1
EXHIBIT 10.29
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is dated as of December 18, 1996 (the
"Effective Date"), between DATAFLEX CORPORATION, a New Jersey corporation
("Company"), and NATIONSCREDIT COMMERCIAL CORPORATION OF AMERICA, a North
Carolina corporation with its principal place of business at Xxxxxxxxx 000
Xxxxxxxx, Xxxxx 0000, 0000 Xxxxxxxxxx Xxxxxx X.X., Xxxxxxx Xxxxxxx 00000
("Lender").
WITNESSETH:
WHEREAS, Company has requested a credit facility up to $10,000,000 from
Lender, and Lender has agreed to provide such facility on the terms set forth
herein;
NOW, THEREFORE, for valuable consideration hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01. DEFINITIONS. As used in this Agreement, the following terms
have the respective meanings indicated below (such meanings to be applicable
equally to both the singular and plural forms of such terms):
"Account" means and includes, as to Company, all of Company's then
owned or existing and future acquired or arising (a) right to the payment of
money or other forms of consideration of any kind (whether classified under the
UCC as accounts, contract rights, chattel paper, general intangibles or
otherwise) including, but not limited to, accounts receivable, vendor credits,
price protection credits, volume rebates, advertising rebates, letters of credit
and the right to receive payment thereunder, the Escrow Account and the right to
receive payments thereunder, chattel paper, tax refunds, insurance proceeds,
Contract Rights, notes, drafts, instruments, documents, acceptances and all
other debts, obligations and liabilities in whatever form from any Person and
guaranties, security and Liens securing payment thereof, (b) goods, whether now
owned or hereinafter acquired, and whether sold, delivered, undelivered, in
transit or returned, which may be represented by, or the sale or lease of which
may have given rise to, any such right to payment or other debt, obligation
2
or liability, and (c) cash and non-cash proceeds of any of the foregoing.
"Adjusted Outstanding" means, as of the effective date of any
Collateral Certificate, (a) (i) the sum of actual outstanding Advances on such
day and (ii) Unfunded Approvals for which Inventory has been received by
Company, less (b) In-Transit Inventory Advances. For purposes of calculating
such Unfunded Approvals for which Inventory has been received by Company,
Inventory shall be deemed to be received by Lender on the fourth day after the
date of approval of the invoice (or such other number of days as Lender in its
sole discretion shall determine is appropriate given periodic reviews by Lender
of Company's actual experience).
"Administrative Fee" has the meaning ascribed thereto in Section 2.05
hereof.
"Advance" means an advance made by Lender to Company to finance the
acquisition of Inventory pursuant to Section 2.01 hereof.
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with another Person.
"Agreement" means this Loan and Security Agreement.
"Ameridata" means Ameridata of New Jersey, Inc., a New Jersey
corporation, and its successors and assigns.
"Ameridata Sale Agreement" means the Asset Purchase Agreement dated
August 30, 1996 between Ameridata and the Borrower, as amended.
"Apple Seed Inventory" means Eligible Inventory purchased pursuant to
the Apple Seed Program.
"Apple Seed Program" means the pricing and repurchase program
established by Apple Computer Corporation to facilitate Company's distribution
and marketing of Apple computers to schools, as the same may be modified and
amended from time to time by Apple Computer Corporation with the written
consent of Lender.
"Business Day" means a day of the year on which banks are open for
business in both Atlanta, Georgia and Clearwater, Florida.
-2-
3
"Business Unit" means the assets constituting the business, or a division
or operating unit thereof, of any Person.
"Capital Lease" means any capital lease or sublease, as defined in
accordance with GAAP.
"Collateral" has the meaning set forth in Section 4.01 hereof.
"Collateral Base" means (a) the sum of --
(i) with respect to continuing operations, the lesser of cost or
market value of --
(A) 100% of Eligible Inventory which is not Apple Seed Inventory;
(B) 90% of Eligible Inventory which is Apple Seed Inventory equal
to or less than 150 days from the original invoice date (hereafter,
"from the original invoice date" shall be referred to as "Old"); and
(C) 50% of Eligible Inventory which is Apple Seed Inventory
greater than 150 days Old and equal to or less than 240 days Old;
(ii) with respect to discontinued operations, the lesser of cost or
market value of --
(A) 50% of Eligible Inventory manufactured by IBM which is equal
to or less than 180 days from the Effective date;
(B) 90% of Eligible Inventory not manufactured by IBM which is
equal to or less than 30 days from the Effective Date;
(C) 80% of Eligible Inventory not manufactured by IBM which is
greater than 30 days from the Effective Date and equal to or less
than 60 days from the Effective Date;
(D) 70% of Eligible Inventory not manufactured by IBM which is
greater than 60 days from the Effective Date and equal to or less
than 90 days from the Effective Date;
-3-
4
(E) 60% of Eligible Inventory not manufactured by IBM which is
greater than 90 days from the Effective Date and equal to or less
than 120 days from the Effective Date; and
(F) 50% of Eligible Inventory not manufactured by IBM which is
greater than 120 days from the Effective Date and equal to or less
than 180 days from the Effective Date; and
(iii) with respect to all operations, 100% of Eligible Vendor
Accounts;
less (b) the balance owed by Company to any vendor under an open account
provided by such vendor to Company (provided that in addition to purchasing
Inventory from such vendor under an open account, Company also uses the
financing provided hereunder to purchase Inventory from such vendor); provided,
however, Lender retains the right to adjust advance rates and establish reserves
from time to time in its reasonable discretion, based upon charge-off and
adjustment experience and other appropriate factors.
"Collateral Certificate" has the meaning ascribed thereto in Section
6.12(a) hereof.
"Commitment" means $10,000,000.
"Company" means DataFlex Corporation, a New Jersey corporation.
"Compliance Certificate" means a certificate of an officer of Company
acceptable to Lender, and in form and substance satisfactory to Lender, (a)
certifying that such officer has no knowledge that a Default or Event of Default
has occurred and is continuing, or if a Default or Event of Default has occurred
and is continuing, a statement as to the nature thereof and the action being
taken or proposed to be taken with respect thereto, and (b) setting forth
detailed calculations with respect to the covenants described in Section 6.01
hereof.
"Contingent Liability" means, as to any Person, any obligation, contingent
or otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Debt or obligation of another in any manner, whether directly
or indirectly, including without limitation any obligation of such Person,
direct or indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or any security for the payment of thereof,
(b) to purchase Property or services for the
-4-
5
purpose of assuring the owner of such Debt of its payment, or (c) to maintain
the solvency, working capital, equity, cash flow, fixed charge or other
coverage ratio, or any other financial condition of the primary obligor so as
to enable the primary obligor to pay any Debt or to comply with any agreement
relating to any Debt or obligation.
"Contract Rights" means and includes, as to Company, all of Company's
then owned or existing and future acquired or arising rights under contracts
not yet earned by performance and not evidenced by an instrument or chattel
paper, to the extent that the same may lawfully be assigned.
"Date of Origination" means (i) with respect to any vendor Account
arising from the return of merchandise by Company to any vendor, the date the
vendor issues an "RMA number" approving such return, and (ii) with respect to
any vendor Account arising from a price protection program provided by any
vendor, the date that Company gives written notice to such vendor of the
applicable pricing adjustment giving rise to such vendor Account.
"Debt" means all obligations, contingent or otherwise, which in
accordance with GAAP should be classified on the balance sheet as liabilities,
and in any event including capital leases, Contingent Liabilities that are
required to be disclosed and quantified in notes to financial statements in
accordance with GAAP, and liabilities secured by any Lien on any Property,
regardless of whether such secured liability is with or without recourse.
"Default" means any event specified in Section 7.01 hereof, for which
any requirement for the giving of notice or lapse of time has not yet been
satisfied.
"Deposit Accounts" means any demand, time, savings, passbook or like
account maintained by Company with a bank, savings and loan association, credit
union or like organization, other than an account evidenced by a certificate of
deposit that is an instrument under the UCC.
"Effective Date" has the meaning ascribed thereto in the preamble of
this Agreement.
"Eligible Vendor Account" means an Account arising from the return of
merchandise by Company to any vendor or arising from a price protection program
provided by any vendor that:
(a) is subject to a perfected, first priority Lien in favor of
Lender, free from any other Lien;
-5-
6
(b) is not unpaid more than 90 days from the Date of Origination;
(c) is not owing by a vendor located or otherwise resident outside
the United States;
(d) is not payable by a vendor who has suspended business, has made
an assignment for the benefit of creditors, is insolvent, or is
the subject of a voluntary or involuntary proceeding under any
bankruptcy law or other law for the relief of debtors;
(e) is not subject to any condition, contingency, allowance,
defense, dispute, off-set or counterclaim;
(f) does not relate to rebilling to the vendor; and
(g) is otherwise acceptable to Lender;
provided, however, each Account otherwise satisfying the requirements of
subparagraphs (a) through (g) above will be reduced by any contra-balances for
amounts then due to the applicable vendor from Company.
