Exhibit 4.18
LOAN AND SECURITY AGREEMENT
dated as of August 12, 1998
by and between
Performance Interconnect Corp.
and
FINOVA Capital Corporation
LOAN AND SECURITY AGREEMENT
---------------------------
AGREEMENT, dated as of August 12,1998, by and between PERFORMANCE
INTERCONNECT CORP. having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower") and FINOVA CAPITAL CORPORATION,
a Delaware corporation ("FINOVA") having a place of business at ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Borrower has requested FINOVA to make a loan to Borrower and
FINOVA is willing to make such loan to Borrower upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and intending to be legally bound hereby, the
parties hereto covenant and agree as follows:
ARTICLE I. DEFINITIONS; CONSTRUCTION
1.1 Certain Definitions.
In addition to other words and terms defined elsewhere in this
Agreement, as used herein the following words and terms have the following
meanings, respectively, unless the context hereof otherwise clearly
requires:
"Agreement" means this Loan and Security Agreement as amended,
modified or supplemented from time to time.
"Business Day" means any day other than a Saturday, Sunday or other
day on which banking institutions are authorized or obligated to close in
New York.
"Casualty" means any damage to, or destruction or loss of, any
Equipment, whether caused by fire or other cause.
"Closing Date" means the date on which the parties enter into this
Agreement.
"Collateral" has the meaning given to that term in Section 6.1.
"Constituent Documents" means the certificate of incorporation,
agreement of partnership or limited partnership, organizational agreement,
operating agreement, by-laws, or such other similar document pursuant to
which Borrower was organized or its affairs are governed.
"Disbursement Date" means the date the Loan proceeds are disbursed to
Borrower or to other persons at Borrowers direction.
"Equipment" means equipment, as such term is defined in Section
9-109(2) of the UCC now owned or hereafter acquired by Borrower and financed
or refinanced with the proceeds of the Loan and any and all additions
thereto and substitutions and replacements of any of the foregoing, wherever
located, and which forms a part of the Collateral.
"Event of Default" means any of the Events of Default described in
Section 7.1 hereof.
"Examination Fee" means Borrower agrees to pay to FINOVA an
examination fee in the amount of $500 per person per day in connection with
each audit or examination of Borrower performed by FINOVA prior to or after
the date hereof, plus all costs and expenses incurred in connection
therewith (the "Examination Fee"). Without limiting the generality of the
foregoing, Borrower shall pay to FINOVA an initial Examination Fee in an
amount equal to $500 per person per day, plus all costs and expenses
incurred in connection therewith. Such initial Examination Fee shall be
deemed fully earned at the time of payment and due and payable upon the
closing of this transaction, and shall be deducted from any good faith
deposit paid by Borrower to PINOVA prior to the date of this Agreement.
"Executive Officer" means the President, the Chief Executive Officer,
or the Chief Financial Officer of Borrower elected from time to time.
"GAAP" means generally accepted accounting principles in the United
States of America (as such principles may change from time to time) applied
on a consistent basis (except for changes in application in which Borrowers
independent certified public accountants concur), applied both to
classification of items and amounts.
"Interest Rate" means a per annum rate of 4% in excess of the prime
rate of interest announced publicly by Citibank, N.A., (or any successor
thereto), from time to time as its "prime rate" (the "Prime Rate") which may
not be such institution's lowest rate. The interest rate chargeable
hereunder in respect of the Term Loans shall be increased or decreased, as
the case may be, without notice or demand of any kind, upon the announcement
of any change in the Prime Rate. Notwithstanding the foregoing, the Interest
Rate chargeable hereunder will not exceed 15 1/2% or be less than 9 1/2%
provided no event of default has occurred or is continuing. Each change in
the Prime Rate shall be effective hereunder on the first day following the
announcement of such change. Interest charges and all other fees and charges
herein shall be computed on the basis of a year of 360 days and actual days
elapsed and shall be payable to FINOVA in arrears on the first day of each
month.
"Law" means any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any government.
"Legal Requirements" means any and all present and future judicial,
and administrative rulings or decisions, and any and all present and future
federal, state, and local laws, ordinances, rules, regulations, permits and
certificates, in each case, in any way applicable to Borrower, (or the
ownership or use of the Equipment), or this transaction.
"Lien" means any mortgage, pledge, lien, security interest (including
without limitation any conditional sale or other title retention agreement),
grant of a leasehold, charge or other encumbrance of any nature whatsoever,
and also means the filing of or the agreement to give any financing
statement or analogous document under the UCC or analogous law of any
jurisdiction.
"Loan" means the aggregate principal amount loaned by FINOVA to
Borrower hereunder.
"Loan Commencement Date" means the date the Loan is made to Borrower.
"Loan Documents" means this Agreement, the Note, and any other
documents required to be, or which are, executed by Borrower in connection
with this Agreement or the Loan,
"Loan Party" means Borrower, each Guarantor, each Subordinating
Creditor and each other party (other than FINOVA) to any Loan Document.
"Maturity Date" means August 11, 2000.
"Note" means the promissory note or notes of Borrower executed and
delivered under this Agreement.
