that of any
endorser, guarantor of surety for any of the Obligations; (i) loss, theft,
damage, destruction or encumbrance of any of the Collateral or any levy, seizure
or attachment thereof; (j) any guarantor of the Obligations denies his
obligation to guarantee any Obligations then existing or attempts to limit or
terminate his obligation to guarantee any future Obligations, including future
Loan advances; and (k) the death of any Borrower, co-maker, guarantor or surety
of the Loans.
10.2 Rights of Bank upon Default. Upon the occurrence of an Event of
Default described in Section 10.1, or at any time in the sole discretion of the
Bank if the Loan is due on demand, the Bank at its option may: (a) declare the
Obligations of the Borrower immediately due and payable, without presentment,
notice, protest or demand of any kind for the payment of all or any part of the
Obligations (all of which are expressly waived by Borrower) and exercise all of
its rights and remedies against Borrower and any Collateral provided herein, in
any other agreement between Borrower and Bank, at law or in equity and (b)
exercise all rights granted to a secured party under the Ohio Uniform Commercial
Code or otherwise. Upon the occurrence of an Event of Default, or in the event
of non-payment of the
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Loan when due in the case of a demand Loan, Bank may take possession of the
Collateral, or any part thereof, and Borrower hereby grants Bank authority to
enter upon any premises on which the Collateral may be situated, and remove the
Collateral from such premises or use such premises, together with the materials,
supplies, books and records of Borrower, to maintain possession and/or the
condition of the Collateral and to prepare the Collateral for sale. Borrower
shall, upon demand by Bank, assemble the Collateral and make it available at a
place designated by Bank which is reasonably convenient to both parties. Unless
the Collateral is perishable or threatens to decline speedily in value or is of
a type customarily sold on a recognized market, Bank will give Borrower
reasonable notice of the time and place of any public sale thereof or of the
time after which any private sales or other intended disposition thereof is to
be made. The requirement of reasonable notice shall be met if such notice is
mailed, postage prepaid, to the address of the Borrower shown at the beginning
of this Agreement at least 5 days prior to the time of such sale or disposition.
10.3 Application of Proceeds. The Bank shall have the right to apply
the proceeds of any disposition of the Collateral to the payment of the
Obligations in such order of application as the Bank may, in its sole
discretion, elect. The Bank shall have no obligation to xxxxxxxx any assets in
favor of the Borrower or any other party.
10.4 Remedies Cumulative. The rights, options and remedies of the Bank
shall be cumulative and no failure or delay by the Bank in exercising any right,
option or remedy shall be deemed a waiver thereof or of any other right, option
or remedy, or waiver of any Event of Default hereunder, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or future
exercise thereof or the exercise of any other right, power or remedy hereunder.
Bank shall not be deemed to have waived any of the Bank's rights hereunder or
under any other agreement, instrument or paper signed by Borrower unless such
waiver be in writing and signed by the Bank.
11. Miscellaneous
11.1 Governing Law; Jurisdiction and Venue. The provisions of this
Agreement shall be governed by and interpreted in accordance with the laws of
the State of Ohio. The Bank and Borrower hereby designate all courts of record
sitting in Cincinnati, Ohio, both state and federal, as forums where any action,
suit or proceeding in respect of or arising out of this Agreement or the
transactions
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contemplated by this Agreement may be prosecuted as to all parties, their
successors and assigns, and by the foregoing designation the Bank and Borrower
consent to the jurisdiction and venue of such courts.
11.2 MUTUAL WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED
INDUCEMENT FOR THE BANK TO EXTEND CREDIT TO BORROWER AND FOR BORROWER TO BORROW
FROM BANK, AND AFTER HAVING THE OPPORTUNITY TO CONSULT COUNSEL, BORROWER AND
BANK HEREBY EXPRESSLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR
PROCEEDING RELATING TO THIS AGREEMENT OR ARISING IN ANY WAY FROM THE
OBLIGATIONS.
11.3 Other Waivers. The Borrower waives notice of nonpayment, demand,
notice of demand, presentment, protest and notice of protest with respect to the
Obligations, or notice of acceptance hereof, notice of Loans made, credit
extended, Collateral received or delivered, or any other action taken in
reliance hereon, and all other demands and notices of any description, except
such as are expressly provided for herein.
