LOAN AGREEMENT
This Loan Agreement is entered this 2O day of June, 1996, at Columbus,
Ohio, by and between THE HUNTINGTON NATIONAL BANK, whose mailing address is 00
Xxxxx Xxxx Xxxxxx (XXX0xX), Xxxxxxxx, Xxxx 00000, Attention: Commercial Banking
(the "Bank") and Dynacraft Golf Products, Inc., an Ohio corporation whose
mailing address is 00 Xxxxx Xxxxxx, Xxxxxx, Xxxx 00000, and Xxx Xxxx Custom
Golf, Inc., an Ohio corporation whose mailing address is 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxx 00000 ("Xxx Xxxx"). Dynacraft and Xxx Xxxx are sometimes
hereinafter collectively referred to as the "Company".
SECTION 1. AMOUNT OF LOAN; LOAN FORMULA
The Bank agrees to lend to the Company a principal sum not to exceed
$1,860,315.00 (the "Loan"), subject to the terms and conditions of this
Agreement. The Loan is a term loan credit facility payable in accordance with
the terms of this Agreement and the promissory note described in Section 3 of
this Agreement.
At no time during the term of the Loan shall the outstanding principal
balance of the Loan exceed an amount equal to the sum of the following assets
(the "Loan Base"): (i) all cash of the Company; plus (ii) the amount equal to
eighty percent (80%) of Accounts Receivable of the Company evidenced by a valid
invoice less than ninety (90) days old from the invoice date; plus (iii) the
amount equal to fifty percent (50%) of the finished goods Inventory of the
Company; plus (iv) the amount equal to sixty percent (60%) of the shafts and
grips inventory of the Company; plus (v) the amount equal to fifteen percent
(15%) of all other Dynacraft label inventory. If the outstanding principal
balance of the Loan exceeds at any time the Loan Base, such event, at the Bank's
option, shall be an event of default under the Loan and this Agreement.
SECTION 2. INTEREST RATE; DEFAULT RATE.
The Company shall have the option of electing between the One Year
Treasury Rate and the Prime Related Rate to be the "Contract Rate" of interest
to accrue on the outstanding principal balance of the Loan.
THE "ONE YEAR TREASURY RATE" is a rate of interest per annum equal to the
"one year index" plus 250 basis points, rounded up to the nearest one-eighth of
one percent (1/8%). The "one year index" shall be the one year U. S. Treasury
Constant Maturities rate stated in the weekly Federal Reserve Statistical
Release Form H.l5(519) published not less than seven days prior to the
applicable Interest Rate Adjustment Date. Each One Year Treasury Rate elected
by the Company shall be adjusted on the next succeeding anniversary of the Note.
THE "PRIME-RELATED RATE" is a variable rate of interest equal to
seventy-five (75) basis points [100 basis points equals one percent] above the
"Prime Rate" (hereinafter defined) from time to time in effect with each change
in the Prime Rate automatically and immediately adjusting the rate of interest
payable hereunder. For the purposes hereof, the term "Prime Rate" shall mean
that interest rate per annum announced from time to time by the Bank as its
"prime rate", or other similar designation, and it is not necessarily the most
favored rate of the Bank.
THE "INTEREST RATE ADJUSTMENT DATE" shall mean each anniversary of the
date of the Note during the term of the Loan.
THE "ADJUSTMENT ELECTION" shall mean an irrevocable written election to
adjust the Contract Rate accruing on the Loan to either the One Year Treasury
Rate or the Prime Related Rate determined by the Bank to be in effect as of each
Interest Rate Adjustment Date, which election may be exercised not later than
thirty days prior to each Interest Rate Adjustment Date by delivering to the
officer of the Bank who is administering the Loan a written notice of such
election specifying the Contract Rate elected by the Company. If the Company
fails to timely make the Adjustment Election prior to any Interest Rate
Adjustment Date, then in such event the Company shall be deemed to have elected
the Prime Related Rate as the Contract Rate to become effective as of such
Interest Rate Adjustment Date. Each election of the Contract Rate shall
continue in effect until the next succeeding Interest Rate Adjustment Date, upon
which date the Contract Rate shall be adjusted in accordance with the Adjustment
Election made or deemed to have been made by the Company for such date.
Interest shall be calculated on a 360 day year basis and shall be
based on the actual number of days which elapse during the interest
calculation period.
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Upon the occurrence of any Event of Default and the expiration of any
applicable cure period, interest shall thereafter accrue on the outstanding
principal balance of all advances made pursuant to this Agreement at a rate
equal to the Prime Rate plus two and three quarters percent (2.75%) per annum.
SECTION 3. EVIDENCE OF THE LOAN AND TERMS OF PAYMENT.
The Loan shall be evidenced by a Commercial Loan Note in the form of
EXHIBIT A to this Agreement, or by one or more notes subsequently executed in
substitution therefor (hereinafter referred to as the "Note" or "Notes").
Repayment of the Loan shall be made in accordance with the terms of the Note or
Notes then outstanding pursuant to this Agreement.
SECTION 4. PREPAYMENT.
The Company may, on any business day, upon payment of all accrued
interest, fees and other amounts then due and payable to the Bank and upon at
least five (5) business days prior written notice to the Bank, elect to prepay
all or part of the unpaid balance of the principal sum; provided, however, that
if said prepayment shall be (1) made on or before the date that is six (6)
months prior to any Interest Rate Adjustment Date or the Maturity Date, and (2)
the aggregate amount of the principal portion of all prepayments made during the
calendar year in which said prepayment is made (including the principal portion
of said prepayment) exceeds 10% of the outstanding principal balance due and
payable to the Bank on January 1 of said calendar year or the date of this Note,
whichever date more proximately precedes the date of prepayment, then the
Company shall pay to the Bank on the date of the prepayment a prepayment premium
calculated using the following formula:
Prepayment Premium = % x (AP - AD) x TM
--
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In such formula:
(i) % equals 3%
(ii) AP is the Amount Paid and means the actual amount of the
principal sum paid on the date of the prepayment; and
(iii) AD is the Amount due and means the total amount of the principal
sum due and payable on the date of the prepayment; and
(iv) TM is the Total Months and means the total number of full months
between the date of the prepayment and the next succeeding
Interest Rate Adjustment Date or the Maturity Date, whichever is
the earlier event.
The prepayment premium shall be due and payable to the Bank regardless of
whether the prepayment results from Borrower's voluntary prepayment or from
the Bank's exercising its rights after default by Borrower through acceleration
of the Loan or otherwise. Unless the Bank shall otherwise agree in writing,
partial prepayments of principal shall be credited to installments of principal
in inverse order of maturity and shall not postpone the due dates of the monthly
installments required hereunder. Notwithstanding the foregoing, in the event of
any prepayment because of foreclosure of the Mortgage or other judicial sale,
there shall be due and payable a prepayment premium in the amount of five
percent (5%) of the amount prepaid.
SECTION 5. USE OF PROCEEDS.
The proceeds of the Loan shall be used by the Company for long term
working capital to refinance existing credit line debt owing to the Bank.
SECTION 6. COSTS AND EXPENSES.
The Company shall pay all costs and expenses incidental to the extension
of credit provided for in this Agreement. Such costs shall include, but not be
limited to, fees and out-of-pocket expenses of the Bank's counsel, title
insurance premiums and costs, recording fees, appraisal fees, survey fees,
inspection fees, revenue stamps and note and mortgage taxes.
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SECTION 7. SECURITY
As security for the Loan, the Company shall grant to the Bank a first
priority security interest in all of the Company's depository accounts at The
Huntington National Bank and in all accounts receivable, inventory, and
intangibles, a second mortgage lien against the Company's real property, and a
second priority security interest in all of the Company's equipment and
fixtures. At the request of the Bank, the Company shall authorize and cause to
be executed any and all documents which the Bank shall require in order to
effect the foregoing.
As further security for the Loan, the Company and or Xxxxxx X. Xxxxxxxxx,
Xx. shall pledge one or more policies evidencing insurance on the life of Xxxxxx
X. Xxxxxxxxx, Xx. in an amount of not less than $500,000.00, providing proper
assignments thereof to the Bank and shall pay all premiums thereon as they
become due.
The payment and performance of the obligations of the Loan shall be
guaranteed by Xxxxxx Xxxxxxxxx, Xx. and Xxxxxx Xxxxxxxxx, Xx.
SECTION 8. WARRANTIES AND REPRESENTATIONS.
The Company warrants and represents to the Bank:
8.1 SUBSIDIARIES.
Dynacraft has no subsidiaries except Xxx Xxxx, Dynacraft Real Estate
Holdings, Inc. ("DREHI"), and Diamond Golf International Ltd., and Dynacraft
will not create or acquire any subsidiaries without the prior written consent of
the Bank. Xxx Xxxx has no subsidiaries and will not create or acquire any
subsidiaries without the prior written consent of the Bank.
8.2 CORPORATE ORGANIZATION AND AUTHORITY.
The Company:
(a) are both corporations duly organized, validly existing and in good
standing under the laws of the State of Ohio;
(b) have all requisite power and authority and all necessary licenses
and permits to own and operate their respective properties and to
carry on their respective businesses as now conducted and as
presently proposed to be conducted; and
(c) are not doing business or conducting any activity in any jurisdiction
in which it has not duly qualified and become authorized to do
business.
8.3 FINANCIAL STATEMENTS.
The financial statements for the fiscal year ending December 31, 1995 and
interim statements for the month ending April 30, 1996 which have been supplied
to the Bank have been prepared in accordance with generally accepted accounting
principles consistently applied and fairly represent the Company's financial
condition as of such dates. There has been no material adverse change in the
Company's financial condition since the most recent of such dates.
8.4 FULL DISCLOSURE.
The financial statements referred to in Section 8.3 do not, nor does this
Agreement or any written statement furnished by the Company to the Bank in
connection with obtaining the Loan, contain any untrue statement of a material
fact or omit a material fact necessary to make the statements contained therein
or herein not misleading. There is no fact which the Company has not disclosed
to the Bank in writing which materially affects the properties, business,
prospects, profits or condition (financial or otherwise) of the Company or the
ability of the Company to perform the obligations undertaken in this Agreement.
8.5 PENDING LITIGATION.
There are no proceedings pending, or to the knowledge of the Company
threatened, against or affecting the Company in any court or before any
governmental authority or arbitration board or tribunal which, individually or
in the aggregate, involve the possibility of materially and adversely affecting
the properties, business, prospects, profits or condition (financial or
otherwise) of the Company, or the ability of the Company to perform this
Agreement.
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8.6 TITLE TO PROPERTIES.
The Company has good and marketable title to all the property which it
purports to own (except as sold or otherwise disposed of in the ordinary course
of business), free from any liens and encumbrances, except as set forth on
EXHIBIT B to this Agreement.
8.7 BORROWING IS LEGAL AND AUTHORIZED.
(a) The Boards of Directors of the Company have duly authorized the
execution and delivery of this Agreement and of the Note and documents
contemplated herein, and the Note executed in connection with this Agreement
will constitute valid and binding obligations of the Company enforceable in
accordance with its terms.
(b) The execution of this Agreement and the related Note and documents
and the compliance by the Company with all the provisions of this Agreement:
(i) are within the corporate powers of the Company; and
(ii) are legal and will not conflict with, result in any breach in
any of the provisions of, constitute a default under or
result in the creation of any lien or encumbrance upon any
property of the Company under the provisions of, any
agreement, charter instrument, bylaw, or other instrument to
which the Company is a party or by which it may be bound.
(c) There are no limitations in any indenture, mortgage, deed of trust
or other agreement or instrument to which the Company is now a party or by which
the Company may be bound with respect to the payment of principal or interest on
any indebtedness of the Company, including the Note to be executed in connection
with this Agreement.
8.8 NO DEFAULTS.
No event has occurred and no condition exists which, with the giving of
notice or lapse of time, or both, would constitute an Event of Default pursuant
to this Agreement. The Company is not in violation in any material respect of
any term of any agreement, charter instrument, bylaw or other instrument to
which it is a party or by which it may be bound.
8.9 GOVERNMENT CONSENT.
Neither the nature of the Company or of its business or properties, nor
any relationship between the Company and any other entity or person, nor any
circumstance in connection with the execution of this Agreement, is such as to
require a consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority on the part of the Company as a
condition to the execution and delivery of this Agreement and the notes and
documents contemplated herein.
8.10 TAXES.
(a) All tax returns required to be filed by the Company in any
jurisdiction have in fact been filed, and all taxes, assessments, fees and other
governmental charges upon the Company or upon any of its respective properties,
which are due and payable have been paid. The Company does not know of any
proposed additional tax assessment against it.
(b) The provisions for taxes on the books of the Company of its current
fiscal period are adequate.
8.11 COMPLIANCE WITH LAW.
The Company (a) is not in violation of any laws, ordinances, governmental
rules or regulations to which it is subject, and (b) has not failed to obtain
any licenses, permits, franchises or other governmental authorizations necessary
to the ownership of its properties or to the conduct of its business, which
violation or failure to obtain might materially and adversely affect the
business, prospects, profits, properties or condition (financial or otherwise)
of the Company.
8.12 RESTRICTIONS ON COMPANY.
The Company is not a party to any contract or agreement, or subject
to any charter or other corporate restriction, which materially and
adversely affects the business of the Company. The Company is not a party
to any contract or agreement which restricts the right or ability of the
Company to incur indebtedness, other than this Agreement.
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The Company has not agreed or consented to cause or permit in the future (upon
the happening of a contingency or otherwise) any of its property, whether now
owned or hereafter acquired, to be subject to a lien or encumbrance.
8.13 ENVIRONMENTAL PROTECTION
The Company (a) has no actual knowledge of the permanent placement, burial
or disposal of any Hazardous Substances (as hereinafter defined) on the Companys
real property (the "Premises") of any spills, releases, discharges, leaks, or
disposal of Hazardous Substances that have occurred or are presently occurring
on, under, or onto the Premises or of any spills, releases, discharges, leaks or
disposal of Hazardous Substances that have occurred or are occurring off of the
Premises as a result of the Company's improvement, operation, or use of the
Premises which would result in noncompliance with any of the Environmental Laws
(as hereinafter defined), with the exception of contamination flowing from the
neighboring parcel owned by the Ohio Department of Transportation; (b) is and
has been in compliance with all applicable Environmental Laws; (c) knows of no
pending or threatened environmental civil, criminal or administrative
proceedings against the Company relating to Hazardous Substances; (d) knows of
no facts or circumstances that would give rise to any future civil, criminal or
administrative proceeding against the Company relating to Hazardous Substances,
and (e) will not permit any of its employees, agents, contractors,
subcontractors, or any other person occupying or present on the Premises to
generate, manufacture, store, dispose, or release on, about or under the
Premises any Hazardous Substances which would result in the Premises not
complying with the Environmental Laws.
As used herein, "Hazardous Substances" shall mean and include all
hazardous and toxic substances, wastes, materials, compounds, pollutants and
contaminants (including, without limitation, asbestos, polychlorinated
biphenyls, and petroleum products) which are included under or regulated by
the Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 U.S.C. Section 9601 ET SEQ., the Toxic Substances Control Act, 15
U.S.C. Section 2601, ET SEQ., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, ET SEQ., the Water Quality Act of 1987, 33 U.S.C. Section
1251, ET SEQ., and the Clean Air Act, 42 U.S.C. Section 7401, ET SEQ., and any
state or local statute ordinance, law, code, rule, regulation or order
regulating or imposing liability (including strict liability) or standards of
conduct regarding Hazardous Substances (hereinafter the "Environmental Laws"),
but does not include such substances as are permanently incorporated into a
structure or any part thereof in such a way as to preclude their subsequent
release into the environment, or the permanent or temporary storage or disposal
of household hazardous substances by tenants, and which are thereby exempt from
or do not give rise to any violation of the forementioned Environmental Laws.
The Company hereby indemnifies the Bank and holds the Bank harmless from
and against any loss, damage, cost, expense or liability (including strict
liability) directly or indirectly arising out of or attributable to the
generation, storage, release, threatened release, discharge, disposal or
presence (whether prior to or during the term of the Loan) of Hazardous
Substances on, under or about the Premises (whether by the Company or any
employees, agents, contractor of subcontractors of the Company or any
predecessor in title or any third persons occupying or present on the Premises)
or the breach of any of the representations and warranties regarding the
Premises, including, without limitation: (a) those damages or expenses
arising under the Environmental Laws; (b) the costs of any required or
necessary repair, cleanup or detoxification of the Premises, including the soil
and ground water thereof, and the preparation and implementation of any closure,
remedial or other required plans; (c) damage to any natural resources; and (d)
all reasonable costs and expenses incurred by the Bank in connection with
clauses (a), (b) and (c) including, but not limited to reasonable attorney's
fees.,
The indemnification provided for herein shall not apply to any
losses, liabilities, damages, injuries, expenses or costs which: (i) arise
from the gross negligence or willful misconduct of the Bank, or (ii) relate to
Hazardous Substances placed or disposed of on the Premises after the Bank
acquires title to the Premises through foreclosure or otherwise.,
The Company and DREHI agree to apply for and accept admission into the
"Voluntary Acceptance Program" administered by the Ohio Environmental Protection
Agency at the earliest opportunity.
8.14 REGULATION U.
The Company is not engaged in the business of purchasing or selling margin
stock (as defined in Regulation U of the Board of Governors of the Federal
Reserve
5
System) or extending credit to others for the purpose of purchasing or carrying
margin stock and no part of the proceeds of any borrowing hereunder will be used
to purchase or carry any margin stock or for any other purpose which would
violate any of the margin regulations of said Board of Governors.
SECTION 9. COMPANY BUSINESS COVENANTS.
The Company covenants that effective as of the date of this Agreement and
continuing thereafter as long as any of the indebtedness provided for herein
remains unpaid:
9.1 PAYMENT OF TAXES AND CLAIMS.
The Company will pay before they become delinquent:
(a) all taxes, assessments and governmental charges or levies imposed
upon it or its property; and
(b) all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords, bailees and other like persons which, if
unpaid, might result in the creation of a lien or encumbrance upon
its property,
PROVIDED that items of the foregoing description need not be paid while being
contested in good faith and by appropriate proceedings and PROVIDED further that
adequate book reserves have been established with respect thereto and PROVIDED
further that the Company's title to, and its right to use, its property is not
materially adversely affected thereby. In the case of any item of the foregoing
description involving in excess of the amount which the Company's independent
public accountants shall fix as the threshold of materiality for purposes of
their audit of the then current year, the appropriateness of the proceedings
shall be supported by an opinion of the independent counsel responsible for such
proceedings and the adequacy of such reserves shall be supported by the opinion
of the independent accountants.,
9.2 MAINTENANCE OF PROPERTIES AND CORPORATE EXISTENCE.
The Company shall:
(a) PROPERTY -- maintain its property in good condition and make all
renewals, replacements, additions, betterments and improvements
thereto which are deemed necessary by the Company;
(b) INSURANCE -- maintain, with financially sound and reputable
insurers, insurance with respect to its properties and business
against such casualties and contingencies, of such types (including
but not limited to fire and casualty, public liability, products
liability, larceny, embezzlement or other criminal misappropriation
insurance) and in such amounts as is customary in the case of
corporations of established reputations engaged in the same or a
similar business and similarly situated;
(c) FINANCIAL RECORDS - - keep true books of records and accounts in
which full and correct entries will be made of all its business
transactions, and reflect in its financial statements adequate
accruals and appropriations to reserves, all in accordance with
generally accepted accounting principles;
(d) CORPORATE EXISTENCE AND RIGHTS - - do or cause to be done all things
necessary (i) to preserve and keep in full force and effect its
existence, rights and franchises, and (ii) to maintain its status as
a corporation duly organized and existing and in good standing under
the laws of the State of its incorporation; and
(e) COMPLIANCE WITH LAW -- not be in violation of any laws, ordinances,
or governmental rules and regulations to which it is subject and
will not fail to obtain any licenses, permits, franchises or
other governmental authorizations necessary to the ownership of its
properties or to the conduct of its business, which violation or
failure to obtain might materially and adversely affect the
business, prospects, profits, properties or condition (financial or
otherwise) of the Company.