"Obligations" means all of the indebtedness, liabilities and
obligations of every kind and nature of Borrower to FINOVA, whether now
existing or hereafter arising, whether or not currently contemplated,
including, without limitation, those under, in connection with or evidenced
by this Agreement, the Note or the other Loan Documents.
"Office", when used in connection with FINOVA, means its office
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other
office of FINOVA as may be designated in writing from time to time by FINOVA
to Borrower.
"Operating Cash Flow/Actual" means, for any period, Borrower's net
income or loss (excluding the effect of any extraordinary gains or losses),
determined in accordance with GAAP, plus or minus each of the following
items, to the extent deducted from or added to the revenues of Borrower in
the calculation of net income or loss: (i) depreciation; (ii) amortization
and other non-cash charges; (iii) interest expense paid or accrued; (iv)
total federal and state income tax expense determined as the accrued
liability of Borrower in respect of such period, regardless of what portion
of such expense has actually been paid by Borrower during such period; and
(v) Management Fees paid, to the extent permitted hereunder, and after
deduction for each of (a) federal and state income taxes, to the extent
actually paid during such period: (b) any non-cash income; and (c) all
actual Capital Expenditures made during such period and not financed.
"Person" means an individual, corporation, national banking
association, partnership, trust, unincorporated association, joint venture,
joint-stock company, government (including political subdivisions),
governmental authority or agency, Indian tribe, or any other entity.
"Plan" means any employee benefit plan which, is covered by Title IV
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and which is maintained by Borrower or, in the case of a plan to
which more than one employer contributes, to which Borrower made
contributions at any time within the five plan years preceding the date of
termination.
"Senior Contractual Debt Service" means, for any period, the sum of
payments made or required to be made by Borrower during such period for (I)
interest and scheduled principal payments due on the Term Loans (excluding
voluntary prepayment and payments made from Borrowers Excess Cash Flow, as
required pursuant to the Schedule), (ii) the Facility Fee, and (iii)
principal and interest payments due on the Permitted Senior Indebtedness.
"Term" means the period beginning on the Loan Commencement Date and
ending on the Maturity Date.
"Total Facility" means $450,000.
"UCC" means the Uniform Commercial Code as adopted in the State of
Arizona.
1.2 Construction.
Unless the context of this Agreement otherwise clearly requires,
references to the plural include the singular, the singular the plural, the
part the whole, and "or" has the inclusive meaning frequently identified by
the phrase "and/or." References to "determination" by FINOVA include a good-
faith estimate by PINOVA (in the case of a quantitative determination) and a
good faith belief by FINOVA (in the case of a qualitative determination).
The words "herein", "hereunder" and "hereof" and similar terms in this
Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. The Section and other headings contained in
this Agreement are for reference purposes only and shall not control or
affect the construction of this Agreement or the interpretation thereof in
any respect.
ARTICLE 2. THE CREDIT
2.1 The Loan.
Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, FINOVA agrees to make a
Loan to Borrower in a principal amount of Four Hundred Fifty Thousand
Dollars ($450,000).
2.2 The Note.
The obligation of Borrower to repay the Loan shall be evidenced by the
following:
(a) One term loan based upon the appraised auction value of Borrower's
existing machinery and equipment (the "M&E Term Loan"), provided that the
M&E Term Loan, if any, shall be in such amounts and on such terms as are set
forth on a separate promissory note of Borrower in form and substance
acceptable to FINOVA; and
(b) One term loan (the "Purchase Money M&E Term Loan) in an aggregate
outstanding principal amount not to exceed $131,570 solely payable to
Newport Corporation (RAM Optical Implementation ("Supplier") for the
purchase of the equipment described in Schedule "A" annexed hereto and
incorporated herein by reference provided that such Purchase Money M&E Term
Loan, if any, shall be in such amounts and on such terms as are set forth on
a separate promissory note of Borrower in form and substance acceptable to
FINOVA.
In no event shall the M&E Term Loan and the Purchase Money M&E Term
Loan exceed the aggregate amount the Loan as set forth in Section 2.1
herein.
2.3 Disbursements.
Subject to the conditions set forth herein, FINOVA shall, on the
Disbursement Date, credit, by wire transfer, the amount of the Loan to the
account of Borrower or the Person or Persons specified by Borrower.
2.4 Loan Account.
FINOVA shall maintain a loan account on its books in the name of
Borrower for the Loan in which will be recorded all payments of principal
thereof and all accruals and payments of interest thereon. The entries in
the loan account (in the absence of manifest error in the making thereof
shall be conclusive evidence of the outstanding principal thereof and
accrued interest thereon from time to time. FINOVA shall provide Borrower
monthly with a statement of charges, expenses and payments made pursuant to
this Agreement. Such statements shall be deemed correct, accurate and
binding on Borrower unless Borrower notifies FINOVA in writing to the
contrary within thirty (30) days after each account is rendered, describing
the nature of any alleged errors or admissions.
2.5 Interest Rates and Fees.
2.5.1 Interest Prior to Maturity. Prior to maturity (whether by
acceleration or otherwise) the unpaid principal amount of the Loan shall
bear interest at the Interest Rate.
