INVENTORY SECURITY AGREEMENT
AND POWER OF ATTORNEY
TO: 21ST mortgage corporation ("Secured Party"), which has its principal place
of business at 000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx 00000, as of
the date set forth in the final paragraph of this Agreement.
The undersigned entity or person ("Debtor") intends to engage or is engaged in
the business of buying, selling and generally dealing in goods of various types
of retail and, from time to time, may desire Secured Party to finance the
acquisition of such goods from manufacturers or other suppliers acceptable to
Secured Party.
Therefore, the parties agree as follows:
1. DEFINITION OF COLLATERAL. The term "Collateral," as used herein, shall have
the same meaning as the following terms, as those definitions under applicable
law may be amended from time to time:
1.1. Inventory. All Inventory or goods of whatever description held for sale,
rent or lease by Debtor, now or hereafter owned, or now or hereafter in the
possession, custody or control of Debtor, wherever located, together with all
attachments, accessories, additions and substitutions, including all returns and
repossessions (hereinafter called "Inventory").
1.2. Other Items. All of Debtor's rights to any (a) accounts including but not
limited to, rebates, discounts, credits, factory holdbacks and incentive
payments which may become due to Debtor by the manufacturer or distributor with
respect to any of the Inventory, (b) equipment, (c) fixtures, (d) contract
rights, (e) chattel paper, (f) instruments, (g) goods, (h) documents, (i)
general intangibles (j) deposit accounts, (k) investment property, (l)
letter-of-credit rights, (m) supporting obligations, and (n) money, whether now
owned or hereafter acquired.
1.3. Proceeds. All proceeds from the above-described Collateral, including, but
not limited to, insurance proceeds payable by reason of loss or damage to any of
the Inventory, equipment and fixtures, cash, goods, instruments, accounts,
chattel paper, contract rights, and replacement Inventory.
2. APPLICATION FOR CREDIT.
2.1. Request. Debtor may request financing from Secured Party for the purchase
of goods from any supplier and, if Secured Party elects, in its sole discretion,
to make such financing available, it shall be made in such amounts and upon such
conditions as Secured Party may determine. Debtor agrees that Secured Party may,
at any time and without notice, elect not to finance Inventory if the supplier
is in default of its obligations to Secured Party or Secured Party is otherwise
reasonably insecure.
2.2. Execution of Documents. As part of an application for such financing,
Debtor shall execute and deliver to Secured Party any and all additional
Initials__JTT___
writings that Secured Party deems necessary or desirable to accomplish the
purposes of this Agreement, including, but not limited to Financing Statements
and any amendments thereto.
2.3. General Terms. Debtor and Secured Party agree that the financial terms of
any advance by Secured Party hereunder, such as finance charge rates, other
fees, maturities and curtailments, are not fully set forth because such terms
depend, in part, upon supplier incentives or discounts, general economic
conditions, governmental and quasi-governmental actions, Debtor's volume and
outstanding indebtedness with Secured Party and other market factors. This
Agreement provides the general terms only of Secured Party's financing program
with Debtor. Debtor shall be deemed to have accepted the specific terms of each
financing transaction hereunder unless Debtor notifies Secured Party in writing
of any objection within fifteen (15) days of receipt of Secured Party's
confirmation. If Debtor timely objects to the terms of any extension of credit
(other than the initial credit transaction which cannot be protested), and
mutually agreeable terms cannot be negotiated, Debtor agrees to pay Secured
Party for such Financing on the same terms and conditions as the immediately
preceding extension of credit for like Inventory from the same supplier, to
which Debtor has not objected. In this event, Debtor acknowledges that Secured
Party may then elect to suspend or terminate this Agreement. Termination for
this reason alone will not be deemed a default of this Agreement, and prior
extensions of credit shall not be accelerated, unless Debtor is, otherwise in
default under this Agreement. Without limiting the generality of the remainder
of this Section 2.3, the parties acknowledge that the interest rate applicable
to all notes funded under this Agreement has been determined based upon a number
of factors, including, without limitation, market conditions, usage of the
available credit facility and credit quality of Debtor. Debtor expressly agrees
that if Secured Party determines that any of these factors has changed, Secured
Party may, in the exercise of its discretion, adjust the interest rate, either
upwards or downwards, for all existing and future notes upon the delivery of
written notice to Debtor. This interest rate adjustment shall be effective
thirty (30) days subsequent to the date of such written notice.