9.3 SALE OF ASSETS OR MERGER.
(a) SALE OF ASSETS - - The Company will not, except in the ordinary
course of business, sell, convey or dispose of any of its assets;
PROVIDED that the
6
foregoing restriction does not apply to the sale of assets for a cash
consideration to one or more persons if the value of all assets so sold in
any twelve-month period (with the assets being valued at the greater of
net book or fair market value) does not exceed five percent (5%) of the
tangible net worth of the Company.
(b) MERGER AND CONSOLIDATION - - The Company will not without the prior
written consent of the Bank consolidate with or merge into any other
entity. In addition, the Company will not without the prior written
consent of the Bank permit any other entity to consolidate with or
merge into it or acquire all or substantially all of the assets or
business of any other company, person or entity.
9.4 LIENS AND ENCUMBRANCES.
(a) NEGATIVE PLEDGE. The Company will not (i) cause or permit or (ii)
agree or consent to cause or permit in the future (upon the
happening of a contingency or otherwise), any of its property,
whether now owned or hereafter acquired, to be subject to a lien or
encumbrance except:
(i) liens securing taxes, assessments or governmental charges or
levies or the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like
persons PROVIDED the payment thereof is not at the time
required by Section 9.1;
(ii) liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation,
unemployment insurance, social security and other like laws;
(iii) attachment, judgment and other similar liens arising in
connection with court proceedings, PROVIDED the execution or
other enforcement of such liens is effectively stayed and the
claims secured thereby are being actively contested in good
faith and by appropriate proceedings;
(iv) inchoate liens arising under ERISA to secure the contingent
liability of the Company;
(v) liens and encumbraces set forth in EXHIBIT B to this
Agreement;
(vi) reservations, exceptions, encroachments, easements, rights of
way, covenants, conditions, restrictions, leases and other
similar title exceptions or encumbrances affecting real
property, PROVIDED they do not in the aggregate materially
detract from the value of said property or materially
interfere with its use in the ordinary conduct of the owning
company's business.,
(vii) purchase money security interests not exceeding in amount
the purchase price of the property purchased.
In addition, the Company will not provide or agree to provide in favor of
any other lender, lessor, creditor, or other third party a negative pledge or
other covenant similar to this Section.,
9.5 OTHER BORROWINGS.
The Company will not create or incur any indebtedness for borrowed money
or advances, including through the execution of capitalized lease agreements,
except in connection with the purchase of property, provided that such
indebtedness does not exceed the purchase price of the property purchased.
9.6 CONTINGENT LIABILITIES.,
The Company will not guarantee, indorse or otherwise become surety for or
upon the obligations of others, except by endorsement of negotiable instruments
for deposit or collection in the ordinary course of business.
9.7 LOANS AND ADVANCES BY THE COMPANY.
The Company will not make any loans or advances to any person, corporation
or entity.
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9.8 CASH DIVIDENDS AND OTHER DISTRIBUTION'S.
The Company shall not declare or pay any cash dividends in any one fiscal
year or make any other distributions of any kind to shareholders.
9.9 ACQUISITION OF CAPITAL STOCK.
The Company shall not redeem or acquire any of its own capital stock
except through the use of the net proceeds from the simultaneous sale of an
equivalent amount of its capital stock, except for ESOP transactions in the
normal course of business.
9.10 INVESTMENTS.
The Company shall not purchase securities of any kind for investment
excepting bonds or other obligations of the United States, certificates of
deposit issued by commercial banks or building and loan associations and
commercial paper rated at least A-l or P-l and having a maturity of not more
than one year.
9.11 SALE OF RECEIVABLES.,
The Company shall not sell any of its account's receivable or notes
receivable, with or without recourse, nor shall it assign or encumber any of
it's accounts receivable or notes receivable.
9.12 LOCK-BOX COLLECTION OF RECEIVABLES: CASH COLLATERAL ACCOUNT.
The Company shall cause all accounts receivable to be collected through a
lock-box arrangement with the Bank. The Company shall establish with the Bank a
cash collateral account over which the Bank shall have exclusive power of
disbursement (the "Cash Collateral Account"). The Cash Collateral Account
shall be the Company's primary operating account. if Company hereafter makes
collections on any of the accounts, Company shall hold the proceeds received
from collections in trust for the Bank, and turn over all checks, drafts, cash
and other remittances and proceeds to the Bank each business day in the exact
form in which they are received, together with a collection report in a form
acceptable to the Bank. Said proceeds shall be deposited in the Cash Collateral
Account. The Bank, in the absence of an Event of Default under this Agreement
shall apply the whole or any part of the collected funds on deposit in the Cash
Collateral Account against the principal of the Loan; and after the occurrence
of an Event of Default such deposited funds may be applied, at the Bank's
option, against the Loan or any other indebtedness or obligation of Company.
Any portion of said funds on deposit in the Cash Collateral Account which the
Bank elects not to apply to the Loan may be paid over and deposited by the Bank
to the Company's commercial depositary account.
After the occurrence of an Event of Default under this Agreement, the Bank
at any time may notify Account Debtors on any accounts receivable of the Company
that such accounts have been assigned to the Bank and shall be paid directly to
the Bank through the lock-box or otherwise. After an Event of Default, upon
request of the Bank at any time, Company shall notify such Account Debtors and
indicate on all xxxxxxxx that the accounts are payable directly to the Bank.,
9.13 TANGIBLE NET WORTH.
The Company shall achieve and maintain a sum of the consolidated tangible
net worth plus subordinated debt of not less than the following amounts on and
after the following described dates:
Date Tangible Net Worth
---- ------------------
6/30/96 $1,500,000.00
12/31/96 $2,200,000.00
6/30/97 $2,400,000.00
12/31/97 $2,600,000.00
6/30/98 $3,000,000.00
12/31/98 $3,250,000.00
9.14 CURRENT RATIO.
The Company shall maintain as of the end of each fiscal quarter a
consolidated ratio of current assets to current liabilities of not less than 1.2
to 1.0.
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9.15 RATIO OF TOTAL LIABILITIES TO TANGIBLE NET WORTH.,
The Company shall maintain as of the end of each fiscal quarter until and
including March 31, 1997 a consolidated ratio of total liabilities to tangible
net worth of not greater than 4.0 to 1.0. Beginning June 30, 1997 and
continuing quarterly thereafter, the Company shall maintain as of the end of
each fiscal quarter a consolidated ratio of total liabilities to tangible net
worth of not greater than 3.0 to 1.0.
9.16 CASH FLOW COVERAGE RATIO.
The Company shall achieve as of December 31, 1996 and maintain as of each
fiscal year end thereafter a ratio of "Adjusted Cash Flow" to "Debt Service
Expense" of not less than 1.20 to 1.0. For purposes of this computation,
"Adjusted Cash Flow" shall be defined as the Company's annual earnings (net
profit) before interest, taxes, depreciation, and amortization expense plus
annual contributions to the Company's Employee Stock Option Plan; and "Debt
Service Expense" shall be defined as the sum of the Company's annual interest
expense plus current maturities of long term debt.,
9.17 ASSET BASED LENDING AUDITS., The Company will make its records,
inventory, equipment, and premises available to the officers or agents of the
Bank to conduct "asset based lending" audits quarterly during the first year of
the term of the Loan., Thereafter, such audits may be performed at such other
times as the Bank may require. The Company shall pay to the Bank the sum of
$500.00 per each day the auditors are performing such audit(s) on the Company's
premises, provided that such charges payable by the Company shall not exceed the
aggregate sum of $4,000.00 per each calendar year.
9.18 ERISA.
The Company shall with respect to their respective pension plans:
(a) at all times make prompt payment of contributions required to meet
the minimum funding standards set forth in Section 302 through 305
of ERISA with respect to its plan,
(b) promptly, after the filing thereof, furnish to the Bank copies of
each annual report required to be filed pursuant to Section 103 of
ERISA in connection with its plan for the plan year, including any
certified financial statements or actuarial statements required
pursuant to said Section 103
(c) notify the Bank immediately of any fact, including, but not limited
to, any "Reportable Event," as that term is defined in Section 4043
of ERISA, arising in connection with the plan which might constitute
grounds for termination thereof by the Pension Benefit Guaranty
Corporation or for the appointment by the appropriate United States
District Court of a Trustee to administer the plan,
(d) notify the Bank of any "Prohibited Transaction" as that term is
defined in Section 406 of ERISA.
The Company will not:
(e) engage in any "Prohibited Transaction," or
(f) terminate any such plan in a manner which could result in the
imposition of a lien on the property of the Company pursuant to
Section 4068 of ERISA.
9.19 MAINTENANCE OF ACCOUNTS
Company shall maintain all of it's primary operating and deposit accounts
at the Bank.
SECTION 10. INFORMATION AS TO COMPANY
The Company shall deliver the following to the Bank:
(a) within 25 days after the end of each calendar month, financial
statements of both Dynacraft and Xxx Xxxx, including a balance sheet
and 'statements of income and surplus, certified by the president or
treasurer of the Company
9
as fairly representing the Company's financial condition as of the
end of such period;
(b) within 10 days after the end of each calendar month, reports of
Dynacraft and Xxx Xxxx signed by their respective president or
treasurer setting forth the number and dollar total of accounts
receivable past due for not more than 30 days, the number and dollar
total past due for not more than 60 days, the number and dollar
total past due for not more than 90 days, and the number and dollar
total past due for more than 90 days;
(c) within 10 days after the end of each calendar month, reports of
Dynacraft and Xxx Xxxx signed by their respective president or
treasurer setting forth the number and dollar total of accounts
payable and the periods past due for such amounts.
(d) within 120 days of the end of each fiscal year, an audited
consolidated financial statement of the Company prepared in
accordance with generally accepted accounting principles
consistently applied by independent public accountants 'satisfactory
to the Bank, containing a balance sheet and statements of income
and surplus, ALONG WITH ANY MANAGEMENT LETTERS WRITTEN BY SUCH
ACCOUNTANTS;
(e) within 30 days after the end of each month, an inventory report in a
form acceptable to the Bank signed by the President or Treasurer of
the Company that describes the value and location of the Company's
inventory;
(f) within 30 days after the end of each month a Certificate of the Loan
Base signed by the President or Treasurer of the Company 'setting
forth and certifying the calculation of the Loan Base as of the end
of such month;
(g) within 120 days of the end of each fiscal year, a statement signed
by the Company's independent public accountants certifying that
nothing has come to their attention that would lead them to believe
that the Company is in violation of the terms of this Agreement;
(h) within thirty days after the end of each calendar year each
guarantor shall furnish to the Bank a signed copy of his financial
statement, including balance sheet, prepared in a manner acceptable
to the Bank.
(i) immediately upon becoming aware of the existence of any condition or
event which constitutes an Event of Default, a written notice
specifying the nature and period of existence thereof and what
action the Company is taking or proposes to take with respect
thereto;
(j) at the request of the Bank, such other information as the Bank may
from time to time reasonably require.
SECTION 11. EVENTS OF DEFAULT
11.1 NATURE OF EVENTS.
An "Event of Default" shall exist if any of the following occurs and is
continuing:
(a) the Company fails to make any payment of principal or interest on
the Loan on or before the date such payment is due;
(b) at the Bank's option, if the outstanding principal balance of the
Loan exceeds the Loan Base at any time;
(c) the Company fails to perform or observe any covenant contained in
Sections 5, 7, 9.1 through 9.18, and 10(a) through 10(h) of this
Agreement;
(d) the Company fails to comply with any other provision of this
Agreement, and such failure continues for more than 30 days after
such failure shall first become known to any officer of the Company;
(e) any warranty, representation or other statement by or on behalf of
the Company contained in this Agreement or in any instrument
furnished in compliance with or in reference to this Agreement is
false or misleading in any material respect;
10
(f) the Company becomes insolvent or bankrupt, or makes an assignment
for the benefit of creditors, or consents to the appointment of a
trustee, receiver or liquidator;
(g) bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings are instituted by or against the Company and
remain undismissed for a period of sixty days;
(h) a final judgment or judgments, from which no further right of appeal
exists, for the payment of money aggregating in excess of $25,000.00
is or are outstanding against the Company and any one of such
judgments has been outstanding for more than 30 days from the date
of its entry and has not been discharged in full or stayed;
(i) the Company fails to make any payment or to perform or observe any
covenant owing to the Bank or to any third party pursuant to any
agreement (other than in connection with accounts payable arising in
the ordinary course of business), and any applicable grace period
has expired;
(j) the Bank for any reason in good xxxxx xxxxx itself insecure with
respect to the repayment of the indebtedness provided for herein.
11.2 DEFAULT REMEDIES.,
(a) ACCELERATION -- If an Event of Default exists, the Bank may
immediately exercise any right, power or remedy permitted to the Bank by law,
and shall have in particular, without limiting the generality of the foregoing,
the right to declare the entire principal and all interest accrued on all notes
then outstanding pursuant to this Agreement to be forthwith due and payable,
without any presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by the Company.
(b) NONWAIVER: REMEDIES CUMULATIVE - -- No course of dealing on the
part of the Bank, nor any delay or failure on the part of the Bank in exercising
any rights, powers or privileges hereunder, shall operate a's a waiver of such
rights, powers or privileges or otherwise prejudice any of the Bank's rights and
remedies hereunder; nor shall any single or partial exercise thereof preclude
any further exercise thereof or the exercise of any other right, power or
privilege by the Bank. No right or remedy conferred upon or reserved to the
Bank under this Agreement is intended to be exclusive of any other right or
remedy, and every right and remedy shall be cumulative and in addition to every
other right or remedy given hereunder or now or hereafter existing under any
applicable law., Every right and remedy given by this Agreement or by
applicable law to the Bank may be exercised from time to time and as often as
may be deemed expedient by the Bank.
(c) RIGHT OF SET-OFF - - Upon the occurrence and during the continuance
of any Event of Default hereunder, the Bank is hereby authorized at any time and
from time to time, without notice to the Company (any such notice being
expressly waived by the Company) and to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by the Bank to or for the credit or the account of the Company against any and
all of the obligations of the Company now or hereafter existing under this
Agreement, irrespective of whether or not the Bank shall have made any demand
hereunder and although such obligations may be unmatured.,
SECTION 12. MISCELLANEOUS
12.1 NOTICES.,
All communications under this Agreement or under the notes executed
pursuant hereto shall be in writing and shall be mailed by first class mail,
postage prepaid to the address of the recipient first set forth above., Any
notice so addressed and mailed by registered mail shall be deemed given when so
mailed.
12 2 REPRODUCTION OF DOCUMENTS.,
This Agreement and all documents relating hereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by the Bank at the closing or otherwise, and
(c) financial statements, certificates and other information previously or
hereafter furnished to the Bank, may be reproduced by the Bank by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process and the Bank may destroy any
11
original document so reproduced. The Company agrees and stipulates that any
such reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by the Bank in the
regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.,
12.3 SURVIVAL.,
All warranties, representations, and covenants made by the Company herein
or on any certificate or other instrument delivered by it or on its behalf under
this Agreement shall be considered to have been relied upon by the Bank and
shall survive the closing of the Loan regardless of any investigation made by
the Bank on its behalf., All statements in any such certificate or other
instrument shall constitute warranties and representations by the Company.
12.4 SUCCESSORS AND ASSIGN'S: PARTICIPATIONS.
This Agreement shall inure to the benefit of and be binding upon the
heirs, successors and assigns of each of the parties.
The Bank, at any time, may sell to one or more participants participating
interests in the Loan or any portion thereof, any promissory note held by the
Bank, or any other interest of the Bank hereunder. In the event of any such
sale by the Bank of participating interest to a participant the Bank shall
remain the holder of any such promissory note for all purposes under this
Agreement, and the Company shall continue to deal solely and directly with the
Bank in connection with the Bank's rights and obligations under this Agreement.
The Company agrees that if amounts outstanding under this Agreement in any
promissory notes in connection herewith have become due and payable, whether by
acceleration or otherwise, each participant shall be deemed to have to the
extent permitted by applicable law, the right of set off in respect of its
participating interest in amounts owing under this Agreement or any promissory
note executed in connection herewith to the same extent as if the amount of its
participating interest were owing directly to it under this Agreement or any
promissory note executed in connection herewith. The Company authorizes the
Bank to disclose to any participant or any prospective participant any and all
financial information in the Bank's possession concerning the Company which has
been delivered to the Bank by or on behalf of the Company pursuant to this
Agreement.
12.5 AMENDMENT AND WAIVER.
This Agreement may be amended, and the observance of any term of this
Agreement may be waived, with (and only with) the written consent of the Company
and the Bank.,
12.6 DUPLICATE ORIGINALS.
Two or more duplicate originals of this Agreement may be signed by the
parties, each of which shall be an original but all of which together shall
constitute one and the same instrument.
12.7 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Ohio.
12.8 ACCOUNTING TERMS AND COMPUTATIONS.
Whenever any accounting term shall be used herein or the character or
amount of any asset or liability or item of income or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made, for the purpose of this Agreement, such accounting term, such
determination or computation shall, to the extent applicable and except as
otherwise specified in this Agreement, be defined or made (as the case may be)
in accordance with generally accepted accounting principles in the United States
applied (in the case of determinations or computations) on a basis consistent
with those applied in the preparation of the financial statements referred to in
Section 7.3 hereof.
12.9 CONSENT TO JURISDICTION AND WAIVER OF OBJECTION TO VENUE.
The Company agrees that any legal action or proceeding with respect to
this Agreement or the notes or the transactions contemplated hereby may be
brought in the Court of Common Pleas of Franklin County, Ohio, or in the United
States District Court
12
for the Southern District of Ohio, Eastern Division, and the Company hereby
irrevocably submits to and accepts generally and unconditionally the
jurisdiction of those courts with respect to its person, property and revenues
and irrevocable consents to service of process in any such action or proceeding
by the mailing thereof by U.S. mail to the Company at the Company's address set
forth in Section 11.1 hereof.
The Company hereby irrevocably waives any objection to the laying of venue
of any such suit or proceeding in the above described courts, and
unconditionally waives and agrees not to plead or claim that any such suit or
proceeding brought in any such court has been brought in an inconvenient forum,
provided, that this provision shall not preclude the Company from seeking to
consolidate actions brought against it.
