EXHIBIT 10.5
NOTICE OF FINAL AGREEMENT
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PRINCIPAL LOAN DATE MATURITY LOAN NO CALL/COLL
$1,000,000.00 03-31-2005 04-30-2006 630062 4,A / 0007
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ACCOUNT OFFICER INITIALS
6686 133
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References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item
Any item above containing ***** has been omitted due to text length limitations.
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Borrower: IRONCLAD PERFORMANCE WEAR Lender: Alliance Bank
CORPORATION Asset Based Lending Division
00000 XXXXXXXX XXXXXX 000 Xxxxxxxxx Xxxxxx
XXX XXXXXXX, XX 00000 P.O. Box 3048
Culver City, CA 90231-3048
(000) 000-0000
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THIS BUSINESS LOAN AGREEMENT (ASSET BASED) DATED MARCH 31, 2005, IS MADE AND
EXECUTED BETWEEN IRONCLAD PERFORMANCE WEAR CORPORATION ("BORROWER") AND ALLIANCE
BANK ("LENDER") ON THE FOLLOWING TERMS AND CONDITIONS. BORROWER HAS RECEIVED
PRIOR COMMERCIAL LOANS FROM LENDER OR HAS APPLIED TO LENDER FOR A COMMERCIAL
LOAN OR LOANS OR OTHER FINANCIAL ACCOMMODATIONS, INCLUDING THOSE WHICH MAY BE
DESCRIBED ON ANY EXHIBIT OR SCHEDULE ATTACHED TO THIS AGREEMENT ("LOAN").
XXXXXXXX UNDERSTANDS AND AGREES THAT: (A) IN GRANTING, RENEWING, OR EXTENDING
ANY LOAN LENDER IS RELYING UPON BORROWER'S REPRESENTATIONS, WARRANTIES, AND
AGREEMENTS AS SET FORTH IN THIS AGREEMENT; (B) THE GRANTING, RENEWING, OR
EXTENDING OF ANY LOAN BY LENDER AT ALL TIMES SHALL BE SUBJECT TO XXXXXX'S SOLE
JUDGMENT AND DISCRETION; AND (C) ALL SUCH LOANS SHALL BE AND REMAIN SUBJECT TO
THE TERMS AND CONDITIONS OF THIS AGREEMENT.
TERM. This Agreement shall be effective as of March 31, 2005, and shall continue
in full force and effect until such time as all of Borrower's Loans in favor of
Lender have been paid in full, including principal, interest, costs, expenses
attorneys' fees, and other fees and charges, or until such time as the parties
may agree in writing to terminate this Agreement.
ADVANCE AUTHORITY. The following persons currently are authorized, except as
provided in this paragraph, to request advances and authorize payments under the
line of credit until Xxxxxx receives from Borrower, at Xxxxxx's address shown
above, written notice of revocation of their authority: XXXXXX X. XXXXXX,
PRESIDENT/CEO OF IRONCLAD PERFORMANCE WEAR CORPORATION; XXXXXX X. XXXXX, XX., VP
FINANCE; AND XXXXXX XXXX, DIRECTOR OF FINANCE. ANY ONE PREVIOUSLY MENTIONED.
LINE OF CREDIT. Xxxxxx agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, provided the aggregate
amount of such Advances outstanding at any time does not exceed the Borrowing
Base. Within the foregoing limits Borrower may borrow partially or wholly prepay
and reborrow under this Agreement as follows:
CONDITIONS PRECEDENT TO EACH ADVANCE. Xxxxxx's obligation to make any
Advance to or for the account of Borrower under this Agreement is subject
to the following conditions precedent, with all documents, instruments,
opinions reports, and other items required under this Agreement to be in
form and substance satisfactory to Lender:
(1) Lender shall have received evidence that this Agreement and all Related
Documents have been duly authorized, executed and delivered by Xxxxxxxx
to Lender.
(2) Lender shall have received such opinions of counsel, supplemental
opinions, and documents as Xxxxxx may request.
(3) The security interests in the Collateral shall have been duly
authorized, created, and perfected with first lien priority and shall
be in full force and effect.
(4) All guaranties required by Xxxxxx for the credit facility(ies) shall
have been executed by each Guarantor delivered to Lender and be in full
force and effect.
(5) Lender, at its option and for its sole benefit, shall have conducted an
audit of Xxxxxxxx'xXxxxxxxx books, records and operations, and Lender
shall be satisfied as to their condition.
(6) Borrower shall have paid to Lender all fees, costs, and expenses
specified in this Agreement and the Related Documents as are then due
and payable.
(7) There shall not exist at the time of any Advance a condition which
would constitute an Event of Default under this Agreement, and Borrower
shall have delivered to Lender the compliance certificate called for in
the paragraph below titled "Compliance Certificate ".
MAKING LOAN ADVANCES. Advances under this credit facility, as well as
directions for payment from Xxxxxxxx's accounts, may be requested orally or
in writing by authorized persons. Lender may, but need not require that all
oral requests be confirmed in writing. Each Advance shall be conclusively
deemed to have been made at the request of and for the benefit of Borrower
(1) when credited to any deposit account of Borrower maintained with Lender
or (2) when advanced in accordance with the instructions of an authorized
person Lender, at its option, may set a cutoff time, after which all
requests for Advances will be treated as having been requested on the next
succeeding Business Day.
MANDATORY LOAN REPAYMENTS. If at any time the aggregate principal amount of
the outstanding Advances shall exceed the applicable Borrowing Base,
Borrower, immediately upon written or oral notice from Lender, shall pay to
Lender an amount equal to the difference between the outstanding principal
balance of the Advances and the Borrowing Base. On the Expiration Date,
Borrower shall pay to Lender in full the aggregate unpaid principal amount
of all. Advances then outstanding and all accrued unpaid interest together
with all other applicable fees costs and charges if any not yet paid.
LOAN ACCOUNT. Lender shall maintain on its books a record of account in
which Lender shall make entries for each Advance and such other debits and
credits as shall be appropriate in connection with the credit facility.
Lender shall provide Borrower with periodic statements of Xxxxxxxx's
account, which statements shall be considered to be correct and
conclusively binding on Borrower unless Borrower notifies Lender to the
contrary within thirty (30) days after Xxxxxxxx's receipt of any such
statement which Borrower deems to be incorrect.
COLLATERAL. To secure payment of the Primary Credit Facility and performance of
all other Loan obligations and duties owed by Borrower to Lender, Borrower (and
others, if required) shall grant to Lender Security Interests in such property
and assets as Lender may require. Lender's Security Interests in the Collateral
shall be continuing liens and shall include the proceeds and products of the
Collateral, including without limitation the proceeds of any insurance With
respect to the Collateral Borrower agrees and represents and warrants to Lender:
PERFECTION OF SECURITY INTERESTS. Xxxxxxxx agrees to execute all documents
perfecting Lenders Security Interest and to take whatever actions are
requested by Xxxxxx to perfect and continue Xxxxxx's Security Interests in
the Collateral. Upon request of Xxxxxx, Xxxxxxxx will deliver to Lender any
and all of the documents evidencing or constituting the Collateral, and
Borrower will note Xxxxxx's interest upon any and all chattel paper and
instruments if not delivered to Lender for possession by Xxxxxx.
Contemporaneous with the execution of this Agreement, Xxxxxxxx will execute
one or more UCC financing statements and any similar statements as may be
required by applicable law, and Lender will file such financing statements
and all such similar statements in the appropriate location or locations.
Borrower hereby appoints Lender as its irrevocable attorney-in-fact for the
purpose of executing any documents necessary to perfect or to continue any
Security Interest Lender may at any time, and without further authorization
from Borrower, file a carbon photograph, facsimile, or other reproduction
of any financing statement for use as a financing statement. Borrower will
reimburse Lender for all expenses for the perfection, termination, and the
continuation of the perfection of Xxxxxx's security interest in the
Collateral. Borrower promptly will notify Lender before any change in
Xxxxxxxx's name including any change to the assumed business names of
Xxxxxxxx. Borrower also promptly will notify Lender before any change in
Borrower's Social Security Number or Employer identification Number.
Xxxxxxxx further agrees to notify Xxxxxx in writing prior to any change in
address or location of Xxxxxxxx's principal governance office or should
Borrower merge or consolidate with any other entity.
COLLATERAL RECORDS. Borrower does now and at all times hereafter shall,
keep correct and accurate records of the Collateral, all of which records
shall be available to Lender or Xxxxxx's representative upon demand for
inspection and copying at any reasonable time. With respect to the
Accounts, Xxxxxxxx agrees to keep and maintain such records as Lender may
require, including without limitation information concerning Eligible
Accounts and Account balances and agings. Records related to Accounts
(Receivables) are or will be located at 00000 XXXXXXXX XXXXXX XXX XXXXXXX,
XX 00000. The above is an accurate and complete list of all locations at
which Borrower keeps or maintains business records concerning Xxxxxxxx's
collateral.
COLLATERAL SCHEDULES. Concurrently with the execution and delivery of this
Agreement, Borrower shall execute and deliver to Lender schedules of
Accounts and schedules of Eligible Accounts in form and substance
satisfactory to the Lender. Thereafter supplemental schedules shall be
delivered according to the following schedule: With respect to Eligible
Accounts schedules shall be delivered MONTHLY.
