Exhibit 4.1
Bank of America [LOGO]
LOAN AGREEMENT
This Agreement dated as of January 12, 2005, is between Bank of America, N.A.
(the "Bank") and Decorize, Inc. (the "Borrower').
1. DEFINITIONS
In addition to the terms which are defined elsewhere in this Agreement, the
following terms have the meanings indicated for the purposes of this Agreement:
1.1 "Borrowing Base" means the sum of:
(a) 85% of the balance due on Acceptable Receivables; and
(b) the lowest of:
(i) One Million Five Hundred Thousand and 00/100 Dollars
($1,500,000.00);
(ii) 50% of the value of Acceptable Inventory
in determining the value of Acceptable Inventory to be included in the Borrowing
Base, the Bank will use the lowest of (i) the Borrower's cost, (ii) the
Borrower's estimated market value, or (iii) the Bank's independent determination
of the resale value of such inventory in such quantities and on such terms as
the Bank deems appropriate.
After calculating the Borrowing Base as provided above, the Bank may deduct such
reserves as the Bank may establish from time to time in its reasonable credit
judgment, including, without limitation, reserves for rent at leased locations
subject to statutory or contractual landlord's liens, inventory shrinkage,
dilution, customs charges, warehousemen's or bailees' charges, liabilities to
growers of agricultural products which are entitled to lien rights under the
federal Perishable Agricultural Commodities Act or any applicable state law, and
the amount of estimated maximum exposure, as determined by the Bank from time to
time, under any interest rate contracts which the Borrower enters into with the
Bank (including interest rate swaps, caps, floors, options thereon, combinations
thereof, or similar contracts).
1.2 "Acceptable Receivable" means an account receivable which satisfies the
following requirements:
(a) The account has resulted from the sale of goods by the Borrower in the
ordinary course of the Borrower's business and without any further
obligation on the part of the Borrower to service, repair, or maintain any
such goods sold other than pursuant to any applicable warranty.
(b) There are no conditions which must be satisfied before the Borrower is
entitled to receive payment of the account. Accounts arising from COD
sales, consignments or guaranteed sales are not acceptable.
(c) The debtor upon the account does not claim any defense to payment of the
account, whether well founded or otherwise.
(d) The account is not the obligation of an account debtor who has asserted
any counterclaims or offsets against the Borrower (including offsets for
any "contra accounts" owed by the Borrower to the account debtor for goods
purchased by the Borrower or for services performed for the Borrower).
(e) The account represents a genuine obligation of the debtor for goods sold
to and accepted by the debtor. To the extent any credit balances exist in
favor of the debtor, such credit balances shall be deducted from the
account balance.
(f) The account balance does not include the amount of any finance or service
charges payable by the account debtor. To the extent any finance charges
or service charges are included, such amounts shall be deducted from the
account balance.
(g) The Borrower has sent an invoice to the debtor in the amount of the
account.
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(h) The Borrower is not prohibited by the laws of the state where the account
debtor is located from bringing an action in the courts of that state to
enforce the debtor's obligation to pay the account. The Borrower has taken
all appropriate actions to ensure access to the courts of the state where
the account debtor is located, including, where necessary, the filing of a
Notice of Business Activities Report or other similar filing with the
applicable state agency or the qualification by the Borrower as a foreign
corporation authorized to transact business in such state.
(i) The account is owned by the Borrower free of any title defects or any
liens or interests of others except the security interest in favor of the
Bank.
(j) The debtor upon the account is not any of the following:
(i) An employee, affiliate, parent or subsidiary of the Borrower, or an
entity which has common officers or directors with the Borrower.
(ii) The U.S. government or any agency or department of the U.S.
government unless the Bank agrees in writing to accept the
obligation, the Borrower complies with the procedures in the Federal
Assignment of Claims Act of 1940 (41 U.S.C. ss.15) with respect to
the obligation, and the underlying contract expressly provides that
neither the U.S. government nor any agency or department thereof
shall have the right of set-off against the Borrower.
(iii) Any state, county, city, town or municipality.
(iv) Any person or entity located in a foreign country.
(k) The account is not in default. An account will be considered in default if
any of the following occur:
(i) The account is not paid within ninety (90) days from its invoice
date or sixty (60) days from its due date, whichever occurs first;
(ii) The debtor obligated upon the account suspends business, makes a
general assignment for the benefit of creditors, or fails to pay its
debts generally as they come due; or
(iii) Any petition is filed by or against the debtor obligated upon the
account under any bankruptcy law or any other law or laws for the
relief of debtors.
(l) The account is not the obligation of a debtor who is in default (as
defined above) on 25% or more of the accounts upon which such debtor is
obligated.
(m) The account does not arise from the sale of goods which remain in the
Borrower's possession or under the Borrower's control.
(n) The account is not evidenced by a promissory note or chattel paper, nor is
the account debtor obligated to the Borrower under any other obligation
which is evidenced by a promissory note.
(o) The account is otherwise acceptable to the Bank.
In addition to the foregoing limitations, the dollar amount of accounts included
as Acceptable Receivables which are the obligations of a single debtor shall not
exceed the concentration limit established for that debtor. To the extent the
total of such accounts exceeds a debtor's concentration limit, the amount of any
such excess shall be excluded. The concentration limit for each debtor shall be
equal to 40% of the total amount of the Borrower's total accounts receivable at
that time. It is provided, however, that if the debtor obligated upon an account
is La-Z-Boy (or other accounts that the Bank may approve), the concentration
limit applicable to such debtor will he increased to 60%.
1.3 "Acceptable Inventory" means inventory which satisfies the following
requirements:
(a) The inventory is owned by the Borrower free of any title defects or any
liens or interests of others except the security interest in favor of the
Bank. This does not prohibit any statutory liens which may exist in favor
of the growers of agricultural products which are purchased by the
Borrower.
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(b) The inventory is located at locations which the Borrower has disclosed to
the Bank and which are acceptable to the Bank. If the inventory is covered
by a negotiable document of title (such as a warehouse receipt) that
document must be delivered to the Bank. Inventory which is in transit is
not acceptable.
(c) The inventory is held for sale in the ordinary course of the Borrower's
business and is of good and merchantable quality. Display items,
work-in-process, parts, raw materials, samples, and packing and shipping
materials are not acceptable. Inventory which is obsolete, unsalable,
damaged, defective, used, discontinued or slow-moving, or which has been
returned by the buyer, is not acceptable.
(d) The inventory is covered by insurance as required in the "Covenants"
section of this Agreement.
(e) The inventory is not subject to any licensing agreements which would
prohibit or restrict in any way the ability of the Bank to sell the
inventory to third parties.