2.5.2 Default Interest. Commencing with the day after the
principal amount of any part of the Loan shall have become due and payable
(by acceleration or otherwise), such part of the Loan shall bear interest at
the daily rate of two percent (2%) per annum above the then applicable
Interest Rate.
2.5.3 Facility Fee. Borrower shall pay to FINOVA a facility fee
equal to 1% per annum of the amount of the Total Facility ("Facility Fee").
The Facility Fee shall be deemed fully earned and payable on the Closing
Date and thereafter shall be payable annually, commencing upon the first
anniversary of the date of this Agreement and continuing on each subsequent
anniversary thereof.
2.6 Payments.
2.6.1 Time; Pace; Manner. All payments to be made in respect of
principal, interest, or other amounts due from Borrower hereund6r or under
the Note shall become due and deemed fully earned by FINOVA at 12:00 o'clock
noon, New York time, on the day when due without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived.
Such payments shall be made to FINOVA in lawful money of the United States
of America in immediately available funds, and which payments must be
received by FINOVA no later than the 20th day of each month, irrespective of
the date of any monthly statement of account rendered by FINOVA. In no event
shall Borrower of a monthly statement of account condition payment by
Borrower upon the rendering or the receipt.
2.6.2 Payment Dates. From and after the Loan Commencement Date,
the Loan shall be repaid on such terms as are set forth on separate
promissory notes of Borrower to FINOVA.
2.6.3 Net Payments. All payments hereunder and under the Note
shall be made by borrower to FINOVA without defense, set-off or counterclaim
and without deduction for any present or future income, stamp or other
taxes, levies, imposts, deductions, charges or withholdings whatsoever
imposed, assessed, levied or collected by or for the benefit of any
jurisdiction or taxing authority. In addition, Borrower shall pay any and
all taxes (stamp or otherwise) payable or determined to be payable in
connection with the execution and delivery of this Agreement, the Note and
on all payments to be made by Borrower hereunder and under the Note (other
than the FINOVA's income taxes) and all taxes payable in connection with or
related to the Collateral.
2.7 Prepayments.
Borrower may terminate this Agreement at any time but only upon sixty
(60) days' prior written notice and prepayment of the Obligations. Upon any
such early termination by Borrower or any termination of this Agreement by
FINOVA upon the occurrence of an Event of Default, then, and in any such
event, Borrower shall pay to FINOVA upon the effective date of such
termination a fee (the "Termination Fee") in an amount equal to:
(i) Four percent (4%) of the Total Facility if such prepayment is
made during the Loan Year beginning on the Closing Date; and
(ii) Two percent (2%) of the Total Facility if such prepayment is made
during the Loan Year beginning on the first anniversary of the
Closing Date.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
3.1 Due Organizations.
It is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas, is qualified and authorized
to do business and is in good standing in all states in which such
qualification and good standing are necessary in order for it to conduct its
business and own its property, and has all requisite power and authority to
conduct its business as presently conducted, to own its property and to
execute and deliver each of the Loan Documents to which it is a party and
perform all of its Obligations thereunder, and has not taken any steps to
wind-up, dissolve or otherwise liquidate its assets.
3.2 Execution and Binding Effect.
This Agreement has been duly and validly executed and delivered by
Borrower and constitutes a legal, valid and binding obligation of Borrower
enforceable in accordance with its terms, and the Note, and the other Loan
Documents when duly and validly executed and delivered by Borrower, will
constitute legal, valid and binding agreements and obligations of Borrower
enforceable in accordance with their terms.
3.4 Authorizations and Filings.
Except for the filing of UCC financing statements, no authorization,
consent, approval, license, exemption or other action by, and no
registration, qualification, designation, declaration or filing with, any
governmental authority is or will be necessary or advisable in connection
with the execution and delivery of this Agreement, Note, the other Loan
Documents or the consummation by Borrower of the transactions herein and
therein contemplated, or performance by Borrower of or compliance by
Borrower with, the terms and conditions hereof or thereof.
3.5 Absence of Conflicts.
Neither the execution and delivery of this Agreement, the Note or
the other Loan Documents, nor consummation of the transactions therein
contemplated nor performance of, or compliance with the terms and conditions
thereof will (a) result in any violation of the provisions of Borrower's
Constituent Documents or any Law, or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over Borrower, or
any of its property, or (b) result in the creation or imposition of any lien
upon any property (now owned or hereafter acquired) of Borrower, except for
the lien created by this Agreement.
3.6 Financial Statements.
Borrower has heretofore furnished to FINOVA certain financial
statements and related financial information ("Financial Statements"). Such
Financial Statements (including the notes thereto) present fairly the
financial condition of Borrower as of the dates of the balance sheets
contained therein, and the results of its operations for the periods then
ended, all in conformity with GAAP on a basis consistent with that of
Financial Statements for corresponding prior periods. Except as disclosed
therein, Borrower has no material contingent liabilities (including
liabilities for taxes), unusual forward or long-term commitments or
unrealized or anticipated losses from unfavorable commitments.
