1
Exhibit 10.11
______________________________
LOAN AND SECURITY AGREEMENT
dated as of October 10, 1995
between
NationsBank of Georgia, N.A.,
Lender,
and
Emergent Commercial Mortgage, Inc.,
Borrower.
$8,000,000
______________________________
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TABLE OF CONTENTS
Section Page
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1. DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.3 USE OF DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.4 SECTION AND EXHIBIT REFERENCES, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2. AMOUNT AND TERMS OF THE LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 INTEREST AND OTHER CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 COMPUTATION OF INTEREST AND OTHER CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.6 PAYMENT ON NON-BANKING DAYS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.7 EFFECTIVE DATE AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.8 STATEMENTS OF ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3. SECURITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4. CONDITIONS PRECEDENT TO ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1 DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 OTHER CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5. CLOSING PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 TRANSFERS OF LOAN DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 RELEASE OF SECURITY INTEREST IN COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6. GENERAL REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.1 ORGANIZATION, STANDING, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2 ENFORCEABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.3 QUALIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.4 COMPLIANCE WITH ARTICLES OF INCORPORATION, BY-LAWS, AND OTHER INSTRUMENTS, ETC . . . . . . . . . . . 12
6.5 SUBSIDIARIES; PARENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.6 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.7 CHANGES IN FINANCIAL CONDITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.8 TAX RETURNS AND PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.9 TITLE TO PROPERTIES AND ASSETS; LIENS; ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.10 PATENTS; TRADEMARKS; FRANCHISES; ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.11 LITIGATION, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.12 ADVERSE DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.13 DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.14 MARGIN SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.15 INVESTMENT COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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6.16 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.17 LOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.18 SOLVENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.19 NAME CHANGE; MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.1 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.2 TAXES AND LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.3 ACCOUNTING; FINANCIAL STATEMENTS; ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.4 INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.5 MAINTENANCE OF CORPORATE EXISTENCE; COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . 18
7.6 USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.7 NOTICE OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.8 MAINTENANCE OF PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.9 NOTICE OF ERISA DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.10 NOTICE OF LITIGATION OR ADVERSE CHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.11 PAYMENT OF LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.12 NOTIFICATION OF CHANGE OF NAME OR BUSINESS LOCATION . . . . . . . . . . . . . . . . . . . . . . . . 19
7.13 TANGIBLE NET WORTH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.14 RATIO OF TOTAL LIABILITIES TO TANGIBLE NET WORTH . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.15 INTEREST COVERAGE RATIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.16 EBC SUBSIDIARY. The Borrower shall be a wholly-owned Subsidiary of EBC.
8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.1 DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.2 LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.3 GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.4 PLAN LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.5 FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.6 OTHER TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.7 MERGER; SUBSIDIARY; ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.8 SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.9 CHANGES IN BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.10 DIVIDENDS AND REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.11 LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.12 PLEDGE OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.13 INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.14 CAPITAL EXPENDITURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9. POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.1 NO WAIVER; CUMULATIVE REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.2 AMENDMENTS, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.3 ADDRESSES FOR NOTICES, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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11.4 COSTS, EXPENSES, AND TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.5 COMMERCIAL TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.6 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.8 TIME IS OF THE ESSENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.9 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.10 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.11 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.12 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.13 GOVERNING LAW; CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.14 WAIVER OF TRIAL BY JURY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Exhibits:
Exhibit A - - Form of Borrower's Secretary's Certificate (Section 1.1)
Exhibit B - - Form of Borrower's CEO's Certificate (Section 1.1)
Exhibit C - - Form of Opinion (Section 1.1)
Exhibit D - - Form of Escrow Agreement (Section 1.1)
Schedules:
Schedule 1 - - Liens (Section 8.2)
Schedule 2 - - Trademarks, Trade Names, Name Changes, etc.
(Sections 6.10 and 6.19)
Schedule 3 - - Litigation (Section 6.11)
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LOAN AND SECURITY AGREEMENT
This Agreement is made as of the 10th day of October, 1995, between
NationsBank of Georgia, N.A. (the "Lender") and Emergent Commercial Mortgage,
Inc. (the "Borrower"), a South Carolina corporation.
The Borrower wants the Lender to finance the Borrower's portfolio of
SBA "504 Program" loans, and the Lender is willing to make such financing
available upon the conditions and terms set forth in this Agreement.
The Borrower and the Lender therefore agree as follows:
1. DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINITIONS. The following terms, when capitalized as in this
Section 1.1, shall have the following meanings:
"Advance": the proceeds of a Loan.
"Affiliate" of any designated Person: another Person controlling,
controlled by, or under common control with such designated Person (but not
including the Lender), and shall include (x) the spouse, parents, brothers,
sisters, children, and grandchildren of such designated Person, (y) any
association, partnership, trust, entity, or enterprise in which such designated
Person is a director, officer, or general partner or in which such designated
Person together with Affiliates of such designated Person own in the aggregate
at least a 10% beneficial interest in assets, profits, or losses, and (z) any
Subsidiary of such designated Person.
"Banking Day": a day for dealings by and between banks, excluding
Saturday, Sunday, any legal holiday in Atlanta, Georgia, and any other day on
which banking institutions in Atlanta, Georgia are generally closed.
"Borrower's CEO's Certificate": the Certificate of the Borrower's
Chief Executive Officer, substantially in the form of Exhibit B.
"Borrower's Secretary's Certificate": the Certificate of the
Borrower's Secretary, substantially in the form of Exhibit A.
"Borrowing Base": defined in Section 2.1(a).
"Capital Expenditures": the dollar amount of gross expenditures
(including obligations under leases which are required under GAAP to be
capitalized for financial reporting purposes) made or incurred for fixed
assets, real property, and plant and equipment which are required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Code": the Internal Revenue Code of 1986, as amended.
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"Collateral": all property described in Section 3 hereof, and all the
Borrower's other property in which the Lender at any time has a security
interest or which at any time are in the Lender's possession or control.
"Default": (x) an event, act, or condition that would be an Event of
Default but for the requirement(s) that notice be given or time elapse, or (y)
an Event of Default.
"EBC": Emergent Business Capital, Inc.
"EBC L&SA": the December 29, 1993 Loan and Security Agreement between
the Lender and EBC.
"EBIT": the total earnings of EBC and its consolidated Subsidiaries
from all sources, excluding extraordinary items, before deducting interest or
income tax expense, but after deducting depreciation and amortization expense.
"EFC": Emergent Financial Corporation.
"Eligible Loan: a commercial loan for which the Borrower holds a first
mortgage lien on the property being financed and which (1) is held by the
Borrower and funded in accordance with an issued SBA Commitment, (2) remains at
all times eligible for SBA funding under that SBA Commitment, including
compliance with all budgetary and other conditions, and (3) meets all the
Lender's other funding requirements which may be imposed with respect to the
loan involved (which may include a takeout purchase commitment from a reliable
"504 Program" lender).
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default": any of the following: (1) non-payment, within
seven days after the due date, of any amount payable on any of the Obligations;
(2) failure to perform any material agreement or meet any obligation of the
Borrower contained herein; (3) nonpayment when due of any premium on any
insurance policy required to be maintained under Section 7.1 hereof; (4) the
existence of a default under any other agreement between the Borrower or EBC
and the Lender or any Affiliate of the Lender's; (5) any statement,
representation, or warranty of the Borrower made in writing herein or in any
other writing at any time furnished or made by the Borrower to the Lender is
untrue in any material respect as of the date furnished or made; (6) suspension
of the operation of the Borrower's present business; (7) any Obligor becomes
insolvent or unable to pay debts as they mature, admits in writing that it is
so, makes a conveyance fraudulent as to creditors under any state or federal
law, or makes an assignment for the benefit of creditors, or a proceeding is
instituted by or against any Obligor alleging that such Obligor is insolvent or
unable to pay debts as they mature, or a petition under any provision of Title
11 of the United States Code (entitled "Bankruptcy"), as amended, is brought by
or against any Obligor; (8) entry of any judgment for more than $50,000 against
any Obligor; (9) creation, assertion, or filing of any Lien (other than a
Permitted Lien) against any of the property of any Obligor; (10) dissolution,
merger, or consolidation of any Obligor (other than a merger or consolidation
of the Borrower or the Guarantor with or into the Borrower or the Guarantor);
(11) termination or withdrawal of any guarantee for any of the Obligations, or
the failure for any other reason of any such guarantee or agreement to be
enforceable by the Lender in accordance with its terms; (12) transfer of a
substantial part of the property of any Obligor; (13) sale, transfer, or
exchange, either directly or indirectly, of a controlling stock interest of the
Borrower or the Guarantor; (14) appointment of a receiver for the Collateral or
for any property in which
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the Borrower has an interest; (15) seizure of the Collateral by any third
party; (16) at least 5% (face value) of the Borrower's loan portfolio are at
least 90 days past due, and have remained at least 90 days past due for at
least 30 days; or (17) the Lender in good faith believes that the prospect of
payment or performance of the Obligations has been impaired.
"GAAP": generally accepted accounting principles applied in a manner
consistent with the financial statements described in Section 6.6.
"Guarantee": the document by that name, dated the date of this
Agreement, of the Guarantor, in favor of the Lender.
"Guarantor": Emergent Business Capital, Inc.
"herein", "hereof", "hereunder", etc.: in, of, under, etc. this
Agreement (and not merely in, of, under, etc. the section or provision where
that reference appears).