(f) The inventory has been produced in compliance with the requirements of the
U.S. Fair Labor Standards Act (29 U.S.C. ss.ss.201 et seq.).
(g) The inventory is not placed on consignment.
(h) The inventory is otherwise acceptable to the Bank.
1.4 "Credit Limit" means the maximum amount indicated for each period
set forth below that may be outstanding under this Agreement. At no time shall
the sum of the amounts outstanding under Facility No. 1 and Facility No. 2
exceed the amounts set forth below:
Period Amount
------ ------
From the date of this Agreement
until May 31, 2005 $4,000,000.00
From June 1, 2005 until the $3,000,000.00
Facility No. 1 Expiration Date
2. FACILITY NO. 1: LINE OF CREDIT AMOUNT AND TERMS
2.1 Line of Credit Amount.
(a) During the availability period described below, the Bank will provide a
line of credit to the Borrower. The amount of the line of credit (the
"Facility No 1 Commitment") is equal to the lesser of (i) the Credit Limit
or (ii) the Borrowing Base.
(b) This is a revolving line of credit. During the availability period, the
Borrower may repay principal amounts and reborrow them.
(c) The Borrower agrees not to permit the principal balance outstanding to
exceed the Facility No. 1 Commitment. If the Borrower exceeds this limit,
the Borrower will immediately pay the excess to the Bank upon the Bank's
demand.
2.2 Availability Period. The line of credit is available between the date of
this Agreement and December 31, 2005, or such earlier date as the availability
may terminate as provided in this Agreement (the "Facility No. 1 Expiration
Date").
The availability period for this line of credit will be considered renewed if
and only if the Bank has sent to the Borrower a written notice of renewal
effective as of the Facility No. 1 Expiration Date for the line of credit (the
"Renewal Notice"). If this line of credit is renewed, it will continue to be
subject to all the terms and conditions set forth in this Agreement except as
modified by the Renewal Notice. The Borrower specifically understands and agrees
that the interest rate applicable to this line of credit may be increased upon
renewal and that the new interest rate will apply to the entire outstanding
principal balance of the line of credit. If this line of credit is renewed, the
term "Expiration Date" shall mean the date set forth in the Renewal Notice as
the Expiration Date and the same process for renewal will apply to any
subsequent (f)
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renewal of this line of credit. A renewal fee may be charged at the Bank's
option. If so, the amount will be specified in the Renewal Notice.
2.3 Conditions to Availability of Credit. In addition to the items required to
be delivered to the Bank under the paragraph entitled "Financial Information" in
the "Covenants" section of this Agreement, the Borrower will promptly deliver
the following to the Bank at such times as may be requested by the Bank:
(a) A borrowing certificate, in form and detail satisfactory to the Bank,
setting forth the Acceptable Receivables and the Acceptable Inventory on
which the requested extension of credit is to be based.
(b) Copies of the invoices or the record of invoices from the Borrower's sales
journal for such Acceptable Receivables and a listing of the names and
addresses of the debtors obligated thereunder.
(c) Copies of the delivery receipts, purchase orders, shipping instructions,
bills of lading and other documentation pertaining to such Acceptable
Receivables.
(d) Copies of the cash receipts journal pertaining to the borrowing
certificate.
2.4 Repayment Terms.
(a) The Borrower will pay interest on January 31, 2004, and then on the same
day of each month thereafter until payment in full of any principal
outstanding under this facility.
(b) The Borrower will repay in full any principal, interest or other charges
outstanding under this facility no later than the Facility No. 1
Expiration Date.
2.5 Interest Rate.
(a) The interest rate is a rate per year equal to the Telerate LIBOR Daily
Floating Rate plus 2 percentage point(s).
(b) The Telerate LIBOR Daily Floating Rate is a fluctuating rate of interest
equal to the average per annum interest rate (rounded upwards to the
nearest 1/100 of one percent) at which U.S. dollar deposits would be
offered for one month by major banks in the London inter-bank market, as
shown on Telerate Page 3750 (or any successor page) as determined for each
banking day at approximately 11:00 a.m. London time two (2) London Banking
Days prior to the date in question, as adjusted from time to time in the
Bank's sole discretion for reserve requirements, deposit insurance
assessment rates and other regulatory costs. If such rate does not appear
on Telerate Page 3750 (or any successor page), the rate will be determined
by such alternate method as reasonably selected by the Bank. A "London
Banking Day" is a day on which the Bank's London Banking Center is open
for business and dealing in offshore dollars. Interest will accrue on any
non-banking day at the rate in effect on the immediately preceding banking
day.
3. FACILITY NO. 2: THE LETTER OF CREDIT FACILITY
3.1 Letters of Credit.
(a) At the request of the Borrower, between the date of this Agreement and
December 31, 2005, (the "Facility No. 2 Expiration Date"), the Bank will
issue:
(i) commercial letters of credit with a maximum maturity riot to extend
more than one hundred eighty (180) days beyond the Facility No. 2
Expiration Date. Each commercial letter of credit will require
drafts payable at sight or up to one hundred eighty (180) days after
sight.
(ii) standby letters of credit with a maximum maturity of three hundred
sixty-five (365) days but not to extend more than one hundred eighty
(180) days beyond the Facility No. 2 Expiration Date. The standby
letters of credit may include a provision providing that the
maturity date will be automatically extended each year for an
additional year unless the Bank gives written notice to the
contrary.
(b) The amount of the letters of credit outstanding at any one time (including
the drawn and unreimbursed amounts of the letters of credit) may not
exceed Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00).
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3.2 Other Terms. The Borrower agrees:
(a) If there is a default under this Agreement, to immediately prepay and make
the Bank whole for any outstanding letters of credit.
(b) The issuance of any letter of credit and any amendment to a letter of
credit is subject to the Bank's written approval and must be in form and
content satisfactory to the Bank and in favor of a beneficiary acceptable
to the Bank.
(c) To sign the Bank's form Application and Agreement for Commercial Letter of
Credit or Application and Agreement for Standby Letter of Credit, as
applicable.
(d) To pay any issuance and/or other fees that the Bank notifies the Borrower
will be charged for issuing and processing letters of credit for the
Borrower.
(e) To allow the Bank to automatically charge its checking account for
applicable fees, discounts, and other charges.
(f) To pay the Bank a non-refundable fee equal to 2% per annum of the
outstanding undrawn amount of each standby letter of credit, payable
annually in advance, calculated on the basis of the face amount
outstanding on the day the fee is calculated.
