COMBINED ACCOUNT PURCHASE AND SECURITY AGREEMENT
This Agreement entered into this 1st day of December, 1997
between Innovo, Inc. (herein called "Client"), a Texas Corporation whose
address is ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and First
American National Bank ("BANK"). In consideration of the mutual
covenants set forth herein Client and BANK agree as follows:
I. DEFINITIONS
"Account" means the right to payment without offset for goods sold or
leased, and delivered, or service rendered, which is not evidenced by an
instrument or chattel paper, whether or not it has been earned by
performance, but does not include any Account arising out of sales or
leases to any subsidiary, parent or affiliated entity of Client.
"Collateral" means all property, real or personal, tangible or
intangible, given as security pursuant to Section 7.01 hereof for the
obligations of Client under this Agreement.
"Credit Problem" means Customer's failure to pay its debts in full when
due at maturity, solely because of its own financial problems, or
financial inability to pay if and only if such Customer files, or has
filed against it, a petition under Title 11 of the United States Code or
if such Customer has made an assignment for the benefit of creditors no
later than 75 days after the invoice date.
"Customer" means Client's customer or the account debtor.
"Customer Dispute" means any claim by a Customer against Client, valid
or invalid, now existing or hereafter arising (including but not limited
to a claim for credit or refund due to a return of goods which gave rise
to an Account), that may reduce the amount collectible from Customer by
BANK. The foregoing notwithstanding, a dispute with a Customer
involving both a Customer Dispute and a Credit Problem shall be deemed a
Customer Dispute.
"Insolvent" means, with respect to any person or entity, that such
person's or entity's liabilities exceed such person's or entity's assets
and/or such person or entity is not generally paying its debts as they
become due.
"Servicing Agent" means National Business Finance, Inc.
II. PURCHASE OF ACCOUNTS RECEIVABLE
2.01 Client hereby assigns to BANK as absolute owner, and BANK hereby
purchases and accepts from Client on the terms and conditions set forth
and incorporated herein, without recourse to Client except as herein set
forth, all Accounts approved and deemed acceptable by BANK, now or
hereafter created by Client's credit sales to Customers, and represented
by Clients to be bona fide existing obligations of its Customers arising
out of, and acquired by it, in the ordinary course of its business, which
Accounts are or will be due and owing to Client without defense, offset
or counterclaim.
2.02 BANK shall purchase only such Accounts hereunder as BANK may
select and approve in its sole and absolute discretion. In the exercise
of such discretion, BANK and/or Servicing Agent may investigate the
credit of any Customer. Based on BANK 's determination of credit
worthiness of any Customer, it may establish a credit line for such
Customer, for the benefit of Client. BANK shall purchase all Accounts
from Client relating to such Customer (which Accounts otherwise qualify
as Accounts deemed acceptable to BANK, pursuant to the warranties,
representations, covenants and general terms and conditions set forth in
this Agreement), within the credit line established, provided however,
such credit line may be modified or eliminated at any time, for any
reason (credit or other), in BANK 's sole and absolute discretion.
2.03 Client will provide BANK an assignment of Accounts, in a form(s)
satisfactory to Servicing Agent, (including any notices of assignment as
may be required by Servicing Agent) together with the original invoice or
a true copy of each invoice and/or statement, as may be specified by
Servicing Agent, including evidence of shipment, or other instrument or
papers that Agent may require.
2.04 Client will place a sticker on each original invoice being sold to
BANK, indicating that the Account has been sold to BANK and that payment
must be mailed directly to Servicing Agent. Said stickers will be
supplied to Client by Servicing Agent.
2.05 Client agrees to provide BANK a sufficient number of Notice of
Assignment of Account forms, in a form satisfactory to BANK, signed by an
authorized representative of Client, which shall be distributed by
Servicing Agent to each Customer whose Account is assigned and sold to
BANK by Client. Said Notice of Assignment of Accounts forms require the
Customer's written agreement to pay to Servicing Agent, without offset of
any kind, the full amount of all Accounts due from said Customer ("Notice
of Assignment of Accounts" form). It shall be Client's obligation to
ensure that the Notice of Assignment of Accounts form , duly executed by
an authorized representative of the Customer, be returned to Servicing
Agent. Any Account assigned and sold by Client to BANK prior to receipt
by Servicing Agent of the Notice of Assignment of Accounts form referred
to in this section, duly signed by the Customer, will be deemed to be
sold to BANK with full recourse to Client and BANK may, in its sole and
absolute discretion, charge back said Account to Client and Client will
immediately pay to BANK, the full amount of any Part Payment made on the
Account by BANK, plus BANK's Discount.