3.7 No Event of Default.
No event has occurred and is continuing and no condition exists which
constitutes or which, with the giving of notice, the passage of time, or
both, would constitute an Event of Default.
3.8 Litigation.
There is no pending or threatened proceeding by or before any court or
governmental agency against or affecting Borrower which, if adversely
decided would have a material adverse effect on the business, operations or
financial condition of B6rrower or on the ability of Borrower to perform its
obligations under this Agreement, the Note or the other Loan Documents.
3.9 Title to Collateral.
At the time the Loan is made, Borrower will have good title to the
Equipment or will acquire good title thereto upon the disbursement of the
proceeds of the Loan, subject to no lien other than the lien created hereby.
3.10 Title to Property.
Borrower has good title to all property owned by it, including all
properties reflected in the most recent audited balance sheet referred to in
Section 3.6 hereof (except as sold or otherwise disposed of in the ordinary
course of business).
3.11 Taxes.
All tax returns required to be filed by Borrower have been properly
prepared, executed and filed. All taxes, assessments, fees and other
governmental charges upon Borrower or upon any of its properties, incomes,
sales or franchises, which are due and payable, have been paid.
3.12 Financial Accounting Practices.
Borrower makes and keeps books, records and accounts, which, in
reasonable detail, accurately and fairly reflect Borrower's transactions and
dispositions of its assets.
3.13 Power To Carry On Business.
Borrower has all requisite power and authority to own and operate its
properties and to carry on its businesses as now conducted and as presently
planned to be conducted.
3.14 No Material Adverse Change.
Since the date of the Financial Statements referred to in Section 3.6,
there has been no material adverse change in the business, operations or
financial condition of Borrower.
3.15 Compliance with Laws.
Borrower is not in violation of any Law, except for violations, which
in the aggregate do not have a material adverse effect on the business,
operations or financial condition of Borrower.
3.16 Accurate and Complete Disclosure.
No representation or warranty made by Borrower in this Agreement and
no statement made by Borrower in the Financial Statements furnished pursuant
to Section 3.6 hereof or otherwise, any certificate, report, exhibit or
document furnished by Borrower to FiNOVA pursuant to or in connection with
this Agreement is false or misleading in any material respect (including by
omission of material information necessary to make such representation,
warranty or statement not misleading).
3.17 Regulations G, T, U and X.
Borrower is not engaged in the business of extending credit for the
purpose of purchasing or carrying "margin stock", as such term is used in
Regulations G, T, U or X promulgated by the Board of Governors of the
Federal Reserve System as amended from time to time. No part of the proceeds
of the Loan will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any "margin
stock". Borrower does not own any "margin stock".
3.18 Perfection.
Except for the filings under Article 9 of the UCC specified in Section
4.7 hereof (and continuation statements at periodic intervals) or under
applicable certificate of title acts with respect to the security interest
created by this Agreement, no further filing or recording is necessary under
the UCC or under any other laws of any jurisdiction, in order to perfect in
all applicable jurisdictions the security interest of FINOVA in the
Collateral.
3.19 Place of Business.
Both the place of business (or chief executive office if there is more
than one place of business) of Borrower and the place where it keeps its
corporate records concerning the Collateral and all of its interest in, to
and under this Agreement are located at the address set forth at the
beginning of this Agreement.
3.20 Location of Collateral.
For all purposes, including, without limitation, perfection of
security interests therein under Article 9 of the UCC, the Collateral is
deemed located in the State of Texas.
3.21 Other Names.
Borrower has not, during the preceding five (5) years, been known by
or used any other corporate or fictitious name, nor has Borrower been the
surviving corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person during such time, except that
Borrower acquired all or substantially all of the assets of I-Con
Industries, Inc. during such time.
3.22 Year 2000
Borrower shall take all action necessary to assure that there will be
no material adverse change to Borrower's business by reason of the advent of
the year 2000, including without limitation that all computer-based systems,
embedded microchips and other processing capabilities effectively recognize
and process dates after April 1,1999.
ARTICLE 4. CONDITIONS OF LENDING
The obligation of FINOVA to make the Loan hereunder is subject to the
accuracy in all material respects, as of the date hereof and the
Disbursement Date, of the representations and warranties herein contained,
to the performance by Borrower of its obligations to be performed hereunder
on or before such Disbursement Date arid to the satisfaction of the
following further conditions.
4.1 Representations and Warranties.
The representations and warranties contained in Article 3 hereof shall
be true on the Closing Date and on and as of the Disbursement Date with the
same effect as if made on and as of such date, and on such date no Event of
Default or any event which, with the giving of notice or the passage of
time, or both, would become an Event of Default shall have occurred and be
continuing or exist or shall occur or exist after giving effect to the Loan.
4.2 Corporate Action.
On the Closing Date, Borrower shall deliver to FINOVA a certificate in
form and substance satisfactory to FINOVA, dated the Closing Date, signed by
a duly authorized officer of Borrower, certifying as to (a) true copies of
the Constituent Documents of Borrower, all as in effect on such date (b)
true copies of all action taken by Borrower relative to this Agreement, the
Note and the other Loan Documents, (c) compliance with Section 3.4 hereof,
and (d) the names, true signatures and incumbency of the officer or officers
of Borrower authorized to execute and deliver this Agreement, the Note and
the other Loan Documents (and FINOVA may conclusively rely on such
certificate unless and until a later certificate revising the prior
certificate has been furnished to FINOVA).
