Exhibit 24
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT dated as of December 16, 1996, between
Fix-Corp International, Inc., an Ohio corporation, with an address of 00000
Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxx 00000 (the "Borrower") and Xxxxxx
Xxxxxxxx Capital Corporation, a Delaware corporation, with an address of 00
Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the "Lender").
FOR VALUE RECEIVED, and in consideration of the granting by the Lender of
financial accommodations to Borrower, Borrower represents and agrees with the
Lender, as of the date hereof and as of the date of each credit and/or other
financial accommodation, as follows.
1. THE LOAN
1.1 LOAN. Subject to the terms and conditions of this Agreement, the Lender
hereby agrees to make a loan to the Borrower in the original principal amount of
$2,500,000.00 (the "Loan") to Borrower. The Loan shall be evidenced by that
certain Note, of even date herewith, (the "Note") by the Borrower in favor of
the lender in the original principal amount of $2,500,000.00, and is secured,
without limitation, by that certain Open-End Mortgage, dated of even date
herewith (the Mortgage"), by the Borrower in favor of the Lender in and to the
premises located at 0000 Xxxxx Xxxxxxx, Xxxxx, Xxxx 00000 (the "Real Property").
This Agreement, the Note, the Mortgage and any and all other documents,
amendments or renewals executed and delivered in connection with any of the
foregoing are collectively hereinafter referred to as the "Loan Documents".
2. GRANT OF SECURITY INTEREST
2.1 GRANT OF SECURITY INTEREST. In consideration of the Lender's extending
credit and other financial accommodations to the Borrower, the Borrower
hereby grants to the Lender a security interest in (including, without
limitation, a lien on and pledge of) all of the Borrowers Collateral (as
hereinafter defined). The security interest granted by this Agreement is
given to and shall be held by the Lender as security for the payment and
performance of all Obligations.
2.2 DEFINITIONS. The following definitions shall apply.
(a) "Code" shall mean the Massachusetts Uniform Commercial Code
(General Law, Chapter 106) as amended from time to time.
(b) "Collateral" shall mean all the Borrower's present and future
right, title and interest in and to any and all of the following property,
whether such property is now existing or hereafter created.
(i) All goods including without limitation all Inventory (as
hereinafter defined), farm products, Equipment (as
hereinafter defined), including without limitation
machinery, furniture, trade fixtures;
(ii) All accounts, accounts receivable, contract rights and
chattel paper, regardless of whether or not they constitute
proceeds of other Collateral;
(iii) All general intangibles, regardless of whether or not
they constitute proceeds of other Collateral, including,
without limitation, all of the Borrower's rights to tax
refunds and all the Borrowers rights (which the Lender may
exercise or not as it in its sole discretion may determine)
to acquire or obtain goods and/or services with respect to
the manufacture, processing, storage, sale, shipment,
delivery or installation of any of the Borrower's inventory
or other Collateral;
(iv) All products of and accessions to any of the Collateral;
(v) All liens, guaranties, securities, rights, remedies and
privileges pertaining to any of the Collateral, including
the right of stoppage in transit;
(vi) All obligations owing to the Borrower of every kind and
nature, and all choses in action;
(vii) All goodwill, trade secrets, computer programs,
customer lists, trade names, trademarks and patents;
(viii) All documents and instruments (whether negotiable or
nonnegotiable, and regardless of their being attached to
chattel paper);
(ix) All proceeds of Collateral of every kind and nature in
whatever form, including, without limitation, both cash and
noncash proceeds resulting or arising from the rendering of
services by the Borrower or the sale or other disposition by
the Borrower of the Inventory or other Collateral;
(x) All books and records relating to the conduct of the
Borrower's business including, without in any way limiting
the generality of the foregoing, those relating to its
accounts; and
(xi) All deposit accounts maintained by the Borrower with any
Lender, trust company, investment firm or fund, or any
similar institution or organization.
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(c) "Contract Rights" or "contract rights" means rights of the
Borrower to payment under contracts not yet earned by performance and not
evidenced by instruments or chattel paper.
(d) "Debtors" shall mean the Borrower's customers who are indebted to
the Borrower.
(e) "Equipment" shall mean and include all the Borrower's machinery,
equipment, furniture, trade fixtures and motor vehicles and intending to
include all tangible personal property, or goods, utilized in the conduct
of the Borrower's business, but excluding therefrom inventory, as that term
is defined in the Code, and all replacements or substitutions therefor and
all accessions thereto.
(f) "Inventory" means all inventory of whatever name, nature, kind or
description, all goods held for sale or lease or to be furnished under
contracts of service, finished goods, work in process, raw materials,
materials used or consumed by Borrower, parts, supplies, all wrapping,
packaging, advertising labeling, and shipping materials, devices, names and
marks, all contract rights and documents relating to any of the foregoing,
whether any of the foregoing be now existing or hereafter arising, wherever
located, now owned or hereafter acquired by Borrower.
(g) "Obligation(s)" shall mean, without limitation, all loans,
advances, indebtedness, notes, liabilities and amounts, liquidated or
unliquidated, owing by the Borrower to the Lender at any time, of each and
every kind, nature and description, whether arising under this Agreement or
otherwise, and whether secured or unsecured, direct or indirect (that is,
whether the same are due directly by the Borrower to the Lender, or are due
indirectly by the Borrower to the lender as endorser, guarantor or other
surety, or as Borrower of obligations due third persons which have been
endorsed or assigned to the Lender, or otherwise), absolute or contingent,
due or to become due, now existing or hereafter contracted. Said term shall
also include all interest and other charges chargeable to the Borrower or
due from the Borrower to the Lender from time to time and all costs and
expenses referred to in this Agreement.
(h) "Person or "party" shall include individuals, firms, corporations
and all other entities.
All words and terms used in this Agreement other than those specifically
defined herein shall have the meanings accorded to them in the Code.
2.3 ORDINARY COURSE OF BUSINESS. The Lender hereby authorizes and permits the
Borrower to hold, process, sell, use or consume in the manufacture or processing
of finished goods, or otherwise dispose of the Inventory for fair consideration,
all in the ordinary course of the Borrower's business, excluding, without
limitation, sales to creditors or in bulk or sales or other dispositions
occurring under circumstances which would or could create any lien or interest
adverse to the Lender's security interest or other right hereunder in the
proceeds resulting
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therefrom. The Lender also hereby authorizes and permits the Borrower to
receive from the Debtors all amounts due as proceeds of the Collateral at the
Borrower's own cost and expense, and also liability, if any, subject to the
direction and control of the Lender at all times, and the Lender may at any
time, without cause or notice, and whether or not a default has occurred or
demand has been made, terminate all or any part of the authority and
permission herein or elsewhere in this Agreement granted to the Borrower with
reference to the Collateral.