2.4. Credit Verification. Debtor agrees Secured party may verify any information
provided by Debtor with Debtor's references, other third parties, and through
credit reporting agencies, and Debtor agrees that Secured Party may provide to
any third party any credit, financial or other information on Debtor that
Secured Party may possess.
2.5. Other Inventory Credit Lines. If Debtor's total Inventory credit lines with
any lenders, including Secured Party, should exceed $ 5,000,000 , Secured Party
may at its sole discretion terminate its credit line. Termination for this
reason alone will not be deemed a default of this Agreement, and prior
extensions of credit shall not be accelerated, unless Debtor is, otherwise in
default under this Agreement.
3. SELECTION OF INVENTORY; DISCLAIMER OF WARRANTY. Debtor has selected both the
Inventory and the supplier from whom Debtor acquired the Inventory and Debtor
assumes all responsibility and risk for the existence, character, quality,
condition and value of the Inventory. This is an agreement regarding the
extension of credit and not the provision of goods and services. Debtor
irrevocably waives any claims against Secured Party with respect to the
Inventory whether for breach of warranty or otherwise and shall not assert
against Secured Party any claim or defense Debtor may have against any supplier
Initials__JTT___
of Inventory to Debtor. Any such claims shall not alter, diminish or otherwise
impair Debtor's liabilities or obligations to Secured Party.
4. GRANT OF SECURITY INTEREST. Debtor grants to Secured Party a security
interest in all Collateral of Debtor, whether presently owned or after-acquired.
The security interest granted under this Agreement or under any other present or
future agreement between Debtor and Secured Party or any of Secured Party's
affiliates or subsidiaries, shall secure the payment and performance of all
debts, liabilities and obligations of Debtor to Secured Party, its affiliates
and subsidiaries, whether presently existing or hereafter arising or created.
The security interest granted by Debtor will secure all present and future
advances made under this Agreement. In granting the security interest, Debtor
authorizes Secured Party to perfect its interest by filing a financing statement
or by taking any other steps to perfect as authorized by law.
5. PAYMENT OF DEBTS DUE FROM SUPPLIERS. Debtor assigns to Secured Party and
agrees to pay the amounts described in Paragraph 1.2 to Secured Party, as soon
as the same are received, for application to Debtor's obligations hereunder.
Debtor authorizes Secured Party to collect any such amounts directly from the
manufacturer, supplier or distributor, and, upon request of Secured party, to so
instruct the manufacturer or distributor to make payments directly to Secured
Party.
6. DOCUMENTS OF TITLE. Debtor shall promptly deliver to Secured Party any
Certificate of Title, Certificate of Origin, or Manufacturer's Statement of
Origin issued for each item of Inventory, or cause any manufacturer or supplier
of Inventory or other third party which may hold such Certificate, or Statement
to deliver same to Secured Party. Secured Party shall have the right to hold
such documents and until such items of Inventory are sold and Secured Party has
been paid the balance owing on such Inventory. Secured Party shall have the
right to have its lien or security interest noted thereon.
7. OBLIGATIONS OF DEBTOR. Debtor shall have the following obligations to Secured
Party:
7.1. Use and Location. Debtor will only display and sell Inventory to buyers in
the ordinary course of business. Debtor shall not use (except for incidental
demonstration for sale), rent, lease, transfer or dispose of Inventory except as
provided herein, nor permit, without the written consent of Secured Party, the
Collateral to be subject to any lien encumbrance or security interest except
that granted herein. All Inventory shall be located at the address(es) listed in
Paragraph 20. Secured Party may examine the Inventory and Debtor's books and
records regarding the Inventory, at any time.
7.2. Documents. Debtor will execute all documents Secured Party requests to
evidence a credit extension, and to perfect Secured Party's Inventory purchase
money security interest, or otherwise assist Secured Party to obtain any
necessary subordination agreements, waivers, releases, or amendments to this
Agreement to ensure Secured Party has the first priority purchase money security
interest in the Inventory.
Initials__JTT___
7.3. Condition. Debtor shall keep all Inventory in good order, repair and
operating condition, and shall immediately notify Secured Party of any loss,
theft or damage to the Inventory.
7.4. Taxes. Debtor shall pay immediately all taxes, expenses, assessments and
charges that may now or hereafter be levied or assessed against the Collateral.