4. COLLATERAL
4.1 Personal Property. The personal property listed below now owned or owned
in the future by the parties listed below will secure the Borrower's obligations
to the Bank under this Agreement. The collateral is further defined in security
agreement(s) executed by the owners of the collateral. In addition, all personal
property collateral owned by the Borrower securing this Agreement shall also
secure all other present and future obligations of the Borrower to the Bank
(excluding any consumer credit covered by the federal Truth in Lending law,
unless the Borrower has otherwise agreed in writing or received written notice
thereof). All personal property collateral securing any other present or future
obligations of the Borrower to the Bank shall also secure this Agreement.
(a) Equipment and fixtures owned by the Borrower.
(b) Inventory owned by the Borrower.
(c) Receivables owned by the Borrower.
(d) Patents, trademarks and other general intangibles owned by the Borrower.
5. FEES AND EXPENSES
5.1 Fees.
(a) Loan Fee. The Borrower agrees to pay a loan fee in the amount of Fifteen
Thousand and 00/100 Dollars ($15,000.00). Seven Thousand Five Hundred and
00/100 Dollars ($7,500.00) of this fee is due by January 12, 2005 and the
remaining Seven Thousand Five Hundred and 00/100 Dollars ($7,500.00) of
this fee is due by March 31, 2005.
(b) Unused Commitment Fee. The Borrower agrees to pay a fee on any difference
between the Facility No. 1 Commitment and the amount of credit it actually
uses, determined by the average of the daily amount of credit outstanding
during the specified period. The fee will be calculated at 0.15% per year.
This fee is due on March 31, 2005, and on the same day of each following
quarter until the expiration of the availability period.
(c) Waiver Fee. If the Bank, at its discretion, agrees to waive or amend any
terms of this Agreement, the Borrower will, at the Bank's option, pay the
Bank a fee for each waiver or amendment in an amount advised by the Bank
at the time the Borrower requests the waiver or amendment. Nothing in this
paragraph shall imply that the Bank is obligated to agree to any waiver or
amendment requested by the Borrower. The Bank may impose additional
requirements as a condition to any waiver or amendment.
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(d) Late Fee. To the extent permitted by law, the Borrower agrees to pay a
late fee in an amount not to exceed four percent (4%) of any payment that
is more than fifteen (15) days late. The imposition and payment of a late
fee shall not constitute a waiver of the Bank's rights with respect to the
default.
5.2 Expenses. The Borrower agrees to immediately repay the Bank for expenses
that include, but are not limited to, filing, recording and search fees,
appraisal fees, title report fees, and documentation fees.
5.3 Reimbursement Costs.
(a) The Borrower agrees to reimburse the Bank for any expenses it incurs in
the preparation of this Agreement and any agreement or instrument required
by this Agreement. Expenses include, but are not limited to, reasonable
attorneys' fees, including any allocated costs of the Bank's in-house
counsel to the extent permitted by applicable law.
(b) The Borrower agrees to reimburse the Bank for the cost of periodic field
examinations of the Borrower's books, records and collateral, and
appraisals of the collateral, at such intervals as the Bank may reasonably
require. The actions described in this paragraph may be performed by
employees of the Bank or by independent appraisers. Unless the Borrower is
in default, field examinations will be conducted no more frequently than
annually.
6. DISBURSEMENTS, PAYMENTS AND COSTS
6.1 Disbursements and Payments.
(a) Each payment by the Borrower will be made in U.S. Dollars and immediately
available funds by direct debit to a deposit account as specified below
or, for payments not required to be made by direct debit, by mail to the
address shown on the Borrower's statement or at one of the Bank's banking
centers in the United States.
(b) Each disbursement by the Bank and each payment by the Borrower will be
evidenced by records kept by the Bank. In addition, the Bank may, at its
discretion, require the Borrower to sign one or more promissory notes.
6.2 Telephone and Telefax Authorization.
(a) The Bank may honor telephone or telefax instructions for advances or
repayments and telefax requests for the issuance of letters of credit
given, or purported to be given, by any one of the individuals authorized
to sign loan agreements on behalf of the Borrower, or any other individual
designated by any one of such authorized signers.
(b) Advances will be deposited in and repayments will be withdrawn from
account number 003482185058 owned by Decorize, Inc. or such other of the
Borrower's accounts with the Bank as designated in writing by the
Borrower.
(c) The Borrower will indemnify and hold the Bank harmless from all liability,
loss, and costs in connection with any act resulting from telephone or
telefax instructions the Bank reasonably believes are made by any
individual authorized by the Borrower to give such instructions. This
paragraph will survive this Agreement's termination, and will benefit the
Bank and its officers, employees, and agents.
6.3 Direct Debit (Pre-Billing).
(a) The Borrower agrees that the Bank will debit deposit account number
003482185058 owned by Decorize, Inc. or such other of the Borrower's
accounts with the Bank as designated in writing by the Borrower (the
"Designated Account") on the date each payment of principal and interest
and any fees from the Borrower becomes due (the "Due Date")
(b) Prior to each Due Date, the Bank will mail to the Borrower a statement of
the amounts that will be due on that Due Date (the "Billed Amount"). The
xxxx will be mailed a specified number of calendar days prior to the Due
Date, which number of days will be mutually agreed from time to time by
the Bank and the Borrower. The calculations in the xxxx will be made on
the assumption that no new extensions of credit or payments will be made
between the date of the billing statement and the Due Date, and that there
will be no changes in the applicable interest rate.
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(c) The Bank will debit the Designated Account for the Billed Amount,
regardless of the actual amount due on that date (the "Accrued
Amount"). If the Billed Amount debited to the Designated Account
differs from the Accrued Amount, the discrepancy will be treated as
follows:
(i) If the Billed Amount is less than the Accrued Amount, the
Billed Amount for the following Due Date will be increased by
the amount of the discrepancy. The Borrower will not be in
default by reason of any such discrepancy.
(ii) If the Billed Amount is more than the Accrued Amount, the
Billed Amount for the following Due Date will be decreased by
the amount of the discrepancy.
Regardless of any such discrepancy, interest will continue to accrue
based on the actual amount of principal outstanding without
compounding. The Bank will not pay the Borrower interest on any
overpayment.
(d) The Borrower will maintain sufficient funds in the Designated Account to
cover each debit. If there are insufficient funds in the Designated
Account on the date the Bank enters any debit authorized by this
Agreement, the Bank may reverse the debit.
(e) If the Borrower terminates this arrangement, then the principal amount
outstanding under this Agreement will at the option of the Bank bear
interest at a rate per annum which is 0.5 percentage point(s) higher than
the rate of interest otherwise provided under this Agreement.
6.4 Banking Days. Unless otherwise provided in this Agreement, a banking day
is a day other than a Saturday, Sunday or other day on which commercial banks
are authorized to close, or are in fact closed, in the state where the Bank's
lending office is located, and, if such day relates to amounts bearing interest
at an offshore rate (if any), means any such day on which dealings in dollar
deposits are conducted among banks in the offshore dollar interbank market. All
payments and disbursements which would be due on a day which is not a banking
day will be due on the next banking day. All payments received on a day which is
not a banking day will be applied to the credit on the next banking day.
