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EXHIBIT 10.2
MASTER SECURITY AGREEMENT
This Master Security Agreement (this "Agreement") is entered into as of
December 23, 1999, by and among SOUND ADVICE, INC., a Florida corporation whose
business address is 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx Xxxxx, Xxxxxxx 00000
(Telecopy No. (000) 000-0000) and SAI DISTRIBUTORS, INC., a Florida corporation
whose business address is 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx Xxxxx, Xxxxxxx 00000
(Telecopy No. (000) 000-0000), (collectively "Borrower"), and XXXXXX FINANCIAL
LEASING, INC., a Delaware corporation, whose address is 000 Xxxx Xxxxxx Xxxxxx,
Xxxxxxx, XX 00000 (Telecopy No. (000) 000-0000) ("Lender"). Capitalized terms
used in this Agreement and not otherwise defined shall have the meanings set
forth in Section 14 of this Agreement.
1. SECURE PAYMENT. To secure payment of all Indebtedness, Borrower
hereby grants and conveys to Lender a continuing lien and security interest in
the Collateral, PROVIDED, HOWEVER, if Lender assigns any Notes, then, the term
"Indebtedness" as used herein with respect to any assignee shall mean only the
indebtedness evidenced by or related to Notes held by the assignee, and the term
Collateral as used herein with respect to such assignee shall mean only the
Collateral described on the Schedules that specifically refer to the Notes held
by such assignee. Each advance of principal under a Note shall be on and subject
to the terms and conditions set forth in the Loan Documents.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS. Borrower represents,
warrants and covenants to Lender that the following statements are true, correct
and complete and, unless specifically limited, shall remain so until payment in
full of all Indebtedness:
(a) PERFORM OBLIGATIONS. Borrower shall pay and perform all
Indebtedness as and when due. Borrower shall use the loan proceeds evidenced by
the Notes for business purposes only, in accordance with the terms of the Loan
Documents.
(b) COLLATERAL FREE AND CLEAR. Borrower shall keep the Collateral
free and clear of any and all Liens, except for Permitted Liens.
(c) POSSESSION AND OPERATION OF COLLATERAL. Borrower shall retain
possession of the Collateral at all times and shall not sell, exchange, assign,
loan, deliver, lease, mortgage or otherwise dispose of the Collateral or any
part thereof without the prior written consent of Lender. Borrower shall at all
times keep the Collateral at the locations specified on the Schedules (except
for removals therefrom in the usual course of business for temporary periods).
Borrower shall keep the Collateral, at Borrower's sole cost and expense, in good
repair and condition and not misuse, abuse, waste, or allow it to deteriorate
except for normal wear and tear. Borrower shall make the Collateral available
for inspection by Lender at all reasonable times. The Collateral at all times
shall be operated by competent, properly trained and, if applicable, legally
licensed operators. In the event the Collateral or any part thereof is vehicles,
Borrower shall at all times operate such vehicles only in the United States and
if any vehicle is not in use, Borrower shall keep it at the location specified
in the Schedules.
(d) INSURANCE. With respect to its business and properties,
Borrower maintains, and shall continue to maintain, adequate insurance for
public liability, property damage and product liability, against loss or damage
of the kinds customarily carried or maintained by companies of established
reputation engaged in similar businesses and in amounts acceptable to Lender.
Borrower shall cause Lender to be named as loss payee on all insurance policies
relating to any Collateral and shall cause Lender to be named as additional
insured under all liability policies, in each case pursuant to appropriate
endorsements in form and substance satisfactory to Lender. No notice of
cancellation has been received with respect to such policies and Borrower is,
and shall continue to be, in full compliance with all requirements and
conditions contained in such policies. Borrower shall give immediate written
notice to Lender and to insurers of loss or damage to the Collateral and shall
promptly file proofs of loss with insurers. Borrower hereby irrevocably appoints
Lender as Borrower's attorney-in-fact, coupled with an interest, for the purpose
of obtaining, adjusting and canceling any such insurance and endorsing
settlement drafts. Borrower hereby assigns to Lender, as additional security for
the Indebtedness, all sums which may become payable under such insurance.
