COMMERCIAL LOAN AND SECURITY AGREEMENT
THIS IS A COMMERCIAL LOAN AND SECURITY AGREEMENT made this 16thday of
November, 2000, by and among:
NATIONAL RECOVERY LIMITED PARTNERSHIP, a limited partnership having its place of
business at 00 Xxxxxx Xxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 (hereinafter
referred to as the "Lender"), TANGIBLE COLLECTIBLES, INC., a Delaware
corporation with a place of business at 0000 Xxx Xxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx
00000 (hereinafter referred to as the "Borrower") and TANGIBLE ASSET GALLERIES,
INC. a Nevada corporation with a place of business at 0000 Xxx Xxxx, Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000 (hereinafter referred to as the "Corporate Guarantor"),
and XXXXXXX XXXXXXXX AND XXX XXXXXXXX, whose address is 0000 Xxx Xxxx, Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000 (herein after referred to as "Individual Guarantors")
(hereinafter sometimes referred to collectively as the "Guarantors").
The liability of the Borrower and of each of the Guarantors hereunder shall be
joint and several.
THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS (reference being hereby made to
Section 10 below for the definition of cer-tain capitalized terms used herein):
SECTION 1. THE LOAN, ADVANCES, INTEREST, GUARANTIES, SECURITY INTEREST,
FINANCING STATEMENTS, COLLATERAL, SUBORDINATIONS, LIFE INSURANCE.
1.1 Loan Authorization
Subject to all the terms and conditions of this Agreement, including the
preconditions to loan advances as herein provided and so long as there exists no
Event of Default nor any event which with the passage of time, the giving of
notice or both would constitute an Event of Default, Lender will make available
to the Borrower:
(a) Demand Note. A Commercial Demand Loan in the principal amount of ONE
MILLION AND 00\100 DOLLARS ($1,000,000.00) (referred to herein as the "Demand
Loan") which shall be made available to Borrower which may only be utilized for
the purposes of purchasing inventory consisting of collectible coins and
artwork. Said renewal of said loan shall only be valid if in writing and
executed by Lender. The Demand Loan shall be evidenced by a Commercial Demand
Note in the form of SCHEDULE "A" attached hereto and made a part hereof
(referred to herein as the "Demand Note"). Any continuance, extension, and/or
issuance of the aforesaid Demand Note and advances thereunder shall be subject
to the provisions of this paragraph and this Agreement. Notwithstanding the
above provisions, the security interest granted to Lender in the Collateral as
herein defined shall not in any way be limited to such amount or be dependent
upon the use to which such funds are put but shall at all times fully secure the
Obligations (as hereinafter defined).
1.2 Obligations
It is specifically agreed by Borrower, Lender and the Guarantors that in
the event that further financial accommodations of any type, including, but not
limited to, letters of credit, term Loan, coverage of overdrafts, time Loan,
demand Loan and the like are now or hereafter extended by Lender to Borrower or
Guarantors that the parties intend that this Instrument shall govern any and all
such financial accommodations. An extension of the foregoing, all advances now
or hereafter made by Lender to Borrower pursuant to this Agreement and/or any of
the Documents or any renewal or extensions thereof or otherwise, whether or not
evidenced by notes, and all liabi-lity whether now existing or hereafter
arising, absolute or con-tingent, direct or indirect with respect to or under
letters of credit, banker's acceptances or guarantees now or hereafter
established by Lender pursuant to this Agreement, together with all other
obligations and indebtedness of every kind and nature, whether now existing or
hereafter arising, absolute or contingent, direct or indirect, under or pursuant
to this Agreement or any of the Documents or otherwise, of Borrower and/or the
Guarantors to Lender, to the extent the same are outstanding from time to time,
are sometimes collectively referred to herein as the "Obligations".
1.3 Interest
(a) Demand Note All amounts outstanding from time to time under the
Demand Note shall bear interest at a per annum rate equal to thirteen and
one-half (13.50%) percent per annum. Upon the occurrence of an Event of
Default, interest shall accrue for the period of time for which any payment was
due, during any applicable grace or cure period, and at all times while such
default shall continue at a rate three (3%) percent per annum greater than the
rate then in effect. In the event that the total amount of any payment required
under any of the Notes is not received by Lender within five (5) days after its
due date, Borrower shall pay to Lender a late charge equal to five (5%) percent
of any such late payment. Upon closing of the Loan the Borrower shall pay the
Lender a fee of one and one half (1.5%) percent of the Loan Amount. Borrower
shall also pay to Lender an interest reserve equal to one (1) months interest on
the Loan.
1.4 Repayment
(a) Demand Note
The Demand Note shall provide for the payment of interest only for the actual
number of days elapsed in each payment period on the daily outstanding principal
balance shall be due and payable in monthly payments in arrears on the 1st day
of each month commencing December 1, 2000 and continuing on the first (1st) day
of each month thereafter until the entire outstanding principal balance and
accrued interest has been paid in full. The entire outstanding principal
balance and accrued and unpaid interest thereon shall be due and payable on the
earlier of demand by the Lender or March 31, 2001 unless said maturity date
shall be extended in writing by Lender in accordance with this Agreement.
Payment of principal or interest shall be deemed received by Lender only upon
receipt of good funds as determined by Lender's depository financial
institution. Borrower shall pay to Lender an interest reserve equal to one
month's interest on the outstanding principal balance.
1.5 Guarantees
The Guarantors are simultaneously herewith executing and delivering to
Lender their joint and several Guaranty Agreement (the "Guaranty")
unconditionally guarantying to Lender the payment of all indebtedness and
obligations now or hereafter owing by the Borrower to Lender for all amounts due
and payable pursuant to the Loan. The Guaranty Agreement shall be in form and
content as set forth in SCHEDULE "C" attached hereto.
1.6 Limitation on Advances (INTENTIONALLY OMITTED)
1.7 Security
(a) UCC Security Interest. As security for the performance of Borrower's
Obligations and the Guaranty pursuant to this Agreement, and the other
Documents, Borrower and Guarantors hereby mortgages, pledges and assigns to
Lender, and gives and grants to Lender a security interest in all of its right,
title and interest in and to the items and types of property described or
referred to below, whether now owned or hereafter acquired, and the proceeds and
products thereof (all of which property is herein collectively called the
"Collateral"), which security interest has and shall remain first and prior to
all other security interests therein and which Collateral shall remain free and
clear of all mortgages, pledges, security interests, liens and other
encumbrances and restrictions on the transfer thereof, except as specifically
set forth in SCHEDULE "D" attached hereto:
(i) Inventory
All inventories of every kind, pre-sently existing or hereafter acquired,
wherever located, including all goods intended for sale or lease or to be
furnished under contracts of service, all raw materials, work in process and
finished goods, any and all rejected and/or returned goods and all supplies,
materials and products of every nature and description used or usable in
connection with the manufacture, packing, shipping, advertising, selling,
leasing or furnishing of such goods, and all contract rights with respect to any
of the same and all documents representing any of the same, all whether now
owned or hereafter acquired by Borrower or in which Borrower may now have or may
hereafter acquire any interest, all whether now existing or hereafter arising
(the "Inventory"). The security interest in the Inventory shall continue in all
Collateral described in this paragraph (except goods sold as pro-vided in
Section 9-307(1) of the Uniform Commercial Code), not-withstanding the sale,
exchange or other disposition hereof by Borrower (sale, exchange or other
disposition of any of said Collateral is not authorized by Lender, other than
sale in the ordinary course of business).
(ii) Documents
All documents and instruments relating to any and all inventory, including,
but not limited to artwork and collectible coins of every nature, whether
presently existing or hereafter acquired by Borrower in which Borrower may now
have or may hereafter acquire any interest, all whether now existing or
hereafter arising.
(iii) Records
All books, records and other documents of every nature relating to the
above described types of property, including, without limitation, all tapes,
cards, discs, cassettes, papers, documents and computer software in the
possession or control of Borrower, any Affiliate of them, all whether now owned
or hereafter acquired by Borrower or in which Borrower now has or may hereafter
acquire any interest, all whether now existing or hereafter arising.
(iv) Insurance Policies
All rights in, to and under policies of insurance on said Inventory,
including claims or rights to payment and proceeds heretofore or hereafter
arising therefrom, with respect to the herein described types of property, all
whether now owned or hereafter acquired by Borrower or in which Borrower may now
have or may hereafter acquire any interest, all whether now existing or
hereafter arising.
(v) All collectible coins and art work of Borrower and Individual
Guarantors.
(vi)Borrower shall also grant a perfected first security interest in certain
assets as further described in a UCC-1 Financing Statement of even date
herewith.
(vii) Proceeds and Products
All proceeds and all products of all Collateral described above.
1.8 Financing Statements
Borrower is concurrently herewith executing and deli-xxxxxx to Lender
financing statements pursuant to the provisions of the Uniform Commercial Code
with respect to the collateral in which Lender has been granted a security
interest by Borrower pursuant to the provisions of this Agreement and the other
Documents. Borrower hereby agrees to execute any and all further documents
deemed necessary by Lender, in its sole discretion, to perfect its security
interest in the Collateral.
1.9 Subordinations.
A. Each of the Guarantors shall execute and deliver to Lender at Lender's
request a Subordination Agreement (the "Subordination") of the Guarantors'
subordinating to the Loan, and the right of the Lender to receive payments under
the Loan, any and all of each Guarantors' indebtedness owed by the Borrower to
each of the Guarantors.