"Eligible Inventory" means Inventory that (a) is subject to a
perfected, first priority Lien in favor of Lender, free from any other Lien
other than those acceptable to Lender in its sole discretion, (b) is not 121
days or more Old (except for Apple Seed Inventory which may not be greater than
240 days Old and Inventory on account of discontinued operations which may not
be greater than 180 days from the Effective Date), and is located at Company's
offices as set forth on Schedule 1 hereto, (c) qualifies for repurchase under
a valid, enforceable repurchase agreement between Lender and the vendor or
manufacturer of the Inventory, (d) is not comprised of spare parts,
demonstration Inventory other than Apple Seed Inventory, Inventory in use by
Company other than Apple Seed Inventory, out of box Inventory, or RMA
Inventory, and (e) is otherwise acceptable to Lender.
"Environmental Law" means any Law or other authorization or requirement
of any Governmental Body relating to actual or threatened emissions, discharges
or releases of pollutants, contaminants, or hazardous or toxic materials, or
otherwise relating to pollution or the protection of health or the environment.
"Equipment" means and includes, as to Company, all of Company's then
owned or existing and future acquired or arising machinery, apparatus,
equipment, motor vehicles, tractors, trailers, rolling stock, fittings, and
other tangible personal property (other than Inventory) of every kind and
description used in Company's business operations
-6-
7
or owned by Company or in which Company has an interest and all parts,
accessories and special tools and all increases and accessions thereto and
substitutions and replacements therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations issued thereunder, as from time to time
in effect.
"Escrow Account" means the escrow account established pursuant to the
Ameridata Sale Agreement for the payment of certain post-closing adjustments,
as set forth in the Ameridata Sale Agreement and the Escrow Account Agreement.
"Escrow Account Agreement" means the escrow account agreement between
Company and Ameridata and escrow agent, entered into pursuant to the Ameridata
Sale Agreement with respect to the payment of certain post-closing adjustments.
"Event of Default" means any of the events specified in Section 7.01 of
this Agreement, provided any requirement for the giving of notice or lapse of
time has been satisfied.
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
"General Intangibles" means, as to Company, all of Company's then owned
or existing and future acquired or arising general intangibles, choose in action
and causes of action and all other intangible personal property of Company of
every kind and nature (other than Accounts), including, without limitation,
Intellectual Property, corporate or other business records, inventions, designs,
blueprints, plans, specifications, trade secrets, goodwill, computer software,
customer lists, registrations, licenses, franchises, tax refund claims,
reversions or any rights thereto and any other amounts payable to Company from
any ERISA Plan or other employee benefit plan, rights and claims against
carriers and shippers, rights to indemnification, business interruption
insurance and proceeds thereof, property, casualty or any similar type of
insurance and any proceeds thereof, proceeds of insurance covering the lives of
key employees on which Company is beneficiary and any letter of credit,
guarantee, claims, security interest or other security held by or granted to
Company to secure payment by an Account obligor of any of the Accounts.
"Governmental Body" means any arbitrator, governmental official, or
state, commonwealth, federal, foreign, territorial, or other court or
governmental body, including
-7-
8
any subdivision, agency, department, commission, board, bureau or
instrumentality.
"IBM" means International Business Machines Corporation.
"IBMCC" means IBM Credit Corporation, Company's Inventory lender prior
to the date hereof.
"In-Transit Inventory Advances" means any Advance made by Lender in
respect of Inventory which has not been received by Company. For purposes of
calculating In-Transit Inventory Advances, Inventory shall be deemed to be
received by the Company on the fourth day after the applicable invoice date (or
such other number of days as Lender in its sole discretion shall determine is
appropriate given periodic reviews by Lender of Company's actual experience).
"Intercreditor Agreement" means that certain intercreditor agreement of
even date between NationsBank, N.A. (South) and Lender pursuant to which
NationsBank, N.A. (South) and Lender agree upon the relative priorities of their
Liens in the Collateral, as the same may be modified and amended from time to
time.
"Interest Payment Date" means the 10th day of each calendar month,
commencing January 10, 1997.
"Intellectual Property" means, as to Company, all of Company's then
owned existing and future acquired or arising patents, patent rights,
copyrights, works which are the subject of copyrights, trademarks, service
marks, trade names, trade styles, patent, trademark and service xxxx
applications, and all licenses and rights related to any of the foregoing and
all other rights under any of the foregoing, all extensions, renewals, reissues
divisions, continuations and continuations-in-part of any of the foregoing and
all rights to xxx for past, present and future infringements of any of the
foregoing.
"Interest Reserve Account" has the meaning ascribed thereto in Section
2.04 hereof.
"Inventory" means and includes, as to Company, all of Company's then
owned or existing and future acquired or arising (a) goods intended for sale or
lease or for display or demonstration, (b) work in process, (c) raw materials
and other materials and supplies of every nature and description used or which
might be used in connection with the manufacture, packing, shipping,
advertising, selling, leasing or furnishing of goods or otherwise used or
consumed
-8-
9
in the conduct of business, and (d) documents evidencing and general intangibles
relating to any of the foregoing.
"Investment" means any acquisition of all or substantially all assets
of any Person, or any acquisition of, or beneficial interest in, partnership or
membership interests, capital stock or other securities of any Person, or any
advance or capital contribution to or other investment in any Person.
"Law" means any law, regulation, order or decree of any Governmental
Body.
"Lender" means NationsCredit Commercial Corporation of America, a North
Carolina corporation.
"License" means, as to any Person, any license, permit or other
authorization by any Governmental Body or third Person necessary or appropriate
for such Person to own or operate its business or Property.
"Lien" means any security interest, lien, pledge, encumbrance, charge
or adverse claim of any kind, including without limitation any agreement to give
or not to give any lien, or any conditional sale or other title retention
agreement.
"Litigation" means any proceeding, claim or investigation conducted or
threatened by or before any Governmental Body.
"Loan Papers" means this Agreement and all certificates, instruments
and agreements delivered by any Person hereunder.
"Material Adverse Change" means any act, omission, event or undertaking
which would, singly or in the aggregate, have a materially adverse effect upon
(a) the business, assets, properties, liabilities, condition (financial or
otherwise), results of operations or business prospects of the Company or any of
its Subsidiaries, (b) upon the respective ability of the Company or any of its
Subsidiaries to perform any obligations under this Agreement or any other Loan
Paper to which it is a party, or (c) the legality, validity, binding effect,
enforceability or admissibility into evidence of any Loan Paper or the ability
of Lender to enforce any rights or remedies under or in connection with any Loan
Paper, in any case, whether resulting from any single act, omission, situation,
status, event, or undertaking, together with other such acts, emissions,
situations, statuses, events, or undertakings.
-9-
10
"Money Borrowed" means, as applied to Debt, (a) Debt for money
borrowed, (b) Debt, whether or not in any such case the same was for money
borrowed, (i) represented by notes payable and drafts accepted, that represent
extensions of credit, (ii) constituting obligations evidenced by bonds,
debentures, notes or similar instruments, or (iii) upon which interest charges
are customarily paid (other than trade Debt) or that was issued or assumed as
full or partial payment for property, (c) Debt that constitutes a capitalized
lease obligation, and (d) Contingent Liabilities, but only to the extent that
the obligations guaranteed are obligations that would constitute Debt for Money
Borrowed.
"NationsBank Loan and Security Agreement" means that certain Loan and
Security Agreement of even date between Company and NationsBank, N.A. (South),
as the same may be modified and amended from time to time.
"Permitted Debt For Money Borrowed" means (a) Permitted Purchase Money
Debt, (b) Debt to NationsBank, N.A. (South) under the NationsBank Loan and
Security Agreement, (c) Subordinated Indebtedness, and (d) Debt owing to Xxxxxxx
Bank of Pinellas County an set forth on Schedule 2 delivered on the Effective
Date.
"Permitted Investments" means Investments of the Company in: (a)
negotiable certificates of deposit, time deposits and banker's acceptances
issued by NationsBank, N.A. (South) or any Affiliate of NationsBank, N.A.
(South) or by any United States bank or trust company having capital, surplus
and undivided profits in excess of $250,000,000, (b) any direct obligation of
the United States of America or any agency or instrumentality thereof which has
a remaining maturity at the time of purchase of not more than one year and
repurchase agreements relating to the same, (c) sales on credit in the ordinary
course of business on terms customary in the industry, and (d) notes, accepted
in the ordinary course of business, evidencing overdue accounts receivable
arising in the ordinary course of business.
