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EXHIBIT 10.49
INVENTORY SECURITY AGREEMENT
This Inventory Security Agreement is made this 2nd day of December 1997
by and between JALATE, LTD., a California corporation having a principal place
of business at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000 ("DEBTOR") and
XXXXXX FINANCIAL, INC., a Delaware corporation having a place of business at 000
X. Xxxxx Xxxxxxxxx, Xxxxxxxx, XX ("XXXXXX").
WHEREAS, Xxxxxx has made and from time to time may make loans or otherwise
extend credit to Debtor, and in connection therewith, Debtor has agreed to grant
to Xxxxxx a security interest in all of Debtor's now owned or hereafter acquired
inventory, and
WHEREAS, Xxxxxx is willing to do so, subject to the terms, covenants and
warranties hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein and other valuable consideration, the parties do hereby
covenant, warrant and agree as follows:
1. Debtor hereby grants to Xxxxxx a security interest in all its now owned
and hereafter acquired (a) Inventory and all proceeds of the Inventory,
and the payment and performance of all indebtedness now or hereafter owed
by Debtor to Xxxxxx including, without limitation, all indebtedness
arising under or referred to in that certain Collection Date Factoring
Agreement executed by Debtor and Xxxxxx (the "AGREEMENT") together with
all other related amendments, documents and instruments, all of which are
effective as of June 30, 1997 (the "FINANCING AGREEMENTS"), and delivered
or assigned to Xxxxxx, and (ii) any and all other present or future
indebtedness, obligations or liabilities (direct or indirect, absolute or
contingent) now due or hereafter due from Debtor to Xxxxxx. "INVENTORY" as
used in this Security Agreement means and includes all goods intended for
sale or lease by Debtor or to be furnished by Debtor under contracts of
service, all such goods that may be returned to Debtor by its customers,
all raw materials, goods in process in all stages of manufacture, finished
goods, materials and supplies of every nature, used or usable, in
connection with the manufacture, packing, shipping, advertising, selling,
leasing or furnishing of such goods, all contract rights with respect
thereto, and all documents of title representing the same.
2. Upon Debtor's request, Xxxxxx may make loans to Debtor prior to Debtor's
sale of Inventory. All such loans will be made at Xxxxxx'x sole
discretion, will be charged to Debtor's account, will be repayable upon
Xxxxxx'x demand and will bear interest payable in the manner and at the
same rate as a specified in the Agreement and shall in all other respects
be governed thereby.
3. Debtor hereby represents, warrants, covenants and agrees that: (a) all
Inventory, patents, trademarks. and trade names are and shall be owned by
it free from any security interest, lien or encumbrance except such as are
held by Xxxxxx, and that the Inventory shall be kept at the locations
identified below; (b) Debtor shall not (without Xxxxxx'x prior written
approval) remove, sell or otherwise dispose of any Inventory except for
the purposes of sale in the ordinary course of business; (c) if any sale
of Inventory is made for cash, Debtor shall immediately deliver to Xxxxxx
the identical checks, cash or other forms of payments which Debtor
receives therefor, and all payments received by Debtor on Accounts (as
defined in the Agreement) or other proceeds arising from the sale of
Inventory will be credited to Debtor's account in accordance with the
provisions of the Agreement; (d) Debtor shall perform any and all actions
requested by Xxxxxx to perfect its security interests in the Inventory and
all of Xxxxxx'x rights hereunder (such actions shall include but not be
limited to, leasing warehouses to Xxxxxx or its designee; placing and
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maintaining signs; appointing custodians; executing and filing financing
or continuation statements under the Uniform Commercial Code in form and
substance satisfactory to Xxxxxx; maintaining Inventory records;
transferring Inventory to warehouses and delivering to Xxxxxx documents of
title in Xxxxxx'x name, and; if any Inventory is in the possession or
control of any of Debtor's agents or processors, Debtor shall notify such
agents or processors of Xxxxxx'x security interests therein and, upon