B. Said Subordination Agreement may provide that so long as there shall be no
Event of Default, Borrower shall be authorized to pay the regular installment of
interest and principal payable on such subordinated debt in the ordinary course
of business.
1.10 Insurance on the Collateral
Borrower and each Guarantor are contemporaneously with the execution hereof
delivering to Lender a Certificate or Certificates of Insurance (and shall
deliver the originals of the policies referred to herein upon request of
Lender), respecting hazard (including, but not limited to, fire and extended
coverage including " all risk"), liability, loss of rental and flood (if any of
the Borrower's tangible assets are located on premises in a special flood hazard
area), with coverage for the fair market value at the time of a loss of the
Collateral and in an amount of at least Two Million ($2,000,000.00) Dollars with
no co-insurance. Borrower shall further be required to provide evidence to
Lender of adequate property insurance for all Collateral, which shall list the
Lender as loss payee.
1.11 Insurance on the Lives of the Guarantors
(Intentionally Omitted)
SECTION 2. REPRESENTATIONS AND WARRANTIES
Borrower and where applicable each of the Guarantors hereby represents and
warrants to Lender that:
2.1 Incorporation and Qualification
Borrower and Corporate Guarantor are corporations duly organized and validly
existing and in good standing under the laws of the state of their
incorporation, have the corporate power to own their assets and conduct their
business as they are now being conducted and are qualified to do business in
each jurisdiction wherein the nature of the business conducted by them or the
property owned or held under lease by them make such qualification necessary.
2.2 Capitalization, Business and Subsidiaries
Except as disclosed on SCHEDULE "F" attached hereto and made a part hereof,
Borrower does not own stock of any other cor-poration, active or inactive. The
information set forth on SCHEDULE "G" attached hereto with respect to Borrower
and as to Borrower's authorized, issued and outstanding capital stock, all of
which stock has been duly authorized and validly issued and is fully paid and
non-assessable, the holders of such stock, the officers, the directors, the
principal and other places of business, the place where its Inventory, Equipment
and Records of its Accounts are kept, and Borrower's, present business
activities and status, is complete and accurate. Borrower neither has a place of
business nor maintains or stores any of the Collateral at any location other
than those set forth in SCHEDULE "G" attached hereto.
2.3 Corporate Authorization
Borrower and Corporate Guarantor have the corporate power to execute,
deliver, and carry out the terms and provisions of this Agreement and the other
Documents to which it is a party and has taken all necessary corporate and legal
action with respect thereto (including, without limitation, obtaining any
consent of stockholders required by law or its Articles of Incorporation or
By-Laws), and this Agreement and such other Documents to which it is a party
have been duly authorized, executed and delivered by it and constitute its
valid, legal and binding agreement and obligation in accordance with the terms
thereof and Lender is entitled to the benefits thereof in accordance with such
terms.
2.4 Financial Statements
There have been furnished to Lender financial state-ments of Borrower and
Corporate Guarantor described or referred to in SCHEDULE "H" attached hereto and
made a part hereof. Each such financial statement, including the comments and
notes contained therein, fairly presents the financial position of the entity or
business to which such statement applies at the date thereof and the results of
its operations for the period purported to be covered thereby. Each such
financial statement has been prepared in con-formity with Generally Accepted
Accounting Principles applied on a consistent basis throughout all periods
involved, subject, in the case of unaudited statements, to normal year-end audit
adjustments.
2.5 Indebtedness
Neither the Borrower nor the Corporate Guarantor has any material outstanding
indebtedness except for liabilities reflected in said financial statements and
liabilities incurred since the date thereof to trade creditors in the ordinary
course of business and/or except as described or set forth in SCHEDULE "I"
attached and made a part hereof and has performed and complied with all of the
terms of such Indebtedness and all instruments and agreements relating thereto
and no default exists as of the date hereof nor does there exist any state of
facts which would after notice or lapse of time, or both, constitute a default
under or with respect to any such Indebtedness, instruments or agreements.
2.6 Title to Properties and Assets; Liens, etc.
Borrower and Corporate Guarantor have good and marketable title to their
proper-ties and assets, including, but not limited to the Collateral, free and
clear of any mortgage, pledge, lien, lease, encumbrance or charge other than
those set forth on SCHEDULE "J" attached hereto and made a part hereof, with
respect to assets (if any) other than the Collateral. No financing statement
under the Uniform Commercial Code which names Borrower as debtor has been filed
in any state or other jurisdiction which covers the Collateral and has not been
terminated. Borrower has not signed any such financing state-ment or any
security agreement authorizing any mortgagee or secured party thereunder to file
any such financing statement on the Collateral or its assets except in
connection herewith or as set forth on SCHEDULE "J" attached hereto with respect
to assets other than the Collateral. Borrower is not a party to any consignment
agreement or lease agreement, except as described in SCHEDULE "J" attached
hereto.
2.7 Patents, Trademarks, etc.
Borrower and Corporate Guarantor own or hold licenses for the use of or have the
right to use all patents, trademarks, service marks, trade names, copyrights and
rights necessary for the conduct of its business as now conducted and as
contemplated, including those identified in SCHEDULE "K" attached hereto and
made a part hereof.
2.8 Litigation, etc.
Except as set forth in SCHEDULE "L" attached hereto and made a part hereof,
there are no actions, proceedings or investi-gations pending or to the knowledge
of Borrower and any Guarantors threatened (or any basis therefor known to it)
which, either in any case or in the aggregate, might result in any material
adverse change in Borrower' or any Guarantors' business, prospects, profits,
properties, liabilities, operations, or con-ditions (financial or otherwise), or
which might affect its abi-lity to perform this Agreement or any other Documents
executed by it, him or her.
2.9 Changes in Condition
Since the date of the financial statements referred to in SCHEDULE "H" there has
been no material adverse change, by reason of any matter or cause whatsoever, in
Borrower's or the Corporate Guarantor's business, prospects, profits,
properties, liabili-ties, operations or condition (financial or otherwise).
2.10 Tax Returns and Payments
All tax returns and reports required by law to be filed by Borrower and any
Guarantor have been duly filed or the time for filing has been extended and all
taxes, assessments, fees and other governmental charges (U.S., foreign, state or
local or other) upon Borrower or any Guarantors or upon any of its or their
properties, assets, income or franchi-ses, which are due and payable have been
paid. To the best of Borrower' and Guarantors' knowledge the provisions on
Borrower' and each Guarantor's books respectively, regarding income taxes for
all fiscal periods to date are adequate according to Generally Accepted
Accounting Principles.
2.11 Compliance With Instruments, Charter and Law
Borrower and Corporate Guarantor, as is applicable, is in full compliance with
and is not in violation or default of any term or provision of (a) its charter,
Certificate of Incorporation or by-laws, if a corporation, (b) any loan
agreement, debt instrument, mortgage or indenture, (c) any other material
contract, agreement or instru-ment, (d) any judgment, decree or order, nor has
it, he or she been notified of any violation of any statute, rule or regulation
including but not limited to the Occupational Safety and Health Act and the
Employee Retirement Income Security Act ("ERISA"), and the regulations issued by
the Department of Environmental protection and (e) any licensing or governmental
requirement. The execution, delivery, performance of, and compliance with this
Agreement or any of the other Documents will not result in any such violation or
default or be in conflict with any such term or provision or result in the
creation of any mortgage, lien, encumbrance or charge upon any of Borrower's
properties or assets except in favor of Lender and there is no such term or
provision which materially adversely affects or in the future may materially
adversely affect its business, prospects, profits, properties, liabilities,
operations or condition (financial or otherwise) or its ability to perform this
Agreement or any of the other Documents executed by Borrower. All material
contracts, agreements, mortga-ges, indentures, instruments, judgments, decrees
and orders to which Borrower is a party or which are effective against it are
listed in SCHEDULE "M" attached except entered into in the normal course of
business.
2.12 Governmental Consents, etc.
No consent, approval or authorization of or designa-tion, declaration or
filing with any governmental authority, federal, foreign or other is required in
connection with the exe-cution and delivery of this Agreement or the Documents
or the consummation of any transaction contemplated hereby or thereby by
Borrower or Corporate Guarantor.
2.13 Solvency
Borrower and each of the Guarantors are solvent, having assets of a value which
exceeds the amount of its and his liabilities and is able to and will be able to
meet its and his debts as they mature and has adequate capital to conduct the
business in which it and he is engaged and is about to engage.
2.14 Change of name, etc.
Except as set forth on SCHEDULE "N" attached hereto and made a part hereof,
neither Borrower nor any Corporate Guarantor has within five (5) years changed
its name, been a party to any con-solidation or merger, acquired all or a
substantial portion of the assets of any Person or purchased any of its or his
assets included in the Collateral from a Person not in the business of selling
such assets.
2.15 Management Agreements (Intentionally Omitted)
2.16 Full Disclosure
The financial statements referred to in Section 2.4 hereof do not, nor does this
Agreement or any Schedule hereto or any other Document, certificate or statement
furnished to Lender by Borrower and each of the Guarantors (or on its or his
behalf) in con-nection with this Agreement, contain any untrue statement of a
material fact or omit to state a fact necessary in order to make the statements
contained therein and herein not misleading. Neither Borrower nor any
Guarantors are aware of any fact which materially adversely affects or in the
future may materially and adversely affect its or his business, prospects,
profits, properties, liabilities, operations or condition (financial or
otherwise), or its or his ability to perform this Agreement or any other
Document executed by it, him or her, which has not been set forth or referred to
herein or in a certificate or statement furnished to Lender by it, him or her.