"Permitted Liens" means; (a) Liens securing taxes, assessments and
other governmental charges or levies (excluding any Lien imposed pursuant to any
of the provisions of ERISA) or the claims of materialmen, mechanics, carriers,
warehousemen or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, but (i) with respect to any Liens securing
taxes, assessments and other governmental charges and levies which are due and
payable, only to the extent
-10-
11
such taxes or other charges are being contested in good faith by appropriate
proceedings and for which adequate reserves have been established on the
appropriate books, and (ii) in the case of warehousemen or landlords controlling
locations where Inventory is located, only if such liens have been waived or
subordinated to the security interest of Lender in a manner satisfactory to
Lender; (b) Liens consisting of deposits or pledges made in the ordinary course
of business in connection with, or to secure payment of, obligations under
workers' compensation, unemployment insurance or similar legislation or under
surety or performance bonds, in each case arising in the ordinary course of
business; (c) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of
Company's real estate, which in the sole judgment of Lender do not materially
detract from the value of such real estate or impair the use thereof in the
business of Company; (d) Purchase Money Liens securing Permitted Purchase Money
Debt; (e) Liens in favor of NationsBank, N.A. (South) as collateral for
Company's obligations under the NationsBank Loan and Security Agreement,
provided such liens shall be subordinate to the security interest granted
hereunder except as provided in the Intercreditor Agreement; (f) Liens of Lender
arising under this Agreement and the other Loan Papers; (g) Liens arising out of
or resulting from any judgment or award, the time for the appeal or petition for
rehearing of which shall not have expired, or in respect of which Company is
fully protected by insurance or in respect of which Company shall at any time in
good faith be prosecuting an appeal or proceeding for a review and in respect of
which a stay of execution pending such appeal or proceeding for review shall
have been secured, and as to which appropriate reserves have been established on
the books of Company, and (h) Liens in favor of Xxxxxxx Bank of Pinellas County
encumbering the property of the Borrower described on Schedule 3, and securing
Debt permitted by clause (d) of the definitions of "Permitted Debt For Money
Borrowed".
"Permitted Purchase Money Debt" means Purchase Money Debt secured only
by Purchase Money Liens and capitalized lease obligations, incurred by Company
after the date hereof, up to an aggregate amount outstanding at any time equal
to $2,000,000.
"Person" means an individual, partnership, joint venture, corporation,
limited liability company, trust, Governmental Body or unincorporated
organization.
"Plan" means any single employer plan or multiple employer plan, within
the meaning of ERISA, established by
-11-
12
Company or otherwise maintained at any time for Company's employees.
"Prime Rate" means the prime rate announced by NationsBank, N.A. at its
office in Charlotte, North Carolina and in effect on the last business day of a
calendar month, effective for the next month.
"Property" means all types of real, personal, tangible or intangible
property.
"Purchase Money Debt" means Debt created with the prior written consent
to Lender to finance the payment of all or any part of the purchase price (not
in excess of the fair market value thereof) of any tangible asset (other than
inventory) and incurred at the time of or within 10 days prior to or after the
acquisition of such tangible asset.
"Purchase Money Lien" means any Lien securing Purchase Money Debt, but
only if such Lien shall at all times be confined solely to the tangible asset
(other than Inventory) the purchase price of which was financed through the
incurrence of the Purchase Money Debt secured by such Lien.
"Restricted Distribution" by any Person means (a) its retirement,
redemption, purchase, or other acquisition for value of any capital stock or
other equity securities or partnership interests issued by such Person, (b) the
declaration or payment of any dividend or distribution on or with respect to any
such securities or partnership interests, (c) any loan or advance by such Person
to, or other investment by such Person in, the holder of any of such securities
or partnership interests, and (d) any other payment by such Person in respect of
such securities or partnership interests.
"Restricted Payment" means (a) any redemption, repurchase or prepayment
or other retirement, prior to the stated maturity thereof or prior to the due
date of any regularly scheduled installment or amortization payment with respect
thereto, of any Debt of a Person (other than the Debt to Lender, Debt to
NationsBank, N.A. (South) under the NationsBank Loan and Security Agreement and
trade debt), and (b) the payment by any Person of the principal amount of or
interest on any Subordinated Debt or on any Debt (other than trade debt) owing
to an Affiliate of such Person.
"Rights" means rights, remedies, powers and privileges.
"RMA Inventory" means merchandise returned by Company to the applicable
vendor.
-12-
13
"Solvent" means, with respect to any Person, that on such date (a) the
fair value of the Property of such Person is greater than the total amount of
liabilities (including Contingent Liabilities) of such Person, (b) the present
fair salable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured, (c) such Person does not intend to, and does
not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (d) such Person is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's Property would constitute an unreasonably
small capital.
"Subordinated Indebtedness" means (a) Debt evidenced by the
Subordinated Notes which is subordinated to the obligations of Company to Lender
secured by the Collateral as set forth in the Subordination Agreements, and (b)
any other Debt for Money Borrowed of Company which is subordinated to the
obligations of Company to Lender secured by the Collateral on terms and
conditions acceptable to Lender in its sole discretion.
"Subordinated Notes" means those certain promissory notes in the form
of Exhibit B attached hereto, with respect to which the outstanding principal
balances as of the date hereof are as set forth on Schedule 2 hereof.
"Subordination Agreements" means the subordination agreements, in form
and substance acceptable to the Lender, pursuant to which the Debt evidenced by
the Subordinated Notes is subordinated to the obligations of Company to Lender
secured by the Collateral.
"Subsidiary" means, as to any Person, any corporation at least 50% of
whose securities having ordinary voting power (other than securities having such
power only by reason of happening of a contingency) are owned by such Person, or
one or more Subsidiaries of that Person, or a combination thereof.
"Taxes" means all taxes, assessments, fees or other charges imposed by
any Law or Governmental Body.
"Termination Date" means December _, 1998, or such later date to which
the termination of the Commitment may be extended under Section 2.06 hereof.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of Georgia.
-13-
14
"Unfunded Approval" means an unfunded approval that has been issued to
a manufacturer or other vendor by Lender, pursuant to which Lender commits to
fund Company's obligations under a purchase order submitted by Company to such
manufacturer or vendor.
"Vendor Account" means an Account owed by an Inventory vendor to
Company, including, without limitation, Eligible Vendor Accounts.
ARTICLE II
ADVANCES
2.01. ADVANCES.
(a) Lender shall, subject to the term and conditions set forth herein,
make Advances to Company from time to time until the Termination Date, to fund
Company's acquisition of Inventory. Company may borrow, repay and reborrow in
accordance with this Agreement. In no event may total outstanding Advances, plus
all Unfunded Approvals, exceed the Commitment unless Lender in its sole
discretion on a case by case basis elects to fund or issue an approval for any
Advance (including Unfunded Approvals) above the Commitment.
(b) Lender will send Company schedules from time to time listing the
amount of each Advance. If Company does not agree with a schedule, it must
immediately notify Lender in writing of the objections. Company's failure to
notify Lender of an objection within fourteen days shall constitute an
acceptance of the schedule.
(c) In lieu of a promissory note or other instrument evidencing the
indebtedness hereunder, Lender will maintain records reflecting Company's
outstanding indebtedness. Failure to make notation of any Advance, however, will
not affect the obligations of Company. Entries in such records will be
conclusive, absent manifest error. Company hereby promises to pay to Lender the
principal amount of all Advances, together with accrued interest and other
amounts due thereon, all in accordance with the terms of this Agreement.
2.02. MAKING ADVANCES. On any Business Day, a vendor (at the request of
Company, which request shall be deemed made unless Company notifies Lender to
the contrary) may contact Lender for an Advance to finance Inventory sold to
Company. Subject to the terms and conditions set forth
-14-
15
herein, Lender will disburse the proceeds of Advances directly to vendors of
Inventory with whom Lender has a repurchase or other dealer financing
arrangement acceptable to Lender. Each date of borrowing must be a Business Day.
In addition to Advances to vendors as described above, Lender shall make
Advances to IBMCC on or before the fourth day following the Effective Date to
refinance certain Debt of Company to IBMCC (which Debt financed Company's
purchase of certain Inventory).
2.03. PREPAYMENT AND REPAYMENT OF ADVANCES
(a) Company may from time to time prepay Advances, in whole or in part.
If, at any time prior to the Termination Date, Company terminates the Commitment
and repays all outstanding Advances, such termination and repayment shall be
accompanied by a termination fee equal to 2% of the Commitment if such
termination and repayment occurs on or before the first anniversary of the
Effective Date, or 1% of the Commitment if such termination and repayment occurs
after the first anniversary of the Effective Date and prior to the second
anniversary of the Effective Date, or such percentage of the Commitment as
Lender and Company agree on or before any extension of the Termination Date;
provided, however, if the Termination Date is extended and Company and Lender do
not agree on such termination fee on or prior to any such extension, the
applicable termination fee shall be the termination fee in effect immediately
prior to such extension of the Termination Date.
(b) Company shall repay the principal amount of each Advance within
thirty (30) days of the date of such Advance; provided, however, with respect to
any Advance made by Lender on behalf of Company to purchase Apple Seed
Inventory under the Apple Seed Program, the principal amount of each Advance
shall be repaid in accordance with the terms of the Apple Seed Program; provided
further, however, with respect to any purchase program created hereafter and
approved by Lender in its sole discretion, principal on each Advance thereunder
shall be due and payable at such time as the parties agree to in writing prior
to any such Advance.
(c) In addition, on the Termination Date, Company shall repay all
outstanding Advances, accrued interest and charges, and all other amounts owing
to Lender. Notwithstanding the foregoing, if, as of the effective date of any
Collateral Certificate, Adjusted Outstandings exceed the lesser of the
Commitment and the Collateral Base, Company shall immediately pay to Lender the
amount by which the Adjusted Outstandings exceed the lesser of the Commitment
and the Collateral Base.