REPRESENTATIONS AND WARRANTIES CONCERNING ACCOUNTS. With respect to the
Accounts, Borrower represents and warrants to Lender: (1) Each Account
represented by Borrower to be an Eligible Account for purposes of this
Agreement conforms to the requirements of the definition of an Eligible
Account; (2) All Account information listed on schedules delivered to
Lender will be true and correct, subject to immaterial variance; and (3)
Lender, its assigns, or agents shall have the right at any time and at
Borrower's expense to inspect examine.
INSURANCE. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect to
Borrower's properties and operations, in form, amounts, coverages and with
insurance companies acceptable to Lender Borrower, upon request of Lender,
will deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including Stipulations that
coverages will not be cancelled or diminished without at least ten (10)
days prior written notice to Lender, Each insurance policy also shall
include an endorsement providing that coverage in favor of Lender will not
be impaired in any way by any act, omission or default of Borrower or any
other person. In connection with all policies covering assets in which
Lender holds or is offered a security interest for the Loans, Borrower will
provide Lender with such lender's loss payable or other endorsements as
Lender may require.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents Loan Documents Borrower shall provide to
Lender the following documents for the Loan (1) the Note, (2) Security
Agreements granting to Lender security interests in the Collateral (3) financing
statements and all other documents perfecting Lender's Security Interests, (4)
evidence of insurance as required below, (5) assignments of life insurance, (6)
guaranties, (7) together with all such Related Documents as Lender may require
for the Loan, all in form and substance satisfactory to Lender and Xxxxxx's
counsel.
XXXXXXXX'S AUTHORIZATION. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions duly
authorizing the execution and delivery of this Agreement the Note and the
Related Documents In addition Borrower shall have provided such other
resolutions authorizations documents and instruments as Lender or its
counsel may require.
FEES AND EXPENSES UNDER THIS AGREEMENT. Borrower shall have paid to Lender
all fees costs, and expenses specified in this Agreement and the Related
Documents as are then due and payable.
REPRESENTATIONS AND WARRANTIES. The representations and warranties set
forth in this Agreement, in the Related Documents and in any document or
certificate delivered to Lender under this Agreement are true and correct.
NO EVENT OF DEFAULT. There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under this Agreement
or under any Related Document.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement as of the date of each disbursement of loan
proceeds as of the date of any renewal extension or modification of any Loan,
and at all times any Indebtedness exists:
ORGANIZATION. Borrower is a corporation for profit which is, and at all
times shall be, duly organized validly existing, and in good standing under
and by virtue of the laws of the State of California Borrower has the full
power and authority to own its properties and to transact the business in
which it is presently engaged or presently proposes to engage Xxxxxxxx
maintains an office at 00000 XXXXXXXX XXXXXX, XXX XXXXXXX, XX 00000. Unless
Borrower has designated otherwise in writing, the principal office is the
office at which Borrower keeps its books and records including its records
concerning the Collateral Borrower will notify Lender prior to any change
in the location of Borrower's state of organization or any change in
Borrower's name Borrower shall do all things necessary to preserve and to
keep in full force and effect its existence, rights and privileges and
shall comply with all regulations, rules, ordinances, statutes, orders and
decrees of any governmental or quasi governmental authority or court
applicable to Borrower and Xxxxxxxx's business activities.
ASSUMED BUSINESS NAMES. Borrower has filed or recorded all documents or
filings required by law relating to all assumed business names used by
Borrower Excluding the name of Borrower the following is a complete list of
all assumed business names under which Borrower does business. None.
AUTHORIZATION. Borrower's execution delivery and performance of this
Agreement and all the Related Documents have been duly authorized by all
necessary action by Borrower and do not conflict with, result in a
violation of, or constitute a default under (1) any provision of (a)
Borrower's articles of incorporation or organization, or bylaws or (b) any
agreement or other instrument binding upon Borrower or (2) any law
governmental regulation court decree or order applicable to Borrower or to
Borrower's properties.
FINANCIAL INFORMATION. Each of Xxxxxxxx's financial statements supplied to
Xxxxxx truly and completely disclosed Xxxxxxxx's financial condition as of
the date of the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender Borrower has no material contingent
obligations except as disclosed in such financial statements.
LEGAL EFFECT. This Agreement constitutes, and any instrument or agreement
Borrower is required to give under this Agreement when delivered will
constitute legal valid and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.
PROPERTIES. Except as contemplated by this Agreement or as previously
disclosed in Xxxxxxxx's financial statements or in writing to Lender and as
accepted by Xxxxxx, and except for property tax liens for taxes not
presently due and payable. Xxxxxxxx owns and has good title to all of
Xxxxxxxx's properties free and clear of all Security Interests, and has not
executed any security documents or financing statements relating to such
properties All of Borrower's properties are titled in Borrower's legal name
and Xxxxxxxx has not used or filed a financing statement under any other
name for at least the last five (5) years.
HAZARDOUS SUBSTANCES. Except as disclosed to and acknowledged by Xxxxxx in
writing, Borrower represents and warrants that (1) During the period of
Borrower's ownership of the Collateral there has been no use, generation
manufacture storage treatment disposal, release or threatened release of
any Hazardous Substance by any person on, under, about or from any of the
Collateral (2) Borrower has no knowledge of, or reason to believe that
there has been (a) any breach or violation of any Environmental Laws (b)
any use generation, manufacture storage treatment disposal release or
threatened release of any Hazardous Substance on under, about or from the
Collateral by any prior owners or occupants of any of the Collateral, or
(c) any actual or threatened litigation or claims of any kind by any person
relating to such matters (3) Neither Borrower nor any tenant contractor,
agent or other authorized user of any of the Collateral shall use generate
manufacture store, treat, dispose of or release any Hazardous Substance on,
under about or from any of the Collateral, and any such activity shall be
conducted in compliance with all applicable federal state, and local laws
regulations, and ordinances including without limitation all Environmental
Laws Borrower authorizes Lender and its agents to enter upon the Collateral
to make such inspections and tests as Lender may deem appropriate to
determine compliance of the Collateral with this section of the Agreement
Any inspections or tests made by Lender shall be at Borrower's expense and
for Lender's purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Borrower or to any
other person The representations and warranties contained herein are based
on Borrower's due diligence in investigating the Collateral for hazardous
waste and Hazardous Substances Borrower hereby (1) releases and waives any
future claims against Lender for indemnity or contribution in the event
Borrower becomes liable for cleanup or other costs under any such laws, and
(2) agrees to indemnify and hold harmless Lender against any and all
claims, losses, liabilities, damages penalties, and expenses which Lender
may directly or indirectly sustain or suffer resulting from a breach of
this section of the Agreement or as a consequence of any use, generation,
manufacture storage, disposal, release or threatened release of a hazardous
waste or substance on the Collateral. The provisions of this section of the
Agreement, including the obligation to indemnify shall survive the payment
of the indebtedness and the termination, expiration or satisfaction of this
Agreement and shall not be affected by Lender's acquisition of any interest
in any of the Collateral whether by foreclosure or otherwise.
LITIGATION AND CLAIMS. No litigation, claim investigation administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or
properties, other than litigation claims or other events, if any that have
been disclosed to and acknowledged by Xxxxxx in writing.
TAXES. To the best of Xxxxxxxx's knowledge, all of Xxxxxxxx's tax returns
and reports that are or were required to be filed, have been filed, and all
taxes, assessments and other governmental charges have been paid in full,
except those presently being or to be contested by Borrower in good faith
in the ordinary course of business and for which adequate reserves have
been provided.
LIEN PRIORITY. Unless otherwise previously disclosed to Lender in writing,
Xxxxxxxx has not entered into or granted any Security Agreements or
permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note that would be prior or that may in any way be
superior to Lender's Security Interests and rights in and to such
Collateral.
BINDING EFFECT. This Agreement the Note all Security Agreements (if any)
and all Related Documents are binding upon the signers thereof as well as
upon their successors representatives and assigns, and are legally
enforceable in accordance with their respective terms.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Xxxxxx that so long as
this Agreement remains in effect, Borrower will:
NOTICES OF CLAIMS AND LITIGATION. Promptly inform Xxxxxx in writing of (1)
all material adverse changes in Borrower's financial condition, and (2) all
existing and all threatened litigation, claims investigations,
administrative proceedings or similar actions affecting Borrower or any
Guarantor which could materially affect the financial condition of Borrower
or the financial condition of any Guarantor.
FINANCIAL RECORDS. Maintain its books and records in accordance with GAAP,
applied on a consistent basis, and permit Xxxxxx to examine and audit
Xxxxxxxx's books and records at all reasonable times.
FINANCIAL STATEMENTS. Furnish Lender with such financial statements and
other related information at such frequencies and in such detail as Lender
may reasonably request.
ADDITIONAL INFORMATION. Furnish such additional information and statements
as Xxxxxx may request from time to time.
INSURANCE REPORTS. Furnish to Lender, upon request of Lender reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (1) the
name of the insurer; (2) the risks insured; (3) the amount of the policy;
(4) the properties insured; (5) the then current property values on the
basis of which insurance has been obtained, and the manner of determining
those values; and (6) the expiration date of the policy. In addition, upon
request of Lender (however not more often than annually), Borrower will
have an independent appraiser satisfactory to Lender determine as
applicable the actual cash value or replacement cost of any Collateral. The
cost of such appraisal shall be paid by Borrower.