(e) In the event Borrower fails to provide Lender with evidence of
the insurance coverage required by this Agreement, Lender may purchase insurance
at Borrower's expense to protect Lender's interests in the Collateral. This
insurance may, but need not, protect Borrower's interests. The coverage
purchased by Lender may not pay any claim made by Borrower or any claim that is
made against Borrower in connection with the Collateral. Borrower may later
cancel any insurance purchased by Lender, but only after providing Lender with
evidence that Borrower has obtained insurance as required by this Agreement. If
Lender purchases insurance for the Collateral, Borrower shall be responsible for
the costs of that insurance, including interest and other charges imposed by
Lender in connection with the placement of the insurance, until the effective
date of the cancellation or expiration of the insurance. The costs of the
insurance may be added to the Indebtedness. The costs of the insurance may be
more than the cost of insurance Borrower is able to obtain on its own.
(f) IF COLLATERAL ATTACHES TO REAL ESTATE. If the Collateral or any
part thereof has been attached to or is to be attached to real estate, a
description of the real estate and the name and address of the record owner is
set forth on the Schedules and Borrower shall promptly following request
therefor furnish Lender with a disclaimer or waiver of any interest in the
Collateral satisfactory to Lender.
(g) FINANCIAL STATEMENTS. If at any time Borrower or any Corporate
Guarantor is required to file Forms 10-K and 10-Q with the SEC, Borrower shall
cause to be delivered to Lender copies of such forms within ten days of the
filing thereof. If Borrower or any Corporate Guarantor is not required to file
such forms, Borrower shall deliver and shall cause each Corporate Guarantor to
deliver to Lender for Borrower and each such Corporate Guarantor respectively:
(i) as soon as practicable, and in any event within 60 days after the end of
each fiscal quarter, unaudited financial statements including in each instance,
balance sheets, income statements, and statements of cash flow, on a
consolidated and consolidating basis, as appropriate, and separate profit and
loss statements as of and for the quarterly period then ended and for the fiscal
year to date, prepared in accordance with GAAP, and certified by Borrower's CFO
to be true and correct, and (ii) as soon as practicable, and in any event within
90 days after the end of each fiscal year, annual audited financial statements,
including balance sheets, income statements and statements of cash flow for the
fiscal year then ended, on a consolidated and consolidating basis, as
appropriate, which have been prepared by its independent accountants in
accordance with GAAP. Such audited financial statements shall be accompanied by
the independent accountant's opinion, which opinion shall be in form generally
recognized as "unqualified." Borrower shall cause each Individual Guarantor to
deliver such financial information as Lender shall require from time to time.
(h) AUTHORIZATION. Borrower is now, and shall at all times remain,
duly licensed, qualified to do business and in good standing in every
jurisdiction where failure to be so licensed or qualified and in good standing
would have a material adverse effect on its business, properties or assets. The
execution and delivery of the Loan Documents have been duly authorized by
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Borrower and the Loan Documents constitute the legal valid and binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms. Borrower shall not, without 30 days prior written notice to
Lender, (1) change its name or its structure such that any financing statement
or other record notice becomes misleading or (2) change its principal place of
business or chief executive or accounting offices from the address stated
herein.
(i) LITIGATION. Except as disclosed by Borrower to Lender in
writing as of the date of this Agreement, there are no judgments outstanding
against or affecting Borrower, its officers, directors or affiliates or any part
of the Collateral and no Litigation exists. Borrower shall furnish to Lender all
information regarding any material Litigation as Lender shall reasonably request
and in any event Borrower shall promptly notify Lender in writing of Litigation
against it if the outcome of such Litigation may materially or adversely affect
the finances or operations of Borrower (for purposes of this provision,
$500,000.00 shall be deemed material).
(j) NO CONFLICTS. Borrower is not in violation of any material term
or provision of its by-laws, or of any material agreement or instrument
applicable to it or any Applicable Law. The execution, delivery, and performance
of the Loan Documents do not and shall not violate, constitute a default under,
or otherwise conflict with any such term or provision or result in the creation
of any Lien upon any of the properties or assets of Borrower, except for the
security interest created hereunder.
(k) COMPLIANCE WITH LAWS. In all material respects, Borrower is and
shall remain at all times in compliance with all Applicable Laws.
(L) TAXES. Should any stamp, excise, or other tax, including
mortgage, conveyance, deed, intangible, or recording taxes become payable in
respect of any Loan Documents, Borrower shall pay the taxes (including interest
and penalties, if any) and shall hold Lender harmless with respect thereto.
(m) REGULATIONS. No proceeds of the loans or any other financial
accommodations under the Loan Documents shall be used, directly or indirectly,
for the purpose of purchasing or carrying any margin security, as that term is
defined in Regulation U of the Board of Governors of the Federal Reserve System.