-15-
16
2.04. INTEREST ON ADVANCES. Advances shall bear interest at a per annum
rate equal to the Prime Rate. Lender shall create an interest reserve account
(the "Interest Reserve Account") comprised of (i) any interest discount paid by
a vendor to Lender on account of an Advance made by Lender hereunder and (ii)
any interest discount reflected in an adjustment to the amount payable by Lender
on any vendor invoice. With respect to subsection (i) above, such interest shall
be credited to the Interest Reserve Account when the interest discount is paid
by the applicable vendor to Lender. With respect to subsection (ii) above, such
interest shall be credited to the Interest Reserve Account when Lender makes the
discounted Advance to the applicable vendor. Accrued interest is due and payable
on each Interest Payment Date. Prior to such date, Lender will provide Company
with a statement of the balance of the Interest Reserve Account five (5)
Business Days prior to the applicable Interest Payment Date. On the Interest
Payment Date, Lender will pay the then due and payable interest and
Administrative Fees hereunder in an amount up to the balance of the Interest
Reserve Account by debiting the Interest Reserve Account and crediting the
interest and Administrative Fees due. If the balance of the Interest Reserve
Account is insufficient to pay in full the interest and Administrative Fees then
due and payable, Company shall pay to Lender any remaining interest and
Administrative Fees then due and payable hereunder after giving effect to the
credit for the amount held in the Interest Reserve Account. If the funds in the
Interest Reserve Account exceed the amount of interest and Administrative Fees
then due and payable, such excess shall be deposited into Company's lockbox
account maintained at NationsBank, N.A. (South), account number 375-077-6979 on
the Interest Payment Date. Notwithstanding the foregoing, upon the occurrence of
a Default or Event of Default hereunder, Lender may apply any funds or credits
in the Interest Reserve Account to the principal, interest and other charges
hereunder in its sole discretion.
During the existence of any Event of Default, at the option of Lender,
amounts owing hereunder shall bear interest at the Prime Rate plus 5% per annum,
due and payable on demand.
2.05. ADMINISTRATIVE FEES. Company shall pay to Lender an
administrative fee (the "Administrative Fee") in the amount of 0.15% for each
vendor invoice paid by Lender hereunder. Such fee shall be payable monthly on
each Interest Payment Date shall be fully earned when due and nonrefundable when
paid.
-16-
17
2.06. EXTENSION OF TERMINATION DATE. The Termination Date shall be
automatically extended for successive one-year periods unless either Lender or
Company provides to the other written notice of termination not less than 60
days prior to the then effective Termination Date.
2.07. COMPUTATIONS AND MANNER OF PAYMENTS. Interest will be calculated
on a simple interest basis for a year of 360 days, based on actual days elapsed.
If any payment is due on a date that is not a Business Day, the due date will be
extended to the next Business Day. All payments due hereunder shall be paid in
immediately available funds no later than 11:00 a.m. (Atlanta, Georgia time) on
the date specified herein. Any payment received by Lender after 11:00 a.m.
(Atlanta, Georgia time) shall be deemed to have been received on the immediately
succeeding Business Day and any applicable interest shall continue to accrue.
Lender may, at any time and without notice to Company, apply monies received in
payment of Company's obligations in such order of application as Lender shall
determine. All payments shall be made in United States dollars and without
set-off, counterclaim or other defense. Company specifically agrees that it will
not delay payment of any obligations to Lender, or assert any defense or set-off
with respect to said obligations, on account of a dispute between Company and
the vendor or manufacturer of any Inventory. Company will repay the full invoice
amount relating to Advances, notwithstanding any allowance or discount provided
by the vendor or manufacturer to Lender.
ARTICLE III
CONDITIONS PRECEDENT
3.01. CONDITIONS PRECEDENT TO EFFECTIVENESS. The effectiveness of this
Agreement is subject to fulfillment of the following conditions precedent:
(a) Lender shall be satisfied, in its reasonable discretion, with
Company's financial condition, Properties, business, affairs or prospects as of
the effective date.
(b) Company shall have executed and delivered to Lender all Loan
Papers, in form and substance satisfactory to Lender.
(c) Company shall have delivered such financing statements and lien
filings as Lender shall request to record and perfect the Liens granted to
Lender hereunder. Lender shall have received such UCC and Lien search reports
-17-
18
as it shall deem appropriate to evidence that its Liens on the Collateral are
first priority Liens, subject only to Permitted Liens.
(d) Lender shall have received a Collateral Certificate in the form of
Exhibit A hereto, in form and detail satisfactory to Lender and showing a
Collateral Base in excess of the initial requested Advance.
(e) Lender shall have received a certificate of a duly authorized
officer of Company, certifying that (i) no Default or Event of Default exists,
(ii) the representations and warranties set forth in Article V hereof are true
and correct, and (iii) Company has complied with all agreements and conditions
to be complied with by it under the Loan Papers by such date.
(f) Lender shall have received a certificate of a duly authorized
officer of Company, certifying (i) that attached copies of Company's articles of
incorporation and bylaws are true and complete, and in full force and effect,
without amendment except as shown, (ii) that an attached copy of resolutions
authorizing execution and delivery of the Loan Papers is true and complete, and
that such resolutions are in full force and effect, were duly adopted, have not
been amended, modified, or revoked, and constitute all resolutions adopted with
respect to this loan transaction, and (iii) to the incumbency, name and
signature of each officer authorized to sign the Loan Papers on behalf of
Company. Lender may conclusively rely on this certificate until it is otherwise
notified by Company in writing.
(g) Lender shall have received an opinion of counsel to Company (i)
that Company has full power and authority to execute and deliver its Loan
Papers; (ii) that the Loan Papers constitute the legal, valid and binding
obligations of Company, enforceable in accordance with their term; and (iii) as
to such other matters, and otherwise in form and substance, satisfactory to
Lender,
(h) Lender shall have received evidence satisfactory to it that Company
is duly organized, validly existing and in good standing in its state of
organization, and is duly qualified and in good standing in all other
appropriate jurisdictions.
(i) Lender shall have received a pay off letter from IBMCC in form and
substance satisfactory to Lender, together with appropriate Uniform Commercial
Code termination statements and other Lien releases as Lender shall request (to
be held in escrow by or on behalf of Lender until
-18-
19
Company's Debt to IBMCC is refinanced as described in Section 2.02 hereof).
(j) Lender shall have received evidence that all conditions precedent
to the effectiveness of the NationsBank Loan and Security Agreement have been
satisfied.
(k) All proceedings of Company taken in connection with the
transactions contemplated hereby, and all documents incidental thereto, shall be
satisfactory in form and substance to Lender. Lender shall have received copies
of all documents or other evidence that it may reasonably request in connection
with such transactions.
3.02. REQUESTS FOR ADVANCES. Each disbursement of an Advance by Lender
directly to a vendor for the acquisition of Inventory shall constitute a
representation by Company that the date of funding, the following are true:
(a) the representations and warranties contained in Article V
hereof are true and correct on such date, as though made on
and as of such date, and
(b) no event has occurred or exists, or would result from such
Advance, that could constitute a Default or Event of Default.
Lender may condition any Advance upon Lenders receipt, in form and substance
acceptable to it, of such other information as it may reasonably deem necessary
or appropriate.
ARTICLE IV
SECURITY INTEREST
4.01. SECURITY INTERESTS IN COLLATERAL. As security for all present and
future obligations of Company to Lender, whether or not arising under this
Agreement, and of whatever kind, now due or to become due, absolute or
contingent, joint or several, Company hereby grants to Lender a continuing
security interest and Lien on all personal property (excluding fixtures) of
Company, whether now owned or hereafter acquired and wherever located
(collectively, "Collateral"), including the following:
(a) all Accounts,
(b) all Inventory,
-19-
20
(c) all Equipment,
(d) all Contract Rights,
(a) all General Intangibles,
(f) all Deposit Accounts,
(g) all goods and other property, whether or not delivered, (i)
the sale or lease of which gives or purports to give rise to any Account,
including, but not limited to, all merchandise returned or rejected by or
repossessed from customers, or (ii) securing any Account, including, without
limitation, all rights as an unpaid vendor or lienor (including, without
limitation, stoppage in transit, replevin and reclamation) with respect to such
goods and other properties,
(h) all mortgages, deeds to secure debt and deeds of trust on real or
personal property, guaranties, leases, security agreements and other agreements
and property which secure or relate to any Account or other Collateral or are
acquired for the purpose of securing and enforcing any item thereof,
(i) all documents of title, policies and certificates of insurance,
securities, chattel paper and other documents and instruments evidencing or
pertaining to any and all items of Collateral,
(j) all files, correspondence,, computer programs, tapes, disks and
related data processing software which contain information identifying or
pertaining to any of the Collateral or any Account obligor or showing the
amounts thereof or payments thereon or otherwise necessary or helpful in the
realization thereon or the collection thereof,
(k) all cash deposited with Lender or any Affiliate thereof or which
Lender is entitled to retain or otherwise possess as collateral pursuant to the
provisions of this Agreement or any of the other Loan Papers, and
(l) any and all products and cash and non-cash proceeds of the
foregoing (including, but not limited to, any claims to any items referred to in
this definition and any claims against third parties for loss of, damage to or
destruction of any or all of the Collateral or for proceeds payable under or
unearned premiums with respect to policies of insurance) in whatever form,
including, but not limited to, cash, negotiable instruments and other
instruments for
-20-
21
the payment of money, chattel paper, security agreements and other documents.