2.06 Upon approval and acceptance by BANK of an Account, Client shall
be entitled to a part payment of the Account in an amount not to exceed
the gross face amount of the Account, less the reserve withheld pursuant
to paragraph 2.07 of this Agreement ("Part Payment").
2.07 BANK shall reserve and hold an amount in a reserve account equal
to 10% (ten per cent) of the gross face amount of each Account purchased
by BANK.
2.08 The purchase price of each Account shall be equal to the amount of
each Account accepted by BANK, less BANK 's Discount. Said purchase
price shall be reduced by the amount of any trade discounts, credits or
allowances, or any other reductions or adjustments to such Account taken
by the Customer ("Net Purchase Price").
2.09 The BANK 's Discount shall be charged against the gross face amount
of each Account collected with the Discount being calculated based on
the following rate schedule based on the number of days an Account is
outstanding from the date of purchase by BANK through the date of
collection by BANK :
DAYS RATE
1-15 1.00% of the gross face amount of each Account
purchased
16- + 1/20 of 1% additionally per day until the Account
is paid in full
Maximum Discount is 6.00%
2.10 Upon collection by BANK of an Account purchased by BANK, BANK may
hold in a reserve account the Net Purchase Price, less the amount of any
Part Payment made pursuant to paragraph 2.06 of this Agreement
("Collected Reserve"). The Collected Reserve may be held by BANK as
security against Accounts charged back or any other obligation of Client
to BANK .
2.11 BANK will return to Client the balance of the Collected Reserve as
of Friday on the subsequent Wednesday only if, in BANK 's sole and
absolute discretion, Servicing Agent has determined that Client has
complied with all of the terms and conditions of servicing this
Agreement, that no events of default as defined in Article VIII below
have occurred and Client acknowledges to BANK that there are no offsets
or claims against, or Customer Disputes relating to, any Account
purchased by BANK. However, if the Collected Reserve has a deficit
balance at any time, Client shall be obligated to immediately pay the
amount of such deficit.
2.12 BANK will assume the risk of any loss resulting from Credit
Problems, such assumption of Credit Problems to be effective upon
delivery and acceptance, without dispute, of the value and quality of the
goods delivered or service rendered to Customer. The foregoing
notwithstanding, such assumption by BANK of the risk of Credit Problems
will not be effective upon the occurrence of any of the following:
(a) Breach of any representations or warranties or covenants
contained herein;
(b) Contribution to or aggravation by Client of Customer's
Credit Problem;
(c) The existence of any dispute of any kind, regardless of
validity, between Client and Customer;
(d) Assertion by Customer of a claim of loss, counterclaim or
offset of any kind against Client or BANK ;
(e) Any case where the Customer has not duly signed and
returned to Servicing Agent a Notice of Assignment of Accounts form; or
(f) Clients failure to affix a sticker to the original invoice
in accordance with paragraph 2.04 of this section.
2.13 Upon the occurrence of any Customer Dispute, whether valid or
invalid, Client will immediately pay to BANK, on the Account purchased by
BANK subject to the Customer Dispute, the amount of any Part Payment made
on the Account by BANK plus the BANK 's Discount. Further,
notwithstanding the payment obligation set forth herein, BANK may, in
addition to any other remedies available to BANK under this Agreement,
immediately charge back the Account purchased by BANK, which is subject
to the Customer Dispute, to Client and provide notice thereof to Client.
2.14 Client shall notify Servicing Agent immediately of any dispute
between Customer and Client.
2.15 Servicing Agent may settle any dispute directly with Customer. Such
settlement does not relieve Client of final responsibility for payment of
any such Account purchased by BANK .
2.16 Until all Accounts purchased by BANK are paid or declared in BANK
's own judgment to be uncollectible due to a Credit Problem, and Client
has fully met the requirements of this Agreement, any Part Payment by
BANK along with BANK 's Discount shall be and remain an obligation of
Client to BANK ("Obligation").