Dynacraft Golf Products, Inc.,
By /s/ Xxxxxx Xxxxxxxxx, Xx.
-------------------------
Its CEO
---
Xxx Xxxx Custom Golf, Inc.
By /s/ Xxx Xxxxxxxxx
-----------------
Its President
---------
The Huntington National Bank
By /s/ Xxxxxxx X. Xxxxxx, Vice President
--------------------------------------
13
COMMERCIAL LOAN NOTE
--------------------------------------------------------------------------------
CITY OFFICE ________________ DIVISION ___________ BRANCH _________ (XX ) SECURED
ACCOUNT NO. ___________________________ NOTE NO. ______________ ( ) UNSECURED
ACCOUNT NAME: DYNACRAFT GOLF PRODUCTS, INC.; XXX XXXX CUSTOM GOLF, INC.
(XX) CORPORATION ( ) PARTNERSHIP ( ) INDIVIDUAL/PROPRIETORSHIP
BANK APPROVAL OFFICER INITIAL __________ BANK CLOSING OFFICER INITIAL __________
--------------------------------------------------------------------------------
$ 1,860,315.00 Columbus, Ohio June 20, 1996
FOR VALUE RECEIVED, the undersigned, jointly and severally if more than
one, promise to pay to the order of The Huntington National Bank (the "Bank",
which term shall include any holder hereof) at such place as the Bank may
designate or, in the absence of such designation, at any of the Bank's offices,
the sum of One Million Eight Hundred Sixty Thousand Three Hundred Fifteen
Dollars ($1,860,315.00) or so much thereof as shall have been advanced by the
Bank at any time and not hereafter repaid (hereinafter called the "'Principal
Sum") together with interest as hereinafter provided, and payable at the time(s)
and in the manner hereinafter provided. The undersigned promise to pay the
Principal Sum and the interest thereon at the times and in the manner
hereinafter provided.
This Note is executed in connection with and subject to the covenants and
conditions of a certain Loan Agreement between the Bank and the undersigned,
dated June 20, 1996 (the "Loan Agreement").
INTEREST
Prior to Maturity, interest will accrue on the unpaid balance of the
Principal Sum until paid at a "CONTRACT RATE" OF EITHER THE "ONE YEAR TREASURY
RATE" OR THE "PRIME RELATED RATE" (both of which are hereinafter defined) duly
elected by the undersigned by an Adjustment Election made in the manner
hereinafter provided. After maturity, whether by acceleration, lapse of time,
or otherwise, interest shall accrue on the unpaid balance of the Principal Sum
at a DEFAULT RATE" equal to the Prime Rate (hereinafter defined) plus Two and
Three Quarters percent (2.75%) per annum.
THE "ONE YEAR TREASURY RATE" is a rate of interest per annum equal to the
"one year index" plus 250 basis points, rounded up to the nearest one-eighth of
one percent (1/8%). The "one year index" shall be the one year U. S. Treasury
Constant Maturities rate stated in the weekly Federal Reserve Statistical
Release Form H.l5(5l9) published not less than seven days prior to the
applicable Interest Rate Adjustment Date.
THE "PRIME-RELATED RATE" is a variable rate of interest equal to
seventy-five (75) basis points [100 basis points equals one percent) above the
"Prime Rate" (hereinafter defined) from time to time in effect with each change
in the Prime Rate automatically and immediately adjusting the rate of interest
payable hereunder. For the purposes hereof, the term "Prime Rate" shall mean
that interest rate per annum announced from time to time by the Bank as its
"prime rate", or other similar designation, and it is not necessarily the most
favored rate of the Bank.
THE "INTEREST RATE ADJUSTMENT DATE" shall mean each anniversary of the date
of this Note during the term of this Note.
THE "ADJUSTMENT ELECTION" shall mean an IRREVOCABLE written election to
adjust the Contract Rate due under this Note TO EITHER THE ONE YEAR TREASURY
RATE or the Prime Related ~de terminedb the Bank to be in effect as of each
Interest Rate Adjustment Date, which election may be exercised not later than
thirty days prior to each Interest Rate Adjustment Date by delivering to the
officer of the Bank who is administering the Loan a written notice of such
election SPECIFYING THE CONTRACT RATE elected by the undersigned If the
undersigned fails to timely make the Adjustment Election prior to any Interest
Rate Adjustment Date, then in such event the undersigned shall be deemed TO HAVE
ELECTED THE Prime Related Rate as the Contract Rate to become effective as of
such Interest Rate Adjustment Date. Each election of the Contract Rate shall
continue in effect until the next succeeding Interest Rate Adjustment Date, upon
which date the Contract Rate shall be adjusted in accordance with the Adjustment
Election made or deemed to have been made by the undersigned for such date.
1
All interest shall be calculated on the basis of a 360 day year for the
actual number of days the Principal Sum or any part thereof remains unpaid.
There shall be no penalty for prepayment. The amount of any payment shall first
be applied to the payment of any interest which is due.
MANNER OF PAYMENT
The Principal Sum and accrued interest at the Contract Rate shall be due
and payable in eighty-four consecutive monthly installments, beginning on August
1, 1996 and continuing on the first day of each month thereafter until maturity,
whether by acceleration, lapse of time, or otherwise. The Principal Sum portion
of each monthly installment shall be computed in relation to the Contract Rate
in effect for the applicable Adjustment Period, except the final installment
shall be for the entire outstanding balance of the Principal Sum. Accrued
interest shall be payable monthly with the installments of the Principal Sum. If
the Contract Rate is the Prime Related Rate, the monthly installment of interest
shall be due and payable in addition to the monthly installment of the Principal
Sum. Unless sooner paid, the entire outstanding balance of the Principal Sum,
together with all accrued but unpaid interest thereon, shall be due and payable
on July 1, 2003 (the "Maturity Date").
The monthly installment shall initially be the sum of TWENTY NINE THOUSAND
THREE HUNDRED FORTY FOUR DOLLARS ($29,344.05), said amount having been computed
based upon A EIGHTY-FOUR (84) MONTH amortization schedule; provided, however,
that on each Interest Rate Adjustment Date on which the Contract Rate changes to
a Treasury Related Contract Rate the monthly installment of principal and
interest due hereunder shall be increased or decreased, as the case may be, to a
new payment equal to the monthly amount required to fully amortize the
outstanding principal balance of the Loan and accrued interest thereon based
upon (i) the new Contract Rate becoming effective as of such Interest Rate
Adjustment , and (ii) the above referenced amortization period, less the number
of months which have elapsed since July 1 1996. On each Interest Rate
Adjustment Date on which the Contract Rate changes to a Prime Related Contract
Rate, the monthly installment shall be computed as the sum of (i) interest in
arrears accrued during each period of thirty days at the Prime Rate(s) in
effect during such period, plus (ii) a monthly portion of principal computed
by dividing the outstanding balance of the Principal Sum as of such Interest
Rate Adjustment Date by the number of months remaining until the Maturity Date.
The undersigned may, on an business day , upon payment of all accrued
interest, fees and other amounts then due and payable to Lender and upon at
least FIVE (5) BUSINESS DAYS prior written notice to Lender, elect to prepay all
or part of the unpaid balance of the PRINCIPAL SUM; provided, however, that if
said prepayment shall be (1) MADE ON OR BEFORE the date that is six (6) months
prior to any Interest Rate Adjustment Date or the Maturity Date and (2) THE
AGGREGATE AMOUNT OF THE PRINCIPAL portion of all prepayments made during the
calendar year in which said prepayment is made (including the principal
portion of said prepayment) exceeds 10% of the outstanding PRINCIPAL balance due
AND PAYABLE TO LENDER ON JANUARY 1 OF SAID CALENDAR YEAR OR THE DATE OF THIS
NOTE, WHICHEVER date more proximately precedes the date of prepayment, then the
undersigned shall pay to Lender on the date of the prepayment A PREPAYMENT
PREMIUM CALCULATED using the following formula:
Prepayment Premium = % x (AP - AD) x TM
--
12
In such formula:
(i) % equals 3%
(ii) AP is the Amount Paid and means the actual amount of the principal sum
paid on the date of the prepayment; and
(iii) AD is the Amount due and means the total amount of the principal sum
due and payable on the date of the prepayment; and
(iv) TM is the Total Months and means the total number of full months
between the date of the prepayment and the next succeeding Interest
Rate Adjustment Date or the Maturity Date, whichever is the earlier
event.
The prepayment premium shall be due and payable to the Bank regardless of
whether the prepayment results from the undersigned's voluntary prepayment or
from the Bank's exercising its rights after default by the undersigned through
acceleration of the Loan or otherwise. Unless the Bank shall otherwise agree in
writing, partial prepayments of principal shall be credited to installments of
principal in inverse order of maturity and shall not postpone the due dates of
the monthly installments required hereunder. Notwithstanding the foregoing, in
the event of any prepayment because of foreclosure or other judicial sale, there
shall be due and payable a prepayment premium in the amount of five percent (5%)
of the amount prepaid.
2
LATE CHARGE
Any installment or other payment not made within 10 days of the date such
payment or installment is due shall be subject to a late charge equal to 5% of
the amount of the installment or payment.
SECURITY
As security for the payment of the obligations evidenced hereby, and of all
other obligations and liabilities of the undersigned, and each of them, to the
Bank, whether now existing or hereafter arising, the undersigned hereby grant
Bank a security interest or mortgage in the following property, including all
substitutions and additions thereto, and the proceeds thereof (all, together
with any other property in which the Bank shall at any time be given a security
interest, hereinafter referred to as the "Collateral"):
First security interest in cash, accounts receivable, inventory,
intangibles; Second priority security interest on equipment and fixtures;
Second mortgage lien on the real estate located at 84, 85,88, 92, 98, 99,
and 000 Xxxxx Xxxxxx, Xxxxxx, Xxxx, 77, 85, and 00 X. Xxxx Xxxxxx, Xxxxxx,
Xxxx, and 00 Xxxxxx Xxxxxx, Xxxxxx, Xxxx 00000; Assignment of $500,000
life insurance policy insuring the life of Xxxxxx X. Xxxxxxxxx, Xx.
If, at the time of payment and discharge hereof, any of the undersigned shall be
then directly or contingently liable to the Bank as maker, indorser, surety or
guarantor of any other note, xxxx of exchange, or other instrument, then the
Bank may continue to hold any of the Collateral as security therefor, even
though this Note shall have been surrendered to the undersigned. The Bank shall
not be bound to take any steps necessary to preserve any rights in the
Collateral against prior parties. If any obligation evidenced by this Note is
not paid when due, the Bank may, at its option, demand, xxx for, collect or make
any compromise or settlement it deems desirable with reference to the
Collateral, and shall have the rights of a secured party under the laws of the
State of Ohio, and the undersigned shall be liable for any deficiency.
DEFAULT
Upon the occurrence of any of the following events:
(1) the undersigned fails to pay any installment when due hereunder or to
perform any obligation of the undersigned to the Bank, including without
limitation all obligations set forth in the Loan Agreement;
(2) the undersigned fails to do all things necessary to preserve and
maintain the value and collectibility of the Collateral;
(3) any event occurs and continues which constitutes a default by any of
the undersigned under any other obligation to or agreement with the Bank;
(4) the Collateral declines in value or become unsatisfactory to the Bank
and the undersigned fails to furnish immediately upon demand additional
Collateral satisfactory to the Bank;
(5) any guarantor revokes its guaranty, or any event occurs and continues
which constitutes a default by any guarantor under its guaranty;
(6) the undersigned fails to furnish true and complete financial
statements from time to time on request of the Bank;
(7) the death or dissolution of any of the undersigned, or any indorser,
surety, accommodation party or guarantor;
(8) any representation, warranty or other information given to the Bank by
any of the undersigned, or by an indorser, surety or guarantor proves to be
false, untrue or misleading; or
(9) if the Bank shall for any reason deem itself insecure with respect to
the obligations evidenced hereby;
then Bank may, at its option, without notice or demand, accelerate the maturity
of the obligation evidenced hereby, which obligation shall become immediately
due and payable. In the event the Bank shall institute any action for the
enforcement or
3
collection of the obligations evidenced hereby, the undersigned agree to pay all
costs and expenses of such actions, including reasonable attorneys' fees, to the
extent permitted by law.
GENERAL PROVISIONS
All of the parties hereto, including the undersigned, and any indorser,
surety, accommodation party, or guarantor, hereby: (1) severally waive
presentment, notice of dishonor, protest, notice of protest, and diligence in
bringing suit against any party hereto; (2) consent that, without discharging
any of them, and without notice, the Bank may (i) extend the time of payment an
unlimited number of times before or after maturity, (ii) grant any other
indulgence at any time and from time to time to any party hereto, (iii) delay in
exercising or omit to exercise any right against, or delay in taking or omit to
take any action to collect from or pursue the Bank's remedies against, any party
hereto, (iv) release or modify any collateral, security, or guaranties; and (3)
severally waive any claim, right or remedy which such party may now have or
hereafter acquire against any other party or parties hereto that arises
hereunder and/or from the performance by such party hereunder, including without
limitation any claim, remedy or right of subrogation, reimbursement,
exoneration, contribution, indemnification or participation in any claim, right
or remedy of the Bank against the other party or parties, or any security which
the Bank now has or hereafter acquires, whether such claim, right or remedy
arises in equity, under contract, by statute, under common law or otherwise.
The Bank shall not be required to pursue any party hereto, including any
guarantor, or to exercise any rights against any Collateral herefor before
exercising any other such rights.
The obligations evidenced hereby may from time to time be evidenced by
another note or notes given in substitution, renewal or extension hereof. Any
security interest or mortgage which secures the obligations evidenced hereby
shall remain in full force and effect notwithstanding any such substitution,
renewal, or extension.
No waiver of any term or condition of this Note shall be effective unless
in writing and signed by the party giving or granting the waiver. No amendment
of any term or condition of this Note shall be effective unless in writing and
signed by the undersigned and the Bank. No failure or delay on the part of the
Bank in exercising any right, power or privilege under this Note, related loan
documents or law nor any course of dealing, shall operate as a waiver of such
right, power or privilege or preclude any other or further exercise thereof or
of any other right, power or privilege.
The captions used herein are for reference only and shall not be deemed a
part of this Note. If any of the terms or provisions of this Note shall be
deemed unenforceable, the enforceability of the remaining terms and provisions
shall not be affected. This Note shall be governed by and construed in
accordance with the law of the State of Ohio.
The undersigned agree that, to the extent that any of the undersigned make
a payment or payments to the Bank, or the Bank receives any proceeds of
collateral, which payment or payments or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to any of the undersigned, its estate, trustee,
receiver or any other party, including without limitation any guarantor, under
any bankruptcy law, state or federal law, common law or equitable cause, then to
the extent of such payment or repayment, the obligations under this Note or the
part hereof which has been paid, reduced or satisfied by such amount shall be
reinstated and continued in full force and effect as of the date such initial
payment, reduction or satisfaction occurred.
WARRANT OF ATTORNEY
Each of the undersigned authorizes any attorney at law to appear in any
Court of Record in the State of Ohio or in any other state or territory of the
United States of America after the above indebtedness becomes due, whether by
acceleration or otherwise, to waive the issuing and service of process, and to
confess judgment against any one or more of the undersigned in favor of the Bank
for the amount then appearing due together with costs of suit, and thereupon to
waive all errors and all rights of appeal and stays of execution. No such
judgment or judgments against less than all of the undersigned shall be a bar to
a subsequent judgment or judgments against any one or more of the undersigned
against whom judgment has not been obtained hereon, this being a joint and
several warrant of attorney to confess judgment. The undersigned waives any
right to move any court for an order having any attorney or firm representing
the Bank removed or disqualified as counsel for the Bank as a result of such
attorney or firm confessing judgment against the under signed in accordance with
this paragraph. The undersigned expressly waives any conflicts of interest
that may now or hereafter exist as a result of any attorney representing the
Bank confessing judgment against the undersigned and expressly consents the
attorney representing the Bank or to any other attorney to confess judgment
against
4
the undersigned in accordance with this paragraph. The undersigned further
consents and agrees that the Bank may pay any attorney confessing judgment
against the undersigned a reasonable fee for confessing judgment and that any
such fees so paid may be included in the amount of such judgment.
WAIVER OF RIGHT TO TRIAL BY JURY
THE UNDERSIGNED ACKNOWLEDGES THAT, AS TO ANY AND ALL DISPUTES THAT MAY
ARISE WITH RESPECT TO THE COVENANTS AND CONDITIONS OF THIS NOTE, THE COMMERCIAL
NATURE OF THE INDEBTEDNESS EVIDENCED HEREBY WOULD MAKE ANY SUCH DISPUTE
UNSUITABLE FOR TRIAL BY JURY. ACCORDINGLY, THE UNDERSIGNED HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY AS TO ANY AND ALL DISPUTES THAT MAY ARISE RELATING TO
THIS NOTE, THE INDEBTEDNESS EVIDENCED HEREBY, OR ANY OF THE OTHER INSTRUMENTS OR
DOCUMENTS EXECUTED IN CONNECTION HEREWITH.
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.
Dynacraft Golf Products, Inc. , an Ohio corporation
By /s/ Xxxxxx Xxxxxxxxx, Xx.
-------------------------
Its CEO
---
Xxx Xxxx Custom Golf, Inc. , an Ohio corporation
By /s/ Xxx Xxxxxxxxx
-----------------
Its President
----------
5
--------------------------------------------------------------------------------
GUARANTOR:
XXXXXX X. XXXXXXXXX, XX.
000 XXXXXXX XXXX
XXXXXXXXX, XXXXXXX XXXXXX XXXX 00000
DEBTOR:
DYNACRAFT GOLF PRODUCTS, INC. AND XXX XXXX CUSTOM GOLF, INC.
00 XXXXX XXXXX
XXXXXX, XX 00000
--------------------------------------------------------------------------------
CONTINUING GUARANTY
UNLIMITED
For the purpose of Inducing The Huntington National Bank (hereinafter referred
to as "Bank") to lend money or advance credit to, or renew, extend or forbear
from demanding immediate payment of the Obligations of DYNACRAFT GOLF PRODUCTS,
INC. AND XXX XXXX CUSTOM GOLF, INC. (hereinafter referred to as "Debtor", the
undersigned (hereinafter referred to as "Guarantors" whether one or more),
jointly and severally if more than one (which joint and several liability shall
exist regardless of whether additional Guarantors have evidenced or may in the
future evidence their undertaking by executing this Guaranty, by co-signing one
or more promissory notes or other instruments of indebtedness, by executing one
or more separate agreements of guaranty of any or all of the Obligations
referred to herein, or otherwise), hereby unconditionally guarantee the prompt
and full payment to Bank when due, whether by acceleration or otherwise, of all
Obligations of any kind for which Debtor is now or may hereafter become liable
to Bank In any manner.
