1
EXHIBIT 10.39
LOAN AGREEMENT
This Loan Agreement (the "Agreement") dated as of the 10" day of
February, 1998 is made and entered into on the terms and conditions set forth,
by and between LINKS COURT #1 ASSOCIATES (the"Lender") and GENERAL CREDIT
CORPORATION (the "Borrower").
RECITALS
A. The Borrower has requested and the Lender has agreed to establish, a
credit facility in favor of the Borrower, in the aggregate principal amount of
Two Million Six Hundred Thousand ($2,600,000.00) Dollars (the "Loan" or the
"Loan Amount") and Borrower, upon the terms and agrees to make one or more
credit loans to the Borrower, upon the terms and conditions set forth in this
Agreement and that certain NonNegotiable Secured Corporate Promissory Note of
ever date herewith (the "Note"), a copy of which is attached hereto and
incorporated by reference hereby as Exhibit "A". Subject to the provisions of
this Agreement and the Note, the Borrower may borrow, repay and re. borrow any
amount of the Loan Amount.
B. The Loan Amount shall be deposited into an account at Fleet Bank,
Now York, New York (the "Loan Account") or such other FDIC. insured. banking
institution within the unilateral discretion of the Borrower (the "Bank") and
the Loan Account shall be in the name of General Credit Corporation or such
other name, as directed by the Borrower (the "Loan Account").
C. All withdrawals from the Loan Account shall require the consent of
the Lender and the Borrower and shall be made upon the terms and conditions of
this Agreement: provided, however, the Lender shall have the right to withdraw
funds from the Loan Account up to the Loan Amount without the 'consent of the
Borrower in the event an interest payment on the Note has not been made within
10 days of the date which it was due (a "Payment Default"). The Borrower hereby
agrees to place in escrow with counsel to the Lender written evidence of its
authorization to allow the Lender to withdraw funds from the Loan Account in the
event of a Payment Default, such escrow to be held substantially upon the terms
and conditions of that certain Escrow Agreement attached hereto and Incorporated
by reference hereby as Exhibit "B".
D. The proceeds of the Loan shall be used by the Borrower to purchase
checks on a non-recourse basis.
E. The Borrower shall have the right for the term of this Agreement to
borrow from the Lender amounts up to 100% of the total account balance
(including funds on deposit but not yet cleared). The Borrower shall have' the
right to borrow from the Lender $2,600,000.00 outstanding on any one day but
only up to $1,000,000.00 in advance in any one business day provided, however,
that any amounts borrowed must be replaced with an equal amount of a deposit of
checks by the end of the business day in which the funds are borrowed. the
Borrower will be allowed to make a cash deposit of up to $100,000.00 to the
Lender or its agent in lieu of the checks by the end of the business day to
repay any funds advanced to the Borrower. On Friday or the last
business day of the week, the Borrower may receive an advance of up to
2
$1,300,000.00 provided, however, that the amount borrowed is replaced with an
equal amount of deposit of checks by the end of the business day. The Borrower
will be allowed to make a deposit of up to $300,000.00 to the Lender or its
agent in lieu of the checks by the end of the next business day to repay any
funds advanced to the Borrower. It shall not constitute a default if any bounced
checks are replaced within one (1) business day. If the funds are not replaced
by the aforementioned deposit, the Borrower shall pay a penalty of $10,000.00
per day until the money is replaced for a period not to exceed three (3)
business days except due to circumstances beyond the control of the parties. At
the end of three (3) business days, if the money is not replaced, the loan shall
be in default and subject, to call, except due to circumstances beyond the
control of the parties. Notwithstanding anything contained herein to the
contrary, the maximum amount that may be borrowed during the term of the Loan
shall not exceed $2,600,000.00 in the aggregate, on any one day. The parties
hereto shall use best efforts to cause the Bank to communicate daily to the
parties both the available balance and the total account balance.
NOW THEREFORE, in consideration of the agreement of the Lender to make
the Loan, the mutual covenants and agreements hereinafter set forth, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower and the Lender hereby agree as follows:
1. RECITALS. The foregoing recitals are true and correct and are
incorporated into this Agreement.