Until the Lender shall otherwise notify the Borrower, all proceeds of
and collections of Collateral shall be retained by the Borrower and used
solely for the ordinary and usual operation of the Borrower's business, from
and after notice by the Lender to the Borrower, all proceeds of and
collections of the Collateral shall be held in trust by the Borrower for the
Lender and shall not be commingled with the Borrowers other funds or
deposited in any Lender account of the Borrower; and the Borrower agrees to
deliver to the Lender on the dates of receipt thereof by the Borrower, duly
endorsed to the Lender or to bearer, or assigned to the Lender, as may be
appropriate, all proceeds of the Collateral in the identical form received by
the Borrower.
2.4 ALLOWANCES. The Borrower may grant such allowances or other adjustments
to Debtors (exclusive of extending the time for payment of any item which
shall not be done without first obtaining the Lender's written consent in
each instance) as the Borrower may reasonably deem to accord with sound
business practice, including, without limiting the generality of the
foregoing, accepting the return of all or any part of the Inventory (subject
to the provisions set forth in this Agreement with reference to returned
Inventory).
2.5 RECORDS. The Borrower shall hold its books and records relating to the
collateral segregated from all the Borrower's other books and records in a
manner satisfactory to the Lender; and shall deliver to the Lender from time
to time promptly at its request all invoices, original documents of title,
contracts, chattel paper, instruments and any other writings relating
thereto, and other evidence of performance of contracts, or evidence of
shipment or delivery of the merchandise or of the rendering of services; and
the Borrower will deliver to the Lender promptly at the Lender's request from
time to time additional copies of any or all such papers or writings, and
such other information with respect to any of the Collateral and such
schedules of Inventory, schedules of accounts and such other writings as the
Lender may in its sole discretion deem to be necessary or effectual to
evidence any loan hereunder or the Lender's security interest in the
Collateral.
2.6 LEGENDS. The Borrower shall promptly make, stamp or record such entries
or legends on the Borrower's books and records or on any of the Collateral as
the Lender shall request from time to time, to indicate and disclose that the
Lender has a security interest in such Collateral.
2.7 INSPECTION. The Lender, or its representative, at any time and from
time to time, shall have the right and the Borrower will permit it and them:
(a) to examine, check, make copies of or tracts from any of the
Borrower's books, records and files (including, without limitation, orders
and original correspondence);
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(b) to inspect and examine the Collateral and to check and test the
same as to quality, quantity, value and condition; and the Borrower agrees
to reimburse the Lender for its reasonable costs and expenses in so doing;
and
(c) to verify the Collateral or any portion or portions thereof or
the Borrower's compliance with the provisions of this Agreement.
3. REPRESENTATIONS AND WARRANTIES
3.1 ORGANIZATION AND QUALIFICATION. The Borrower is a duly organized and
existing corporation under the laws of the State of its incorporation, as
indicated above, in good standing under the laws of said state, and is duly
qualified to do business under the laws of each state where the nature of the
business done or property owned requires such qualification.
3.2 SUBSIDIARIES. The Borrower has no subsidiaries other than those listed
on Schedule 3.2, if any, and the Borrower has never consolidated, merged or
acquired substantially all of the assets of any other entity or person other
than those listed on Schedule 3.2, if any.
3.3 CORPORATE RECORDS. The Borrower's Corporate Charter, Articles of
Organization or Incorporation and all amendments thereto have been duly filed
and are in proper order. All outstanding capital stock issued by the Borrower
was and is properly issued and all books and records of the Borrower,
including but not limited to its minute books, bylaws and books of account,
are accurate and up to date and will be so maintained.
3.4 TITLE TO PROPERTIES; ABSENCE OF LIENS. Borrower has good and clear
record and marketable title to all of its properties and assets, and all of
its properties and assets including the Collateral are free and clear of all
mortgages, liens, pledges, charges, encumbrances, setoffs, except (a) the
mortgages and security interests as set forth on Schedule 3.4a if any, and
(b) the leases of personal property as set forth on Schedule 3.4b, if any.
3.5 PLACES OF BUSINESS. Borrower's chief executive office is correctly
stated in the preamble to this Agreement, and Borrower shall, during the term
of this Agreement, keep the Lender currently and accurately informed in
writing of each of its other places of business, and shall not change the
location of such chief executive office or open or close, move or change any
existing or new place of business without giving the Lender at least thirty
(30) days prior written notice thereof.
3.6 VALID OBLIGATIONS. The execution, delivery and performance of the Loan
Documents have been duly authorized by all necessary corporate action and
each represents a legal, valid and binding obligation of Borrower and is
fully enforceable according to its terms, except as limited by laws relating
to the enforcement of creditors' rights.
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3.7 CONFLICTS WITH OTHER AGREEMENTS. There is no provision in any
indenture, contract or agreement to which Borrower is a party which prohibits
the execution, delivery or performance of the Loan Documents.
3.8 GOVERNMENTAL APPROVALS. The execution, delivery and performance of the
Loan Documents does not require any approval of any governmental agency or
authority.
3.9 LITIGATION. There are no actions, suits or proceedings pending or to
the knowledge of Borrower threatened against Borrower which might materially
adversely affect the ability of Borrower to perform its obligations under the
Loan Documents.
3.10 FINANCIAL STATEMENTS. The Borrower has furnished to the Lender the
following Financial Statements (the "Financial Statements") balance sheet as
of September 30, 1996, and statement of profit and loss for the period ending
September 30, 1996. The balance sheet fairly presents the condition of the
Borrower at the date thereof and the statement of profit and loss fairly
presents the results of the operations of the Borrower for the period
indicated, all in conformity with generally accepted accounting principles,
consistently applied.