The word "Obligations" is used in its most comprehensive sense and includes,
without limitation, all indebtedness, debts and liabilities (including
principal, interest, late charges, collection costs, attorneys' fees and the
like) of Debtor to Bank, either created by Debtor alone or together with another
or others, primary or secondary, secured or unsecured, absolute or contingent,
liquidated or unliquidated, direct or indirect, whether evidenced by note,
draft, application for letter of credit a agreements of guaranty or otherwise,
and any and all renewals of, extensions of or substitutes therefor. The word'
"Obligations" shall include, BUT NOT BE LIMITED TO, all indebtedness owed by
Debtor to Bank by reason of credit extended or to be extended to Debtor in the
principal amount of $1,860,315.00, pursuant to one or more instruments of
indebtedness and related loan documents.
Guarantors, and each of them, hereby promise that if one or more of the
Obligations are not paid promptly when due, they, and each of them, will, upon
request of Bank, pay the Obligations to Bank, irrespective of any action or lack
of action on Bank's part in connection with the acquisition, perfection,
possession, enforcement or disposition of any or all Obligations or any or all
security therefor or otherwise, and further irrespective of any invalidity in
any or all Obligations, the unenforceability thereof or the insufficiency,
invalidity or unenforceability of any security therefor. Furthermore,
Guarantors, and each of them, hereby waive any claim, right or remedy which
Guarantors may now have or hereafter acquire against Debtor that arises
hereunder and/or from the performance by Guarantors, or any of them, hereunder
including, without limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, contribution, indemnification, or participation in
any claim, right or remedy of Bank against Debtor, or any security which Bank
now has or hereafter acquires, whether such claim, right or remedy arises in
equity, under contract, by statute, under common law or otherwise.
Guarantors waive notice of any and all acceptances of this Guaranty. This
Guaranty is a continuing guaranty, and, in addition to covering all present
Obligations of Debtor to Bank, will extend to all future Obligations of Debtor
to Bank, and this whether such Obligations are reduced or entirely extinguished
and thereafter increased or reincurred. This Guaranty is made and will remain in
effect as to any and all Obligations of Debtor incurred or arising prior to
receipt by the loan officer of Bank who is handling Debtor's Obligations of
written notice of termination of this Guaranty. No revocation will in any way
affect the duties of Guarantors to Bank with respect to Obligations of Debtor
incurred prior to the receipt of such notice by such loan officer of Bank.
Revocation by any one or more of Guarantors will not affect the duties of the
remaining Guarantor or Guarantors.
Guarantors waive presentment, demand, protest, notice of protest, and notice of
dishonor or other non payment of any and all Obligations and further waive
notice of sale or other disposition of any collateral or security now held or
hereafter acquired by Bank. Guarantors agree that no extension of time, whether
one or more, nor any other indulgence granted by Bank to Debtor, or to
Guarantors, or any of them, and no omission or delay on Bank's part in
exercising any right against, or in taking any action to collect from or pursue
Bank's remedies against Debtor or Guarantors, or any of them, will release,
discharge or modify the duties of Guarantors. Guarantors agree that Bank may,
without notice to or further consent from Guarantors, release or modify any
collateral, security or other guaranties, and no such action will release,
discharge or modify the duties of Guarantors hereunder. Guarantors further agree
that Bank will not be required to pursue or exhaust any of its rights or
remedies against Debtor or Guarantors, or any of them, with respect to payment
of any of the Obligations, or to pursue, exhaust or preserve any of Its rights
or remedies with respect to any collateral, security or other guaranties given
to secure the Obligations, or to take any action of any sort, prior to demanding
payment from or pursuing its remedies against Guarantors. Guarantors further
agree that, to the extent that Debtor makes a payment or payments to Bank, or
Bank receives any proceeds of collateral, which payment or payments or proceeds
or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to Debtor, its estate,
trustee, receiver or any other party, including without limitation any
Guarantor, under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment, the
Obligations or the art thereof which has been aid, reduced or satisfied by such
amount shall be reinstated and continued in full force and effect as of the date
such initial payment, reduction or satisfaction occurred.
1
Guarantors agree to furnish true and complete financial statements from time to
time on request of Bank and agree that failure to furnish such financial
statements may constitute or be deemed to constitute a default or event of
default of the Obligations. Guarantors agree that any legal suit, action or
proceeding arising out of or relating to this Guaranty may be instituted In a
state or federal court of appropriate subject matter jurisdiction in the State
of Ohio; waive any objection which they may have now or hereafter to the venue
of any such suit, action or proceeding; and Irrevocably submit to the
jurisdiction of any such court in any such suit, action or proceeding.
Guarantors hereby authorize any attorney at law to appear for them in any action
on any or all Obligations guaranteed hereby at any time after such Obligations
become due, whether by acceleration or otherwise, in any court of record in or
of the State of Ohio or elsewhere, to waive the issuing and service of process
against, and confess judgment against Guarantors, or any of them, in favor of
Bank for the amount that may be due, including interest, late charges,
collection costs, attorneys' fees and the like as provided for in said
Obligations, and costs of suit, and to waive and release all errors in said
proceedings and judgments, and all petitions in error, and right of appeal from
the judgments rendered. No such judgment or judgments against less than all of
Guarantors shall be a bar to a subsequent judgment or judgments against any one
or more of Guarantors against whom judgment has not been obtained hereon, this
being a joint and several warrant of attorney to confess judgment. The attorney
at law authorized hereby to appear for Guarantors may be an attorney at law also
representing Ban, and Guarantors, and each of them, hereby expressly waive any
conflict of interest that may exist by virtue of such representation.
If any Obligation of Debtor is assigned by Bank, this Guaranty will inure to the
benefit of Bank's assignee, and to the benefit of any subsequent assignee, to
the extent of the assignment or assignments, provided that no assignment will
operate to relieve Guarantors, or any of them, from any duty to Bank hereunder
with respect to any unassigned Obligation. In the event that an one or more of
the provisions contained in this Guaranty or any application thereof shall be
determined to be invalid, illegal or unenforceable In any respect, the validity,
legality and enforceability of the remaining provisions contained herein and any
other applications thereof shall not in any way be affected or impaired thereby.
This Guaranty shall be construed in accordance with the law of the State of
Ohio. As security for payment by Guarantors hereunder, and of all other
liabilities of Guarantors to Bank whether now existing or hereafter arising,
Guarantors hereby grant Bank a security interest in the following property:
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
whether Guarantors' interest therein as owner, co-owner, lessee, consignee,
secured party or otherwise be now owned or existing or hereafter arising or
acquired, and wherever located, together with all substitutions, replacements,
additions and accessions therefor or thereto, alI replacement and repair parts
therefor, all negotiable documents relating thereto, all products thereof and
any and all cash and non-cash proceeds thereof including, but not limited to
notes, drafts, checks, instruments and insurance proceeds (hereinafter the
Collateral"). If at the time of payment of the Obligations and any discharge
hereof, Guarantors shall be then directly or continently liable to Bank as
maker, indorser, surety or guarantor of any other loan or obligation whether the
same shall be evidenced by a note, xxxx of exchange, agreement of guaranty or
other instrument, then Bank may continue to hold the Collateral as security
therefor, even though this Guaranty shall have been surrendered to Guarantors.
Bank shall not be bound to take any steps necessary to preserve any rights in
the Collateral against prior parties. If any Obligations hereunder are not aid
when due, Bank may, at its option, demand, xxx for, collect or make any
compromise or settlement it deems desirable with reference to the Collateral,
and shall have the rights of a secured party under the law of the State of Ohio.
Guarantors shall be liable for any deficiency.
GUARANTORS, AND EACH OF THEM, ACKNOWLEDGE THAT, AS TO ANY AND ALL DISPUTES THAT
MAY ARISE BETWEEN GUARANTORS AND BANK, THE COMMERCIAL NATURE OF THE TRANSACTION
OUT OF WHICH THIS GUARANTY ARISES MAKES ANY SUCH DISPUTE UNSUITABLE FOR TRIAL BY
JURY. ACCORDINGLY, EACH OF THE GUARANTORS HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY AS TO ANY AND ALL DISPUTES THAT MAY ARISE RELATING TO THIS GUARANTY OR TO
ANY OF THE OTHER INSTRUMENTS OR DOCUMENTS EXECUTED IN CONNECTION HEREWITH.
Executed and delivered at COLUMBUS. OHIO on JUNE 20 , 1996 .
WARNING- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TIRAL.
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.
GUARANTOR(S): XXXXXX X. XXXXXXXXX, XX
/s/ Xxxxxx Xxxxxxxxx, Xx
------------------------
XXXXXX X. XXXXXXXXX, XX
2
--------------------------------------------------------------------------------
GUARANTOR:
XXXXXX X. XXXXXXXXX, XX.
000 XXXX XX XXXXX
XXXXXXXXX, XXXXXXX XXXXXX XXXX 00000
DEBTOR:
DYNACRAFT GOLF PRODUCTS, INC. AND XXX XXXX CUSTOM GOLF, INC.
00 XXXXX XXXXX
XXXXXX, XX 00000
--------------------------------------------------------------------------------
CONTINUING GUARANTY
UNLIMITED
For the purpose of Inducing The Huntington National Bank (hereinafter referred
to as "Bank") to lend money or advance credit to, or renew, extend or forbear
from demanding immediate payment of the Obligations of DYNACRAFT GOLF PRODUCTS,
INC. AND XXX XXXX CUSTOM GOLF, INC. (hereinafter referred to as "Debtor" , the
undersigned (hereinafter referred to as "Guarantors" whether one or more),
jointly and severally if more than one (which joint and several liability shall
exist regardless of whether additional Guarantors have evidenced or may in the
future evidence their undertaking by executing this Guaranty, by co-signing one
or more promissory notes or other instruments of indebtedness, by executing one
or more separate agreements of guaranty of any or all of the Obligations
referred to herein, or otherwise), hereby unconditionally guarantee the prompt
and full payment to Bank when due, whether by acceleration or otherwise, of all
Obligations of any kind for which Debtor is now or may hereafter become liable
to Bank In any manner.
The word "Obligations" is used in its most comprehensive sense and includes,
without limitation, all indebtedness, debts and liabilities (including
principal, interest, late charges, collection costs, attorneys' fees and the
like) of Debtor to Bank, either created by Debtor alone or together with another
or others, primary or secondary, secured or unsecured, absolute or contingent,
liquidated or unliquidated, direct or indirect, whether evidenced by note,
draft, application for letter of credit a agreements of guaranty or otherwise,
and any and all renewals of, extensions of or substitutes therefor. The word'
"Obligations" shall include, BUT NOT BE LIMITED TO, all indebtedness owed by
Debtor to Bank by reason of credit extended or to be extended to Debtor in the
principal amount of $1, 860,315.00, pursuant to one or more instruments of
indebtedness and related loan documents.
Guarantors, and each of them, hereby promise that if one or more of the
Obligations are not paid promptly when due, they, and each of them, will, upon
request of Bank, pay the Obligations to Bank, irrespective of any action or lack
of action on Bank's part in connection with the acquisition, perfection,
possession, enforcement or disposition of any or all Obligations or any or all
security therefor or otherwise, and further irrespective of any invalidity in
any or all Obligations, the unenforceability thereof or the insufficiency,
invalidity or unenforceability of any security therefor. Furthermore,
Guarantors, and each of them, hereby waive any claim, right or remedy which
Guarantors may now have or hereafter acquire against Debtor that arises
hereunder and/or from the performance by Guarantors, or any of them, hereunder
including, without limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, contribution, indemnification, or participation in
any claim, right or remedy of Bank against Debtor, or any security which Bank
now has or hereafter acquires, whether such claim, right or remedy arises in
equity, under contract, by statute, under common law or otherwise.
Guarantors waive notice of any and all acceptances of this Guaranty. This
Guaranty is a continuing guaranty, and, in addition to covering all present
Obligations of Debtor to Bank, will extend to all future Obligations of Debtor
to Bank, and this whether such Obligations are reduced or entirely extinguished
and thereafter increased or reincurred. This Guaranty is made and will remain in
effect as to any and all Obligations of Debtor incurred or arising prior to
receipt by the loan officer of Bank who is handling Debtor's Obligations of
written notice of termination of this Guaranty. No revocation will in any way
affect the duties of Guarantors to Bank with respect to Obligations of Debtor
incurred prior to the receipt of such notice by such loan officer of Bank.
Revocation by any one or more of Guarantors will not affect the duties of the
remaining Guarantor or Guarantors.
Guarantors waive presentment, demand, protest, notice of protest, and notice of
dishonor or other non payment of any and all Obligations and further waive
notice of sale or other disposition of any collateral or security now xxXx or
hereafter acquired by Bank. Guarantors agree that no extension of time, whether
one or more, nor any other indulgence granted by Bank to Debtor, or to
Guarantors, or any of them, and no omission or delay on Bank's part in
exercising any right against, or in taking any action to collect from or pursue
Bank's remedies against Debtor or Guarantors, or any of them, will release,
discharge or modify the duties of Guarantors. Guarantors agree that Bank may,
without notice to or further consent from Guarantors, release or modify any
collateral, security or other guaranties, and no such action will release,
discharge or modify the duties of Guarantors hereunder. Guarantors further agree
that Bank will not be required to pursue or exhaust any of its rights or
remedies against Debtor or Guarantors, or any of them, with respect to payment
of any of the Obligations, or to pursue, exhaust or preserve any of Its rights
or remedies with respect to any collateral, security or other guaranties given
to secure the Obligations, or to take any action of any sort, prior to demanding
payment from or pursuing its remedies against Guarantors. Guarantors further
agree that, to the extent that Debtor makes a payment or payments to Bank, or
Bank receives any proceeds of collateral, which payment or payments or proceeds
or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to Debtor, its estate,
trustee, receiver or any other party, including without limitation any
Guarantor, under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment, the
Obligations or the art thereof which has been aid, reduced or satisfied by such
amount shall be reinstated and continued in full force and effect as of the date
such initial payment, reduction or satisfaction occurred.
3
Guarantors agree to furnish true and complete financial statements from time to
time on request of Bank and agree that failure to furnish such financial
statements may constitute or be deemed to constitute a default or event of
default of the Obligations. Guarantors agree that any legal suit, action or
proceeding arising out of or relating to this Guaranty may be instituted In a
state or federal court of appropriate subject matter jurisdiction in the State
of Ohio; waive any objection which they may have now or hereafter to the venue
of any such suit, action or proceeding; and Irrevocably submit to the
jurisdiction of any such court in any such suit, action or proceeding.
Guarantors hereby authorize any attorney at law to appear for them in any action
on any or all Obligations guaranteed hereby at any time after such Obligations
become due, whether by acceleration or otherwise, in any court of record in or
of the State of Ohio or elsewhere, to waive the issuing and service of process
against, and confess judgment against Guarantors, or any of them, in favor of
Bank for the amount that may be due, including interest, late charges,
collection costs, attorneys' fees and the like as provided for in said
Obligations, and costs of suit, and to waive and release all errors in said
proceedings and judgments, and all petitions in error, and right of appeal from
the judgments rendered. No such judgment or judgments against less than all of
Guarantors shall be a bar to a subsequent judgment or judgments against any one
or more of Guarantors against whom judgment has not been obtained hereon, this
being a joint and several warrant of attorney to confess judgment. The attorney
at law authorized hereby to appear for Guarantors may be an attorney at law also
representing Ban, and Guarantors, and each of them, hereby expressly waive any
conflict of interest that may exist by virtue of such representation.
If any Obligation of Debtor is assigned by Bank, this Guaranty will inure to the
benefit of Bank's assignee, and to the benefit of any subsequent assignee, to
the extent of the assignment or assignments, provided that no assignment will
operate to relieve Guarantors, or any of them, from any duty to Bank hereunder
with respect to any unassigned Obligation. In the event that an one or more of
the provisions contained in this Guaranty or any application thereof shall be
determined to be invalid, illegal or unenforceable In any respect, the validity,
legality and enforceability of the remaining provisions contained herein and any
other applications thereof shall not in any way be affected or impaired thereby.
This Guaranty shall be construed in accordance with the law of the State of
Ohio. As security for payment by Guarantors hereunder, and of all other
liabilities of Guarantors to Bank whether now existing or hereafter arising,
Guarantors hereby grant Bank a security interest in the following property:
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
whether Guarantors' interest therein as owner, co-owner, lessee, consignee,
secured party or otherwise be now owned or existing or hereafter arising or
acquired, and wherever located, together with all substitutions, replacements,
additions and accessions therefor or thereto, alI replacement and repair parts
therefor, all negotiable documents relating thereto, all products thereof and
any and all cash and non-cash proceeds thereof including, but not limited to
notes, drafts, checks, instruments and insurance proceeds (hereinafter the
Collateral"). If at the time of payment of the Obligations and any discharge
hereof, Guarantors shall be then directly or continently liable to Bank as
maker, indorser, surety or guarantor of any other loan or obligation whether the
same shall be evidenced by a note, xxxx of exchange, agreement of guaranty or
other instrument, then Bank may continue to hold the Collateral as security
therefor, even though this Guaranty shall have been surrendered to Guarantors.
Bank shall not be bound to take any steps necessary to preserve any rights in
the Collateral against prior parties. If any Obligations hereunder are not aid
when due, Bank may, at its option, demand, xxx for, collect or make any
compromise or settlement it deems desirable with reference to the Collateral,
and shall have the rights of a secured party under the law of the State of Ohio.
Guarantors shall be liable for any deficiency.
GUARANTORS, AND EACH OF THEM, ACKNOWLEDGE THAT, AS TO ANY AND ALL DISPUTES THAT
MAY ARISE BETWEEN GUARANTORS AND BANK, THE COMMERCIAL NATURE OF THE TRANSACTION
OUT OF WHICH THIS GUARANTY ARISES MAKES ANY SUCH DISPUTE UNSUITABLE FOR TRIAL BY
JURY. ACCORDINGLY, EACH OF THE GUARANTORS HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY AS TO ANY AND ALL DISPUTES THAT MAY ARISE RELATING TO THIS GUARANTY OR TO
ANY OF THE OTHER INSTRUMENTS OR DOCUMENTS EXECUTED IN CONNECTION HEREWITH.
Executed and delivered at COLUMBUS. OHIO on JUNE 20 , 1996 .
WARNING- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TIRAL.
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.
GUARANTOR(S): XXXXXX X. XXXXXXXXX, XX
/s/ Xxxxxx Xxxxxxxxx, Xx
------------------------
XXXXXX X. XXXXXXXXX, XX
4
EQUIPMENT, FIXTURES, INVENTORY AND RECEIVABLES
XXX XXXX CUSTOM GOLF, INC.