6.5 Interest Calculation. Except as otherwise stated in this Agreement, all
interest and fees, if any, will be computed on the basis of a 360-day year and
the actual number of days elapsed. This results in more interest or a higher fee
than if a 365-day year is used. Installments of principal which are not paid
when due under this Agreement shall continue to bear interest until paid.
6.6 Default Rate. Upon the occurrence of any default under this Agreement, all
amounts outstanding under this Agreement, including any interest, fees, or costs
which are not paid when due, will at the option of the Bank bear interest at a
rate which is 6.0 percentage point(s) higher than the rate of interest otherwise
provided under this Agreement. This may result in compounding of interest. This
will not constitute a waiver of any default.
6.7 Overdrafts. At the Bank's sole option in each instance, the Bank may do
one of the following:
(a) The Bank may make advances under this Agreement to prevent or cover an
overdraft on any account of the Borrower with the Bank. Each such advance
will accrue interest from the date of the advance or the date on which the
account is overdrawn, whichever occurs first, at the interest rate
described in this Agreement The Bank may make such advances even if the
advances may cause any credit limit under this Agreement to be exceeded.
(b) The Bank may reduce the amount of credit otherwise available under this
Agreement by the amount of any overdraft on any account of the Borrower
with the Bank.
This paragraph shall not be deemed to authorize the Borrower to create
overdrafts on any of the Borrower's accounts with the Bank.
6.8 Payments in Kind. If the Bank requires delivery in kind of the proceeds of
collection of the Borrower's accounts receivable, such proceeds shall be
credited to interest, principal, and other sums owed to the Bank under
this Agreement in the order and proportion determined by the Bank in its
sole discretion. All such credits will be conditioned upon collection and
any returned items may, at the Bank's option, be charged to the Borrower.
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7. CONDITIONS
Before the Bank is required to extend any credit to the Borrower under this
Agreement, it must receive any documents and other items it may reasonably
require, in form and content acceptable to the Bank, including any items
specifically listed below.
7.1 Authorizations. If the Borrower or any guarantor is anything other than a
natural person, evidence that the execution, delivery and performance by the
Borrower and/or such guarantor of this Agreement and any instrument or agreement
required under this Agreement have been duly authorized.
7.2 Governing Documents. If required by the Bank, a copy of the Borrower's
organizational documents.
7.3 Guaranties. Guaranties signed by SRC Holdings Corporation ("SRC").
7.4 Security Agreements. Signed original security agreements covering the
personal property collateral which the Bank requires.
7.5 Perfection and Evidence of Priority. Evidence that the security interests
and liens in favor of the Bank are valid, enforceable, properly perfected in a
manner acceptable to the Bank and prior to all others' rights and interests,
except those the Bank consents to in writing on Schedule 7.5. All title
documents for motor vehicles which are part of the collateral must show the
Bank's interest.
7.6 Payment of Fees. Payment of all fees and other amounts due and owing to
the Bank, including without limitation payment of all accrued and unpaid
expenses incurred by the Bank as required by the paragraph entitled
"Reimbursement Costs."
7.7 Repayment of Other Credit Agreement. Evidence that the existing
indebtedness with GE Capital Commercial Services, and The CIT Group/Commercial
Services, Inc. has been or will be repaid and cancelled on or before the first
disbursement under this Agreement.
7.8 Good Standinq. Certificates of good standing for the Borrower from its
state of formation and from any other state in which the Borrower is required to
qualify to conduct its business.
7.9 Subordination Agreements. Subordination agreements in favor of the Bank
signed by SRC Holdings Corporation and Xxxxx X. Xxxxxxx.
7.10 Landlord Agreement. For any personal property collateral located on real
property which is subject to a mortgage or deed of trust or which is not owned
by the Borrower (or the grantor of the security interest) an agreement from the
owner of the real property and the holder of any such mortgage or deed of trust.
7.11 Insurance Evidence of insurance coverage, as required in the "Covenants"
section of this Agreement.
8. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, and until the Bank is repaid in full,
the Borrower makes the following representations and warranties. Each request
for an extension of credit constitutes a renewal of these representations and
warranties as of the date of the request
8.1 Formation. If the Borrower is anything other than a natural person, it is
duly formed and existing under the laws of the state or other jurisdiction where
organized.
8.2 Authorization. This Agreement, and any instrument or agreement required
hereunder, are within the Borrower's powers, have been duly authorized, and do
not conflict with any of its organizational papers.
8.3 Enforceable Agreement. This Agreement is a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, and any instrument or agreement required hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.
8.4 Good Standing. In each state in which the Borrower does business, it is
properly licensed, in good standing, and, where required, in compliance with
fictitious name statutes.
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8.5 No Conflicts. This Agreement does not conflict with any law, agreement,
or obligation by which the Borrower is bound.
8.6 Financial Information. All financial and other information that has been
or will be supplied to the Bank is sufficiently complete to give the Bank
accurate knowledge of the Borrower's (and any guarantor's) financial condition,
including all material contingent liabilities. Since the date of the most recent
financial statement provided to the Bank, there has been no material adverse
change in the business condition (financial or otherwise), operations,
properties or prospects of the Borrower (or any guarantor). If the Borrower is
comprised of the trustees of a trust, the foregoing representations shall also
pertain to the trustor(s) of the trust.
8.7 Lawsuits. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower which, if lost, would materially impair the
Borrower's financial condition or ability to repay the loan, except as have been
disclosed in writing to the Bank.
8.8 Collateral. All collateral required in this Agreement is owned by the
grantor of the security interest free of any title defects or any liens or
interests of others, except those which have been approved by the Bank in
writing.
8.9 Permits, Franchises. The Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade name
rights, patent rights, copyrights and fictitious name rights necessary to enable
it to conduct the business in which it is now engaged.
8.10 Other Obligations. The Borrower is not in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation, except as have been disclosed in
writing to the Bank.
8.11 Tax Matters. The Borrower has no knowledge of any pending assessments or
adjustments of its income tax for any year and all taxes due have been paid,
except as have been disclosed in writing to the Bank.
8.12 No Event of Default. There is no event which is, or with notice or lapse
of time or both would be, a default under this Agreement.
8.13 Insurance. The Borrower has obtained, and maintained in effect, the
insurance coverage required in the "Covenants" section of this Agreement.
8.14 Merchantable Inventory; Compliance with FLSA. All inventory which is
included in the Borrowing Base is of good and merchantable quality and free from
defects, and has been produced in compliance with the requirements of the U.S.