Xxxxxx'x request, instruct them to hold all such Inventory for Xxxxxx'x
account and subject to Xxxxxx'x instructions); (e) Xxxxxx may examine and
inspect the Inventory at any time and a physical listing of all Inventory
wherever located shall be taken by Debtor at least every three (3) months
and whenever otherwise requested by Xxxxxx, and a copy of each such
physical listing shall be supplied to Xxxxxx; (f) Debtor shall reimburse
Xxxxxx for all expenses, including reasonable attorneys' fees, incurred or
paid by Xxxxxx in protecting or enforcing any of its rights hereunder; (g)
in the event of a default hereunder or under the Agreement, Xxxxxx shall
have the right to take physical possession of the Inventory and to
maintain such possession on Debtor's premises or request Debtor to
assemble the Inventory and make it available to Xxxxxx at a place to be
reasonably designated by Xxxxxx; and (h) Debtor shall at all times and at
its own expense keep the Inventory insured against loss or damage by fire,
theft, extended coverage and such other hazards as Xxxxxx may specify, in
such amounts and companies and under such policies and in such form as
shall be acceptable to Xxxxxx, and the policies shall be endorsed in
Xxxxxx'x favor so that any loss thereunder shall be payable to Xxxxxx as
its interest may appear and such policies shall be deposited with Xxxxxx.
In the event Debtor fails to provide Xxxxxx with evidence of the insurance
coverage required by or this Agreement, Xxxxxx may, but is not required
to, purchase insurance at Debtor's expense to protect Xxxxxx'x interests
in the Inventory. This insurance may, but need not, protect Debtor's
interests. The coverage purchased by Xxxxxx may not pay any claim made by
Debtor or any claim that is made against Debtor in connection with the
Inventory. Debtor may later cancel any insurance purchased by Xxxxxx, but
only after providing Xxxxxx with evidence that Debtor has obtained
insurance as required by this Agreement. If Xxxxxx purchases insurance for
the Inventory, Debtor will be responsible for the costs of that insurance,
including interest and other charges imposed by Xxxxxx 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 Obligations. The costs of the insurance may be more
than the cost of insurance Debtor is able to obtain on its own.
4. Debtor further warrants to and agrees with Xxxxxx that: (a) Debtor is and
will be a corporation, validly existing and in good standing under the
laws of the State of California and duly qualified to conduct its business
in any jurisdiction where any of the Inventory may now or hereafter be
located; (b) Debtor is duly authorized to execute this Agreement and the
Financing Agreements and such agreements upon execution, will be valid,
enforceable and binding upon the Debtor in accordance with their terms;
(c) Debtor shall pay and perform all of its obligations to Xxxxxx under
the Financing Agreements and this Agreement according to their terms,
whether by maturity, by acceleration or otherwise; (d) Debtor shall
immediately advise Xxxxxx in writing of any change in any of Debtor's
places of business or the opening of any new place of business; and (e)
Debtor shall join with Xxxxxx in executing one or more financing
statements pursuant to the Uniform Commercial Code and any other document,
in a form satisfactory to Xxxxxx, necessary to perfect the security
interest granted herein or to effectuate the purposes of this Agreement.
5. Default by Debtor as to any present or future agreement, obligation,
indebtedness, note, mortgage, guaranty, security agreement, instrument or
document to which Xxxxxx and Debtor are parties, shall constitute an event
of default under every other agreement, obligation, instrument or document
to which Xxxxxx and Debtor are parties, and all security and collateral
theretofore or to be delivered to Xxxxxx pursuant thereto shall be deemed
and considered to be and shall be collateral and security for each and
every present or future agreement, obligation, indebtedness, note,
mortgage, guaranty, security agreement, instrument or document delivered
by Debtor to
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Xxxxxx. Xxxxxx shall have the right, without obligation of apportionment
to look to any of such collateral or security for satisfaction of any
present or future obligation of Debtor to Xxxxxx.