If Debtor fails to pay such taxes, fees or charges, Secured Party may, but shall
not be obligated to, do so on Debtor's behalf and demand from Debtor repayment
of all such amounts plus interest at the highest contract rate allowed by law.
7.5. Payment. Debtor's payments are due upon receipt of its monthly billing
statement. Payment of the Late Fee will not waive the default caused by the
failure to make such payment. Debtor shall pay Secured Party promptly when due
the amount of any extension of credit according to the terms of any floorplan
note or any other writing evidencing such extension of credit, including, but
not limited to, all accrued and unpaid interest, any required curtailments,
maturities and additional charges and fees as required in any Addendum, Terms
Schedule or other written supplement to this Agreement, all without regard to
any manufacturer or distributor rebates, credits, holdbacks or discounts.
Notwithstanding the foregoing, Debtor agrees to pay Secured Party the amount of
any extension of credit on each item of inventory financed hereunder immediately
upon the sale thereof or removal from the location listed in Paragraph 20 except
for the purposes of incidental demonstration.
Secured Party may apply payments received from Debtor toward the payment of any
obligations of Debtor in such order of application as Secured Party may
determine. Secured Party may apply payments to finance charges first, then to
principal, regardless of Debtor's instructions and it may apply payments to
oldest (earliest) Inventory floorplan notes. All principal payments will be
applied first to such Inventory that is sold, stolen, lost, damaged, rented,
leased or otherwise missing. Any payment by the Debtor shall be deemed credited
3 Business Days after received by the Secured Party at the place for payment
provided for in the Agreement, or if paid to the Secured Party at any other
place, 3 Business Days after deposited by the Secured Party.
If Secured Party determines that the aggregate outstanding credit owed by Debtor
exceeds the aggregate wholesale invoice price of the Inventory in Debtor's
possession, Debtor shall immediately upon demand pay Secured Party the
difference between the two amounts. Acceptance by Secured Party of past due
amounts shall not be construed as a waiver of default or an amendment to the
terms of this Agreement. Any supplier or third party discount rebate, bonus, or
credit paid to Secured Party will not reduce Debtor's obligations to Secured
Party until such payment becomes Secured Party's cash.
7.6. Finance Charge Calculation. All payments are due upon Debtor's receipt of
Secured Party's monthly or other billing statement. Debtor agrees to pay Secured
Party finance charges on the outstanding principal indebtedness owing for each
item of Inventory at the rate(s) provided in the Terms Schedule in effect on the
applicable floorplan note (or other evidence of debt) created related to such
Inventory, unless Debtor objects thereto as provided in Section 2.3. Finance
charges at the stated rate shall be computed based on a 360 day year and
calculated by multiplying the Daily Charge (defined below) by the actual number
of days in the applicable billing period. Such finance charges shall accrue from
the floorplan note date for the Inventory until Secured Party receives the
entire principal amount. The "Daily Charge" is the product of the Daily Rate
Initials __JTT___
(defined below) multiplied by the Average Daily Balance (defined below). The
"Daily Rate" is the quotient of the annual rate provided in the Terms Schedule
divided by 360. The "Average Daily Balance" is the quotient of (i) the sum of
the outstanding principal debt owed Secured Party on each day of a billing
period for each item of Collateral, divided by (ii) the actual number of days in
such billing period.
Whenever used in this agreement, in any other document referring to this
agreement, or in the Terms Schedule, the term "Prime Rate" shall mean the higher
of 1.) The prevailing domestic "Prime Rate" as published in the Wall Street
Journal in its "Money Rates" column on a daily basis or 2.) the Minimum Prime
Rate as defined in the Terms Schedule. In the event that the "Prime Rate" as
published in the Wall Street Journal ceases to exist or the Wall Street Journal
ceases publishing a "Prime Rate," the Secured Party will substitute a comparable
index, which is outside the control of the Secured Party. In the event of an
error by the Wall Street Journal, the "Prime Rate" will be based upon the "Prime
Rate" as corrected.
Notwithstanding the above, Debtor acknowledges that Secured Party intends to
strictly comply with all applicable usury laws governing this Agreement. Should
such law other than Tennessee apply and the usury rate be less than that billed,
any excess finance charges paid shall be deemed payment on the unpaid principal
on the applicable floorplan note. If an overpayment of principal results, it may
be applied to principal on any other floorplan note, and if none, refunded to
Debtor.