III. WARRANTIES AND REPRESENTATIONS OF CLIENT
In order to induce BANK to enter into this Agreement, and with
full knowledge that the truth and accuracy of the warranties and
representations set forth in this Agreement are being relied upon by
BANK, since time is of the essence, and a substantial delay could be
caused by a complete credit investigation of each Customer, Client
warrants and represents to BANK now, and during the term of this
Agreement:
3.01 Client:
(a) is duly organized, validly existing, and in good standing
under the laws of the state of Texas;
(b) has the power and authority to own its properties, and carry
on its business as it is now being conducted, and is to be conducted
following consummation of the transactions contemplated by this
Agreement;
(c) is qualified to do business in every jurisdiction where such
qualification is necessary;
(d) is duly authorized to conduct such business under the trade
name of Innovo, Inc. and such trade name has been properly registered as
required by the laws of the State of Tennessee, and
(e) has the power to execute and deliver this Agreement and to
execute and deliver to BANK and Servicing Agent any and all documents
required to be executed and delivered hereunder.
3.02 As of the date of this Agreement, Client is not Insolvent.
3.03 To the best knowledge of Client, no Customer of Client whose
Accounts are to be assigned to or purchased by BANK, is Insolvent.
3.04 Client has good title to all inventory and Accounts, free and clear
of all mortgages, liens and encumbrances, covenants or restrictions.
3.05 Each Account offered for sale to BANK is an accurate and undisputed
(without claim of offset defense or counterclaim) statement of
indebtedness by Customer to Client, for a sum certain, which is due and
payable within 90 (ninety) days or less.
3.06 Each Account offered for sale to BANK arises out of a bona fide
sale or lease, delivery and acceptance of goods, or rendition of service
by Client to Customer, made in the ordinary course of Client's business.
3.07 None of the Accounts being sold to BANK have been sold or assigned
to any person, firm or corporation, nor has any security interest in such
Accounts been granted to any person, firm or corporation.
3.08 There are no agreements, verbal or written, between Client and
Customer, or any other party, which would prohibit the sale of the
Customer Account by Client to BANK .
3.09 The execution and performance by Client of the terms and provisions
of this Agreement and the execution and delivery of any other documents
required to be executed and delivered hereunder have been duly authorized
by all requisite company action, and neither the execution and
performance of this Agreement or any other documents required to be
delivered hereunder, will violate any provision of law, any order of any
court or other agency of government, the articles of incorporation or
agreement of partnership, if any, of Client, or any indenture, agreement
or other instrument to which Client is a party, or by which Client is
bound, or be in conflict with, result in breach of, or constitute (with
due notice or lapse of time or both) a default under, or result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the property or assets of Client pursuant to any
such indenture, agreement or instrument, except as provided in this
Agreement.
3.10 There is no action, suit or proceeding at law or in equity or by or
before any governmental instrumentality or other agency now pending or,
to the knowledge of Client, threatened against or affecting Client which,
if adversely determined, would have a material adverse effect on the
business, operations, properties, assets or condition, financial or
otherwise, of Client.
3.11 Client is not a party to any material agreement or instrument or
subject to any restriction adversely affecting its business, properties
or assets, operations or condition, financial or otherwise. Client is
not in default in the performance, observance or fulfillment of any
material agreement or instrument to which it is a party.
3.12 Except as disclosed in writing to BANK, there is no fact known to
Client which materially adversely affects the business, operations,
affairs or conditions of Client or any of its properties.
3.13 Client has filed all tax returns required by law to be filed and
has paid all taxes, assessments and other governmental charges levied
upon its properties, assets and income, other than those not yet
delinquent. There are no unpaid assessments for additional taxes or any
basis therefor.
3.14 Client is in full compliance with all state and federal laws
relating to the conduct of its business.
IV. CONDITIONS TO BANK 'S OBLIGATIONS HEREUNDER
The obligations of BANK to perform its obligations hereunder is
subject to the following conditions precedent:
4.01 The representations and warranties set forth in Article III hereof
shall be true and correct on and as of the date hereof, and on the date
each Account is offered to BANK for sale pursuant to this Agreement, and
no default as specified in Article VIII hereof, nor any event which upon
notice or lapse of time or both would constitute such Event of Default,
shall have occurred and be continuing, and each offer of an Account for
sale to BANK shall constitute a certification to such effect as of the
date of such offer.
