LOAN AND SECURITY AGREEMENT
(DATED AS OF FEBRUARY 26, 2003)
BETWEEN
GREENFIELD COMMERCIAL CREDIT, L.L.C.
AND
BONTEX, INC.
TABLE OF CONTENTS
PAGE
1. DEFINITIONS.......................................................1
2. REVOLVING CREDIT LOAN.............................................3
3. COLLATERAL........................................................4
4. CHARGES AND INSURANCE.............................................5
5. EXAMINATION OF RECORDS; REPORTING.................................5
6. OTHER LIENS.......................................................6
7. GENERAL WARRANTIES AND REPRESENTATIONS............................6
8. CONDITIONS TO OBLIGATIONS OF LENDER...............................8
9. AFFIRMATIVE COVENANTS.............................................11
10. NEGATIVE COVENANTS................................................12
11. TERMINATION.......................................................12
12. DEFAULT...........................................................13
13. YOUR RIGHTS AND REMEDIES..........................................13
14. WAIVER; AMENDMENTS; SUCCESSORS AND ASSIGNS........................14
15. BANKRUPTCY PROVISIONS.............................................14
16. MISCELLANEOUS.....................................................15
17. WAIVER OF JURY TRIAL..............................................17
18. NO ORAL ARGUMENTS.................................................18
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LOAN AND SECURITY AGREEMENT
GREENFIELD COMMERCIAL CREDIT, L.L.C.
Gentlemen:
This Agreement, effective as of the date accepted by you, sets forth the
terms and conditions upon which you will make loans and advances and extend
other financial accommodations to the undersigned (whether one or more in
number, referred to herein as "we," "us" or "our" and which, if two or more in
number, shall be jointly and severally bound):
1. DEFINITIONS. As used herein:
(A) "ADVANCES" means loans to us under this Agreement and the Revolving
Credit Loan Rider, and for which our obligation to repay is evidenced by the
Revolving Credit Note.
(B) "COLLATERAL" means all of our presently owned and hereafter acquired
or arising:
(i) accounts (whether or not earned by performance), letter of
credit rights, chattel paper, contracts, contract rights,
instruments, documents and supporting obligations
(individually and collectively referred to as
"RECEIVABLES");
(ii) general intangibles (including, without limitation, tax
refunds, tax refund claims, trade names, goodwill,
trademarks, copyrights, processes, patents, patent rights,
patent applications, licenses, inventories, royalties,
and/or commissions and permits, choses-in-action, judgments
and tort claims) (individually and collectively referred to
as "INTANGIBLES");
(iii) goods, inventory, merchandise and other personal property,
wherever located, to be furnished under any contract of
service or held for sale or lease, all raw materials, work
in process, finished goods and materials and supplies of any
kind, nature or description which are or might be used or
consumed in our business or used in connection with the
manufacture, packing, shipping, advertising, selling or
finishing of such goods, merchandise and other personal
property including without limitation such goods which give
rise to any Receivables and which goods have been returned
to or repossessed or stopped in transit by us ("INVENTORY");
(iv) tangible goods (other than Inventory), machinery, equipment
and fixtures including without limitation office machines,
tools, dies, furniture, and vehicles together with all
accessions, parts and appurtenances thereto appertaining or
attached or kept or used or intended for use in connection
therewith, and all substitutions, renewals, improvements and
replacements of and additions thereto (sometimes hereinafter
individually and collectively referred to as "EQUIPMENT");
(v) property now or at any time hereafter in your possession
(including monies, deposit accounts, claims and credit
balances);
(vi) all deposit accounts and investment property;
(vii) all interests in any lease of real property or personal
property, whether as a lessor or lessee, including all
options to purchase any leased property, and all leasehold
improvements;
(viii) books, blueprints, drawings and records related to any of
the foregoing as described in subsection (i) through (vii)
above;
and all proceeds (including proceeds of any insurance policies, including
business interruption or business income insurance policies) and products of and
accessions to all the foregoing described property in which we may have any
right, title or interest.
(C) "DEFAULT" shall have the meaning set forth in Paragraph 12 of this
Agreement.
(D) "DISCLOSURE SCHEDULE" has the meaning set forth in Section 7(A).
(E) "INDEBTEDNESS" means all of our present and future obligations,
liabilities, debts, claims and indebtedness, contingent, fixed or otherwise,
however evidenced, created, incurred acquired, owing or arising, whether under
written or oral agreement, operation of law, or otherwise, and includes, without
limiting the foregoing (i) Obligations, (ii) obligations and liabilities of any
Person secured by a lien, claim, encumbrance, or security interest upon property
owned by us, even though we have not assumed or become liable therefor, (iii)
obligations and liabilities created or arising under any lease (including
capitalized leases) or conditional sales contract or other title retention
agreement with respect to property used or acquired by us, even though the
rights and remedies of the lessor, seller or lender are limited to repossession,
(iv) all unfunded pension fund obligations and liabilities, and (v) deferred
taxes.
(F) "LOAN ACCOUNT" means an account maintained by you for the Loan.
(G) "LOAN" means the Revolving Credit Loan.
(H) "MATERIAL ADVERSE EFFECT" means any effect that (i) is material
and adverse to our financial position, results of operations or business, or
(ii) would materially impair our ability to perform our obligations under this
Agreement.
(I) "NOTE" means the Revolving Credit Note.
(J) "OBLIGATIONS" means all present and future loans, advances, debts,
liabilities, obligations, covenants, duties and Indebtedness owing by us to you,
whether evidenced by any note, or other instrument or document, whether arising
from an extension of credit, opening of a letter of credit, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by you in our
debts owing to others), absolute or contingent, due or to become due, including,
without limitation, all interest, charges, expenses, fees, attorneys' fees and
any other sums chargeable to us hereunder or under any other agreement with you.
(K) "OBLIGOR" means us or any guarantor of the Obligations,
individually or collectively.
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(L) "PERSON" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
(M) "PRIME RATE" means the rate published from day to day in the WALL
STREET JOURNAL in its "Money Rates" column as the "Prime Rate." Should such
publication not continue to publish the Prime Rate or a substitute rate, then
Lender will select a comparable announced rate. The Effective Rate will change
at any time the published "Prime Rate" changes.
(N) "TERM SHEET" means any document attached to this Agreement and to
any Rider which contains other terms and conditions of this transaction.
(O) Any accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings customarily given to them in accordance with
generally accepted accounting principles.
(P) All other terms contained in this Agreement, unless otherwise
indicated, shall have the meanings provided by the Uniform Commercial Code of
the state set forth in Paragraph 16(B) ("CODE") to the extent the same are
defined therein.
2. REVOLVING CREDIT LOAN.
(A) REVOLVING CREDIT LOAN; LOAN ADVANCES. You will establish a
revolving credit loan facility (the "Revolving Credit Loan") in the amount of
the Maximum Loan Amount as set forth on the Term Sheet, and, subject to the
terms of this Agreement, you may, upon our request, but at all times in your
sole discretion, make Advances to us from time to time, pursuant to the
Revolving Credit Loan Rider attached hereto and made a part hereof (the
"RIDER"). You may, in your sole discretion and without notice to us, disburse
any or all of the proceeds of any or all of the Advances made by you to such
person or persons as you deem necessary to insure that the security interest in
or lien upon the Collateral shall at all times have the priority represented by
us in this Agreement. You may, in your sole discretion, at any time reduce the
Percentage Advance Rate or the Advance amounts set forth in any Rider. You may,
from time to time, reimburse yourself for any loan, interest due, fees or
expenses, or any third party for any of our Obligations by charging our Loan
Account. You may deduct from the Advances under this Agreement reserves for
accrued interest and such other reserves as you deem proper and necessary.
(B) REVOLVING CREDIT LOAN NOTE. Our obligation to repay Advances
under the Revolving Credit Loan shall be evidenced by a Revolving Credit Loan
Note (the "Note") executed by us, in form satisfactory to you executed
simultaneously herewith, the terms of which are incorporated herein by this
reference.
(C) INTEREST AND OTHER CHARGES. We shall pay you interest on the daily
outstanding balance of the Note(s) at the rates as set forth in the applicable
Rider. In addition, we shall also pay you on the first day of each month, with
respect to the prior calendar month or portion thereof 1/12 of two percent
(2.0%) of the average amount of the Maximum Loan Amount not utilized during the
prior month. In no event whatsoever shall the interest rate and other charges
charged hereunder exceed the highest rate permissible under any law which a
court of competent jurisdiction shall, in the final determination, deem
applicable hereto. In the event that a court determines that you have received
interest or other charges hereunder in excess of the highest rate applicable
hereto, you shall promptly, in your sole discretion, either apply such amount to
the Obligations or refund such amount to us and the provisions herein shall be
deemed amended to provide for such permissible rate.
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(D) TERM. The Term of this Agreement and of the Loan shall be on
demand, but if demand is not made, then no later than the date set forth on the
Term Sheet (the "Maturity Date").