2.17 No Event of Default
No Event of Default or event or condition that with the passage of time or
giving of notice or both might become an Event of Default has occurred or
exists.
SECTION 3. AFFIRMATIVE COVENANTS
Except with the prior written consent of Lender, Borrower and the Corporate
Guarantor covenants and agrees that so long as there is outstanding any portion
of the Loan, or any agreement of Lender to make advances to Borrower, it, he and
she will comply or cause compliance with the following provisions:
3.1 Punctual Payment
Borrower will duly and punctually pay all principal, interest, charges and other
items included in the Loan which is owing by it in accordance with the
provisions hereof and of the other Documents.
3.2 Prompt Payment of Taxes, Mortgages, Leases and Indebtedness
Borrower and the Corporate Guarantor will promptly pay and discharge, or cause
to be paid and discharged, on the date due so as to prevent the accruing of
interest thereon, all lawful taxes, assessments, and governmental charges or
levies imposed upon items of the Collateral owned by it, him or her or in which
he, she or it has an interest or upon the income, profits, property or business
of himself, herself or itself or any of its Subsidiaries. Borrower and the
Corporate Guarantor will promptly pay or cause to be paid when due (or in
conformity with customary trade terms) all other Indebtedness of himself,
herself or itself incident to his, her or its operations and will promptly pay
and perform all obli-gations under leases of real and personal property and
under material contracts and will promptly notify Lender of any default or
notice of alleged default received with respect to any such Indebtedness, lease
or contract.
3.3 Conduct of Business
Borrower and the Corporate Guarantor will do all things necessary to
preserve, renew and keep in full force and effect and in good standing, their
respective current corporate existence, qualification and any franchises,
licenses, patents, trademarks and items necessary to continue its business. They
will maintain its properties and assets in good order and repair, all in
compliance with applicable federal, state, and local judgments, decrees, orders,
statutes, rules and regulations, including but not limited to state and federal
environmental regulations and those of the Occupational Safety and Health
Administration.
3.4 Insurance
Borrower and Corporate Guarantor will maintain insurance in amounts,
coverage and with insurers satisfactory to Lender with respect to the Collateral
owned by them, or in which they have an interest and their other properties and
business against loss or damage to the extent that property of similar character
is usually so insured by other companies engaged in a similar business. Without
limiting the foregoing, such insurance shall include (a) liability insurance in
such amounts and covering such risks as Lender may reasonably require, (b) all
worker's compensation and other employees' liability insurance as may be
required by law, and (c) property insurance with respect to the items of the
Collateral consti-tuting tangible personal property and fixtures, and with
respect to the other properties both real and personal, including, if necessary,
flood insurance, to the full extent of the insurable value thereof, and covering
such risks as Lender may reasonably require. All of Borrower's and Corporate
Guarantor's property insurance policies, with respect to the Collateral shall
contain loss payable and/or mortgagee clauses in form and substance reasonably
satisfactory to Lender, naming Lender as loss payee as appropriate and providing
(i) that all proceeds thereunder shall be payable to Lender as its interests may
appear, and (ii) that such insurance shall not be affected by any act or neglect
of the insured or owner of the property described in said policy, and (iii) that
such policy and loss payable clause may not be canceled, amended or terminated
unless Lender has received written notice thereof at least thirty (30) days'
prior to the effective date of such cancellation, amendment or termination
provided said thirty (30) day notice is reasonably obtainable from the
respective insurer otherwise said prior notice to Lender shall be at least ten
(10) days. Borrower and Corporate Guarantor will furnish a certificate with
respect to the insurance at the time which is in force pur-suant to this Section
3.4, specifying the amount and character of coverage, identifying the insurers
and certifying as to no default in the payment of current premiums thereon and
will fur-nish Lender with original or duplicate original copies of all policies.
All insurance proceeds for any occurrence or any series of related occurrences
which exceed $10,000.00 and which are subject to a security interest under this
Agreement may, upon Lender's request, in Lender's sole and absolute discretion,
be paid to Lender and shall be applied by Lender to the payment of any of the
principal, whether or not due, or interest or such other obligation or
Indebtedness which constitutes a part of the Loan as Lender may determine in its
sole discretion. Proceeds of $10,000.00 or less shall be payable to Borrower
for general corporate purposes. Borrower and the Corporate Guarantor does hereby
grant Lender an Irrevocable Power of Attorney and appoint Lender as its
attorney-in-fact (said power of Attorney being coupled with an interest) for the
sole purpose of executing, negotiating and signing any drafts, checks,
instru-ments or documents to carry out the terms hereof.
3.5 Accounting Financial Statements and Other Information
Borrower and Guarantors will maintain a system of accounts established and
administered in accordance with Generally Accepted Accounting Principles
consistently applied. Borrower and each Guarantor will deliver or cause to be
delivered to Lender:
Financial Reports
(i) as soon as available and in any event within forty-five (45) days after the
end of each of the first three (3) fiscal quarters of each fiscal year financial
statements of Borrower including a balance sheet as of the end of period, and
statements of income for the period(s) that have been included as part of the
consolidated financial statement disclosure of the SEC Form 10-Q filing of
Borrower's parent TAG which has been reviewed by Borrower's appointed
independent accounting firm, along with statements of cash flows for that
period. In connection with the financial statements presented by the Borrower,
an officer, on behalf of the Borrower, will provide written representation that
there is no knowledge of an Event of Default or an event that with notice or
lapse of time or both could constitute and Even of Default, has occurred and is
continuing or if in the opinion of said individual an Event of Default or such
an event has occurred and is continuing a statement as to the nature thereof and
the action which the Borrower propose to take with respect thereto (the
provision for such a statement herein shall in no way be construed as a consent
to the existence of such an Event of Default and of the granting of time to
cure);
(ii) as soon as available and in any event within one hundred twenty (120) days
after the end of each fiscal year, financial statements of Borrower including a
balance sheet as of the end of the fiscal year, and statements of income for the
year(s) that have been included as part of the consolidated financial statement
disclosure of the SEC Form 10-K filing for Borrower's parent TAG and which has
been audited by Borrower's appointed independent accounting firm, and statements
of cash flow for that period. In connection with the financial statements
presented by the Borrower, an officer, on behalf of Borrower, will provide
written representation that there is no knowledge of an Event of Default or an
event that with notice or lapse of time or both could constitute an Event of
Default, has occurred and is continuing or if in the opinion of such accounting
firm such an Event of Default has occurred and is continuing, a statement as to
the nature thereof (the provisions for such a statement herein shall in no way
be construed as a consent to the existence of such an Event of Default or the
granting of time to cure).
(iii) at least annually, and more frequently if Lender reasonably requests, a
financial statement of each Individual Guarantor together with such
verifications of the entries therein as Lender shall require, in such form and
containing such other information respecting each of the Individual Guarantor's
financial status as Lender shall reasonably require.
(iv) within ten (10) days of filing thereof copies of all federal and state
income tax returns for Borrower and each of the Guarantors.
(v) such financial information from Borrower and Guarantors as shall reasonably
be requested by Lender.
(vi) as soon as reasonably practicable, upon reasonable request of Lender such
other data and information (financial and otherwise) bearing upon or related to
Borrower or any Guarantors' financial condition, (including personal financial
statements of each Guarantor) results of operations, assets and/or Borrower's
projections of cash flow and profit and loss, all as Lender from time to time,
may reasonably request.
(vii) within fifteen (15) days after the end of each calendar month, a list of
(a) the Borrower's aged accounts receivable and a complete list of its inventory
duly certified by the chief financial officer of Borrower and such other
information relating to Accounts as Lender shall request at such times as Lender
shall request upon such forms and using such procedures as Lender shall
reasonably require.
3.6 Inspection.
Borrower and the Corporate Guarantor will at Borrower's or such Guarantor's
expense permit Lender and any authorized represen-tatives of Lender, the
reasonable cost of which shall be reimbursed by Borrower to Lender, to visit and
inspect any of its offices or any of its or his Affiliates, including all items
of Collateral and its and their books and records, including books and records
relating to Accounts (and to make extracts therefrom), and to discuss its and
their affairs, finances and accounts, with its and their employees with
Borrower's or such Guarantor's consent, all at such times during normal business
hours and as often and continuously as may be reasonably requested by Lender.
3.7 Notice of Certain Events and Changes
As soon as reasonably practicable after becoming aware of any condition,
event or state of facts which constitutes a default of this Agreement or which,
after notice or lapse of time, or both, would constitute such a default,
Borrower or the Corporate Guarantor will give written notice to Lender
specifying the nature and period of existence thereof. Borrower and each
Guarantor will promptly give Lender written notice of any con-dition, event or
state of facts which causes or may cause material loss or depreciation in the
value of the Collateral and of the commencement or threat of any action,
proceeding or investigation, or the occurrence or existence of any other event,
matter or cause whatsoever, which either in any case or in the aggregate results
or might result in any material adverse change in its business, prospects,
profits, properties, operations or condition (financial or otherwise). Borrower
and each of the Guarantors will give Lender written notice of any change in its
or his place or places of business, any change of location of any item of the
Collateral having a book value in excess of $10,000.00, except as items of
Collateral may be moved in the ordinary course of business.
3.8 Application of Proceeds
Borrower agrees that it will apply the proceeds of the Demand Note made to it
pursuant to this Agreement will be utilized to acquire inventory consisting of
artwork and collectible coins and working capital. Borrower agrees that it will
not, directly or indirectly, apply any part of such proceeds to the purchasing
or carrying of any "margin stock" within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System, or for any use which will
cause a violation of any other regulation of the Board of Governors of the
Federal Reserve System or of any regulations, interpretations or rulings
thereunder.