2. DESCRIPTION OF LOAN.
A. The Borrower shall have the right for the term of this Agreement to
borrow from the Lender amounts up to 100% of the total account balance
(including funds on deposit but not yet cleared). The Borrower shall have the
right to borrow from the Lender $2,600,000.00 outstanding on any one day but
only up to $1,000,000.00 in advance in any one business day provided, however,
that any amounts borrowed must be replaced with an equal amount of a deposit of
checks by the end of the business day in which the funds are borrowed. The
Borrower will be allowed to make a cash deposit of up to $100,000.00 to the
Lender or its agent in lieu of the checks by the end of the business day to
repay any funds advanced to the Borrower. On Friday or the last business day of
the week. the Borrower may receive an advance of up to $1.500,000.00 provided,
however, that the amount borrowed is replaced with an equal amount of deposit of
checks by the end of the business day. The Borrower will be allowed to make a
deposit of up to $300,000.00 to the Lender or its agent by the end of the next
business day to repay any funds advanced to the Borrower If the funds are not
replaced by the aforementioned deposit, the Borrower shall pay a penalty of
$10,000.00 per day until the money is replaced for a period not to exceed three
(3) business day. At the end of three (3) business days, if the money is not
replaced, the loan shall be in default and subject to call except for reasons
beyond the control of the parties. Notwithstanding. anything contained herein to
the contrary, the maximum amount that
- 2 -
3
may be borrowed during the term of the Loan shall not exceed $2,600,000.00
outstanding on any one day but only up to $1,000,000.00 in advance in any one
business day provided, however, that any amounts borrowed must be replaced with
an equal amount of deposit of checks by the and' of the business day in which
the funds are borrowed. On Friday or the last business day of the week, the
Borrower may receive an advance of up to $1,300,000.00, provided, however, that
the amount borrowed is replaced with an equal amount of deposit of checks by the
end of the business day. The Borrower will be allowed to make a cash deposit of
up to $100,000.00 to the Lender or its agent by the end of the next business day
to repay any funds advanced to the Borrower. The parties hereto shall use best
efforts to cause the Bank to communicate daily to the parties both the available
balance and the total or account balance. It shall not constitute a default if
any bounced checks are replaced within one (1) business day. In the event the
1998 year end statement of profit and loss shows a net profit, after taxes, of
$200,000.00, the Borrower shall have the right to advance on Friday, or the last
business day of the Week, up to $1,500,000.00.
B. The proceeds of the Loan shall be advanced and re-advanced from time
to time to the Borrower as a single continuous revolving loan that allows the
Borrower to borrow, repay and re-borrow upon the terms and subject to the
conditions of this Agreement and the Note.
C. The maximum amount that may be borrowed during the term of the
Loan shall not exceed $2,600,000.00 in the aggregate in any one day.
D. For purposes of this Agreement, the term "available balance" shall
mean that amount held in the Loan Account which is available to be withdrawn as
confirmed by the Bank and the term "total account balance" shall mean the total
amount held in the Loan Account, inclusive of monies on deposit but not yet
cleared as confirmed by the Bank.
3. PAYMENTS. All payments made by the Borrower shall be applied first
to the payment of interest due to the Lender and then to the payment of unpaid
principal on the Note.
4. SECURITY. To secure the payment and performance of the Note the
Borrower shall deliver for the benefit of the Lender the following documents for
the purpose of conveying a priority security interest in the collateral
described therein:
(A) The Security Agreement dated as of the date hereof
between the Borrower and the Lender attached hereto and incorporated by
reference hereby as exhibit "C" (the "Security Agreement").
(B) UCC-1 Financing Statements approved for filing in
accordance with the applicable Uniform Commercial Code to perfect the security
interest created by the Security Agreement.
- 3 -
4
5. ADDITIONAL ACQUISITIONS. Borrower shall not be permitted to make
any acquisitions over $500,000.00 from its current capital base without the
written consent of the Lender. Each year the amount of the acquisition approval
amount shall increase by the amount of the increase in retained earnings for the
previous year.
6. MISCELLANEOUS. This Agreement (including the exhibits and schedules
hereto) constitutes the entire agreement between the parties hereto with respect
to the subject matter hereof and supersedes all prior negotiations,
understandings, agreements, arrangements and understandings, both oral and
written, among the parties hereto with respect to such subject Matter.
(A) AMENDMENT. This Agreement may not be amended or
modified in any respect, except to the mutual written
agreement of the parties hereto.