4.3 Opinion of Counsel.
On the Closing Date, FINOVA shall have received a favorable written
opinion of counsel for Borrower, dated the Closing Date and in form and
substance satisfactory to FINOVA and its counsel.
4.4 No Change of Law or Facts.
No change shall have occurred after the date of execution and delivery
of this Agreement in applicable Law or regulations thereunder or
interpretations thereof by appropriate regulatory authorities which, in the
opinion of FINOVA or its counsel, would make it illegal for FINOVA to
acquire the Note, make the Loan, or otherwise to participate in the Loan,
nor shall any facts come to the attention of FINOVA, concerning Borrower,
its business or financial condition which, in the opinion of FINOVA, would
increase the risk to FINOVA of repayment of the Loan by Borrower.
4.5 Documents.
The following documents shall have been duly authorized, executed and
delivered by the respective party or parties thereto, shall be in form and
substance satisfactory to FINOVA and its counsel and shall be in full force
and effect on the Closing Date and on the disbursement Date, and an executed
counterpart of each thereof shall have been delivered to FINOVA and its
counsel:
4.5.1 this Agreement;
4.5.2 the Note;
4.5.3 insurance certificates or policies of insurance evidencing the
coverages required by Section 5.3 hereof;
4.5.4 other Loan Documents, if any.
4.6 Equipment.
Borrower shall provide to FINOVA a complete description of each item
of Equipment the cost of which will be paid or refinanced with the proceeds
of the Loan. FINOVA may reject any such item of Equipment, in which case
Borrower may substitute other Equipment acceptable to FINOVA or reduce the
amount of the Loan to be made.
4.7 Financing Statements.
Prior to the disbursement of the proceeds of the Loan, UCC financing
statements covering the security interest created by this Agreement in the
Equipment shall have been duly filed in the office of the Secretary of State
of the State where the Equipment is located and in all other places as. in
the opinion of FINOVA, or its counsel are necessary or desirable to perfect
such security interests.
4.8 Licenses and Permits.
All appropriate action shall have been taken prior to the Closing Date
in order to permit consummation of the transactions contemplated herein and
all licenses, permits, waivers, exemptions, authorizations and approvals
required (or, in the opinion of FINOVA or its counsel, advisable) to be in
effect on the Closing Date shall have been issued and shall be in full force
and effect on such date, and copies thereof shall have been delivered to
FINOVA.
4.9 Proceedings and Documents.
All legal details and proceedings in connection with the transactions
contemplated by this Agreement shall be in form and substance reasonably
satisfactory to counsel for FINOVA and FINOVA shall have received all such
counterpart originals or certified or other copies of such documents and
proceedings in connection with such transactions, in form and substance, as
to certification and otherwise, reasonably satisfactory to said counsel for
FINOVA, as FINOVA or counsel for FINOVA may reasonably request.
ARTICLE 5. COVENANTS
Borrower covenants that from and after the date hereof and until
payment in full of the Note and interest thereon and all other amounts due
from Borrower hereunder or under the Note or the other Loan Documents,
unless FINOVA shall otherwise consent in writing:
5.1.1 Annual Audit Reports. As soon as practicable, and in any
event within 90 days after the close of each fiscal year of Borrower,
Borrower shall furnish to FINOVA statements of income, retained Warnings and
changes in financial position of Borrower for such fiscal year and a balance
sheet of Borrower as of the close of such fiscal year and notes to each, all
in reasonable detail, selling forth in comparative form the corresponding
figures for the preceding fiscal year where such presentation is appropriate
under GAPS, certified by independent certified public accountants of
recognized standing selected by Borrower and satisfactory to FINOVA,
together with (or included in such certification) a written statement of
such accountants substantially to the effect that (i) such accountants
examined such financial statements in accordance with generally accepted
auditing standards and accordingly made such tests of accounting records and
such other auditing procedures as they considered necessary in the
circumstances and (ii) in the opinion of such accountants such financial
statements present fairly the financial position of Borrower as of the end
of such fiscal year and the results of its operations and the changes in its
financial position for the fiscal year then ended, in conformity with
generally accepted accounting principles-applied on a basis consistent with
that of the preceding fiscal year except for changes in application in which
such accountants concur).
5.1.2 Quarterly Reports. Within 45 days after the end of each of
the first three fiscal quarters of each fiscal year, Borrower shall furnish
to FINOVA a copy of its interim financial statements certified by an
Executive Officer of Borrower.
5.1.3 Further Requests. Borrower will promptly furnish to FINOVA
such other information concerning Borrower in such form as FINOVA may
reasonably request.
5.1.4 Notice of Event of Default. Promptly upon becoming aware of
any Event of Default, or any event which, with the giving of notice or the
passage of time, or both, would become an Event of Default, Borrower shall
give FINOVA notice thereof, together with a written statement of an
Executive Officer of Borrower setting forth the details thereof and any
action with respect thereto taken or contemplated to be taken by Borrower.