3.9 Governmental Notices
As soon as reasonably practicable upon the issuance thereof, Borrower and
each of the Guarantors will send to Lender a copy of all orders issued by any
federal, state or municipal regula-tory authority under any laws or regulations
adopted thereby, which, if enforced, would have a material adverse effect upon
its or his condition whether financial, operating, or otherwise, and further,
Borrower and each of the Guarantors will as soon as reasonably practicable send
to Lender copies of all reports or other materials filed by it or him with or
issued to it or him by the U.S. Securities and Exchange Commission, and all
reports, noti-ces or statements sent by Borrower or Corporate Guarantor to its
stockholders.
3.10 Financial Covenants (Intentionally Omitted)
3.11 Pension Plans (Intentionally Omitted)
3.12 Management
It is specifically acknowledged by the Borrower and Corporate Guarantor that
Lender would not have entered into this Agreement unless the Individual
Guarantors remain stockholders, officers and directors of the Borrower and the
Borrower agrees that the Individual Guarantors shall remain in such capacities,
and shall retain their present offices and directorships. Xxxxxxx X. Xxxxxx
shall also remain as the President of Borrower.
3.13 Maintenance of Property and Collateral
Borrower and the Corporate Guarantor shall maintain its properties and the
Collateral in good repair, working order and condition and make all needed and
proper repairs, renewals, replacements, additions or improvements thereto and
immediately notify Lender of any event causing loss or depreciation in the value
of the Collateral and the amount of such loss or depreciation. Borrower shall
defend the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein, and in the event Lender's Security
Interest in the Collateral or a part thereof would be impaired by an adverse
decision, allow Lender to contest or defend any such claim or demand in
Borrower's name, at Borrower's reasonable cost, charge and expenses, and pay to
Lender upon demand all costs and expenses, including without limitation,
attorney's fees incurred by Lender in connection therewith.
3.14 Payment of Expenses
Borrower and/or Guarantors shall pay to Lender on demand any and all
reasonable expenses including attorney's fees incurred or expended by Lender in
preparation of this Agreement and all related agreements, instruments and
documents in making or processing the Loan in the collection or attempted
collection of the Obligations, and in protecting and/or enforcing the rights of
Lender against Borrower and/or Guarantors, in sustaining and/or enforcing the
Security Interest and other liens, if any, granted to Lender hereunder and under
all related agreements, instruments and documents.
SECTION 4. NEGATIVE COVENANTS
Except with the prior express written consent of Lender, Borrower covenants
and agrees that so long as there is outstanding any portion of the Loan, or so
long as this Agreement has not been terminated if there is no amount outstanding
under the Loan, it will not:
4.1 Liens
Directly or indirectly, create, incur, assume or per-mit to exist any mortgage,
lien, charge or encumbrance on or pledge or deposit of or conditional sale,
lease or other title retention agreement with respect to any Collateral, whether
now owned or hereafter acquired, or be bound by or subject to any agreement or
option to do so, provided that the foregoing restrictions shall not apply to:
(a) liens for taxes, assessments or governmental charges or levies the payment
of which is not at the time required by Section 3.2;
(b) liens incurred or deposits made in the ordi-nary course of business in
connection with worker's compensation or unemployment insurance or to secure the
performance of ten-ders, statutory obligations, surety and appeal bonds,
performance and return-of-money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money);
(c) liens, charges and encumbrances related to the conduct of its business or
the ownership of its or his properties or assets which are not incurred in
connection with the borrowing of money and which in the aggregate are not
material;
(d) statutory or common law possessory liens for charges incurred in the
ordinary course of business the payment of which is not yet due;
(e) the mortgages, liens and encumbrances referred to or described in SCHEDULES
"D" AND "J" attached hereto;
(f) liens created hereunder;
4.2 Restrictions on Indebtedness
Directly or indirectly, create, incur, assume, guaran-tee, agree to
purchase or repurchase, pay or provide funds in respect of, or otherwise become
or be or remain liable, con-tingently, directly or indirectly, with respect to
any Indebtedness other than:
(a) Indebtedness hereunder;
(b) Current liabilities for trade and other obligations incurred in the ordinary
course of its business not as a result of borrowing;
(c) presently existing indebtedness specifically described in SCHEDULE "I"
attached hereto, none of which shall be prepaid without Lender's prior written
consent.
(d) Indebtedness in respect of endorsements made in connection with the deposit
of items for credit or collection in the normal and ordinary course of business.
4.3 Restrictions on Investments, Loan, etc.
Purchase or otherwise acquire or own any stock or other securities or
Indebtedness of any other Person, or make or permit to be outstanding any loan
or advance or capital contribu-tion to any other Person, other than:
(a) presently outstanding Loan, advances and invest-ments described in SCHEDULES
"H" AND "I" attached hereto;
(b) Indebtedness of customers for merchandise sold or services rendered in the
ordinary course of business; and
(c) investments in bills or bonds issued by the government of the United States
of America and/or Certificates of Deposit issued by a bank having a net worth of
at least $50,000,000.00 and/or securities issued by and purchased from Lender.
4.4 Stock Issuance, Dividends, Distributions, Redemptions and
Directors' Fees
Issue any additional shares of stock, directly or indirectly, declare, order,
pay, make or set apart any sum or property for the redemption, retirement,
purchase or other acquisition, direct or indirect, of any shares of its stock of
any class now or hereafter outstanding or for the payment of any dividends on
any of such stock, except for quarterly dividends payable concurrently with
payments to Lender under Section 9 hereof, or pay any directors' fees.
4.5 Sale of Assets and Collateral, Consolidation, Merger, Acquisition of
Assets
Directly or indirectly, sell, abandon or otherwise dispose of the
Collateral or any part thereof, except for sales of Inventory in the ordinary
course of Borrower' business, or replacement with Collateral of like value and
quality, or indirectly or indirectly sell, abandon or otherwise dispose of all
or any portion of its properties or assets or consolidate with or merge into any
other corporation, or permit any other corporation to consolidate with or merge
into it or acquire all or a substantial portion of the assets of another Person
or form or acquire any Subsidiary.
4.6 Transactions With Affiliates
Enter into any transaction with any Affiliate other than in the ordinary course
of business and on terms not less favorable to it than are at the time available
to it from any Non-Affiliate, except as otherwise authorized by this Agreement.
4.7 Management/Ownership
Borrower shall not suffer a change in the ownership of any shares in Borrower'
capital stock, as shown on SCHEDULE "P" attached hereto, and Borrower shall
execute any document to effectuate said restriction on transferability as
Lender's counsel deems reasonably necessary. Xxxxxx Xxxxxx shall be the
President of the Borrower at all times that the Loan is outstanding.
4.8 Partnerships, Joint Ventures, Other Businesses
Create or participate in the creation of any part-nership, joint venture,
corporation, or other entity (including but not limited to any subsidiaries) or
engage in any business other than the business presently conducted by it, except
in the ordinary course of business.
4.9 Subordinate Debt Payments
Pay principal or interest on Subordinate Debt (present or future) except as
authorized in this Agreement.
4.10 Expenditures for Capital Assets
Make any expenditure for capital assets (other than for routine repairs and
maintenance which are not required to be capitalized as hereinafter set forth)
unless, immediately after giving effect thereto the aggregate amount expended or
to be expended on account of all such expenditures by the Borrower in any fiscal
year commencing with the current fiscal year of Borrower would not exceed the
amount of $100,000.00. The following shall be deemed to be expenditures for
capital assets as subject to the limitations of this Section 4.10:
a. Expenditures for acquisition, major repairs and maintenance which, in
accordance with generally accepted accounting principles, are or should be
capitalized; and
b. All lease rentals and other amounts payable under leases entered into after
the date hereof whether "true leases" or finance leases other than renewals and
extensions of leasing existing on the date hereof and all amounts payable under
contracts or arrangements for the purchase of property for payment of the
purchase price for such property as deferred in whole or in part.
SECTION 5. EVENTS OF DEFAULT
If any one or more of the following events ("Events of Default") shall
occur:
(a) If Borrower shall fail to make payment of any part or installment of
principal or interest of the Loan or Obligations when any such payment shall be
due and payable, whether at any stated maturity or by demand, acceleration or
otherwise; or
(b) If Borrower or any of the Guarantors shall be in default in the
performance of or compliance with any other term, covenant or condition
applicable to it contained in this Agreement or contained in any other
Documents, and shall have failed to cure such default for ten (10) days after
receipt of written notice from the Lender.