(E) EARLY TERMINATION FEE. If this Agreement is terminated at any time
prior to the Maturity Date, we shall be obligated to pay to you a termination
fee (the "Termination Fee") equal to two percent (2%) of the Maximum Loan
Amount. The Termination Fee will also be due and payable in connection with any
termination of this Agreement by you or by or on behalf of us, whether voluntary
or involuntary, including upon a Default and including in connection with
termination of this Agreement or payment of the Obligations by any trustee or
debtor-in-possession in any insolvency proceeding. The Termination Fee is
presumed to be a reasonable estimate of the amount of damages sustained by you
as a result of the early termination of this Agreement and we agree that such
amount is reasonable under the circumstances currently existing.
(F) MONTHLY ACCOUNTING. You will provide us, monthly, with an
accounting of Advances, charges and payments made pursuant to this Agreement.
Such accounting shall be deemed correct, accurate and binding upon us and an
account stated (except for reverses and reapplications of payments made as
provided in Paragraph 16(G) hereof, and corrections or errors discovered by
you), unless we notify you in writing to the contrary within thirty (30) days
after each accounting is rendered.
3. COLLATERAL.
(A) GRANT OF SECURITY INTEREST. As security for the Obligations, we
hereby grant you a continuing security interest in and lien upon, and a right of
setoff against and we hereby pledge and assign to you, all of the Collateral,
including any Collateral not deemed eligible for Advances. We acknowledge that
nothing contained in this Agreement or in any Rider shall be (i) construed as
your agreement to resort or look to a particular type of Collateral as security
for any loan to us, or limit in any way your right to resort to any or all of
the Collateral as security for any of the Obligations, or (ii) deemed to limit
or reduce any security interest in or lien upon any portion of the Collateral
for the Obligations. You agree that if we obtain a loan or loans to be secured
only by our real estate and/or our machinery and equipment and provided no
Default has occurred and is continuing, you will release your security interests
in the machinery, equipment and/or fixtures which we pledge as security for such
loan(s).
(B) PERFECTION AND PROTECTION OF SECURITY INTEREST. We shall, at our
expense, perform all steps requested by you at any time to perfect, maintain,
protect, and enforce your security interest in the Collateral, including,
without limitation, executing and filing financing, continuation statements and
amendments thereof, and searches to confirm the priority of your security
interests, in form and substance satisfactory to you, placing notations on our
books of account to disclose your security interest therein, and taking such
other steps as are deemed necessary by you to maintain your control of and
security interest in the Collateral, and delivering to you all letters of credit
on which we are named beneficiary. You may file, without our signature, one or
more financing statements disclosing your security interest under this
Agreement. We agree that a carbon, photographic, photostatic, or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement. If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of our agents or processors, we shall
notify such person of your security interest in such Collateral and, upon your
request, instruct them to hold all such Collateral for your account subject to
your instructions. From time to time, we shall, upon your request, execute and
deliver confirmatory written instruments pledging to you the Collateral, but our
failure to do so shall not affect or limit your security interest or other
rights in and to the Collateral. Until all Obligations have been fully
satisfied, your security interest in the Collateral shall continue in full force
and effect.
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(C) ATTORNEY-IN-FACT. We hereby appoint you and any designee of yours
as our attorney-in-fact and authorize you or such designee, at our sole expense,
to exercise at any times in your or such designee's discretion all or any of the
following powers, which powers of attorney, being coupled with an interest,
shall be irrevocable until all Obligations have been paid in full: (a) receive,
take, endorse, assign, deliver, accept and deposit, in your name or our name,
any and all cash, checks, commercial paper, drafts, remittances and other
instruments and documents relating to the Collateral or the proceeds thereof,
(b) transmit to account debtors, other obligors or any bailees notice of your
interest in the Collateral or request from account debtors or such other
obligors or bailees at any time, in our name or your name or any designee,
information concerning the Collateral and any amounts owing with respect
thereto, (c) notify account debtors or other obligors to make payment directly
to you, or notify bailees as to the disposition of Collateral, (d) take or
bring, in your name or our name, all steps, actions, suits or proceedings deemed
by you necessary or desirable to effect collection of or other realization upon
the accounts and other Collateral, (e) after a Default, change the address for
delivery of mail to us and to receive and open mail addressed to us, (f) extend
the time of payment of, compromise or settle for cash, credit, return of
merchandise, and upon any terms or conditions, any and all accounts or other
Collateral which includes a monetary obligation and discharge or release the
account debtor or other obligor, without affecting any of the Obligations, and
(g) execute in our name and file against us in your favor financing statements
or amendments with respect to the Collateral.
4. CHARGES AND INSURANCE.
(A) You may, in your discretion, at any time discharge any lien or
encumbrance or bond the same, pay any insurance, maintain guards, pay any
service bureau, or obtain any record and charge the cost thereof to our Loan
Account.
(B) We shall at all times insure the Collateral in your name against
loss or damage by fire, theft, burglary, pilferage, loss in transit, business
interruption and such other hazards as you shall specify in amounts, under
policies and by insurers acceptable to you. Each policy shall include a
provision for thirty (30) days prior written notice to you of any cancellation
or substantial modification and shall show you as mortgagee/secured party, loss
payee and additional insured in a manner acceptable to you. We shall execute and
deliver to you simultaneously herewith and at any other time hereafter such
assignments of policies of insurance, including business interruption insurance,
as you shall require. All premiums shall be paid by us and the policies shall be
delivered to you. If we fail to do so, you may (but shall not be required to)
procure such insurance at our expense.
5. EXAMINATION OF RECORDS; REPORTING.
(A) You may at all reasonable times have access to, examine, audit,
make extracts from and inspect our records, files, books of account and the
Collateral. We will deliver to you any instrument necessary for you to obtain
records from any service bureau maintaining records for us. All instruments and
certificates prepared by us showing the value of any of the Collateral shall be
accompanied, upon request, by copies of related purchase orders and invoices.
You may, at any time after default, remove from our premises our books and
records or require us to deliver them to you and you may, without expense to
you, use such of our personnel, supplies and premises as may be reasonably
necessary for maintaining or enforcing your security interest.
(B) We shall furnish you, upon request, information and statements
showing our business affairs, financial condition and the results of our
operations. We will provide you with (i) original sales invoices, customer
statements and credit memos issued, remittance advices and reports and copies of
deposit slips, copies of letters of credit and supporting documentation
(originals to your agent), daily, (ii) copies of shipping and delivery
documents, upon request, (iii) within twenty (20) days after the
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end of each Interim Financial Statement Period set forth on the Term Sheet, our
internally prepared income statement and balance sheet prepared on a basis
consistent with such statement prepared in prior months and in accordance with
generally accepted accounting principles, and within ninety (90) days after the
end of each of our fiscal years, our financial statements prepared by our
independent, certified public accountants acceptable to you prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with prior year- end statements (said interim and year-end financial
statements hereinafter referred to as "Financials") (the scope of the CPA's
engagement is set forth on the Term Sheet), (iv) complete copies of all tax
returns when filed, and (v) certificates relating to the foregoing as you may
request.
6. OTHER LIENS. We represent and warrant that all Collateral is and will
continue to be owned by us free and clear of all liens, claims and encumbrances
whatsoever, whether prior or subordinate to the liens we have granted you,
except for Permitted Liens, if any, as set forth on the Term Sheet; and that we
will not, without your prior written approval, which may be withheld in your
sole discretion, sell, encumber or dispose of or permit the sale, encumbrance or
disposal of any Collateral, except for sales of Inventory in the ordinary course
of business.
7. GENERAL WARRANTIES AND REPRESENTATIONS. Subject to Paragraphs 7(A) and
7(B), we warrant and represent in Paragraphs 7(C) through 7(T) that:
(A) DISCLOSURE SCHEDULE. On or prior to the date hereof, we have
delivered to you a schedule (the "Disclosure Schedule") attached hereto as
Schedule 7(A) setting forth, among other things, items the disclosure of which
is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or more
representations or warranties contained in this Section 7(A) or to one or more
covenants in Section 9 or 10; provided that (i) no such item is required to be
set forth in the Disclosure Schedule as an exception to a representation or
warranty if its absence would not be reasonably likely to result in the related
representation or warranty being deemed untrue or incorrect under the standard
established by Section 7(B), and (ii) the mere inclusion of an item in the
Disclosure Schedule as an exception to a representation or warranty shall not be
deemed an admission by us that such item represents a material exception or
fact, event or circumstance or that such item is reasonably likely to result in
a Material Adverse Effect. The Disclosure Schedule is incorporated herein by
this reference.
(B) STANDARD. No representation or warranty of ours contained in this
Section 7 shall be deemed untrue or incorrect, and we shall not be deemed to
have breached a representation or warranty, as a consequence of the existence of
any fact, event or circumstance unless such fact, circumstance or event,
individually or taken together with all other facts, events or circumstances
inconsistent with any representation or warranty contained in this Section 7 has
had or is reasonably likely to have a Material Adverse Effect.