3.11 ACCOUNTS AND CONTRACT RIGHTS. All accounts arise out of legally
enforceable and existing contracts; and represent unconditional and
undisputed bonafide indebtedness by the Debtor for sales or leases of
Inventory shipped and delivered or services rendered by the Borrower to a
Debtor, and are not and will not be subject to any discount (except such cash
or trade discount as may be shown on any invoice, contract or other writing
delivered to the Lender). No contract right, account, general intangible or
chattel paper is, or will be represented by any note or other instrument, and
no contract right, account or general intangible is, or will be represented
by any conditional or installment sales obligation or other chattel paper,
except such instruments or chattel paper as have been immediately upon
receipt by the Borrower will be delivered to the Lender (duly endorsed or
assigned), such delivery, in the case of chattel paper, to include all
executed copies except those in the possession of the installment buyer and
any security for or guaranty of any of the Collateral shall be delivered to
the Lender immediately upon receipt thereof by the Borrower, with such
assignments and endorsements thereof as the Lender may request.
3.12 TITLE TO COLLATERAL. At the date hereof the Borrower is (and as to
Collateral that the Borrower may acquire after the date hereof, will be) the
lawful owner of the Collateral, and that the Collateral and each item thereof
is, will be and shall continue to be free of all restrictions, liens,
encumbrances or other rights, title or interests (other than the security
interest therein granted to the Lender hereby), credits, defenses, recoupments,
set-offs or counterclaims whatsoever; that the Borrower has and will have full
power and authority to grant to the Lender a security interest therein, and that
the Borrower has not transferred, assigned, sold, pledged, encumbered, subjected
to lien or granted any security interest in, and will not transfer, assign, sell
(except sales or other dispositions in the ordinary course of business in
respect to inventory as expressly permitted in this Agreement), pledge,
encumber, subject to lien or grant any security interest in any of the
Collateral (or any of the Borrower's right, title or interest therein), to any
person other than the Lender; that the Collateral is and will be valid and
genuine in all respects;
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that all accounts arise out of legally enforceable and existing contracts in
accordance with their tenor; and that upon the Borrower's acquisition of any
interest in contract rights, it shall in writing immediately notify the
Lender thereof, specifically identifying the same as contract rights, and,
except for such contract rights, no part of the Collateral (or the validity
or enforceability by the Lender thereof) is or shall be contingent upon the
fulfillment of any agreement or condition whatsoever and that the Collateral,
other than Inventory and equipment, shall represent unconditional and
undisputed bona fide indebtedness by the Debtor for sales or leases of
Inventory shipped and delivered or services rendered by the Borrower to
Debtor, and is not and will not be subject to any discount (except such cash
or trade discount as may be shown on any invoice, contract or other writing
delivered to the Lender); and that the Borrower will warrant and defend the
Lender's right to and interest in the Collateral against all claims and
demands of all persons whatsoever.
3.13 LOCATION OF COLLATERAL. Except for sale, processing, use, consumption
or other disposition in the ordinary course of business, the Borrower will
keep all Inventory and Equipment only at locations specified in this
Agreement; that the Borrower shall, during the term of this Agreement, keep
the Lender currently and accurately informed in writing of each location
where the Borrower's records relating to its accounts and contract rights,
respectively, are kept, and shall not remove such records or any of them to
another state without giving the Lender at least thirty (30) days prior
written notice thereof.
3.14 THIRD PARTIES. The Lender shall not be deemed to have assumed any
liability or responsibility to the Borrower or any third person for the
correctness, validity or genuineness of any instruments or documents that may
be released or endorsed to the Borrower by the Lender (which shall
automatically be deemed to be without recourse to the Lender in any event) or
for the existence, character, quantity, quality, condition, value or delivery
of any goods purporting to be represented by any such documents; and that the
Lender, by accepting such security interest in the Collateral, or by
releasing any Collateral to the Borrower, shall not be deemed to have assumed
any obligation or liability to any supplier or Debtor or to any other third
party, and the Borrower agrees to indemnify and defend the Lender and hold it
harmless in respect to any claim or proceeding arising out of any matter
referred to in this paragraph.
3.15 PAYMENT OF ACCOUNTS. Each account or other item of Collateral, other
than Inventory and Equipment, will be paid in full on or before the date
shown as its due date in the schedule of Collateral, in the copy of the
invoice(s) relating to the account or other Collateral or in contracts
relating thereto, that upon any suspension of business, assignment or trust
mortgage for the benefit of creditors, dissolution, petition in receivership
or under any chapter of the Bankruptcy Code as amended from time to time by
or against any Debtor, any Debtor becoming insolvent or unable to pay its
debts as they mature or any other act of the same or different nature
amounting to a business failure, the Borrower will forthwith notify the
Lender thereof.
3.16 NOTIFICATION OF DAMAGE. The Borrower will immediately notify the Lender of
any loss or damage to, or material diminution in or any occurrence that would
adversely affect the value of the Inventory, the Equipment of other Collateral.
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3.17 CHANGES. Since the date of the Financial Statements, there have been no
changes in the assets, liabilities, financial condition or business of the
Borrower, other than changes in the ordinary course of business, the effect
of which have, in the aggregate, been materially adverse.
3.18 TAXES. Borrower has filed all Federal, state and other tax returns
required to be filed (except for such returns for which current and valid
extensions have been filed), and all taxes, assessments and other
governmental charges due from the Borrower have been fully paid. Borrower
has established on its books reserves adequate for the payment of all
Federal, state and other tax liabilities (if any).
3.19 USE OF PROCEEDS. No portion of any Loan is to be used for the purpose
of purchasing or carrying any "margin security" or "margin stock" as such
terms are used in Regulations G and U of the Board of Governors of the
Federal Reserve System, 12 C.F.R. 207 and 221.
4. AFFIRMATIVE COVENANTS
4.1 PAYMENTS. Borrower will duly and punctually pay all interest and
principal becoming due the Lender and will duly and punctually perform all
things on its part to be done or performed under this Agreement.
4.2 FACILITY COLLATERAL MONITORING FEE. In addition to all amounts due and
payable respecting the Loan pursuant to the Note and the other Loan
Documents, Borrower hereby agrees to pay to Lender a "Facility/Collateral
Monitoring Fee" equal to $7,500 per month payable in advance, the first such
payment due on December ___, 1996 and each subsequent payment due on the
first business day of every calendar month commencing January 2, 1997 so long
as any amounts are outstanding respecting the Loan and the Note.