LIFE INSURANCE. As soon as practical, obtain and maintain life insurance in
form and with insurance companies acceptable to Lender on the following
individual in the amount indicated below and, at Lender's option, cause
such insurance coverage to be pledged, made payable to, or assigned to
Lender on Lender's forms Lender, at its discretion, may apply the proceeds
of any insurance policy to the unpaid balances of any Loan:
NAME / TITLE OF INSURED AMOUNT
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XXXXXX X. XXXXXX $1,250,000.00
GUARANTIES. Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Xxxxxx, executed by the guarantor named
below, on Xxxxxx's forms and in the amount and under the conditions set
forth in those guaranties.
NAME OF GUARANTOR AMOUNT
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XXXXXX X. XXXXXX Unlimited
OTHER AGREEMENTS. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
LOAN PROCEEDS. Use all Loan proceeds solely for Xxxxxxxx's business
operations, unless specifically consented to the contrary by Xxxxxx in
writing.
TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, prior to the
date on which penalties would attach and all lawful claims that, if unpaid,
might become a lien or charge upon any of Borrower's properties, income, or
profits.
PERFORMANCE. Perform and comply, in a timely manner, with all terms
conditions, and provisions set forth in this Agreement, in the Related
Documents, and in all other instruments and agreements between Borrower and
Lender Borrower shall notify Lender immediately in writing of any default
in connection with any agreement.
OPERATIONS. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner.
ENVIRONMENTAL STUDIES. Promptly conduct and complete, at Borrower's
expense, all such investigations, studies, samplings and testings as may be
requested by Lender or any governmental authority relative to any
substance, or any waste or by-product of any substance defined as toxic or
a hazardous substance under applicable federal, state or local law rule,
regulation order or directive at or affecting any property or any facility
owned leased or used by Borrower.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the conduct of Borrower's properties
businesses and operations, and to the use or occupancy of the Collateral,
including without limitation, the Americans With Disabilities Act. Borrower
may contest in good faith any such law, ordinance, or regulation and
withhold compliance during any proceeding, including appropriate appeals,
so long as Borrower has notified Lender in writing prior to doing so and so
long as, in Xxxxxx's sole opinion. Xxxxxx's interests in the Collateral are
not jeopardized Lender may require Borrower to post adequate security or a
surety bond reasonably satisfactory to Lender, to protect Xxxxxx's
interest.
INSPECTION. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Xxxxxxxx's other
properties and to examine or audit Xxxxxxxx's books, accounts, and records
and to make copies and memoranda of Xxxxxxxx's books, accounts, and
records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records) in the possession of
a third party. Borrower, upon request of Xxxxxx, shall notify such party to
permit Lender free access to such records at all reasonable times and to
provide Lender with copies of any records it may request, all at Borrower's
expense.
COMPLIANCE CERTIFICATES. Unless waived in writing by Xxxxxx, provide Lender
at least annually, with a certificate executed by Borrowers chief financial
officer, or other officer or person acceptable to Lender, certifying that
the representations and warranties set forth in this Agreement are true and
correct as of the date of the certificate and further certifying that as of
the date of the certificate, no Event of Default exists under this
Agreement.
ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all respects
with any and all Environmental Laws; not cause or permit to exist, as a
result of an intentional or unintentional action or omission on Borrower's
part or on the part of any third party, on property owned and/or occupied
by Borrower, any environmental activity where damage may result to the
environment, unless such environmental activity is pursuant to and in
compliance with the conditions of a permit issued by the appropriate
federal, state or local governmental authorities; shall furnish to Lender
promptly and in any event within thirty (30) days after receipt thereof a
copy of any notice, summons, lien, citation, directive, letter or other
communication from any governmental agency or instrumentality concerning
any intentional or unintentional action or omission on Borrower's part in
connection with any environmental activity whether or not there is damage
to the environment and/or other natural resources.
ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, assignments,
financing statements, instruments documents and other agreements as Lender
or its attorneys may reasonably request to evidence and secure the Loans
and to perfect all Security Interests.
XXXXXX'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Xxxxxx's interest in the Collateral or if Borrower fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Borrower's failure to discharge or pay when due any amounts.
Borrower is required to discharge or pay under this Agreement or any Related
Documents. Lender on Xxxxxxxx's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on any Collateral and paying all
costs for insuring, maintaining and preserving any Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Xxxxxxxx. All such expenses will become a
part of the indebtedness and, at Lender's option, will (A) be payable on demand;
(B) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity.
NEGATIVE COVENANTS, Borrower covenants and agrees with Lender that while this
Agreement is in effect. Borrower shall not without the prior written consent of
Lender:
INDEBTEDNESS AND LIENS, (1) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (2) sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of Borrower's assets
(except as allowed as Permitted Liens) or (3) sell with recourse any of
Borrower's accounts except to Lender
CONTINUITY OF OPERATIONS. (1) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(2) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, or (3) pay any dividends
on Borrower's stock (other than dividends payable in its stock), provided,
however that notwithstanding the foregoing but only so long as no Event of
Default has occurred and is continuing or would result from the payment of
dividends, if Borrower is a "Subchapter S Corporation" (as defined in the
Internal Revenue Code of 1986, as amended). Borrower may pay cash dividends
on its stock to its shareholders from time to time in amounts necessary to
enable the shareholders to pay income taxes and make estimated income tax
payments to satisfy their liabilities under federal and state law which
arise solely from their status as Shareholders of a Subchapter S
Corporation because of their ownership of shares of Borrower's stock or
purchase or retire any of Borrower's outstanding shares or alter or amend
Borrower's capital structure.
LOANS, ACQUISITIONS AND GUARANTIES. (1) Loan, invest in or advance money or
assets to any other person, enterprise or entity, (2) purchase, create or
acquire any interest in any other enterprise or entity or (3) incur any
obligation as surety or guarantor other than in the ordinary course of
business.
AGREEMENTS. Borrower will not enter into any agreement containing any
provisions which would be violated or breached by the performance of
Borrower's obligations under this Agreement or in connection herewith.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(A) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes
incompetent or becomes insolvent files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse
change in Borrower's financial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan; or (D) any
Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the Loan or any other loan with Lender; or (E) Lender in
good xxxxx xxxxx itself insecure, even though no Event of Default shall have
occurred.
DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:
PAYMENT DEFAULT. Xxxxxxxx fails to make any payment when due under the
Loan.
OTHER DEFAULTS. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Agreement or in any of
the Related Documents or to comply with or to perform any term obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.
DEFAULT IN FAVOR OF THIRD PARTIES. Borrower or any Grantor defaults under
any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's or any Grantor's property or
Borrower's or any Grantor's ability to repay the Loans or perform their
respective obligations under this Agreement or any of the Related
Documents.
FALSE STATEMENTS Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this
Agreement or the Related Documents is false or misleading in any material
respect either now or at the time made or furnished or becomes false or
misleading at any time thereafter.
INSOLVENCY. The dissolution or termination of Xxxxxxxx's existence as a
going business, the insolvency of Xxxxxxxx, the appointment of a receiver
for any part of Xxxxxxxx's property, any assignment for the benefit, of
creditors, any type of creditor workout or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
document to create a valid and perfected security interest or lien) at any
time and for any reason.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the Loan. This includes
a garnishment of any of Xxxxxxxx's accounts including deposit accounts,
with Xxxxxx. However, this Event of Default shall not apply if there is a
good faith dispute by Xxxxxxxx as to the validity or reasonableness of the
claim which is the basis of the creditor or forfeiture proceeding and if
Borrower gives Xxxxxx written notice of the creditor or forfeiture
proceeding and deposits with Lender monies or a surety bond for the
creditor or forfeiture proceeding, in an amount determined by Lender, in
its sole discretion, as being an adequate reserve or bond for the dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or any Guarantor dies or
becomes incompetent or revokes or disputes the validity of, or liability
under, any Guaranty of the Indebtedness. In the event of a death, Lender,
at its option may, but shall not be required to, permit the Guarantor s
estate to assume unconditionally the obligations arising under the guaranty
in a manner satisfactory to Lender, and in doing so cure any Event of
Default.
CHANGE IN OWNERSHIP. Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower.
ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition, or Xxxxxx believes the prospect of payment or performance of the
Loan is impaired.
INSECURITY. Lender in good faith believes itself insecure.
RIGHT TO CURE. If any default, other than a default on Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been given
a notice of a similar default within the preceding twelve (12) months, it
may be cured if Borrower or Grantor, as the case may be, after receiving
written notice from Lender demanding cure of such default; (1) cure the
default within fifteen (15) days; or (2) if the cure requires more than
fifteen (15) days immediately initiate steps which Xxxxxx deems in Xxxxxx's
sole discretion to be sufficient to cure the default and thereafter
continue and complete all reasonable and necessary stops sufficient to
produce compliance as soon as reasonably practical.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
further Loan Advances or disbursements), and at Lender's option, all
Indebtedness immediately will become due and payable, all without notice of any
kind to Borrower except that in the case of an Event of Default of the type
described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Xxxxxx shall have all the rights and
remedies
provided in the Related Documents or available at law, in equity, or otherwise.
Except as may be prohibited by applicable law, all of Lender's rights and
remedies shall be cumulative and may be exercised singularly or concurrently.
Election by Xxxxxx to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to perform an
obligation of Borrower or of any Grantor shall not affect Xxxxxx's right to
declare a default and to exercise its rights end remedies.
COLLATERAL MONITORING FEE. Xxxxxxxx agrees to pay Lender a Collateral Monitoring
Fee of fifteen hundred dollars ($1,500) each calendar month (the 'Monthly
Minimum"), and Eighteen Thousand Dollars ($18,000) in each contract year (the
Annual Minimum). If the Business Loan Agreement (Asset Based) is terminated by
the Borrower or Lender prior to the end of the initial contract year or in any
subsequent contact year, the Borrower will pay the difference of the actual
monthly collateral fee paid prior to the termination date and the annual
minimum. All fees payable hereunder shall be computed as of the last business
day of the month and charged to the Borrower on the first business day of the
following month.