(c) If any representation or warranty made by or on behalf of Borrower or
any of the Guarantors in this Agreement or in the Schedules hereto, or in any of
the other Documents, or in connection with the transactions contemplated hereby
and thereby shall be false or incorrect in any material respect; or
(d) If at any time the respective ownership of Borrower shall change from
that set forth on SCHEDULE "P" attached hereto except as permitted in Section
4.7; or
(e) If Borrower or any of the Guarantors shall default in the payment of any
Indebtedness for borrowed money, including, but not limited to, the indebtedness
which is referred to in SCHEDULE "I" attached hereto or shall default with
respect to any of the terms of any evidence of such Indebtedness or of any
indenture or other agreement relating thereto, or if Borrower or any of the
Guarantors shall commit any material breach or be in default under any contract
set forth in SCHEDULE "M" attached hereto; or
(f) If Borrower or any of the Guarantors shall make an assignment for the
benefit of creditors, or shall admit in writing an inability to pay debts as
they become due, or shall file a voluntary petition in bankruptcy, or shall be
adjudicated a bankrupt or insolvent, or shall file any petition or answer
seeking for itself any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present or future statute,
law or regulation, or shall file any answer admitting or shall fail to deny the
material allega-tions of a petition filed against it for any such relief, or
shall seek or consent to or acquiesce in the appointment of any trustee,
receiver or liquidator of itself or of all or any substantial part of its
properties, or its directors or majority stockholders shall take any action
looking to its dissolution or liquidation, or it shall cease doing business as a
going con-cern; or
(g) If, within ninety (90) days after the commencement of any proceeding against
Borrower or any of the Guarantors seeking any reorganization, arrangement,
composition, readjustment, liquida-tion, dissolution or similar relief under any
present or future statute, law or regulation, such proceeding shall not have
been dismissed, or if, within ninety (90) days after the appointment, without
its consent or acquiescence of any trustee, receiver or liquidator of itself or
himself or of all or any substantial part of its properties, such appointment
shall not have been vacated;
(h) If any Individual Guarantor shall die or become permanently disabled;
then, and in any such event, in addition to its rights and remedies under this
Agreement, the other Documents and any other instruments, Lender may at its
option declare the Note and Obligations or any portion thereof to be immediately
due and payable, whereupon the same shall forthwith mature together with
interest accrued thereon and together with any and all costs of collection,
including, but not limited to, reasonable attorney's fees without notice and
without presentment, demand or protest, all of which are hereby waived.
SECTION 6. PAYMENT TERMS. Payment of all sums due hereunder shall, unless
sooner converted into Conversion Shares pursuant to the Note or prepaid pursuant
to the Note thereof, shall become due and shall be payable on demand, but if no
demand be made, on or before March 31, 2001. Interest payments hall be due and
payable in arrears on or before the first (1st) day of the month for the
preceding month, and a late fee of five (5%) percent of the payment due shall be
imposed if interest is not timely paid in accordance herewith. Borrower shall
make each payment of principal of, and interest on, the Loan and of fees and all
other amounts payable by Borrower under this Agreement, in good funds no later
than 5:00 p.m. (Pacific time) on the date when due and payable, without
condition or deduction for any counterclaim, defense, recoupment or setoff, in
Federal or other funds immediately available to Lender at its address referred
to herein and in the Note. All payments received by Lender after 5:00 p.m.
(Pacific time) shall be deemed to have been received by Lender on the next
succeeding Business Day. If the date for any payment of principal is extended
by operation of law or otherwise, interest thereon at the then applicable rate,
shall be payable for such extended time. Notwithstanding the foregoing, upon
the occurrence and continuance of an Event of Default, all sums due hereunder
shall, at the option of the Lender, become immediately due and payable upon
written notice to Borrower.
SECTION 7. CONVERTIBILITY. At any time prior to Borrower's payment in full
of all principal and interest due hereunder, the Lender shall have the option of
converting (a) Five Hundred Thousand ($500,000.00) Dollars, and no lesser amount
of the outstanding balance to the acquisition of 666,666 valid, non-assessable
shares of Tangible Asset Galleries, Inc. (hereinafter referred to as "TAG")
common stock, which may be issued pursuant to SEC Rule 144 ("Conversion
Shares"); and (b) an additional Five Hundred Thousand ($500,000.00) Dollars, and
no lesser amount of the outstanding balance to the acquisition of an additional
500,000 Conversion Shares, in accordance with the terms and conditions contained
herein.
7.1 Lender's Exercise of Conversion Rights. Lender shall exercise its
rights hereunder upon delivery of the following to TAG at its principal
executive offices; (i) a written notice of exercise which identifies this
Agreement and states whether exercise is under subsection (a) hereof, (b)
hereof, or both subsections (a) and (b) hereof; (ii) a letter, if requested by
TAG, in such form and substance as TAG may reasonably require, setting forth the
investment intent of Lender and/or any other documents TAG may reasonably
require to evidence this transaction. Upon TAG's receipt of the necessary
documents, TAG shall arrange for the prompt issuance of Conversion Shares to
Lender, and interest shall no longer be due thereafter from Borrower to Lender
with respect to the principal amount being converted hereunder.
7.2 Registration and "Piggyback" Rights. Lender acknowledges that TAG
may issue Conversion Shares without registering such Shares under the Securities
Act of 1933, as amended (the "Securities Act"), on the basis of certain
exemptions from such registration requirement. Accordingly, Lender agrees that
issuance of Conversion Shares may be expressly conditioned upon his delivery to
TAG of an investment certificate including such representations and undertakings
as TAG may reasonably require in order to assure the availability of such
exemptions, including a representation that Lender is acquiring the Conversion
Shares for investment and not with a present intention of selling or otherwise
disposing thereof and an agreement by Lender that the certificates evidencing
the Conversion Shares may bear a legend indicating such non-registration under
the Securities Act and the resulting restrictions on transfer. Lender
acknowledges that, because Conversion Shares may be unregistered, Lender may be
required to hold the Conversion Shares indefinitely unless they are subsequently
registered for resale under the Securities Act or an exemption from such
registration is available. If, however, TAG intends to file a registration
statement with respect to any offering of TAG' stock, TAG shall give Lender
thirty (30) days notice of that intention and Lender shall have the right to
register any Conversion Shares as part of that offering, as well as to join in
the offering itself on a pro rate basis.
SECTION 8 WARRANTS. Upon execution hereof, TAG hereby grants to Lender
non-forfeitable warrants (the "Warrants") which shall entitle Lender to purchase
all or any portion of a total of Two Hundred Fifty Thousand (250,000.00) shares
of TAG's Common Stock, par value $.001 per share exercisable within three (3)
years from the date hereof, at a purchase price calculated by taking the average
of the actually traded closing price of TAG's stock on the NASDAQ exchange for
the three (3) trading days preceding the date of hereof (the "Exercise Price")
and on the terms and subject to the conditions that are set forth in this
Agreement.
8.1 Lender's Exercise of Warrants, Lender shall exercise its rights
hereunder upon delivery of the following to TAG at its principal executive
offices; (i) a written notice of exercise which identifies this Agreement and
states the desire to exercise all of the warrants, and no lesser amount; (ii) a
check or cash in the amount of the Exercise Price; (ii) a letter, if requested
by TAG, in such form and substance as TAG may require, setting forth the
investment intent of Lender. Upon TAG' receipt of the necessary documents, TAG
shall arrange for the prompt issuance of the Shares to Lender.
8.2 Registration and "Piggyback" Rights. Lender acknowledges that TAG
may issue warrants without registering the Shares issuable thereunder under the
Securities Act of 1933, as amended (the "Securities Act"), on the basis of
certain exemptions from such registration requirement. Accordingly, Lender
agrees that issuance of Shares pursuant to Lender's warrants may be expressly
conditioned upon his delivery to TAG of an investment certificate including such
representations and undertakings as TAG may reasonably require in order to
assure the availability of such exemptions, including a representation that
Lender is acquiring the Shares for investment and not with a present intention
of selling or otherwise disposing thereof and an agreement by Lender that the
certificates evidencing the Shares may bear a legend indicating such
non-registration under the Securities Act and the resulting restrictions on
transfer. Lender acknowledges that, because Shares may be unregistered, Lender
may be required to hold the Shares indefinitely, unless they are subsequently
registered for resale under the Securities Act or any exemption from such
registration is available. If, however, TAG intends to file a registration
statement with respect to any offering of TAG's stock, TAG shall give Lender
thirty (30) days notice of that intention and Lender shall have the right to
register any Shares acquired hereunder as part of that offering, as well as to
join in the offering itself on a pro rate basis.
SECTION 9 ADDITIONAL COMPENSATION TO LENDER. As additional consideration
for Lender's making the Loan described herein, and for so long as the
Indebtedness remains outstanding between Borrower and Lender Borrower shall
pay Lender twenty-five (25%) of it's annual net pre-tax income (as determined by
its Chief Financial Officer utilizing the formula set forth in "SCHEDULE Q"
attached hereto and made a part hereof in accordance with GAAP), subject to
adjustment after review by Borrower's independent public accountant, said
payment(s) to be made quarterly within fifteen (15) days following the end of
the respective fiscal quarter. For purposes of this subparagraph, the parties
agree that the first fiscal year shall commence on January 1, 2000 but that the
first year shall be a short period commencing with the actual date Borrower
commenced operations. The parties agree that $200,000.00 on an annual basis
shall be paid in twelve (12) equal monthly installments by Borrower to Tangible
Asset Galleries, Inc. as reimbursement for legal, accounting, management, rent
and other intercompany expenses under this Section 9. The parties further agree
that said sum shall increase by five (5%) percent per year, and be adjusted, by
such amount as may be mutually agreed by Lender and Borrower, in the event that
Borrower undergoes a material change in operations. For purpose of calculating
net pre-tax income under this Section 9, no losses sustained by Borrower in any
quarter shall be carried forward to subsequent quarters.
SECTION 10. REMEDIES, PROVISIONS RE: COLLATERAL, ETC.
In the event of an occurrence of an Event of Default, Lender:
(a) may proceed to protect and enforce its rights if Lender deems necessary
to do so by suit in equity, action at law or other appropriate proceedings,
whether for the specific performance of any agreement contained herein or in any
other Document, or for an injunction against a violation of any of the terms
hereof or thereof, or in aid of the exercise of any right, power or remedy
granted thereby or by law, equity or otherwise.