V. AFFIRMATIVE COVENANTS BY CLIENT
Client covenants and agrees that, from the date hereof and until
termination of this Agreement and performance of all of Client's
obligations hereunder, Client will, unless agreed to in writing by BANK
or Servicing Agent:
5.01 Promptly, from time to time, permit BANK or Servicing Agent to
inspect its books and records, at reasonable business hours, and make
copies or abstracts thereof, and furnish such other information regarding
its operations, assets, business, affairs and financial condition, as
BANK may request.
5.02 Promptly notify Servicing Agent or BANK of any development which
would materially adversely affect the business of Client, its properties
or affairs or the ability of Client to perform its obligations under this
Agreement, or any other document delivered in connection herewith.
5.03 Promptly advise Servicing Agent of any material adverse change in
Client's condition, financial or otherwise, and of the occurrence of any
Event of Default by Client as defined in Article VIII hereof, and of the
occurrence of any event which upon notice or lapse of time, or both,
would constitute such an Event of Default.
5.04 Maintain a standard system of accounting in accordance with
generally accepted accounting principles on a consistent basis.
5.05 Maintain insurance coverage, against loss or damage to Client's
property.
5.06 Pay all taxes or fees in relation to the Accounts, goods sold or
services rendered and pay all taxes which if unpaid would give rise to a
lien or priority claim by any taxing authority. Client further covenants
and agrees to pay BANK for periodic tax lien searches not more often than
monthly which searches may be done at BANK's sole discretion.
5.07 Hold in trust and safekeeping, and immediately turn over to
Servicing Agent any payment on an Account purchased by BANK whenever
such payment, whether cash, check (payable to Client, BANK or both),
money order or other form of payment, comes into Client's possession.
5.08 Hold in trust and safekeeping , and immediately deliver to
Servicing Agent, all goods giving rise to Accounts purchased by BANK
which are returned or rejected by, or repossessed from Customer(s).
Client shall not intermingle such goods with Client's other property, as
the same are the sole and separate property of BANK .
5.09 Upon the sale of any of its Accounts to BANK, Client will
immediately make proper entries on its books and records disclosing the
sale of such Accounts to BANK .
VI. NEGATIVE COVENANTS
Client covenants and agrees that, until termination of this
Agreement and performance by Client of all of its obligations hereunder,
unless BANK or Servicing Agent shall otherwise consent in writing, it
will not, directly or indirectly:
6.01 Create, incur, assume or suffer to exist any pledge, lien, charge
or other encumbrance of any nature whatsoever on any of its Accounts, or
inventory, now or hereafter owned.
6.02 Sell, lease, transfer or otherwise dispose of any of its business,
except in the ordinary course of its business.
6.03 Interfere in any fashion or under any circumstances with any of
BANK 's rights under this Agreement.
6.04 Sell its Accounts except to BANK during the term of this Agreement.
6.05 Change or modify the terms of the original Account with Customer.
6.06 Pledge the credit of BANK or Servicing Agent to any person or
entity for any purpose whatsoever.
6.07 Alter any Customer payment schedule.
VII. SECURITY INTEREST
7.01 As a further inducement for BANK to enter into this agreement,
Client hereby grants to BANK, as security for the repayment of any and
all of Client's obligations hereunder, a security interest in all of
Client's Accounts, inventory, instruments, documents, contract rights,
chattel paper, general intangibles and the proceeds thereof (including
any insurance proceeds), now and hereafter owned by Client, or in which
Client now or hereafter may have any rights, wherever situated and
whenever acquired ("Collateral").