"including": containing, embracing, or involving the enumerated
item(s), but not necessarily limited to such item(s).
"Insurance": the policy or policies of insurance described in Section
7.1, including all required endorsements thereto.
"Interest on NationsBank Debt": the interest on the Obligations and
all "Obligations" under the EBC L&SA during the period for which computation is
being made.
"Lien": any mortgage, pledge, deed of trust, assignment, security
interest, encumbrance, hypothecation, lien, or charge of any kind, including
any conditional sale or other title retention agreement, any lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement under the Uniform Commercial
Code or comparable law of any jurisdiction.
"Loans": the loan(s) under Section 2.1(a) in the principal amount of
up to $8,000,000, plus any Overadvances, made by the Lender to the Borrower
under this Agreement.
"Obligations": all present and future (a) duties, obligations, and
liabilities of the Borrower to the Lender under this Agreement, or under any
document or agreement executed and delivered pursuant to or in connection with
this Agreement, (b) sums owing to the Lender for goods or services purchased by
the Borrower from any other firm financed by the Lender, (c) obligations under
all notes and contracts of suretyship, guarantee, or accommodation made by the
Borrower in favor of the Lender, and (d) all other obligations of the Borrower
to the Lender, however and whenever created, arising, or evidenced, whether
direct or indirect, through assignment from third parties, absolute,
contingent, or otherwise, primary or secondary, now or hereafter existing, or
due or to become due.
"Obligor": the Borrower, any guarantor, or any other party at any time
primarily or secondarily, directly or indirectly liable on any of the
Obligations.
"Opinion": the legal opinion, of counsel to the Borrower satisfactory
to the Lender, substantially in the form of Exhibit C.
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"or": at least one, but not necessarily only one, of the alternatives
enumerated.
"Overadvances": loans by the Lender to the Borrower in excess of those
described in Section 2.1(a).
"Permitted Lien": a Lien permitted by Section 8.2.
"Person": any individual, joint venture, partnership, firm,
corporation, trust, unincorporated organization, or other organization or
entity, or a governmental body or any department or agency thereof.
"Plan": any present or future employee benefit plan (as defined in
Section 3 of ERISA) and any trust created thereunder, covered by Title I or
Title IV of ERISA, established or maintained for employees of the Borrower or
the Guarantor.
"Prime Rate": the rate of interest announced by NationsBank of
Georgia, N.A. from time to time as its "Prime Rate".
"Projections": the Borrower's forecasted consolidated and
consolidating balance sheets, profit-and-loss statements, and cash-flow
statements, all prepared on a basis consistent with the Borrower's historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.
"Reportable Event": as defined in Title IV of ERISA.
"SBA": the United States Small Business Administration, an agency of
the United States government.
"SBA Commitment": the SBA's commitment to purchase a portion of the
loans equal to 40% of the cost of the property financed, on a basis whereby the
SBA's lien on the property financed is subordinated to the Borrower's lien on
that property, upon completion of the construction period for the underlying
property.
"Securities": any share(s) of beneficial or equity interest or capital
stock or any other instrument commonly understood to be a "security", excluding
promissory notes issued for money borrowed in commercial transactions.
"Solvent": has capital sufficient to carry on its business and
transactions and all business and transactions in which it is about to engage,
is able to pay its debts as they mature, and owns property having a value, both
at fair valuation and at present fair saleable value, greater than the amount
required to pay its debts.
"Subordinated Debt": EBC's debt that is subordinated (as to right and
time of payment) to the Obligations under the Subordination Agreement.
"Subordination Agreement": the December 29, 1993 Agreement of
Subordination and Assignment of Carolina Investors, Inc. and EBC in favor of
the Lender.
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"Subsidiary" of any designated corporation: any other corporation more
than 20% of the shares of voting stock of which is owned, directly or
indirectly, by such designated corporation, including subsidiary of a
subsidiary.
"Tangible Net Worth": the total assets of EBC and its consolidated
Subsidiaries, plus Subordinated Debt, minus Total Liabilities (excluding from
the definition of total assets the amount of (a) any write-up in the book value
of any asset resulting from a revaluation thereof after December 31, 1992, (b)
treasury stock, (c) Receivables and other amounts due from stockholders and
other Affiliates, (d) unamortized debt discount and expense and (e) patents,
trademarks, trade names, goodwill, deferred charges, organizational expenses
and other intangible assets, all determined in accordance with GAAP).
"Total Liabilities": all obligations of EBC and its consolidated
Subsidiaries to pay money, excluding Subordinated Debt.
1.2 ACCOUNTING TERMS. All accounting terms used herein shall be
construed in accordance with GAAP applied consistently with those principles
applied in the preparation of the financial statements referred to in Section
6.6, and all financial data submitted pursuant to this Agreement shall be
prepared in accordance with GAAP. In the event of ambiguities in GAAP, the
more conservative principle or interpretation shall be used.
1.3 USE OF DEFINED TERMS. Any defined term used in the plural
preceded by "the" encompasses all members of the relevant class. Any defined
term used in the singular preceded by "any" indicates any number of the members
of the relevant class. Any agreement or instrument referred to in Section 1.1,
or the term "Agreement", means such agreement or instrument as from time to
time supplemented and amended. A definition in singular form applies to the
plural form of the term, and vice versa.
1.4 SECTION AND EXHIBIT REFERENCES, ETC. References to sections,
exhibits, and the like refer to those in or attached to this Agreement unless
otherwise specified.
2. AMOUNT AND TERMS OF THE LOANS
2.1 THE LOANS. (a) Revolving Loans. The Lender agrees to make
loans to the Borrower, and the Borrower agrees to borrow from the Lender, upon
request of the Borrower from time to time, up to 50% of the Borrower's Eligible
Loans (the sum of the Eligible Loans being the "Borrowing Base"); provided,
that the total amount of all Loans outstanding at any time under this sentence
shall not exceed $8,000,000. The amounts of such Loans shall be determined in
the sole discretion of the Lender to be consistent with the value of the
Eligible Loans, taking into account all fluctuations of the value thereof in
light of the Lender's experience and sound business principles. Such
determinations shall be subject to the requirements of good faith on the
Lender's part, the Borrower's undertakings hereunder, and especially the
Borrower's grant to the Lender of a security interest in the Collateral as
security for the Loans and all other Obligations of the Borrower to the Lender,
which will, of necessity, fluctuate in amount, and to the condition that the
Lender at all times be fully secured. To the extent necessary to reduce the
total amount of all Loans outstanding to the maximum amount then available
under clauses (i) and (ii) of this Section 2.1, the Borrower shall pay to the
Lender, on demand, the amount of outstanding Loans in excess of that maximum
amount.
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An Eligible Loan shall be included in the Borrowing Base when the
Borrower has provided the Lender with a copy of the related SBA Commitment, the
original loan documentation for that loan (to the extent requested by the
Lender), and such other documentation as the Lender reasonably requests, by fax
or otherwise.
(b) Overadvances. The Lender may make Overadvances as, in its sole
and absolute discretion, it determines to lend. Any such Overadvances may be
evidenced by a written agreement between the Lender and the Borrower, which
agreement may provide, at the Lender's option, for interest and fees on such
Overadvances in addition to those specified hereunder. Except to the extent
otherwise provided in any such agreement, any such Overadvances shall be
"Loans", shall be repayable upon demand, and shall in all other respects be
subject to the terms and conditions of this Agreement.
2.2 INTEREST AND OTHER CHARGES. The Loans shall bear interest on
the average daily net balance thereof, calculated monthly, at a fluctuating
rate of interest equal to the Prime Rate. Changes in the rate of interest
shall be effected monthly to reflect changes in the Prime Rate, as follows:
The rate shall be adjusted on the first day of each month based on the Prime
Rate in effect at the close of business on the last Banking Day of the
preceding calendar month. Interest shall be due and payable monthly, on the
first day of each month, for the preceding month. The final payment of all
accrued and unpaid interest shall be due and payable on the date that the
outstanding principal amount of the Loans is paid or due and payable in full.
After an Event of Default, interest shall also be due and payable upon the
Lender's demand from time to time.
The Lender shall inform the Borrower of the amount of interest due and
payable as of each payment date set forth in the preceding paragraph, and the
Borrower shall pay the interest when due or the Lender may, in its discretion,
charge such amount to the Borrower's account under this Agreement.
As additional consideration for the credit facility established in
Section 2.1, the Borrower agrees to pay to the Lender a fee, payable on the
first day of each month for the preceding month, equal to the average unused
principal portion of the maximum loan facility hereunder (i.e., $8,000,000
minus the average daily principal amount of Loans outstanding) times 0.125% per
annum.
For interest computation purposes, Borrower's account will be credited
for each remittance received on the day that the underlying funds are
collected; the day of receipt of funds shall be deemed to be the following
Banking Day if the receipt is after the Lender's cutoff time for receipt of
funds or if such day is not a Banking Day.
If the outstanding principal amount of the Loans becomes due and
payable or if any payment of principal or interest is not timely made, or (at
the Lender's option) if any Event of Default exists, interest shall accrue on
the unpaid principal balance of the Loans or on such defaulted principal
payment, from the date that the Loans became so due and payable or that the
defaulted payment was not timely made, at a rate of 4% per annum above the
Prime Rate. Changes in the rate shall be effected monthly to reflect changes
in the Prime Rate as follows: The rate shall be adjusted on the first day of
each month based on the Prime Rate in effect at the close of business on the
last Banking Day of the preceding calendar month. Such interest shall continue
to accrue until the date of payment of all principal and accrued but unpaid
interest or such defaulted payment, as applicable, and shall be due and payable
upon demand from time to time by the Lender.