An additional security for all present and future obligations of
Company to Lender, whether or not arising under this Agreement, and of whatever
kind, now due or to become due, absolute or contingent, joint or several,
Company grants to Lender for itself and as agent for any Affiliate of Lender a
security interest in, and assigns to Lender for itself and as agent for any
Affiliate of Lender all of Company's right, title and interest in and to, any
deposits or other sums at any time credited by or due from Lender and each
Affiliate of Lender to Company, with the same rights therein as if the deposits
or other sums were credited by or due from Lender.
4.02. DUTIES RELATING TO COLLATERAL. So long as this Agreement is in
effect or any amounts are owing to Lender, Company agrees that it shall:
(a) Except for liquidations of up to $100,000 per year, sell and
deliver Inventory in the ordinary course of business, and not otherwise sell,
transfer, encumber (except with respect to Permitted Liens) or lease any item of
Collateral without Lender's prior written consent;
(b) Keep accurate and complete records of the Collateral; keep all
Collateral (including books and records relating thereto) at Company's addresses
specified under or pursuant to Schedule 1 hereof; and provide at least 30 days
advance written notice to Lender of any change in the location of any
Collateral;
(c) Promptly report and pay all Taxes and other charges against the
Collateral; maintain a perfected, first priority Lien in favor of Lender in the
Collateral, subject only to Permitted Liens; and discharge all other Liens that
from time to time attach to or are asserted against the Collateral;
(d) Pay all transportation and storage charges on the Collateral; and
pay all rents, if any, for the use of premises on which Company keeps any
Collateral; and
(e) Subject to the rights of NationsBank, N.A. (South) under the
Intercreditor Agreement: xxxx all chattel paper, instruments and records
evidencing or relating to the Accounts as being subject to the security interest
created hereby; take all actions appropriate for the collection and enforcement
of Accounts, and for the perfection of any liens securing Accounts; permit
Lender to contact Account obligors
-21-
22
to verify information provided by Company, and assist Lender in such
verification process; and after a Default or Event of Default, not adjust,
settle or compromise the amount, payment or performance of any obligations
relating to Accounts, without the prior consent of Lender.
4.03. COLLECTION OF ACCOUNTS. Subject to the rights of NationsBank,
N.A. (South) under the Intercreditor Agreement and under the NationsBank Loan
and Security Agreement:
(a) Until Lender exercises its rights to collect the Accounts directly
as set forth below, Company will collect all Accounts with diligence, whether or
not they constitute Eligible Accounts. Upon the occurrence of an Event of
Default, Company will advise any or all Account obligors to make remittances to
a lock box established by Lender. Remittances received in the lock box shall be
credited to Company's obligations, but all credits are conditional, subject to
collection. Returned items and costs relating to any lock box account will be
charged to and payable by Company.
(b) Lender may, upon the occurrence of an Event of Default, with or
without cause, (i) give notice of assignment to any or all Account obligors;
(ii) collect any or all Accounts directly, at Company's expense; (iii) settle or
adjust disputes and claims directly with Account obligors for amounts and upon
terms which Lender considers advisable; (iv) receive, open and dispose of all
mail addressed to Company and notify post office authorities to change the
address for delivery of Company's mail to an address designated by Lender; (v)
endorse Company's name on any checks or other evidence of payment that may come
into possession of Lender and on any invoice, freight or express xxxx, xxxx of
lading or other document; (vi) in Company's name or otherwise, demand, xxx for,
collect and give acquittance for any and all monies due or to become due on
Accounts; (vii) compromise, prosecute or defend any action or claim concerning
Accounts; and/or (viii) do any and all things appropriate to carry out the
intent of this Agreement, or any other agreement between the parties. Neither
Lender nor any person acting as its attorney hereunder shall be liable for any
acts or omissions or for any error of judgment or mistake of fact or law, except
for gross negligence or willful misconduct. Company agrees that the powers
granted hereunder, are coupled with an interest and shall be irrevocable, as
long as the Commitment or any obligations of Company to Lender remain
outstanding.
-22-
23
(c) Notwithstanding the foregoing, the parties agree that Lender is
under no duty to take any actions relating to any Accounts, any related
agreements or any other Collateral, including any duty as to the collection or
protection of Accounts or income therefrom, or the preservation of rights
relating thereto.
4.04. INSURANCE OF COLLATERAL. Company shall keep the Collateral
insured for full value against all insurable risks, on terms and with insurers
reasonably acceptable to Lender, and with Lender as the loss payee, assignee or
additional insured, as appropriate. Company shall provide notice to Lender in
writing at least 10 days before changing or canceling any policy. Each policy
shall require the insurer to give not less than 30 days prior written notice to
Lender of cancellation, and shall provide that Lender's interest will not be
impaired by any act or neglect of Company or any other Person nor by any use of
the premises for purposes more hazardous than are permitted by the policy.
4.05. POWER OF ATTORNEY. Company hereby irrevocably appoints Lender,
including any officer or employee of Lender as Lender may designate, as
Company's true and lawful attorney-in-fact with power of substitution to do the
following acts on behalf of Company in connection with the transactions
contemplated by the Loan Papers: to prepare, execute and deliver in the name of
Company security instruments, financing statements, lien filings and
certificates of title relating to Collateral; to endorse Company's name upon any
notes, checks, drafts, money orders and other forms of instruments made payable
to Company and relating to Collateral; and generally to perform all acts and do
all things necessary and proper in connection with the transactions contemplated
hereby or in discharge of the powers hereby conferred, including the making of
affidavits and the acknowledgment of instruments as fully as if done by Company.
The foregoing powers are coupled with an interest and shall be irrevocable, as
long as the Commitment or any obligations of Company to Lender remain
outstanding.
4.06. FURTHER ASSURANCES. Company shall execute such financing
statements and other instruments and agreements, and shall take such actions,
as Lender shall request from time to time to evidence or perfect any Lien
granted hereunder. Unless prohibited by Law, Company authorizes Lender to
execute and file any financing statement or other instrument or agreement on
behalf of Company for the foregoing purposes. The parties agree that a copy of
this Agreement or any financing statement may be
-23-
24
filed as a financing statement in any appropriate jurisdiction.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Company represents and warrants that the following are true and
correct:
5.01. ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the Laws of its state of
organization. The Company is qualified to do business in all jurisdictions where
the nature of its business or Properties require such qualification. Company has
no Subsidiaries.
5.02. DUE AUTHORIZATION, VALIDITY. The Board of Directors of Company
has duly authorized the execution, delivery and performance of its Loan Papers.
No consent of any shareholders of Company is required as a prerequisite to the
validity and enforceability of its Loan Papers. Company has full legal right,
power and authority to execute, deliver and perform under its Loan Papers. Such
Loan Papers constitute the legal, valid and binding obligations of Company,
enforceable in accordance with their terms (subject as to enforcement of
remedies to any applicable bankruptcy, reorganization, moratorium, or similar
Laws or principles of equity affecting creditors' rights generally).
5.03. CONFLICTING AGREEMENTS AND OTHER MATTERS. The execution or
delivery of any Loan Papers, and performance thereunder, do not conflict with,
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the creation of any
Lien (other than consents already obtained) on any Properties of Company under,
or require any approval, action by or notice to any Governmental Body or other
Person pursuant to, the articles of incorporation or bylaws of Company, or any
Law or material agreement to which Company or any of its Properties is subject.
5.04. FINANCIAL STATEMENTS. The financial statements of Company
delivered to Lender fairly present Company's financial condition and its results
of operations as of the date and for the period shown, and, with respect to the
annual financial statements, were prepared in accordance with GAAP. Company's
financial statements reflect all material liabilities, direct and contingent, of
-24-
25
Company that are required to be disclosed in accordance with GAAP. Company does
not have any material Contingent Liabilities, liabilities for Taxes, forward or
long-term commitments, or unrealized or anticipated losses from any unfavorable
commitments that are not reflected in such financial statements. Company is
Solvent.
5.05. LITIGATION. Except as set forth on Schedule 5.05 hereof, there is
no Litigation pending or, to the beat of Company's knowledge, threatened against
Company on the date hereof that involves a claim for damages or reasonably
expected potential liability of $100,000 or more. There in no pending or, to the
best of Company's knowledge, threatened Litigation against Company that could
result in a Material Adverse Change.
5.06. LAWS REGULATING INCURRENCE OF DEBT . NO proceeds of any Advance
will be used directly or indirectly to acquire any securities. No Advance will
be used to purchase or carry margin stock (as defined in applicable Federal
Reserve regulations), nor to extend credit to others to do so. Company is not
subject to regulation under any Law that prohibits or restricts its incurrence
of Debt in any material respect, including Laws relating to common or contract
carriers, or public utility holding companies.
5.07. LICENSES, TITLE TO PROPERTIES, ETC. Company possesses all
Licenses and is not in violation thereof in any material respect. Company has
full power, authority and legal right to own and operate its Properties, and to
conduct its business. Company has good and indefeasible title (fee or leasehold,
as applicable) to its Properties, subject to no Lien of any kind, except
Permitted Liens. Company is not in violation of its articles of incorporation or
bylaws, any award of any arbitrator, or any Law or material agreement to which
Company or any or any of its Properties is subject. No business or Properties
of Company is affected by any strike, lock-out or other labor dispute, casualty,
earthquake, embargo or act of God.