Fair Labor Standards Act (29 U.S.C. ss.201 et seq.).
9. COVENANTS
The Borrower agrees, so long as credit is available under this Agreement and
until the Bank is repaid in full:
9.1 Use of Proceeds.
(a) To use the proceeds of Facility No. 1 only for AIR and Inventory
Financing.
(b) To use the proceeds of Facility No. 2 only for Commercial and Standby
Letters of Credit.
9.2 Financial Information. To provide the following financial information and
statements in form and content acceptable to the Bank, and such additional
information as requested by the Bank from time to time:
(a) Within ninety (90) days of the fiscal year end, the annual financial
statements of the Borrower. These financial statements must be audited by
the Borrower's Certified Public Accountant. The statements shall be
prepared on a consolidated basis.
(b) Within forty-five (45) days of the period's end (including the last period
in each fiscal year), quarterly financial statements of the Borrower.
These financial statements may be company-prepared. The statements shall
be prepared on a consolidated basis.
9
(c) Within ninety (90) days of the end of each fiscal year and within
forty-five (45) days of the end of each quarter, a compliance certificate
of the Borrower signed by an authorized financial officer, and setting
forth (i) the information and computations (in sufficient detail) to
establish that the Borrower is in compliance with all financial covenants
at the end of the period covered by the financial statements then being
furnished and (ii) whether there existed as of the date of such financial
statements and whether there exists as of the date of the certificate, any
default under this Agreement and, if any such default exists, specifying
the nature thereof and the action the Borrower is taking and proposes to
take with respect thereto.
(d) A borrowing certificate setting forth the amount of Acceptable Receivables
and Acceptable Inventory as of the last day of each month within
twenty-five (25) days after month end and, upon the Bank's request, copies
of the invoices or the record of invoices from the Borrower's sales
journal for such Acceptable Receivables, copies of the delivery receipts,
purchase orders, shipping instructions, bills of lading and other
documentation pertaining to such Acceptable Receivables, and copies of the
cash receipts journal pertaining to the borrowing certificate.
(e) If the Bank requires the Borrower to deliver the proceeds of accounts
receivable to the Bank upon collection by the Borrower, a schedule of the
amounts so collected and delivered to the Bank.
(f) Promptly upon the Bank's request, such other books, records, statements,
lists of property and accounts, budgets, forecasts or reports as to the
Borrower and as to each guarantor of the Borrower's obligations to the
Bank as the Bank may request.
9.3 Tangible Net Worth. To maintain on a consolidated basis Tangible Net Worth
equal to at least the amounts indicated for each period specified below:
Period Amounts
------ -------
At June 30, 2005 $1,585,000.00
At September 30, 2005 $1,600,000.00
At December 31, 2005 $1,800,000.00
"Tangible Net Worth" means the value of total assets (including leaseholds and
leasehold improvements and reserves against assets but excluding goodwill,
patents, trademarks, trade names, organization expense, unamortized debt
discount and expense, capitalized or deferred research and development costs,
deferred marketing expenses, and other like intangibles, and monies due from
affiliates, officers, directors, employees, shareholders, members or managers)
less total liabilities, including but not limited to accrued and deferred income
taxes, but excluding the non-current portion of Subordinated Liabilities.
"Subordinated Liabilities" means liabilities subordinated to the Borrower's
obligations to the Bank in a manner acceptable to the Bank in its sole
discretion.
9.4 Basic Fixed Charge Coverage Ratio. To maintain on a consolidated basis a
Basic Fixed Charge Coverage Ratio of at least 1.2:1.0 beginning June 30, 2005
and thereafter.
"Basic Fixed Charge Coverage Ratio" means the ratio of (a) the sum of EBITDA
plus lease expense and rent expense, minus income tax, minus dividends,
withdrawals, and other distributions, to (b) the sum of interest expense, lease
expense, rent expense, the current portion of long term debt and the current
portion of capitalized lease obligations.
"EBITDA" means net income, less income or plus loss from discontinued operations
and extraordinary items, plus income taxes, plus interest expense, plus
depreciation, depletion, and amortization. This ratio will be calculated at the
end of each reporting period for which the Bank requires financial statements,
using the results of the twelve-month period ending with that reporting period.
The current portion of long-term liabilities will be measured as of the date
twelve (12) months prior to the current financial statement.
9.5 Bank as Principal Depository. To maintain the Bank as its principal
depository bank, including for the maintenance of business, cash management,
operating and administrative deposit accounts.
9.6 Other Debts. Not to have outstanding or incur any direct or contingent
liabilities or lease obligations (other than those to the Bank), or become
liable for the liabilities of others, without the Bank's written consent. This
does not prohibit:
10
(a) Acquiring goods, supplies, or merchandise on normal trade credit.
(b) Endorsing negotiable instruments received in the usual course of business.
(c) Obtaining surety bonds in the usual course of business.
(d) Liabilities, lines of credit and leases in existence on the date of this
Agreement disclosed in writing to the Bank.
9.7 Other Liens. Not to create, assume, or allow any security interest or lien
(including judicial liens) on property the Borrower now or later owns, except:
(a) Liens and security interests in favor of the Bank.
(b) Liens for taxes not yet due.
(c) Liens outstanding on the date of this Agreement disclosed in writing to
the Bank.
9.8 Maintenance of Assets.
(a) Not to sell, assign, lease, transfer or otherwise dispose of any part of
the Borrower's business or the Borrower's assets except in the ordinary
course of the Borrower's business.
(b) Not to sell, assign, lease, transfer or otherwise dispose of any assets
for less than fair market value, or enter into any agreement to do so.
(c) Not to enter into any sale and leaseback agreement covering any of its
fixed assets.
(d) To maintain and preserve all rights, privileges, and franchises the
Borrower now has.
(e) To make any repairs, renewals, or replacements to keep the Borrower's
properties in good working condition.
9.9 Investments. Not to have any existing, or make any new, investments in any
individual or entity, or make any capital contributions or other transfers of
assets to any individual or entity, except for:
(a) Existing investments disclosed to the Bank in writing.
(b) Investments in the Borrower's current subsidiaries.
(c) Investments in any of the following:
(i) certificates of deposit,
(ii) U.S. treasury bills and other obligations of the federal government;
(iii) readily marketable securities (including commercial paper, but
excluding restricted stock and stock subject to the provisions of
Rule 144 of the Securities and Exchange Commission).
(d) Other investments approved in writing by Bank.
9.10 Loans. Not to make any loans, advances or other extensions of credit to
any individual or entity, except for:
(a) Existing extensions of credit disclosed to the Bank in writing.
(b) Extensions of credit to the Borrowers current subsidiaries.
(c) Extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the
ordinary course of business to non-affiliated entities.