4.3 APPRAISAL OF REAL ESTATE. On or before January 1, 1997, the Lender
shall have received a satisfactory written appraisal by an appraiser
acceptable to Lender and Borrower for the Real Property, which appraisal
shall be paid for by Borrower and addressed to the Lender. Such appraisal
shall be acceptable to the Lender in its sole discretion and confirm that the
value of the Real Property must be at least $1,400,000 based upon an orderly
liquidation. In the event the value of the Real Property in such appraisal is
less than $1,400,000 on a quick sale basis, Borrower hereby agrees to (i)
provide additional collateral acceptable to Lender in Lender's sole
discretion to cover the difference between $1,400,000 and such appraised
value of the Real Property (the "Shortfall"); or (ii) to make an immediate
payment to Lender in the amount of the Shortfall to reduce the principal
balance of the Loan.
4.4 SUBORDINATION OF SECURITY INTEREST BY LENDER. Lender hereby agrees to
subordinate its security interest in the Collateral upon payment to Lender of
an amount equal to $1,500,000 (the "Collateral Prepayment") plus 60% of the
Exit Fee (as such term is defined in the Note) which would be due and payable
at the time the Collateral Prepayment is paid if all amounts outstanding
respecting the Note had been paid at such time. In the, event 60% of the
Exit Fee (the "Collateral Exit Fee Amount") is paid to Lender in accordance
with this paragraph the amount of the Exit Fee due at the time all amounts
outstanding respecting the Note are paid in full shall be reduced by the
Collateral Exit Fee Amount. The Lender shall subordinate its lien in the
Collateral only to the
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extent of amounts actually paid to Lender and upon execution and delivery of
a Subordination and Intercreditor Agreement between Lender and such parties
funding the repayment of amounts paid to Lender containing terms reasonably
acceptable to Lender.
4.5 SUBORDINATION OF MORTGAGE BY LENDER. Lender hereby agrees to
subordinate its Mortgage in the Real Property upon payment to Lender of an
amount equal to $1,000,000 (the "Real Estate Prepayment") plus 40% of the
Exit Fee (as such term is defined in the Note) which would be due and payable
at the time the Real Estate Prepayment is paid if all amounts outstanding
respecting the Note had been paid at such time. In the event 40% of the Exit
Fee (the "Real Estate Exit Fee Amount') is paid to Lender in accordance with
this paragraph the amount of the Exit Fee due at the time all amounts
outstanding respecting the Note are paid in full shall be reduced by the Real
Estate Exit Fee Amount. The Lender shall subordinate its Mortgage only to
the extent of amounts actually paid to Lender and upon execution and delivery
of a Subordination and Intercreditor Agreement between Lender and such
parties funding the repayment of amounts paid to Lender containing terms
reasonably acceptable to Lender.
4.6 BOOKS AND RECORDS; INSPECTION. Borrower will at all times keep proper
books of account in which full, true and correct entries will be made of its
transactions in accordance with generally accepted accounting principles,
consistently applied and which are, in the opinion of a Certified Public
Accountant acceptable to Lender, adequate to determine fairly the financial
condition and the results of operations of Borrower. Borrower will at all
reasonable times make its books and records available in its offices for
inspection and examination by the Lender and the Lender's representatives and
will permit inspection of the Collateral and all of its properties by the
Lender and the Lender's representatives. Borrower will from time to time
furnish the Lender with such information and statements as the Lender may
request in its sole discretion with respect to the Obligations or the
Lender's security interest in the Collateral. Borrower shall, during the
term or this Agreement, keep the Lender currently and accurately informed in
writing of each location where the Borrower's records relating to its
accounts and contract rights are kept, and shall not remove such records to
another state without giving the Lender at least thirty (30) days prior
written notice thereof.
4.7 FINANCIAL STATEMENTS. Borrower will furnish to Lender:
(a) as soon as available to Borrower, but in any event within 15 days
after the close of each month, a full and complete signed copy of financial
statements, which shall include a balance sheet of the Borrower, as at the
end of such month, and statement of profit and loss of the Borrower
reflecting the results of its operations during such month and shall be
prepared by the Borrower and certified by Borrower's chief financial
officer as to correctness in accordance with generally accepted accounting
principles, consistently applied, subject to year-end adjustments;
(b) as soon as available to Borrower, but in any event within 30 days
after the close of each quarterly period of its fiscal year, a full and
complete signed copy of financial statements, prepared by certified public
accountants acceptable to Lender, which shall include a balance sheet of
the Borrower, as at the end of such quarter, and statement of
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profit and loss of the Borrower reflecting the results of its operations
during such quarter, bearing the opinion of such certified public
accountants and prepared on a compiled basis in accordance with generally
accepted accounting principles, consistently applied, subject to year-end
adjustments;
(c) as soon as available to Borrower, but in any event within 90 days
after the close of each fiscal year, a full and complete signed copy of
financial statements, prepared by certified public accountants acceptable
to Lender, which shall include a balance sheet of the Borrower, as at the
end of such year, and statement of profit and loss of the Borrower
reflecting the results of its operations during such year, bearing the
opinion of such certified public accountants and prepared on an audited
basis in accordance with generally accepted accounting principles,
consistently applied together with any so-called management letter;
(d) on or before May 1 of each year or such other date approved by
the Lender, Borrower's filed federal and state tax returns for the prior
year;
(e) from time to time, such financial data and information about
Borrower as Lender may reasonably request; and
(f) any financial data and information about any guarantors of the
Obligations as Lender may reasonably request.
4.8 CONDUCT OF BUSINESS. The Borrower will maintain its corporate existence
in good standing and comply with all laws and regulations of the United
States and of any state or states thereof and of any political subdivision
thereof, and of any governmental authority which may be applicable to it or
to its business; provided that this covenant shall not apply to any tax,
assessment or charge which is being contested in good faith and with respect
to which reserves have been established and are being maintained.
4.9 NOTICE TO ACCOUNT DEBTORS. The Borrower agrees, at the request of the
Lender, to notify all or any of the Debtors in writing of the Lender's
security interest in the Collateral in whatever manner the Lender requests
and, if the Lender so requests, to permit the Lender to notify all or any of
the Debtors at the Borrower's expense.
4.10 TAXES. Borrower will promptly pay all real and personal property taxes,
assessments and charges and all franchise, income, unemployment, old age
benefits, withholding, sales and other taxes assessed against it or payable
by it before delinquent; provided that this covenant shall not apply to any
tax assessment or charge which is being contested in good faith and with
respect to which reserves have been established and are being maintained.
The Lender may, at its option, from time to time, discharge any taxes, liens
or encumbrances of any of the Collateral, and the Borrower will pay to the
Lender on demand or the Lender in its sole discretion may charge to the
Borrower all amounts so paid or incurred by it.