(C) We are duly organized and existing in good standing under the
laws of the Formation State set forth on the Term Sheet, are qualified to do
business and are in good standing in all states in which qualification and good
standing are necessary in order for us to conduct our business and own our
property and have all requisite power and authority to conduct our business, to
own our property and to execute, deliver and perform all of our Obligations;
(D) We have not, during the preceding five (5) years, been known by
or used any other Assumed Names or Trade Names other than as set forth on the
Term Sheet;
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(E) The execution, delivery and performance by us of this Agreement
will not constitute a violation of any applicable law or of our Articles or
Certificate of Incorporation, By-Laws or Code of Regulations or any agreement,
or document to which we are a party or bound;
(F) We possess adequate assets, licenses, patents, patent
applications, copyrights, trademarks, trademark applications, and tradenames for
the conduct of our business;
(G) We have capital sufficient to conduct our business, are solvent
and able to pay our debts as they mature and own property having a fair value
greater than the amount required to pay our debts;
(H) Except for trade payables arising in the ordinary course of our
business and except as heretofore disclosed to you in writing, we have (i) no
pending or threatened litigation, actions or proceedings which would materially
and adversely affect our business assets, operations or condition, financial or
otherwise, or the Collateral and (ii) no Indebtedness, other than the
Obligations;
(I) We have good, indefeasible, and merchantable title to the
Collateral, and there is no lien or encumbrance thereon other than the security
interest granted to you and Permitted Liens;
(J) We are not a party to any contract, or subject to any charge,
corporate restriction, judgment, decree or order materially and adversely
affecting our business, assets, operations or condition, financial or otherwise,
and are not subject to any labor dispute; and, no labor contract is scheduled to
expire during the term of this Agreement, except as heretofore disclosed to you
in writing;
(K) We are not in violation of any applicable statute, regulation or
ordinance, in any respect materially and adversely affecting the Collateral or
our business, assets, operations or condition, financial or otherwise;
(L) We are not in default with respect to any note, indenture, loan
agreement, mortgage, lease, deed or other agreement to which we are a party or
bound;
(M) The financial statements delivered to you fairly present our
financial condition and results of operations and those of such other Persons
described therein as of the date thereof; and there has been no material and
adverse change in such financial condition or operations since the date of the
statements;
(N) We have received no notice that we are not in full compliance
with any of the requirements of the Employee Retirement Income Security Act of
1974, as amended, ("ERISA") and its regulations and, to the best of our
knowledge, there exists no event described in Section 4043 of ERISA, excluding
subsections 4043(b)(2) and 4043(b)(3) thereof, with respect to us;
(O) We have filed all tax returns and other reports we are required
by law to file and have paid all taxes and similar charges that are due and
payable;
(P) Our Chief Executive Office, Principal Place of Business and the
Location of Collateral Records is at the location set forth on the Term Sheet;
(Q) We have not received any notice alleging and are not aware of
any facts indicating noncompliance with any State or Federal law governing the
use, generation, storage or release of any hazardous waste or substance;
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(R) We have no Subsidiaries or Affiliates other than as set forth on
the Term Sheet. To the extent any subsidiary or affiliate is shown on the Term
Sheet, neither the assets or chief executive office of such subsidiary or
affiliate is located at one or more of our locations specified in Schedule 7(R)
hereof;
(S) We own all properties on which Collateral is located other than
the Leased Properties set forth on the Term Sheet; and
(T) All Collateral which is tangible personal property is kept only
at the Collateral Locations set forth on the Term Sheet.
8. CONDITIONS TO OBLIGATIONS OF LENDER.
(A) CONDITIONS FOR CLOSING. Your obligation to close the Loan
hereunder is subject to receipt by you of the following documents, fully
executed, and completion of the following matters, all in form and substance
satisfactory to you:
(i) CHARTER DOCUMENTS. Certificates of recent date of the
appropriate authority or official of our state of
incorporation (listing all of our charter documents on file
in that office if such listing is available) certifying as
to our good standing and corporate existence together with
copies of such charter documents, certified as of a recent
date by such authority or official and certified as true and
correct as of the date hereof by us by a duly authorized
officer;
(ii) CERTIFICATION OF GOOD STANDING. Certificates of recent date
of the appropriate authority or official of each state in
which we are legally qualified to do business, each
certifying as to our good standing;
(iii) BY-LAWS AND CORPORATE AUTHORIZATIONS. Copies of our by-laws
together with all authorizing resolutions and evidence of
other corporate action taken by us to authorize the
execution, delivery and performance by us of this Agreement
and all documents and instruments executed in connection
therewith (the "Loan Documents"), and the consummation by us
of the transactions contemplated hereby, certified as true
and correct as of the date hereof by us by a duly authorized
officer;
(iv) INCUMBENCY CERTIFICATES. A certificate of incumbency for us
containing, and attesting to the genuineness of, the
signatures of those officers authorized to act on our behalf
in connection with the Loan Documents to which we and the
consummation by us of the transactions contemplated hereby,
certified as true and correct as of the date hereof by us by
a duly authorized officer;
(v) NOTE. The Revolving Credit Note duly executed by us;
(vi) SECURITY DOCUMENTS. This Loan and Security Agreement duly
executed on our behalf granting to you, as collateral
security for the Obligations, the Collateral intended to be
provided pursuant to Section 3, together with the following
in fully executed form:
(a) RECORDING, FILING, ETC. Evidence of the recordation,
filing and other action (including payment of any
applicable taxes or fees) in such jurisdictions as you
may
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deem necessary or appropriate with respect to any
security interest, including the filing of financing
statements and similar documents which you may deem
necessary or appropriate to create, preserve or
perfect the liens, security interests and other rights
intended to be granted to you thereunder, together
with Uniform Commercial Code record searches in such
offices as you may request;
(b) CASH COLLECTION DOCUMENTS. The Cash Collection
Documents specified in any Rider and a Letter of Credit
Agreement with LaSalle Bank;
(c) INTELLECTUAL PROPERTY. A Patent, Trademark, Copyright
and License Mortgage assigning to you of all of our
rights in applications for and registered patents,
trademarks, copyrights and all other rights in such
property;
(d) DEPOSIT ACCOUNT CONTROL AGREEMENT. A Deposit Account
Control Agreement which has been accepted and agreed to
by Wachovia Bank, National Association;
(e) VALIDITY GUARANTY. A Validity Guaranty constituting the
unconditional, unlimited joint and several validity
guaranty of the Obligations by Xxxxx X. Xxxxxxxx and
Xxxxxxx Xxxx ("Guarantor");
(f) UCC INSURANCE. A fully-paid policy of insurance
insuring the priority of your security interests in the
Collateral as senior to all other security interests in
the Collateral except for Permitted Liens and such
other exceptions, together with such endorsements as
are acceptable to you;
(g) CASUALTY AND OTHER INSURANCE.
(1) Evidence that the casualty and other insurance
required pursuant to Section 4 of this Agreement
is in full force and effect and assignments of
policies of insurance as you shall require;
(2) A duly executed assignment of our export credit
insurance policy issued by the Export-Import Bank
of the United States;
(h) BAILEE/LANDLORD AGREEMENTS. Such bailee and landlord
agreements as you shall require.
(vii) CLOSING CERTIFICATE; BORROWING AUTHORIZATION. A Closing
Certificate and a Borrowing Authorization in form
satisfactory to you duly executed by us by a duly authorized
officer;
(viii) GUARANTOR FINANCIAL STATEMENT. Receipt and review by you
of a current personal financial statements of Xxxxx X.
Xxxxxxxx and Xxxxxxx Xxxx which is satisfactory in all
respects to you;
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(ix) LEGAL OPINIONS. The favorable written opinion of counsel for
us and the Guarantor with respect to such matters as you may
reasonably request;
(x) CONSENTS, APPROVALS, ETC. Copies of all governmental and
nongovernmental consents, approvals, authorizations,
declarations, registrations or filings, if any, required on
our part in connection with the execution, delivery and
performance of the Loan Documents or the transactions
contemplated hereby or as a condition to the legality,
validity or enforceability of the Loan Documents, certified
as true and correct and in full force and effect as of the
date hereof by us by a duly authorized officer of Borrower,
or, if none is required, a certificate of such officer to
that effect;
(xi) FEE. The balance of the Commitment Fee in the amount of
Seventy-Five Thousand and 00/100 Dollars ($75,000.00). Any
unused amount of the Expense Deposits (as defined in the
commitment letter dated January 27, 2003) paid to you to
date shall be credited against amounts due hereunder. The
Commitment Fee was fully earned upon acceptance of the
commitment letter;
(xii) PAYOFF LETTERS AND LIEN TERMINATIONS. A payoff letter from
Congress Financial, addressed to you, in form and substance
acceptable to you, together with UCC financing statement
terminations and other documents and instruments necessary
or reasonably desired by you to effect and evidence the
release and discharge of all liens, security interests and
assignments in their favor with respect to the Collateral;
(xiii) OTHER MATTERS. Such other documents, and completion of
such other matters, as you may reasonably request.
(B) FURTHER CONDITIONS FOR DISBURSEMENT. Your obligation to make any
Advance (including the first Advance) is further subject to the satisfaction of
the following conditions precedent:
(i) The representations and warranties contained in Section 7
hereof and in any of the Loan Documents shall be true and correct on and as of
the date such Advance is made (both before and after such Advance is made) as if
such representations and warranties were made on and as of such date;
(ii) No Default shall exist or shall have occurred and be
continuing on the date such Advance is made (whether before or after such
Advance is made); and
(iii) In the case of any Advance under the Revolving Credit
Loan, you shall have received, when due, all Reports required pursuant to
Section 5(B) as of the close of business on the last business day of the week
next preceding the date such Advance is made.