00 XXXXX XXXXXX
XXXXXX, XXXXXXX XXXXXX XXXX 00000
The undersigned (hereinafter called "Debtor" whether one or more), for
valuable consideration, the receipt t and sufficiency of which are hereby
acknowledged, hereby grants, pledges and assigns to The Huntington National Bank
(hereinafter called "Bank"), a security interest in the following property,
whether Debtor's interest therein as owner, co-owner, lessee, consignee, secured
party or otherwise be now owned or existing or hereafter arising or acquired and
wherever located, together with all substitutions, replacements, additions and
accessions therefor or thereto, all replacement and repair parts therefor, all
negotiable documents relating thereto, all products thereof and all cash and
non-cash proceeds thereof including but not limited to, notes, drafts, checks,
instruments, insurance proceeds, indemnity proceeds, warranty and guaranty
proceeds and proceeds arising in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the following property
by any governmental body, authority, bureau or agency (or any person acting
under color of governmental authority):
(a) All of Debtor's machinery, equipment, tools, furniture, furnishings
and fixtures including, but not limited to, all manufacturing, fabricating,
processing, transporting and packaging equipment, power systems, heating,
cooling and ventilating systems, lighting and communication systems, electric,
gas and water distribution systems, food service systems, fire prevention, alarm
and security systems, laundry systems and computing and data processing
systems (hereinafter sometimes called the "Equipment"), some of which Equipment
may be more fully described in the schedule set forth at the end of this
agreement or in a separate schedule attached hereto;
(b) All of Debtor's inventory including, but not limited to, parts,
supplies, raw materials, work in process, finished goods, materials used or
consumed in Debtor's business, repossessed an returned goods (hereinafter
sometimes called the "Inventory"), some or all of which inventory may be more
fully described in the schedule set forth at the end of this agreement or in a
separate schedule attached hereto;
(c) All of Debtor's accounts, accounts receivable, contract rights,
chattel paper, general intangibles, income tax refunds, instruments, negotiable
documents, notes, drafts, acceptances and other forms of obligations and
receivables arising from or in connection with the operation of Debtor's
business including, but not limited to, those arising from or in connection with
Debtor's sale, lease or other disposition of Inventory (hereinafter sometimes
called the "Receivables"); and
(d) All of Debtor's trade names, trademarks, goodwill, patents, patent a
applications, copyrights, deposit accounts, licenses and franchises (all of the
foregoing hereinafter sometimes called the "Collateral").
The security interest hereby granted is to secure the prompt and full
payment and complete performance of all Obligations of Debtor to Bank. The word
"Obligations" is used in its most comprehensive sense and includes, without
limitation, all indebtedness, debts and liabilities (including principal,
interest, late charges, collection costs, attorneys' fees and the like) of
Debtor to Bank, whether now existing or hereafter arising, either created by
Debtor alone or together with another or others, primary or secondary, secured
or unsecured, absolute or contingent, liquidated or unliquidated, direct or
indirect, whether evidenced by note, draft, application for letter of credit or
otherwise, and any and all renewals of or substitutes therefor. The word
"Obligations" s all include, BUT NOT BE LIMITED TO, all indebtedness owed by
Debtor to Bank by reason of a credit extended or to be extended to Debtor in the
principal amount of $1, 860,315.00, pursuant to one or more instruments of
Indebtedness and related loan documents.
It is Debtor's express intention that this agreement and the continuing
security interest granted hereby, in addition to covering all present
Obligations of Debtor to Bank, shall extend to all future Obligations of Debtor
to Bank, whether or not such Obligations are reduced or entirely extinguished
and thereafter increased or reincurred, whether or not such Obligations are
related to the indebtedness identified above by class, type or kind and whether
or not such Obligations are specifically contemplated by Debtor and Bank as of
the date hereof. The absence of any reference to this agreement in any
documents, instruments or agreements evidencing or relating to any Obligation
secured hereby shall not limit or be construed to limit the scope or
applicability of this agreement.
1. GENERAL COVENANTS. Debtor represents, warrants and covenants as
follows:
a) Except for such claims and interests, if any, shown in the schedule
set forth at the end of this agreement or in any schedule he attached hereto and
signed by both Debtor and Bank and the security interest granted hereby, (i)
Debtor is, or as to Collateral arising or to be acquired after the date hereof,
shall be, the sole owner of the Collateral free from any and all liens, security
interests, encumbrances, claims and interests; and (ii) no security agreement,
financing statement, equivalent security or lien instrument or continuation
statement covering any of the Collateral is on file or of record in any public
office.
(b) Debtor shall not create, permit or suffer to exist, and shall take
such action as is necessary to remove, any claim to or interest in or lien or
encumbrance upon the Collateral, other than those, if any, shown in the schedule
set forth at the tend of this agreement or in any schedule attached hereto and
signed by both Debtor and Bank and the security interest granted hereby, and
shall defend the right, title and interest of Bank in and to the Collateral
against all claims and demands of all persons and entities at any time claiming
the same or any interest therein.
(c) Debtor's principal place of business and chief executive
office/residence is located at the address set forth at the beginning of this
agreement; Debtor has no other place of business/residence, except as shown in
the schedule set forth at the end of this agreement or in any schedule attached
hereto and signed by both Debtor and Bank; and, unless Bank consents in writing
to a change in the location of the Equipment, Inventory or Debtor's records
concerning the Receivables prior to such a change in location, the Equipment,
Inventory and Debtor's records concerning the Receivables shall be kept at that
address or at the locations set forth in such schedules.
(d) At least thirty (30) days prior to the occurrence of any of the
following events, Debtor shall deliver to the loan officer handling
Debtor's Obligations on behalf of Bank written notice of such
impending events: (i) a change in Debtor's principal place of
business, chief executive office and/or residence; (ii) the opening or
closing of any place of business; or (iii) a change in Debtor's name,
identity or corporate structure.
(e) Subject to any limitation stated therein or in connection therewith,
all information furnished by Debtor concerning the Collateral or
otherwise in connection with the Obligations, is or shall be at the
time the same is furnished, accurate, correct and complete in all
material respects.
(f) The Collateral is and shall be used primarily for business purposes.
2. COLLECTION OF RECEIVABLES. Debtor shall, unless otherwise directed by
Bank, collect all of Debtor's Receivables, and whenever Debtor shall receive
payment of any Receivable, Debtor shall hold such payment in trust for Bank and
shall forthwith deliver the same to Bank in the form received by Debtor without
commingling with any funds belonging to Debtor. Debtor authorizes Bank to
indorse the name of Debtor upon any checks or other items received in payment of
any Receivable and to do an and all things necessary in order to reduce the same
to money. All amounts received by Bank representing payment of receivables may
be applied by Bank to the payment of the Obligations in such order or preference
as Bank may determine, or Bank may, at is option, impound all or any portion of
such amounts and retain said amounts as security for the payment of the
Obligations, with the right on the part of debtor, upon approval by Bank, to
obtain the release of all or part of such impounded amounts. Bank may, however,
at any time, without notice, apply all or any part of such impounded amounts as
aforesaid. Debtor also authorizes Bank at any time without notice, to
appropriate and apply any balances, credits, deposits, accounts or money of
Debtor in Bank's possession, custody or control to the payment of any of the
Obligations.
If any of Debtor's Receivables arise out of contracts with or orders from
the United States or any State or any department, a agency or instrumentality
thereof, Debtor shall immediately notify Bank thereof in writing and shall
execute any instrument an take any steps required by Bank in order that all
money due and to become due under such contract or order shall be assigned to
Bank and due notice thereof given to the appropriate governmental agency.
Debtor agrees to execute, deliver, file and record all such notices,
affidavits, assignments, financing statements and other instruments as shall in
the judgment of Bank be necessary or desirable to evidence, validate and perfect
the security interest of Bank in the Receivables. Bank shall have the right to
notify any persons or entities owing any Receivables and to demand and receive
payment, but Bank shall have no duty so to do. Upon request of Bank at any time,
Debtor shall notify such account debtors and shall indicate on all invoices to
such account debtors that the accounts are payable to Bank.
3. INSURANCE. Debtor shall have and maintain insurance at all times with
respect to all Equipment and Inventory (i) insuring against risks of fire
(including so-called extended coverage), explosion, theft, sprinkler leakage and
such other casualties as Bank may designate, and (ii) insuring against liability
for personal injury and property damage relating to the Equipment and Inventory,
containing such terms, in such form, for such periods and written by such
companies as may be satisfactory to Bank, such insurance to be payable to Bank
and Debtor as their interests may appear. All policies of insurance shall
provide for twenty (20) days' written minimum cancellation notice to Bank and,
at request of Bank , shall be delivered to and held by it. Bank may act as
attorney for Debtor in obtaining, adjusting, settling and canceling such
insurance and indorsing any drafts. In the event of failure to provide insurance
as herein provided, Bank may, at its option, provide such insurance and Debtor
shall pay to Bank, upon demand, the cost thereof. Should Debtor fail to pay said
sum to Bank upon demand, interest shall accrue thereon, from the date of demand
until paid in full, at the highest rate set forth in any document or instrument
evidencing any of the Obligations.
4. INSPECTION. Debtor shall at all times keep accurate and complete
records of the Receivables and Debtor shall, at all reasonable times and from
time to time, allow Bank, by or through any of its officers, agents, attorneys
or accountants, to examine, inspect and make extracts from Debtor's books and
records and to arrange for verification of the Receivables directly with account
debtors or by other methods and to examine and inspect the Collateral wherever
located. Debtor shall perform, do, make, execute and deliver all such additional
and further acts, things, deeds, assurances and instruments as Bank may require
to more completely vest in and assure to Bank its rights hereunder and in or to
the Collateral.
5. PRESERVATION AND DISPOSITION OF COLLATERAL.
(a) Except for such claims and interests, if any, shown in the schedule
set forth at the end of this agreement or in any schedule attached hereto and
signed by both Debtor and Bank and the security interest granted hereby, Debtor
shall keep the Collateral free from any and all liens, security interests,
encumbrances, claims and interests. Debtor shall advise Ban promptly, in writing
and in reasonable detail, (i) of any material encumbrance upon or claim asserted
against any of the Collateral; (ii) of any material change in the composition of
the Collateral; and (iii) of the occurrence of any other event that would have a
material effect upon t he aggregate value of the Collateral or upon the security
interest of Bank.
(b) Debtor shall not sell or otherwise dispose of the Collateral; provided,
however, that until default, Debtor may use the Collateral in any lawful manner
not inconsistent with this agreement or with the terms or conditions of any
policy of insurance thereon and may also sell or otherwise dispose of the
Inventory in the ordinary course of Debtor's business. A sale in the ordinary
course of business shall not include the a transfer In partial or total
satisfaction of a debt.
(c) Debtor shall keep the Collateral in good condition and shall not
misuse, abuse, secrete, waste or destroy any of the same.
(d) Debtor shall not use the Collateral in violation of any statute,
ordinance, regulation, rule, decree or order.
(e) Debtor shall pay promptly when due all taxes, assessments, charges or
levies upon the Collateral or in respect to the income or profits therefrom,
except that no such charge need be paid if (i) the validity thereof is being
contested in good faith by appropriate proceedings; (ii) such proceedings do not
involve an danger of sale, forfeiture or loss of any Collateral or any interest
therein; and (iii) such charge is adequately reserve against in accordance with
generally accepted accounting principles.
(f) At its option, Bank may discharge he taxes, liens, security interests
or other encumbrances at any time levied or placed on the Collateral and may pay
for the maintenance and preservation of the Collateral. Debtor agrees to
reimburse Bank upon demand for any payment made or any expense incurred
(including reasonable attorneys' fees) by Bank pursuant to the foregoing
authorization. Should Debtor fail to pay said sum to Bank upon demand, interest
shall accrue thereon, from the date of demand until paid in full, at the highest
rate set forth in any document or instrument evidencing any of the Obligations.
(g) Upon Bank's request at any time or times, Debtor shall assign and
deliver to Bank any Collateral and shall furnish to Bank additional collateral
of value and character satisfactory to Ban as security for the Obligations.
6. EXTENSIONS AND COMPROMISES. With respect to any Collateral held by
Bank as security for the Obligations, Debtor assents to all extensions or
postponements of the time of payment thereof or any other Indulgence In
connection therewith, to each substitution, exchange or release of Collateral,
to the addition or release of any party primarily or secondarily liable, to the
acceptance of partial payments thereon and to the settlement, compromise or
adjustment thereof, all in such manner and at such time or times as Bank may
deem advisable. Bank shall have no duty as to the collection or protection of
Collateral or any income therefrom, nor as to the preservation of rights against
prior parties, nor as to the preservation of any right pertaining thereto,
beyond the safe custody of Collateral in the possession of Bank.
7. FINANCING STATEMENTS. At the request of Bank, Debtor shall join with
Bank in executing one or more financing statements in a form satisfactory to
Bank and shall pay the cost of filing the same in all public offices wherever
filing is deemed by Bank to be necessary or desirable. A carbon, photographic or
other reproduction of this agreement or of a financing statement shall be
sufficient as a financing statement.
8. BANK'S APPOINTMENT AS ATTORNEY-IN-FACT. Debtor hereby irrevocably
constitutes and a points Bank and any officer or agent thereof, with full power
of substitution, as Debtor's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Debtor and in the name
of Debtor or in Bank's own name, from time to time in Bank discretion, for the
purpose of carrying out the terms of this agreement, to take any and all
appropriate action and to execute any and all documents and instruments that may
be necessary or desirable to accomplish the purposes of this agreement and,
without limiting the generality of the foregoing, hereby grants to Bank the
power and right, on behalf of Debtor, without notice to or assent y Debtor:
(a) To execute, file and record all such financing statements,
certificates of title and other certificates of registration and of operation
and similar documents and instruments including, but not limited to, those
relating to aircraft or marine vessels, as Bank may deem necessary or desirable
to protect, perfect and validate Bank's security's therein.
(b) Upon the occurrence and continuance of any event of default under
paragraph 9 hereof, (i) to sign and indorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts and other
documents relating to the Collateral; (ii) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce any
other right in respect of any Collateral; (iii) to defend any suit, action or
proceeding described above and, in connection therewith, to make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though Bank were the absolute owner thereof for all purposes, and
to do, at Bank's option and Debtor's expense, at any time or from time to time,
all acts and things which Bank deems necessary to protect, preserve or realize
upon the Collateral and Bank's security interest therein, in order to effect the
intent of this agreement, all as fully and effectively as Debtor might do.
Debtor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
The powers conferred upon Bank hereunder are solely to protect its
interests in the Collateral and shall not impose any duty upon Bank to exercise
such powers and neither Bank nor any of its officers, directors, employees or
agents shall be responsible to Debtor for any act or failure to act, except for
Bank's own gross negligence or willful misconduct.
9. DEFAULT. If any event of default in the payment or performance of any
of the Obligations secured by this agreement or the performance of any covenant
contained herein shall occur and be continuing; or if any warranty,
representation or statement made or furnished to Bank by Debtor proves to have
been false in any material respect when made or furnished; or if Bank shall for
any reason deem itself insecure as to the prospect of payment of any of the
Obligations:
(a) Bank may, at its option and without notice, declare the unpaid balance
of any or all of the Obligations immediately due and payable and this agreement
and any or all of the Obligations in default.
(b) All payments received by Debtor under or in connection with any of the
Collateral shall be held by Debtor in trust for Bank, shall be segregated from
other funds of Debtor and shall forthwith upon receipt by Debtor be turned over
to Bank in the same form as received by Debtor (duly indorsed by Debtor to Bank,
if required). Any and all such payments so received by Bank (whether from Debtor
or otherwise) may, in the sole discretion of Bank, be held by Bank as collateral
security for, and/or then or at any time thereafter be applied in whole or in
part by Bank against, all or any part of
the Obligations in such order as Bank may elect. Any balance of such payments
held by Bank and remaining after payment in full of all the Obligations shall be
paid over to Debtor or to whomsoever may be lawfully entitled to receive the
same. Nothing set forth in this subparagraph b) shall authorize or be construed
to authorize Debtor to sell or otherwise dispose of any Collateral except as
provided in subparagraph 5(b) hereof.
(c) Bank shall have the rights and remedies of a secured party under this
agreement, under any other instrument or agreement securing, evidencing or
relating to the Obligations and under the law of the State of Ohio. Without
limiting the generality of the foregoing, Bank shall have the right to take
possession of the Collateral and all books and records relating to the
Collateral an for that purpose Bank may enter upon, with or without breaking
into, any premises on which the Collateral or books and relating to the
Collateral or any part thereof may be situated and remove the same therefrom.
Debtor expressly agrees that Bank, without demand of performance or other
demand, advertisement or notice of any kind (except the notices specified below
of time and place of public sale or disposition or time after which a private
sale or disposition is to occur) to or upon Debtor or any other person or entity
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, lease, assign,
give option or options to purchase or sell or otherwise dispose of and deliver
the Collateral (or contract to do so), or any part thereof, in one or more
parcels at public or private sale or sales, at any of Bank's offices or
elsewhere at such prices as Bank may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. Bank shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in Debtor. Debtor
further agrees, at Bank's request, to assemble the Collateral and to make it
available to Bank at such places as Bank may reasonably select, whether at
Debtor's premises or elsewhere. Debtor further agrees to allow Bank to use or
occupy Debtor's premises, without charge, for the purpose of effecting Bank's
remedies in respect of the Collateral. Bank shall apply the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any or all of the
Collateral or in any way relating to the rights of Bank hereunder, including
reasonable attorneys' fees and legal expenses, to the payment in whole or in
part of the 0bligations, in such order as Bank may elect, and only after so
paying over such net proceeds and after payment by Bank of any other amount
required by any provision of law, including Ohio Revised Code Section 1
309.47(A)3), need Bank account for the surplus, if any, to Debtor. To the extent
permitted by applicable law, Debtor waives all claims, damages and demands
against Bank arising out of the repossession, retention, sale or disposition of
the Collateral. Debtor agrees that Bank need not give more than five (5) days'
notice (which notification shall be deemed given when mailed, postage prepaid,
addressed to Debtor at Debtor's address set forth at the beginning of this
agreement, or when telecopied or telegraphed to that address or when telephoned
or otherwise communicate orally to Debtor or any agent of Debtor at that
address) of the time and place of any public sale or of the time after which a
private sale may take place and that such notice is reasonable notification of
such matters. Debtor shall remain liable or any deficiency if the proceeds of
any sale or disposition of the Collateral are insufficient to pay all amounts to
which Bank is entitled, Debtor shall also be liable for the costs of collecting
any of the Obligations or otherwise enforcing the terms thereof or of this
agreement including reasonable attorneys' fees.
10. GENERAL. Any provision of this 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. Bank shall not be deemed to have waived any of its rights
hereunder or under any other agreement, instrument or paper signed by Debtor
unless such waiver be in writing and signed by Bank. No delay or omission on the
part of Bank in exercising any right shall operate as a waiver of such right or
any other right. All of Bank's rights and remedies, whether evidenced hereby or
by any other agreement, instrument or paper, shall be cumulative and may be
exercised singularly or concurrently. Any written demand upon or written notice
to Debtor shall be effective when deposited In the mails addressed to Debtor at
the address shown at the beginning of this agreement. This agreement and all
rights and obligations hereunder including matters of construction, validity and
performance, shall be governed by the law of the State of Ohio. The provisions
hereto shall, as the case may require, bind or inure to the benefit of, the
respective heirs, successors, legal representatives and assigns of Debtor and
Bank.
Schedule of Additional Places of Business
No. and Street City County State
IN WITNESS WHEREOF, Debtor has signed this agreement on June 20, 1996.
-------------
DEBTOR(S)*: DYNACRAFT GOLF PRODUCTS, INC.
/s/ Xxxxxx Xxxxxxxxx, Xx.
-------------------------
BY: XXXXXX XXXXXXXXX, XX. PRESIDENT
------------------------------------
EQUIPMENT, FIXTURES, INVENTORY AND RECEIVABLES
DYNACRAFT GOLF PRODUCTS, INC.