(b) without limitation of any rights and reme-dies of Lender as a secured
party under the Uniform Commercial Code and any rights or remedies set forth in
any of the Documents, Lender shall have all of the following rights and remedies
with respect to the Collateral or any portion thereof:
(i) Lender may, at any time and from time to time, with or without
judicial process and the aid or assistance of others, reasonably enter upon any
premises in which any of the Collateral may be located and, without resistance
or interference by Borrower or any of the Guarantors, take possession of the
Collateral and/or dispose of any part or all of the Collateral on any such
premises; and/or require Borrower or any of the Guarantors to assemble and make
available to Lender at the expense of Borrower or such Guarantors any part or
all of the Collateral at any place or time designated by Lender which is
reasonably convenient to Borrower or such Guarantors and Lender; and/or remove
any part or all of the Collateral from any premises on which any part may be
located for the purpose of effecting sale or other disposition thereof; and/or
sell, resell, lease, assign and deliver, grant options for or otherwise dispose
of any or all of the Collateral in its then condition or following any
commercially reasonable preparation or processing, at public or private sale or
proceedings, by one or more contracts, in one or more parcels, at the same or
different times, with or without having the Collateral at the place of sale or
other disposition, for cash and/or credit and upon any reaso-nable and customary
terms, at such place(s) and time(s) and to such Persons as Lender shall deem
best, all without demand for performance or any notice or advertisement
whatsoever, except that the owner of the items to be sold shall be given fifteen
(15) business days' written notice of the place and time of any public sale or
of the time after which any private sale or other intended disposition is to be
made, which notice Borrower and each of the Guarantors hereby agree shall be
reasonable notice thereof. If any of the Collateral is sold by Lender upon
credit or for future delivery, Lender shall not be liable for the failure of the
purchaser to pay for same and in such event Lender may resell such Collateral.
Lender may buy any part or all of the Collateral at any public sale and if any
part or all of the Collateral is of a type customarily sold in a recognized
market or is of the type which is the subject of widely distributed in standard
price quotations Lender may buy at private sale and may make payment therefor by
application of all or a part of the Loan.
(ii) Lender shall apply the cash proceeds from any sale or other
disposition of the Collateral first, to the reasonable expenses of retaking,
holding, preparing for sale, selling, leasing and otherwise disposing of such
Collateral, to reasonable attorneys' fees and all legal expenses, travel and
other expenses which are to be paid or reimbursed to Lender pur-suant hereto or
pursuant to the other Documents, second, to all accrued interest, fees and
charges outstanding with respect to the Loan, third, to all other outstanding
portions of the Loan, fourth, if there is any surplus to any other secured
parties having an interest in the Collateral known to Lender in accor-dance with
their interests, and fifth, if there is any surplus to the Borrower and/or such
Guarantors; provided, however, that Borrower and each of the Guarantors shall
remain liable with respect to unpaid portions of the Loan.
(iii) Any of the proceeds of the Collateral received by Borrower or any of
the Guarantors after demand by Lender for repayment of all or any part of the
Loan, shall not be commingled with any other of its property but shall be
segregated, held by it or him in trust as the exclusive property of Lender, and
it will immediately deliver to Lender the identical checks, monies, or other
proceeds of Collateral.
(iv) At its option, Lender may pay for insurance on the Collateral and taxes,
assessments or other charges which Borrower fails to pay in accordance with the
provisions hereof or of any related agreement, instrument or document and may
discharge any security interest or lien upon the Collateral. No such payment or
discharge of any such security interest or lien shall be deemed to constitute a
waiver by Lender of the violation of any covenant by Borrower as a result of the
Borrower's failure to make any such payment or Borrower's suffering of any such
security interest or lien. Any payment made or expense incurred by Lender
pursuant to this or any other provisions of this Agreement shall be added and
become a part of the Obligations of Borrower to Lender, shall bear interest at a
rate per annum as provided for in the Note, and shall be payable on demand.
SECTION 11. CUMULATIVE REMEDIES; NO WAIVERS, ETC.
No right, power or remedy granted to Lender in this Agreement or in the
other Documents is intended to be exclusive, but each shall be cumulative and in
addition to any other rights, powers or remedies referred to in this Agreement,
in the other Documents or otherwise available to Lender at law or in equity; and
the exercise or beginning of exercise by Lender of any one or more of such
rights, powers or remedies, shall not preclude the simultaneous or later
exercise by Lender of any or all of such other rights, powers or remedies. No
waiver by, nor any failure or delay on the part of Lender in any one or more
instances to insist upon strict performance or observance of one or more
cove-nants or conditions hereof, or of the other Documents shall in any way be,
or be construed to be, a waiver thereof or to prevent Lender's rights to later
require the strict performance or xxxxx-xxxxx of such covenants or conditions,
or otherwise prejudice Lender's rights, powers or remedies.
SECTION 12. PARTIAL INVALIDITY; WAIVERS
(a) If any term or provision of this Agreement or any of the other
Documents or the application thereof to any Person or circumstance shall, to any
extent, be invalid or unen-forceable by reason of any applicable law, the
remainder of this Agreement and the other Documents, or application of such term
or provision to Persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement and the other Documents shall be valid and be
enforced to the fullest extent permitted by law. To the full extent, however,
that the provisions of any such applicable law may be waived, they are hereby
waived by Borrower and each Guarantor to the end that this Agreement and the
other Documents shall be deemed to be valid and binding obligations enforceable
in accordance with their terms.
(b) To the extent permitted by applicable law, Borrower and each of the
Guarantors hereby waive presentment, demand, protest, notice of protest, notice
of default or dishonor, notice of payments and non-payments, or of any default.
(c) BORROWER AND EACH OF THE GUARANTORS ACKNOWLEDGES THAT EACH HAS THE
RIGHT UNDER CHAPTER 903a, AS FROM TIME TO TIME AMENDED, OF THE CONNECTICUT
GENERAL STATUTES, SUBJECT TO CERTAIN LIMITATIONS, TO NOTICE OF AND HEARING ON
THE RIGHT OF THE LENDER TO OBTAIN A PREJUDGMENT REMEDY, SUCH AS ATTACHMENT,
GARNISHMENT AND/OR REPLEVIN, UPON COMMENCING ANY LITIGATION AGAINST BORROWER OR
EACH OF THE GUARANTORS. NOTWITHSTANDING, BORROWER AND EACH OF THE GUARANTORS
HEREBY WAIVE ALL RIGHTS TO NOTICE, JUDICIAL HEARING OR PRIOR COURT ORDER TO
WHICH EACH MIGHT OTHERWISE HAVE THE RIGHT UNDER SAID CHAPTER 903a, AS FROM TIME
TO TIME AMENDED, OR UNDER ANY OTHER STATE OR FEDERAL STATUTE OR CONSTITUTION IN
CONNECTION WITH THE OBTAINING BY THE LENDER OF ANY PREJUDGMENT REMEDY BY REASON
OF THIS LOAN AND SECURITY AGREEMENT, OR BY REASON OF BORROWER AND EACH
GUARANTOR'S OBLIGATIONS OR ANY RENEWALS OR EXTENSIONS OF THE SAME. BORROWER AND
EACH OF THE GUARANTORS ALSO WAIVE ANY AND ALL OBJECTION WHICH EACH MIGHT
OTHERWISE ASSERT, NOW OR IN THE FUTURE, TO THE EXERCISE OR USE BY LENDER OF ANY
RIGHT OF SET-OFF, REPOSSESSION OR SELF HELP AS MAY PRESENTLY EXIST UNDER STATUTE
OR COMMON LAW.
SECTION 13. DEFINITIONS
As used herein, the following terms have the following meanings:
AFFILIATE: with reference to any Person, any direc-tor, officer or employee
of such Person, any corporation, asso-ciation, firm or other entity in which
such Person has a direct or indirect substantial interest or by which such
Person is directly or indirectly controlled or is under direct or indirect
substantial common control with such Person. For purposes of this Agreement,
Borrower and all Guarantors are Affiliates of one another.
COLLATERAL: the meaning specified in Section 1.7.
DOCUMENTS: this Agreement, the Demand Note, the Guaranty, UCC-1 Financing
Statements, the Subordinations, and all other instruments and documents
heretofore, now or hereafter executed and delivered pursuant to this Agreement
or pursuant to any of the aforesaid documents.
FINANCIAL STATEMENTS: the reports, statements and other information to be
delivered to Lender pursuant to Section 3.5.
FISCAL YEAR: a twelve (12) month year ending with December 31st
GUARANTORS: the meaning specified on page 1.
GUARANTY: the Guaranty executed and delivered to Lender by each Guarantor
contemporaneously herewith or any of the same hereafter executed by such
Guarantor.
INDEBTEDNESS: as applied to a Person, (a) all items, except items of capital
stock or of surplus or of unappropriated retained earnings or of amounts accrued
for deferred income taxes if in compliance with Section 3.2, which in accordance
with
Generally Accepted Accounting Principles would be included in determining total
liabilities as shown on the liability side of a balance sheet of such person as
at the date of which Indebtedness is to be determined, (b) all indebtedness
secured by any mortgage, pledge, lease, lien or conditional sale or other title
retention agreement existing on any property or asset owned or held by such
person subject thereto, whether or not such indebtedness shall have been
assumed, and (c) all indebtedness of others which such Person has directly or
indirectly guaranteed, endorsed, discounted or agreed contingently or otherwise
to purchase or repurchase or otherwise acquire, or in respect of which such
Person has agreed to supply or advance funds (whether by way of loan, stock
purchase, capital contribution or other-wise) or otherwise to become liable
directly or indirectly with respect thereto.