VIII. DEFAULTS
8.01 Upon the occurrence of any of the following events (each of which
is herein sometimes called an "Event of Default");
(a) If Client shall fail to pay any of its Obligations to
BANK when due;
(b) If Client confesses inability to continue performance
in accordance with this Agreement;
(c) If any representation or warranty made herein or in
any report, assignment, certificate, financial statement or other
instrument furnished in connection with this Agreement, shall prove to be
false or misleading in any material respect;
(d) If Client shall fail to perform any covenant, condition
or agreement contained herein;
(e) If Client or any other person liable in whole or in
part for payment or performance of the Obligations contained herein shall
(i) apply for or consent to appointment of a receiver, trustee, custodian
or liquidator of it or any of its property, (ii) admit in writing its
inability to pay its debts as they mature, (iii) make a general
assignment for the benefit of creditors, (iv) be adjudicated bankrupt or
insolvent or be subject to an order for relief under Title 11, Chapter 7
or 11 of the United States Code or (v) file a voluntary petition in
bankruptcy, or a petition or answer seeking reorganization or an
arrangement with creditors or to take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or statute, or any answer admitting the material
allegations of a petition filed against it in any proceeding under any
such law, or if a corporate action shall be taken for the purpose of
effecting any of the foregoing;
(f) If any order, judgment or decree shall be entered, without
the application, approval or consent of Client by any court of competent
jurisdiction, approving a petition seeking reorganization of Client or
appointing a receiver, trustee, custodian or liquidator of Client, or of
all or a substantial part of the assets of Client;
(g) If there occurs any attachment of any deposits or other
property of Client in the hands or possession of BANK or Servicing
Agent then, and in every such Event of Default and at any time thereafter
during the continuance of such event, BANK may take any one or more of
the following actions; (i) charge back to Client all outstanding Accounts
and declare all Obligations secured hereby immediately due and payable;
(ii) enforce the security interest given hereunder pursuant to the
Uniform Commercial Code or any other law; (iii) require Client to
assemble the Collateral and records pertaining to the Accounts and make
them available to BANK at a place designated by BANK; (iv) enter the
premises of Client and take possession of the Collateral and of the
records pertaining to the Accounts and any other Collateral; (v) grant
extensions, compromise claims and settle the Accounts for less than face
value, all without prior notice to Client; (vi) use, in conjunction with
any assembly or disposition of the Collateral, a trademark, trade name,
copyright, patent right or technical process used or utilized by Client;
(vii) retain any surplus realized to cover Client's Obligations to BANK
and hold Client liable for any deficiency as provided in the Uniform
Commercial Code; (viii) offset any funds held by BANK in any reserve
account for Obligations of Client to BANK including but not limited to
legal fees or other costs associated with the collection of Accounts; or
pursue any other remedy at law or equity which BANK may have.
IX. MISCELLANEOUS
9.01 This Agreement and all covenants, agreements, representations and
warranties made herein, shall survive the purchase by BANK of the
Accounts hereunder, and shall continue in full force and effect, so long
as Client shall have any Obligations to BANK hereunder. Whenever in
this Agreement any of the parties hereto is referred to, such reference
shall be deemed to include their heirs, personal representatives, legal
representatives, successors and assigns of such parties; and all
covenants promises and agreements in this Agreement contained, by or on
behalf of Client, shall inure to the benefit of the successors and
assigns of BANK .
9.02 Once BANK has purchased an Account, payment on such Account by
Customer is the sole property of BANK .
9.03 The prevailing party shall be entitled to reimbursement of any and
all legal expenses and reasonable attorney's fees which it may incur as
a result of either Client or BANK enforcing this agreement.
9.04 In order to carry out this Agreement and avoid unnecessary
notification to Customers, Client irrevocably appoints Servicing Agent,
or any person designated by BANK, its special attorney in fact, or agent,
with power to:
(a) Delete Client's address on all invoices and statements
mailed to Customers, and to substitute in its place Servicing Agent's
address;
(b) Receive, open and dispose of all mail addressed to Client
or to Client's trade name at Servicing Agent's address;
(c) Endorse the name of Client or Client's trade name on any
checks or other evidence of payment that may come into the possession of
BANK or Servicing Agent on Accounts purchased by BANK and on any invoices
or other documents related to any of the Accounts;
(d) In Client's name, or otherwise, to demand, ▇▇▇ for,
collect, receive and give acquittance for any and all moneys due or to
become due on Accounts purchased by BANK ;
(e) To settle, compromise, compound, prosecute, or defend any
action or proceeding with respect to said Accounts;
(f) To extend the time of payment of any or all of the
Accounts purchased by BANK and to make any allowances and other
adjustments with reference thereto;
(g) Offer discounts to Client's Customer exclusive of Client's
normal business custom with said Customer where necessary to affect
collection; and
(h) To do any and all things necessary and proper to carry
out the purpose of this Agreement. The authority granted pursuant to
this power of attorney shall continue in full force and effect until all
Accounts purchased by BANK have been paid in full.
9.05 Should BANK or Servicing Agent receive a double payment on an
Account or other payment which in not identified, BANK shall carry
such sums as open items and shall return to Client or Customer upon
proper notification.
9.06 Client shall hold BANK and Servicing Agent harmless against any
Customer ill will arising from Servicing Agent's or BANKs collecting or
attempting to collect any Account.
9.07 This agreement shall continue in full force and effect until
termination by thirty (30) days written notice by either party.