AUTHORIZATION. Borrower hereby irrevocably authorizes Xxxxxx at Borrowers
expense, to exercise all or any of the following powers until all of the
Obligations have been paid in full; (a) receive, take, endorse, assign, deliver,
accept and deposit, in the name of Lender or Borrower, any and all cash, checks,
commercial paper, drafts, remittances and other instruments and documents
relating to the Collateral or the proceeds thereof, (b) take or bring, in the
name of Lender or Borrower all steps, actions, suits or proceedings deemed by
Lender necessary or desirable to effect collection of or other realization upon
the accounts and other Collateral, (c) after an Event of Default (as defined
herein), change the address for delivery of mail to Borrower and to receive and
open mail addressed to Borrower, (d) after an Event of Default, 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 any Account Debtor or
other obligor (including filing of any public record releasing any lien granted
to Borrower by such Account Debtor), without affecting any of the Obligations,
(e) pay any sums necessary to discharge any lien or encumbrance which is senior
to Lender's security interest in the Collateral, which sums shall be included as
Obligations hereunder, (f) file in the name of Client or Lender or both, (1)
mechanic's lien or related notices or (2) claims under any payment bond, in
connection with goods or services sold by Borrower in connection with the
improvement of realty, and (g) notify any Account Debtor obligated with respect
to any Account that the underlying Account has been pledged to Lender by
Xxxxxxxx and that payment thereof is to be made to the order of and directly to
Lender and (h) communicate directly with Borrowers Account Debtors to verify the
amount and validity of any Account created by Xxxxxxxx.
INVOICING. All invoices for merchandise sold or services rendered shall be
prepared by Borrower and shall bear a notice that they are payable directly to
Borrower at P.O. Box 50026 City of Industry, CA 91716-8026. Upon Lenders
request, Borrower shall furnish Lender with copies of all invoices, original
shipping or delivery receipts, and such other information or documents as Lender
in its sole discretion may request from time to time. Each invoice shall bear
the terms of sale and no change from the original terms of sale shall be made
without Lenders prior written consent.
PAYMENT OF ACCOUNTS. All payments of Accounts and other payments on behalf of
Xxxxxxxx received by Xxxxxx shall be credited to Borrowers account. Payments
shall be applied first to Lenders costs and attorneys fees, then interest and
finally to principal.
ANNUAL LINE FEE. Xxxxxxxx agrees to pay Lender an annual line fee of twelve
thousand five hundred dollars ($12,500.00) (the Annual Line Fee) payable when
the Business Loan Agreement (Asset Based) is executed and each one (1) year
anniversary thereafter.
CROSS DEFAULT. Any default under the Loan Documents which comprise the
Commercial Term Loan shall also constitute an Event of Default under this
Business Loan Agreement (Asset Based) the Note and the Security Agreement and
any Event of Default under this Business Loan Agreement (Asset Based) the Note
or the Security Agreement shall constitute a default under the Commercial Term
Loan.
INDEMNIFICATION. Borrower shall indemnify and hold harmless from and against any
and all claims, debts losses, demands, actions, causes of action lawsuits
damages, penalties, judgments, liabilities costs and expenses (including,
without limitation, attorneys' fees) of any kind or nature which Lender may
sustain in connection with, or arising from, (a) this Business Loan Agreement
(Asset Based), the Note, the Security Agreement or any of the documents which
comprise the Real Estate Loan (b) any violation of any environmental law, (c)
any present or future agreement between Borrower and Lender (d) any claim which
effects the Collateral, (e) any avoidance action or other litigation brought in
the United States Bankruptcy Court or under any other similar debtor relief
statute which seeks to recover money or challenge Xxxxxx's security interest, or
(e) any other matter which pertains to Lender and Borrower, notwithstanding any
other provision of this Business Loan Agreement, the Note, Security Agreement,
the documents which comprise the Real Estate Agreement or any other agreement
between Borrower and Lender. This indemnity agreement shall survive termination
of this Business Loan Agreement (Asset Based) the Note Security Agreement the
documents which comprise the Real Estate Loan or any other agreement between the
parties.
DAILY REPORTING REQUIREMENTS. Borrower shall provide Lender on a daily basis
with copies of sales journals credit memo journals, cash receipt journals,
proofs of delivery on all invoices over Five Thousand Dollars ($5,000) and such
other documents reports journals as Lender may require in its sole discretion.
REMITTANCES AND POWER OF ATTORNEY. All remittances received by Borrower with
respect to all of its Accounts and other sources of incoming receipts, including
but not limited to insurance reimbursements, tax refunds deposits, investment
funds, or any other monies received, shall be paid to Lender at the Lock Box,
regardless of whether or not any indebtedness is owed to Lender. If there is no
indebtedness owed to Lender at the time Borrower receives any such payment at
the Lock Box, Lender shall transfer such Funds to Borrower's general operating
account located at Lender. All remittances received by Borrower with respect to
any of its Accounts, shall be held in trust for Lender, and Borrower shall
immediately deliver to Lender the identical checks, drafts, monies or other
forms of payment received within three (3) business days thereof. All payments
hereunder shall be delivered to Lender through its lock box facility, as follows
(1) if by US mail, to Ironclad Performance Wear Corporation P.O. Box 80026, City
of industry, CA 91716-8026 or (2) if by overnight delivery to Ironclad
Performance Wear Corporation, Attn lock box #80026, 00000 Xxxx Xxxxxx Xxxxx
Xxxxx, Xxxxxx, XX 00000. In the event that Xxxxxxxx fails to remit such check,
draft, money or other form of payment as required herein. Lender may assess as
liquidated damages, a misdirected payment fee of fifteen percent (15%) of the
face amount of such check, draft, money or other form of payment (the
"Misdirected Payment Fee'). Borrower hereby appoints Lender or such person as
Xxxxxx may name as its attorney in fact to execute all necessary documents in
Borrowers name and do all things necessary to carry out this Agreement. Xxxxxxxx
ratifies and approves all acts of the attorney and agrees that neither Xxxxxx
nor the attorney shall be liable for any acts of commission or omission nor for
any error of judgment or mistake of fact or law. This power being coupled with
an interest is irrevocable until the later of maturity or so long as there are
any outstanding Obligations.
REPORTING REQUIRMENTS
1) Borrower to provide to Lender reviewed financial statements submitted
annually not later than 90 days after period end. First due date is
03-31-05.
2) Borrower to provide to Xxxxxx compiled interim financial statements
submitted monthly not later than 30 days after the end of the period.
First due date is 04-30-05.
3) Borrower to provide to Lender Accounts Payable Aging Report submitted
monthly not later than 30 days after the end of the period. First due
date is 04-30-05.
4) Borrower to provide to Lender Inventory Listing monthly, not later than
15 days after the end of the period. First due date is 04-15-05.
5) Borrower to provide to Lender Borrowing Base Certificate submitted
weekly and at each month end not later than 15 days after the end of
the period. First due date is 04-15-05.
6) Borrower to provide to Lender Payroll Tax Reports DE-6 & Federal 941
submitted quarterly. First due date is 04-30-05.
7) Borrower to provide to Lender copy of tax returns submitted annually
within 120 days of fiscal year end. First due date is 04-30-05.
8) Guarantor to provide to Lender self-prepared financial statements
submitted annually within 90 days after fiscal year end. First due date
is 03-31-06.
9) Guarantor to provide to Lender copy of personal tax returns submitted
annually within 120 days of year end. First due date is 04-30-05.
EXAMINATION. Borrower shall permit Lender and any authorized representatives
designated by Lender to visit and inspect any of the properties of Borrower
including its collateral financial and accounting records, and to make copies
and take extracts therefrom, and to discuss its finances and business with its
officers and independent public accountants at such reasonable times during
normal business hours as often as may be reasonably requested Borrower
acknowledges that Lender intends to make such inspections from time to time and
Borrower shall be charged all expenses relating to each such examination.
CONSENT TO LOAN PARTICIPATION In the paragraph titled Consent to Participation
the following is added: Not to exceed the rights granted under this Agreement.
MISCELLANEOUS PROVISIONS The following miscellaneous provisions are a part of
this Agreement.
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
ATTORNEYS FEES, EXPENSES. Borrower agrees to pay upon demand all of
Xxxxxx's costs and expenses, including Xxxxxx's attorneys fees and Xxxxxx's
legal expenses, incurred m connection with the enforcement o1 this
Agreement Lender may hire or pay someone else to help enforce this
Agreement and Borrower shall pay the costs and expenses of such enforcement
Costs and expenses include Xxxxxx's attorneys' fees and legal expenses
whether or not there is a lawsuit, including attorneys' fees and legal
expenses for bankruptcy proceedings (including efforts to modify or vacate
any automatic stay or injunction) appeals, and any anticipated
post-judgment collection services. Borrower also shall pay all court costs
and such additional fees as may be directed by the court.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
CONSENT TO LOAN PARTICIPATION. Xxxxxxxx agrees and consents to Xxxxxx's
sale or transfer, whether now or later, of one or more participation
interests in the Loan to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation whatsoever,
to any one or more purchasers or potential purchasers any information or
knowledge Lender may have about Borrower or about any other matter relating
to the Loan, and Borrower hereby waives any rights to privacy. Borrower may
have with respect to such matters Borrower additionally waives any and all
notices of sale of participation interests, as well as all notices of any
repurchase of such participation interests Borrower also agrees that the
purchasers of any such participation interests will be considered as the
absolute owners of such interests in the Loan and will have all the rights
granted under the participation agreement or agreements governing the sale
of such participation interests Borrower further waives all rights of
offset or counterclaim that it may have now or later against Lender or
against any purchaser of such a participation interest and unconditionally
agrees that either Lender or such purchaser may enforce Xxxxxxxx's
obligation under the Loan irrespective of the failure or insolvency of any
holder of any interest in the Loan Borrower further agrees that the
purchaser of any such participation interests may enforce its interests
irrespective of any personal claims or defenses that Borrower may have
against Xxxxxx.