7.7. Additional Charges. If Secured Party does not receive by the 25th day of
the month payment of all amounts listed on the monthly billing statement
(including principal, interest, curtailment and administrative charges), Debtor
will to the maximum extent permitted by applicable law, pay Secured Party a late
fee in the amount equal to the greater of $5.00 or 5% of the amount of such
delinquent payments (the "Late Fee"). To the extent permitted by applicable law,
Debtor agrees to pay Secured Party $100 for each check returned unpaid for
insufficient funds to cover administrative costs.
Debtor further agrees to pay the Secured Party, promptly as billed, the service
charge with respect to each unit of Inventory as specified in the Terms Schedule
attached to this agreement. These charges are intended as an administrative fee
to defray the costs and expenses of managing the financing and/or monitoring and
inspecting of the Inventory.
7.8. Establishment of Direct Pay Relationship. It is the responsibility of the
Debtor to (i.) notify the Secured Party of the proposed sale of any Collateral
prior to such Collateral physically leaving the Debtor's applicable sales
location, and (ii.) establish a contractual direct pay relationship between the
Secured Party and the applicable lender, or the purchaser of the Collateral in
the event that a lender is not involved in the transaction (i.e., purchase for
cash). If the debtor cannot complete both of these tasks then the Collateral
becomes immediately due and payable without notice or demand. Failure to comply
with these requirements will be treated as an Event of Default under paragraph
11 of the Inventory Security Agreement and Power of Attorney. Furthermore, this
default will subject the Debtor to all Remedies as listed in paragraph 12 of the
Inventory Security Agreement and Power of Attorney or those provided by
applicable law.
Initials_JTT___
8. INSURANCE. Debtor shall keep the Inventory insured with an insurance company
acceptable to Secured Party for full value against all insurable risks,
including flood, with Secured Party as the loss payee, and will notify Secured
Party in writing ten (10) days before changing or canceling such insurance.
Debtor shall provide Secured Party with written evidence of such coverage and
loss payee and lender's clauses. If Debtor should fail to obtain such insurance,
Secured Party may obtain coverage, but shall not be obligated to do so, on
Debtor's behalf. Secured Party can demand from Debtor repayment for all
expenditures together with interest at the highest contract rate allowed by law.
9. DEBTOR'S RECORDS AND FINANCIAL INFORMATION. Debtor shall keep accurate and
complete records of the Collateral that may be examined and copied by Secured
Party upon request. Debtor agrees to provide, within 90 days of the end of
Debtor's fiscal year, Financial Statements and shall provide management prepared
Financial Statements within 45 days of the end of each fiscal quarter of Debtor.
For the purposes of this Section 9, Financial Statements shall include, without
limitation, reasonably detailed balance sheets and reasonably detailed income
statements, all prepared in accordance with generally accepted accounting
principles, consistently applied. Debtor grants Secured Party an irrevocable
license and right to occupy Dealer's business locations during normal business
hours without notice to verify the Inventory, examine Debtor's books and records
relating to the Inventory and Collateral, and to verify Debtor's compliance with
this Agreement. Debtor shall give Secured Party at least 45 days prior written
notice of any change in Debtor's identity, name, location, form of business
organization, ownership, and additional business locations.
10. POWER OF ATTORNEY. Debtor hereby grants a Power of Attorney to Secured Party
(which may be exercised by any agents or employees of Secured Party) under which
Secured Party may execute, on behalf of Debtor, any trust receipts, floorplan
notes, chattel paper, financing statements and amendments thereto, or other
writing in connection with this Agreement as attorney-in-fact for Debtor. Debtor
hereby directs Secured Party to sign all floorplan notes on Debtor's behalf.
Secured Party agrees to furnish Debtor a copy of such notes upon written request
of Debtor. Debtor shall call any errors in such floorplan notes to Secured
Party's attention within fifteen (15) days of Debtor's receipt of such note or
receipt of Debtor's monthly statement. Secured Party will sign a corrected note
in replacement of any incorrect note. Under this Power of Attorney, Secured
Party is authorized to execute any such writings manually or by affixing a
mechanical facsimile or printed signature. Upon Debtor's request, Secured Party
will furnish Debtor with a copy of each writing executed under the Power of
Attorney.
11. EVENTS OF DEFAULT. The occurrence of one or more of the following events
shall constitute a default by Debtor under this Agreement:
11.1. Failure to Pay. Any failure by Debtor to pay any portion of its debts to
Secured Party, when due and payable hereunder.