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4.11 MAINTENANCE. Borrower will keep and maintain the Collateral and its
other properties, if any, in good repair, working order and condition. The
Borrower will immediately notify the Lender of any loss or damage to or any
occurrence which would adversely affect the value of any Collateral. The
Lender may, at its option, from time to time, take any other action that the
Lender may deem proper to repair, maintain or preserve any of the Collateral,
and the Borrower will pay to the Lender on demand or the Lender in its sole
discretion may charge to the Borrower all amounts so paid or incurred by it.
4.12 INSURANCE. Borrower will maintain in force casualty insurance on all
Collateral and any property of the Borrower, if any, against risks
customarily insured against by companies engaged in businesses similar to
that of the Borrower containing such terms and written by such companies as
may be satisfactory to the Lender, such insurance to be payable to the Lender
as its interest may appear in the event of loss; no loss shall be adjusted
thereunder without the Lender's approval; and all such policies shall provide
that they may not be canceled without first giving at least ten (10) days'
written notice of cancellation to the Lender. In the event that the Borrower
fails to provide evidence of such insurance, the Lender may, at is option,
secure such insurance and charge the cost thereof to the Borrower. At the
option of the Lender, all insurance proceeds received from any loss or damage
to any of the Collateral shall be applied either to the replacement or repair
thereof or as a payment on account of the Obligations. From and after the
occurrence of an Event of Default, the Lender is authorized to cancel any
insurance maintained hereunder and apply any returned or unearned premiums,
all of which are hereby assigned to the Lender, as a payment on account of
the Obligations.
4.13 NOTIFICATION OF DEFAULT. Within five (5) days of becoming aware of the
existence of any condition or event which constitutes an Event of Default, or
any condition or event which would upon notice or lapse of time, or both,
constitute an Event of Default, Borrower shall give Lender written notice
thereof specifying the nature and duration thereof and the action being or
proposed to be taken with respect thereto.
4.14 NOTIFICATION OF MATERIAL LITIGATION. Borrower will promptly notify the
Lender in writing of any litigation or of any investigative proceedings of a
governmental agency or authority commenced or threatened against it which
would or might be materially adverse to the financial condition of Borrower.
4.15 PENSION PLANS. With respect to any pension or benefit plan maintained
by Borrower, or to which Borrower contributes (Plan"), the benefits under
which are guarantied, in whole or in part, by the Pension Benefit Guaranty
Corporation created by the Employee Retirement Income Security Act of 1974,
P. L. 93-406, or any governmental authority succeeding to any or all of the
functions of the Pension Benefit Guaranty Corporation ("Pension Benefit
Guaranty Corporation"), Borrower will (a) fund each Plan as required by the
provisions of Section 412 of the Internal Revenue Code of 1986, as amended;
(b) cause each Plan to pay all benefits when due; (c) furnish Lender (i)
promptly with a copy of any notice of each Plan's termination sent to the
Pension Benefit Guaranty Corporation and (ii) no later than the date of
submission to the Department of Labor or to the Internal Revenue Service, as
the case may be, a copy of any request for waiver from the funding standards
or extension of the amortization periods required
11
by Section 412 of the Internal Revenue Code of 1954, as amended; and (d)
subscribe to any contingent liability insurance provided by the Pension
Benefit Guaranty Corporation to protect against employer liability upon
termination of a guarantied pension plan, if available to Borrower.
4.16 ENVIRONMENTAL. As of the date hereof neither the Borrower nor any of
Borrower's agents, employees or independent contractors (1) have caused or
are aware of a release or threat of release of Materials (as defined herein)
on any of the premises or personal property owned or controlled by Borrower,
or any abutting property, which could give rise to liability under any
Superfund and Hazardous Waste Laws (as defined herein) or any other federal,
state or local law, rule or regulation; (2) have arranged for the transport
of or transported any Materials in a manner as to violate, or result in
potential liabilities under, any Superfund and Hazardous Waste Laws; (3) have
received any notice, order or demand from the Environmental Protection Agency
or the Ohio Department of Environmental Protection under any Superfund and
Hazardous Waste Laws; (4) have incurred any liability under any Superfund and
Hazardous Waste Laws in connection with the mismanagement, improper disposal
or release of Materials; (5) are aware of any inspection or investigation of
any of the premises or personal property owned or controlled by Borrower or
abutting property by any federal, state or local agency for possible
violations of the Superfund and Hazardous Waste Laws.
To the best of Borrower's knowledge, no prior owner or tenant of any
premises or property presently controlled or owned by Borrower committed or
omitted any act which caused the release of Materials on such premises or
property which could give rise to a lien thereon by any federal, state or
local government. No notice or statement of claim or lien affecting any
property or premises owned or controlled by Borrower has been recorded or
filed in any public records by any federal, stale or local government for
costs, penalties, fines or other charges as to such property.
Borrower agrees to indemnify and hold Lender harmless from all
liability, loss, cost, damage and expense, including attorney fees and costs
of litigation, arising from any and all of its violations of the Superfund
and Hazardous Waste Laws including those arising from any lien on any
premises or property owned or controlled by Borrower by any federal, state
and local government arising from the presence of Materials. Borrower
further agrees to reimburse Lender upon demand for any costs incurred by
Lender in connection with the foregoing. Borrower agrees its obligations
hereunder shall be continuous and shall survive the repayment of all debts to
Lender including repayment of all Obligations.
The term "Materials" means any "oil," "hazardous material," "hazardous
wastes" or "hazardous substances" as defined under the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section
9601 ET SEQ., as amended, the Resource Conservation and Recovery Act of 1976,
42 U.S.C. Section 6901 ET SEQ., as amended, and Ohio hazardous waste laws and
regulations, and the foregoing are collectively the "Superfund and Hazardous
Waste Laws."
12
5. NEGATIVE COVENANTS
5.1 NET OPERATING INCOME. Borrower hereby agrees to pay to Lender, in
addition to all other amounts due respecting the Note, $100,000 of the
outstanding principal balance of the Note within 20 days of the start of any
calendar month following any period of two consecutive months in which
Borrower fails to maintain monthly net operating income before income taxes,
as defined in accordance with generally accepted accounting principles,
consistently applied. equal to at least the amount shown on Schedule 5.1 for
the calendar months indicated on Schedule 5.1.