00 XXXXX XXXXXX
XXXXXX , XXXXXXX XXXXXX XXXX 00000
The undersigned (hereinafter called "Debtor" whether one or more), for
valuable consideration, the receipt t and sufficiency of which are hereby
acknowledged, hereby grants, pledges and assigns to The Huntington National Bank
(hereinafter called "Bank"), a security interest in the following property,
whether Debtor's interest therein as owner, co-owner, lessee, consignee, secured
party or otherwise be now owned or existing or hereafter arising or acquired and
wherever located, together with all substitutions, replacements, additions and
accessions therefor or thereto, all replacement and repair parts therefor, all
negotiable documents relating thereto, all products thereof and all cash and
non-cash proceeds thereof including but not limited to, notes, drafts, checks,
instruments, insurance proceeds, indemnity proceeds, warranty and guaranty
proceeds and proceeds arising in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the following property
by any governmental body, authority, bureau or agency (or any person acting
under color of governmental authority):
(a) All of Debtor's machinery, equipment, tools, furniture, furnishings
and fixtures including, but not limited to, all manufacturing, fabricating,
processing, transporting and packaging equipment, power systems, heating,
cooling and ventilating systems, lighting and communication systems, electric,
gas and water distribution systems, food service systems, fire prevention, alarm
and security systems, laundry systems and computing and data processing
systems (hereinafter sometimes called the "Equipment"), some of which Equipment
may be more fully described in the schedule set forth at the end of this
agreement or in a separate schedule attached hereto;
(b) All of Debtor's inventory including, but not limited to, parts,
supplies, raw materials, work in process, finished goods, materials used or
consumed in Debtor's business, repossessed an returned goods (hereinafter
sometimes called the "Inventory"), some or all of which inventory may be more
fully described in the schedule set forth at the end of this agreement or in a
separate schedule attached hereto;
(c) All of Debtor's accounts, accounts receivable, contract rights,
chattel paper, general intangibles, income tax refunds, instruments, negotiable
documents, notes, drafts, acceptances and other forms of obligations and
receivables arising from or in connection with the operation of Debtor's
business including, but not limited to, those arising from or in connection with
Debtor's sale, lease or other disposition of Inventory (hereinafter sometimes
called the "Receivables"); and
(d) All of Debtor's trade names, trademarks, goodwill, patents, patent a
applications, copyrights, deposit accounts, licenses and franchises (all of the
foregoing hereinafter sometimes called the "Collateral").
The security interest hereby granted is to secure the prompt and full
payment and complete performance of all Obligations of Debtor to Bank. The word
"Obligations" is used in its most comprehensive sense and includes, without
limitation, all indebtedness, debts and liabilities (including principal,
interest, late charges, collection costs, attorneys' fees and the like) of
Debtor to Bank, whether now existing or hereafter arising, either created by
Debtor alone or together with another or others, primary or secondary, secured
or unsecured, absolute or contingent, liquidated or unliquidated, direct or
indirect, whether evidenced by note, draft, application for letter of credit or
otherwise, and any and all renewals of or substitutes therefor. The word
"Obligations" s all include, BUT NOT BE LIMITED TO, all indebtedness owed by
Debtor to Bank by reason of a credit extended or to be extended to Debtor in the
principal amount of $1, 860,315.00, pursuant to one or more instruments of
Indebtedness and related loan documents.
It is Debtor's express intention that this agreement and the continuing
security interest granted hereby, in addition to covering all present
Obligations of Debtor to Bank, shall extend to all future Obligations of Debtor
to Bank, whether or not such Obligations are reduced or entirely extinguished
and thereafter increased or reincurred, whether or not such Obligations are
related to the indebtedness identified above by class, type or kind and whether
or not such Obligations are specifically contemplated by Debtor and Bank as of
the date hereof. The absence of any reference to this agreement in any
documents, instruments or agreements evidencing or relating to any Obligation
secured hereby shall not limit or be construed to limit the scope or
applicability of this agreement.
1. GENERAL COVENANTS. Debtor represents, warrants and covenants as follows:
a) Except for such claims and interests, if any, shown in the schedule
set forth at the end of this agreement or in any schedule he attached hereto and
signed by both Debtor and Bank and the security interest granted hereby, (i)
Debtor is, or as to Collateral arising or to be acquired after the date hereof,
shall be, the sole owner of the Collateral free from any and all liens, security
interests, encumbrances, claims and interests; and (ii) no security agreement,
financing statement, equivalent security or lien instrument or continuation
statement covering any of the Collateral is on file or of record in any public
office.
(b) Debtor shall not create, permit or suffer to exist, and shall take such
action as is necessary to remove, any claim to or interest in or lien or
encumbrance upon the Collateral, other than those, if any, shown in the schedule
set forth at the tend of this agreement or in any schedule attached hereto and
signed by both Debtor and Bank and the security interest granted hereby, and
shall defend the right, title and interest of Bank in and to the Collateral
against all claims and demands of all persons and entities at any time claiming
the same or any interest therein.
(c) Debtor's principal place of business and chief executive
office/residence is located at the address set forth at the beginning of this
agreement; Debtor has no other place of business/residence, except as shown in
the schedule set forth at the end of this agreement or in any schedule attached
hereto and signed by both Debtor and Bank; and, unless Bank consents in writing
to a change in the location of the Equipment, Inventory or Debtor's records
concerning the Receivables prior to such a change in location, the Equipment,
Inventory and Debtor's records concerning the Receivables shall be kept at that
address or at the locations set forth in such schedules.
(d) At least thirty (30) days prior to the occurrence of any of the
following events, Debtor shall deliver to the loan officer handling
Debtor's Obligations on behalf of Bank written notice of such
impending events: (i) a change in Debtor's principal place of
business, chief executive office and/or residence; (ii) the opening or
closing of any place of business; or (iii) a change in Debtor's name,
identity or corporate structure.
(e) Subject to any limitation stated therein or in connection therewith,
all information furnished by Debtor concerning the Collateral or
otherwise in connection with the Obligations, is or shall be at the
time the same is furnished, accurate, correct and complete in all
material respects.
(f) The Collateral is and shall be used primarily for business purposes.
2. COLLECTION OF RECEIVABLES. Debtor shall, unless otherwise directed by
Bank, collect all of Debtor's Receivables, and whenever Debtor shall receive
payment of any Receivable, Debtor shall hold such payment in trust for Bank and
shall forthwith deliver the same to Bank in the form received by Debtor without
commingling with any funds belonging to Debtor. Debtor authorizes Bank to
indorse the name of Debtor upon any checks or other items received in payment of
any Receivable and to do an and all things necessary in order to reduce the same
to money. All amounts received by Bank representing payment of receivables may
be applied by Bank to the payment of the Obligations in such order or preference
as Bank may determine, or Bank may, at is option, impound all or any portion of
such amounts and retain said amounts as security for the payment of the
Obligations, with the right on the part of debtor, upon approval by Bank, to
obtain the release of all or part of such impounded amounts. Bank may, however,
at any time, without notice, apply all or any part of such impounded amounts as
aforesaid. Debtor also authorizes Bank at any time without notice, to
appropriate and apply any balances, credits, deposits, accounts or money of
Debtor in Bank's possession, custody or control to the payment of any of the
Obligations.
If any of Debtor's Receivables arise out of contracts with or orders from
the United States or any State or any department, a agency or instrumentality
thereof, Debtor shall immediately notify Bank thereof in writing and shall
execute any instrument an take any steps required by Bank in order that all
money due and to become due under such contract or order shall be assigned to
Bank and due notice thereof given to the appropriate governmental agency.
Debtor agrees to execute, deliver, file and record all such notices,
affidavits, assignments, financing statements and other instruments as shall in
the judgment of Bank be necessary or desirable to evidence, validate and perfect
the security interest of Bank in the Receivables. Bank shall have the right to
notify any persons or entities owing any Receivables and to demand and receive
payment, but Bank shall have no duty so to do. Upon request of Bank at any time,
Debtor shall notify such account debtors and shall indicate on all invoices to
such account debtors that the accounts are payable to Bank.
3. INSURANCE. Debtor shall have and maintain insurance at all times with
respect to all Equipment and Inventory (i) insuring against risks of fire
(including so-called extended coverage), explosion, theft, sprinkler leakage and
such other casualties as Bank may designate, and (ii) insuring against liability
for personal injury and property damage relating to the Equipment and Inventory,
containing such terms, in such form, for such periods and written by such
companies as may be satisfactory to Bank, such insurance to be payable to Bank
and Debtor as their interests may appear. All policies of insurance shall
provide for twenty (20) days' written minimum cancellation notice to Bank and,
at request of Bank , shall be delivered to and held by it. Bank may act as
attorney for Debtor in obtaining, adjusting, settling and canceling such
insurance and indorsing any drafts. In the event of failure to provide insurance
as herein provided, Bank may, at its option, provide such insurance and Debtor
shall pay to Bank, upon demand, the cost thereof. Should Debtor fail to pay said
sum to Bank upon demand, interest shall accrue thereon, from the date of demand
until paid in full, at the highest rate set forth in any document or instrument
evidencing any of the Obligations.
4. INSPECTION. Debtor shall at all times keep accurate and complete
records of the Receivables and Debtor shall, at all reasonable times and from
time to time, allow Bank, by or through any of its officers, agents, attorneys
or accountants, to examine, inspect and make extracts from Debtor's books and
records and to arrange for verification of the Receivables directly with account
debtors or by other methods and to examine and inspect the Collateral wherever
located. Debtor shall perform, do, make, execute and deliver all such additional
and further acts, things, deeds, assurances and instruments as Bank may require
to more completely vest in and assure to Bank its rights hereunder and in or to
the Collateral.
5. PRESERVATION AND DISPOSITION OF COLLATERAL.
(a) Except for such claims and interests, if any, shown in the schedule
set forth at the end of this agreement or in any schedule attached hereto and
signed by both Debtor and Bank and the security interest granted hereby, Debtor
shall keep the Collateral free from any and all liens, security interests,
encumbrances, claims and interests. Debtor shall advise Ban promptly, in writing
and in reasonable detail, (i) of any material encumbrance upon or claim asserted
against any of the Collateral; (ii) of any material change in the composition of
the Collateral; and (iii) of the occurrence of any other event that would have a
material effect upon t he aggregate value of the Collateral or upon the security
interest of Bank.
(b) Debtor shall not sell or otherwise dispose of the Collateral; provided,
however, that until default, Debtor may use the Collateral in any lawful manner
not inconsistent with this agreement or with the terms or conditions of any
policy of insurance thereon and may also sell or otherwise dispose of the
Inventory in the ordinary course of Debtor's business. A sale in the ordinary
course of business shall not include the a transfer In partial or total
satisfaction of a debt.
(c) Debtor shall keep the Collateral in good condition and shall not
misuse, abuse, secrete, waste or destroy any of the same.
(d) Debtor shall not use the Collateral in violation of any statute,
ordinance, regulation, rule, decree or order.
(e) Debtor shall pay promptly when due all taxes, assessments, charges or
levies upon the Collateral or in respect to the income or profits therefrom,
except that no such charge need be paid if (i) the validity thereof is being
contested in good faith by appropriate proceedings; (ii) such proceedings do not
involve an danger of sale, forfeiture or loss of any Collateral or any interest
therein; and (iii) such charge is adequately reserve against in accordance with
generally accepted accounting principles.
(f) At its option, Bank may discharge he taxes, liens, security interests
or other encumbrances at any time levied or placed on the Collateral and may pay
for the maintenance and preservation of the Collateral. Debtor agrees to
reimburse Bank upon demand for any payment made or any expense incurred
(including reasonable attorneys' fees) by Bank pursuant to the foregoing
authorization. Should Debtor fail to pay said sum to Bank upon demand, interest
shall accrue thereon, from the date of demand until paid in full, at the highest
rate set forth in any document or instrument evidencing any of the Obligations.
(g) Upon Bank's request at any time or times, Debtor shall assign and
deliver to Bank any Collateral and shall furnish to Bank additional collateral
of value and character satisfactory to Ban as security for the Obligations.
6. EXTENSIONS AND COMPROMISES. With respect to any Collateral held by
Bank as security for the Obligations, Debtor assents to all extensions or
postponements of the time of payment thereof or any other Indulgence In
connection therewith, to each substitution, exchange or release of Collateral,
to the addition or release of any party primarily or secondarily liable, to the
acceptance of partial payments thereon and to the settlement, compromise or
adjustment thereof, all in such manner and at such time or times as Bank may
deem advisable. Bank shall have no duty as to the collection or protection of
Collateral or any income therefrom, nor as to the preservation of rights against
prior parties, nor as to the preservation of any right pertaining thereto,
beyond the safe custody of Collateral in the possession of Bank.
7. FINANCING STATEMENTS. At the request of Bank, Debtor shall join with
Bank in executing one or more financing statements in a form satisfactory to
Bank and shall pay the cost of filing the same in all public offices wherever
filing is deemed by Bank to be necessary or desirable. A carbon, photographic or
other reproduction of this agreement or of a financing statement shall be
sufficient as a financing statement.
8. BANK'S APPOINTMENT AS ATTORNEY-IN-FACT. Debtor hereby irrevocably
constitutes and a points Bank and any officer or agent thereof, with full power
of substitution, as Debtor's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Debtor and in the name
of Debtor or in Bank's own name, from time to time in Bank discretion, for the
purpose of carrying out the terms of this agreement, to take any and all
appropriate action and to execute any and all documents and instruments that may
be necessary or desirable to accomplish the purposes of this agreement and,
without limiting the generality of the foregoing, hereby grants to Bank the
power and right, on behalf of Debtor, without notice to or assent y Debtor:
(a) To execute, file and record all such financing statements,
certificates of title and other certificates of registration and of operation
and similar documents and instruments including, but not limited to, those
relating to aircraft or marine vessels, as Bank may deem necessary or desirable
to protect, perfect and validate Bank's security's therein.
(b) Upon the occurrence and continuance of any event of default under
paragraph 9 hereof, (i) to sign and indorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts and other
documents relating to the Collateral; (ii) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce any
other right in respect of any Collateral; (iii) to defend any suit, action or
proceeding described above and, in connection therewith, to make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though Bank were the absolute owner thereof for all purposes, and
to do, at Bank's option and Debtor's expense, at any time or from time to time,
all acts and things which Bank deems necessary to protect, preserve or realize
upon the Collateral and Bank's security interest therein, in order to effect the
intent of this agreement, all as fully and effectively as Debtor might do.
Debtor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
The powers conferred upon Bank hereunder are solely to protect its
interests in the Collateral and shall not impose any duty upon Bank to exercise
such powers and neither Bank nor any of its officers, directors, employees or
agents shall be responsible to Debtor for any act or failure to act, except for
Bank's own gross negligence or willful misconduct.
9. DEFAULT. If any event of default in the payment or performance of any
of the Obligations secured by this agreement or the performance of any covenant
contained herein shall occur and be continuing; or if any warranty,
representation or statement made or furnished to Bank by Debtor proves to have
been false in any material respect when made or furnished; or if Bank shall for
any reason deem itself insecure as to the prospect of payment of any of the
Obligations:
(a) Bank may, at its option and without notice, declare the unpaid balance
of any or all of the Obligations immediately due and payable and this agreement
and any or all of the Obligations in default.
(b) All payments received by Debtor under or in connection with any of the
Collateral shall be held by Debtor in trust for Bank, shall be segregated from
other funds of Debtor and shall forthwith upon receipt by Debtor be turned over
to Bank in the same form as received by Debtor (duly indorsed by Debtor to Bank,
if required). Any and all such payments so received by Bank (whether from Debtor
or otherwise) may, in the sole discretion of Bank, be held by Bank as collateral
security for, and/or then or at any time thereafter be applied in whole or in
part by Bank against, all or any part of
the Obligations in such order as Bank may elect. Any balance of such payments
held by Bank and remaining after payment in full of all the Obligations shall be
paid over to Debtor or to whomsoever may be lawfully entitled to receive the
same. Nothing set forth in this subparagraph b) shall authorize or be construed
to authorize Debtor to sell or otherwise dispose of any Collateral except as
provided in subparagraph 5(b) hereof.
(c) Bank shall have the rights and remedies of a secured party under this
agreement, under any other instrument or agreement securing, evidencing or
relating to the Obligations and under the law of the State of Ohio. Without
limiting the generality of the foregoing, Bank shall have the right to take
possession of the Collateral and all books and records relating to the
Collateral an for that purpose Bank may enter upon, with or without breaking
into, any premises on which the Collateral or books and relating to the
Collateral or any part thereof may be situated and remove the same therefrom.
Debtor expressly agrees that Bank, without demand of performance or other
demand, advertisement or notice of any kind (except the notices specified below
of time and place of public sale or disposition or time after which a private
sale or disposition is to occur) to or upon Debtor or any other person or entity
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, lease, assign,
give option or options to purchase or sell or otherwise dispose of and deliver
the Collateral (or contract to do so), or any part thereof, in one or more
parcels at public or private sale or sales, at any of Bank's offices or
elsewhere at such prices as Bank may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. Bank shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in Debtor. Debtor
further agrees, at Bank's request, to assemble the Collateral and to make it
available to Bank at such places as Bank may reasonably select, whether at
Debtor's premises or elsewhere. Debtor further agrees to allow Bank to use or
occupy Debtor's premises, without charge, for the purpose of effecting Bank's
remedies in respect of the Collateral. Bank shall apply the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any or all of the
Collateral or in any way relating to the rights of Bank hereunder, including
reasonable attorneys' fees and legal expenses, to the payment in whole or in
part of the 0bligations, in such order as Bank may elect, and only after so
paying over such net proceeds and after payment by Bank of any other amount
required by any provision of law, including Ohio Revised Code Section 1
309.47(A)3), need Bank account for the surplus, if any, to Debtor. To the extent
permitted by applicable law, Debtor waives all claims, damages and demands
against Bank arising out of the repossession, retention, sale or disposition of
the Collateral. Debtor agrees that Bank need not give more than five (5) days'
notice (which notification shall be deemed given when mailed, postage prepaid,
addressed to Debtor at Debtor's address set forth at the beginning of this
agreement, or when telecopied or telegraphed to that address or when telephoned
or otherwise communicate orally to Debtor or any agent of Debtor at that
address) of the time and place of any public sale or of the time after which a
private sale may take place and that such notice is reasonable notification of
such matters. Debtor shall remain liable or any deficiency if the proceeds of
any sale or disposition of the Collateral are insufficient to pay all amounts to
which Bank is entitled, Debtor shall also be liable for the costs of collecting
any of the Obligations or otherwise enforcing the terms thereof or of this
agreement including reasonable attorneys' fees.