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2.3 COMPUTATION OF INTEREST AND OTHER CHARGES. Interest on the
Loans, and other periodic charges hereunder, shall be computed on the basis of
a 360-day year and actual days lapsed.
2.4 CHARGES. The Borrower and the Lender hereby agree that the
only charges imposed by the Lender upon the Borrower for the use of money in
connection herewith are and shall be the interest described in Section 2.2.
All other charges imposed by the Lender upon the Borrower in connection with
the Loans, any commitment fees, collection fees, letter of credit fees,
facility fees, origination fees, prepayment charges or early termination fees,
default charges, late charges, attorneys' fees, and reimbursement for costs and
expenses paid by the Lender to third parties, or for damages incurred by
Lender, are and shall be deemed to be charges made to compensate the Lender for
underwriting or administrative services and costs and other services or costs
performed and incurred, and to be performed and incurred, by the Lender in
connection with the Loans, and shall under no circumstances be deemed to be
charges for the use of money.
In no event shall the amount of interest due or payable hereunder
exceed the maximum rate of interest allowed by applicable law, and if any such
payment is made by the Borrower or received by the Lender, then such excess sum
shall be credited as a payment of principal, unless the Borrower notifies the
Lender, in writing, that the Borrower elects to have such excess sum returned
to it forthwith. It is the express intent hereof that the Borrower not pay and
the Lender not receive, directly or indirectly, in any manner whatsoever,
interest in excess of that which may be lawfully paid by the Borrower under
applicable law.
2.5 PAYMENT. All payments by the Borrower shall be made to the
Lender at its address referred to in Section 11.3 hereof in lawful money of the
United States of America and in immediately available funds.
2.6 PAYMENT ON NON-BANKING DAYS. Whenever any payment to be made
hereunder shall be stated to be due on a day which is not a Banking Day, such
payment shall be made on the following Banking Day, and such extension of time
shall be included in the computation of interest.
2.7 EFFECTIVE DATE AND TERMINATION. This Agreement shall be
effective on the date set forth in the first paragraph of this Agreement, and
shall continue in full force and effect until December 29, 1998 and from year
to year thereafter unless terminated on December 29, 1998 or any anniversary
thereof by either party's giving to the other not less than 60 days' prior
written notice. If the Borrower terminates this Agreement other than on
December 29, 1998 or any anniversary thereof, the Borrower shall pay to the
Lender an early termination fee equal to $100,000 for any termination before
December 29, 1998, $50,000 for any termination after December 29, 1998 and
before December 29, 1999, and $25,000 for any termination thereafter not on a
December 29. Upon the occurrence of an Event of Default, the Lender shall have
the right to terminate this Agreement at any time without notice. This
Agreement shall automatically terminate upon the termination of the December
29, 1993 Loan and Security Agreement, as from time to time amended, between the
Lender and EBC. Notwithstanding any termination of this Agreement, the Lender
shall retain all of its rights and remedies hereunder (including its security
interest in the Collateral), and the Borrower shall continue to be bound by all
the terms, conditions, and provisions hereof until all of the Obligations of
every nature have been fully disposed of, concluded, finally paid, satisfied,
and liquidated.
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2.8 STATEMENTS OF ACCOUNT. The Lender shall render a statement of
account monthly, and, absent manifest error, such statement rendered by the
Lender shall bind the Borrower and the Lender (unless the Borrower or the
Lender notifies the other in writing to the contrary within 30 days after the
date of each statement rendered; and any such notice shall be deemed an
objection only to those items specifically objected to therein).
3. SECURITY INTERESTS
As security for the full payment and performance of the Obligations,
the Borrower hereby grants to the Lender a security interest in all of the
following property and interests in property of the Borrower, whether now owned
or existing or acquired or arising in the future or in which the Borrower now
has or in the future acquires any rights, and wherever located:
(a) all right, title, and interest in any loan made by the
Borrower, including all related documentation, and all guarantees, collateral,
and other security therefor,
(b) all of the Borrower's accounts, inventory, general
intangibles, instruments, chattel paper, documents, equipment, and other goods,
(c) all accessions to, substitutions for, and replacements,
products, and proceeds of any of the foregoing, including insurance proceeds
and rental payments, and
(d) all books and records (including customer lists, credit files,
computer programs, print-outs, and other computer materials and records)
pertaining to any of the foregoing.
The Borrower shall execute and deliver all supplemental documentation
that the Lender from time to time requests to perfect or maintain the
perfection of the security interest granted in this Section, and shall pay (or
reimburse the Lender for) the cost of filing or recording any such
documentation, on demand.
4. CONDITIONS PRECEDENT TO ADVANCES
4.1 DOCUMENTS. The determination by the Lender to make Advances
is subject to the Lender's having received the following, in form and substance
satisfactory to the Lender:
(a) the Guarantee,
(b) the Borrower's Secretary's Certificate,
(c) the Borrower's CEO's Certificate,
(d) certified copies of all documents evidencing other
necessary corporate action and governmental approvals, if any, with
respect to this Agreement,
(e) the Opinion,
(f) appropriate UCC-1 financing statements,
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13
(g) the documentation described in Section 5.1 for each
loan for which an Advance is made, and
(h) such other documentation as the Lender reasonably
requests.
4.2 OTHER CONDITIONS PRECEDENT. In addition to the foregoing, any
obligation of the Lender to make each Advance is subject to the following
conditions precedent: (a) the representations and warranties contained in
Section 6 (except 6.13, 6.17, and 6.19) hereof shall be correct on and as of
the date of the Advances with the same effect as though made on and as of such
date, except to the extent that such representations and warranties relate
solely to an earlier date; (b) since the date of the statements referred to in
Section 6.6 hereof, no materially adverse change shall have occurred in the
Borrower's business, prospects, condition, affairs, operations, or assets, nor
in its right or ability to carry on its operations; (c) no Default shall exist
or would result from the Advance; and d. the Lender in its sole discretion
determines that such Advance will be fully secured, as provided for in Section
2.1, and will not cause the outstanding balance of the Loans to exceed the
limits described in Section 2.1.
5. CLOSING PROCEDURES.
5.1 TRANSFERS OF LOAN DOCUMENTS. Before the Lender funds an
Advance for an Eligible Loan, the Borrower shall provide the Lender with a copy
of the related SBA Commitment, all original loan documentation for that loan
(to the extent requested by the Lender), and such other documentation as Lender
reasonably requests, by fax or otherwise. The Borrower shall deliver the
original of each underlying note to the Lender by the third Banking Day
following the closing for the related Eligible Loan. In addition, if the
Borrower requests a Loan for which the Borrowing Base would be insufficient
without the Lender's having a perfected security interest in the related
underlying note, then if and to the extent that the Lender so requests, the
Borrower shall execute and deliver to the Lender the underlying note and all
other documents relating to that Eligible Loan, and properly executed
assignments of each such document, in recordable form acceptable to the Lender
in its sole discretion.
The originals of all such collateral, loan, and other documents shall
be held by the Borrower unless specifically requested by the Lender. The
Lender may hold any such specifically-requested documents until the Lender
releases its security interest in such Collateral pursuant to Section 5.2
(unless an Event of Default exists, in which case the Lender shall have its
right to pursue the rights and remedies).
Neither the Lender's execution of this Agreement nor its taking of any
action contemplated or permitted hereunder shall constitute or be deemed to be
an assumption of any of the Borrower's liabilities or obligations, and the
Lender shall not thereby be deemed to have consented to any reporting
requirements of, or other regulations by, the SBA.
5.2 RELEASE OF SECURITY INTEREST IN COLLATERAL. Upon receipt of
payment in full of any Loan, the Lender shall release its security interest in
the related loan, and shall return any related note that it holds.
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6. GENERAL REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender to enter into this Agreement and to make
Advances hereunder, the Borrower represents and warrants the following:
6.1 ORGANIZATION, STANDING, ETC. The Borrower is a corporation
duly organized, validly existing, and in good standing under the laws of South
Carolina, and has all requisite power and authority (corporate and otherwise)
to own and operate its properties and to carry on its business as now conducted
and proposed to be conducted; and the Borrower has all requisite power and
authority (corporate and otherwise) to execute, deliver, and perform its
obligations under this Agreement and all other documents executed in connection
therewith.
6.2 ENFORCEABILITY. This Agreement, and all other documents
executed in connection with the Loans, when delivered for value received, shall
constitute valid and binding obligations of the Borrower enforceable in
accordance with their terms.
6.3 QUALIFICATION. The Borrower is duly qualified, licensed, or
domesticated, and in good standing as a foreign corporation duly authorized to
do business, in all jurisdictions in which the character of its properties
owned or the nature of its activities conducted makes such qualification,
licensing, or domestication necessary, as follows: Alabama, Florida, Louisiana,
Mississippi, North Carolina, and Tennessee.