6. Until default, Debtor may retain possession of the Inventory and use it in
any lawful manner not inconsistent with this Agreement or with the terms
or conditions of any policy of insurance thereon. Debtor shall be in
default under this Agreement upon the happening of any of the following
events or conditions:
(a) Default by Debtor in payment of any indebtedness or obligation now
or hereafter owed by Debtor to Xxxxxx or default in the performance
of any obligation, covenant or liability contained in this Agreement
or the Financing Agreements; or
(b) Any warranty, representation or statement made or furnished to
Xxxxxx by or on behalf of Debtor proves to have been false in any
material respect when made or furnished; or
(c) Any loss, theft, damage or destruction of any material portion of
the Inventory which is not covered by insurance as provided herein,
or the making of any levy, seizure or attachment thereof or thereon,
or any unauthorized sale or encumbrance with respect thereto; or
(d) Dissolution, termination of existence, discontinuance of the
business, insolvency, business failure, or appointment of a receiver
of any part of the property of, or assignment for the benefit of
creditors by, the Debtor or the commencement of any proceedings
under any bankruptcy or insolvency laws by or against Debtor.
7. Upon any such default as set forth in the preceding section of this
Agreement, Xxxxxx shall then, or at any time thereafter, have all the
rights and remedies of a Secured Party under the Uniform Commercial Code,
all rights provided in this Agreement and the Financing Agreements, or in
any other applicable security or loan agreement or document, all of which
rights and remedies shall, to the full extent permitted by law, be
cumulative. Xxxxxx may enter upon the Debtor's premises to take possession
of the Inventory, to remove it, to render it unusable or dispose of the
Inventory on the Debtor's premises, and the Debtor agrees not to resist or
interfere. The Debtor waives notice of and the holding of a judicial
hearing prior to repossession or replevin of the Inventory by Xxxxxx.
Xxxxxx may require the Debtor to assemble the Inventory and make it
available at a place designated by Xxxxxx which is mutually convenient.
Any notice in writing of the sale, disposition or other intended action by
Xxxxxx after default by Debtor which is sent by mail, postage prepaid, to
the Debtor at its principal place of business specified above, or such
other address of Debtor which may from time to time be shown on Xxxxxx'x
records, at least ten days prior to such actions, shall constitute
reasonable notice to the Debtor. The waiver of any default hereunder shall
not be a waiver of any subsequent default or of the same default on a
future occasion.
8. All rights of Xxxxxx hereunder shall inure to the benefit of its successors
and assigns and all obligations of the Debtor shall bind its heirs,
executors, administrators, successors and assigns.
9. This Agreement may not be amended, modified or terminated except in writing
signed by the party to be charged.
10. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
11. CONSENT TO JURISDICTION. DEBTOR HEREBY CONSENTS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF LOS ANGELES
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STATE OF CALIFORNIA AND IRREVOCABLY AGREES THAT, SUBJECT TO XXXXXX'X
ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER FINANCING AGREEMENTS SHALL BE LITIGATED IN SUCH
COURTS. DEBTOR EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. DEBTOR
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 DEBTOR, AT THE ADDRESS SET
FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10)
DAYS AFTER THE SAME HAS BEEN POSTED.
12. WAIVER OF JURY TRIAL. DEBTOR AND XXXXXX HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT AND THE OTHER FINANCING AGREEMENTS. DEBTOR
AND XXXXXX ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN
ENTERING INTO THIS AGREEMENT AND THE OTHER FINANCING AGREEMENTS AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
DEBTOR AND XXXXXX 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.
This Agreement has been executed by Debtor, being duly authorized and
empowered, and Xxxxxx on the day and year just above written.
JALATE,LTD. XXXXXX FINANCIAL, INC.
By: [SIG] By: [SIG]
_______________________________ ____________________________
Title: V.P. FINANCE Title: V.P.
____________________________ _________________________
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