11.2. Breach. Any breach or failure of Debtor to observe or perform any of its
other terms, obligations, representations, warranties, covenants or undertakings
hereunder.
Initials__JTT___
11.3. Misrepresentation. Any misrepresentation by Debtor to Secured Party in
connection with the business and financial condition or organizational structure
of Debtor or any misrepresentation relating to the Collateral.
11.4. Death or Dissolution. Death or dissolution of Debtor or of any guarantor
or surety for Debtor's obligations hereunder.
11.5. Termination of Guaranty. The termination by any guarantor or surety of a
guaranty or suretyship with respect to Debtor.
11.6. Insolvency Proceedings. Debtor or any guarantor or surety: (a) makes an
assignment for the benefit of creditors; (b) files or has filed against it a
petition in bankruptcy or for the appointment of a receiver.
11.7. Judgments/Attachment. Any other creditor, customer or tax authority
obtains a judgment or lien against Debtor or any guarantor, or any attachment,
sale or seizure issues or is executed against any assets of Debtor or any
guarantor.
11.8. Collateral Impairment/Sale Out of Trust. Any material reduction in the
value of the Collateral or any act of Debtor which imperils the prospect of full
performance or satisfaction of Debtor's obligations hereunder; any sale, lease,
rental, or other transfer of any Inventory by Debtor without informing Secured
Party and promptly paying off the applicable floorplan note and any other
charges.
11.9. Fraudulent Acts. Debtor has concealed, removed, transferred or permitted
to be concealed, removed or transferred, any part of its assets, so as to
hinder, delay or defraud any of its creditors or in such manner as would be
fraudulent under any bankruptcy, insolvency, fraudulent conveyance or similar
law.
11.10. Loss of Right to Sell. Debtor has voluntarily or involuntarily given up
or lost any franchise, permission, license or right to sell or deal in any
product line of Inventory that represents a significant portion of Debtor's
sales volume.
11.11. Insecurity. Secured Party shall, in good faith, deem itself insecure with
respect to any of the Collateral or repayment of any of the amounts described
herein.
11.12. Other Agreement with Secured Party. If Secured Party has Retail Financing
Agreement(s) with Debtor, a default on one agreement may, at Secured Party's
option, constitute a default on the other agreement(s). Any monies due Debtor by
Secured Party, under any agreement(s) may be applied to other defaults at the
Secured Party's discretion.
12. REMEDIES. In the event of a default, as defined in Paragraph 11:
12.1. Acceleration. Secured Party shall have, in addition to any and all rights
under the Uniform Commercial Code, the option to terminate this Agreement
immediately and to declare any and all indebtedness or liabilities of Debtor to
Secured Party immediately due and payable without notice or demand.
Initials__JTT___
12.2. Default Finance Charge. Secured Party may impose a default finance charge
to all of Debtor's outstanding principal indebtedness equal to that default
rate, if any, specified in the Terms Schedule, or, if there is none specified,
at the lesser of 16% per annum on each outstanding floorplan note, or the
highest lawful contract rate of interest permitted under applicable law.
12.3. Assembly of Collateral. Debtor shall, if Secured Party so requests,
assemble the Inventory and deliver it to Secured Party, in good order and repair
at Debtor's expense, at a place designated by Secured Party.
12.4. Repossession and Sale. Secured Party shall also have the right to take
immediate and exclusive possession of all Collateral or any part thereof,
wherever it may be found, and also may enter any of the premises of Debtor with
or without process of law, without force, wherever the said Collateral may be or
supposed to be and take possession of, and remove, sell, and dispose of, said
Collateral, or any part thereof, at public auction or private sale. Secured
Party reserves the right to bid and become the purchaser at any such sale.
Debtor acknowledges that a manufacturer's repurchase agreement may exist as to
the Collateral, and Debtor hereby agrees that, without limiting other methods of
disposition, disposition of the Collateral pursuant to such an agreement is a
commercially reasonable foreclosure sale under the Uniform Commercial Code.
Debtor hereby specifically waives any right to judicial proceedings prior to
Secured Party's exercise of this right of "self-help" repossession.