6.4 COMPLIANCE WITH ARTICLES OF INCORPORATION, BY-LAWS, AND OTHER
INSTRUMENTS, ETC. (a) The Borrower is not in violation of any material term of
its articles of incorporation or by-laws, and no event, status, or condition
has occurred or exists which upon notice or lapse of time, or both, would
constitute a violation thereof; (b) to the best of its knowledge, the Borrower
is not in violation of any material term of any mortgage, indenture, or
agreement relating to outstanding borrowings to which it is a party, or of any
judgment, decree, or order to which it is subject, or of any other instrument,
lease, contract, or agreement to which it is a party, or of any statute, or
governmental rule or regulation applicable to it, and no event, status, or
condition has occurred or exists which upon the giving of notice or lapse of
time, or both, would constitute a material violation of any such term; (c) the
Borrower's execution, delivery, and performance of this Agreement and the other
instruments and agreements provided for by this Agreement to which the Borrower
is, or is to be, a party, and the carrying out of the transactions contemplated
hereby and thereby have been duly authorized by all requisite action on the
part of the Borrower (corporate and otherwise) and will not result in any
violation of the articles of incorporation or by-laws of the Borrower, or
violate or constitute a default under any term of anything described in clause
(b) above, or result in the creation of any mortgage, lien, encumbrance or
charge upon any of the properties or assets of the Borrower pursuant to any
term of anything described in clause (b) above; and (d) there is no term of
anything described in clause (b) above which materially adversely affects or in
the future may (so far as the Borrower can now foresee) materially adversely
affect the Borrower's business, prospects, condition, affairs, operations,
properties, or assets.
6.5 SUBSIDIARIES; PARENT. The Borrower has no Subsidiary. EBC
owns all the stock of the Borrower.
6.6 FINANCIAL STATEMENTS. The Borrower has furnished the Lender
with copies of the fiscal year-end consolidated and consolidating balance sheet
of EFC and its consolidated subsidiaries
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as at December 31, 1994, and the consolidated and consolidating statements of
income and of cash flows of such corporations for such fiscal year, which
annual financial statements have been examined by Xxxxxxx Xxxxx & Co.,
independent certified public accountants; and copies of such financial
statements for each month thereafter through July 31, 1995, duly certified by
the chief financial officer of EFC. Such financial statements are complete and
have been prepared in accordance with GAAP applied on a basis consistent with
the accounting principles applied in the preceding fiscal period, and present
fairly the financial condition of EFC as at the dates indicated and the results
of the operations of EFC for such periods. Such financial statements show all
liabilities (direct, indirect, and contingent, including guarantee and surety
obligations) of the Borrower and the Guarantor as of the respective dates
thereof, except those arising in the ordinary course of business since the date
of the last of such financial statements.
6.7 CHANGES IN FINANCIAL CONDITION. Since the date of the annual
financial statements referenced in Section 6.6, there has been no change in the
assets, liabilities, or financial condition of the Borrower or the Guarantor
from that set forth or reflected in the fiscal year-end balance sheet referred
to in Section 6.6, other than changes in the ordinary course of business, none
of which has been, either in any case or in the aggregate, materially adverse.
6.8 TAX RETURNS AND PAYMENTS. All federal, state, and local tax
returns and reports of the Borrower or the Guarantor required to be filed have
been filed, and all taxes, assessments, fees, and other governmental charges
upon the Borrower or the Guarantor, or upon any of the properties, assets,
incomes, or franchises of either, which are due and payable in accordance with
such returns and reports, have been paid, other than those presently (a)
payable without penalty or interest, or (b) contested in good faith and by
appropriate and lawful proceedings prosecuted diligently. The aggregate amount
of the taxes, assessments, charges, and levies so contested is not material to
the condition (financial or otherwise) and operations of the Borrower or the
Guarantor. The charges, accruals, and reserves on the books of the Borrower
and the Guarantor in respect of federal, state, and local taxes for all fiscal
periods to date are adequate, and the Borrower knows of no unpaid assessment
for additional federal, state, or local taxes for any such fiscal period or of
any basis therefor.
6.9 TITLE TO PROPERTIES AND ASSETS; LIENS; ETC. The Borrower has
(a) good and marketable title to its properties and assets, including the
Collateral and the properties and assets reflected in the fiscal year-end
balance sheet referred to in Section 6.6, except properties and assets disposed
of since the date of such balance sheet in the ordinary course of business, and
(b) good and marketable title to its leasehold estates and such properties,
assets, and leasehold interests are subject to no covenant, restriction,
easement, right, lease, or Lien, other than Permitted Liens.
6.10 PATENTS; TRADEMARKS; FRANCHISES; ETC. The Borrower owns or
has the right to use all of the patents, trademarks, service marks, trade
names, copyrights, franchises, and licenses, and rights with respect thereto,
necessary for the conduct of its business as now conducted, without any known
conflict with the rights of others, and, in each case, subject to no Lien,
lease, license, or option, except as specified on Schedule 2. Each such asset
or agreement is in full force and effect, and the holder thereof has fulfilled
and performed all of its obligations with respect thereto. No event has
occurred or exists which permits, or after notice or lapse of time or both
would permit, revocation or termination, or which materially adversely affects
or in the future may materially adversely affect, the rights of such holder
thereof with respect thereto. No other license or franchise is necessary to
the operations of the business of the Borrower as now conducted or proposed to
be conducted. The Borrower
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does not do business (and has not done business since the date that it was
formed) under any trade names or tradestyles other than those listed on
Schedule 2.
6.11 LITIGATION, ETC. Except as specified on Schedule 3, there are
no actions, proceedings, or investigations, however described or denominated,
pending or (to the knowledge of the Borrower) threatened (or any basis therefor
known to the Borrower) which, either in any case or in the aggregate, might
result in any materially adverse change in the Borrower's or the Guarantor's
business, prospects, condition, affairs, operations, properties, or assets, or
in its right or ability to carry on its operations as now conducted or proposed
to be conducted, or might result in any material liability on the part of the
Borrower or the Guarantor, and none which questions the validity of this
Agreement or any of the other instruments or agreements provided for by this
Agreement or of any action taken or to be taken in connection with the
transactions contemplated hereby or thereby.
6.12 ADVERSE DEVELOPMENTS. Since the date of the latest financial
statements referred to in Section 6.6, neither the financial condition,
business operations, affairs, or prospects of the Borrower or the Guarantor,
nor the properties or assets of either, have been materially adversely affected
in any way as the result of any legislative or regulatory change, or any
revocation, amendment, or termination, or any pending or threatened such
action, or any franchise or license or right to do business, or any fire,
explosion, flood, drought, windstorm, earthquake, accident, casualty, labor
trouble, riot, condemnation, requisition, embargo or Act of God or the public
enemy or of armed forces, or otherwise, whether or not insured against.
6.13 DISCLOSURE. To the best of the Borrower's knowledge, neither
this Agreement nor the financial statements referred to in Section 6.6 nor any
other document, certificate or statement furnished to Lender by or on behalf of
the Borrower or the Guarantor in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein or
herein not misleading.
6.14 MARGIN SECURITIES. The Borrower is not engaged principally or
as one of its important activities in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System). No part
of the proceeds of the Loans has been or will be used, directly or indirectly,
to purchase or carry any margin securities within the meaning of Regulation U.
6.15 INVESTMENT COMPANY. The Borrower is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
6.16 ERISA. The Borrower, the Guarantor, and each Plan is in
compliance with those portions of ERISA and the Code pertaining to each Plan.
No Plan that is subject to the minimum funding standards of ERISA or the Code
has incurred any accumulated funding deficiency within the meaning of ERISA or
the Code. Neither the Borrower nor the Guarantor has incurred, and no facts
lead the Borrower to believe it or the Guarantor will incur, any liability to
the Pension Benefit Guaranty Corporation in connection with any Plan. The
assets of each Plan that is subject to Title IV of ERISA are sufficient to
provide the benefits under such Plan which the Pension Benefit Guaranty
Corporation would guarantee the payment thereof if such Plan terminated, and
are also sufficient to provide all other benefits due under the Plan. No
Reportable Event has occurred and is continuing with respect to any Plan. No
Plan nor any trust created under a Plan, nor any trustee or administrator
thereof, has engaged in a "prohibited transaction" (as defined in Section 406
of ERISA or Section 4975 of the Code) which
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would subject any Plan, any trust created thereunder, or any trustee or
administrator thereof, or any party dealing with any Plan or any such trust, to
the tax or penalty on "prohibited transactions" imposed by Section 502 of ERISA
or Section 4975 of the Code.
Neither the Borrower nor the Guarantor is required to contribute to or
is contributing to a "multiemployer pension plan" (as defined in the
Multiemployer Pension Plan Amendments Act of 1980), and neither the Borrower
nor the Guarantor has any "withdrawal liability" (as defined in such Act) to
any multiemployer pension plan.
6.17 LOCATIONS. The Borrower's principal place of business and
chief executive office is located at its address specified in Section 11.3.
6.18 SOLVENCY. The Borrower is Solvent.
6.19 NAME CHANGE; MERGER. During the past five years, the Borrower
has not changed its corporate name or been party to a merger or consolidation,
except as specified in Schedule 2.
7. AFFIRMATIVE COVENANTS.
The Borrower covenants, for so long as any Loan is outstanding or any
of the other Obligations remains unpaid or unperformed, as follows:
7.1 INSURANCE. The Borrower shall insure its property against
all risks to which it is exposed, including loss, damage, fire, theft, and all
other such risks, and in such amounts, as would be prudent for similar
businesses similarly situated, including loss, damage, fire, theft, and all
other such risks, and in such amounts, with such companies, under such
policies, and in such form as shall be satisfactory to the Lender. In
addition, the Borrower will maintain comprehensive public liability and
worker's compensation insurance and such other insurance against loss or damage
as are customarily carried by corporations similarly situated, with reputable
insurers, in such amounts, with such deductibles, and by such methods as shall
be adequate and in any event in amounts of not less than the amounts generally
maintained by other companies engaged in similar businesses.