(n) NO LIABILITY. Borrower acknowledges and agrees that Lender
shall not be liable for any acts or omissions nor for any error of judgment or
mistake of fact or law other than as a result of Lender's gross negligence or
willful misconduct.
(o) SETOFF. Without limiting any other right of Lender, whenever
Lender has the right to declare any Indebtedness to be immediately due and
payable (whether or not it has so declared), Lender is hereby authorized at any
time to the fullest extent permitted by law, to set off and apply against any
and all of the Indebtedness, any and all monies then or thereafter owed to
Borrower by Lender in any capacity, whether or not the obligation to pay such
monies owed by Lender is then due. Lender shall be deemed to have exercised such
right of set-off immediately at the time of such election even though any charge
therefor is made or entered on Lender's records subsequent thereto.
(p) BOOKS AND RECORDS. Borrower shall maintain, at all times, true
and complete books, records and accounts in which true and correct entries are
made of its transactions in accordance with GAAP and consistent with those
applied in the preparation of Borrower's financial statements. At all reasonable
times, upon reasonable notice, and during normal business hours, Borrower shall
permit Lender or its agents to audit, examine and make extracts from or copies
of any of its books, ledgers, reports, correspondence, and other records.
(q) INDEMNITY. Borrower shall indemnify, defend and hold harmless
Lender, its parent, officers, directors, agents, employees, and consultants from
and against any loss, expense (including reasonable attorneys' fees and costs),
damage or liability arising directly or indirectly from (i) any breach of any
representation, warranty or covenant contained herein and in the other Loan
Documents, (ii) any claim or cause of action that would deny Lender the full
benefit or protection of any provision herein and in the Loan Documents and
(iii) the ownership, possession, lease, operation, use, condition, sale, return,
or other disposition of the Collateral, except to the extent the loss, expense,
damage or liability arises solely and directly from Lender's gross negligence or
willful misconduct. If after receipt of any payment of all or any part of the
Indebtedness, Lender is for any reason compelled to surrender such payment to
any person or entity, because such payment is determined to be void or voidable
as a preference, an impermissible set-off or for any other reason, the Loan
Documents shall continue in full force and effect and Borrower shall be liable
to Lender for the amount of such payment surrendered together with interest at
the applicable rate. The provisions of this paragraph shall survive termination
of the Loan Documents.
(r) COLLATERAL DOCUMENTATION. Borrower shall deliver to Lender
prior to any advance of principal under a Note, satisfactory documentation
regarding the Collateral to be financed, including, but not limited to,
invoices, canceled checks evidencing payments therefore, or other documentation
as may be reasonably requested by Lender. Immediately prior to any advance,
Borrower shall satisfy Lender that Borrower's business and financial information
is as represented and there has been no material change in Borrower's business,
financial condition or operations since the date of the most recent audited
financial statement delivered under this Agreement.
(s) YEAR 2000 COMPLIANCE. Borrower has made an assessment of the
microchip and computer-based systems and the software used in its business and
based upon such assessment believes that it shall be "year 2000 Compliant" by
January 1, 2000. For purposes of this paragraph, "year 2000 Compliant" means
that all software, embedded microchips and other processing capabilities
utilized by, and material to the business, operations or financial condition of
Borrower are able to interpret, store, transmit, receive and manipulate data
involving all calendar dates correctly and without causing any abnormal ending
scenarios in relation to dates on and after the Year 2000. From time to time, at
the request of Lender, Borrower shall provide to Lender such updated information
as is requested regarding the status of its efforts to become Year 2000
Compliant.
(t) EXPENSES AND ATTORNEYS' FEES. Borrower shall be liable for all
charges, costs, expenses and attorneys' fees incurred by Lender (including
allocated costs of internal counsel): (i) in perfecting, defending, protecting
or terminating its security interest in the Collateral, or any part thereof,
including all costs of registration or of titling the Collateral; (ii) in the
negotiation, execution, delivery, administration, amendment or enforcement of
the Loan Documents or any provision thereof or the collection of any amounts due
under any Note or other Loan Document; (iii) in any lawsuit or other legal
proceeding in any way connected with any of the Loan Documents, including, any
contract or tort or other actions, any arbitration or other alternative dispute
resolution proceeding, all appeals and judgment enforcement actions and any
bankruptcy proceeding (including any relief from stay and/or adequate protection
motions, cash collateral disputes, assumption/rejection motions and disputes or
objections to any proposed disclosure statement or reorganization plan). The
provisions of this paragraph shall survive the termination of the Loan Documents
and any judgment with respect to the Indebtedness or any part thereof.