5.2 LIMITATIONS ON INDEBTEDNESS. Borrower will not issue any evidence of
indebtedness or create, assume, guarantee, become contingently liable for, or
suffer to exist indebtedness in addition to indebtedness to the Lender,
except indebtedness or liabilities of Borrower, other than for money
borrowed, incurred or arising in the ordinary course of business.
5.3 SALE OF INTEREST. There shall not be any sale or transfer of ownership
of any interest in the Borrower without the Bank's prior written consent.
5.4 LOANS OR ADVANCES. Borrower will not make any loans or advances to any
individual, firm or corporation, including without limitation its officers
and employees; provided, however, that Borrower may make advances to its
employees, including its officers, with respect to expenses incurred or to be
incurred by such employees which expenses are reimbursable by Borrower; and
provided further, however, that Borrower may extend credit in the ordinary
course of business in accordance with customary trade practices.
5.5 DIVIDENDS AND DISTRIBUTIONS. Borrower will not, without prior written
permission of the Lender, pay any dividends on or make any distribution on
account of any class of Borrower's capital stock in cash or in property
(other than additional shares of such stock), or redeem, purchase or
otherwise acquire, directly or indirectly, any of such stock, except if
Borrower is a Subchapter S corporation, under the regulations of the Internal
Revenue Service of the United States, in which event, so long as Borrower is
not in default hereunder, Borrower may distribute to the stockholders of
Borrower such amounts as are necessary to pay the tax liability of such
stockholders due as a result of such stockholders interest in the Borrower.
5.6 INVESTMENTS. Without the prior written consent of Lender, which shall
not be unreasonably withheld, the Borrower will not (i) make investments in,
or advances to, any individual, partnership, corporation, limited liability
company, trust or other organization or person; or (ii) purchase or otherwise
invest in or hold securities, nonoperating real estate or other nonoperating
assets or purchase all or substantially all the assets of any entity.
5.7 MERGER. Borrower will not merge or consolidate or be merged or
consolidated with or into any other corporation.
SALE OF ASSETS. Borrower will not without Lender's prior written consent
sell, lease or otherwise dispose of any of its assets, except in the ordinary
and usual course of business and
13
except for the purpose of replacing machinery, equipment or other personal
property which, as a consequence of wear, duplication or obsolescence, is no
longer used or necessary in the Borrower's business, provided that fair
consideration is received therefor; provided, however, the Lender shall not
unreasonably withhold consent in the event Borrower proposes to transfer any
assets to a corporation (a "Subsidiary") for which one hundred percent of the
issued and outstanding capital stock is owned by Borrower, provided such
Subsidiary executes and delivers such guarantees, security agreements and
other agreements reasonably requested by Lender to perfect and preserve
Lender's rights under this Agreement and the other Loan Documents.
5.9 RESTRICTION ON LIENS. Borrower will not grant any security interest in,
or mortgage of, any of its properties or assets including the Collateral.
5.10 OTHER BUSINESS. Borrower will not engage in any business other than the
business in which it is currently engaged or a business reasonably allied
thereto.
6. DEFAULT
6.1 DEFAULT. "Event of Default" shall mean the occurrence of one or more of
any of the following events:
(a) Default of any liability, obligation or undertaking of the
Borrower to the Lender, hereunder or otherwise, including failure to pay in
full and when due any installment of principal or interest continuing for 5
business days with respect to any monetary obligation or continuing for 5
business days after the giving of notice by the Lender with respect to all
other obligations.
(b) Failure of the Borrower to maintain aggregate collateral security
value satisfactory to the Lender continuing for 5 business days after the
giving of notice by the Lender.
(c) Default of any material liability, obligation or undertaking of
the Borrower to any other party continuing for 5 business days after the
giving of notice by the Lender.
(d) If any statement, representation or warranty heretofore, now or
hereafter made in connection with this Agreement or in any supporting
financial statement of the Borrower shall be determined by Lender to have
been false in any material respect when made continuing for 5 business days
after the giving of notice by the Lender.
(e) The liquidation, termination or dissolution of, or the merger
consolidation of the Borrower, into another entity or the Borrower ceasing
to carry on actively its present business or the appointment of a receiver
for the Borrower.
(f) The liquidation, termination or dissolution of any guarantor of
the Obligations or if a corporation, the merger or consolidation of any
such guarantor into
14
another entity, or any guarantor of the Obligations ceasing to carry on
actively its present business, or the appointment of a receiver for any
guarantor of the Obligations or the death of any guarantor of the
Obligations or any partner or trustee of any guarantor of the Obligations.
(g) The institution by or against the Borrower or guarantor of the
Obligations of any proceedings under the Bankruptcy Code 11 U.S.C. Section
101 ET SEQ. or any other law in which the Borrower any guarantor of the
Obligations is alleged to be insolvent or unable to pay their respective
debts as they mature, or the making by the Borrower or any guarantor of the
Obligations of an assignment for the benefit of creditors or the granting
of a trust mortgage for the benefit of creditors.
(h) The service upon the Lender hereof of a writ in which the Lender
is named as trustee of the Borrower or of any guarantor of the Obligations.
(i) A judgment or judgments for the payment of money shall be
rendered against the Borrower and any such judgment shall remain
unsatisfied and in effect for any period of thirty (30) consecutive days
without a stay of execution.
(j) Any levy, seizure, attachment, execution or similar process shall
be issued or levied on any of the property of the Borrower.
(k) The termination of any guaranty of the Obligations.
(l) The occurrence of such a change in the condition or affairs
(financial or otherwise) of the Borrower or any guarantor or other surety
for any of the obligations, or the occurrence of any event or circumstance
such that the Lender, in its sole discretion, deems that it is insecure or
that the prospects for timely or full payment or performance of any of the
Obligations have been or may be impaired.
6.2 DEFAULT. If an Event of Default shall occur, at the election of the
Lender, all Obligations shall become immediately due and payable without
notice or demand, except with respect to Obligations payable on DEMAND, which
shall be due and payable on DEMAND, whether or not an Event of Default has
occurred.