5.1.5 Notice of Material Adverse Change. Promptly upon
becoming aware thereof Borrower shall give FINOVA written notice about any
material adverse change in the business, operations or financial condition
of Borrower.
5.1.6 Notice of Material Proceedings. Promptly upon becoming
aware thereof Borrower shall give FINOVA written notice of the commencement,
existence or threat of any proceeding by or before any court or
administrative agency against or affecting Borrower which, if adversely
decided1 would have a material adverse effect on the business, operations or
financial condition of Borrower or on the ability of Borrower to perform its
obligations under this Agreement, the Note, or the other Loan Documents.
5.1.7 Visitation. Borrower shall permit such persons as FINOVA
may designate to visit and inspect the Collateral and to examine the books
and records of Borrower and take copies and extracts therefrom, and to
discuss its affairs with officers of Borrower and its independent
accountants, at such reasonable times and as often as FINOVA may reasonably
5.2 Preservation of Existence and Franchises.
5.2.1 Borrower shall not enter into any merger, reorganization,
or consolidation or wind up, liquidate or dissolve, nor agree to do any of
the foregoing.
5.2.2 Borrower will qualify to do business and will remain in
good standing under the laws of each jurisdiction in which it is required to
be qualified by reason of at the location of the properties owned or leased
by it or the conduct of its business
5.2.3 Borrower will comply with all Laws relative to the conduct
of its business or the location of the properties owned or leased by it, the
non-compliance with which could have a material adverse effect on the
business, operation, assets or financial or other condition of the Borrower,
as contemplated hereby, or the ability of Borrower to perform its
obligations under this Agreement, the Note, or the other Loan Documents and
will obtain or cause to be obtained as promptly as possible any permit,
license, consent or approval of any governmental authority and make any
filing or registration therewith which at the time shall be required with
respect to the performance of its obligations under this Agreement the Note
or the other Loan Documents for the operation of its business as presently
conducted or as contemplated by it
5.2.4 Borrower shall not. (i) convey, assign, sell, mortgage,
encumber, pledge, hypothecate, grant a security interest in, grant options
with respect to, lease or otherwise dispose of all or any part of any legal
or beneficial interest in any part or all of the Collateral or any interest
therein; or (ii) directly or indirectly sell, assign, lease or otherwise
dispose of or permit the sale, assignment or other disposition of (a) more
than 10% of the legal or beneficial interest in the stock of any corporation
which is either Borrower or is a beneficial owner of all or part of Borrower
without the prior written consent of FINOVA which will not be unreasonably
withheld; (b) any legal or beneficial interest in any of the Collateral or
(c) any legal or beneficial interest in Borrower if Borrower is a limited or
general partnership, joint venture, tenancy in common or tenancy by the
entirety; or (iii) convey, assign, transfer or otherwise dispose of a
material portion of the assets of Borrower (other than the Collateral),
other than in the ordinary course of business of Borrower.
5.3 Insurance.
Borrower will maintain and deliver evidence to FINOVA of such
insurance as is required by FINOVA, written by insurers, in amounts, and
with lender's loss payee, additional insured, and other endorsements,
satisfactory to FINOVA. All premiums with respect to such insurance shall be
paid by Borrower as and when due Accurate and certified copies of the
policies shall be delivered by Borrower to FINOVA. If Borrower fails to
comply with this Section, FINOVA may (but shall not be required to) procure
such insurance and endorsements at Borrower's expense and charge the cost
thereof to Borrower's loan account as an Obligation.
5.4 Maintenance of Properties.
Borrower shall maintain or cause to be maintained in good repair,
working order and condition the properties now replacements and improvements
thereto so that the business carried on in connection therewith may be
properly and advantageously conducted at all times, or hereafter owned,
leased or otherwise possessed by it, including the Equipment and shall make
or cause to be made all needful and proper repairs, renewals,
5.5 Payment of Taxes and Other Potential Charges.
Borrower shall pay or discharge
5.5.1 all taxes, assessments and other governmental charges or
levies imposed upon it or any of its properties, including the Collateral,
or income (including such as may arise under ERISA or any similar provision
of law). on or prior to the date on which penalties attach thereto,
5.5.2 all lawful claims of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons which, if unpaid, might
result in the creation of a Lien upon any such property, on or prior to the
date when due; provided, that unless and until foreclosure, distraint, levy,
sale or similar proceedings shall have been commenced, Borrower need not pay
or discharge any such tax, assessment, charge, levy, claim or current
liability so long as (i) the validity thereof is contested in good faith and
by appropriate proceedings diligently pursued, (ii) in FINOVA's sole
judgment there is no reasonably foreseeable risk of forfeiture of the
Collateral, and (iii) such reserves or other appropriate provisions as may
be required by GAPS shall have been made therefor, and so long as such
failure to pay or discharge does not have a material adverse effect on the
business, operations or financial condition of Borrower.