(u) COMPLETE INFORMATION. No representation or warranty made by
Borrower in this Agreement and no other document or statement furnished to
Lender by or on behalf of Borrower contains any material misstatement of a
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material fact or omits to state any material fact necessary in order to make the
statements contained herein or therein not misleading.
3. PREPAYMENT. Borrower may NOT prepay the Indebtedness, whether in
whole or in part, at any time during the term of this Agreement except as set
forth in the Notes.
4. EVENTS OF DEFAULT. Each of the following events shall constitute an
Event of Default: (a) Borrower fails to pay any part of the Indebtedness within
five calendar days of receipt of written notice, (b) any warranty or
representation of Borrower in any Loan Document is materially untrue, misleading
or inaccurate at the time it is made, (c) Borrower or any Guarantor breaches or
defaults in the performance of any other agreement or covenant under any Loan
Document, (d) Borrower or any Guarantor breaches or defaults in the payment or
performance of any debt or other obligation owed by it to Lender or any
affiliate of Lender, and Lender has (without being obligated to do so) declared
such event, an Event of Default hereunder, (e) Borrower breaches or defaults in
the payment or performance (including but not limited to compliance with
financial covenants) of any debt or other obligation, whether now or hereafter
existing, with an outstanding principal balance in excess of $1,000,000.00, (f)
there shall be a change in the beneficial ownership and control, directly or
indirectly, of the majority of the outstanding voting securities or other
interests entitled to elect or appoint members of the board of directors or
other managing body of Borrower or any Corporate Guarantor (a "change of
control"), or there is any merger, consolidation, dissolution, liquidation,
winding up or sale or other transfer of all or substantially all of the assets
of Borrower or any Corporate Guarantor pursuant to which there is a change of
control or cessation of Borrower or the Corporate Guarantor or the business of
either, (g) death or incompetency of any Individual Guarantor or Borrower if
Borrower is a natural person, (h) any money judgment is entered or filed against
Borrower or any Guarantor in excess of insurance coverage of $1,000,000.00, (i)
the appointment of a receiver for all or any part of the property of Borrower or
any Guarantor, or any assignment for the benefit of creditors by Borrower or any
Guarantor, (j) the filing of a petition by Borrower or any Guarantor under any
bankruptcy, insolvency or similar law, or the filing of any such petition
against Borrower or any Guarantor if the same is not dismissed within 45 days of
such filing (k) failure to maintain working capital of at least $2,000,000.00 at
any quarter end, and/or net cumulative aggregate losses from and after October
1, 1997 in excess of $4,000,000.00, or (l) Borrower shall fail to comply with
section 15 hereof.
5. REMEDIES. Upon the occurrence of an Event of Default, in addition to
all rights and remedies of a Lender under the UCC and under any other applicable
law, Lender may, at its option, at any time (a) declare the Indebtedness to be
immediately due and payable without notice to Borrower or any Guarantor; (b)
without demand or legal process, enter any premises where the Collateral may be
and take possession and/or remove the Collateral all without charge to or
liability on the part of Lender, (c) require Borrower to assemble the
Collateral, crate, pack, ship, and deliver the Collateral to Lender in such
manner and at such place as Lender may require, all at Borrower's sole cost and
expense, (d) render the Collateral unusable at the Borrower's premises and
dispose of such Collateral on such premises without liability for rent or costs
(e) sell the Collateral at public or private sales, in whole or in part, and
have the right to bid and purchase at said sale, and/or (f) lease or otherwise
dispose of all or part of the Collateral, applying proceeds therefrom to the
Indebtedness. Any notice which Lender is required to give to Borrower under any
Applicable Law of the time and place of any public sale or the time after which
any private sale or other intended disposition of the Collateral is to be made
shall be deemed to constitute reasonable notice if such notice given to the last
known address of Borrower at least five days prior to such action. Borrower
shall remain fully liable for any deficiency, with interest thereon at the
applicable rate set forth in the related Notes.