GOVERNING LAW. This Agreement will be governed by federal law applicable to
Lender and to the extent not preempted by federal law, the laws of the
State of California without regard to its conflicts of law provisions. This
Agreement has been accepted by Xxxxxx in the State of California.
NO WAIVER BY XXXXXX. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed by
Xxxxxx. No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by
Xxxxxx of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Xxxxxx, nor any course of dealing between Xxxxxx and Borrower, or between
Lender and any Grantor, shall constitute a waiver of any of Lender's rights
or of any of Borrower's or any Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may he granted or withheld in the
sole discretion of Lender.
NOTICES. Any notice requited to be given under this Agreement shall be
given in writing and shall be effective when actually delivered when
actually received by telefacsimile (unless otherwise required by law), when
deposited with a nationally recognized overnight courier, or, if mailed
when deposited in the United States mail, as first class, certified or
registered mail postage prepaid, directed to the addresses shown near the
beginning of this Agreement Any party may change its address for notices
under this Agreement by giving formal, written notice to the other parties,
specifying that the purpose of the notice is to change the party's address.
For notice purposes, Xxxxxxxx agrees to keep Xxxxxx informed at all times
of Xxxxxxxx's current address. Unless otherwise provided or required by law
if there is more shown near the beginning of this Agreement. Any party may
change its address for notices under this Agreement by giving formal
written notice to the other parties, specifying that the purpose of the
notice is to change the party's address for notice purposes. Xxxxxxxx
agrees to keep Xxxxxx informed at all times of Xxxxxxxx's current address.
Unless otherwise provided or required by law, if there is more than one
Borrower any notice given by Lender to any Borrower is deemed to be notice
given to all Borrowers.
SEVERABILITY If a court of competent jurisdiction finds any provision of
this Agreement to be illegal, invalid, or unenforceable as to any
circumstance that finding shall not make the offending provision illegal
invalid, or unenforceable as to any other circumstance if feasible, the
offending provision shall be considered modified so that it becomes legal,
valid and enforceable If the offending provision cannot be so modified,
it shall be considered deleted from this Agreement Unless otherwise
required by law, the illegality invalidity, or unenforceability of any
provision of this Agreement shall not affect the legality validity or
enforceability of any other provision of this Agreement.
SUBSIDIARIES AND AFFILIATES OF BORROWER To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower" as
used in this Agreement shall include all of Borrower's subsidiaries and
affiliates. Notwithstanding the foregoing however, under no circumstances
shall this Agreement be construed to require Lender to make any Loan or
other financial accommodation to any of Borrower's subsidiaries or
affiliates.
SUCCESSORS AND ASSIGNS. All covenants and agreements by or on behalf of
Borrower contained in this Agreement or any Related Documents shall bind
Xxxxxxxx's successors and assigns and shall inure to the benefit of Lender
and its successors and assigns Borrower shall not, however have the right
to assign Xxxxxxxx's rights under this Agreement or any interest therein,
without the prior written consent of Lender
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and agrees
that in extending Loan Advances Lender is relying on all representations,
warranties, and covenants made by Borrower in this Agreement or in any
certificate or other instrument delivered by Borrower to Lender under this
Agreement or the Related Documents Borrower further agrees that regardless
of any investigation made by Xxxxxx, all such representations, warranties
and covenants will survive the extension of Loan Advances and delivery to
Lender of the Related Documents shall be continuing in nature, shall be
deemed made and redated by Borrower at the time each Loan Advance is made,
and shall remain in full force and effect until such time as Borrower's
Indebtedness shall be paid in full or until this Agreement shall be
terminated in the manner provided above, whichever is the last to occur.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Agreement.
WAIVE JURY. All parties to this Agreement hereby waive the right to any
jury trial in any action proceeding or counterclaim brought by any party
against any other party.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement Unless specifically stated to the contrary,
all references to dollar amounts shall mean amounts in lawful money of the
United States of America. Words and terms used in the singular shall include the
plural, and the plural shall include the singular as the context may require
Words and terms not otherwise defined in this Agreement shall have the meanings
attributed to such terms in the Uniform Commercial Code Accounting words and
terms not otherwise defined in this Agreement shall have the meanings assigned
to them in accordance with generally accepted accounting principles as in effect
on the date of this Agreement.
ACCOUNT. The word "Account" means a trade account, account receivable,
other receivable, or other right to payment for goods sold or services
rendered owing to Borrower (or to a third party grantor acceptable to
Lender).
ADVANCE. The word "Advance" means a disbursement of Loan funds made, or to
be made, to Borrower or on Borrower's behalf under the terms and conditions
of this Agreement.
AGREEMENT. The word "Agreement" means this Business Loan Agreement (Asset
Based), as this Business Loan Agreement (Asset Based) may be amended or
modified from time to time together with all exhibits and schedules
attached to this Business Loan Agreement (Asset Based) from time to time.
BORROWER. The word "Borrower" means IRONCLAD PERFORMANCE WEAR CORPORATION
and includes al! co-signers and co-makers signing the Note.
BORROWING BASE. The words "Borrowing Base" mean as determined by Lender
from time to time the lesser of (1) $1,000,000.00 or (2) 75% of the
aggregate amount of Eligible Accounts
BUSINESS DAY. The words "Business Day" mean a day on which commercial banks
are open in the State of California.
COLLATERAL. The word "Collateral" means all property and assets granted as
collateral security for a Loan, whether real or personal property, whether
granted directly or indirectly, whether granted now or in the future and
whether granted in the form of a security interest mortgage, collateral
mortgage, deed of trust, assignment, pledge crop pledge, chattel mortgage,
collateral chattel mortgage chattel trust, factor's lien, equipment trust
conditional sale, trust receipt, lien, charge, hen or title retention
contract lease or consignment intended as a security device or any other
security or lien interest whatsoever, whether created by law, contract or
otherwise The word Collateral also includes without limitation all
collateral described in the Collateral section of this Agreement.
ELIGIBLE ACCOUNTS. The words Eligible Accounts mean at any time, all of
Borrower's Accounts which contain selling terms and conditions acceptable
to Lender The net amount of any Eligible Account against which Borrower may
borrow shall exclude all returns, discounts credits, and offsets of any
nature. Unless otherwise agreed to by Xxxxxx in writing Eligible Accounts
do not include:
(1) Accounts with respect to which the Account Debtor is employee or
agent of Xxxxxxxx
(2) Accounts with respect to which the Account Debtor is a subsidiary
of or affiliated with Borrower or its shareholders officers or
directors
(3) Accounts with respect to which goods are placed on consignment,
guaranteed sale or other terms by reason of which the payment by
the Account Debtor may be conditional
(4) Accounts with respect to which Borrower is or may become liable to
the Account Debtor for goods sold or services rendered by the
Account Debtor to Borrower
(5) Accounts which are subject to dispute counterclaim, or setoff
(6) Accounts with respect to which the goods have not been shipped, or
delivered or the services have not been rendered to the Account
Debtor
(7) Accounts with respect to which Lender, in its sole discretion
deems the creditworthiness or financial condition of the Account
Debtor to be unsatisfactory
(8) Accounts of any Account Debtor who has filed or has had filed
against it a petition in bankruptcy or an application for relief
under any provision of any state or federal bankruptcy,
insolvency, or debtor-in-relief acts; or who has had appointed a
trustee, custodian, or receiver for the assets of such Account
Debtor or who has made an assignment for the benefit of creditors
or has become insolvent or fails generally to pay its debts
(including its payrolls) as such debts become due.
(9) Accounts which have not been paid in full within 120 DAYS from the
invoice date
(10) (11)Ineligible defined as Accounts arising from sales to an
Account Debtor if more than twenty five percent (25%) of such
Accounts are more than 120 days past due from invoice date
12) Accounts arising from sales to a single Account Debtor which
exceed twenty five percent (25%) of the aggregate amount of all
outstanding Accounts from all Account debtors, (the Concentration
Limit)
13) Accounts which Alliance Bank in its sole discretion deems
unacceptable
ENVIRONMENTAL LAWS. The words "Environmental Laws" mean any and all state
federal and local statutes regulations and ordinances relating to the
protection of human health or the environment, including without limitation
the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended 42 U.S.C Section 9601, et seq ("CERCLA") the Superfund
Amendments and Reauthorization Act of 1986, Pub. L. No 99-499 ("XXXX"), the
Hazardous Materials Transportation Act, 49 U.S.C Section 1801, et seq , the
Resource Conservation and Recovery Act 42 U.S.C Section 6901, et seq,
Chapters 6.5 through 7.7 of Division 20 of the California Health and Safety
Code, Section 25100 et seq , or other applicable state or federal laws,
rules or regulations adopted pursuant thereto.