11
9.11 Additional Negative Covenants. Not to, without the Bank's written consent:
(a) Enter into any consolidation, merger, or other combination, or become a
partner in a partnership, a member of a joint venture, or a member of a
limited liability company.
(b) Acquire or purchase a business or its assets.
(c) Engage in any business activities substantially different from the
Borrower's present business.
(d) Liquidate, dissolve or voluntarily suspend the Borrowers business.
(e) Voluntarily suspend its business.
9.12 Notices to Bank. To promptly notify the Bank in writing of:
(a) Any lawsuit over Two Hundred Fifty Thousand and 00/100 Dollars
($250,000.00) against the Borrower (or any guarantor or, if the Borrower
is comprised of the trustees of a trust, any trustor).
(b) Any substantial dispute between any governmental authority and the
Borrower (or any guarantor or, if the Borrower is comprised of the
trustees of a trust, any trustor).
(c) Any event of default under this Agreement, or any event which, with notice
or lapse of time or both, would constitute an event of default.
(d) Any material adverse change in the Borrower's (or any guarantor's, or, if
the Borrower is comprised of the trustees of a trust, any trustor's)
business condition (financial or otherwise), operations, properties or
prospects, or ability to repay the credit.
(e) Any change in the Borrower's name, legal structure, place of business, or
chief executive office if the Borrower has more than one place of
business.
(f) Any actual contingent liabilities of the Borrower (or any guarantor or, if
the Borrower is comprised of the trustees of a trust, any trustor), and
any such contingent liabilities which are reasonably foreseeable.
9.13 Insurance.
(a) General Business Insurance. To maintain insurance satisfactory to the Bank
as to amount, nature and carrier covering property damage (including loss
of use and occupancy) to any of the Borrower's properties, business
interruption insurance, public liability insurance including coverage for
contractual liability, product liability and workers' compensation, and
any other insurance which is usual for the Borrower's business. Each
policy shall provide for at least 30 days prior notice to the Bank of any
cancellation thereof.
(b) Insurance Covering Collateral. To maintain all risk property damage
insurance policies covering the tangible property comprising the
collateral. Each insurance policy must be for the full replacement cost of
the collateral and include a replacement cost endorsement. The insurance
must be issued by an insurance company acceptable to the Bank and must
include a lender's loss payable endorsement in favor of the Bank in a form
acceptable to the Bank.
(c) Evidence of Insurance. Upon the request of the Bank, to deliver to the
Bank a copy of each insurance policy, or, if permitted by the Bank, a
certificate of insurance listing all insurance in force
Unless Borrower provides evidence of the insurance coverage required by this
agreement with the Bank, the Bank may purchase insurance at Borrower's expense
to protect the Bank's interest in Borrower's collateral. This insurance may, but
need not, protect Borrower's interests. The coverage that the Bank purchases may
not pay any claim that the Borrower makes or any claim that is made against
Borrower in connection with the collateral. Borrower may later cancel any
insurance purchased by the Bank, but only after providing evidence that Borrower
has obtained insurance as required by this agreement. If the Bank purchases
insurance for the collateral, Borrower will be responsible for the costs of that
insurance, including the insurance premium, interest and any other charges the
Bank may impose in connection with the placement of the insurance, until the
effective date of the cancellation or expiration of the insurance. The costs of
the
12
insurance may be added to Borrower's total outstanding balance or obligation.
The costs of the insurance may be more than the cost of insurance Borrower may
be able to obtain on its own.
9.14 Compliance with Laws. To comply with the laws (including any fictitious or
trade name statute), regulations, and orders of any government body with
authority over the Borrower's business.
9.15 ERISA Plans. Promptly during each year, to pay and cause any subsidiaries
to pay contributions adequate to meet at least the minimum funding standards
under ERISA with respect to each and every Plan; file each annual report
required to be filed pursuant to ERISA in connection with each Plan for each
year; and notify the Bank within ten (10) days of the occurrence of any
Reportable Event that might constitute grounds for termination of any capital
Plan by the Pension Benefit Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee to administer any Plan.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time. Capitalized terms in this paragraph shall have the meanings
defined within ERISA.
9.16 Books and Records. To maintain adequate books and records.
9.17 Audits. To allow the Bank and its agents to inspect the Borrower's
properties and examine, audit, and make copies of books and records at any
reasonable time. If any of the Borrower's properties, books or records are in
the possession of a third party, the Borrower authorizes that third party to
permit the Bank or its agents to have access to perform inspections or audits
and to respond to the Bank's requests for information concerning such
properties, books and records. Bank represents and warrants that it has standard
internal procedures relating to the confidentiality of customer information and
that it will use reasonable care to maintain nonpublic information obtained from
the Borrower in connection with this Agreement in confidence in accordance with
those procedures.
9.18 Perfection of Liens. To help the Bank perfect and protect its security
interests and liens, and reimburse it for related costs it incurs to protect its
security interests and liens.
9.19 Cooperation. To take any action reasonably requested by the Bank to carry
out the intent of this Agreement.
10. DEFAULT AND REMEDIES
If any of the following events of default occurs, the Bank may do one or more of
the following: declare the Borrower in default, stop making any additional
credit available to the Borrower, and require the Borrower to repay its entire
debt immediately and without prior notice. If an event which, with notice or the
passage of time, will constitute an event of default has occurred and is
continuing, the Bank has no obligation to make advances or extend additional
credit under this Agreement. In addition, if any event of default occurs, the
Bank shall have all rights, powers and remedies available under any instruments
and agreements required by or executed in connection with this Agreement, as
well as all rights and remedies available at law or in equity. If an event of
default occurs under the paragraph entitled "Bankruptcy," below, with respect to
the Borrower, then the entire debt outstanding under this Agreement will
automatically be due immediately.
10.1 Failure to Pay. The Borrower fails to make a payment under this Agreement
when due.
10.2 Other Bank Agreements. Any default occurs under any other agreement the
Borrower (or any Obligor) or any of the Borrower's related entities or
affiliates has with the Bank or any affiliate of the Bank. For purposes of this
Agreement, "Obligor" shall mean any guarantor, any party pledging collateral to
the Bank, or, if the Borrower is comprised of the trustees of a trust, any
trustor.
10.3 Cross-default. Any default occurs under any agreement in connection with
any credit the Borrower (or any Obligor) or any of the Borrower's related
entities or affiliates has obtained from anyone else or which the Borrower (or
any Obligor) or any of the Borrower's related entities or affiliates has
guaranteed.
10.4 False Information. The Borrower or any Obligor has given the Bank
false or misleading information or representations.