6. CUMULATIVE REMEDIES. Lender's remedies hereunder or otherwise are
cumulative, are in addition to any other remedies provided for by law or in
equity and may, to the extent permitted by law, be exercised concurrently or
separately, and the exercise of any one remedy shall not be deemed an election
of such remedy or to preclude the exercise of any other remedy. No failure on
the part of Lender to exercise, and no delay in exercising any right or remedy,
shall operate as a waiver thereof or in any way modify or be deemed to modify
the terms of this Agreement or the other Loan Documents or the Indebtedness, nor
shall any single or partial exercise by Lender of any right or remedy preclude
any other or further exercise of the same or any other right or remedy. Lender
shall not be under any obligation to marshal any assets in favor of Borrower,
any Guarantor or any other person or against or in payment of any or all of the
Indebtedness. If Debtor shall fail to comply with any provision of any of the
Loan Documents, Secured Party shall have the right, but shall not be obligated,
to take action to address such non-compliance, in whole or in part, and all
expenses and obligations incurred or assumed by Secured Party together with
interest thereon at the applicable rate shall be added to the Indebtedness and
paid by Debtor upon demand.
7. ASSIGNMENT. Lender may transfer or assign all or any part of the
Indebtedness and the Loan Documents without releasing Borrower or the
Collateral, and upon such transfer or assignment the assignee or holder shall be
entitled to all the rights, powers, privileges and remedies of Lender to the
extent assigned or transferred. The obligations of Borrower shall not be
subject, as against any such assignee or assignee, to any defense, set-off, or
counter-claim available to Borrower against Lender and any such defense,
set-off, or counter-claim may be asserted only against Lender.
8. GOVERNING LAW. THE LOAN DOCUMENTS SHALL BE GOVERNED BY AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
9. CONSENT TO JURISDICTION. BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF XXXX,
STATE OF ILLINOIS, AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S ELECTION,
ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS
SHALL BE LITIGATED IN SUCH COURTS. BORROWER EXPRESSLY SUBMITS AND CONSENTS TO
THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS. BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND
AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON DEBTOR BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER, AT THE ADDRESS
SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS
AFTER THE SAME HAS BEEN POSTED.
10. FURTHER ASSURANCE; NOTICE. Borrower shall, at its expense, execute,
and deliver such documents and do such further acts as Lender may from time to
time reasonably require to assure and confirm the rights created or intended to
be created under the Loan Documents to facilitate the performance of the Loan
Documents or to assure the validity, perfection, continuing first priority or
enforceability of any security interest created hereunder. Borrower agrees to
execute any instrument or instruments necessary or expedient for filing,
recording, registering, perfecting, notifying, foreclosing, and/or liquidating
of Lender's interest in the Collateral upon request of, and as determined by,
Lender, and Borrower hereby specifically authorizes Lender to prepare and file
UCC financing statements and other documents necessary to perfect Lender's
interests hereunder, and to execute same for and on behalf of Borrower as
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Borrower's attorney-in-fact, irrevocably and coupled with an interest, for such
purposes. Any written notice to be given under this Agreement shall be in
writing addressed to the respective party as set forth in the heading to this
Agreement (or such other address as may have been designated in a written
notice) and shall be deemed to have been given: (a) if delivered in person, when
delivered; (b) if delivered by telecopy, on the date of transmission if
transmitted on a business day before 4:00 p.m. Central Standard time or, if not,
on the next succeeding business day; (c) if delivered by overnight courier, two
days after delivery to such courier properly addressed; or (d) if by U.S. Mail,
four business days after depositing in the United States mail, with postage
prepaid and properly addressed.
11. JOINT AND SEVERAL OBLIGATION. If this Agreement is executed by more
than one person as Borrower, each such person hereby acknowledges it is jointly
and severally liable for and unconditionally guarantees the prompt and full
payment and performance of all obligations of each other Borrower hereunder and
under the other Loan Documents.
12. WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THE LOAN DOCUMENTS. BORROWER AND LENDER ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH
HAS RELIED ON THE WAIVER IN ENTERING INTO THE LOAN DOCUMENTS AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWER AND
LENDER WARRANT AND REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS
JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS.
13. ENTIRE AGREEMENT. THE LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT
AMONG THE PARTIES HERETO AND SUPERSEDE ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERTAKINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THIS AGREEMENT MAY NOT BE AMENDED OR MODIFIED EXCEPT BY
INSTRUMENT IN WRITING EXECUTED BY ALL PARTIES HERETO.
14. CERTAIN DEFINED TERMS. The following terms used in this Agreement
shall have the following meanings:
"APPLICABLE LAWS" means any and all existing and future laws, rules,
regulations, ordinances, decrees and codes relating to Borrower's business and
operations including, without limitation, all present and future federal, state,
and local laws, rules, regulations, orders, and decrees relating to pollution,
hazardous substances, waste disposal or the protection of human health or
safety, plant life or animal life, national resources or the environment, all as
amended from time to time (collectively "Environmental Laws").