We shall be deemed to have made a representation and warranty to you at the time
of the making of, and the continuation or conversion of, each Advance to the
effects set forth in clauses (A) and (B) of this Section 8. For purposes of this
Section 8(B), the representations and warranties contained in Section 7 hereof
shall be deemed made with respect to both the financial statements referred to
therein and the most recent financial statements delivered pursuant to Section
5(B).
(C) POST-CLOSING CONDITIONS. After the date hereof, we agree to
provide you with the following:
(i) UCC SEARCHES. Uniform Commercial Code searches in all
jurisdictions in which you have filed UCC Financing Statements or in which we
conduct business;
10
(ii) EVIDENCE OF USE OF LOAN PROCEEDS. All documents you
require to evidence the use by us of the proceeds of the Loan.
9. AFFIRMATIVE COVENANTS. We covenant that, so long as any Obligations
remain outstanding and this Agreement is in effect, we shall:
(A) Pay to you on demand all fees and expenses which you incur in
connection with (i) the forwarding of loan proceeds, (ii) the processing of loan
advances, (iii) the establishment and maintenance of the lock box and of all
other accounts created in connection with the transaction contemplated hereby,
and (iv) examination of the Collateral;
(B) Promptly file all tax returns and other reports which we are
required to file and promptly pay all taxes, assessments and other charges;
(C) Promptly notify you in writing of any litigation affecting us,
whether or not the claim is covered by insurance, and of any suit or
administrative proceeding which may materially and adversely affect the
Collateral or our business, assets, operations or condition, financial or
otherwise;
(D) Notify you in writing (i) promptly upon the occurrence of any
event described in Section 4043 of ERISA, other than a termination, partial
termination or merger of a "Plan" (as defined in ERISA) or a transfer of a
Plan's assets, and (ii) prior to any termination, partial termination or merger
of a Plan or a transfer of a Plan's assets;
(E) Give you thirty (30) days prior written notice of our opening or
closing any place of business;
(F) Maintain our corporate existence and our qualification and good
standing in all states necessary to conduct our business and own our property
and maintain adequate assets, licenses, patents, copyrights, trademarks and
tradenames to conduct our business;
(G) Promptly notify you in writing of any labor dispute to which we
are or may become subject and the expiration of any labor contract to which we
are a party or bound;
(H) Promptly notify you in writing of any violation of any law,
statute, regulation or ordinance of any governmental entity, or of any agency
thereof, applicable to us which may materially and adversely affect the
Collateral or our business, assets, operations or condition, financial or
otherwise;
(I) Notify you in writing within five (5) business days of our default
under any note, indenture, loan agreement, mortgage, lease, or other agreement
to which we are a party or bound;
(J) Promptly notify you in writing of any default under any
Indebtedness or indebtedness owing to us;
(K) Promptly notify you in writing of the making of any capital
expenditures materially affecting our business, assets, operations or
conditions, financial or otherwise;
(L) Execute and deliver to you, upon request, such documents and
agreements as you may, from time to time, reasonably request to carry out the
terms and conditions of this Agreement;
(M) Promptly, and in any event within five (5) days of the receipt
thereof, deliver any communication in any way concerning any act or omission on
our part regarding the use, generation,
11
storage or release of a hazardous waste or substance. We agree to indemnify and
hold you harmless from any and all loss, damage, cost, liability or expense
(including reasonable attorney fees) arising out of our use, generation, storage
or release of any hazardous waste or substance;
(N) Promptly, and in any event within five (5) days of the receipt
thereof, deliver to you a copy of any communication from the Federal Department
of Labor concerning any alleged act or omission on our part in connection with
the payment of minimum and/or overtime wages to an employee;
(O) Promptly, and in any event within five (5) days of the receipt
thereof, deliver to you a copy of any communication concerning any violation of
a state or Federal law which could result in the forfeiture of the Collateral;
and
(P) Maintain the liens and security interests granted to you as first,
prior and only liens upon the Collateral, except for Permitted Liens.
(Q) Comply in all respects with the Environmental Order (as defined on
Schedule 7(A)).
10. NEGATIVE COVENANTS. Without your prior written consent, we covenant
that, so long as any Obligations remain outstanding and this Agreement is in
effect, we shall not:
(A) Merge or consolidate with or acquire any other Person;
(B) Declare or pay cash dividends upon any of our stock or distribute
any of our property or make (except in the ordinary course of business) any
loans or extensions of credit, or investments in, any Person, or redeem, retire,
purchase or acquire, directly or indirectly any of our stock, or make any
material change in our capital structure or in our business or operations which
might adversely affect the repayment of the Obligations;
(C) Enter into any transaction which materially and adversely affects
the Collateral or our ability to repay the Obligations, including any secondary
liens thereon;
(D) Become liable for the indebtedness of any Person, except by
endorsement of instruments for deposit;
(E) Incur Indebtedness, other than trade payables arising in the
ordinary course of our business, and the Obligations;
(F) Make a sale to any customer on a xxxx-and-hold, guaranteed sale,
sale and return, sale on approval, consignment, or any other repurchase or
return basis;
(G) Remove the Collateral which is tangible personal property from the
Collateral Locations set forth on the Term Sheet unless we give you thirty (30)
days prior written notice and the same is removed to a location within the
continental United States of America;
(H) Use any other corporate or fictitious name; or
(I) Prepay any Indebtedness, except the Loan.
11. TERMINATION. Either party shall have the right to terminate this
Agreement at the end of the Term of this Agreement or at any time thereafter by
giving the other party written notice by
12
registered or certified mail not less than sixty (60) days prior to the
effective date of such termination. Upon the effective date of termination, all
Obligations shall become immediately due and payable.
12. DEFAULT. Any one or more of the following events shall constitute a
default ("Default") under this Agreement: (a) we shall fail to pay when due, or
breach, any Obligations, or (b) Obligor shall (i) become insolvent, (ii)
generally not pay its respective debts as they become due, (iii) make an
assignment for the benefit of creditors, (iv) attempt to enter into a
composition of debts, or (v) make any misrepresentation to you or fail to
observe or perform any covenants or conditions in connection with this
Agreement, any Rider or any other instrument related to the Loan hereto, or (c)
there shall be filed by or against any Obligor a petition in bankruptcy for
liquidation or for reorganization, or a custodian, receiver or agent is
appointed or authorized to take charge of its properties, or any Obligor
authorizes any such action, or (d) there hereafter occur any material and
adverse change in our business, assets, operations and condition, financial or
otherwise, or (e) we shall be in default under any agreement to which we are a
party, or (f) any guaranty of the Obligations shall be terminated or revoked, or
(g) you in good faith believe that either (i) the prospect of payment or
performance of the Obligations is impaired or (ii) the Collateral is not
sufficient to secure fully the Obligations.
OBLIGOR ACKNOWLEDGES THAT WHILE THERE ARE EVENTS OF DEFAULT SET FORTH, THE
OBLIGATIONS ARE DUE UPON DEMAND, AND IF DEMAND IS NOT MADE, THEN UPON THE
MATURITY DATE SET FORTH IN THE TERM SHEET. DEMAND MAY OCCUR WITH OR WITHOUT
THERE BEING AN EVENT OF DEFAULT.
13. YOUR RIGHTS AND REMEDIES.
(A) If a Default has occurred under this Agreement and is continuing
or you have made demand, you may, at your election, without notice of your
election and without demand, do any one or more of the following: (a) declare
our Obligations, whether evidenced by a revolving credit note, a term note or
otherwise, to be immediately due and payable; (b) stop advancing money or
extending credit to or for our benefit under the Agreement or any Rider; (c)
exercise any and all of the rights accruing to a secured party under the Code
and any other applicable law; (d) take possession of the Collateral and keep it
on our premises, at no cost to you, or remove any part of it to such other
place(s) as you may desire or we shall, upon your demand, at our cost, assemble
the Collateral and make it available to you at a place reasonably convenient to
you; (e) seek the appointment of a receiver or trustee under the laws of any
court having jurisdiction for such appointment (to which appointment we consent
to in advance and waive any rights to object to or oppose).
(B) In the event of a Default hereunder, you may sell and deliver any
Collateral at public or private sales, for cash, upon credit or otherwise, at
such prices and upon such terms as you deem advisable, at your discretion, and
may, if you deem it reasonable, postpone or adjourn any sale of the Collateral
by an announcement at the time and place of sale of such postponed or adjourned
sale without giving a new notice of sale. We agree that you have no obligation
to preserve rights to the Collateral or xxxxxxxx any Collateral for the benefit
of any Person. You are hereby granted a license or other right to use, without
charge, our labels, patents, copyrights, name, trade secrets, trade names,
trademarks and advertising matter, or any similar property, in completing
production, advertising or selling any Collateral and our rights under all
licenses and all franchise agreements shall inure to your benefit. Any
requirement of reasonable notice shall be met if such notice is mailed postage
prepaid to us at our address set forth below at least ten (10) days before sale
or other disposition. The proceeds of sale shall be applied first to all
expenses of sale, including attorneys' fees, and second to (in whatever order
you elect) all Obligations. You will return any excess to us and we shall remain
liable for any deficiency.