EVENT OF DEFAULT. The words "Event of Default" mean any of the events of
default set forth in this Agreement in the default section of this
Agreement.
EXPIRATION DATE. The words "Expiration Date" mean the date of termination
of Xxxxxx's commitment to lend under this Agreement.
GAAP. The word "GAAP" means generally accepted accounting principles.
GRANTOR. The word "Grantor" means each and all of the persons or entities
granting a Security Interest in any Collateral for the Loan including
without limitation all Borrowers granting such a Security Interest.
GUARANTOR. The word "Guarantor'" means any guarantor, surety or
accommodation party of any or all of the Loan.
GUARANTY. The word "Guaranty" means the guaranty from Guarantor to Lender,
including without limitation a guaranty of all or part of the Note.
HAZARDOUS SUBSTANCES. The words "Hazardous Substances" mean materials that,
because of their quantity concentration or physical, chemical or infectious
characteristics, may cause or pose a present or potential hazard to human
health or the environment when improperly used, treated, stored, disposed
of, generated, manufactured, transported or otherwise handled. The words
'Hazardous Substances" are used in their very broadest sense and include
without limitation any and all hazardous or toxic substances, materials or
waste as defined by or listed under the Environmental Laws. The term
"Hazardous Substances' also includes, without limitation petroleum and
petroleum by-products or any fraction thereof and asbestos.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which
Borrower is responsible under this Agreement or under any of the Related
Documents.
LENDER. The word "Lender" means Alliance Bank, its successors and assigns.
LOAN. The word "Loan" means any and all loans and financial accommodations
from Lender to Borrower whether now or hereafter existing, and however
evidenced, including without limitation those loans and financial
accommodations described herein or described on any exhibit or schedule
attached to this Agreement from time to time.
NOTE. The word "Note" means the Note executed by IRONCLAD PERFORMANCE WEAR
CORPORATION in the principal amount of $1,000,000.00 dated March 31, 2005,
together with all renewals of, extensions of, modifications of,
refinancings of consolidations of and substitutions for the note or credit
agreement.
PERMITTED LIENS. The words "Permitted Liens" mean (1) liens and security
interests securing Indebtedness owed by Borrower to Lender; (2) liens for
taxes, assessments, or similar charges either not yet due or being
contested in good faith; (3) liens of materialmen, mechanics, warehousemen,
or carriers, or other like liens arising in the ordinary course of business
and securing obligations which are not yet delinquent; (4) purchase money
liens or purchase money security interests upon or in any property acquired
or held by Borrower in the ordinary course of business to secure
indebtedness outstanding on the date of this Agreement or permitted to be
incurred under the paragraph of this Agreement titled "Indebtedness and
Liens"; (5) liens and security interests which, as of the date of this
Agreement, have been disclosed to and approved by the Lender in writing;
and (6) those liens and security interests which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to
the net value of Xxxxxxxx's assets.
PRIMARY CREDIT FACILITY. The words "Primary Credit Facility'" mean the
credit facility described in the Line of Credit section of this Agreement.
RELATED DOCUMENTS. The words "Related Documents" mean all promissory notes,
credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages and all other instruments agreements and documents, whether now
or hereafter existing executed in connection with the Loan.
SECURITY AGREEMENT. The words "Security Agreement" mean end include without
limitation any agreements, promises, covenants, arrangements,
understandings or other agreements whether created by law, contract, or
otherwise evidencing, governing representing or creating a Security
Interest.
SECURITY INTEREST. The words "Security Interest" mean, without limitation,
any and all types of collateral security present and future, whether in the
form of a lien, charge encumbrance, mortgage, deed of trust, security deed,
assignment, pledge, crop pledge, chattel mortgage, collateral chattel
mortgage, chattel trust, factor's lien, equipment trust, conditional sale,
trust receipt, lien or title retention contract, lease or consignment
intended as a security device or any other security or lien interest
whatsoever whether created by law, contract, or otherwise.
XXXXXXXX ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) AND XXXXXXXX AGREES TO ITS TERMS THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) IS DATED MARCH 31, 2005.
BORROWER:
IRONCLAD PERFORMANCE WEAR CORPORATION
/s/ Xxxxxx X. Xxxxxx
BY: ----------------------------------------
XXXXXX X. XXXXXX, PRESIDENT & CEO OF
IRONCLAD PERFORMANCE WEAR CORPORATION
LENDER
ALLIANCE BANK
BY: ----------------------------------------
AUTHORIZED SIGNER
NOTICE OF FINAL AGREEMENT
----------------- ------------- -------------- ------------- --------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL/COLL
$1,000,000.00 03-31-2005 04-30-2006 630062 4,A / 0007
----------------- ------------- -------------- ------------- --------------
------------- -------------- -------------
ACCOUNT OFFICER INITIALS
6686 133
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References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item
Any item above containing ***** has been omitted due to text length limitations.
--------------------------------------------------------------------------------
Borrower: IRONCLAD PERFORMANCE WEAR Lender: Alliance Bank
CORPORATION Asset Based Lending Division
00000 XXXXXXXX XXXXXX 000 Xxxxxxxxx Xxxxxx
XXX XXXXXXX, XX 00000 P.O. Box 3048
Culver City, CA 90231-3048
(000) 000-0000
================================================================================
PRINCIPAL AMOUNT: $1,000,000.00 INITIAL RATE: 8.750%
DATE OF NOTE: MARCH 31, 2005
PROMISE TO PAY. IRONCLAD PERFORMANCE WEAR CORPORATION ("Borrower") promises to
pay to Alliance Bank ("Lender") or order, in lawful money of the United States
of America, the principal amount of One Million & 00/100 Dollars ($1,000,000.00)
or so much as may be outstanding, together with interest on the unpaid
outstanding principal balance of each advance. Interest shall be calculated from
the date of each advance until repayment of each advance.
PAYMENT. Xxxxxxxx will pay this loan in full immediately upon Xxxxxx's demand.
If no demand is made, Borrower will pay this loan in one payment of all
outstanding principal plus all accrued unpaid interest on April 30, 2006. In
addition, Borrower will pay regular monthly payments of all accrued unpaid
Interest due as of each payment date, beginning April 30, 2005, with all
subsequent interest payments to be due on the same day of each month after that.
Unless otherwise agreed or required by applicable law, payments will be applied
first to any accrued unpaid interest; then to principal; then to any unpaid
collection costs; and then to any late charges. The annual interest rate for
this Note is computed on a 365/360 basis; that is, by applying the ratio of the
annual Interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding Borrower will pay Lender at Xxxxxx's address shown above or at
such other place as Lender may designate in writing.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the Prime rate as
published in the Wall Street Journal. When a range of rates has been published,
the higher of the rates will be used (the ' Index"). The Index is not
necessarily the lowest rate charged by Lender on its loans. If the Index becomes
unavailable during the term of this loan, Lender may designate a substitute
index after notice to Borrower Lender will tell Borrower the current Index rate
upon Borrower's request. The interest rate change will not occur more often than
each day. Borrower understands that Lender may make loans based on other rates
as well. The Index currently is 5.750%. The interest rate to be applied to the
unpaid principal balance of this Note will be at a rate of 3.000 percentage
points over the Index, resulting in an initial rata of 8.750%. NOTICE: Under no
circumstances will the interest rate on this Note be more than the maximum rate
allowed by applicable law.
PREPAYMENT: MINIMUM INTEREST CHARGE. In any event, even upon full prepayment of
this Note, Xxxxxxxx understands that Lender is entitled to a minimum interest
charge of $100.00. Other than Xxxxxxxx's obligation to pay any minimum interest
charge, Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Xxxxxx in
writing, relieve Borrower of Xxxxxxxx's obligation to continue to make payments
of accrued unpaid interest Rather, early payments will reduce the principal
balance due. Xxxxxxxx agrees not to send Lender payments marked "paid in full",
"without recourse" or similar language. If Borrower sends such a payment, Xxxxxx
may accept it without losing any of Xxxxxx's rights under this Note, and
Borrower will remain obligated to pay any further amount owed to Lender. All
written communications concerning disputed amounts, including any check or other
payment instrument that indicates that the payment constitutes "payment in full"
of the amount owed or that is tendered with other conditions or limitations or
as full satisfaction of a disputed amount must be mailed or delivered to:
Alliance Bank, Asset Based Lending Division 000 Xxxxxxxxx Xxxxxx, X.X. Box 3048,
Culver City CA 90231-3048.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $10.00 whichever is greater.
INTEREST AFTER DEFAULT. Upon default, the variable interest rate on this Note
shall immediately increase to 8.000 percentage points over the Index if
permitted under applicable law.
DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note:
PAYMENT DEFAULT. Borrower fails to make any payment when due under this
Note.
OTHER DEFAULTS. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Note or in any of the
related documents or to comply with or to perform any term obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.
DEFAULT IN FAVOR OF THIRD PARTIES. Borrower or any Grantor defaults under
any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's ability
to repay this Note or perform Borrower's obligations under this Note or any
of the related documents.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this Note or
the related documents is false or misleading in any material respect either
now or at the time made or furnished or becomes false or misleading at any
time thereafter.