9.08 After termination of this Agreement, Client shall remain fully
responsible to BANK for any Accounts purchased before such termination.
9.09 This Agreement shall inure to the benefit of and be binding upon
the heirs, executors, administrators, successors and assigns of the
parties hereto.
9.10 No failure on the part of BANK or Servicing Agent to exercise, and
no delay in exercising, and no course of dealing with respect to any
right, power or remedy under this Agreement shall operate as a waiver
thereof nor shall any single or partial exercise by BANK or Servicing
Agent of any right, power or remedy under this Agreement preclude any
other right, power or remedy. The remedies in this Agreement are
cumulative and are not exclusive of any other remedies provided by law.
9.11 This Agreement shall be construed in accordance with and governed
by the laws of the State of Colorado. Unless otherwise defined herein,
or unless the context otherwise requires, all terms used herein which are
defined in the Uniform Commercial Code have the meaning therein stated.
9.12 Client hereby consents to the jurisdiction of the courts of the
State of Colorado and the United States District Courts for the District
of Colorado, for the purpose of any suit, action or other proceeding
arising out of any of its Obligations hereunder or with respect to the
transactions contemplated hereby, and expressly waives any and all
objections it may have as to venue in any of such courts. Client and
BANK also waive trial by jury in any action brought on or with respect to
this Agreement
9.13 BANK or Servicing Agent may, in its sole discretion, give notice
of assignment to any and all Customers of Client and collect Accounts
directly from such Customers.
9.14 All notices and communications hereunder shall be given or made to
the parties at their respective addresses set forth in the first
paragraph of this Agreement, or at such other address as the addressee
may hereafter specify for the purpose of written notice to the other
party hereto. Such notices and other communications will be effectively
given only if and when given in writing and delivered at the address set
forth herein or duly deposited in the mails with first-class postage
prepaid, or delivered to a telegraph company with all charges prepaid,
addressed as aforesaid.
9.15 If any provision hereof is held invalid, illegal or unenforceable
in any jurisdiction, for any reason whatsoever, the other provisions
hereof shall remain in full force and effect in such jurisdiction and to
that end, provisions hereof are declared to severable and the remaining
provisions shall be liberally construed in favor of BANK .
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto all as of the day and year first written above.
First American National Bank INNOVO, INC.
By:/s/▇▇▇▇▇▇▇ ▇▇▇▇ By:/s/▇. ▇. ▇▇▇▇▇
_________________________ _________________________
▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇. ▇▇▇▇▇
Title: Vice President CEO
Client's signature witnessed by ▇▇▇▇▇▇▇ ▇▇▇▇
STATE OF _____________________________ )
CITY AND ) ss.
COUNTY OF ___________________________ )
The foregoing instrument was acknowledged before me this _____
day of ____________________ , 199__, by _________________________________
as ___________________________________
(Name) (Title)
of _______________________ .
(Company)
Witness my hand and official seal.
My Commission expires : _____________________
______________________________________
(Notary Public)
CONTINUING CORPORATE GUARANTY AND WAIVER
Reference is made to the Combined Account Purchase and Security Agreement
(herein "Security Agreement") dated December 1, 1997, and entered into
between Innovo, Inc. ("Company") and First American National Bank (herein
"BANK"). The terms used herein, other than the term "Agreement", where
applicable and appropriate, shall have the same meaning as the terms used
and defined in the Security Agreement.
For valuable consideration and to induce BANK to enter into the Security
Agreement, the undersigned agrees as follows:
1. GUARANTY OF OBLIGATIONS: The undersigned unconditionally guaranty to
BANK, or order, its successors and assigns, full prompt and faithful
performance by the Company of all its present and future obligations
under the Security Agreement and any other present and future obligations
to BANK, including but not limited to its present and future obligations
under the Security Agreement and any other present and future obligations
arising in connection therewith, irrespective of any invalidity therein,
the enforceability thereof or the insufficiency, invalidity or
unenforceability of any security therefor. The obligations guaranteed
hereunder shall be collectively referred to herein as "Obligations".
2. RIGHTS ARE INDEPENDENT: The Obligations of the undersigned are
independent of the obligations of the Company under said Security
Agreement, and separate action or actions may be brought and prosecuted
by BANK against the undersigned whether or not an action is brought
against the Company or whether the Company is joined in any such action
or action.