7.2 TAXES AND LIABILITIES. The Borrower shall pay and discharge,
when due, all taxes, assessments, and governmental charges or levies imposed
upon it or its income or profits, or against its properties, and all lawful
claims which, if unpaid, might become a lien or charge upon any of its
properties; provided, that the Borrower shall not be required to pay any such
tax, assessment, charge, levy, or claim so long as it is being contested in
good faith and by appropriate and lawful proceedings diligently pursued and
with respect to which adequate reserves have been set aside on its books.
7.3 ACCOUNTING; FINANCIAL STATEMENTS; ETC. The Borrower will
deliver to Lender:
(a) within 30 days after the end of each of the first 11
months in each fiscal year of the Borrower a consolidating balance sheet of EFC
and its consolidated subsidiaries (including the Borrower), as at the end of
such period and statements of income and of cash flows of such corporations for
such period and for the year-to-date period then ended, setting forth in each
case in comparative form the figures for the corresponding period of the
previous fiscal year, in form and detail as reasonably required by the Lender,
and certified as complete and correct by the chief financial officer of EFC or
of
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the Borrower, together with a certificate by such officer stating that, as of
the date of such certification, no Default exists (or, if any Default exists,
specifying the nature thereof and what action the Borrower has taken, is taking
or proposes to take with respect thereto);
(b) within 90 days after the end of each fiscal year, a
consolidated balance sheet of Emergent Group, Inc. and a consolidating balance
sheet of EFC and its consolidated subsidiaries (including the Borrower) as at
the end of such fiscal year, and statements of profit and loss, shareholders'
equity, and changes in cash flows of such corporations for such year, setting
forth in each case in comparative form the figures for the previous fiscal year
in form and detail as reasonably required by the Lender, and accompanied by an
unqualified report and opinion on such financial statements (including on the
supplemental schedules) from Xxxxxx Xxxxx & Company (or other certified public
accountants satisfactory to the Lender), which report and opinion shall be
prepared in accordance with GAAP, together with a certificate by the chief
financial officer of EFC or of the Borrower of the character specified in
Section 7.3(a), and a certificate by such accountants stating whether or not
their examination has disclosed the occurrence or existence of any Default,
and, if their examination has disclosed a Default, specifying the nature and
period of existence thereof, and demonstrating as at the end of such accounting
period in reasonable detail compliance during such accounting period with
Sections 6.18, 7.6, 7.13, 7.14, 7.15, 8.10, 8.11, 8.12, and 8.14;
(c) copies of all other statements or reports prepared by
or supplied to the Borrower by its accountants or auditors reflecting the
financial position of the Borrower;
(d) within 30 days after the end of each fiscal year,
Projections for the next three years, year-by-year;
(e) within 90 days after the end of each fiscal year,
financial statements, of the type described in Section 7.3(b), for the
Guarantor; and
(f) with reasonable promptness, such other data and
information as the Lender from time to time reasonably requests.
7.4 INSPECTION. The Borrower will permit authorized
representatives designated by the Lender to visit and inspect any of the
properties of the Borrower, including its books and records (and to make
extracts therefrom), and to discuss its affairs, finances, and accounts with
its officers, directors, employees, and accountants, all at such reasonable
times and as often as the Lender reasonably requests. The Borrower will at all
times keep accurate and complete records with respect to the Collateral.
7.5 MAINTENANCE OF CORPORATE EXISTENCE; COMPLIANCE WITH LAWS. The
Borrower shall at all times preserve and maintain in full force and effect its
corporate existence, powers, rights, licenses, permits, and franchises in the
jurisdiction of its incorporation, and shall operate in full compliance with
all applicable laws, statutes, regulations, certificates of authority, and
orders in respect of the conduct of its business, and shall qualify and remain
qualified as a foreign corporation in each jurisdiction in which such
qualification is necessary or appropriate in view of its business and
operations.
7.6 USE OF PROCEEDS. The proceeds of the Loans will be used
solely for repaying existing debt, and for general corporate purposes. No part
of the proceeds will be used to cause a violation of Section 6.14.
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7.7 NOTICE OF DEFAULT. The Borrower shall promptly notify the
Lender in writing upon the occurrence or existence of any known Default, and
shall provide to the Lender with such written notice a detailed statement by a
responsible officer of the Borrower of all relevant facts and the action being
taken or proposed to be taken by the Borrower with respect thereto.
7.8 MAINTENANCE OF PROPERTIES. The Borrower shall maintain or
cause to be maintained in good repair, working order, and condition all
properties used or useful in its business, and from time to time will make or
cause to be made all appropriate repairs, renewals, and replacement thereof.
The Borrower will not do or permit any act or thing which might impair the
value or commit or permit any waste of its properties or any part thereof or
permit any unlawful occupation, business, or trade to be conducted on or from
any of its properties.
7.9 NOTICE OF ERISA DEVELOPMENTS. As soon as possible and in any
event within 30 days after the Borrower knows or has reason to know of any
Reportable Event or "prohibited transaction" (as defined in Section 6.16) with
respect to any Plan or that the Pension Benefit Guaranty Corporation or the
Borrower has instituted or will institute proceedings under ERISA to terminate
a Plan subject to Title IV of ERISA, or a partial termination of a Plan has or
is alleged to have occurred, or any litigation regarding a Plan or naming the
trustee of a Plan or the Borrower or the Guarantor with respect to a Plan is
threatened or instituted, the Borrower shall provide to the Lender the written
statement of the chief financial officer of the Borrower setting forth details
of such Reportable Event, prohibited transaction, termination proceeding,
partial termination, or litigation and the action being or proposed to be taken
with respect thereto, together with copies of the notice of such Reportable
Event or any other notices, applications, or forms submitted to the Pension
Benefit Guaranty Corporation, Internal Revenue Service, or United States
Department of Labor, and copies of any notices or correspondence received from
the Pension Benefit Guaranty Corporation, Internal Revenue Service, or United
States Department of Labor, and copies of any pleadings, notices, or other
documents relating to such litigation.
7.10 NOTICE OF LITIGATION OR ADVERSE CHANGE. The Borrower shall
promptly give to the Lender written notice (a) of all threatened or actual
actions, suits, investigations, or proceedings by or before any court,
arbitrator, or governmental department, commission, board, bureau, agency or
other instrumentality (state, federal, or foreign), affecting the Borrower or
the Guarantor or the rights or other properties of the Borrower or the
Guarantor, except any litigation or proceedings which is not likely to affect
the financial condition of the Borrower or the Guarantor or to impair the right
or ability of the Borrower or the Guarantor to discharge the Obligations; (b) of
any materially adverse change in the condition (financial or otherwise) of the
Borrower or the Guarantor; and (c) of any seizure or levy upon any part of any
of the Borrower's or the Guarantor's properties under any process or by a
receiver.
7.11 PAYMENT OF LOANS. The Borrower shall punctually pay the
principal and interest on the Loans, and all other sums falling due hereunder
or under any other documents executed in connection with the Loans, in
accordance with the terms hereof and thereof.
7.12 NOTIFICATION OF CHANGE OF NAME OR BUSINESS LOCATION. The
Borrower shall notify the Lender immediately of each change in the Borrower's
corporate name and trade names, in the location of the Borrower's principal
place of business, in each location where any of the Collateral is kept, and
the office where the Borrower's books and records are kept.
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7.13 TANGIBLE NET WORTH. EBC shall maintain at all times a
Tangible Net Worth of not less than $3,000,000 during 1995, $3,750,000 during
1996, $4,500,000 during 1997, and $5,250,000 during 1998, and continuing to
increase by $750,000 each fiscal year thereafter.
7.14 RATIO OF TOTAL LIABILITIES TO TANGIBLE NET WORTH. EBC shall
maintain at all times a ratio of Total Liabilities to Tangible Net Worth of not
more than 6 to 1.
7.15 INTEREST COVERAGE RATIO. EBC shall maintain during each
consecutive four-quarter period (or such lesser number of quarters for which
this Agreement has been in effect) a ratio of EBIT to Interest on NationsBank
Debt of at least 1.5 to 1.
7.16 EBC SUBSIDIARY. The Borrower shall be a wholly-owned
Subsidiary of EBC.
8. NEGATIVE COVENANTS.
The Borrower covenants, for so long as any of the Loans is outstanding
or any of the other Obligations remains unpaid or unperformed, as follows:
8.1 DEBT. The Borrower will not obtain or attempt to obtain from
any party (other than for the purpose of repaying the Obligations in full) any
loans, advances, or other financial accommodations or arrangements other than
(a) the Obligations, (b) debt underlying any purchase money security interest
permitted by Section 8.2 not to exceed, in aggregated principal amount,
$100,000 minus any such debt owed by EBC at any one time outstanding, (c)
unsecured borrowings not to exceed in the aggregate $500,000 minus any such
debt owed by EBC at any one time outstanding, (d) unsecured trade credit,
incurred in the ordinary course of business, having commercially customary
terms, and (e) borrowings from EBC or Carolina Investors, Inc. that are fully
subordinated to the Obligations.
8.2 LIENS. The Borrower shall not create, incur, assume, or
suffer to exist any Lien of any kind upon any of its property or assets
(including the Collateral), whether now owned or hereafter acquired, except (a)
Liens in favor of the Lender; (b) Liens existing on the date hereof and
specified on Schedule 1; (c) Liens on property securing all or part of the
purchase price of such property if (1) such Lien is created contemporaneously
with the acquisition of such property, (2) such Lien attaches only to the
specific item(s) of property so acquired, (3) such Lien secures only the debt
incurred to acquire such property, and (4) the debt secured by such Lien is
permitted by Section 8.1; and (d) Liens for taxes, or for other claims, that are
not then due.