INSOLVENCY. The dissolution or termination of Xxxxxxxx's existence as a
going business, the insolvency of Xxxxxxxx, the appointment of a receiver
for any part of Xxxxxxxx's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the loan. This includes
a garnishment of any of Xxxxxxxx's accounts including deposit accounts,
with Xxxxxx. However, this Event of Default shall not apply if there is a
good faith dispute by Xxxxxxxx as to the validity or reasonableness, of the
claim which is the basis of the creditor or forfeiture proceeding and if
Borrower gives Xxxxxx written notice of the creditor or forfeiture
proceeding and deposits with Lender monies or a surety bond
for the creditor or forfeiture proceeding, in an amount determined by
Lender, in its sole discretion as being an adequate reserve or bond for the
dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to any Guarantor of any of the indebtedness or any Guarantor dies or
becomes incompetent, or revokes or disputes the validity of, or liability
under, any guaranty of the indebtedness evidenced by this Note In the event
of a death, Lender at its option, may, but shall not be required to, permit
the Guarantor's estate to assume unconditionally the obligations arising
under the guaranty in a manner satisfactory to Lender and in doing so, cure
any Event of Default.
CHANGE IN OWNERSHIP. Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower.
ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition, or Xxxxxx believes the prospect of payment or performance of
this Note is impaired.
INSECURITY. Lender in good faith believes itself insecure.
CURE PROVISIONS. If any default, other than a default in payment is curable
and if Borrower has not been given a notice of a breach of the same
provision of this Note within the preceding twelve (12) months, it may be
cured if Borrower after receiving written notice from Lender demanding cure
of such default; (1) cures the default within fifteen (15) days; or (2) if
the cure requires more than fifteen (15) days, immediately initiates steps
which Lender deems in Lender's sole discretion to be sufficient to cure the
default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.
LENDERS RIGHTS. Upon default, Xxxxxx may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, and then
Borrower will pay that amount.
ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay, Borrower will pay Lender that amount. This
includes, subject to any limits under applicable law, Xxxxxx's attorneys fees
and Xxxxxx's legal expenses, whether or not there is a lawsuit, including
attorneys' fees, expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), and appeals. Xxxxxxxx also
will pay any court costs, in addition to all other sums provided by law.
JURY WAIVER. Xxxxxx and Xxxxxxxx hereby waive the right to any Jury trial in any
action proceeding or counterclaim brought by either Xxxxxx or Borrower against
the other.
GOVERNING LAW. This Note will be governed by federal law applicable to Lender
and to the extent not preempted by federal law, the laws of the State of
California without regard to its conflicts of law provisions. This Note has been
accepted by Xxxxxx in the State of California.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $25.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
COLLATERAL. Borrower acknowledges this Note is secured by COMMERCIAL SECURITY
AGREEMENT DATED MARCH 24, 2004 AND UCC1 FINANCING STATEMENT FILED NOVEMBER 5,
2001 #0131060276 TOGETHER WITH ALL AMENDMENTS AND CONTINUATIONS AND ASSIGNMENT
OF LIFE INSURANCE POLICY DATED MARCH 24, 2004 ON LIFE OF XXXXXX X. XXXXXX.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested orally by Borrower or as provided in this paragraph.
All oral requests shall be confirmed in writing on the day of the request. All
communications, instructions, or directions by telephone or otherwise to Lender
are to be directed to Xxxxxx's office shown above. The following persons
currently are authorized, except as provided in this paragraph, to request
advances and authorize payments under the line of credit until Xxxxxx receives
from Borrower, at Xxxxxx's address shown above, written notice of revocation of
their authority: XXXXXX X. XXXXXX, PRESIDENT/CEO OF IRONCLAD PERFORMANCE WEAR
CORPORATION; XXXXXX X. XXXXX, XX., VP FINANCE: AND XXXXXXX XXXX, DIRECTOR OF
FINANCE. ANY ONE PREVIOUSLY MENTIONED. Xxxxxxxx agrees to be liable for all sums
either: (A) advanced in accordance with the instructions of an authorized person
or (B) credited to any of Xxxxxxxx's accounts with Xxxxxx. The unpaid principal
balance owing on this Note at any time may be evidenced by endorsements on this
Note or by Xxxxxx's internal records, including daily computer print-outs.
Lender will have no obligation to advance funds under this Note if: (A) Borrower
or any guarantor is in default under the terms of this Note or any agreement
that Borrower or any guarantor has with Lender, including any agreement made in
connection with the signing of this Note; (B) Borrower or any guarantor ceases
doing business or is insolvent; (C) any guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such guarantor's guarantee of this Note or
any other loan with Lender; (D) Borrower has applied funds provided pursuant to
this Note for purposes other than those authorized by Lender; or (E) Lender in
good faith believes itself insecure.
PRIOR NOTE. PROMISSORY NOTE #630062 DATED MARCH 24, 2004 IN THE ORIGINAL
PRINCIPAL AMOUNT OF $1,000,000.00 FROM BORROWER TO LENDER.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Xxxxxxxx, and
upon Xxxxxxxx's heirs, personal representatives successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.
NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES
Please notify us if we report any inaccurate information about your account(s)
to a consumer reporting agency. Your written notice describing the specific
inaccuracy(ies) should be sent to us at the following address; Alliance Bank
Real Estate Department 000 Xxxxxxxxx Xxxxxx, X.X. 0000, Xxxxxx Xxxx, XX
00000-0000.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Xxxxxx's right to
declare payment of this Note on its demand. Lender may delay or forgo enforcing
any of its rights or remedies under this Note without losing them. Borrower and
any other person who signs, guarantees or endorses this Note, to the extent
allowed by law, waive any applicable statute of limitations, presentment demand
for payment, and notice of dishonor. Upon any change in the terms of this Note,
and unless otherwise expressly stated in writing, no party who signs this Note,
whether as maker, guarantor, accommodation maker or endorser, shall be released
from liability. All such parties agree that Lender may renew or extend
(repeatedly and for any length of time) this loan or release any party or
guarantor or collateral; or impair, fail to realize upon or perfect Xxxxxx's
security interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone, All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.
PRIOR TO SIGNING THIS NOTE, XXXXXXXX READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. XXXXXXXX AGREES TO
THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.
BORROWER:
IRONCLAD PERFORMANCE WEAR CORPORATION
/s/ Xxxxxx X. Xxxxxx
BY: ----------------------------------------
XXXXXX X. XXXXXX, PRESIDENT & CEO OF
IRONCLAD PERFORMANCE WEAR CORPORATION
NOTICE OF FINAL AGREEMENT
----------------- ------------- -------------- ------------- --------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL/COLL
$1,000,000.00 03-31-2005 04-30-2006 630062 4,A / 0007
----------------- ------------- -------------- ------------- --------------
------------- -------------- -------------
ACCOUNT OFFICER INITIALS
6686 133
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References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item
Any item above containing ***** has been omitted due to text length limitations.
--------------------------------------------------------------------------------
Borrower: IRONCLAD PERFORMANCE WEAR Lender: Alliance Bank
CORPORATION Asset Based Lending Division
00000 XXXXXXXX XXXXXX 000 Xxxxxxxxx Xxxxxx
XXX XXXXXXX, XX 00000 P.O. Box 3048
Culver City, CA 90231-3048
(000) 000-0000
================================================================================
TO: ATTN: Insurance Agent Date: March 31, 2005
RE: Policy Number(s):
Insurance Companies/Company:
Dear Insurance Agent:
Grantor, IRONCLAD PERFORMANCE WEAR CORPORATION ("Grantor") is obtaining a loan
from Alliance Bank. Please send appropriate evidence of insurance to Alliance
Bank, together with the requested endorsements, on the following property, which
Grantor is giving as security for the loan.
COLLATERAL: All Inventory and Equipment.
TYPE: All risks, including fire theft and liability
AMOUNT: Full Insurable Value
BASIS: Replacement value.
ENDORSEMENTS: Lender loss payable clause with stipulation that coverage
will not be cancelled or diminished without a minimum of 10 days prior
written notice to Lender Comments: PLEASE NAME ALLIANCE BANK AS LOSS
PAYEE OR CERTIFICATE HOLDER
DEDUCTIBLES: $1,000.00
LATEST DELIVERY DATE: By the loan closing date
GRANTOR:
IRONCLAD PERFORMANCE WEAR CORPORATION
/s/ Xxxxxx X. Xxxxxx
BY: ----------------------------------------
XXXXXX X. XXXXXX, PRESIDENT & CEO OF
IRONCLAD PERFORMANCE WEAR CORPORATION
RETURN TO:
----------------------------
Alliance Bank Insurance
P.O. Box 3048
Culver City, CA 90231
----------------------------
NOTICE OF FINAL AGREEMENT
----------------- ------------- -------------- ------------- --------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL/COLL
$1,000,000.00 03-31-2005 04-30-2006 630062 4,A / 0007
----------------- ------------- -------------- ------------- --------------
------------- -------------- -------------
ACCOUNT OFFICER INITIALS
6686 133
------------- -------------- -------------
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item
Any item above containing ***** has been omitted due to text length limitations.
--------------------------------------------------------------------------------
Borrower: IRONCLAD PERFORMANCE WEAR Lender: Alliance Bank
CORPORATION Asset Based Lending Division
00000 XXXXXXXX XXXXXX 000 Xxxxxxxxx Xxxxxx
XXX XXXXXXX, XX 00000 P.O. Box 3048
Culver City, CA 90231-3048
(000) 000-0000
================================================================================
INSURANCE REQUIREMENTS. Grantor, IRONCLAD PERFORMANCE WEAR CORPORATION
("Grantor"), understands that insurance coverage is required in connection with
the extending of a loan or the providing of other financial accommodations to
Grantor by Xxxxxx. These requirements are set forth in the security documents
for the loan. The following minimum insurance coverages must be provided on the
following described collateral (the "Collateral"):
COLLATERAL: All Inventory and Equipment.