3. AUTHORITY TO MODIFY OBLIGATIONS: The undersigned authorizes BANK,
from time to time, without notice or demand, and without affecting any of
the Obligations of the undersigned hereunder to:
a. Renew, extend, amend, waive, restructure, refinance,
release, accelerate, or otherwise change the terms of the
Obligations and the Security Agreement;
b. Consent to the change, restructure or termination of the
corporate structure or existence, of the Company, and
correspondingly restructure the Obligations;
c. Accept partial payment of the Obligations;
d. Take and hold security or additional guarantees for the
Obligations, and amend, alter, exchange, substitute,
transfer, enforce, waive, subordinate, terminate or release
any such security or guarantees;
e. Apply any security and direct the order and manner of
sale thereof as BANK , in its sole and absolute discretion,
may determine; and
▇. ▇▇▇▇▇▇, release on terms satisfactory to BANK or by
operation of law or otherwise, compromise, collect, or
otherwise liquidate the Obligations and/or security or
guarantees therefor in any manner.
4. WAIVERS OF DEFENSES: The undersigned waive:
a. Any right to require BANK to proceed against the
Company, the Customer, or any other person, or proceed
against or exhaust any security, or pursue any other remedy
in BANK 's power;
b. Any defense arising in conjunction with the sale of any
security or collateral by BANK including, but not limited
to, the commercial reasonableness of such sale(s);
c. Any right of subrogation in favor of the undersigned as
to the Company;
d. The right to a jury trial in any action hereunder;
e. All presentments for payment, demand, protest and notice
thereof as to any instrument, and all other notices and
demands to which the undersigned might otherwise be
entitled, including without limitations, notice of all of
the following: the creation, existence, or incurring of new
or additional Obligations; the amount of the indebtedness
from time to time outstanding; any adverse change in the
Company's financial condition; any other fact which might
increase the undersigned's risk; any default, partial
payment or non-payment of all or any part of any Obligations
by the Company; and any and all agreements and arrangements
between NBFInc. and the Company, and any changes
modifications, or extensions thereof;
f. All setoffs and counterclaims;
g. The right to plead any and all statutes of limitations as
a defense to this Agreement and to any of the Obligations
thereby guaranteed; and
h. Any claim or defense under Colorado Revised Statutes
Section ▇▇-▇▇-▇▇▇ and/or ▇▇-▇▇-▇▇▇.
5. WAIVER OF CLAIMS: The undersigned hereby waives any and all claims
or rights it may have against the Company in connection with this
guaranty whether or not the undersigned is called upon to fulfill any or
all of the Company's Obligations under the Security Agreement.
6. CONTINUING GUARANTY: It is the intention of the undersigned that
this Agreement shall constitute a continuing guaranty of the Obligations
and/or any indebtedness of the Company under each and every agreement
between BANK and Company, which is made prior to the actual receipt by
the holder hereof of written notice from such undersigned of the
withdrawal of his guaranty, but any such withdrawal shall not affect the
then existing liability of such undersigned to any extent.
7. SUBORDINATION: Any indebtedness of the Company now or hereafter held
by the undersigned is hereby subordinated to the Obligations and any
other indebtedness of the Company to BANK. Any indebtedness of the
Company to the undersigned, if BANK so shall request, shall be
collected, enforced, and received by the undersigned as Trustee for BANK
and shall be paid over to BANK on account of the Obligations and any
other indebtedness of the Company to BANK, but without reducing or
affecting the liability of the undersigned under the other provisions of
this Agreement.
8. DEFAULT: Any one or more of the following shall be a default
hereunder:
a. Any default in payment or performance of any
indebtedness, instrument, or of the Obligations hereby
guaranteed; or
b. Any warranty, representation, statement, report,
covenant, or certificate made or delivered to BANK by or on
behalf of the Company or the undersigned which is incorrect,
false, untrue or misleading when given in any respect
whatever; or
c. There shall be made or exist any levy, assessment,
attachment, seizure, lien or encumbrance for any cause or
reason whatsoever upon all or any material part of the
assets of the Company or the undersigned (unless discharge
by payment, release, or bond not more than twenty (20) days
after such event has occurred); or
d. There shall occur the dissolution, termination of
existence, insolvency or business failure of the Company or
the undersigned, or the appointment of a receiver, trustee
or custodian for the Company or the undersigned or all or
any part of the property of either of them, or any
assignment for the benefit of creditors by, or the
commencement of any proceedings under any reorganization
insolvency law brought against the Company or the
undersigned or the entry of the order of any Court which
enjoins, restrains or in any way prevents the Company or the
undersigned from conducting all or any material part of its
business; or
e. There shall occur the dissolution of the Company or the
transfer, hypothecation or liquidation of all or
substantially all of the Company's assets; or
f. The undersigned shall sell, transfer, convey or in any
manner alienate its interest in the Company
In the event of any of the foregoing, any or all
indebtedness, instruments and the Obligations hereby
guaranteed shall become, for the purpose of this Agreement,
due and payable by the undersigned forthwith without demand
or notice.