10.5 Bankruptcy. The Borrower, any Obligor, or any general partner of the
Borrower or of any Obligor files a bankruptcy petition, a bankruptcy petition is
filed against any of the foregoing parties, or the Borrower, any Obligor, or any
general partner of the Borrower or of any Obligor makes a general assignment for
the benefit of creditors.
13
10.6 Receivers. A receiver or similar official is appointed for a substantial
portion of the Borrowers or any Obligor's business, or the business is
terminated, or, if any Obligor is anything other than a natural person, such
Obligor is liquidated or dissolved.
10.7 Lien Priority. The Bank fails to have an enforceable first lien (except
for any prior liens to which the Bank has consented in writing) on or security
interest in any property given as security for this Agreement (or any guaranty).
10.8 Judgments. Any judgments or arbitration awards are entered against the
Borrower or any Obligor, or the Borrower or any Obligor enters into any
settlement agreements with respect to any litigation or arbitration, in an
aggregate amount of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00)
or more in excess of any insurance coverage.
10.9 Material Adverse Change. A material adverse change occurs, or is
reasonably likely to occur, in the Borrower's (or any Obligor's) business
condition (financial or otherwise), operations, properties or prospects, or
ability to repay the credit; or the Bank determines that it is insecure for any
other reason.
10.10 Government Action. Any government authority takes action that the Bank
believes materially adversely affects the Borrower's or any Obligor's financial
condition or ability to repay.
10.11 Default under Related Documents. Any default occurs under any guaranty,
subordination agreement, security agreement, deed of trust, mortgage, or other
document required by or delivered in connection with this Agreement or any such
document is no longer in effect, or any guarantor purports to revoke or disavow
the guaranty.
10.12 ERISA Plans. Any one or more of the following events occurs with respect
to a Plan of the Borrower subject to Title IV of ERISA, provided such event or
events could reasonably be expected, in the judgment of the Bank, to subject the
Borrower to any tax, penalty or liability (or any combination of the foregoing)
which, in the aggregate, could have a material adverse effect on the financial
condition of the Borrower:
(a) A reportable event shall occur under Section 4043(c) of ERISA with
respect to a Plan.
(b) Any Plan termination (or commencement of proceedings to terminate a
Plan) or the full or partial withdrawal from a Plan by the Borrower or
any ERISA Affiliate.
10.13 Other Breach Under Agreement. A default occurs under any other term or
condition of this Agreement not specifically referred to in this Article. This
includes any failure or anticipated failure by the Borrower (or any other party
named in the Covenants section) to comply with the financial covenants set forth
in this Agreement, whether such failure is evidenced by financial statements
delivered to the Bank or is otherwise known to the Borrower or the Bank.
11. ENFORCING THIS AGREEMENT: MISCELLANEOUS
11.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.
11.2 Missouri Law. This Agreement is governed by Missouri state law.
11.3 Successors and Assigns. This Agreement is binding on the Borrower's and
the Bank's successors and assignees. The Borrower agrees that it may not assign
this Agreement without the Bank's prior consent. The Bank may sell
participations in or assign this loan, and may exchange financial information
about the Borrower with actual or potential participants or assignees. If a
participation is sold or the loan is assigned, the purchaser will have the right
of set-off against the Borrower.
11.4 Arbitration
(a) This paragraph concerns the resolution of any controversies or claims
between the parties, whether arising in contract, tort or by statute,
including but not limited to controversies or claims that arise out of or
relate to: (i) this agreement (including any renewals, extensions or
modifications), or (ii) any document related to this agreement
(collectively a "Claim"). For the purposes of this arbitration provision
only, the term "parties" shall include any parent corporation, subsidiary
or affiliate of the Bank involved in the servicing, management or
administration of any obligation described or evidenced by this agreement.
14
(b) At the request of any party to this agreement, any Claim shall be resolved
by binding arbitration in accordance with the Federal Arbitration Act
(Title 9, U.S. Code) (the "Act"). The Act will apply even though this
agreement provides that it is governed by the law of a specified state.
(c) Arbitration proceedings will be determined in accordance with the Act, the
applicable rules and procedures for the arbitration of disputes of JAMS or
any successor thereof ("JAMS"), and the terms of this paragraph. In the
event of any inconsistency, the terms of this paragraph shall control.
(d) The arbitration shall be administered by JAMS and conducted, unless
otherwise required by law, in any U.S. state where real or tangible
personal property collateral for this credit is located or if there is no
such collateral, in the state specified in the governing law section of
this agreement. All Claims shall be determined by one arbitrator; however,
if Claims exceed Fifty Thousand Dollars ($50,000), upon the request of any
party, the Claims shall be decided by three arbitrators. All arbitration
hearings shall commence within ninety (90) days of the demand for
arbitration and close within ninety (90) days of commencement and the
award of the arbitrator(s) shall be issued within thirty (30) days of the
close of the hearing. However, the arbitrator(s), upon a showing of good
cause, may extend the commencement of the hearing for up to an additional
sixty (60) days. The arbitrator(s) shall provide a concise written
statement of reasons for the award. The arbitration award may be submitted
to any court having jurisdiction to be confirmed and enforced.
(e) The arbitrator(s) will have the authority to decide whether any Claim is
barred by the statute of limitations and, if so, to dismiss the
arbitration on that basis. For purposes of the application of the statute
of limitations, the service on JAMS under applicable JAMS rules of a
notice of Claim is the equivalent of the filing of a lawsuit. Any dispute
concerning this arbitration provision or whether a Claim is arbitrable
shall be determined by the arbitrator(s). The arbitrator(s) shall have the
power to award legal fees pursuant to the terms of this agreement.
(f) This paragraph does not limit the right of any party to: (i) exercise
self-help remedies, such as but not limited to, setoff; (ii) initiate
judicial or non-judicial foreclosure against any real or personal property
collateral; (iii) exercise any judicial or power of sale rights, or (iv)
act in a court of law to obtain an interim remedy, such as but not limited
to, injunctive relief, writ of possession or appointment of a receiver, or
additional or supplementary remedies.
(g) The filing of a court action is not intended to constitute a waiver of the
right of any party, including the suing party, thereafter to require
submittal of the Claim to arbitration.
11.5 Severability; Waivers. If any part of this Agreement is not enforceable,
the rest of the Agreement may be enforced. The Bank retains all rights, even if
it makes a loan after default. If the Bank waives a default, it may enforce a
later default. Any consent or waiver under this Agreement must be in writing.
11.6 Attorneys' Fees. The Borrower shall reimburse the Bank for any reasonable
costs and attorneys' fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and in
connection with any amendment, waiver, "workout" or restructuring under this
Agreement. In the event of a lawsuit or arbitration proceeding, the prevailing
party is entitled to recover costs and reasonable attorneys' fees incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator. In the event that any case is commenced by or against the
Borrower under the Bankruptcy Code (Title 11, United States Code) or any similar
or successor statute, the Bank is entitled to recover costs and reasonable
attorneys' fees incurred by the Bank related to the preservation, protection, or
enforcement of any rights of the Bank in such a case. As used in this paragraph,
"attorneys' fees" includes the allocated costs of the Bank's inhouse counsel.