8.3 GUARANTEES. The Borrower shall not guarantee, endorse, become
surety with respect to, or otherwise become directly or contingently liable for
or in connection with the obligations of any other Person, except by
endorsement of negotiable instruments for deposit or collection and similar
transactions in the ordinary course of business.
8.4 PLAN LIABILITIES. The Borrower shall not permit the aggregate
present value of accrued benefits of any Plan subject to Title IV of ERISA,
computed in accordance with actuarial principles and assumptions applied on a
uniform and consistent basis by an enrolled actuary of recognized standing
acceptable to the Lender, to exceed the aggregate value of assets of the Plan,
computed on a fair market value basis, or permit the aggregate present value of
vested benefits of any Plan subject to Title IV of ERISA, computed in
accordance with actuarial principles and assumptions applied on a uniform
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and consistent basis by an enrolled actuary of recognized standing acceptable
to the Lender, to exceed the aggregate value of assets of the Plan, computed on
a fair market value basis.
8.5 FISCAL YEAR. The Borrower will not change its fiscal year
from a year ending on December 31 without prior written notice to the Lender.
8.6 OTHER TRANSACTIONS. The Borrower will not engage in any
transaction with any of its officers, directors, employees, or Affiliates,
except for an "arms-length" transaction on terms no more favorable to the other
party than would be granted to an unaffiliated Person, which transaction shall
be approved by its disinterested directors and shall be disclosed in a timely
manner to the Lender before being consummated.
8.7 MERGER; SUBSIDIARY; ETC. The Borrower will not merge or
consolidate with any other corporation, form or acquire any Subsidiary, or
issue any share of capital stock.
8.8 SALE OF ASSETS. The Borrower will not sell, lease or
otherwise transfer all or any substantial part of its assets material to its
operations, except in the ordinary course of its business; provided, that it
may in any calendar year dispose of items of equipment having an aggregate
market value of not more than $50,000, minus any such equipment disposed of by
EBC, if the Borrower uses the proceeds of such disposition to acquire property
of a similar nature.
8.9 CHANGES IN BUSINESS. The Borrower will not engage in any
business other than the business presently conducted by it on the date of this
Agreement and business of substantially the same type or directly related
thereto.
8.10 DIVIDENDS AND REDEMPTIONS. The Borrower will not declare or
pay any dividend (other than a dividend payable solely in common stock of the
Borrower) on any share of any class of its capital stock, or apply any of its
property or assets to the purchase, redemption, or other retirement of, or set
apart any sum for the payment of any dividends on, or for the purchase,
redemption, or other retirement of, or make any other distribution by reduction
of capital or otherwise in respect of, any shares of any class of capital stock
of the Borrower.
8.11 LOANS. The Borrower will not make any loans or advances to or
extend any credit to any Person except (a) the extension of trade credit in the
ordinary course of business, and (b) advances to employees not to exceed to any
one employee an outstanding total of $5,000 minus any advances to such employee
by EBC.
8.12 PLEDGE OF CREDIT. The Borrower will not pledge the Lender's
credit for any purpose whatsoever.
8.13 INVESTMENTS. The Borrower shall not purchase, acquire, or
otherwise invest in any Person except: (a) Eligible Loans, (b) direct
obligations of the United States of America maturing within one year from the
acquisition thereof, (c) certificates of deposit issued by, or investment
accounts in, banks or financial institutions having a net worth of not less
than $50,000,000, (d) commercial paper rated A-1 by Standard & Poor's
Corporation or P-1 by Xxxxx'x Investors Service, Inc., (e) overnight repurchase
agreements issued by the Lender or any corporate Affiliate of the Lender's, or
(f) assets received from foreclosing on a loan.
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8.14 CAPITAL EXPENDITURES. The Borrower shall not make or incur
Capital Expenditures in excess of $100,000 during any fiscal year of the
Borrower, unless the Lender gives its prior written consent (which shall not be
unreasonably withheld).
9. POWER OF ATTORNEY.
The Borrower hereby appoints and constitutes the Lender as its
attorney-in-fact to do any of the following if an Event of Default exists: to
receive, open, and dispose of all mail addressed to the Borrower pertaining to
Collateral (or appearing to the Lender possibly to pertain to Collateral); to
notify the postal authorities to change the address and delivery of mail
addressed to the Borrower to such address as the Lender shall designate; to
endorse the Borrower's name upon any notes, acceptances, checks, drafts, money
orders, and other forms of payment that come into the Lender's possession, and
to deposit or otherwise collect the same; to sign the Borrower's name on any
document relating to any Collateral; to execute in the name of the Borrower any
affidavits and notices with regard to any and all lien rights; and to do all
other acts and things necessary to carry out this Agreement. The Borrower
hereby waives notice of presentment, protest, and dishonor of any instrument so
endorsed by the Lender.
All the Lender's acts as attorney-in-fact are hereby authorized,
ratified, and approved by the Borrower, and the Borrower agrees that, as
attorney-in-fact, the Lender shall not be liable for any acts of omission or
commission, nor for any error of judgment or mistake of fact or law, except to
the extent of loss or damage caused directly and primarily by the Lender's
gross negligence or willful misconduct. This power, being coupled with an
interest, is irrevocable so long as this Agreement remains in effect or any of
the Obligations remains outstanding.
10. REMEDIES.
Upon the occurrence of any Event of Default, and at any time
thereafter, the entire outstanding principal amount of the Loans, together with
all accrued but unpaid interest thereon, and all other of the Obligations
shall, at the option of the Lender, immediately become absolute and due and
payable, without presentation, demand of payment, protest, notice for demand of
payment, protest and notice of nonpayment, or any other notice of any kind with
respect thereto, all of which are hereby expressly waived by the Borrower to
the full extent permitted by law. The Lender may exercise from time to time
any rights and remedies available to it under the Uniform Commercial Code and
other applicable law in Georgia or any other applicable jurisdiction. The
Borrower agrees, after the occurrence of any Event of Default, immediately to
assemble at the Borrower's expense all the Collateral at a convenient place
acceptable to the Lender, and to surrender such property to the Lender. The
Borrower agrees to pay all costs that the Lender pays or incurs to collect the
Obligations or enforce its rights hereunder. The Borrower agrees that the
Lender may charge the Borrower's account for, and that the Borrower will pay on
demand, all costs and expenses, including 15% of the total amount involved as
attorneys' fees (not to exceed the amount of attorneys' fees actually
incurred), incurred: (i) to liquidate any Collateral, (ii) to obtain or enforce
payment of any Obligations, or (iii) to prosecute or defend any action or
proceeding either against the Lender or against the Borrower concerning any
matter growing out of or connected with this Agreement or any Receivable or any
Obligation. The Borrower agrees that the Lender may apply any proceeds from
disposing of the Collateral first to any security interest(s), lien(s), or
encumbrance(s) prior to the Lender's security interest.
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The Lender shall be entitled to hold or set off any sums and all other
property of the Borrower's, at any time to the credit of the Borrower or in the
possession of the Lender, whether by pledge or otherwise, or upon or in which
the Lender may have a lien or security interest.
Recourse to security shall not at any time be required, and the
Borrower shall at all times remain liable for the repayment to the Lender of
all Obligations in accordance with their terms, regardless of the existence or
non-existence of any Event of Default.
11. MISCELLANEOUS.
11.1 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the
part of the Lender in exercising any right, power, or remedy hereunder, or
under any other document or agreement given by the Borrower or received by the
Lender in connection herewith, shall operate as a waiver thereof, and no waiver
shall be valid unless in writing signed by the Lender (and then only to the
extent therein stated); nor shall any single or partial exercise of any such
right, power, or remedy preclude any other or further exercise thereof or the
exercise of any other right, power, or remedy hereunder or thereunder. The
remedies herein and therein provided are cumulative and not exclusive of any
remedies provided by law or in equity.
11.2 AMENDMENTS, ETC. No amendment, modification, termination, or
waiver of any provision of this Agreement or of any other document or agreement
given by the Lender or received by the Borrower in connection herewith, nor
consent to any departure by the Borrower therefrom, shall in any event be
effective unless it is in writing and signed by the Lender (and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given). No notice to or demand on the Borrower in
any case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances.
11.3 ADDRESSES FOR NOTICES, ETC. All notices, requests, demands,
and other communications provided for hereunder, other than routine
communications in the ordinary course of business, shall be in writing
(including telecopies) and mailed, telecopied, or delivered as follows:
if to the Borrower:
Emergent Commercial Mortgage, Inc.
00 X. Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Fax: (000) 000-0000
with a copy to:
Xxxx X. Xxxx, Xx.
Wyche, Burgess, Xxxxxxx & Xxxxxx
00 Xxxx Xxxxxxxxxx Xxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Fax: (000) 000-0000
if to the Lender:
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NationsBank of Georgia, N.A.
Business Credit Division
P. O. Xxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx
Fax: (000) 000-0000
or, as to each party, at such other address as it designates in a written
notice to the other party complying as to the delivery with the terms of this
Section. Except as otherwise expressly provided in this Agreement, all such
notices, requests, demands, and other communications shall, when mailed or
telecopied, be effective two Banking Days after being deposited in the mails
(postage paid) or when sent over a telecopier owned or operated by a party
hereto with an answerback response set forth on the sender's copy of the
document, addressed as aforesaid, and otherwise shall be effective upon
receipt.