5.6 Financial Accounting Practices.
Borrower shall make and keep books, records and accounts, which, in
reasonable detail, accurately and fairly reflect its transactions and
dispositions of its assets.
5.7 Compliance with Laws.
Borrower shall comply with all applicable Laws in all respects,
provided, that Borrower shall not be deemed to be in violation of this
Section 5.7 as a result of any failures to comply which would not result in
fines, penalties, injunctive relief or other civil or criminal liabilities
which, in the aggregate, would not materially affect the business or
operations of Borrower or the ability of Borrower to perform its obligations
under this Agreement, the Note or the other Loan Documents..
5.8 Maintenance of Collateral.
Borrower will maintain and preserve the Collateral in good condition
and repair, promptly repairing, replacing or rebuilding any part of the
Collateral, which may be destroyed by any casualty, or become damaged, worn
or dilapidated.
5.9 Financial Covenant.
5.9.1 Borrower shall comply with all of the following
covenants. Compliance shall be determined as of the end of each
month or quarter (as determined by FINOVA in its sole and
absolute discretion), except as
5.9.1(a) From the closing date until the end of the current
fiscal year, Borrower shall maintain a Net Worth
of not less than Six Hundred Thousand Dollars
($600,000). For each fiscal year thereafter
Borrower's minimum net worth shall increase in
increments of $200,000.
5.9.1(b) Borrower shall maintain a ratio of Indebtedness to
Net Worth of not greater than 6.0 to 1.0; and
5.9.1(c) Senior Debt Service Coverage Ratio. As of the last
day of each calendar quarter ended September 30,
1999 or December 31, Borrower's Operating Cash
Flow /Actual for the period ending as of such last
day must be at least 1.0 times the amount
necessary to meet Borrower's Senior Contractual
Debt Service for such period, and as of the last
day of each calendar quarter ended March 31, 1999,
June 30, 1999, September30, 1999, December30, 1999
and March 31, 2000, Borrowers Operating Cash
Flow/Actual for the: period ending as of such last
day must be at least 20 times the amount necessary
to meet Borrower's Senior Contractual Debt Service
for such period; provided however, that, with
respect to the calculations set forth herein for
the period from the Closing Date through December
31, 1998, Borrower's Operating Cash Flow/Actual
and Senior Contractual Debt Service shall be
determined beginning as of June 30, 1998 (the
"Start Date") and be measured as follows: (a) the
time period from the Start Date through September
30, 1998, shall be for such amounts for such
period, and (b) the time period from the Start
Date through December 31, 1998, shall be for such
amounts for such period; and, provided further,
that all such determinations shall be made on a
consolidated basis.
5.9.2 Words and terms used in this Section 5.9 and not otherwise
defined in this Agreement shall have the meanings commonly ascribed to such
terms in accordance with GAAP.
5.9.2 Year 2000.
Borrower shall take all action necessary to assure that there will be
no material adverse change to Borrower's business by reason of the advent of
the year 2000, including without limitation that all computer-based systems,
embedded microchips and other processing capabilities effectively recognize
and process dates after April 1, 1999. At FINOVA's request, Borrower shall
provide to FINOVA assurance reasonably acceptable to FINOVA that Borrowers
computer-based systems, embedded microchips and; other processing
capabilities are year 2000 compatible.
5.10 Further Assurances
Borrower shall cause to be done, executed, acknowledged and delivered
all and every such further act, conveyance and assurance as FINOVA shall
require for accomplishing the purposes of this Agreement, the Note and the
other Loan Documents. Borrower will defend and protect its title with
respect to the Collateral and will indemnify FINOVA with respect thereto.
Any payment in respect of such indemnity shall be made directly to FINOVA on
demand in immediately available funds. Forthwith after notice from FINOVA,
Borrower shall promptly, without further consideration, execute, acknowledge
and deliver such further instruments and documents and will take such other
actions as FINOVA may deem necessary or advisable from time to time to
ensure the enforceability or priority of the liens granted hereby, or
otherwise to confirm and carry out the intent and purpose of this Agreement.
ARTICLE 6. SECURITY INTEREST
6.1 Security.
To secure the payment and performance of the Obligations when due,
Borrower hereby grants to FINOVA a first priority security interest (subject
only to Permitted Encumbrances) in all of Borrowers now owned or hereafter
acquired or arising Machinery and Equipment and a security interest in all
of Borrower's now owned or hereafter acquired or arising, accounts
receivables, inventory, life insurance policies and the proceeds thereof,
trademarks, copyrights. licenses and patents, investment property (as
defined in Section 9-115 of the Code) and general intangibles, including,
without limitation, all of Borrower's deposit accounts, money, any and all
property now or at any time hereafter in FINOVA's possession (including
claims and credit balances), and all proceeds (including proceeds of any
insurance policies, proceeds of proceeds and claims against third parties),
all products and all books and records and computer data related to any of
the foregoing together with that certain machinery and equipment described
in Schedule "A" annexed hereto (all of the foregoing, together with all
other property in which FINOVA may be granted a lien or security interest,
is referred to herein, collectively, as the "Collateral").