5.08. OUTSTANDING DEBT AND LIENS. Company has no outstanding Debt or
Contingent Liabilities which are prohibited by the terms hereof and Company has
no Liens, except Permitted Liens.
5.09. TAXES. Except as set forth on Schedule 5.09 hereof, Company has
filed all Tax returns and reports which are required to be filed, and has paid
all Taxes, to the extent due and payable, except for certain franchise Taxes
disclosed to Lender in writing on or before the date hereof. All Tax liabilities
of Company are adequately provided for
-25-
26
on its books (including interest and penalties) and adequate reserves have been
established therefor in accordance with GAAP. No taxing authority has notified
Company of any deficiency in a Tax return nor asserted any Tax liability in
excess of that already paid.
5.10. EMPLOYEE BENEFITS. All employee benefits are provided in
accordance with all applicable Laws. Each Plan satisfies the minimum funding
standards under all applicable laws, and has no accumulated deficiency. Company
has not incurred any withdrawal liability nor engaged in any prohibited
transaction with respect to a Plan. Company has not failed to make any payment
to a Plan as required under applicable laws, and no reportable event (as defined
under ERISA) has occurred. Company has not received any notice from any
Governmental Body or administrator of any potential termination of a Plan, and
no circumstance or event exists that could constitute grounds for the
termination of or appointment of a trustee to administer any Plan.
5.11. ENVIRONMENTAL LAWS. Company has delivered to Lender copies of all
environmental studies and reports conducted or received by Company in connection
with its Properties. Such studies cover all real Property, if any, owned in fee
by Company and reveal no potential liability, violations or discrepancies under
any Environmental Laws. All Licenses have been obtained or filed that are
required under any Environmental Laws, unless the failure to obtain or file same
could not result in a Material Adverse Change. No Hazardous Materials are
generated, produced or released at or in connection with any Properties or
operations of Company. Company has no potential liability with respect to any
release of Hazardous Materials into the environment.
5.12. DISCLOSURE. Company has not made a material misstatement of fact,
or failed to disclose any fact necessary to make the facts disclosed not
misleading, to Lender during the course of application for and negotiation of
this Agreement or otherwise in connection with any transactions contemplated
hereby. There is nothing known to Company that could materially adversely affect
Company's financial condition, Properties or business, or that could result in a
Material Adverse Change, which is not set forth herein or in notices hereafter
delivered to Lender.
-26-
27
ARTICLE VI
COVENANTS
So long as this Agreement is in effect or any amounts are owing to
Lender, Company agrees that it shall:
6.01. FINANCIAL COVENANTS. Company shall comply with the financial
covenants set forth in Section 10.1 of the NationsBank Loan and Security
Agreement as in effect on the Effective Date or as such covenants may
thereafter be modified or amended with the written consent of Lender; provided,
however, if the NationsBank Loan Security Agreement is terminated prior to the
termination of this Agreement, Company shall comply with the financial
covenants set forth in Section 10.1 of the NationsBank Loan and Security
Agreement (or any other section containing financial covenants) as in effect
immediately prior to the termination of such agreement.
6.02. DEBT. Company shall not incur, create, assume, or otherwise
become or remain obligated in respect of, or permit or suffer to exist or to be
created, assumed or incurred or to be outstanding any Debt for Money Borrowed,
except for Permitted Debt for Money Borrowed and Company's Debt to IBMCC
provided such Debt to IBMCC is repaid on or before the fourth day following the
Effective Date.
6.03. CONTINGENT LIABILITIES. Company shall not incur, assume or be
liable in any manner for any Contingent Liabilities, except those resulting
from the endorsement of negotiable instruments for collection in the ordinary
course of business.
6.04. LIENS. Company shall not create, assume or permit or suffer to
exist or to be created or assumed any Lien on any of the property or assets of
Company, real, personal or mixed, tangible or intangible, except for Permitted
Liens and Liens securing Company's Debt to IBMCC; provided such Liens of IBMCC
are released on or before the fourth day following the Effective Date.
6.05. AMENDMENT OF ORGANIZATIONAL DOCUMENTS; RESTRICTED DISTRIBUTIONS.
(a) Company shall not amend or modify, or permit the
amendment or modification of, its articles of incorporation or bylaws in any
material respect, without the prior written consent of Lender (which will not be
unreasonably withheld).
-27-
28
(b) Company shall not declare or make any Restricted
Distribution or Restricted Payment, except that so long as no Default or Event
of Default shall have occurred and be continuing or would result therefrom, the
Company may (a) make payments on the Subordinated Debt (including "earn-out"
payments due 90 days after the end of each fiscal year under that certain Asset
Purchase Agreement dated as of November 17, 1994 between Company and National
Data Products, Inc.) to the extent permitted by the Subordination Agreements or
the other subordination provisions applicable thereto, (b) make cash dividends
and distributions and redeem shares of its capital stock for cash, in an
aggregate amount not to exceed $1,000,000 in any fiscal year, if Company would
be permitted to make such dividend, distribution or redemption under the
NationsBank Loan and Security Agreement, and (c) convert any Subordinated Debt
into stock of the Company, provided no distribution of cash or other
consideration (other than stock) is made to any such converting holder of
Subordinated Debt.
6.06. LAWS, LICENSES AND MATERIAL AGREEMENTS. Company shall obtain and
comply in all material respects with all applicable Laws and Licenses. Company
shall maintain and comply in all material respects with all agreements
necessary or appropriate for its business and Properties. Company shall
maintain its Plans such that the representation and warranty in Section 5.11
hereof is true at all times.
6.07. DISPOSITION OF ASSETS. Except as permitted by Section 4.02(a),
Company shall not sell, transfer, encumber or lease any of its assets, except
sales or dispositions of assets in the ordinary course of business, including
dispositions of obsolete or useless assets.
6.08. MERGER; INVESTMENTS; BUSINESS. Company shall not merge into or
consolidate with any Person, or permit any other Person to merge into or
consolidate with it, or form or acquire any Subsidiary. Company shall not
change the nature of its business as now conducted. Company shall not make or
allow to be outstanding any Investment other than Permitted Investments.
Company shall not, after the Effective Date, acquire any Business Unit.
6.09. INSURANCE. Except as otherwise required by Section 4.04
hereof, Company shall (a) keep its insurable Properties adequately insured at
all times by financially sound and reputable insurers to such extent and
against such risks, including fire and other risks insured against by extended
coverage, as is customary with companies similarly
-28-
29
situated and in the same or similar businesses, (b) maintain in full force and
effect public liability and workers compensation insurance, in amounts
customary for such similar companies to cover normal risks, by insurers
satisfactory to Lender, and (c) maintain such other insurance as may be required
by Law or reasonably requested by Lender. Company shall deliver evidence of
renewal of each insurance policy on or before the date of its expiration, and
from time to time shall deliver to Lender, upon demand, evidence of the
maintenance of such insurance. Company shall promptly deliver to Lender copies
of all reports provided to insurers.
6.10. INSPECTION RIGHTS. Company shall permit Lender, upon reasonable
notice and during normal business hours, to examine and make copies of and
abstracts from Company's books and records, to inspect its Properties and to
discuss its affairs with any of its directors, officers, employees or
accountants, all as Lender may reasonably request. Company agrees to reimburse
Lender for the cost of any inspection, but such cost shall not to exceed $1,000
per quarter so long as no Default or Event of Default exists.
6.11. RECORDS; CHANGES IN GAAP. Company shall keep adequate books and
records in conformity with GAAP. Company shall not change its fiscal year nor
change its method of financial accounting except in accordance with GAAP. In
connection with any change in accounting methods resulting from a change in
GAAP, Company and Lender shall make appropriate alterations to the covenants set
forth in Section 6.01 hereof, reflecting such change.
6.12. REPORTING REQUIREMENTS. Company shall furnish to Lender:
(a) No later than 3 Business Days following the Effective Date, a
Collateral Certificate in the form of Exhibit A hereto, as modified with the
consent of Lender from time to time (a "Collateral Certificate"), together with
a detailed aged trial balance of all of its then existing trade Accounts,
specifying the name of and the balance due from (and any rebate due to) each
trade Account obligor obligated on an Account so listed, a detailed Inventory
report (excluding spare parts) and a detailed Vendor Accounts agings report;
which Collateral Certificate and reports shall be in form and substance
satisfactory to Lender and certified as true and correct, prepared as of the
close of business on the Effective Date;
(b) No later than 3 Business Days after the last day of each accounting
week of Company, a Collateral
-29-
30
Certificate, together with a detailed Inventory report (excluding spare parts)
and a detailed Vendor Accounts agings report; which Collateral Certificate and
reports shall be in form and substance satisfactory to Lender and certified as
true and correct, prepared as of the close of business on the last Business Day
of such week;
(c) No later than 15 days after the end of each accounting month of
Company, (i) a schedule of Accounts setting forth (A) a detailed aged trial
balance of all Company's then existing trade Accounts, specifying the name and
the balance due from (and any rebate due to) each trade Account obligor
obligated on an Account so listed and (B) a reconciliation to the schedule of
Accounts delivered in respect of the next preceding accounting month, (ii) a
detailed Inventory report (excluding spare parts), (iii) a spare parts Inventory
report, and (iv) a detailed Vendor Accounts agings report; which reports shall
be in form and substance satisfactory to Lender and certified as true and
correct, prepared as of the close of business on the last day of such month;
(d) As soon as available and in any event within 30 days after the end of
each month, a balance sheet and statement of income of Company for such month
and for the portion of the fiscal year ending with such month, prepared in
reasonable detail, and certified by an officer of Company (in a manner
satisfactory to Lender) as fairly presenting the financial condition and results
of operations of Company, together with a Compliance Certificate;
(e) As soon as available and in any event within 45 days after the end of
each quarter, a balance sheet and statement of income of Company for such
quarter and for the portion of the fiscal year ending with such quarter,
prepared in reasonable detail, and certified by an officer of Company (in a
manner satisfactory to Lender), as fairly presenting the financial condition and
results of operations of Company, together with a Compliance Certificate.