11.4 COSTS, EXPENSES, AND TAXES. The Borrower shall pay to the
Lender, on demand, all costs and expenses paid or incurred by the Lender in
connection with the preparation, reproduction, execution, delivery,
administration, or enforcement of this Agreement and other instruments and
documents from time to time delivered in connection with this Agreement,
including the fees and expenses of counsel for the Lender, and in connection
with the Lender's initial evaluation of the line of credit contemplated by this
Agreement (including travel and field exam expenses). In addition, the
Borrower shall pay any and all stamp and other taxes and recording and filing
fees payable or determined to be payable in connection with the execution and
delivery of this Agreement and all other instruments and documents from time to
time delivered in connection with this Agreement, and shall save and hold
harmless the Lender from and against any and all liabilities with respect to or
resulting from any delay in paying or failure to pay such taxes or fees.
11.5 COMMERCIAL TRANSACTION. THE BORROWER HEREBY ACKNOWLEDGES THAT
THE OBLIGATIONS AROSE OUT OF A "COMMERCIAL TRANSACTION" (AS DEFINED IN O.C.G.A.
Section 44-14-260(1), CONCERNING FORECLOSURE OF INTERESTS IN PERSONAL
PROPERTY), AND AGREES THAT AFTER ANY EVENT OF DEFAULT (AS "Event of Default" IS
DEFINED IN SECTION 1.1), THE LENDER SHALL HAVE THE RIGHT TO AN IMMEDIATE WRIT
OF POSSESSION WITHOUT NOTICE OR HEARING. THE BORROWER KNOWINGLY AND
INTELLIGENTLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO ANY NOTICE OR POSTING OF
A BOND BY THE LENDER PRIOR TO SEIZURE BY THE LENDER (OR THE LENDER'S
TRANSFEREES, ASSIGNS, OR SUCCESSORS IN INTEREST) OF THE COLLATERAL OR ANY
PORTION THEREOF. THIS IS INTENDED BY THE BORROWER AS A "WAIVER" AS DEFINED IN
O.C.G.A. Section 44-14-260(3) (RELATING TO FORECLOSURE OF INTERESTS IN
PERSONAL PROPERTY).
11.6 SUCCESSORS AND ASSIGNS. All of the terms of this Agreement,
and each of the documents and agreements executed and delivered pursuant to
this Agreement, shall bind, benefit, and be enforceable by the successors and
assignees of the parties hereto, whether so expressed or not. The Borrower
shall not assign or transfer this Agreement, or any of its rights hereunder,
without the prior written consent of the Lender.
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations, warranties, covenants, and agreements contained herein or made
in writing by the Borrower in connection
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herewith shall survive the execution and delivery of this Agreement and any and
all other documents and instruments relating to or arising out of any of the
foregoing.
11.8 TIME IS OF THE ESSENCE. Time is of the essence of this
Agreement.
11.9 HEADINGS. The headings in this Agreement are for convenience
of reference only, and are not a substantive part of the agreement.
11.10 ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding between the parties hereto and supersede all prior
agreements and understandings relating to the subject matter hereof and
thereof.
11.11 SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law. In case any one or more of the provisions in this
Agreement shall for any reason be held to be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
11.12 COUNTERPARTS. This Agreement may be executed in separate
counterparts.
11.13 GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT AND
THE OTHER DOCUMENTS AND AGREEMENTS EXECUTED IN CONNECTION HEREWITH (UNLESS
SPECIFICALLY STIPULATED TO THE CONTRARY IN SUCH DOCUMENT OR AGREEMENT), AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
GEORGIA (DISREGARDING ANY CONFLICTS-OF-LAWS RULE THAT WOULD APPLY THE LAW OF
ANY OTHER JURISDICTION). THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT SITTING
IN ATLANTA, GEORGIA, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS OR AGREEMENTS DESCRIBED OR
CONTEMPLATED HEREIN, AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
UNITED STATES FEDERAL OR STATE COURT. SERVICE OF COPIES OF THE SUMMONS AND
COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED ON THE BORROWER IN ANY SUCH
ACTION OR PROCEEDING MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH
PROCESS TO THE BORROWER IN ACCORDANCE WITH SECTION 11.3 HEREOF.
11.14 WAIVER OF TRIAL BY JURY. THE BORROWER AND THE LENDER EACH
WAIVE ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO
TRANSACTIONS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER
DOCUMENTS DESCRIBED OR CONTEMPLATED HEREIN.
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IN WITNESS WHEREOF, the Borrower and the Lender have executed this
Loan and Security Agreement.
EMERGENT COMMERCIAL MORTGAGE, INC.
[Seal]
By: /s/
------------------------------
Title:
Attest:
By: /s/
--------------------------
Secretary
Accepted this 10th day of October, 1995, in Atlanta, Georgia.
NATIONSBANK OF GEORGIA, N.A.
By: /s/
------------------------------
Title:
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EXHIBIT A
Borrower's Secretary's Certificate
for the Benefit of
NationsBank of Georgia, N.A.
I, Xxxxx X. Xxxx, Secretary of Emergent Commercial Mortgage, Inc. (the
"Borrower"), a South Carolina corporation, hereby certify that:
1. Attached hereto as Exhibit 1 is a certified copy of the
articles of incorporation of the Borrower as originally filed, together with
all amendments thereto.
2. Attached hereto as Exhibit 2 is a true and correct copy of the
by-laws of the Borrower. Those by-laws have not been amended, modified, or
revoked, and are in full force and effect as of the date hereof.
3. Attached hereto as Exhibit 3 is a good standing certificate
for the Borrower issued by the South Carolina Secretary of State on
______________, 1995.
4. The Borrower has since the date of the certificate referred to
in Paragraph 3 above through the date hereof remained in good standing under the
laws of the state of South Carolina.
5. No suit or proceeding for the dissolution or liquidation of
the Borrower has been instituted or is now threatened.
6. Attached hereto as Exhibit 4 is a true and complete copy of
resolutions of the Board of Directors of the Borrower, adopted at a meeting
duly called and held on ______________, 1995, at which meeting a quorum for the
transaction of business was present and acting throughout. The corporate
action in adopting those resolutions was duly taken at that meeting in
accordance with the provisions of law and of the Borrower's articles of
incorporation and by-laws, and those resolutions are now in full force and
effect and have not been modified in any respect.
7. The resolutions referred to in Paragraph 6 authorized the
Borrower and its officers referred to therein to execute and deliver, and to
do all things necessary or appropriate for the payment and performance of all
the Borrower's obligations under, the Loan and Security Agreement (the
"Agreement") dated as of October ___, 1995, between NationsBank of Georgia,
N.A. (the "Lender") and the Borrower, and all certificates, agreements and
other documents to be executed and delivered to the Lender by the Borrower
pursuant to the Agreement, and pursuant to the specific resolutions referred
to in Paragraph 6.
8. The following persons have been duly elected, have duly
qualified, as of the date of the execution of the Agreement were, and on the
date hereof are, officers of the Borrower, holding the offices set opposite
their names below, and the signatures set opposite their names below are their
genuine signatures:
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Name Title Signature
---- ----- ---------
Xxxxx X. Xxxxxxx Chief Executive Officer
-----------------------------------------------------
Xxxxx X. Xxxx Vice President, Secretary
and Treasurer
-----------------------------------------------------
Xxxx X. Xxxxxxx President
-----------------------------------------------------
IN WITNESS WHEREOF, I have signed this Certificate and affixed to it
the Borrower's corporate seal on October ___, 1995.
-----------------------------------
Secretary
[Seal]
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EXHIBIT 4
----
Board of Directors' Resolutions
----
RESOLVED, that the officers of this Corporation be and they hereby are
jointly and severally authorized and directed to borrow from NationsBank of
Georgia, N.A. ("NationsBank"), from time to time, on behalf of this
Corporation, such sums as they or any of them may deem necessary or desirable
in connection with the operation of the business of this Corporation, upon such
terms and conditions as shall be obtained through negotiation with NationsBank,
and to execute one or more or financing agreements and promissory notes in
respect thereto in the name of this Corporation for the payment of such amounts
so borrowed, and further to extend, renew, renegotiate, refinance, or otherwise
modify such terms and conditions by agreement with NationsBank.
FURTHER RESOLVED, that the officers of this Corporation be and they
hereby are jointly and severally authorized and directed to request, from time
to time, on behalf of this Corporation, as they deem necessary or desirable for
the operation of the business of this Corporation, that NationsBank make
advances and overadvances to this Corporation, such advances and overadvances
to become subject to the terms and conditions of any agreement with regard to
the loan financing of accounts receivable existing at the time of such request
or any modification, extension, renewal, or renegotiation thereof.
FURTHER RESOLVED, that the officers of this Corporation be and they
hereby are jointly and severally authorized and directed, from time to time, on
behalf of this Corporation, to secure any such loans, advances, overadvances,
or other indebtedness to NationsBank however arising, by pledging, or by
granting full lien rights and full security title and security interest in and
to, any and all of the assets of this Corporation, both real and personal, and
such officers are jointly and severally authorized to execute any and all
instruments necessary or desired by NationsBank in any manner as may now or
hereafter be recognized by the laws of the United States or any state, or of
any foreign state.