10. GENERAL. Any provision of this 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. Bank shall not be deemed to have waived any of its rights
hereunder or under any other agreement, instrument or paper signed by Debtor
unless such waiver be in writing and signed by Bank. No delay or omission on the
part of Bank in exercising any right shall operate as a waiver of such right or
any other right. All of Bank's rights and remedies, whether evidenced hereby or
by any other agreement, instrument or paper, shall be cumulative and may be
exercised singularly or concurrently. Any written demand upon or written notice
to Debtor shall be effective when deposited In the mails addressed to Debtor at
the address shown at the beginning of this agreement. This agreement and all
rights and obligations hereunder including matters of construction, validity and
performance, shall be governed by the law of the State of Ohio. The provisions
hereto shall, as the case may require, bind or inure to the benefit of, the
respective heirs, successors, legal representatives and assigns of Debtor and
Bank.
Schedule of Additional Places of Business
No. and Street City County State
00 X. Xxxx Xxxxxx Xxxxxx Xxxxxxx Xxxx
----------------------------------------------------------------------
IN WITNESS WHEREOF, Debtor has signed this agreement on June 20, 1996.
-------------
DEBTOR(S)*: XXX XXXX CUSTOM GOLF, INC.
/s/ Xxxxx Xxxxxxxxx
-------------------
BY: XXXXX XXXXXXXXX, PRESIDENT
------------------------------
SUBORDINATION AGREEMENT
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which
are hereby acknowledged, and in consideration of the loans, advances,
discounts, renewals or extensions now or hereafter made by The
Huntington National Bank, its legal representatives, successors and assigns
(hereinafter referred to as "Senior Creditor"), directly or indirectly, to or
for the benefit of DYNACRAFT GOLF PRODUCTS INC. (hereinafter referred to as
"Debtor"), the undersigned, on behalf of the undersigned and the undersigned's
legal representatives, heirs, successors and assigns (hereinafter referred
to as "Subordinated Creditor"), agrees with Senior Creditor as follows:
1. Subordinated Creditor represents to Senior Creditor that Debtor is
indebted to Subordinated Creditor in the amount and manner set forth in
Schedule A to this agreement. Subordinated Creditor further represents
that said indebtedness has not heretofore been subordinated in favor of
or sold, assigned, pledged or otherwise transferred or encumbered, in
whole or in part, to any other person, firm or corporation, and that
Subordinated Creditor holds no security therefor, except as may be set forth in
Schedule B to this agreement.
2. Subordinated Creditor hereby subordinates all present and future
indebtedness of Debtor to Subordinated Creditor (hereinafter referred to as the
"Subordinated Debt") to any and all indebtedness now or hereafter owing
by Debtor to Senior Creditor (hereinafter referred to as the "Senior
Debt") to the extent and in the manner hereinafter set forth, and
Subordinated Creditor agrees not to demand, accept or receive, directly or
indirectly, any payment of principal, premium or interest upon account of the
Subordinated Debt, or any collateral therefor, in contravention hereof:
(a) Payments of principal of or premium, if any, or interest on the
Subordinated Debt, shall not be made by Debtor, directly or indirectly, nor
accepted by Subordinated Creditor until such time as the Senior Debt, including
principal, premium, if any, and interest, have been paid in full, except in
accordance with the terms set forth in Schedule C to this agreement;
(b) In the event of any default or event of default as defined or provided
in any loan or other agreement of Debtor with Senior Creditor, and during the
continuance thereof, no amount shall be paid by Debtor or accepted by
Subordinated Creditor, whether in cash, property, securities or otherwise, in
respect of the principal of or premium, if any, or interest on the Subordinated
Debt; and
(c) In the event of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to Debtor or to its creditors, as such, or to
its properties, or in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of Debtor, whether or not involving insolvency
or bankruptcy, then Senior Creditor shall be entitled to receive payment
in full of all principal of and premium, if any, and interest on the Senior
Debt before Subordinated Creditor is entitled to receive any payment on account
of principal of or premium, if any, or interest on the Subordinated Debt, and to
that end (but subject to the power of a court of competent jurisdiction to make
other equitable provisions reflecting the rights conferred hereby upon the
Senior Debt and Senior Creditor with respect to the Subordinated Debt and
Subordinated Creditor by a lawful plan of reorganization under applicable
bankruptcy law) Senior Creditor shall be entitled to receive for
application in payment thereof any payment or distribution of any kind or
character, whether in cash or property or securities, which may be payable or
deliverable in any such proceedings in respect of the Subordinated Debt, except
securities which are subordinate and junior in right of payment to the payment
of all the Senior Debt then outstanding.
3. Subordinated Creditor shall cause all promissory notes and other
instruments and agreements evidencing any Subordinated Debt to bear an
appropriate legend referring to this agreement and reciting that the payment of
the Subordinated Debt evidenced thereby is subject to the provisions hereof. As
security for the Senior Debt and in order to effectuate the foregoing
subordination, Subordinated Creditor hereby transfers and assigns to Senior
Creditor all claims or demands of Subordinated Creditor against Debtor and all
mortgages, liens, security interests and other property held by Subordinated
Creditor as security for the payment thereof, with full right on the part of
Senior Creditor, in its own name or in its name as attorney-in-fact for
Subordinated Creditor, to enforce and collect said claims by suit, proof of
debt in bankruptcy or other liquidation, reorganization or insolvency
proceedings or otherwise. If requested by Senior Creditor, Subordinated
Creditor will promptly deliver or cause to be delivered to Senior Creditor all
promissory notes and other instruments and agreements evidencing the
Subordinated Debt, all mortgages, security agreements, instruments and other
writings and property evidencing or constituting the security, and all records,
documents and information necessary or convenient to permit Senior Creditor to
enforce and collect said claims.
1
4. If, prior to the satisfaction of all the Senior Debt, Subordinated
Creditor receives from any source whatsoever including, but not limited to,
receipt resulting from the exercise by any court of its legal or equitable
powers, any payment with respect to any of the Subordinated Debt or any
security for or on account of the Subordinated Debt, Subordinated Creditor
shall forthwith deliver such payment or security to Senior Creditor, in
precisely the form received, except for Subordinated Creditor's indorsement when
necessary, for application on account of the Senior Debt and until so delivered,
such payment or security shall be held in trust by Subordinated Creditor as the
property of Senior Creditor. In the event of the failure of any Subordinated
Creditor to indorse any instrument for the payment of money so received by such
Subordinated Creditor, Senior Creditor is irrevocably appointed attorney for
such Subordinated Creditor with full power to make such indorsement and with
full power of substitution. The provisions of this Section 4 are not intended
to and shall not be construed to constitute consent by Senior Creditor to the
acceptance of payments by Subordinated Creditor.
5. Subordinated Creditor, and Subordinated Creditor's legal
representatives, heirs, successors and assigns, agree for the benefit of the
holders of the Senior Debt that, so long as any part of the Senior Debt remains
outstanding, Subordinated Creditor will not take any action to accelerate or
demand the payment of the security or guaranty given by Debtor to secure or
guarantee the Subordinated Debt prior to the earlier of (i) 180 days after
written notice having been given to Senior Creditor by Subordinated Creditor of
any default by Debtor in the payment of any scheduled installment of principal
of or premium, if any, or interest on the Subordinated Debt which is not
thereafter cured or waived by Subordinated Creditor prior to taking such action,
or (ii) the acceleration of any Senior Debt by Senior Creditor. The foregoing
provisions of this Section 5 are solely for the purpose of defining the relative
rights of the holders of the Senior Debt on the one hand and the holders of the
Subordinated Debt on the other and shall not limit or otherwise affect any
rights which the holders of the Subordinated Debt may have against Debtor under
the terms of any agreement or instrument executed in connection with such
Subordinated Debt.
6. In order to carry out the terms and intent of this agreement more
effectively, Subordinated Creditor will do all acts and execute all further
instruments deemed by Senior Creditor to be necessary or convenient to preserve
for Senior Creditor the benefits of this agreement.
7. No action which Senior Creditor, or Debtor with the consent of Senior
Creditor, may take or refrain from taking with respect to any Senior Debt, or
any note or notes representing the same, or any collateral therefor,
including a waiver or release thereof, or any agreement or agreements
(including guaranties) in connection therewith, shall affect this agreement or
the obligations of Subordinated Creditor hereunder.
8. No waiver shall be deemed to be made by Senior Creditor of any of its
rights hereunder unless the same shall be in writing and then only with respect
to the specific instance involved, and shall in no way impair or offset the
rights of Senior Creditor or the obligations of Subordinated Creditor in any
other respect or at any other time.
9. This agreement shall be binding upon Subordinated Creditor and Debtor
and their respective legal representatives, heirs, successors and assigns and
shall inure to the benefit of Senior Creditor and its respective legal
representatives heirs, successors and assigns (including without limitation
any transferee of any Senior Debt). References herein to the binding effect
of this agreement shall not be deemed to constitute consent or acquiescence in
the sale, assignment, pledge or other transfer or encumbrance of the
Subordinated Debt by Subordinated Creditor, that Subordinated Debt having been
fully transferred and assigned to Senior Creditor as security in Section 3 of
this agreement. This agreement shall be construed and enforced in accordance
with and governed by the law of the State of Ohio.
SCHEDULE A
Schedule of Subordinated Debt
[PROMISSORY NOTE DATED JUNE 21, 1996 IN THE AMOUNT OF $250,000 FROM
DYNACRAFT GOLF PRODUCTS, INC. TO XXXXXX XXXXXXXXX,. SR.]
SCHEDULE B
Description of Security Held by Subordinated Creditor
2
PROMISSORY NOTE
Amount: $250,000.00 Date: June21, 1996
FOR VALUE RECEIVED, the undersigned promises to pay to the order of Xxxxxx
Xxxxxxxxx, Xx. the sum of $250,000.00 with interest from the date hereof on the
unpaid balance of principal at 9.25% per annum. Payments under this note shall
be made as follows:
The Principal Sum shall be due and payable in 60 consecutive monthly
installments, beginning on July 1, 1996. Each installment of the Principal Sum
shall be in the amount of $2,976.19 except the final installment shall be for
the unpaid balance. Accrued interest shall be due and payable on the same dates
as installments of the Principal Sum. All payments shall be first be applied to
accrued interest and then to the unpaid balance of principal. There shall be no
penalty for prepayment.
In the event of non-payment of any installment hereunder, when due, the
entire balance of principal, then remaining unpaid, with accrued interest
thereon, shall at once become due and payable at the option of the holder
hereof, with notice or demand being given to the maker hereof in writing.
Payment of this note is subordinated to the payment Of all obligations of
the maker hereof to the Huntington National Bank pursuant to the terms of
subordination agreement dated June 21, 1996.
Dynacraft Golf Products, Inc.
By /s/ Xxxxxx Xxxxxxxxx, Xx.
-------------------------
Its CEO
3
SCHEDULE C
Permitted Payments on Subordinated Debt
Principal and Interest Monthly
IN WITNESS WHEREOF, Subordinated Creditor has executed this agreement on
JUNE 20, 1996
SUBORDINATED CREDITOR: XXXXXX X. XXXXXXXXX, XX.
/s/Xxxxxx Xxxxxxxxx, Xx.
------------------------
XXXXXX X. XXXXXXXXX,XX.
Debtor hereby acknowledges notice of the within and foregoing Subordination
Agreement and agrees to be bound by all of the terms, Provisions and
conditions hereof.
DEBTOR: DYNACRAFT GOLF PRODUCTS, INC.
/s/ Xxxxxx Xxxxxxxxx, Xx.
-------------------------
BY: XXXXXX X. XXXXXXXXX, XX., PRESIDENT
4
SUBORDINATION AGREEMENT
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which
are hereby acknowledged, and in consideration of the loans, advances,
discounts, renewals or extensions now or hereafter made by The
Huntington National Bank, its legal representatives, successors and assigns
(hereinafter referred to as "Senior Creditor"), directly or indirectly, to or
for the benefit of DYNACRAFT GOLF PRODUCTS INC. (hereinafter referred to as
"Debtor"), the undersigned, on behalf of the undersigned and the undersigned's
legal representatives, heirs, successors and assigns (hereinafter referred
to as "Subordinated Creditor"), agrees with Senior Creditor as follows:
1. Subordinated Creditor represents to Senior Creditor that Debtor is
indebted to Subordinated Creditor in the amount and manner set forth in
Schedule A to this agreement. Subordinated Creditor further represents
that said indebtedness has not heretofore been subordinated in favor of
or sold, assigned, pledged or otherwise transferred or encumbered, in
whole or in part, to any other person, firm or corporation, and that
Subordinated Creditor holds no security therefor, except as may be set forth in
Schedule B to this agreement.
2. Subordinated Creditor hereby subordinates all present and future
indebtedness of Debtor to Subordinated Creditor (hereinafter referred to as the
"Subordinated Debt") to any and all indebtedness now or hereafter owing
by Debtor to Senior Creditor (hereinafter referred to as the "Senior
Debt") to the extent and in the manner hereinafter set forth, and
Subordinated Creditor agrees not to demand, accept or receive, directly or
indirectly, any payment of principal, premium or interest upon account of the
Subordinated Debt, or any collateral therefor, in contravention hereof:
(a) Payments of principal of or premium, if any, or interest on the
Subordinated Debt, shall not be made by Debtor, directly or indirectly, nor
accepted by Subordinated Creditor until such time as the Senior Debt, including
principal, premium, if any, and interest, have been paid in full, except in
accordance with the terms set forth in Schedule C to this agreement;
(b) In the event of any default or event of default as defined or provided
in any loan or other agreement of Debtor with Senior Creditor, and during the
continuance thereof, no amount shall be paid by Debtor or accepted by
Subordinated Creditor, whether in cash, property, securities or otherwise, in
respect of the principal of or premium, if any, or interest on the Subordinated
Debt; and
(c) In the event of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to Debtor or to its creditors, as such, or to
its properties, or in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of Debtor, whether or not involving insolvency
or bankruptcy, then Senior Creditor shall be entitled to receive payment
in full of all principal of and premium, if any, and interest on the Senior
Debt before Subordinated Creditor is entitled to receive any payment on account
of principal of or premium, if any, or interest on the Subordinated Debt, and to
that end (but subject to the power of a court of competent jurisdiction to make
other equitable provisions reflecting the rights conferred hereby upon the
Senior Debt and Senior Creditor with respect to the Subordinated Debt and
Subordinated Creditor by a lawful plan of reorganization under applicable
bankruptcy law) Senior Creditor shall be entitled to receive for
application in payment thereof any payment or distribution of any kind or
character, whether in cash or property or securities, which may be payable or
deliverable in any such proceedings in respect of the Subordinated Debt, except
securities which are subordinate and junior in right of payment to the payment
of all the Senior Debt then outstanding.
3. Subordinated Creditor shall cause all promissory notes and other
instruments and agreements evidencing any Subordinated Debt to bear an
appropriate legend referring to this agreement and reciting that the payment of
the Subordinated Debt evidenced thereby is subject to the provisions hereof. As
security for the Senior Debt and in order to effectuate the foregoing
subordination, Subordinated Creditor hereby transfers and assigns to Senior
Creditor all claims or demands of Subordinated Creditor against Debtor and all
mortgages, liens, security interests and other property held by Subordinated
Creditor as security for the payment thereof, with full right on the part of
Senior Creditor, in its own name or in its name as attorney-in-fact for
Subordinated Creditor, to enforce and collect said claims by suit, proof of
debt in bankruptcy or other liquidation, reorganization or insolvency
proceedings or otherwise. If requested by Senior Creditor, Subordinated
Creditor will promptly deliver or cause to be delivered to Senior Creditor all
promissory notes and other instruments and agreements evidencing the
Subordinated Debt, all mortgages, security agreements, instruments and other
writings and property evidencing or constituting the security, and all records,
documents and information necessary or convenient to permit Senior Creditor to
enforce and collect said claims.
5
4. If, prior to the satisfaction of all the Senior Debt, Subordinated
Creditor receives from any source whatsoever including, but not limited to,
receipt resulting from the exercise by any court of its legal or equitable
powers, any payment with respect to any of the Subordinated Debt or any
security for or on account of the Subordinated Debt, Subordinated Creditor
shall forthwith deliver such payment or security to Senior Creditor, in
precisely the form received, except for Subordinated Creditor's indorsement when
necessary, for application on account of the Senior Debt and until so delivered,
such payment or security shall be held in trust by Subordinated Creditor as the
property of Senior Creditor. In the event of the failure of any Subordinated
Creditor to indorse any instrument for the payment of money so received by such
Subordinated Creditor, Senior Creditor is irrevocably appointed attorney for
such Subordinated Creditor with full power to make such indorsement and with
full power of substitution. The provisions of this Section 4 are not intended
to and shall not be construed to constitute consent by Senior Creditor to the
acceptance of payments by Subordinated Creditor.
5. Subordinated Creditor, and Subordinated Creditor's legal
representatives, heirs, successors and assigns, agree for the benefit of the
holders of the Senior Debt that, so long as any part of the Senior Debt remains
outstanding, Subordinated Creditor will not take any action to accelerate or
demand the payment of the security or guaranty given by Debtor to secure or
guarantee the Subordinated Debt prior to the earlier of (i) 180 days after
written notice having been given to Senior Creditor by Subordinated Creditor of
any default by Debtor in the payment of any scheduled installment of principal
of or premium, if any, or interest on the Subordinated Debt which is not
thereafter cured or waived by Subordinated Creditor prior to taking such action,
or (ii) the acceleration of any Senior Debt by Senior Creditor. The foregoing
provisions of this Section 5 are solely for the purpose of defining the relative
rights of the holders of the Senior Debt on the one hand and the holders of the
Subordinated Debt on the other and shall not limit or otherwise affect any
rights which the holders of the Subordinated Debt may have against Debtor under
the terms of any agreement or instrument executed in connection with such
Subordinated Debt.
6. In order to carry out the terms and intent of this agreement more
effectively, Subordinated Creditor will do all acts and execute all further
instruments deemed by Senior Creditor to be necessary or convenient to preserve
for Senior Creditor the benefits of this agreement.
7. No action which Senior Creditor, or Debtor with the consent of Senior
Creditor, may take or refrain from taking with respect to any Senior Debt, or
any note or notes representing the same, or any collateral therefor,
including a waiver or release thereof, or any agreement or agreements
(including guaranties) in connection therewith, shall affect this agreement or
the obligations of Subordinated Creditor hereunder.
8. No waiver shall be deemed to be made by Senior Creditor of any of its
rights hereunder unless the same shall be in writing and then only with respect
to the specific instance involved, and shall in no way impair or offset the
rights of Senior Creditor or the obligations of Subordinated Creditor in any
other respect or at any other time.
9. This agreement shall be binding upon Subordinated Creditor and Debtor
and their respective legal representatives, heirs, successors and assigns and
shall inure to the benefit of Senior Creditor and its respective legal
representatives heirs, successors and assigns (including without limitation
any transferee of any Senior Debt). References herein to the binding effect
of this agreement shall not be deemed to constitute consent or acquiescence in
the sale, assignment, pledge or other transfer or encumbrance of the
Subordinated Debt by Subordinated Creditor, that Subordinated Debt having been
fully transferred and assigned to Senior Creditor as security in Section 3 of
this agreement. This agreement shall be construed and enforced in accordance
with and governed by the law of the State of Ohio.
SCHEDULE A
Schedule of Subordinated Debt
[PROMISSORY NOTE DATED JUNE 21, 1996 IN THE AMOUNT OF $250,000 FROM
DYNACRAFT GOLF PRODUCTS, INC. TO XXXXXX XXXXXXXXX, XX.]