LENDER: the meaning specified on page 1.
LOAN: the meaning specified in Section 1.1.
OBLIGATIONS: the meaning specified in Section 1.2.
PERSON: a corporation, an association, a partnership, an organization, a
business, an individual or a government or political subdivision thereof or any
governmental agency.
SUBORDINATION AGREEMENT: the meaning specified in Section 4.9.
SUBSIDIARY: with reference to any Person, is a cor-poration, or similar
association or entity of which not less than a majority of the outstanding
shares of the class or classes of stock, have by the terms thereof ordinary
voting power to elect a majority of the directors, managers or trustees of such
cor-poration, association or entity, of which are at the time owned or
controlled, directly or indirectly, by such Person or by a Subsidiary of such
Person.
SECTION 14. EXPENSES
Borrower and each of the Guarantors agree to indemnify and save Lender
harmless from, and to pay or reimburse Lender for, all reasonable charges,
costs, damages, liabilities and expenses, including, without limitation,
reasonable attorneys' fees, if any, incurred by Lender in defending or
protecting the security interests and liens granted pursuant to this Agreement
or the other Documents, or the priority of any thereof, or in the per-formance
of any obligation of Borrower or any of the Guarantors in connection with the
Collateral or in the attempted enforcement or enforcement of this Agreement or
the other Documents, or in the collection or attempted collection of any of the
obligations owing under any thereof, or in the realization or attempted
realization upon the Collateral or in the prosecution or defense of any action
or proceeding concerning any matter growing out of or connected or any Guarantor
with this Agreement, the other Documents or the Collateral.
SECTION 15. FURTHER ASSURANCES; POSSESSION OF COLLATERAL; CUSTODIANS
Borrower will deliver to Lender such financing statements and other
instruments constituting or evidencing items of the Collateral as may be
reasonably requested by Lender to better assure it with respect to the security
interests granted to it pursuant to this Agreement and the other Documents. To
the extent permitted by applicable law, Borrower hereby authorizes Lender to
execute and file, in the name of Borrower, financing statements which Lender in
its sole discretion deems necessary to further perfect the security interests
granted under this Agreement and the other Documents.
SECTION 16. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND WARRANTIES, ETC.
All agreements, representations and warranties con-tained herein or made in
writing by or on behalf of Borrower and each Guarantor, in connection with the
transactions contemplated hereby shall survive the execution and delivery of
this Agreement and the other Documents shall survive any investiga-tion at any
time made by Lender and any disposition of the Loan by Lender and, to the extent
applicable, shall be deemed to be made a new by each of them each time an
advance is made pursuant hereto or pursuant to the other Documents. All
statements con-tained in any certificate or other instrument delivered by or on
behalf of Borrower or any of the Guarantors pursuant hereto or in connec-tion
with the transactions contemplated hereby shall be deemed representations and
warranties made hereunder.
SECTION 17. FAILURE TO PERFORM
If Borrower or any of the Guarantors shall fail to observe or perform any
of the covenants hereof, Lender may pay such reaso-nable amount or incur
reasonable liabilities to remedy or attempt to remedy any such failure, and all
such payments made and liabi-lities incurred shall be for the account of
Borrower and shall be in Lender's sole discretion or shall be withdrawn from
Borrower or any Guarantor's accounts maintained with Lender.
SECTION 18. NOTICES, ETC.
All notices, requests, consents and other com-munications hereunder shall
be in writing and shall be deemed to be duly delivered upon actual receipt if by
facsimile or over night courier, and five (5) days after mailing if by first
class registered mail, return receipt requested :
(a) if to Lender:
Lender: National Recovery Limited Partnership
00 Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxx
with a copy to:
Xxxxx X. Xxxxxx, Esq.
0000 Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
or at such other address as may have been furnished in writing by Lender to
Borrower; or
(b) if to Borrower:
Borrower: Tangible Collectibles, Inc.
0000 Xxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
with a courtesy copy to:
Xxxxx Xxxxxxx, Esq.
000 Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
(c) if to Guarantors:
Guarantors: Xxxxxxx XxXxxxxx
Xxx XxXxxxxx
0000 Xxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Tangible Asset Galleries, Inc.
3444 Via Lido
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
or at such other address as may have been furnished in writing by Borrower
or such Guarantors to Lender.
Notwithstanding the foregoing agreement to provide courtesy copies, such copy
shall be a courtesy copy only, and failure to provide such copy shall have
absolutely no effect or entitle Borrower or Guarantor to any remedy.
SECTION 19. AMENDMENTS AND WAIVERS
Neither this Agreement nor any other Document nor any term hereof or
thereof may be changed, waived, discharged or ter-minated except by a writing
signed by the party to be charged.
SECTION 20. TERM
The term of this Agreement and the other Documents shall be from the date
hereof and continue until all amounts due hereunder are paid in full. Any
expiration or termination of this Agreement shall not affect any rights of
Lender under this Agreement or under the other Documents and upon any such
expira-tion or termination Borrower shall be obligated to forthwith pay all of
the Loan and Borrower and each Guarantor shall continue to be bound by all of
the provisions of this Agreement until all of the Loan shall have been paid in
full.
SECTION 21. CONDITIONS PRECEDENT
21.1 The obligation of the Lender to make the Loan and advances to be
made by it hereunder is subject to the following conditions precedent;
(a) Approval of Lender Counsel
All legal matters incident to the transac-tions hereby contemplated shall be
satisfactory to counsel for the Lender.
(b) Proof of Corporate Action
The Lender shall have received certified copies of all corporate action taken by
the Borrower to authorize the execution and delivery of this Agreement and the
notes and borrowing hereunder, and such other papers as the Lender or its
counsel shall reasonably request.
(c) Corporate Documents and Opinions
Borrower and Guarantors are furnishing to Lender a certificates of good standing
of the state of its incorporation, resolutions, incumbency certificates, and
other documents which it acknowledges are being relied upon by Lender, and such
other documents are to be in the form and of the content as may be satisfactory
to Lender and its counsel.
(d) Loan Documents
Receipt by Lender of the Demand Note fully executed by Borrower, the Guaranty
fully executed by the Guarantors, the fully executed Subordinations, fully
executed UCC-1' Financing Statements and other material documents required by
Lender.
(e) Insurance
Receipt by Lender of the policies of insurance in compliance with Section 1.10.
(f) UCC-11'S
Receipt by Lender of UCC-11's demonstrating no liens or encumbrances against
the Collateral.
(g) Opinion of Counsel
The Lender shall have received from Counsel for the Borrower and each of the
Guarantors a written opinion, satisfac-tory to the Lender and its counsel with
reference to the matters stated in Section 2.1 through 2.17 hereof and further
to the effect that (i) the making and performance by the Borrower and each of
the Guarantors of this Agreement and the other Documents have been duly
authorized by all necessary corporate action and this Agreement and the other
Documents upon execution and delivery will constitute legal, valid and binding
obligations of the Borrower, each of the Guarantors, and each other party
thereto enforceable according to their terms; (ii) that the Note and Other
Documents have been duly authorized and when executed will constitute a legal,
valid and binding obligations of the Borrower enforceable in accordance with
their terms; (iii) that the Guaranty has been duly authorized and when executed
will constitute a legal, valid and binding obligation of the Guarantors and
shall be enforceable in accordance with its terms; and (iv) that except as
otherwise may be set forth in said opinion letter, to the best of said counsel's
knowledge upon inquiry of Borrower and Guarantors, and upon examination of its
office files, the execution and delivery of each of the afore stated Agreements
and other Documents will not constitute a default under any bank loan or credit
agreement or other agreement or instrument to which the Borrower or any of the
Guarantors are a party.
(h) Representations and Warranties
The Representations and Warranties con-tained in Section 2 herein shall be true
on and as of the date of closing.
(i) Collateral
Receipt by Lender of any of the Collateral where possession by Lender is
necessary to perfect its security interest therein.
21.2 The obligation of the Lender to make each sub-sequent advance to be
made by it hereunder is subject to the con-ditions precedent that:
(a) No Event of Default
No Event of Default specified in Section 5 hereof, and no event which pursuant
to the provisions of Section 5 with the lapse of time and/or notice specified
therein would become such an Event of Default, has occurred and is continuing;
and
(b) No Material Adverse Change
There has been no material adverse change in the consolidated financial
condition of the Borrower or any of the Guarantors and its or his consolidated
subsidiaries; and
(c) Representations and Warranties
The Representations and Warranties con-tained in Section 2 are true and correct;
and that the Borrower, by its president, and each of the Guarantors shall have
so certified to the Lender.
21.3 By delivering the Note and each other Document to the Lender and receiving
the Loan and advances, the Borrower and each of the Guarantors represent that no
Event of Default specified in Section 5 hereof exists or is continuing and no
material change has taken place with regard to their financial condition as
represented to the Lender.
SECTION 22. SETOFF.
Borrower and each Guarantor hereby gives Lender a security interest in, and
a right of set-off for the Loan upon or against, all the deposits, credits,
Collateral, and property of Borrower and each Guarantor, now or hereafter in the
possession or control of Lender or in transit to it. Lender may at any time
apply or set-off the same, or any part thereof, to any Loan even though
unmatured.
SECTION 23. MISCELLANEOUS
(a) This Agreement and each other document granting Lender a security
interest in the Collateral is a security agreement within the meaning of the
Uniform Commercial Code. Where any provision in this Agreement refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person. This Agreement and the other Documents shall be
construed in accordance with the laws of the State of Connecticut.