12.5. Commercial Sale. Dealer agrees that Secured Party may, at its option,
either (i) conduct a private sale of any or all of the Collateral, (ii)
liquidate the Collateral to any supplier of Inventory or (iii) liquidate the
Collateral at a public sale. Without limiting the methodology of disposing of
the Collateral and without excluding other methods of conducting a private sale,
Debtor agrees that a private sale is a commercially reasonably sale under the
Uniform Commercial Code if Secured Party requests bids from at least three (3)
dealers, distributors or suppliers of Inventory of that type and any sale occurs
in whole or in parcels within 180 days after Secured Party obtained possession
and authority (if needed) to sell the Inventory and the sale is made to the
highest bidder making a written cash offer. Debtor agrees that any resale of
Inventory to the supplier of inventory (commonly called a Manufacturer's
Repurchase) under any agreement between the supplier and Secured Party is a
commercially reasonable private sale of inventory under the Uniform Commercial
Code and no requests for bids shall be required.
12.6. Costs and Expenses. Debtor shall pay all costs incurred by Secured Party
in the collection of any indebtedness or liabilities owed Secured Party by
Debtor and the enforcement of any obligations of Debtor to Secured Party,
including the costs of repossession, reasonable attorney's fees and other legal
expenses, and reasonable costs of maintenance, possession and sale of the
Collateral.
12.7. Notice. Any notification of collateral disposition shall be deemed
reasonably and properly given if mailed at least ten (10) days before such
disposition, postage prepaid, addressed to Debtor.
12.8. Application of Proceeds. Any proceeds of the Collateral may be applied by
Secured Party to the payment of the reasonable expenses of retaking, holding,
Initials__JTT___
preparing for sale, selling and the like, including reasonable attorney's fees
and legal expenses, and any balance of such proceeds may be applied by Secured
Party toward the satisfaction of Debtor's indebtedness or liabilities in such
order of application as Secured Party may in its sole discretion determine. Any
surplus shall be paid to Debtor, and Debtor agrees to pay any deficiency
immediately upon demand.
12.9. Prepayment Penalty. If Debtor elects to liquidate inventory advanced upon
by Secured Party in an amount exceeding 50% of the outstanding inventory balance
at any one time in a manner other than the ordinary course of business, Secured
Party may, at its sole discretion, apply a prepayment penalty of up to 5% of the
outstanding inventory balance.
12.10. Access to Premises. Debtor grants Secured Party an irrevocable license
and right to occupy Dealer's business locations twenty-four (24) hours a day,
seven (7) days a week. Secured Party may at its sole discretion prohibit the
removal of any Collateral from the premises without payment in full.
13. PRIOR ACTS NOT A WAIVER. Secured Party shall have the right at all times to
enforce the terms and provisions of this Agreement in strict accordance with the
terms thereof, notwithstanding the prior failure of Secured Party to take such
action.
14. ASSIGNMENT. Secured Party may assign this Agreement but Debtor may not
assign this Agreement without the prior written consent of Secured Party.
15. AMENDMENT. This Agreement and the Terms Schedule attached hereto may not be
amended except through a written instrument. Debtor agrees that Secured Party
may notify Debtor of amendments to this Agreement. These amendments shall apply
to any transactions financed by Secured Party after the date of the amendment
without the execution of the amendment by Debtor, but such amendments shall not
apply to transactions financed by Secured Party prior to the date of such
amendment without Debtor executing and delivering such amendment. Debtor agrees
that in addition to the remedies described in Section 12, upon the occurrence of
an Event of Default, Secured Party shall have the right to adjust the interest
rate for all transactions, including those entered into prior to the date of the
adjustment. If Debtor previously signed any Inventory Security Agreement
regarding the Collateral with Secured Party, this Agreement will amend and
supplement such prior agreement. If this Agreement conflicts with the terms of
any prior agreement, the terms of this Agreement shall govern.
16. CHOICE OF LAW. This Agreement is deemed to have been entered into and to be
performed at Secured Party's office in Knoxville, Tennessee. The validity,
enforceability and interpretation of this Agreement and any promissory notes
taken, charges made and sums paid in connection herewith shall be governed by
the laws of the State of Tennessee. If any provision of this Agreement or its
application is deemed invalid or unenforceable, the remainder of this Agreement
will not be affected and will remain binding and enforceable.
17. TERMINATION. Either Secured Party or Debtor may terminate this Agreement by
sending thirty (30) days written notice by certified mail to the other, but
termination of this Agreement does not end Debtor's obligations to Secured Party
Initials__JTT___
for those obligations which accrued prior to the effective date of the
termination; provided, however, no notice of termination to Debtor will be
required if Debtor is in default of this Agreement.