(f) As soon as available and in any event within 120 days after the end of
each fiscal year of Company, audited balance sheets and statements of income and
cash flow for each of Company and Guarantor for such fiscal year, prepared in
accordance with GAAP in reasonable detail and accompanied by unqualified
opinions of independent certified public accountants acceptable to Lender,
together with a Compliance Certificate;
(g) Promptly upon receipt thereof, copies of all material reports or
letters submitted to Company by any
-30-
31
auditors or accountants in connection with any annual, interim or special audit;
(h) As soon as possible but at least 30 days prior to the commencement
of each fiscal year, a monthly business plan for such year, including a
projected balance sheet, income and cash flow statements, expenses and sales,
accompanied by a statement of assumptions and certified by an officer of Company
in a manner acceptable to Lender;
(i) As soon as possible and in any event within five days, a notice of
the occurrence of any Default or Event of Default, setting forth the details
thereof, and the action being taken or proposed to be taken with respect
thereto;
(j) As soon as possible and in any event within five days, notice of
any Litigation pending or threatened against Company which, if determined
adversely, could result in damages in excess of $100,000 or more or any other
Material Adverse Change, together with a statement of an officer of Company
describing the allegations of such Litigation, and the action being taken or
proposed to be taken with respect thereto;
(k) Promptly after filing, copies of all reports and notices that
Company furnishes to NationsBank, N.A. (South) in connection with the
NationsBank Loan and Security Agreement;
(l) Promptly after filing or receipt thereof, copies of all reports
and notices that Company furnishes to or receives from any holders of any Debt
Contingent Liability relating to a breach, default or event of default
thereunder, or otherwise relating to any event or circumstance that could
result in a Default or Event of Default;
(m) No later than 3 Business Days following the Effective Date, a list
of unfunded approvals provided by IBMCC as of the Effective Date in form and
substance satisfactory to Lender; and
(n) Promptly upon request, such information concerning the Collateral
Base, Accounts, Inventory, Company's financial condition, Properties, business,
affairs or prospects, and other matters, as Lender may from time to time
reasonably request.
6.13. TRANSACTIONS WITH AFFILIATES. Except as permitted herein,
Company shall not enter into or be party to a transaction with any Affiliate,
except on terms no less
-31-
32
favorable than could be obtained on an arm's-length basis with a Person that
is not an Affiliate.
6.14. FURTHER ASSURANCES. Within 30 days after the Effective Date,
Company shall deliver to Lender documentation (in form and substance
satisfactory to Lender) evidencing Ameridata's agreement to pay to Lender any
Vendor Accounts collected by Ameridata pursuant to the Ameridata Sale Agreement
or any related sale documents. Additionally, within 30 days after the
Effective Date, Company shall become qualified to do business as a foreign
corporation in the State of Georgia and provide Lender with evidence of same.
Company at its expense will promptly execute and deliver to Lender, or cause to
be executed and delivered to Lender, all such other and further documents,
agreements, and instruments in compliance with or accomplishment of the
covenants and agreements of Company in the Loan Papers, or to correct any
omissions in the Loan Papers, or more fully to state the obligations set out
herein or in any of the Loan Papers, or to obtain any consents, all as may be
necessary or appropriate in connection therewith and as may be reasonably
requested by Lender.
ARTICLE VII
EVENTS OF DEFAULT
7.01. EVENTS OF DEFAULT. Each of the following shall be an "Event of
Default" hereunder, if the same shall occur for any reason whatsoever, whether
voluntary or involuntary, by operation of Law or otherwise:
(a) Company shall fail to pay any principal payable under Section
2.03(c) hereunder when due, or the Company shall fail to pay any other
principal (other than principal due under Section 2.03(c)), interest, fees, or
other amounts payable under any Loan Papers within five (5) days after the date
such payment was due;
(b) Any representation or warranty of Company made in connection with
this Agreement or any transactions contemplated hereby shall be incorrect or
misleading in any material respect when given;
(c) Company shall fail to perform or observe (i) any term or covenant
set forth in Article IV or Article VI hereof, or (ii) any other term or
covenant contained in any Loan Paper (other than as specifically provided for
otherwise in this Section 7.01) and such failure shall
-32-
33
continue for a period of 30 days after written notice thereof has been given to
the Company by Lender;
(d) Any provision of any Loan Papers shall, for any reason, not be
valid and binding on Company, or shall be declared to be null and void; the
validity or enforceability of any provision of any Loan Papers shall be
contested by Company; or any breach, default or event of default shall occur or
exist under any Loan Papers after any applicable grace period;
(e) Any of the following shall occur: (i) Company shall make an
assignment for the benefit of creditors, be insolvent or unable to pay its
debts as they come due, or cease doing business as a going concern; (ii)
Company shall petition any Governmental Body for the appointment of a trustee,
receiver or liquidator of it or any of its assets, or shall commence any
proceedings under any bankruptcy, reorganization, insolvency, moratorium,
liquidation or other debtor relief Laws; (iii) any petition shall be filed, or
any such proceedings shall be commenced, against Company under any such Laws
and the same is not dismissed or otherwise discharged within 60 days, or an
order, judgment or decree shall be entered approving such petition or
appointing any trustee, receiver or liquidator for Company, or any of their
assets; or (iv) any final order, judgment or decree shall be entered decreeing
Company's dissolution, split-up or divestiture of assets;
(f) Company shall fail to make any payment when due with respect to
any Debt or Contingent Liability of $100,000 or more, and such failure shall
continue after any applicable grace period; Company shall fail to observe any
term or condition of any agreement relating to any Debt or Contingent Liability
of $100,000 or more, and such failure shall continue after any applicable grace
period; or any such Debt or Contingent Liability shall be declared to be due
and payable, or required to be prepaid, prior to the stated maturity thereof;
(g) Company shall have any final judgment(s) outstanding against it
for the payment of $200,000 or more, and such judgment(s) shall remain unstayed
and unpaid for over 30 days;
(h) There shall be an issuance of an order of attachment in excess of
$100,000 against Company or any of its Property, or there shall be damage to or
destruction of a substantial part of the Collateral;
-33-
34
(i) Company shall have any material change in its ownership,
management or control;
(j) Lender shall determine that there has been any Material Adverse
Change; or
(k) There shall occur any Event of Default (as such term is defined in
the NationsBank Loan and Security Agreement) under the NationsBank Loan and
Security Agreement.
7.02 REMEDIES UPON DEFAULT. If any Event of Default described in
Section 7.01(e) hereof shall occur with respect to Company, all amounts owing to
Lender shall, to the extent permitted by applicable Law, become immediately due
and payable without any action by Lender, and without diligence, presentment,
demand, protest, notice of protest or intent to accelerate, or notice of any
other kind, all of which are hereby waived to the fullest extent permitted by
Law. If any other Event of Default shall occur and be continuing, Lender may do
any one or more of the following from time to time:
(a) Declare all Advances, interest and other amounts owing to Lender
immediately due and payable, whereupon they shall be due and payable without
diligence, presentment, demand, protest, notice of protest or intent to
accelerate, or notice of any other kind, all of which are hereby waived to the
fullest extent permitted by Law;
(b) Terminate or reduce the Commitment; and/or
(c) Subject to the rights of NationsBank, N.A. (South) under the
NationsBank Loan and Security Agreement and under the Intercreditor Agreement,
exercise any other Rights afforded under any agreement, by Law, at equity or
otherwise, including those Rights of a secured party under the Uniform
Commercial Code in effect in any jurisdiction where the Collateral is kept.