9. AUTHORITY OF OFFICERS: It is not necessary for BANK to inquire
into the powers of the Company or the officers, directors, or agents
acting or purporting to act in its behalf and any Obligations made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
10. PARTNERSHIP OR ASSOCIATION: When the Company is in partnership or
other association, this Agreement is to extend to the person or persons
for the time being and from time to time carrying the business now
conducted by the Company, notwithstanding any change or change in the
name, structure and/or membership of the Company.
11. FINANCIAL CONDITION OF COMPANY: The undersigned represents to BANK
that they are now and will be completely familiar with the business,
operations and conditions of the Company and all subsidiaries, and they
hereby waive and relinquish any duty on the part of BANK to disclose
any matter, fact or thing relating to the business, operation or
financial condition of the Company or its subsidiaries now known or
hereafter known by NBFInc.
12. RECOURSE TO SEPARATE PROPERTY: If any married person shall execute
this Agreement, such person agrees that recourse may be had against such
person's separate and marital property as provided by the law of the
state in which he or she resides for payment of the Obligations and any
indebtedness arising under this Agreement.
13. GUARANTOR'S DIRECT BENEFIT: The undersigned hereby represents and
warrants that it is in the undersigned's direct interest to assist the
Company because of the undersign's interest(s) in the relationship(s)
with the Company.
14. ATTORNEY'S FEES: Whether or not suit be instituted, the undersigned
agrees to pay reasonable attorney's fees and all other costs and expenses
incurred by BANK in enforcing this Agreement and any such action or
proceedings arising out of or relating to this Agreement.
15. CUMULATIVE RIGHTS: All rights, remedies and powers granted to BANK
in this Agreement, are cumulative and may be exercised singularly or
concurrently with such other rights as BANK may have.
16. MODIFICATIONS: Neither this Agreement nor any provisions hereof may
be modified, amended, waived, discharged or terminated except by an
instrument in writing duly signed by BANK.
17. SUCCESSORS AND ASSIGNS: This Agreement shall bind the successors
and assigns of the undersigned as shall inure to the benefit of BANK 's
successors and assigns.
18. GOVERNING LAW: This Agreement shall be governed by, and construed
in accordance with the laws of the State of Colorado.
19. SEVERABILITY: In case any right of BANK herein shall be held to
be invalid, illegal, or unenforceable, such invalidity, illegality and/or
unenforceability shall not affect any other right granted hereby.
20. JOINT AND SEVERAL: All of the obligations of the undersigned
hereunder shall be joint and several.
21. SECTION HEADINGS: The section headings used in this Agreement are
for convenience or reference only and shall not limit or otherwise affect
the provisions of this Agreement.
THE UNDERSIGNED CORPORATE GUARANTOR ACKNOWLEDGES THAT IT HAS NOT RELIED
ON ANY ORAL OR WRITTEN REPRESENTATIONS BY BANK IN ENTERING INTO THIS
AGREEMENT OR GUARANTY AND THAT IT HAS FREELY, WITHOUT COERCION OR DURESS,
ENTERED INTO THIS AGREEMENT.
IN WITNESS WHEREOF, the undersigned has executed this
Guaranty this 1st day of December, 1997.
Innovo Group Inc. Authorized
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Signature /s/▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ _______________
▇. ▇. ▇▇▇▇▇
Signature witnessed by ▇▇▇▇▇▇▇ ▇▇▇▇
EIN: ▇▇-▇▇▇▇▇▇▇
STATE OF ___________________________)
CITY AND ) ss.
COUNTY OF _________________________)
The foregoing instrument was acknowledged before me this ___
day _________________, 199__, by ____________________ .
(Name)
Witness my hand and official seal.
My commission expires: ________________
_________________________________________
Notary Public