18. BINDING ARBITRATION. Except for any action to recover, repossess or replevin
any collateral hereunder, and any action to recover any deficiency due Secured
Party following the disposition of such collateral, all actions, disputes,
claims and controversies under common law, statutory law or equity of any type
or nature whatsoever (including, without limitation, all tort, all contract
actions, whether regarding express terms or implied terms, such as implied
covenants of good faith, fair dealing, and the commercial reasonableness of any
Collateral disposition, or any other contract claim, all claims of deceptive
trade practices of lender liability, and all claims questioning the
reasonableness or lawfulness of any act, whether arising before or after the
date of this Agreement, and whether directly or indirectly relating to: (a) this
Agreement or any amendments and addendum hereto, or the breach, invalidity or
termination hereof; (b) any previous or subsequent agreement between Secured
Party and Debtor; or (c) any other relationship, transaction or dealing between
Secured Party and Debtor (collectively the "Disputes"), will be subject to and
resolved by binding arbitration, to the extent permitted by applicable law.
18.1. Any dispute arising out of or relating to this Agreement, or the breach,
termination or validity thereof, shall be determined by arbitration in the
Division of the Federal Judicial District of Secured Party's office in
accordance with the provisions of this Section 18 and the Commercial Arbitration
Rules ("Rules") of the American Arbitration Association ("AAA") in effect on the
date of this Agreement by a single arbitrator who (i) has the qualifications and
experience set forth in paragraph 18.2 of this Section 18 and (ii) is selected
as provided in paragraph 18.3 of this Section 18; provided, however, that, if
the dispute involves more than $1 million, three arbitrators having such
qualifications and experience shall be appointed, each of whom shall be selected
in the same manner as set forth herein for the selection of a single arbitrator.
The arbitrator(s) shall base their award on this Agreement and applicable law
and judicial precedent and shall accompany their award with a written
explanation of the reasons for their award. The arbitration shall be governed by
the substantive laws of the State of Tennessee applicable to contracts made and
to be performed therein and by the arbitration laws of the United States (Title
9, U.S. Code), and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
18.2. Every person nominated or recommended to serve as an arbitrator hereunder
shall be a professional who has had experience as an arbitrator and at least 15
years experience specializing in manufactured housing, with expertise in
interpreting contracts; retail financing and Inventory financing.
18.3. The arbitrator shall be selected as provided in this Section 18 and
otherwise in accordance with the AAA's Commercial Arbitration Rules in effect on
the date of this Agreement, except that each party shall be entitled to strike
on a peremptory basis any or all of the names of potential arbitrators on the
list submitted to the parties by the AAA as being qualified in accordance with
the criteria set forth in paragraph 18.2 hereof. In the event the parties cannot
agree on a mutually acceptable arbitrator from the list submitted by the AAA,
the Regional Vice-President of the AAA, under supervision of the AAA's national
department of case administration, shall submit to both parties a second list
Initials__JTT___
containing the names of three lawyers meeting the foregoing qualifications, each
of whom shall be a member of the AAA's Commercial Finance Disputes Arbitration
Panel, and each party shall be entitled to strike one of such names on a
peremptory basis, indicating its order of preference with respect to the
remaining names, and the selection of the arbitrator shall be made by such
Regional Vice-President from among such name(s) which have not been so stricken
by either party in accordance with their designated order of mutual preference.