The Lender is hereby authorized, at its election, after an Event of Default
or after Demand, without any further demand or notice except to such extent as
notice may be required by applicable law, to take possession and/or sell or
otherwise dispose of all or any of the Collateral at public or private sale; and
the Lender may also exercise any and all other rights and remedies of a secured
party under the Code or which are otherwise accorded to it by applicable law,
all as the Lender may determine. If notice of a sale or other action by the
Lender is required by applicable law, unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Borrower agrees that five (5) days' written notice to the
Borrower, or the shortest period of written notice permitted by such law,
whichever is larger, shall be sufficient notice; and that to the extent
permitted by law, the Lender, its officers, attorneys and agents may bid and
become purchasers at any such sale, if public, and may purchase
15
at any private sale any of the Collateral that is or a type customarily sold
on a recognized market or which is the subject of widely distributed standard
price quotations. Any sale (public or private) shall be free from any right
of redemption, which the Borrower hereby waives and releases. No purchaser
at any sale (public or private) shall be responsible for the application of
the purchase money. Any balance of the net proceeds of sale remaining after
paying all Obligations of the Borrower to the Lender shall be returned to the
Borrower or to such other party as may be legally entitled thereto; and if
there is a deficiency, the Borrower shall be responsible for the same, with
interest. Upon demand by the Lender, the Borrower shall assemble the
Collateral and make it available to the Lender at a place designated by the
Lender which is reasonably convenient to the Lender and the Borrower. The
Borrower hereby acknowledges that the Lender has extended credit and other
financial accommodations to the Borrower upon reliance of the Borrower's
granting the Lender the rights and remedies contained in this Agreement
including without limitation, the right to take immediate possession of the
Collateral upon the occurrence of an Event of Default or after DEMAND with
respect to Obligations payable on DEMAND and the Borrower hereby acknowledges
that the Lender is entitled to equitable and injunctive relief to reinforce
any of its rights and remedies hereunder or under the Code and the Borrower
hereby waives any defense to such equitable or injunctive relief based upon
any allegation of the absence of irreparable harm to the Lender.
6.3 POWER OF ATTORNEY. The Borrower hereby irrevocably constitutes and
appoints the Lender as the Borrower's true and lawful attorney, with full
power of substitution, at the sole cost and expense of the Borrower but for
the sole benefit of the Lender, upon the occurrence of an Event of Default or
after DEMAND with respect to Obligations payable on DEMAND, to convert the
Collateral into cash, including, without limitation, completing the
manufacture or processing of work in process, and the sale (either public or
private) of all or any portion or portions of the Inventory and other
Collateral; to enforce collection of the Collateral, either in its own name
or in the name of the Borrower, including, without limitation, executing
releases, compromising or settling with any Debtors and prosecuting,
defending, compromising or releasing any action relating to the Collateral;
to receive, open and dispose of all mail addressed to the Borrower and to
take therefrom any remittances or proceeds of Collateral in which the Lender
has a security interest; to notify Post Office authorities to change the
address for delivery of mail addressed to the Borrower to such address as the
Lender shall designate to endorse the name of the Borrower in favor of the
Lender upon any and all checks, drafts, money orders, notes, acceptances or
other instruments of the same or different nature; to sign and endorse the
name of the Borrower on and to receive as secured party any of the
Collateral, any invoices schedules of Collateral, freight or express
receipts, or bills of lading, storage receipts, warehouse receipts, or other
documents of title of the same or different nature relating to the
Collateral; to sign the name of the Borrower on any notice of the Debtors or
on verification of the Collateral; and to sign and file or record on behalf
of the Borrower any financing or other statement in order to perfect or
protect the Lender's security interest. The Lender shall not be obliged to
do any of the acts or exercise any of the powers hereinabove authorized, but
if the Lender elects to do any such act or exercise any such power, it shall
not be accountable for more than it actually receives as a result of such
exercise of power, and it shall not be responsible to the Borrower except for
willful misconduct in bad faith. All powers conferred upon the Lender by this
Agreement, being coupled with an interest, shall be irrevocable so long as
any Obligation of the Borrower to the Lender shall remain unpaid.
16
6.4 NONEXCLUSIVE REMEDIES. All of the Lender's rights and remedies not only
under the provisions of this Agreement but also under any other agreement or
transaction shall be cumulative and not alternative or exclusive, and may be
exercised by the Lender at such time or times and in such order of preference
as the Lender in its sole discretion may determine.
6.5 REASSIGNMENT TO BORROWER. Whenever the Lender deems it desirable that
any legal action he instituted with respect to any Collateral or that any
other action be taken in any attempt to effectuate collection of any
Collateral, the Lender may reassign the item in question to the Borrower (and
if the Lender shall execute any such reassignment, it shall automatically be
deemed to be without recourse to the Lender in any event) and require the
Borrower to proceed with such legal or other action at the Borrower's sole
liability, cost and expense, in which event all amounts collected by the
Borrower on such item shall nevertheless be subject to the Lender's security
interest.
7. MISCELLANEOUS
7.1 WAIVERS. The Borrower waives notice of nonpayment, demand, presentment,
protest or notice of protest of the Collateral, and all other notices,
consents to any renewals or extensions of time of payment thereof, and
generally waives any and all suretyship defenses and defenses in the nature
thereof.
7.2 SEVERABILITY. If any provision of this Agreement or portion of such
provision or the application thereof to any person or circumstance shall to
any extent be held invalid or unenforceable, the remainder of this Agreement
(or the remainder of such provision) and the application thereof to other
persons or circumstances shall not be affected thereby.
7.3 SET-OFF. Any deposits, balances or other sums credited by or due from
the Lender or any of its affiliates to Borrower and any security or other
property of the Borrower in the possession of the Lender, whether for
safekeeping or otherwise, may, at any time whether or not an Event of Default
has occurred or demand has been made, without notice to Borrower, or
compliance with any other condition precedent now or hereafter imposed by
statute, rule of law, or otherwise (all of which are hereby expressly waived)
be set off, appropriated and applied by Lender against any and all of the
Obligations in such manner as the Lender in its sole discretion may determine.
7.4 INDEMNIFICATION. The Borrower shall indemnify, defend and hold the
Lender harmless of and from any claim brought or threatened against the
Lender by Borrower, any guarantor or endorser of the Obligations, or any
other person (as well as from attorneys' reasonable fees and expenses in
connection therewith) on account of the Lender's relationship with the
Borrower, or any guarantor or endorser of the Obligations (each of which may
be defended, compromised, settled or pursued by the Lender with counsel of
the Lender's election, but at the expense of the Borrower), except for any
claim arising out of the gross negligence or willful misconduct of the
Lender. The within indemnification shall survive payment of the Obligations,
and/or any termination, release or discharge executed by the Lender in favor
of the Borrower.