TYPE: All risks, including fire, theft and liability
AMOUNT: Full Insurable Value
BASIS: Replacement value.
ENDORSEMENTS: Lender loss payable clause with stipulation that coverage
will not be cancelled or diminished without a minimum of 10 days prior
written notice to Lender.
COMMENTS: PLEASE NAME ALLIANCE BANK AS LOSS PAYEE OR CERTIFICATE HOLDER
DEDUCTIBLES: 51,000.00
LATEST DELIVERY DATE: By the loan closing date.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance company
Grantor may choose that is reasonably acceptable to Lender Grantor understands
that credit may not be denied solely because insurance was not purchased through
Lender.
INSURANCE MAILING ADDRESS, All documents and other materials relating to
insurance for this loan should be mailed delivered or directed to the following
address:
Alliance Bank Insurance
P.O. Box 3048
Culver City, CA 90231
FAILURE TO PROVIDE INSURANCE. Xxxxxxx agrees to deliver to Xxxxxx, on the latest
delivery date stated above, proof of the required insurance as provided above,
with an effective date of March 31, 2005, or earlier. Grantor acknowledges and
agrees that if Grantor fails to provide any required insurance or fails to
continue such insurance in force, Lender may do so at Grantor's expense as
provided in the applicable security document. The cost of any such insurance, at
the option of Lender, shall be added to the indebtedness as provided in the
security document GRANTOR ACKNOWLEDGES THAT IF LENDER SO PURCHASES ANY SUCH
INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE
TO THE COLLATERAL UP TO AN AMOUNT EQUAL TO THE LESSER OF (1) THE UNPAID BALANCE
OF THE DEBT, EXCLUDING ANY UNEARNED FINANCE CHARGES, OR (2) THE VALUE OF THE
COLLATERAL; HOWEVER, GRANTOR'S EQUITY IN THE COLLATERAL MAY NOT BE INSURED. IN
ADDITION, THE INSURANCE MAY NOT PROVIDE ANY PUBLIC LIABILITY OR PROPERTY DAMAGE
INDEMNIFICATION AND MAY NOT MEET THE REQUIREMENTS OF ANY FINANCIAL
RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral, Grantor
authorizes Lender to provide to any person (including any insurance agent or
company) all information Lender deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO PROVIDE
INSURANCE AND AGREES TO ITS TERMS THIS AGREEMENT IS DATED MARCH 31, 2005.
GRANTOR:
IRONCLAD PERFORMANCE WEAR CORPORATION
/s/ Xxxxxx X. Xxxxxx
BY: -------------------------------------
XXXXXX X. XXXXXX, PRESIDENT & CEO OF
IRONCLAD PERFORMANCE WEAR CORPORATION
FOR LENDER USE ONLY
INSURANCE VERIFICATION
DATE: PHONE:
------------------ -------------------
AGENT'S NAME:
----------------------------------------------
AGENCY:
---------------------------------------------------
INSURANCE COMPANY:
-----------------------------------------
POLICY NUMBER:
--------------------------------------------
EFFECTIVE DATES:
-------------------------------------------
COMMENTS:
-------------------------------------------------------------------
-----------------------------------------------------------------------------
LOAN TYPE. This is a Variable Rate Nondisclosable Revolving Line of Credit Loan
to a Corporation for $1,000,000.00 due on April 30, 2006. The reference rate
(Prime rate as published in the Wall Street Journal, when a range of rates has
been published, the higher of the rates will be used, currently 5.750%) is added
to the margin of 3.000% resulting in an initial rate of 8.750. This is an
unsecured renewal of the following described indebtedness: PROMISSORY NOTE
#630062 DATED MARCH 24, 2004 IN THE ORIGINAL PRINCIPAL AMOUNT OF $1,000,000.00
FROM BORROWER TO LENDER.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for:
|_| PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES OR PERSONAL INVESTMENT.
|_| BUSINESS (INCLUDING REAL ESTATE INVESTMENT).
SPECIFIC PURPOSE. The specific purpose of this loan is: PURCHASE ACCOUNTS
RECEIVABLE INVENTORY LOAN TO OPEN LC'S ONLY.
DISBURSEMENT INSTRUCTIONS. Xxxxxxxx understands that no loan proceeds will be
disbursed until all of Xxxxxx's conditions for making the loan have been
satisfied. Please disburse the loan proceeds of $1,000,000.00 as follows:
UNDISBURSED FUNDS: $794,641.28
AMOUNT PAID ON BORROWER S ACCOUNT: $205,358.72
$205,358.72 Payment on Loan # 630062 LOAN BALANCE
-------------
NOTE PRINCIPAL: $1,000,000.00
AUTOMATIC PAYMENTS. Borrower hereby authorizes Xxxxxx automatically to deduct
from Borrower's account, numbered 00000000, the amount of any loan payment. If
the funds in the account are insufficient to cover any payment. Lender shall not
be obligated to advance funds to cover the payment At any time and for any
reason Borrower or Lender may voluntarily terminate Automatic Payments.
FINANCIAL CONDITION, BY SIGNING THIS AUTHORIZATION, XXXXXXXX REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION
AS DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO XXXXXX. THIS
AUTHORIZATION IS DATED MARCH 31, 2005.
GRANTOR:
IRONCLAD PERFORMANCE WEAR CORPORATION
/s/ Xxxxxx X. Xxxxxx
BY: --------------------------------------
XXXXXX X. XXXXXX, PRESIDENT & CEO OF
IRONCLAD PERFORMANCE WEAR CORPORATION
BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THE WRITTEN
LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES, (B) THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (C) THE WRITTEN LOAN
AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.
AS USED IN THIS NOTICE, THE FOLLOWING TERMS HAVE THE FOLLOWING MEANINGS:
LOAN. The term "Loan" means the following described loan: a Variable Rate
Nondisclosable Revolving Line of Credit Loan to a Corporation for $1,000,000.00
due on April 30, 2006. The reference rate (Prime rate as published in the Wall
Street Journal. When a range of rates has been published, the higher of the
rates will be used currently 5.750%) is added to the margin of 3.000%, resulting
in an initial rate of 8.750%. This is an unsecured renewal of the following
described indebtedness: PROMISSORY NOTE #630062 DATED MARCH 24, 2004 IN THE
ORIGINAL PRINCIPAL AMOUNT OF $1,000,000.00 FROM BORROWER TO LENDER.
LOAN AGREEMENT. The term "Loan Agreement" means one or more promises, promissory
notes, agreements, undertakings, security agreements, deeds of trust or other
documents, or commitments, or any combination of those actions or documents
relating to the Loan, including without limitation the following:
LOAN DOCUMENTS
Business Loan Agreement [Asset Based)
CA Commercial Guaranty: XXXXXX X. XXXXXX
Assignment of Life Insurance Policy Policy No. 0467073201
Insurance Policy Verification: Policy No. 0467073201
Statement filed November 5, 2001 #0131060276
CA National UCC Financing Statement (Rev 05/22/02): All
Inventory Chattel Paper, Accounts, Equip.
Collateral Receipt: Term Life Insurance Policy Number
0467073201 in the amount of $1,250,000 00 on the life of
XXXXXX X. XXXXXX, issued by PRIMERICA LIFE INSURANCE
COMPANY
Notice of Insurance Requirements: All Inventory, Chattel
Paper, Accounts, Equipment and General Intangibles; UCC1
Financing Statement filed November 5, 2001 #0131060276
together with all amendments and continuations
Promissory Note
CA Commercial Security Agreement: All Inventory, Chattel
Paper, Accounts, Equipment and General Intangibles; UCC1
Financing Statement filed November 5, 2001 #0131060276
together with all amendments and continuations; owned by
IRONCLAD PERFORMANCE WEAR CORPORATION
Agreement to Provide Insurance: Ali Inventory, Chattel Paper,
Accounts, Equipment and General Intangibles; UCC1 Financing
Statement filed November 5, 2001 #0131060276 together with
all amendments and continuations; owned by IRONCLAD
PERFORMANCE WEAR CORPORATION
Disbursement Request and Authorization
Notice of Final Agreement
Parties. The term "Parties" means Alliance Sank and any and all entities or
individuals who are obligated to repay the loan or have pledged property as
security for the Loan including without limitation the following:
BORROWER: IRONCLAD PERFORMANCE WEAR CORPORATION
GRANTOR(S): IRONCLAD PERFORMANCE WEAR CORPORATION
GRANTOR(S): XXXXXX X. XXXXXX
XXXXXXXXX 1: XXXXXX X. XXXXXX
EACH PARTY WHO SIGNS BELOW, OTHER THAN ALLIANCE BANK, ACKNOWLEDGES, REPRESENTS
AND WARRANTS TO ALLIANCE BANK THAT IT HAS RECEIVED READ AND UNDERSTOOD THIS
NOTICE OF FINAL AGREEMENT, THIS NOTICE IS DATED MARCH 31 2005.
BORROWER:
IRONCLAD PERFORMANCE WEAR CORPORATION
BY: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
XXXXXX X. XXXXXX, PRESIDENT & CEO OF
IRONCLAD PERFORMANCE WEAR CORPORATION
GRANTOR:
X: /s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX, INDIVIDUALLY
GUARANTOR:
X: /s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX, INDIVIDUALLY
LENDER:
X /s/ Illegible
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AUTHORIZED SIGNER