18.4. Each party will, upon written request of the other party, provide the
other with copies of documents relevant to the issues raised by any claim or
counterclaim. Other discovery may be ordered by the arbitrator. Any dispute
regarding discovery, including disputes as to the need therefore or the
relevance or scope thereof, shall be determined by the arbitrator, which
determination shall be conclusive. All expenses and fees of the arbitrator and
expenses for hearing facilities, stenographers and other expenses of the
arbitration shall be borne equally by both parties unless they agree otherwise,
or unless the arbitrator in the award assesses such expenses against one of the
parties other than equally. Each party shall bear its own counsel fees and the
expenses of its witnesses except to the extent otherwise provided in the
Agreement. Any attorney who serves as an arbitrator shall be required to agree
to do so for a fee based on his or her current hourly rate for handling
commercial matters. The arbitration proceedings conducted pursuant hereto shall
be confidential. Neither party shall disclose any information about the evidence
adduced by the other in the arbitration proceedings or about documents produced
by the other in connection with the proceeding except in the course of a
judicial, regulatory or arbitration proceeding or as may be requested by
governmental authority. Before making any disclosure permitted by the preceding
sentence, the party intending to make such disclosure shall give the other party
reasonable written notice of the intended disclosure and afford the other party
opportunity to protect its interests. The arbitrator(s), expert witnesses and
stenographic reporters shall sign appropriate nondisclosure agreements in order
to effectuate this agreement of the parties as to confidentiality. The
arbitrator(s) shall set forth their findings of fact and conclusions of law and
shall render an award based thereon. Upon application to the court for an order
confirming, modifying or vacating the award, the court shall have the power to
review (a) whether the findings of fact rendered by the arbitrator(s) are
supported by substantial evidence and (b) whether, as a matter of law based on
such findings of fact, the award should be affirmed, modified or vacated. Upon
such determination, judgment shall be entered in favor of either party
consistent herewith.
18.5. Nothing herein will be construed to prevent Secured Party's or Debtor's
use of bankruptcy, receivership, injunction, repossession, replevin, claim and
delivery, sequestration, seizure, attachment, foreclosure, dation or any other
prejudgment or provisional action or remedy relating to any Collateral for any
current or future debt owed by either party to the other. Any such action or
remedy will not waive Secured Party's or Debtor's right to compel arbitration of
any Dispute. If either Secured Party or Debtor brings any other action for
judicial relief with respect to any Dispute, the party bringing such action will
be liable for and immediately pay all of the other party's costs and expenses
(including attorneys' fees) incurred to stay or dismiss such action and remove
or refer such Dispute to arbitration.
18.6. Any arbitration proceeding must be instituted: (a) with respect to any
Dispute for the collection of any debt owed by either party to the other, within
one (1) year after the date the last payment was received by the instituting
party; and (b) with respect to any other Dispute, within one (1) year after the
Initials__JTT___
date the incident giving rise thereto occurred, whether or not any damage was
sustained or capable of ascertainment or either party knew of such incident.
Failure to institute an arbitration proceeding within such period will
constitute an absolute bar and waiver to the institution of any proceeding with
respect to such Dispute. Except as otherwise stated herein, all notices,
arbitration claims, responses, requests and documents will be sufficiently given
or served if mailed or delivered: (i) to Debtor's principal place of business
specified herein; and (ii) the Secured Party, 000 xxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxx, Xxxxxxxxx 00000, Attention: President, or such other address as the
parties may specify from time to time in writing. No arbitration hereunder will
include, by consolidation, joinder or otherwise, any third party other than a
guarantor of the indebtedness, unless such third party agrees to arbitrate
pursuant to the arbitration provisions contained herein and the Rules.
19. If Section 18 of this Agreement or its application is invalid or
unenforceable, any legal proceeding with respect to any Dispute will be tried in
a court of competent jurisdiction by a judge without a jury. Debtor and Secured
Party waive any right to a jury trial in any such proceeding, to the extent
permitted by applicable law.
THIS CONTRACT CONTAINS BINDING ARBITRATION AND JURY WAIVER PROVISIONS.
20. LOCATION. Debtor Business and Storage Addresses:
0000 Xxxxxxxx Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
To include any and all locations.
Secured Party Business Address:
21st MORTGAGE CORPORATION
Attention: President
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
21. NOTIFICATION. The Parties will be deemed to have received notification if
delivered by certified mail to the address indicated in Section 20.
Initials__JTT___
IN WITNESS WHEREOF, the parties hereto have caused their names to be signed by
their proper officers/agents as of the 13th day of July, 2004.
THE HOME PLACE, LLC
-------------------
(Debtor)
ATTEST: _/s/ Xxxxxxx X. Xxxxxx BY: /s/ Xxxxx Xxxxxxx
--------------------------- -----------------
(or Witness) (Secretary or Witness)
PRINT NAME: Xxxxx Xxxxxxx
-----------------
(Corporate Seal, if applicable) TITLE: ___President__________
BY: ______________________
PRINT NAME: ______________________
TITLE: ______________________
ACCEPTED: 21ST MORTGAGE
CORPORATION
(Secured Party)
BY: /s/ Xxxxx Xxxxxx
PRINT NAME: Xxxxx Xxxxxx
TITLE: Commercial Credit Mgr.
Initials________