13
(C) IN THE EVENT OF A DEFAULT HEREUNDER, WE HEREBY WAIVE ALL RIGHTS TO
NOTICE AND HEARING PRIOR TO THE EXERCISE BY YOU OF YOUR RIGHTS TO REPOSSESS THE
COLLATERAL WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON SUCH
COLLATERAL WITHOUT NOTICE OR HEARING AND ALL RIGHTS OF SET-OFF AND COUNTERCLAIM
AGAINST YOU.
14. WAIVER; AMENDMENTS; SUCCESSORS AND ASSIGNS. Your failure to exercise
any right, remedy or option under this Agreement or any Rider or other agreement
between you and us or delay by you in exercising the same will not operate as a
waiver. No waiver by you will be effective unless in writing and then only to
the extent stated. No waiver by you shall affect your right to require strict
performance of this Agreement. Your rights and remedies will be cumulative and
not exclusive. This Agreement cannot be changed or terminated orally. All terms,
conditions, promises, covenants, provisions and warranties shall inure to the
benefit of and bind your and our respective representatives, successors and
assigns.
15. BANKRUPTCY PROVISIONS. In consideration of your agreements hereunder
and under the Loan Documents, we agree that, in the event we (as a "Debtor")
file for relief under Title 11 of the United States Code ("Bankruptcy Code") or
are otherwise subject to an order for relief under the Bankruptcy Code, that:
(A) RELIEF FROM STAY. You shall be entitled to relief from the
automatic stay imposed by Bankruptcy Code Section 362 on or against the exercise
of any and all rights and remedies available to you under this Agreement, the
Loan Documents or applicable law, if Debtor fails to file a Plan of
Reorganization within 120 days or fails to obtain confirmation of a Plan of
Reorganization within 180 days, after entry of the order for relief. We
specifically acknowledge that "cause" exists for such relief within the meaning
of Section 362(d) of the Bankruptcy Code.
(B) CASH COLLATERAL. Any attempt by Debtor to use "Cash Collateral"
(as defined in Section 363 of the Bankruptcy Code) shall be subject to the prior
entry of an order pursuant to Section 363 of the Bankruptcy Code ("Cash
Collateral Order") specifically incorporating the principal terms set forth on
Schedule 15(B) attached hereto and the Debtor shall under no circumstances seek
to use Cash Collateral other than on the terms provided in this Agreement. Any
such Cash Collateral Order shall permit the use of Cash Collateral only until
the earliest to occur of: (i) a Default under any of the provisions of this
Agreement or the Loan Documents (other than a Default occasioned solely by the
bankruptcy of Debtor), (ii) the appointment of a Chapter 11 trustee or examiner
in Debtor's case, (iii) the dismissal of Debtor's case or its conversion to a
case under Chapter 7 of the Bankruptcy Code, or (iv) the entry of an order
modifying or terminating the automatic stay or prohibiting the further use of
cash collateral. Upon the occurrence of any of the events described in (i)
through (iv) of the preceding sentence, Debtor's ability to use Cash Collateral
shall terminate immediately and automatically; such termination shall not,
however, affect or impair the rights, interests or liens granted to you under
this Agreement or the other Loan Documents.
All existing and future revenue and cash shall constitute Cash Collateral,
subject to your xxxxxx, fully perfected and presently enforceable liens and
security interests, and, to the extent they are used and consumed by Debtor
after filing of the petition or entry of the order for relief, Debtor
specifically agrees that they are collateral for your secured claims under
Section 506 of the Bankruptcy Code in the amount so used.
To the extent it is determined that Section 552(a) of the Bankruptcy Code
applies to limit your interest under the Loan Documents and this Agreement you
shall be deemed to have, as adequate protection for the use of Cash Collateral,
14
a continuing perfected protection for the use of Cash Collateral, a continuing
perfected post-bankruptcy lien and security interest in all Collateral, and all
revenue and cash, whether derived from operations prior to or subsequent to or
the filing of a voluntary of involuntary petition for relief with respect to
Debtor. As further adequate protection for Debtor's use of Cash Collateral,
Debtor shall maintain at all times an adequate and appropriate amount and type
of coverage of insurance, including endorsements issued therewith covering the
Collateral in amounts not less than that required under the Loan Documents. To
the extent that the collateral securing your claims in Debtor's bankruptcy case
is deemed or proves to be insufficient to pay your claims in full, your secured
claims shall be deemed to have been inadequately protected by the provisions of
the Cash Collateral Order, and they shall therefore have administrative expenses
of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code,
which superpriority shall be equal to the priority provided under the provisions
of Section 364(c)(1) of the Bankruptcy Code over all other costs and
administrative expenses incurred in the case of the kind specified in, or
ordered pursuant to, Sections 105, 326, 327, 330, 331, 503(b), 506(c), 507(a),
507(b) or 726 of the Bankruptcy Code and shall at all times be senior to the
rights of Debtor or any successor trustee in the resulting bankruptcy proceeding
or any subsequent proceeding under the Bankruptcy Code.
During the pendency of Debtor's bankruptcy, if it is determined that any of
the rights granted hereunder or by any of the Loan Documents are security
interests or liens, they shall be deemed perfected without the necessity of the
filing of any documents or commencement of proceedings otherwise required under
non-bankruptcy law for the perfection of security interests, with such
perfection being binding upon any subsequently appointed trustee, either in
Chapter 11 or under any other Chapter of the Bankruptcy Code, and upon other
creditors of Debtor who have or may hereafter extend secured or unsecured credit
to Debtor.
(C) SURCHARGE WAIVER. Debtor and/or any other representative of
Debtor's bankruptcy estate waives any right to seek a surcharge of your
collateral under 11 U.S.C. Section 506(c) or any other provision of applicable
law.
(D) OTHER WAIVERS. Debtor waives any right to seek an order under
11 U.S.C. Sections 363, 364, 1129 or any other provision of the Bankruptcy Code,
imposing liens or security interests of senior or equal priority with your liens
and security interests in the Collateral or the Cash Collateral.
(E) OTHER ACTIONS NOT PROHIBITED. Nothing contained in this Section 15
shall be deemed to limit or restrict your rights to seek in the bankruptcy court
any relief that you may deem appropriate in the event of a bankruptcy commenced
by or against Debtor, and in particular, you shall be free to seek the dismissal
or conversion of any case filed by Debtor, the appointment of a trustee or
examiner, and relief from the automatic stay.
16. MISCELLANEOUS.
(A) If any provision of this Agreement shall be prohibited or invalid,
under applicable law, it shall be ineffective only to such extent, without
invalidating the remainder of this Agreement.
(B) This Agreement shall be interpreted in accordance with the
Governing Law of the state set forth on the Term Sheet.
(C) All of our representations and warranties contained in this
Agreement shall survive the execution, delivery and acceptance thereof by the
parties.
15
(D) No termination of this Agreement or of any guaranty of the
Obligations shall affect or impair the powers, obligations, duties, rights,
warranties, representations or liabilities of the parties hereto and all shall
survive such termination.
(E) Each Obligation may, in your discretion, be evidenced by notes or
other instruments issued or made by us to you. If not so evidenced, such
Obligation shall be evidenced solely by entries upon your books and records.
(F) All Obligations shall constitute one loan secured by the
Collateral. You may, in your sole discretion: (i) exchange, enforce, waive or
release any of the Collateral or (ii) apply Collateral and direct the order or
manner without affecting your right to take any other action with respect to any
other Collateral.
(G) You shall have the continuing and exclusive right to apply or
reverse and re-apply any and all payments to any portion of the Obligations. To
the extent that we make a payment or you receive any payment or proceeds of the
Collateral for our benefit, which are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
debtor in possession, receiver or any other party under any bankruptcy law,
common law or equitable cause, then, to such extent, the Obligations or part
thereof intended to be satisfied shall be revived and continue as if such
payment or proceeds had not been received by you.
(H) We shall reimburse you for all expenses incurred or to be
incurred by you in connection with (a) the negotiation, preparation and closing
of this Agreement; (b) the protection, perfection or preservation of your
security interest in or lien upon the Collateral; (c) your inspection or
verification of the Collateral; (d) any court or bankruptcy proceeding relating
to the Agreement or any claim or action by any Person against you which would
not have been asserted were it not for your relationship with us hereunder or
otherwise; (e) actions taken with respect to the Collateral and your security
interest or lien therein; and (f) enforcement of any of your rights and remedies
with respect to the Obligations or Collateral. The foregoing expenses shall
include, without limitation: (i) reasonable fees, costs and expenses of your
attorneys and paralegals; (ii) interest on the foregoing at the highest
applicable interest rate provided under this Agreement, which shall be part of
the Obligations, payable on demand and secured by the Collateral. In addition,
we shall pay those fees set forth on the Term Sheet at the times specified
therein. In recognition of your right to have all your expenses incurred or to
be incurred in connection with this Agreement and the fees due you secured by
the Collateral, you shall not be required to record any discharge of your lien
or termination of your security interest unless and until we deliver to you a
general release acceptable to you.
(I) We agree to give you written notice of any action or omission by
you or your agents in connection with this Agreement that may be actionable
against you or that may be a defense to payment of the Obligations for any
reasons. We further agree that unless such a notice specifically describing the
action or omission is given by us within thirty (30) days after we have
knowledge or with the exercise of reasonable diligence should have had knowledge
of the occurrence of said action or omission we shall not assert, and we shall
be deemed to have waived, any claim or defense arising therefrom.