SCHEDULE B
Description of Security Held by Subordinated Creditor
6
PROMISSORY NOTE
Amount: $250,000.00 Date: June 21, 1996
FOR VALUE RECEIVED, the undersigned promises to pay to the order of Xxxxxx
Xxxxxxxxx, Xx. the sum of $250,000.00 with interest from the date hereof on the
unpaid balance of principal at 9.25% per annum. Payments under this note shall
be made as follows:
The Principal Sum shall be due and payable in 60 consecutive monthly
installments, beginning on July 1, 1996. Each installment of the Principal Sum
shall be in the amount of $2,976.19 except the final installment shall be for
the unpaid balance. Accrued interest shall be due and payable on the same dates
as installments of the Principal Sum. All payments shall be first be applied to
accrued interest and then to the unpaid balance of principal. There shall be no
penalty for prepayment.
In the event of non-payment of any installment hereunder, when due, the
entire balance of principal, then remaining unpaid, with accrued interest
thereon, shall at once become due and payable at the option of the holder
hereof, with notice or demand being given to the maker hereof in writing.
Payment of this note is subordinated to the payment Of all obligations of
the maker hereof to the Huntington National Bank pursuant to the terms of
subordination agreement dated June 21, 1996.
Dynacraft Golf Products, Inc.
By /s/ Xxxxxx Xxxxxxxxx, Xx.
-------------------------
Its CEO
7
SCHEDULE C
Permitted Payments on Subordinated Debt
Principal and Interest Monthly
IN WITNESS WHEREOF, Subordinated Creditor has executed this agreement
on JUNE 20, 1996
SUBORDINATED CREDITOR: XXXXXX X. XXXXXXXXX, XX.
/s/ Xxxxxx Xxxxxxxxx, Xx.
-------------------------
XXXXXX X. XXXXXXXXX, XX.
Debtor hereby acknowledges notice of the within and foregoing Subordination
Agreement and agrees to be bound by all of the terms, Provisions and
conditions hereof.
DEBTOR: DYNACRAFT GOLF PRODUCTS, INC.
/s/ Xxxxxx Xxxxxxxxx, Xx.
-------------------------
BY: XXXXXX X. XXXXXXXXX, XX., PRESIDENT
8
HUNTINGTONCOMMERCIAL LOAN NOTE
BANKS Business Purpose
--------------------------------------------------------------------------------
City Office COLUMBUS Div. BUSINESS BKG Branch HCO8LO
-------- ------------ ------
Account No: ___________ Note No. ________ [x] Secured (YIN)
Acct Name XXXXXX X. XXXXXXXXX, XX.
[ ] corporation [ ] partnership [x] individual/proprietorship
[ ] other ___________
--------------------------------------------------------------------------------
$ 250,000.00 COLUMBUS OHIO June 20, 1996
--------------- -------------- --------------
FOR VALUE RECEIVED, the undersigned, jointly and severally if more than one,
promise to pay to the order of The Huntington National Bank, (hereinafter called
the "Bank", which term shall include any holder hereof), at such place as the
Bank may designate or, in the absence ot such designation, at any of the Bank's
offices, the sum OF TWO HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($
250,000.00 ) (hereinafter called the "Principal Sum") together with interest
as hereinafter provided. The undersigned promise to pay the Principal Sum and
the interest thereon at the time(s) and in the manner(s) hereinafter provided.
INTEREST
Interest will accrue on the unpaid balance of the Principal Sum until paid at
the rate of 9.625% per annum.
All interest shall be calculated on the basis of a 360 day year (or, if marked,
[x] on the basis of a 365 day year (366 days in a leap year)) for the actual
number of days the Principal Sum or any part thereof remains unpaid.
MANNER OF PAYMENT
The Principal Sum and accrued interest shall be due and payable in 60
consecutive MONTHLY installments, beginning on JULY 1, 1996 Each installment
of the Principal Sum and accrued interest shall be in the amount of
$ 4102.02 except the final installment shall be for the unpaid balance.
The undersigned may, on any business day, upon payment of all accrued interest,
fees and other amounts then due and payable to the Bank, and upon at least five
(5) business days prior written notice to the Bank, elect to prepay all or part
of the unpaid balance of the Principal Sum; provided, however, that if (1) said
prepayment shall be made on or before the date that is six (6 months prior to
the last scheduled payment of the Principal Sum (as indicated above), and (2)
the aggregate amount of the principal portion of all prepayments made during
the calendar year in which said prepayment is made (including the principal
portion of said prepayment) is in excess of 10% of the outstanding balance of
the Principal Sum on January 1 st of said calendar year (or, if the outstanding
balance of the Principal Sum on January 1 st of said calendar year is zero
because the prepayment occurs within one year from the date of execution hereof,
10% of the outstanding balance of the Principal Sum due and payable to the Bank
on the date of execution hereof), then the undersigned shall pay to the Bank on
the date of the prepayment a prepayment premium calculated using the following
formula:
TM
Prepayment Premium = % x (AP - AD) x 12
where:
(1) % equals 3% (or, if marked, [X] 1.00%);
(2) AP is the Amount Paid and means the actual amount off the Principal
Sum paid on the date of the prepayment;
(3) AD is the Amount Due and means the principal portion of the
installment payment due and payable on the date of the prepayment in
accordance with the payment schedule above, if any; and
(4) TM is the Total Months and means the number of full months between the
date off the prepayment and the last scheduled payment of the Principal
Sum.
The undersigned further agree that the prepayment premium shall be due and
payable to the Bank regardless of whether the prepayment results from the
undersigned's voluntary prepayment or from the Bank's exercise of its rights
after default by the undersigned, acceleration or otherwise. Unless the Bank
otherwise agrees in writing, partial prepayments of principal shall be credited
to Installments off principal In inverse order of maturity and shall not
postpone the due dates of the installments required hereunder.
9
LATE CHARGE
Any installment or other payment not made within 10 days of the date such
payment or installment is due shall be subject to a late charge equal to 5% of
the amount of the installment or payment.
SECURITY
As security for the payment of the obligations evidenced hereby, and of all
other obligations and liabilities of the undersigned, and each of them, to the
Bank, whether now existing or hereafter arising, the undersigned hereby grant
the Bank a security interest in the following property, including all
substitutions and additions thereto, and the proceeds thereof (all, together
with any other property in which the Bank shall at any time be given a security
interest, hereinafter referred to as the "Collateral"):
MORTGAGE ON REAL PROPERTY LOCATED AT 000 XXXXXXXXX XXXX,
XXXXXX, XXXXXXX XXXXXX FLORIDA
If, at the time of payment and discharge hereof, any of the undersigned shall be
then directly or contingently liable to the Bank as maker, indorser, surety or
guarantor of any other note, xxxx of exchange, or other instrument, then the
Bank may continue to hold any of the Collateral as security therefor, even
though this Note shall have been surrendered to the undersigned. The Bank shall
not be bound to take any steps necessary to preserve any rights in the
Collateral against prior parties. If any obligation evidenced by this Note is
not paid when due, the Bank may, at its option, demand, xxx for, collect or make
any compromise or settlement it deems desirable with reference to the
Collateral, and shall have the rights of a secured party under the law of the
State of Ohio, and the undersigned shall be liable for any deficiency.
DEFAULT
Upon the occurrence of any of the following events:
(1) the failure of the undersigned to pay any installment when due
hereunder or to perform any obligation of the undersigned to the Bank;
(2) if the undersigned shall fail to do all things necessary to preserve
and maintain the value and collectibility of the Collateral;
(3) if the Collateral shall decline in value or become unsatisfactory to
the Bank and the undersigned shall fail to furnish immediately upon demand
additional Collateral satisfactory to the Bank;
(4) if the undersigned shall fail to furnish true and complete financial
statements from time to time on request of the Bank;
(5) the death or dissolution of any of the undersigned, or any indorser,
surety, or guarantor;
(6) if any representation, warranty or other information given to the Bank
by any of the undersigned, or by any indorser, surety or guarantor shall prove
to be false, untrue or misleading; or
(7) if the Bank shall for any reason deem itself insecure with respect to
the obligations evidenced hereby;
then Bank may, at its option, without notice or demand, accelerate the maturity
of the obligation evidenced hereby, which obligation shall become immediately
due and payable In the event the Bank shall institute any action for the
enforcement or collection of the obligations evidenced hereby, the undersiqned
agree to pay all costs and expenses of such action, including reasonable
attorneys' fees, to the extent permitted by law.
GENERAL PROVISIONS
All of the parties hereto, including the undersigned, and any indorser,
surety, or guarantor, hereby severally waive presentment, notice of dishonor,
protest, notice of protest, and diligence in bringing suit against any party
hereto, and consent that, without discharging any of them, the time of payment
may be extended an unlimited number of times before or after maturity without
notice. The Bank shall not be required to pursue any party hereto, including any
guarantor, or to exercise any rights against any Collateral herefor before
exercising any other such rights.
The obligations evidenced hereby may from time to time be evidenced by
another note or notes given in substitution, renewal or extension hereof. Any
security interest or mortgage which secures the obligations evidenced hereby
shall remain in full force and effect notwithstanding any such substitution,
renewal, or extension.
No amendment to or waiver of any term or condition of this Note shall be
effective unless in writing and signed by the undersigned and the Bank. No
failure or delay on the part of the Bank in exercising any right, power or
privilege under this Note, related loan documents or law nor any course of
dealing, shall operate as a waiver to such right, power or privilege or preclude
any other or further exercise thereof or of any other right, power or privilege.
The captions used herein are for reference only and shall not be deemed a
part of this Note. If any of the terms or provisions of this Note shall be
deemed unenforceable, the enforceability of the remaining terms and provisions
shall not be affected. This Note shall be governed by and construed in
accordance with the law of the State of Ohio.
10
WARRANT OF ATTORNEY
Each of the undersigned authorize any attorney at law to appear in any Court of
Record in the State of Ohio or in any other state or territory of the United
States after the above indebtedness becomes due, whether by acceleration or
otherwise, to waive the issuing and service of process, and to confess judgment
against any one or more of the undersigned in favor of the Bank for the amount
then appearing due together with costs of suit, and thereupon to waive all
errors and all rights of appeal and stays of execution. No such judgment or
judgments against less than all of the undersigned shall be a bar to a
subsequent judgment or judgments against any one or more of the undersigned
against whom judgment has not been obtained hereon; this being a joint and
several warrant of attorney to confess judgment.
WARNING
BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU
DO NOT PAY ON TIME A COURT JUDGEMENT CAN 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.
BORROWER(S): XXXXXX X. XXXXXXXXX, XX.
/s/ Xxxxxx Xxxxxxxxx, Xx.
-------------------------
XXXXXX X. XXXXXXXXX, XX.
11
HUNTINGTONCOMMERCIAL LOAN NOTE
BANKS Business Purpose
--------------------------------------------------------------------------------
City Office COLUMBUS Div. BUSINESS BKG Branch HCO8LO
-------- ------------ ------
Account No: ___________ Note No. ________ [x] Secured (YIN)
Acct Name XXXXXX X. XXXXXXXXX, XX.
[ ] corporation [ ] partnership [x] individual/proprietorship
[ ] other ___________
--------------------------------------------------------------------------------
$ 250,000.00 COLUMBUS OHIO JUNE 20, 1996
--------------- -------------- --------------
FOR VALUE RECEIVED, the undersigned, jointly and severally if more than one,
promise to pay to the order of The Huntington National Bank, (hereinafter called
the "Bank", which term shall include any holder hereof), at such place as the
Bank may designate or, in the absence ot such designation, at any of the Bank's
offices, the sum OF TWO HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($
250,000.00 ) (hereinafter called the "Principal Sum") together with interest
as hereinafter provided. The undersigned promise to pay the Principal Sum and
the interest thereon at the time(s) and in the manner(s) hereinafter provided.
INTEREST
Interest will accrue on the unpaid balance of the Principal Sum until paid at
the rate of 9.625% per annum.
All interest shall be calculated on the basis of a 360 day year (or, if marked,
[x] on the basis of a 365 day year (366 days in a leap year)) for the actual
number of days the Principal Sum or any part thereof remains unpaid.
MANNER OF PAYMENT
The Principal Sum and accrued interest shall be due and payable in 60
consecutive MONTHLY installments, beginning on JULY 1, 1996 Each installment
of the Principal Sum and accrued interest shall be in the amount of $ 4102.02
except the final installment shall be for the unpaid balance.
The undersigned may, on any business day, upon payment of all accrued interest,
fees and other amounts then due and payable to the Bank, and upon at least five
(5) business days prior written notice to the Bank, elect to prepay all or part
of the unpaid balance of the Principal Sum; provided, however, that if (1) said
prepayment shall be made on or before the date that is six (6 months prior to
the last scheduled payment of the Principal Sum (as indicated above), and (2)
the aggregate amount of the principal portion of all prepayments made during
the calendar year in which said prepayment is made (including the principal
portion of said prepayment) is in excess of 10% of the outstanding balance of
the Principal Sum on January 1 st of said calendar year (or, if the outstanding
balance of the Principal Sum on January 1 st of said calendar year is zero
because the prepayment occurs within one year from the date of execution hereof,
10% of the outstanding balance of the Principal Sum due and payable to the Bank
on the date of execution hereof), then the undersigned shall pay to the Bank on
the date of the prepayment a prepayment premium calculated using the following
formula:
TM
Prepayment Premium = % x (AP - AD) x 12
where:
(1) % equals 3% (or, if marked, [X] 1.00%);
(2) AP is the Amount Paid and means the actual amount off the Principal
Sum paid on the date of the prepayment;
(3) AD is the Amount Due and means the principal portion of the
installment payment due and payable on the date of the prepayment in
accordance with the payment schedule above, if any; and
(4) TM is the Total Months and means the number of full months between the
date off the prepayment and the last scheduled payment of the Principal
Sum.
The undersigned further agree that the prepayment premium shall be due and
payable to the Bank regardless of whether the prepayment results from the
undersigned's voluntary prepayment or from the Bank's exercise of its rights
after default by the undersigned, acceleration or otherwise. Unless the Bank
otherwise agrees in writing, partial prepayments of principal shall be credited
to Installments off principal In inverse order of maturity and shall not
postpone the due dates of the installments required hereunder.
12
LATE CHARGE
Any installment or other payment not made within 10 days of the date such
payment or installment is due shall be subject to a late charge equal to 5% of
the amount of the installment or payment.
SECURITY
As security for the payment of the obligations evidenced hereby, and of all
other obligations and liabilities of the undersigned, and each of them, to the
Bank, whether now existing or hereafter arising, the undersigned hereby grant
the Bank a security interest in the following property, including all
substitutions and additions thereto, and the proceeds thereof (all, together
with any other property in which the Bank shall at any time be given a security
interest, hereinafter referred to as the "Collateral"):
MORTGAGE ON REAL PROPERTY LOCATED AT 000 XXXXXXXXX XXXX,
XXXXXX, XXXXXXX XXXXXX FLORIDA
If, at the time of payment and discharge hereof, any of the undersigned shall be
then directly or contingently liable to the Bank as maker, indorser, surety or
guarantor of any other note, xxxx of exchange, or other instrument, then the
Bank may continue to hold any of the Collateral as security therefor, even
though this Note shall have been surrendered to the undersigned. The Bank shall
not be bound to take any steps necessary to preserve any rights in the
Collateral against prior parties. If any obligation evidenced by this Note is
not paid when due, the Bank may, at its option, demand, xxx for, collect or make
any compromise or settlement it deems desirable with reference to the
Collateral, and shall have the rights of a secured party under the law of the
State of Ohio, and the undersigned shall be liable for any deficiency.
DEFAULT
Upon the occurrence of any of the following events:
(1) the failure of the undersigned to pay any installment when due
hereunder or to perform any obligation of the undersigned to the Bank;
(2) if the undersigned shall fail to do all things necessary to preserve
and maintain the value and collectibility of the Collateral;
(3) if the Collateral shall decline in value or become unsatisfactory to
the Bank and the undersigned shall fail to furnish immediately upon demand
additional Collateral satisfactory to the Bank;
(4) if the undersigned shall fail to furnish true and complete financial
statements from time to time on request of the Bank;
(5) the death or dissolution of any of the undersigned, or any indorser,
surety, or guarantor;
(6) if any representation, warranty or other information given to the Bank
by any of the undersigned, or by any indorser, surety or guarantor shall prove
to be false, untrue or misleading; or
(7) if the Bank shall for any reason deem itself insecure with respect to
the obligations evidenced hereby;
then Bank may, at its option, without notice or demand, accelerate the maturity
of the obligation evidenced hereby, which obligation shall become immediately
due and payable In the event the Bank shall institute any action for the
enforcement or collection of the obligations evidenced hereby, the undersiqned
agree to pay all costs and expenses of such action, including reasonable
attorneys' fees, to the extent permitted by law.
GENERAL PROVISIONS
All of the parties hereto, including the undersigned, and any indorser,
surety, or guarantor, hereby severally waive presentment, notice of dishonor,
protest, notice of protest, and diligence in bringing suit against any party
hereto, and consent that, without discharging any of them, the time of payment
may be extended an unlimited number of times before or after maturity without
notice. The Bank shall not be required to pursue any party hereto, including any
guarantor, or to exercise any rights against any Collateral herefor before
exercising any other such rights.
The obligations evidenced hereby may from time to time be evidenced by
another note or notes given in substitution, renewal or extension hereof. Any
security interest or mortgage which secures the obligations evidenced hereby
shall remain in full force and effect notwithstanding any such substitution,
renewal, or extension.
No amendment to or waiver of any term or condition of this Note shall be
effective unless in writing and signed by the undersigned and the Bank. No
failure or delay on the part of the Bank in exercising any right, power or
privilege under this Note, related loan documents or law nor any course of
dealing, shall operate as a waiver o such right, power or privilege or preclude
any other or further exercise thereof or of any other right, power or privilege.
The captions used herein are for reference only and shall not be deemed a
part of this Note. If any of the terms or provisions of this Note shall be
deemed unenforceable, the enforceability of the remaining terms and provisions
shall not be affected. This Note shall be governed by and construed in
accordance with the law of the State of Ohio.
13
WARRANT OF ATTORNEY
Each off the undersigned authorize any attorney at law to appear in any Court of
Record in the State of Ohio or in any other state or territory of the United
States after the above indebtedness becomes due, whether by acceleration or
otherwise, to waive the issuing and service of process, and to confess judgment
against any one or more of the undersigned in favor of the Bank for the amount
then appearing due together with costs of suit, and thereupon to waive all
errors and all rights of appeal and stays of execution. No such judgment or
judgments against less than all of the undersigned shall be a bar to a
subsequent judgment or judgments against any one or more of the undersigned
against whom judgment has not been obtained hereon; this being a joint and
several warrant of attorney to confess judgment.
WARNING
BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU
DO NOT PAY ON TIME A COURT JUDGEMENT CAN 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.
BORROWER(S): XXXXXX X. XXXXXXXXX, XX.
/s/ Xxxxxx Xxxxxxxxx, Xx.
-------------------------
XXXXXX X. XXXXXXXXX, XX.
14