11.7 One Aqreement. This Agreement and any related security or other
agreements required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements between the Bank
and the Borrower concerning this credit;
(b) replace any prior oral or written agreements between the Bank and the
Borrower concerning this credit; and
(c) are intended by the Bank and the Borrower as the final, complete and
exclusive statement of the terms agreed to by them.
15
In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail. Any reference in any
related document to a "promissory note" or a "note" executed by the Borrower and
dated as of the date of this Agreement shall be deemed to refer to this
Agreement, as now in effect or as hereafter amended, renewed, or restated.
11.8 Disposition of Schedules and Reports. The Bank will not be obligated to
return any schedules, invoices, statements, budgets, forecasts, reports or other
papers delivered by the Borrower. The Bank will destroy or otherwise dispose of
such materials at such time as the Bank, in its discretion, deems appropriate.
11.9 Returned Merchandise. Until the Bank exercises its rights to collect the
accounts receivable as provided under any security agreement required under this
Agreement, the Borrower may continue its present policies for returned
merchandise and adjustments. Credit adjustments with respect to returned
merchandise shall be made immediately upon receipt of the merchandise by the
Borrower or upon such other disposition of the merchandise by the debtor in
accordance with the Borrower's instructions. If a credit adjustment is made with
respect to any Acceptable Receivable, the amount of such adjustment shall no
longer be included in the amount of such Acceptable Receivable in computing the
Borrowing Base.
11.10 Verification of Receivables. The Bank may at any time, either orally or in
writing, request confirmation from any debtor of the current amount and status
of the accounts receivable upon which such debtor is obligated.
11.11 Waiver of Confidentiality. The Borrower authorizes the Bank to discuss the
Borrower's financial affairs and business operations with any accountants,
auditors, business consultants, or other professional advisors employed by the
Borrower, and authorizes such parties to disclose to the Bank such financial and
business information or reports (including management letters) concerning the
Borrower as the Bank may request. Bank represents and warrants that it has
standard internal procedures relating to the confidentiality of customer
information and that it will use reasonable care to maintain nonpublic
information obtained from the Borrower in connection with this Agreement in
confidence in accordance with those procedures.
11.12 Indemnification. The Borrower will indemnify and hold the Bank harmless
from any loss, liability, damages, judgments, and costs of any kind relating to
or arising directly or indirectly out of (a) this Agreement or any document
required hereunder, (b) any credit extended or committed by the Bank to the
Borrower hereunder, (c) any claim, whether well-founded or otherwise, that there
has been a failure to comply with any law regulating the Borrower's sales or
leases to or performance of services for debtors obligated upon the Borrower's
accounts receivable and disclosures in connection therewith, and (d) any
litigation or proceeding related to or arising out of this Agreement, any such
document, any such credit, or any such claim. This indemnity includes but is not
limited to attorneys' fees (including the allocated cost of in-house counsel).
This indemnity extends to the Bank, its parent, subsidiaries and all of their
directors, officers, employees, agents. successors, attorneys, and assigns. This
indemnity will survive repayment of the Borrower's obligations to the Bank. All
sums due to the Bank hereunder shall be obligations of the Borrower, due and
payable immediately without demand.
11.13 Notices. Unless otherwise provided in this Agreement or in another
agreement between the Bank and the Borrower, all notices required under this
Agreement shall be personally delivered or sent by first class mail, postage
prepaid, or by overnight courier, to the addresses on the signature page of this
Agreement, or sent by facsimile to the fax numbers listed on the signature page,
or to such other addresses as the Bank and the Borrower may specify from time to
time in writing. Notices and other communications shall be effective (i) if
mailed, upon the earlier of receipt or five (5) days after deposit in the U.S.
mail, first class, postage prepaid, (ii) if telecopied, when transmitted, or
(iii) if hand-delivered, by courier or otherwise (including telegram, lettergram
or mailgram), when delivered.
11.14 Headings. Article and paragraph headings are for reference only and shall
not affect the interpretation or meaning of any provisions of this Agreement.
11.15 Counterparts. This Agreement may be executed in as many counterparts as
necessary or convenient, and by the different parties on separate counterparts
each of which, when so executed, shall be deemed an original but all such
counterparts shall constitute but one and the same agreement.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY EXTEND CREDIT OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT
ARE NOT ENFORCEABLE, REGARDLESS OF THE ELGAL THEORY UPON WHICH IT IS BASED THAT
IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER(S)) AND
US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH
COVERING SUCH MATTERS ARE
16
CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE
AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
THE PARTIES.
This Agreement is executed as of the date stated at the top of the first page.
Borrower Bank
Decorize, Inc Bank of America, N.A.
By:/s/ Xxxxx Xxxxxxx / President By:
------------------------------------- --------------------------------------
Xxxxx Xxxxxxx, President/CEO Xxxxxx Xxxxxxxx,
Assistant Vice President
By:/s/ Xxxxx Xxxxx
-------------------------------------
Xxxxx Xxxxx, Vice President Finance
Address where notices to the Borrower Address where notices to the Bank
are to be sent: are to be sent:
1938 East Xxxxxx St. Louis CCS, Attn: Notice Desk
------------------------------------- --------------------------------------
Xxxxxxxxxxx, XX 00000 000 Xxxxxx Xxxxxx / M01-800-07-05
------------------------------------- --------------------------------------
Telephone: Xx. Xxxxx, XX 00000
------------------------------------- --------------------------------------
Facsimile:
-------------------------------------
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Schedule 7.5--Other security interests and liens;
The following security interests, liens and rights exist with respect to
Borrower's assets and Bank consents to them by execution of this Schedule 7.5:
LIENS (INCLUDING CAPITAL LEASES):
Xxx Xxxxxxx(1) $ 845,468
Xxx Xxxxxxx(2) $1,000,000
Nest USA $ 120,408
SRC Holdings Corporation $ 750,000
Liberty Bank - SBA $ 61,935
AI Credit Corporation $ 10,505
Xxxxxxxx Financial Inc. $ 19,068
NMHG Financial Services $ 12,013
IFC Credit Corporation, Inc. $ 35,358
CITI Capital $ 13,762
CIT Technology Financial Services $ 2,169
Bank of America, N.A.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Print Name: Xxxxxx X. Xxxxxxxx
---------------------------
Title: Client Manager
--------------------------------
Date: January 12, 2005
---------------------------------
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