(J) If you shall breach your obligation under this Agreement to make
an advance under the terms of this Agreement, notwithstanding our conformance
with the provisions thereof, we agree that our sole remedy on account thereof
shall be to recover liquidated damages on account of such breach, computed as
hereinafter provided, in recognition of the fact that the damages which we might
incur are uncertain and speculative. Liquidated damages to which we shall be
entitled shall be equal to sixty (60) times the interest payable for one day on
the loans outstanding as of the day that you are
16
deemed to have failed to fund. In any event, you shall never be liable to us for
special, indirect and consequential damages, whatever the nature of your breach
hereunder.
(K) We authorize and direct you to disburse, for our account, the
proceeds of loans made by you to us to such Person as any of our officers or
directors shall direct, whether in writing or orally.
(L) Any notice required hereunder shall be in writing, and addressed
to the party to be notified as follows:
IF TO YOU: Xxxxxx X. Xxxx, Xx., President
Greenfield Commercial Credit, L.L.C.
0000 Xxxx Xxxx Xxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxxxx 00000
IF TO US: The Borrower's Address set forth
on the Term Sheet.
or to such other address as each party may designate for itself by like notice.
(M) We represent and warrant to you that, with respect to the
financing transaction herein contemplated, no Person is entitled to any
brokerage fee or other commission and we agree to indemnify and hold you
harmless against any and all such claims.
(N) The paragraph titles contained in this Agreement are without
substantive meaning and are not part of the Agreement.
(O) We hereby release and exculpate you, your officers, employees and
designee, from any liability arising from any acts under this Agreement or in
furtherance thereof, whether as attorney-in-fact or otherwise, whether of
omission or commission, and whether based upon any error of judgment or mistake
of law or fact, except for willful misconduct. In no event will you have any
liability to us for lost profits or other special or consequential damages.
(P) You may, at your option, cure any default by us under any
agreement with a third party or pay or bond on appeal any judgment entered
against us, discharge taxes, liens, security interests or other encumbrances at
any time levied on or existing with respect to the Collateral and pay any
amount, incur any expense or perform any act which, in your sole judgment, is
necessary or appropriate to preserve, protect, insure, maintain, or realize upon
the Collateral. You may charge our Loan Account for any amounts so expended,
such amounts to be repayable by us on demand. You shall be under no obligation
to effect such cure, payment, bonding or discharge, and shall not, by doing so,
be deemed to have assumed any obligation or liability of ours.
(Q) All representations and warranties by us contained in this
Agreement or any of the other agreements contemplated herein shall survive the
execution and delivery of this Agreement until the termination hereof and the
indefeasible satisfaction in full of all Obligations.
17. WAIVER OF JURY TRIAL. Our legal counsel has advised us that (i) there
may be a constitutional right to a jury trial in connection with any claim,
dispute or lawsuit arising out of this Agreement or any Rider and (ii) such
constitutional right may be waived. After consultation with our counsel (which
has included our counsel's review of this Agreement), we believe that it is in
our best
17
interest in this commercial transaction to waive such right. Accordingly, we
hereby waive our right to a jury trial, and further agree that the best forum
for hearing any claim, dispute or lawsuit, if any, arising in connection with
this Agreement or any Rider or our relationship with you, shall be a court of
competent jurisdiction sitting without a jury.
18. NO ORAL AGREEMENTS. We acknowledge that this Agreement and each Rider
represents the final agreement between you and us and the terms of such
documents may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements that may have or will be exchanged between you
(including your officers, employees and agents) and us.
Very truly yours,
BONTEX, INC.,
a Virginia corporation
By: /S/ XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx
Its: President
Accepted at: February 26, 0000
XXXXXXXXXX XXXXXXXXXX CREDIT, L.L.C.,
a Michigan limited liability company
By: GCC Management, Inc.
Its: Manager
By: /S/ XXXXXXX X. XXXXXXX
Xxxxxxx X. Xxxxxxx
Its: Vice President
18
LOAN AND SECURITY AGREEMENT
DATED AS OF FEBRUARY 26, 2003
TERM SHEET
PARAGRAPH PROVISIONS TERMS
2(A) Maximum Loan Amount: $1,500,000.00
2(C) Underutilization Fee 1/12 of 2% monthly
2(D) Maturity Date: February 26, 2004
5(B) Interim Financial Statement Period Monthly
5(B) Scope of CPA Engagement: Audited
7(A) Formation State: Virginia
7(B) Assumed Names or Trade Names: See Disclosure Schedule
7(I) Permitted Liens See Schedule 7(I)
7(N) Chief Executive Office, Principal Place of One Bontex Drive
Business and Location of Collateral Records: Xxxxx Xxxxx, XX 00000
7(R) Subsidiaries or Affiliates: See Schedule 7(R)
7(S) Leased Properties: See Schedule 7(T)
7(T) Collateral Locations: See Schedule 7(T)
16(B) Governing Law: Michigan
Term Sheet-1
16(H) Fees:
(i) Commitment Fee: $75,000 payable on the date
hereof, $50,000 of which shall be
paid by an overadvance on the
Revolving Credit Loan. The
overadvance shall be reduced to
$25,000 by March 29, 2003 and
to $-0- by April 28, 2003;
(ii) Loan Processing Fee: $1,000 payable monthly with the
interest payment;
(iii) Collateral Evaluation Fee: $1,000 per day for examination of
collateral - estimated four times
per year - payable as incurred;
and
(iv) Fees for Lockbox and Other Accounts: As specified by depository
institutions.
16(L) Borrower's Address: Xxx Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
We understand that this Term Sheet defines certain terms used in the
attached Loan and Security Agreement ("Attachment"). We have read the Attachment
and this Term Sheet and fully understand their relationship. By executing both
documents, we acknowledge the foregoing.
LENDER: BORROWER:
GREENFIELD COMMERCIAL CREDIT, L.L.C., BONTEX, INC.,
a Michigan limited liability company a Virginia corporation
By: GCC Management, Inc.
Its: Manager
By: /S/ XXXXXXX X. XXXXXXX By: /S/ XXXXX X. XXXXXXXX
Xxxxxxx X. Xxxxxxx Xxxxx X. Xxxxxxxx
Its: Vice President Its: President
Term Sheet-2
REVOLVING CREDIT LOAN RIDER #1
(TO LOAN AND SECURITY AGREEMENT DATED AS OF FEBRUARY 26, 2003)
GREENFIELD COMMERCIAL CREDIT, L.L.C.
This Revolving Credit Loan Rider and the attached Term Sheet (collectively,
the "Rider") sets forth the terms upon which you will make certain Advances to
us under the Revolving Credit Loan and is a supplement to and is hereby
incorporated into that Loan and Security Agreement between you and us, as
amended (the "Agreement").
1. DEFINITIONS. As used herein:
A. "ELIGIBLE RECEIVABLE" is a Receivable arising in the ordinary
course of Borrower's business from the sale or lease of goods which have been
delivered to and accepted by the Receivable Debtor. The following are not
Eligible Receivables:
(i) sales by Borrower to any affiliate, to any person controlled
by an affiliate or any subsidiary of Borrower;
(ii) an account which is due or unpaid more than ninety (90) days
after the original invoice date;
(iii) if ten (10%) percent or more of the accounts of a single
Receivable Debtor are not deemed to be eligible hereunder,
except Eligible Bojos Receivables;
(iv) the Receivable Debtor is also a creditor or supplier of
Borrower or has disputed liability with respect to such
account or such account is subject to any right of set off
by the Receivable Debtor;
(v) the Receivable Debtor is a debtor under Federal Bankruptcy
Laws or has filed or filed against it an application for
relief under such laws;
(vi) the Receivable Debtor has suspended business;
(vii) a receiver, trustee, liquidator or custodian has been
appointed for the Receivable Debtor or a significant part of
its assets;
(viii) the account arises from a sale outside of the United
States, unless it is a Qualified Foreign Receivable;
(ix) the account arises from a xxxx and hold, guaranteed sale,
sell or return, sale on approval, consignment or any other
repurchase or return basis;
(x) the Receivable Debtor is the United States of America or any
department thereof;
(xi) the goods giving rise to such account have not been
delivered to or accepted by the Receivable Debtor;
(xii) the total unpaid accounts of a Receivable Debtor exceeds a
credit limit determined by you in your discretion;
(xiii) there is an agreement with the Receivable Debtor for any
deduction beyond those shown on the face of the invoice
related to such account;
(xiv) You, in your sole and absolute discretion, believe that the
collection of the account is doubtful or will be delayed.
B. "ELIGIBLE BOJOS RECEIVABLES" means Receivables owing to us by Bojos
Leather and/or Bojos Manufacturing that are supported in the manner set forth in
subpart 2(ii) of the definition of Qualified Foreign Receivable and are
otherwise Eligible Receivables provided that less than twenty-five (25%) percent
of the aggregate Receivables owing by such Receivables Debtors are not otherwise
deemed to be ineligible hereunder.