11.4 Collection Costs. All costs and expenses incurred by the Bank to
obtain, enforce or preserve the security interests granted by this Agreement and
to collect the Obligations, including, without limitation, stationery and
postage, telephone and telegraph, secretarial and clerical expenses, the fees or
salaries of any collection agents utilized, all costs to maintain and preserve
the Collateral and all attorneys' fees and legal expenses incurred in obtaining
or enforcing payment of any of the Obligations or foreclosing the Bank's
security interest in any of the Collateral, whether through judicial proceedings
or otherwise, or in enforcing or protecting its rights and interests under this
Agreement or under any other instrument or document delivered pursuant hereto,
or in protecting the rights of any holder or holders with respect thereto, or in
defending or prosecuting any actions or proceedings arising out of or relating
to the Bank's transactions with the Borrower, shall be paid by the Borrower to
the Bank, upon demand, or, at the Bank's election, charged to the Borrower's
account and added to the Obligations, and the Bank may take judgment against the
Borrower for all such costs, expense and fees in addition to all other amounts
due from the Borrower hereunder.
11.5 Expenses. The Borrower shall reimburse the Bank for all
out-of-pocket costs and expenses incurred by the Bank in connection with the
preparation of this Agreement and the making of the Loans
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hereunder, including reasonable fees and expenses of the Bank's counsel, and
for all UCC search, filing, recording and other costs connected with the
perfection of the Bank's security interest in the Collateral.
11.6 Notices. All notices, requests, directions, demands, waivers, and
other communications provided for herein shall be in writing and shall be deemed
to have been given or made when delivered personally, by telecopy, or sent by
registered or certified mail, postage prepaid and return receipt requested,
addressed to the Borrower or the Bank, as the case may be, at their respective
addresses set forth at the beginning of this Agreement. Notices of changes of
address shall be given in the same manner.
11.7 Severability. Any provision of this Agreement which is prohibited
and enforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
11.8 Entire Agreement, Modification, Benefit. This Agreement shall
constitute the entire agreement of the parties and no provision of this
Agreement, including the provisions of this Section, may be modified, deleted or
amended in any manner except by agreement in writing executed by the parties.
All terms of this Agreement shall be binding upon, inure to the benefit of and
be enforceable by the parties hereto and their respective successors and
assigns, provided, however, that the Borrower shall not assign or transfer its
rights hereunder.
11.9 Construction. All references in this Agreement to the single
number and neuter gender shall be deemed to mean and include the plural number
and all genders, and vice versa, unless the context shall otherwise require.
11.10 Headings. The underlined headings contained herein are for
convenience only and shall not affect the interpretation of this Agreement.
11.11 Counterparts. This Agreement may be executed in more than one
counterpart, each of which shall be deemed an original.
11.12 Nonliability of Bank. The relationship between the Borrower and
the Bank shall be solely that of borrower and lender. The Bank shall not have
any fiduciary responsibilities to the Borrower. The Bank undertakes no
responsibility to the Borrower to review or inform the Borrower of any matter in
connection with any phase of the Borrower's business or operations.
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11.13 Limitation of Liability. No claim may be made by the Borrower
against the Bank, or the Affiliates, directors, officers, employees, attorneys
or agents of Bank for any special, consequential or punitive damages in respect
of any claim for breach of contract or any other theory of liability arising out
of or related to the transactions contemplated by this Agreement, or any act,
omission or event occurring in connection therewith; and the Borrower hereby
waives, releases and agrees not to xxx upon any such claim for any such damages,
whether or not accrued and whether or not known or suspected to exist in its
favor.
11.14 Warrant of Attorney. The Borrower(s) authorize any attorney at
law, including an attorney engaged by the Bank, to appear in any court of record
in the State of Ohio or any other State or Territory of the United States, after
the occurrence of an Event of Default hereunder and waive the issuance and
service of process and confess judgment against the Borrower(s) or any one of
them in favor of the Bank, for the amount of the Obligations then appearing due,
together with costs of suit and, thereupon, to release all errors and waive all
rights of appeal and stay of execution, but no such judgment or judgments
against any one of the Borrower(s) shall be a bar to a subsequent judgment or
judgments against any one or more than one of such persons against whom judgment
has not been obtained hereon. The Borrower(s) hereby expressly waive any
conflict of interest that the Bank's attorney may have in confessing such
judgment against Borrower(s) and expressly consent to the confessing attorney
receiving a legal fee from the holder for confessing such judgment against
Borrower(s). This warrant of attorney to confess judgment is a joint and several
warrant of attorney. The foregoing warrant of attorney shall survive any
judgment; and if any judgment be vacated for any reason, the Bank nevertheless
may thereafter use the foregoing warrant of attorney to obtain an additional
judgment or judgments against the Borrower(s) or any one or more of them.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers.
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH
THE AGREEMENT OR ANY OTHER CAUSE.
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CABLE LINK, INC. THE PROVIDENT BANK
By:/s/ Xxxxxx X. Xxxxxxxx By: /s/
-------------------------------------- -----------------------
Title: President Title: Vice President
ATTEST: /s/
--------------------------------
Secretary or Assistant Secretary
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