17
7.5 COSTS AND EXPENSES. The Borrower shall pay to the Lender any and all
costs and expenses (including, without limitation, reasonable attorneys'
fees, court costs, litigation and other expenses) incurred or paid by the
Lender in establishing, maintaining, protecting or enforcing any of the
Lender's rights or the Obligations, including, without limitation, any and
all such costs and expenses incurred or paid by the Lender in defending the
Lender's security interest in, title or right to the Collateral or in
collecting or attempting to collect or enforcing or attempting to enforce
payment of the Collateral.
7.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which shall
constitute but one agreement.
7.7 BINDING EFFECT OF AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the respective heirs, executors, administrators,
legal representatives. successors and assigns of the parties hereto, and
shall remain in full force and effect (and the Lender shall be entitled to
rely thereon) until terminated as to future transactions by written notice
from either Party to the other party of the termination hereof; provided that
any such termination shall not release or affect any Collateral in which the
Lender already has a security interest or any Obligations incurred or rights
accrued hereunder prior to the effective date of such notice (as hereinafter
defined) of such termination. Notwithstanding any such termination, the
Lender shall have a security interest in all Collateral to secure the payment
and performance of Obligations arising after such termination as a result of
commitments of undertakings made or entered into by the Lender prior to such
termination. The Lender may transfer and assign this Agreement and deliver
the Collateral to the assignee, who shall thereupon have all of the rights of
the Lender; and the Lender shall then be relieved and discharged of any
responsibility or liability with respect to this Agreement and the Collateral.
7.8 FURTHER ASSURANCES. Borrower will from time to time execute and deliver
to the Lender, and take or cause to be taken, all such other further action
as the Lender may request in order to effect and confirm or vest more
securely in the Lender all rights contemplated or to vest more fully in or
assure to the Lender the security interest in the Collateral granted to the
Lender by this Agreement or to comply with applicable statute or law and to
facilitate the collection of the Collateral.
7.9 AMENDMENTS AND WAIVERS. This Agreement may be amended and Borrower may
take any action herein prohibited, or omit to perform any act herein required
to be performed by it, if Borrower shall obtain the Lender's prior written
consent to each such amendment, action or omission to act. No delay or
omission on the part of Lender in exercising any right hereunder shall
operate as a waiver of such right or any other right and waiver on any one or
more occasions shall not be construed as a bar to or waiver of any right or
remedy of Lender on any future occasion.
7.10 TERMS OF AGREEMENT. This Agreement shall continue in force and effect so
long as any Obligations or obligation of Borrower to Lender shall be outstanding
and is supplementary to each and every other agreement between Borrower and
Lender and shall not be so construed as to
18
limit or otherwise derogate from any of the rights or remedies of Lender or
any of the liabilities, obligations or undertakings of Borrower under any
such agreement, nor shall any contemporaneous or subsequent agreement between
Borrower and the Lender be construed to limit or otherwise derogate from any
of the rights or remedies of Lender or any of the liabilities, obligations or
undertakings of Borrower hereunder, unless such other agreement specifically
refers to this Agreement and expressly so provides.
7.11 NOTICES. Any notices under or pursuant to this Agreement shall be
deemed duly received and effective if delivered in hand to any officer of
agent of the Borrower or Lender, or if mailed by registered or certified
mail, return receipt requested, addressed to the Borrower or Lender at
address set forth in this Agreement or as any Party may from time to time
designate by written notice to the other party.
7.12 MASSACHUSETTS LAW. This Agreement is intended to take effect as a
sealed instrument and has been executed or completed and is to be performed
in Massachusetts, and it and all transactions thereunder or pursuant thereto
shall be governed as to interpretation, validity, effect, rights, duties and
remedies of the parties thereunder and in all other respects by the domestic
laws of Massachusetts.
7.13 REPRODUCTIONS. This Agreement and all documents which have been or may
be hereinafter furnished by Borrower to the Lender may be reproduced by the
Lender by any photographic, photostatic, microfilm, xerographic or similar
process, and any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not
the original is in existence and whether or not such reproduction was made in
the regular course of business).
7.14 VENUE. Borrower irrevocably submits to the nonexclusive jurisdiction of
any federal or state court sitting in Massachusetts, over any suit, action or
proceeding arising out of or relating to this Agreement. Borrower
irrevocably waives, to the fullest extent it may effectively do so under
applicable law, any objection it may now or hereafter have to the laying of
the venue of any such suit, action or proceeding brought in any such court
and any claim that the same has been brought in an inconvenient forum.
Borrower irrevocably appoints the Secretary of State of the Commonwealth of
Massachusetts as its authorized agent to accept and acknowledge on its behalf
any and all process which may be served in any such suit, action or
proceeding, consents to such process being served (i) by mailing a copy
thereof by registered or certified mail, postage prepaid, return receipt
requested to Borrower and (ii) by serving the same upon such agent, and
agrees that such service shall in every respect be deemed effective service
upon Borrower.
7.15 JURY WAIVER. THE BORROWER AND LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY, AND AFTER AN OPPORTUNITY T0 CONSULT WITH LEGAL COUNSEL, WAIVE
ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING IN CONNECTION
WITH THIS AGREEMENT, THE OBLIGATIONS, ALL MATTERS CONTEMPLATED HEREBY AND
DOCUMENTS EXECUTED IN CONNECTION HEREWITH. THE BORROWER CERTIFIES THAT NEITHER
THE LENDER NOR
19
ANY OF ITS REPRESENTATIVES, AGENTS OR COUNSEL HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE LENDER WOULD NOT IN THE EVENT OF ANY SUCH PROCEEDING SEEK
TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.
Witness Borrower
Fix-Corp International, Inc.
/s/ Xxxxxx Xxxxx By: /s/ Xxxx Xxxxxx
---------------------------- ---------------------------
Xxxx Xxxxxx, President
Accepted at Boston, Massachusetts: Xxxxxx Xxxxxxxx Capital Corporation
By:/s/ Xxxxxx X. Xxxxx
-----------------------
Name: Xxxxxx X. Xxxxx
Title: President
20
SCHEDULE 5.1
February 1997 $ 20,907
March 1997 84,271
April 1997 79,734
May 1997 79,734
June 1997 79,734
July 1997 79,734
August l997 123,122
September 1997 250,517
October 1997 394,198
November 1997 394,198
December 1997 394,198
January 1998 394,198
21