C. "ELIGIBLE INVENTORY" means new, non-obsolete raw material for
fiberboard production and marketable first quality finished fiberboard goods
owned by Borrower intended for sale located only at One Bontex Drive, Buena
Vista, Virginia, which has been Eligible Inventory and has been possessed by
Borrower for not more than one hundred eighty (180) days. Without limiting your
discretion, we understand the following Inventory is not Eligible Inventory:
(i) Inventory which is work-in-process;
(ii) Inventory which is obsolete or damaged, or not useful;
(iii) Inventory in which you do not have a first perfected
security interest or in which any other Person claims a
security interest or lien;
(iv) Inventory which is in transit or in locations other than
described in Paragraph 6 of this Rider;
(v) Inventory which is uninsured or under-insured;
(vi) Inventory which is held on consignment for or is subject to
a bailment arrangement with any other Person;
(vii) Inventory which is trade-in Inventory or returned goods;
(viii) Inventory which is used in packaging or shipping of
Inventory; and
(ix) Inventory which is nonconforming to standards imposed by any
governmental agency regulating such Inventory or the sale or
use thereof.
D. "QUALIFIED FOREIGN RECEIVABLE" means any account that arises from
a sale outside of the United States (1) that is otherwise an Eligible
Receivable, and (2) is supported by either (i) an irrevocable letter of credit
issued by a bank satisfactory to you, which letter of credit has been delivered
to you or your agent, has been assigned to you and the issuer thereof has been
notified of the assignment of the proceeds of such letter of credit or (ii)
insurance issued by the Export-Import Bank of the United States, which insurance
has been collaterally assigned to you and such assignment has been consented to
by the Export-Import Bank of the United States, which in either case under
(2)(i) or (2)(ii) is
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acceptable to you in all respects, is sufficient to cover the Receivable and is
payable only in the United States and in United States dollars.
E. "RECEIVABLE(S)" means an account(s) as defined in Article 9 of the
Uniform Commercial Code.
F. "RECEIVABLE DEBTOR" means an account debtor of ours.
G. All terms defined in the Agreement which are used herein shall
have the meanings as defined in the Agreement, unless specifically defined
otherwise herein.
2. REVOLVING CREDIT LOAN ADVANCES.
A. ADVANCES. Subject to the terms of the Agreement, you may, in your
sole discretion and upon our request made only by one of the persons as set
forth on the Term Sheet (or such other or different persons as we may advise you
from time to time by corporate resolution), make Advances to us in an amount
(hereinafter referred to as the "Gross Availability") which is the lesser of (i)
the MAXIMUM LOAN AMOUNT as set forth on the Term Sheet or (ii) an amount up to
the sum of (x) the applicable PERCENTAGE ADVANCE RATE as set forth on the Term
Sheet times the face amount (less maximum discounts, credits and allowances
which may be taken by or granted to account debtors in connection therewith) of
Eligible Receivables; plus (y) the applicable Percentage Advance Rate as set
forth on the Term Sheet times the value of our Eligible Inventory (less freight
and container costs) calculated at the lower of cost or market value; which
Advances we may borrow, repay and reborrow during the term of the Agreement. All
Advances and amounts payable pursuant to this Rider shall constitute part of the
Obligations.
B. RESERVES. You shall have a continuing right to deduct reserves in
determining the Gross Availability ("RESERVES"), and to increase and decrease
such Reserves from time to time, if and to the extent that, in your sole
judgment, such Reserves are necessary to protect you against any state of facts
which does, or would, with notice or passage of time or both, constitute an
Event of Default or have an adverse effect on any Collateral. You may, at your
option, implement Reserves by designating as ineligible a sufficient amount of
accounts or inventory which would otherwise be Eligible Receivables or Eligible
Inventory so as to reduce Gross Availability by the amount of the intended
Reserve.
C. BORROWING PROCEDURE. With each request for an Advance, we will
submit to you original invoices, an inventory certification and such other
documents and information as you shall request, all of which shall be
satisfactory to you.
D. INTEREST RATE. We shall pay you interest on the daily outstanding
balance of our Revolving Credit Loan account at a per annum rate equal to the
EFFECTIVE RATE as set forth on the Term Sheet. In the event any payments of
principal are not paid when due or declared due, whether at maturity, by
acceleration, by lapse of time or otherwise, including any fees, costs or
expenses advanced or paid by you, the principal balance shall bear interest
thereafter, at your option, and without affecting any of your rights and
remedies provided for in the Agreement, this Rider or any promissory note
evidencing our Obligations, at a per annum rate equal to DEFAULT RATE as set
forth on the Term Sheet. Any change in any of the above interest rates resulting
from a change in the Prime Rate shall become effective immediately with each
change in the Prime Rate. Interest charges shall be computed on the basis of a
year of 360 days for the actual days elapsed in a month and, except as set forth
in Paragraph 12 of the Agreement, will be payable to you on the first day of
each month hereafter at your address shown at Paragraph 16 of the Agreement.
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E. PRINCIPAL PAYMENTS. In the event that the principal amount
outstanding under the Revolving Credit Loan is in excess (for whatever reason)
of the amount of the Gross Availability, we agree to remit to you within one (1)
business day such amount as may be necessary to reduce the total outstanding
amount to the amount of the Gross Availability. All principal and interest due
under the Revolving Credit Loan shall be due upon termination of the Agreement.
F. USE OF PROCEEDS. We shall use the proceeds of the Revolving Credit
Loan solely for the purposes as set forth in the Agreement and on the attached
Term Sheet.
3. COLLECTIONS. If you elect to place Borrower on a dominion of funds
arrangement, we shall, at our expense and in the manner directed by you from
time to time, direct that all cash, checks, drafts and other instruments for the
payment of money (properly endorsed, where required, so that such items may be
collected by you), which may be received by us at any time in full or partial
payment of any of the Receivables or as proceeds of any of the Collateral
("REMITTANCES") shall be sent to a lockbox designated by you and/or maintained
in your name, and deposited into a non-interest bearing deposit account now or
hereafter selected by you and maintained in your name (the "CASH COLLECTION
ACCOUNT") as security for payment of the Obligations, and under arrangements
with the depository bank under which all funds deposited to the Cash Collection
Account are required to be transferred solely to you. We shall have no right to
withdraw any funds deposited in the Cash Collection Account. In the event that
we repay the Obligations in full at any time hereafter, the balance in the Cash
Collection Account or such other accounts holding the proceeds thereof will be
delivered to us five (5) business days after the date of pay off. Unless you
shall (acting in your sole discretion) notify us to the contrary, Remittances
shall be administered on the basis set forth on the Term Sheet. We shall bear
all risk of loss of any funds deposited into the Cash Collection Account. To
implement the foregoing, we shall execute such lockbox and bank account
agreements and all other documents from time to time as you shall specify ("CASH
COLLECTION DOCUMENTS"). Any collections or other proceeds received by us shall
be held in trust for you and immediately remitted to you in kind.
4. INVENTORY.
A. RETURN OF INVENTORY. If at any time prior to our Default under the
Agreement or this Rider, any account debtor returns any Inventory to us in the
ordinary course of our business, we shall promptly determine the reason for such
return and issue a credit memorandum to the account debtor in the appropriate
amount. We agree to give you prompt notice of the return of such Inventory. In
the event any attempted return occurs after our Default hereunder, we shall (i)
hold the returned Inventory in trust for you, (ii) segregate all returned
Inventory from all of our other property and (iii) conspicuously label the
returned Inventory as your property.
B. SALE OF INVENTORY. Until our Default under the Agreement or this
Rider, we may, in any lawful manner, sell Inventory, but only in the ordinary
course of our business, provided, however, our sale shall not cause a breach of
our warranties and representations as set forth in this Rider. We acknowledge
that any sale of Inventory in the ordinary course of business does not include a
transfer of partial or total satisfaction of Indebtedness.
5. COVENANTS.
A. RECEIVABLES. Unless or until you notify us in writing that you have
dispensed with any one or more of the following requirements, we shall:
(i) Immediately upon our learning thereof, inform you in writing
of the rejection of goods by any account debtor, delays in
delivery of goods,
4
nonperformance of contracts and of any assertion of any
claims, offsets or counterclaims by any account debtor;
(ii) Not permit or agree to any extension, compromise or
settlement or make any change or modification of any kind or
nature with respect to any Receivables, including any of the
terms relating thereto;
(iii) Immediately upon our learning thereof, furnish to and
inform you of all information relating to the financial
condition of any account debtor;
(iv) Immediately upon our learning thereof, notify you in writing
of those Receivables which are not Eligible Receivables; (v)
Keep all goods returned by any account debtor and all good
repossessed or stopped in transit by us from any account
debtor segregated from our other property, holding the same
as trustee for you until otherwise directed in writing by
you;
(vi) Not re-date any invoice or sale or make sales on extended
dating terms beyond that customary in our industry; and
(vii) Immediately deliver to you any promissory note, trade
acceptance or any other instrument for the payment of money
evidencing any Receivables and endorsed to your order.