Such Rights shall include the right to cancel any Unfunded Approvals, to direct
Company to return any Inventory to a vendor or manufacturer thereof for credit
or refund, to enter any of Company's premises with or without legal process,
but without force, and/or to take possession of and remove Collateral, and
books and records relating to Collateral. Subject to the rights of NationsBank,
N.A. (South) under the NationsBank Loan and Security Agreement and under the
Intercreditor Agreement, at Lender's request during an Event of Default,
Company will assemble, prepare for removal and make available to Lender at a
place to be designated by Lender which is reasonably convenient to both parties
such items of Collateral as
-34-
35
Lender may from time to time request. During the continuance of an Event of
Default, Lender may take control of any funds generated by the Collateral,
notify Account obligors to make payment to an account or location designated by
Lender, and in Lender's name or Company's name, demand, collect, receipt for,
settle, compromise, xxx for, repossess, accept returns of, foreclose or realize
upon any Collateral, including without limitation Accounts and related
instruments and security therefor. Ten days written notice of a public sale
date or the date after which a private sale may occur shall be a reasonable
notice. Lender shall not be chargeable with responsibility for the accuracy or
validity of any document or for the existence or value of any Collateral, and
shall not be liable for failure to collect any amounts owing on an Account or
instrument. Company waives all relief from all appraisement, valuation,
deficiency or exemption laws now in force or hereafter enacted. LENDER SHALL
NOT BE LIABLE FOR ANY ACT OR OMISSION OF ITS OFFICERS, AGENTS OR EMPLOYEES,
ABSENT GROSS NEGLIGENCE OR WILFUL MISCONDUCT.
7.03. CUMULATIVE RIGHTS. All Rights available to Lender under the
Loan Papers shall be cumulative of and in addition to all other Rights under
any other agreement, at Law or in equity. The acceptance by Lender at any time
and from time to time of partial payment of any amount owing under any Loan
Papers shall not be deemed to be a waiver of any Event of Default then
existing. No waiver by Lender of an Event of Default shall be deemed to be a
waiver of any Event of Default other than such Event of Default. No delay or
omission by Lender in exercising any Right under the Loan Papers shall impair
such Right or be construed as a waiver thereof or an acquiescence therein, nor
shall any single or partial exercise of any Right preclude other or further
exercise thereof, or the exercise of any other Right under the Loan Papers or
otherwise.
7.04. PERFORMANCE BY LENDER; EXPENDITURES. Should any covenant of
Company fail to be performed in accordance with the terms of the Loan Papers,
Lender may, at its option, attempt to perform such covenant on behalf of
Company. It is expressly understood, however, that Lender does not assume and
shall never have any liability or responsibility for the performance of any
obligations of Company. Any amounts expended or incurred by Lender in the
performance of any such act or in the enforcement of this Agreement (including
reasonable attorneys' fees) shall constitute part of the obligations secured
hereunder, will bear interest at the default rate hereunder and will be payable
upon demand.
-35-
36
7.05 CONTROL. None of the provisions hereof shall be deemed to give
Lender any right to exercise control over the affairs and/or management of
Company, which the parties agree is retained by Company.
ARTICLE VII
MISCELLANEOUS
8.01. AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of any Loan Papers, nor consent to any departure by Company
therefrom, shall be effective unless the same shall be in writing and signed by
Lender, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
8.02. NOTICES. Unless otherwise provided herein, all notices,
demands and other communications under the Loan Papers shall be in writing and
shall be personally delivered, sent by telecopy or telex (answerback received),
or sent by certified mail, postage prepaid, to the following addresses:
(a) If to Company:
Dataflex Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxx
(b) If to Lender:
NationsCredit Commercial Corporation of America
0000 Xxxxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Regional Manager, Business Finance
with a copy to:
NationsCredit Commercial Corporation
Riverwood 100 Building
0000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxxx, Esq.
Associate General Counsel
or to such other address as any party shall hereafter designate in written
notice to the other party. All
-36-
37
notices, demand and other communications will be effective when so personally
delivered or sent by telecopy or telex, or five days after being so mailed;
provided, however, that notices to Lender pursuant to Article II hereof shall
only be effective when received.
8.03. PARTIES IN INTEREST. The Loan Papers shall bind and inure to
the benefit of the parties hereto, and their successors and assigns. Lender may
from time to time assign its rights or obligations hereunder, but Company may
not assign or transfer it rights or obligations hereunder (whether voluntarily
or by operation of Law), without the prior written consent of Lender.
8.04. COSTS, EXPENSES AND TAXES. Company agrees to pay on demand (i)
all reasonable costs and expenses of Lender in connection with the preparation,
negotiation and administration of any Loan Papers, including without limitation
reasonable attorneys' fees, (ii) all reasonable costs and expenses (including
reasonable attorneys' fees) of Lender in connection with any extension,
modification, waiver or release of any Loan Papers, and (iii) all reasonable
costs and expenses of Lender incurred in any work-out or enforcement of any
Loan Papers, including reasonable attorneys' fees and the costs and expenses of
environmental or other consultants. Company shall pay any stamp, debt,
recordation, withholding and other Taxes payable in connection with any Loan
Papers or payments thereunder (other than Taxes on the overall net income of
Lender), and agrees to save Lender harmless from and against all liabilities
relating to any Taxes arising by virtue of the execution, delivery and
performance of the Loan Papers and the transactions contemplated thereunder
excluding Taxes on the income of Lender. All payments by Company shall be made
free and clear of and without deduction for any Taxes (other than Taxes on the
income of Lender) of any nature now or hereafter existing.
8.05. INDEMNIFICATION BY COMPANY. Company agrees to indemnify,
defend and hold harmless Lender and its Affiliates, directors, officers,
agents, employees and representatives, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against any of them
in any way relating to or arising out of any Loan Papers (including in
connection with or as a result, in whole or in part, of the negligence of any
of them), any transaction related hereto or thereto, or any act, omission or
transaction of Company, or any of its Affiliates, or any of its directors,
officers, agents,
-37-
38
employees or representatives; provided, however, that Company shall not
indemnify, defend and hold harmless any indemnified Person for losses or damages
that Company proves were caused by such Person's willful misconduct or gross
negligence. Company agrees that Lender shall never be liable to Company for any
consequential damages. This indemnity shall survive repayment of Company's
obligations to Lender.
8.06 HAZARDOUS WASTE INDEMNIFICATION. Company shall indemnify and hold
harmless Lender, its parent company, subsidiaries and all of their directors,
officers, employees, agents, successors, attorneys and assigns from and against
any loss, damage, cost, expense or liability directly or indirectly arising out
of or attributable to the use, generation, manufacture, treatment, production,
storage, release, threatened release, discharge, disposal or presence of a
hazardous substance on, under or about Company's property or operations or
property leased to Company, including but not limited to attorneys' fees
(including the reasonable estimate of the allocated cost of in-house counsel and
staff). For these purposes, the term "hazardous substances" means any substance
which is or becomes designated as "hazardous" or "toxic" under any federal,
state or local law. This indemnity shall survive repayment of Company's
obligations to Lender.
8.07. DISCLAIMER OF WARRANTY. COMPANY ACKNOWLEDGES THAT LENDER HAS MADE
NO EXPRESS OR IMPLIED WARRANTIES WITH RESPECT TO ANY INVENTORY OR OTHER
COLLATERAL, INCLUDING ANY WARRANTY OF MERCHANTABILITY. COMPANY IRREVOCABLY
WAIVES ANY CLAIMS AGAINST LENDER WITH RESPECT TO THE INVENTORY AND OTHER
COLLATERAL WHETHER FOR BREACH OF WARRANTY OR OTHERWISE. Any such claims shall
not alter, diminish or otherwise impair Company's liabilities or obligations to
Lender hereunder. Lender does not assume any obligations of Company relating to
the Inventory, any Accounts, any contract obligations, or any other obligations
or duties arising from the Collateral.
8.08. RATE PROVISION. It is not the intention of any party to any Loan
Papers to make an agreement violative of the Laws of any applicable jurisdiction
relating to usury. In no event shall Company be obligated to pay any amount in
excess of the maximum amount of interest permitted under applicable Law. If
from any circumstance Lender shall ever receive anything of value deemed excess
interest under applicable Law, an amount equal to such excess shall be applied
to the reduction of the principal amount of outstanding Advances and any
remainder shall be refunded to the payor.
-38-
39
8.09. SEVERABILITY; COUNTERPARTS. If any provision of any Loan Papers
is held to be illegal, invalid or unenforceable under present or future Laws
during the term thereof, such provision shall be fully severable, and the Loan
Papers shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part thereof. This Agreement and
the other Loan Papers may be executed in any number of counterparts.
8.10. GOVERNING LAW. This Agreement and the other Loan Papers shall
be governed by and construed in accordance with the laws of the Georgia. The
state and federal courts located in Georgia, including the U.S. District Court
for the Northern District of Georgia, shall have jurisdiction to determine any
claim or dispute pertaining to this Agreement, and the parties expressly submit
and consent to such jurisdiction.
8.11. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
THE PARTIES HERETO WAIVE ANY RIGHT TO A TRIAL BY JURY OF ANY DISPUTE ARISING
UNDER OR RELATING TO THIS AGREEMENT, THE OTHER LOAN PAPERS OR ANY RELATED
MATTERS.
8.12. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL
AGREEMENTS BETWEEN THE PARTIES.
[remainder of pay intentionally left blank]
-39-
40
IN WITNESS WHEREOF, this Loan and Security Agreement is executed under
seal as of the date first set forth above.
DATAFLEX CORPORATION
By /s/ Xxxxxxx X. Xxxxx (SEAL)
-------------------------------------
Title: President
Attest:
------------------------------
Title:
--------------------------
NATIONSCREDIT COMMERCIAL CORPORATION
OF AMERICA
BY /s/ Xxxxx X. Kasnes (SEAL)
-------------------------------------
Title: Senior Vice President
Attest:
------------------------------
Title:
--------------------------
-40-