FURTHER RESOLVED, that any such officers of this Corporation be and
are hereby jointly and severally authorized and directed, on behalf of this
Corporation, to do such other things and to execute such other documents as may
be necessary or desirable to effect the foregoing transactions, including the
execution of financing statements and such other notices or instruments as may
be necessary or requested by NationsBank.
FURTHER RESOLVED, that all acts and deeds of any officer of this
Corporation heretofore performed on behalf of this Corporation in entering
into, executing, performing, carrying out, or otherwise pertaining to the
arrangements and intentions authorized by these resolutions be and they hereby
are ratified, approved, confirmed, and declared binding upon this Corporation.
FURTHER RESOLVED, that the Secretary of this Corporation shall certify
to NationsBank the names of the presently duly elected and qualified officers
of this Corporation and shall from time to time hereafter as each change in
identity of those officers is made, immediately certify such change to
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NationsBank, and NationsBank shall be fully protected in relying on such
certification(s) (or the absence thereof), and shall be indemnified and saved
harmless by this Corporation from any claim, demand, expense, loss, or damage
resulting from or growing out of honoring the signature of any officer so
certified or for refusing to honor any signature not so certified.
FURTHER RESOLVED, that the foregoing resolutions shall remain in full
force and effect until the close of business on the banking day after written
notice of their amendment or rescission shall have been received by NationsBank
and that receipt of such notice shall not affect any action taken by
NationsBank prior thereto.
FURTHER RESOLVED, that the Secretary of this Corporation be, and
hereby is, authorized and directed to certify to NationsBank the foregoing
resolutions and that the provisions thereof are in accordance with the
provisions of law and of the articles of incorporation and by-laws of this
Corporation.
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EXHIBIT B
Borrower's CEO's Certificate
for the Benefit of
NationsBank of Georgia, N.A.
I, Xxxxx X. Xxxxxxx, Chief Executive Officer of Emergent Commercial
Mortgage, Inc. (the "Borrower"), a South Carolina corporation, do hereby
certify, pursuant to Section 4.1 of the Loan and Security Agreement (the
"Agreement") between NationsBank of Georgia, N.A. (the "Lender") and the
Borrower, dated as of October ___, 1995, that Xxxxx X. Xxxx has been duly
elected, has duly qualified, as of the date of the execution of the Agreement
was, and on the date hereof is, the Secretary of the Borrower, and that the
signature appearing below is a true specimen of his signature.
--------------------------------------
Xxxxx X. Xxxx, Secretary
October ___, 1995.
-------------------------------------------
Xxxxx X. Xxxxxxx, Chief Executive Officer
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EXHIBIT C
[To Be Retyped on Letterhead
of Counsel to the Borrower]
October ___, 1995
NationsBank of Georgia, N.A.
X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Re: Emergent Commercial Mortgage, Inc.
Ladies and Gentlemen:
We have acted as counsel to Emergent Commercial Mortgage, Inc. (the
"Borrower"), a South Carolina corporation, in connection with its execution and
delivery of the October ___, 1995 Loan and Security Agreement (the "Loan
Agreement") between it and you, and certain related documents. Unless
otherwise specified in this opinion letter, the terms used herein have the same
meanings as in the Loan Agreement.
We also have acted as counsel to Emergent Business Credit, Inc. in
connection with its execution and delivery of the Guarantee.
In so acting, we have examined the Loan Agreement and the Guarantee,
and originals or copies of all other documents that we deemed relevant and
necessary as a basis for the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
(1) The Borrower is a corporation duly organized and
validly existing in good standing under the laws of South Carolina, and has all
requisite power and authority to conduct its business, to own and operate its
properties, and to execute, deliver, and perform all of its obligations under
the Loan Agreement. The Borrower has no Subsidiary. The Borrower is duly
qualified, licensed, or domesticated and in good standing as a foreign
corporation duly authorized to do business in all jurisdictions in which the
character of its properties owned or the nature of its activities conducted
makes such qualification, licensing, or domestication necessary (as set forth
in Section 7.3 of the Loan Agreement).
(2) The Borrower's execution, delivery, and performance
of the Loan Agreement have been duly authorized by all necessary corporate
action and do not and will not (a) require any consent or approval of
shareholders of the Borrower or violate the articles of incorporation, by-laws,
or Securities of the Borrower, (b) violate any provision of any law, rule, or
regulation (including Regulation
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X of the Board of Governors of the Federal Reserve System) of the United States
or of South Carolina, or, to the best of our knowledge, any order, judgment,
injunction, decree, determination, or award of any court, arbitrator, or
governmental department, agency, or other instrumentality, (c) to the best of
our knowledge, result in a breach of or constitute a default under any
agreement or instrument to which the Borrower is a party or by which it or its
properties may be bound or affected, or (d) result in, or require, to the best
of our knowledge, the creation or imposition of any Lien upon or with respect
to any of the properties now owned or hereafter acquired by the Borrower (other
than the Liens created by the Loan Agreement). To the best of our knowledge,
the Borrower is not in violation of any provision of any of the items described
in clause (b) of this paragraph or in default under any provision of any of the
items described in clause (c) of this paragraph.
(3) No authorization, consent, approval, license, or
exemption of, or filing or registration with, any court or governmental
department, agency, or other instrumentality of the United States or of South
Carolina is or will be necessary to the Borrower's valid execution, delivery,
or performance of the Loan Agreement or for the payment to the Lender of all
sums due and payable thereunder.
(4) The Loan Agreement has been duly executed and
delivered by the Borrower, and constitute the Borrower's legal, valid, and
binding obligation, enforceable against the Borrower in accordance with its
terms.
(5) To the best of our knowledge, there are no actions,
suits, or proceedings pending or threatened against or affecting the Borrower
of the Guarantor or the properties of the Borrower or the Guarantor before any
court, arbitrator, or governmental department, commission, board, bureau,
agency, or other instrumentality (state, federal, or foreign) which, if
determined adversely to the Borrower or the Guarantor, would have a materially
adverse effect on the financial condition, properties, or operations of the
Borrower or the Guarantor, or create a Lien on any property of the Borrower or
the Guarantor.
(6) You should perfect all the security interests granted
under the Loan Agreement (in Collateral for which a security interest can be
perfected by filing UCC-1 financing statements) by filing a UCC-1 financing
statement in the attached form with the South Carolina Secretary of State.
Upon the filing of such financing statement, you will have a perfected
first-priority security interest in such Collateral, and no further recording
or filing in South Carolina or any other jurisdiction is necessary or advisable
in order to establish and perfect such first-priority security interest.
(7) The Guarantee has been duly authorized, executed, and
delivered by the Guarantor, and constitutes the Guarantor's legal, valid, and
binding obligation, enforceable against the Guarantor in accordance with its
terms.
This opinion is limited to the laws of the United States and of South
Carolina. The opinions in paragraphs nos. 4 and 7 are given as if the laws of
South Carolina governed the Loan Agreement and the Guarantee, despite their
express choice of Georgia law as the law governing their construction and
interpretation. No opinion is given as to the validity of the choice of law in
the Loan Agreement and the Guarantee.
Our opinions set forth herein as to the validity, binding effect, and
enforceability of the Loan Agreement and the Guarantee are specifically
qualified to the extent that the validity, binding effect, or enforceability of
any obligations of the Borrower and the Guarantor thereunder or the
availability or
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enforceability of any of the remedies provided therein, may be subject to or
limited by (i) applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium, and other statutory or decisional laws, heretofore or
hereafter enacted or in effect, affecting the rights of creditors generally to
the extent the same may constitutionally be applied including, without
limitation, decisional or statutory law concerning recourse by creditors to
security in the absence of notice of a hearing; (ii) the exercise of judicial
or administrative discretion in accordance with general equitable principles;
(iii) the possible unenforceability of any provision requiring or in effect
requiring that waivers or amendments of any provision of the Loan Agreement or
the Guarantee, or any related document, may be effected only in writing; (iv)
the possible unenforceability of provisions imposing increased interest rates
or late payment charges upon delinquency in payment or default, to the extent
that any such provision is deemed a "penalty"; (v) limitations imposed by rules
and statutes regarding forum, venue, pleading, service of process,
qualification to do business, and statutes of limitation; or (vi) limitations
on the availability or enforceability of the remedies of specific performance
or injunctive relief and of waivers contained in the Loan Agreement or the
Guarantee, all of which may be limited by equitable principles or applicable
laws, rules, regulations, court decisions, and constitutional requirements.
All opinions rendered herein are limited to the existing laws of the
State of South Carolina and laws of the United States of America, all as in
effect on the date hereof, and we express no opinion as to any other laws,
rules, or regulations of such jurisdictions or matters governed by such laws,
rules, or regulations; nor do we undertake, by delivery hereof or otherwise, to
advise you of any changes in such laws, rules, or regulations.
This opinion is made as of the date hereof, and we undertake no (and
hereby disclaim any) obligation to advise you of any change in any matter set
forth herein. This opinion is limited to the matters expressly set forth
herein and no opinion is implied or may be inferred beyond the matters
expressly stated herein. This opinion is solely for your benefit in connection
with the Loan Agreement and the Guarantee and may not be relied upon in any
manner by any other person.
Very truly yours,
WYCHE, BURGESS, XXXXXXX & XXXXXX, P.A.
By:
---------------------------------------------
Xxxx X. Xxxx, Xx.
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XXXXXXXX 0
Xxxxx
XXXX
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SCHEDULE 2
Trademarks, Tradenames, Name Changes, etc.
NONE
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SCHEDULE 3
Litigation
NONE
1