B. INVENTORY. Unless or until you notify us in writing that you have
dispensed with one or any one or more of the following requirements, we shall:
(i) not remove the Inventory from the Collateral Locations
described in the Agreement;
(ii) promptly, and in any event within five (5) days of the
receipt thereof, deliver such certification schedules and
information relating to the Inventory and Eligible Inventory
as you may reasonably request;
(iii) keep correct and accurate records itemizing and describing
the kind, type, quality and quantity of Inventory, our
costs, therefore, selling price thereof, and the daily
withdrawals therefrom and additions thereto, all of which
records shall be available to you, your officers, employees
and agents upon demand for inspection and copying;
(iv) concurrently, with the delivery of any of the Inventory to a
bailee, warehousemen or similar party deliver to you, in
form acceptable to you, warehouse receipts in your name
evidencing the storage of Inventory;
(v) allow you to have the right upon demand and at any time or
times thereafter during our usual business hours to inspect
and examine Inventory and to check and test the same as to
quality, quantity, value and condition. We agree to
reimburse you for your reasonable costs and expenses in
doing so;
5
(vi) conduct a physical count of the Inventory at such intervals
as you may request and promptly supply you with a copy of
such counts accompanied by a report of the value (valued at
the lower of cost or market value) of the Inventory;
(vii) if sales of Inventory are made for cash, we shall
immediately deliver to you the identical checks, cash or
other forms of payment which we receive (only in the event
Lender elects to place Borrower on a dominion of funds
arrangement or on Default);
(viii) not acquire consigned Inventory.
6. REPRESENTATIONS.
A. RECEIVABLES. With respect to all Receivables now in existence or
hereafter created, we warrant and represent to you that, except as disclosed to
you in writing:
(i) all Receivables are genuine in all respects, are what they
purport to be and are not evidenced by a judgment;
(ii) all Receivables represent undisputed, BONA FIDE transactions
completed in accordance with the terms and provisions
contained in the invoices and purchase orders relating
thereto;
(iii) the amounts shown on all certifications provided to you,
our books and records and all invoices and statements
delivered to you with respect thereto are actually and
absolutely owing to us and are not contingent for any
reason;
(iv) if you have requested us to do so, all payments thereon
following such request have been or shall be turned over to
you by us;
(v) there are no setoffs, counterclaims or disputes existing or
asserted with respect thereto and we have not made any
agreement with any account debtor thereof for any deduction
or discount of the sum payable thereunder except regular
discounts allowed by us in the ordinary course of our
business for prompt payment;
(vi) there are not now and there shall not be at any time or
times hereafter any facts, events or occurrences which in
any way impair the validity or enforcement thereof or tend
to reduce the amount payable thereunder from the amounts
thereof as shown on the certifications provided to you, our
books and records and the invoices and statements delivered
to you with respect thereto;
(vii) all account debtors thereof have the capacity to contract
and are solvent to the best of our knowledge;
(viii) the goods sold or transferred and the services furnished,
giving rise thereto are not subject to a lien, claim,
encumbrance or security interest except your security
interest;
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(ix) we have no knowledge of any fact or circumstance which would
impair the validity or collectability thereof;
(x) there are no proceedings or actions which are threatened or
pending against any account debtor which might result in any
material adverse change in its financial condition; and
(xi) with respect to those Receivables upon which we rely for
Advances, all are Eligible Receivables.
B. INVENTORY. With respect to all Inventory now in existence or
hereafter required, we warrant and represent to you that, except as disclosed to
you in writing:
(i) Inventory is kept only at the COLLATERAL LOCATIONS described
in the Agreement;
(ii) The amount shown on all certifications provided to you and
on our books and records is actually owned by us without any
claim or ownership by any other Person; and
(iii) With respect to that Inventory upon which we rely for
Advances, all is Eligible Inventory.
7. NOTIFICATION AND COLLECTION. We understand that you will:
A. At your option, notify all account debtors that Receivables have
been assigned to you, you have a security interest therein and payment is to be
made to a lockbox;
B. To the extent you have not given notice previously, you may
request all account debtors to make payments on Receivables directly to you;
C. If deemed necessary by you, enforce payment and collect in your
name, by legal proceedings or otherwise, our Receivables and to charge the
collection costs and expenses to our Loan account; and
D. If deemed necessary by you, take control in any manner of any
cash or non-cash proceeds of Receivables and of any rejected, returned, stopped
in transit or repossessed goods relating to Receivables.
8. POWER OF ATTORNEY. We hereby irrevocably designate, make, constitute and
appoint you (and any agents designated by you) as our true and lawful attorney,
with power, without notice to us and at such time or times hereafter as you may
in your sole discretion determine, in our name or your name and at our expense:
A. To demand payment of Receivables;
B. To enforce payment of Receivables, by legal proceedings or
otherwise;
C. To exercise all of our rights and remedies with respect to the
collection of Receivables;
D. To settle, adjust, compromise, extend or renew any Receivables;
7
E. To settle, adjust or compromise any legal proceedings brought to
collect Receivables;
F. To sell or assign any Receivables upon such terms, for such amount
and at such time as you deem advisable;
G. To discharge and release any Receivables;
H. To prepare, file and sign our name on any proof of claim in
bankruptcy or similar document against any account debtor;
I. To prepare, file and sign our name on any financing statement,
notice of lien, claim of mechanic's lien, assignment or satisfaction of lien or
mechanics lien, or similar document in connection with any Receivables;
J. To do all acts and things necessary, in your sole discretion, to
fulfill our obligations under the Agreement and this Rider;
K. To endorse our name upon any checks, notes, acceptances, money
orders or other forms of payment and to deposit the same in the Cash Collateral
Account on account of our Obligations;
L. To endorse our name upon any chattel paper, document, instrument,
freight xxxx, xxxx of lading or similar document or agreement relating to any
Receivables or goods pertaining thereto;
M. To sign our name to verifications of Receivables and notices
thereof to account debtors; and
N. To notify the post office authorities, after our Default under this
Agreement, to change the address for delivery of our mail to an address
designated by you and to open such mail for purposes of collecting Receivables.
We ratify and approve all acts of you and your designee. Neither you nor
your designee will be liable for any acts or omissions nor for any error of
judgment or mistake of fact or law. This power, being coupled with an interest,
is irrevocable until the Obligations have been fully satisfied.
9. COSTS AND EXPENSES. All costs and expenses incurred by you in any manner
or way with respect to your enforcement of your rights and remedies under the
Agreement or this Rider or with respect to your collection of Receivables or
protection of your security interest in Receivables and the Collateral, whether
by suit or otherwise, or with respect to your notification of account debtors or
verification of Receivables shall be a part of the Obligations and payable on
demand. Without limiting the generality of the foregoing, such costs and
expenses include reasonable attorneys' fees, court costs, court reporting
expenses, long distance telephone charges, postage, telegram charges, wire
transfer expenses, expenses of auditors, collectors, clerks and investigators,
expenses for travel, lodging and food and expenses for repairing, altering or
supplying goods, if any, necessary to fulfill in whole or in part any purchase
order of any account debtor from which the Receivables involved have arisen.
8
10. TERMINATION. This Rider and your and our respective obligations
hereunder shall terminate upon payment in full of the Obligations or upon our
execution and your acceptance of a subsequently numbered and/or dated Term Sheet
and Revolving Credit Loan Rider.
Very truly yours,
BONTEX, INC.,
a Virginia corporation
By: /S/ XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx
Its: President
Accepted on February 26, 0000
XXXXXXXXXX XXXXXXXXXX CREDIT, L.L.C.,
a Michigan limited liability company
By: GCC Management, Inc.
Its: Manager
By: /S/ XXXXXXX X. XXXXXXX
Xxxxxxx X. Xxxxxxx
Its: Vice President
9
TERM SHEET
ATTACHMENT TO
REVOLVING CREDIT LOAN RIDER #1
DATED AS OF FEBRUARY 26, 2003
TO LOAN AND SECURITY AGREEMENT
DATED AS OF FEBRUARY 26, 2003
PARAGRAPH PROVISIONS TERMS
2(A) Authorized Persons Xxxxxxx Xxxxxxxx: Senior Vice President
Xxxxxxx Xxxxxxxx: Senior Vice President
Xxxxxxx Xxxx: Controller
2(A)(i) Maximum Loan Amount $1,500,000.00
2(A)(ii) Percentage Advance Rate
Eligible Receivables 75%
Eligible Inventory 40% (not to exceed $300,000.00)
2(B) Effective Rate 8.0% plus the Prime Rate
Default Rate 12.0% plus the Prime Rate
2(D) Use of Proceeds Repayment of indebtedness to Congress
Financial Corporation and working Capital
3(A) Lockbox Collection Basis [x] Yes [ ] No
Lockbox Bank LaSalle Bank
Float Days Three (3) banking days
We understand that this Term Sheet defines certain terms used in the
Revolving Credit Loan Rider (the "Rider") to which this Term Sheet is attached.
We have read the Rider and this Term Sheet and fully understand their
relationship. By executing both documents, we acknowledge the foregoing.
GREENFIELD COMMERCIAL CREDIT, L.L.C., BONTEX, INC.,
a Michigan limited liability company a Virginia corporation
By: GCC Management, Inc.
Its: Manager
By: /S/ XXXXXXX X. XXXXXXX By: /S/ XXXXX X. XXXXXXXX
Xxxxxxx X. Xxxxxxx Xxxxx X. Xxxxxxxx
Its: Vice President Its: President