"COLLATERAL" means the property described on each Schedule, together with all
attachments, accessories, substitutions, additions, and replacements therefor
and all proceeds thereof, including insurance proceeds, and any and all
accounts, chattel paper, contract rights and general intangibles arising from
the sale, lease or other disposition thereof.
"CORPORATE GUARANTOR" means any guarantor of all or any part of the Indebtedness
that is not an Individual Guarantor.
"ENVIRONMENTAL LAWS" means all present and future federal, state, and local
laws, rules, regulations, orders, and decrees relating to pollution, hazardous
substances, waste disposal or the protection of human health or safety, plant
life or animal life, national resources or the environment, all as amended from
time to time.
"GAAP" means generally accepted accounting principles, applied consistently with
past periods.
"GUARANTOR" means collectively, Individual Guarantors and Corporate Guarantors.
"INDIVIDUAL GUARANTOR" means any guarantor of all or any part of the
Indebtedness that is a natural person.
"INDEBTEDNESS" means all obligations, liabilities and indebtedness of every
nature of Borrower from time to time owed to Lender evidenced by the Notes or
otherwise incurred pursuant to this Agreement or the other Loan Documents, now
existing or hereafter arising including, without limitation, all interest, fees,
cost and expenses accrued or incurred after the filing of any petition under any
bankruptcy or insolvency law.
"LIEN OR LIENS" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary, (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"LITIGATION" means any and all actions, charges, claims, demands, suits,
proceedings, or governmental investigations now pending or threatened against
Borrower or any of Borrower's property.
"LOAN DOCUMENTS" means this Agreement, the Schedules, the Notes , the Conditions
Rider, if any, and any other documents and instruments executed
contemporaneously with or delivered pursuant to this Agreement or the Notes, all
as amended, modified, extended or renewed from time to time.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (a) the business,
operations, prospects, properties, assets or condition (financial or otherwise)
of Borrower or any Guarantor or (b) the ability of Borrower or any Guarantor to
perform its obligations under any Loan Document to which it is a party or (c)
the ability of Lender to enforce its security interests or collect any of the
Indebtedness.
"NOTE" or "NOTES" means any and all promissory notes which Borrower has executed
and delivered or will execute and deliver to Lender and which are identified on
a Schedule evidencing Indebtedness.
"PERMITTED LIENS" means the following types of Liens, claims, charges, taxes,
and assessments of any kind: (a) Liens (other than Liens relating to
Environmental Laws) for taxes, assessments or other governmental charges not yet
due and payable; (b) statutory Liens of landlords, carriers, warehousemen,
mechanics, materialmen and other similar Liens imposed by law, which are
incurred in the ordinary course of business for sums not more than 30 days
delinquent; (c) Liens in favor of Lender, and (d) Liens set forth on any
Schedule.
"SCHEDULE" or "SCHEDULES" means any and all Schedules which Borrower has
executed and delivered or will execute and deliver to Lender in connection with
this Agreement.
"SEC" means the Securities and Exchange Commission.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in the
State of Illinois, as amended from time to time, and any successor statute.
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15. Additional Terms. Borrower shall maintain a minimum Interest
Coverage Ratio ("Interest Coverage Ratio" shall mean, for any trailing twelve
month period of Borrower, EBITDA (Earnings before Interest, Taxes, Depreciation,
and Amortization) for such period divided by total cash interest expense of
Borrower and its subsidiaries for such period) tested quarterly, of no less than
3.50 : 1.00 through the period ending January 31, 2001. If the Borrower's
Interest Coverage Ratio is less than 3.50 : 1.00, then Borrower will immediately
furnish a Five Hundred Thousand and 00/100 Dollar ($500,000.00) letter of
credit, in form and substance satisfactory to Lender, for the benefit of Lender
from an institution approved by the Lender, for the remaining term of the
transaction. (Lender agrees that Foothill Capital Corporation would be an
acceptable institution.)
IN WITNESS WHEREOF, Lender and Borrower have each signed this Master
Security Agreement as of the day and year first above written.
LENDER BORROWER
XXXXXX FINANCIAL LEASING, INC., a Delaware corporation SOUND ADVICE, INC., a Florida corporation
By: /s/ XXXXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXXXXXX
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Name: Xxxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxxxxxx
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Title: Vice President Title: CFO & Treasurer
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SAI DISTRIBUTORS, INC., a Florida corporation
By: /s/ XXXXXXX X. XXXXXXXXX
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Name: Xxxxxxx X. Xxxxxxxxx
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Title: CFO & Treasurer
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