Notwithstanding the foregoing, Borrower and each of the Guarantors expressly
consent to the in personam jurisdiction over such Person of the courts of the
State of Connecticut. To the extent there is any inconsistency between the terms
of this Agreement and any of the other Documents, this Agreement shall control.
All of the terms of this Agreement and the other Documents shall be binding upon
and inure to the bene-fit of and be enforceable by the respective heirs,
executors, administrators, successors and assigns of the parties hereto, whether
so expressed or not, and by any other holder or holders at the time of the Loan
or any part thereof. The headings in this Agreement are for the purposes of
reference only and shall not limit or otherwise affect any of the terms hereof.
This Agreement may be executed in two (2) or more counterparts, each of which
shall be deemed an original, and by the several parties hereto in separate
counterparts, but all of which together shall constitute one and the same
instrument.
(b) This Agreement is among the Lender, the Borrower and each of the Guarantors
only and shall not be relied upon by any third party. Without limiting the
foregoing, Lender shall have no liability to any third party whatever (including
without limitation Borrower, any of the Guarantors or anyone conducting business
with any of the foregoing) in the event Lender for any reason and at any time
determines not to advance sums under the Revolving Note and/or for any reason or
otherwise exercises its rights under this Agreement and/or the other Documents.
(c) The security interests granted hereby extends to the Collateral, whether
acquired before or after the commencement of a case under the Bankruptcy Reform
Act of 1978.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
on the day first above mentioned.
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF:
BORROWER:
TANGIBLE COLLECTIBLES, INC.
BY: /s/ Xxxxxxx XxXxxxxx
Xxxxxxx XxXxxxxx
Its Chairman, Duly Authorized
BY: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Its President, Duly Authorized
GUARANTORS:
TANGIBLE ASSET GALLERIES, INC.
By: /s/ Xxxxxxx XxXxxxxx
Xxxxxxx XxXxxxxx
Its Chairman, Duly Authorized
BY: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Its President, Duly Authorized
/s/ Xxxxxxx XxXxxxxx
Xxxxxxx XxXxxxxx
Individually
/s/ Xxx XxXxxxxx
Xxx XxXxxxxx
Individually
LENDER
NATIONAL RECOVERY LIMITED PARTNERSHIP
BY /s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
Its: General Partner
$1,000,000.00 NEWPORT BEACH, CALIFORNIA NOVEMBER 16, 2000
FOR VALUE RECEIVED, ON DEMAND, the undersigned, (hereinafter referred to as
"Maker") promises to pay to the order of NATIONAL RECOVERY LIMITED PARTNERSHIP
(hereinafter referred to as "Lender"), at its main office at 00 Xxxxxx Xxxx
Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, or at such other place as the Lender shall
from time to time designate in writing, ON DEMAND the principal sum of ONE
MILLION AND 00/100 ($1,000,000.00) DOLLARS with interest from the date hereof,
computed on a 360 day year, on so much of said principal sum as shall from time
to time be outstanding, at the interest rate of thirteen and one half (13.50%)
percent per annum together with all taxes assessed or enforced against said
payee or other holder of this Note upon said sum or this Note, and all its
reasonable costs, expenses and attorney's fees incurred or charged in any action
or pro-ceeding for collection of said debt or in any litigation arising from or
concerning said debt or in foreclosing or otherwise recovering on any mortgage
or security interest securing said debt or in protecting or sustaining the lien
and/or priority of any such mortgage or security interest . Said interest
shall be payable at the aforesaid rate, or at the rate in effect as hereinafter
provided, whether before or after maturity, by acceleration or otherwise, or
whether or not judgment has been obtained, and after judgment, on the full
amount of said judgment, at the greater of the legal rate or the rate then in
effect hereunder.
From the date hereof interest on the daily outstanding principal balance for the
actual number of days elapsed in each payment period shall be due and payable in
monthly payments in arrears commencing December 1, 2000 and continuing on the
1st day of each month thereafter until the entire outstanding principal balance
and accrued and unpaid interest thereon has been paid in full. All principal
and interest evidenced by this Note, if not sooner paid , or demanded, shall be
due and payable on March 31, 2001 without the necessity of demand or notice.
All payments of principal or interest shall be considered received by Lender
upon receipt of good funds as defined by Lender's financial depository.
This Note is subject in all respects to the terms and conditions of a certain
Loan and Security Agreement of even date by and among, inter alia, Maker and
Lender (the "Loan Agreement"), including without limitation Events of Default as
defined therein.
It is agreed that time is of the essence of this Note, and that in the
event of default in the payment of any such installment of principal and/or
interest for a period of five (5) days after the same is due and payable or upon
default under any of the terms, conditions and/or provisions contained in this
note or upon the occurrence of an Event of Default under the Loan Agreement,
then, and in any of said events, the unpaid remaining principal balance of this
indebtedness together with all accrued and unpaid interest thereon and all other
amounts due hereunder shall immediately become due and payable, at the option of
Lender without the necessity for demand or notice; and any failure to exercise
said option shall not constitute a waiver of the right to exercise the same at
any other time. If any such default shall occur, then, interest shall accrue,
on and after the first day of said default, for the period for which any such
payment was due, and during such period of five (5) days or other expired
applicable cure period, and at all times while such default continues, on all
principal and due and unpaid interest, at a rate three (3%) percent per annum
higher than the rate above stated and said interest shall be due and payable on
the first day of each month while any such default exists.
Maker shall pay a late charge equal to five (5%) percent of any installment not
paid within five (5) days of the due date thereof.
Maker reserves the right to prepay this note in full or in part at any time
after December 24, 2000. Maker shall not have the right to make such prepayment
before December 24, 2000. In the event of a default prior to December 24, 2000
upon Holder demanding payment of this Note the Maker shall pay a prepayment
penalty of three(3%) percent.
Any deposits, securities or other property of the Maker, (exclusive of deposits,
securities or other property held by the undersigned in a fiduciary capacity for
the benefit of others) which are at anytime within Lender's possession or
control may be held and treated as collateral security for the payment of this
note, and Lender shall have a lien thereon and right to setoff the same against
any sums due hereunder.
At any time prior to the Maker's payment in full of all principal and interest
due hereunder, the Holder shall have the option of converting this Note to
shares of the capital stock of Tangible Asset Galleries, Inc. pursuant to the
terms of the Loan Agreement.
Notwithstanding any provisions of this Note, in the event that the rate of
interest charged hereunder shall at any time exceed the maximum rate allowed by
law, the interest rate payable hereunder shall be deemed to be the maximum rate
allowed by law and any payments in excess of the maximum rate allowed by law
shall be deemed principal payments and applied against the principal balance
hereof.
The Maker hereby agrees that the loan evidenced by the within note is a
"commercial transaction" as defined by the Connecticut General Statutes as
amended.
Upon failure to pay the indebtedness secured hereby in full at maturity, whether
stated or by acceleration, Holder is authorized and empowered to sell the whole
or any part of the Collateral then held by it in such manner as Holder sees fit
and is consistent with applicable law. Sale of part of the Collateral shall not
exhaust Holder's power of sale, but sales may be made from time to time until
all the Collateral is sold, or until the debts hereby secured are paid in full.
Holder shall receive the proceeds of such sale or sales and shall apply those
proceeds in the order stipulated in the relevant provisions of the Connecticut
Uniform Commercial Code. If this Note is placed in the hands of an attorney for
collection or is collected in whole or in part through any judicial or arbitrial
proceedings, Obligor agrees to pay Holder's attorney's fees and costs.
THE MAKER AND EVERY ENDORSER HEREBY WAIVES ALL RIGHTS TO NOTICE AND PRIOR COURT
HEARING OR COURT ORDER IN CONNECTION WITH ANY AND ALL PREJUDGMENT REMEDIES THE
HOLDER HEREOF MAY BECOME ENTITLED TO BY VIRTUE OF ANY DEFAULTS OR PROVISIONS OF
THE NOTE SECURING THE SAME.
THE MAKER AND EVERY ENDORSER WAIVES A TRIAL BY JURY IN ANY ACTION WITH RESPECT
TO THIS NOTE AND AS TO ANY ISSUE ARISING RELATING TO THIS NOTE OR TO THE
INSTRUMENTS SECURING THIS NOTE.
TO INDUCE LENDER TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION EVIDENCED BY THIS
NOTE AND SECURITY AGREEMENT, MAKER AGREES THAT THE SAID TRANSACTION IS
COMMERCIAL AND NOT A CONSUMER TRANSACTION AND WAIVES ANY RIGHT OF MAKER TO
NOTICE AND HEARING, JURY TRIAL AND THE POSTING OF BOND BY LENDER UNDER CHAPTER
903(A) OF THE CONNECTICUT GENERAL STATUTES, REVISION OF 1958 AS AMENDED, OR
OTHER STATUTE OR STATUTES AFFECTING PREJUDGMENT REMEDIES AND AUTHORIZED LENDER'S
ATTORNEY TO ISSUE A WRIT FOR PREJUDGMENT REMEDIES AND AUTHORIZED LENDER'S
ATTORNEY TO ISSUE A WRIT FOR PREJUDGMENT REMEDY WITHOUT A COURT ORDER PROVIDED
THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER.
Presentment, protest and notice are hereby waived.
TANGIBLE COLLECTIBLES, INC.
By: /s/ Xxxxxxx XxXxxxxx
Xxxxxxx XxXxxxxx
Its Chairman, Duly Authorized
By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Its President, Duly Authorized