(B) NO THIRD PARTY BENEFICIARY. Nothing expressed or implied
in this Agreement is intended, or shall be construed, to confer upon or give any
person, firm, corporation, partnership, association or other entity, other than
the parties hereto and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
(C) WAIVERS AND REMEDIES. The waiver by any of the parties
hereto of any other party's prompt and complete performance, or reach or
violation, of any provision of this Agreement shall not be construed as a waiver
of any subsequent breach or violation, and the waiver by any of the parties
hereto exercise any right or remedy which it may possess hereunder shall not
operate nor be construed as a bar to the exercise of such right or remedy by
such party upon the occurrence of any subsequent breach or violation.
(D) SEVERABILITY. The invalidity of any one or more of the
words, phrases, sentences, clauses, sections or subsections contained in this
Agreement shall not affect the enforceability of the remaining portions of this
Agreement or any part hereof, all of which are inserted conditionally on their
being valid in law, and, in the event that any one or more of the words,
phrases, sentences, clauses, sections or subsections contained in this Agreement
shall be declared invalid by a court of competent jurisdiction, this Agreement
shall, be construed as if such invalid word or words, phrase or phrases,
sentence or sentences, clause or clauses, section or sections or subsection or
subsections had not been inserted.
(E) DESCRIPTIVE HEADINGS. Descriptive headings contained
herein are for convenience only and shall not control Or affect the meaning or
construction of any provision f this Agreement.
(F) COUNTERPARTS. This Agreement may be executed in any
numbers
- 4 -
5
of counterparts and by the separate parties hereto in separate counterparts,
each of which shall be deemed to be one and the same instrument.
(G) NOTICES. All notices, requests, instructions, approvals and
other communications provided for herein and all legal process sin regard hereto
shall be in writing and shall be deemed to hi0e been duly given, when delivered
by hand by three (3) days after deposited in the United States mail, by
registered or certified mail, return receipt requested, postage prepaid as
follows:
If to LINKS COURT #1 ASSOCIATES: LINKS COURT #1 ASSOCIATES
0 Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Att: Xxxxxx Xxxxxxx
If to GENERAL CREDIT CORPORATION: GENERAL CREDIT CORPORATION
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Att: Xxxxx Xxxxxxxxxxx
G.S. CAPITAL CORP.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att: Xxxxxx Xxxxxxx
or to such other address as any part hereto may from time to time designate in
writing delivered in a like manner.
(H) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. None of the parties hereto shall assign any of its
rights or obligations hereunder.
(I) APPLICABLE LAW. This Agreement shall be governed by, and
shall be construed, interpreted and enforced in accordance with the laws of the
State of New York.
(J) EXPENSES. Each of the parties hereto agrees to pay all of
the respective expenses by it in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby.
(K) AGENT. Neither party is hereby constituted an agent or
legal representative of the other party hereto and neither is granted any right
or authority hereunder to assume or create any obligation, express or implied,
or to make any representation, covenant, warranty or guaranty, except as
expressly granted or made in this Agreement.
- 5 -
6
(L) OTHER DOCUMENTS. The parties hereto shall cooperate in the
effectuation of the transactions contemplated hereby and shall execute any and
all additional documents and shall take such additional actions as hall be
reasonably necessary or appropriate for such purposes.
Borrower represents that there was a profit for the period May
3, 1997 through and including December 31, 1997 before deductions for
depreciation and goodwill. In the event Borrower does not show a profit, Lender
may accelerate the loan. Simultaneously with its SEC filings for each quarter
but no later than sixty (60) days after the end of each quarter and seventy-five
(75) days after the end of each year. Borrower will provide Lender with a copy
of its profit and loss statement and balance sheet for the previous quarter.
THE PARTIES TO THIS AGREEMENT HAVE READ THIS AGREEMENT, HAVE
HAD THE OPPORTUNITY TO CONSULT WITH INDEPENDENT COUNSEL OF THEIR OWN CHOICE, AND
UNDERSTAND EACH OF THE PROVISIONS OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
LINKS COURT #1 ASSOCIATES
By:______________________________
GENERAL CREDIT CORPORATION
By:________________________________
CONSENTED & AGREED TO:
G.S. CAPITAL CORP.
By:_____________________________
- 6 -