6.2 FINOVA Has Rights and Remedies of a Secured Party.
In addition to all rights and remedies given to FINOVA by this
Agreement, FINOVA shall have all the rights and remedies of a secured party
under the UCC.
6.3 Provisions Applicable to the Collateral.
The parties agree that, at all times during the term of this
Agreement, the following provisions shall be applicable to the Collateral:
6.3.1 Borrower covenants and agrees that it will keep accurate
and complete books and records concerning the Collateral owned or acquired
by it in accordance with GAAP.
6.3.2 FINOVA shall have the right t& review the books and
records of Borrower pertaining to the Collateral and to copy the same and to
make excerpts therefrom, all at such reasonable times upon reasonable notice
and as often as FINOVA may reasonably request.
6.3.3 Borrower shall maintain and keep its principal place of
business and its chief executive office at the address set forth at the
beginning of this Agreement, and at no other location without giving FINOVA
at least thirty (30) days prior written notice of any move. Borrower shall
maintain and keep its records concerning the Collateral at such address and
at no other location without giving FINOVA at least thirty (30) days prior
written notice of any move. Borrower shall keep any Equipment comprising the
Collateral only at such address. Borrower may change any such location only
if it has given FINOVA thirty (30) days prior written notice of the new
location. Borrower may not move the Collateral without the prior written
consent of FINOVA.
6.3.4 Borrower shall not sell, lease, transfer or otherwise
dispose of or encumber any of the Collateral.
6.3.5 Borrower shall cause the Equipment and any other Collateral
to be maintained and preserved in the same condition, repair and working
order as when new, ordinary wear and tear excepted, and shall promptly make
or cause to be made all repairs, replacements and other improvements in
connection therewith which are necessary or desirable to that end.
6.3.6 Borrower shall not permit any item of Equipment to become a
fixture (other than a trade fixture) to real estate or an accession to other
property.
6.4 Certain Covenants.
Borrower covenants and agrees with FINOVA for the benefit of FINOVA
that:
6.4.1 Borrower has and will have good and merchantable title to
all Collateral, in each case as from time to time owned or acquired by it,
free and clear of all Liens. Borrower will defend such title against the
claims and demands of all Persons whomsoever.
6.4.2 Borrower will faithfully preserve and protect FINOVA's
security interest in the Collateral and will, at its own cost and expense,
cause said security interest to be perfected and continued perfected, and
for such purpose Borrower will from time to time at the request of FINOVA
and at the expense of Borrower, make, execute, acknowledge and deliver, and
file or record, or cause to be filed or recorded, in. the proper filing
places, all such instruments, documents and notices, including without
limitation financing statements and continuation statements, as FINOVA may
deem necessary or advisable from time to time in order to perfect and
continue perfected said security interest. Borrower will do all such other
acts and things and make, execute, acknowledge and deliver all such other
instruments and documents, including without limitation further security
agreements pledges, endorsements, assignments and notices, as FINOVA may
deem necessary or advisable from time to time in order to perfect and
preserve the priority of said security interest as a first lien security
interest in the Collateral prior to the rights of all other Persons therein
or thereto.
6.4.3 Borrower will not, without the prior written consent of
FINOVA, (i) borrow or permit any Person to borrow against the Collateral
other than the Loan to Borrower from FINOVA pursuant to this Agreement; (ii)
create, incur, assume or suffer to exist any Lien with respect to any of the
Collateral: (iii) permit any levy or attachment to be made against any of
the Collateral except any levy or attachment relating to this Agreement; or
(iv) permit any financing statement to be on file with respect to any of the
Collateral, except financing statements in favor of FINOVA.
6.4.4 Risk of loss of, damage to or destruction of the
Collateral is and shall remain upon Borrower. Borrower will insure the
Collateral as provided in Section 5.3 of this Agreement. If Borrower fails
to effect and keep in full force and effect such insurance or fails to pay
the premiums thereon when due, FINOVA may do so for the account of Borrower
and add the cost thereof to the Obligations and the same shall be payable to
FINOVA on demand. Borrower hereby assigns and sets over unto FINOVA for the
benefit of FINOVA all moneys which may become payable on account of such
insurance, including without limitation any return of unearned premiums
which may be due upon cancellation of any such insurance, and directs the
insurers to pay FINOVA any amount so due. FINOVA, its officers, employees
and authorized agents and its successors and assigns, are hereby appointed
attorneys-in-fact of Borrower, for the purpose of endorsing any draft or
check which may be payable to Borrower in order to collect the proceeds of
such insurance or any return of unearned premiums. Such appointment is
irrevocable and coupled with an interest. The proceeds of insurance shall be
applied to reduction of the Obligations in any order FINOVA may choose or,
in FINOVA's sole discretion, to the repair or replacement of the Collateral,
or any part thereof, in which case FINOVA may impose such conditions on the
disbursement of the proceeds as FINOVA in its sole discretion deems
appropriate.
6.4.5 Upon the occurrence and during the continuation or
existence of any Event of Default, Borrower shall promptly upon demand by
FINOVA assemble the Equipment and any other Collateral and make it available
to FINOVA at the place or places to be designated by FINOVA. The right of
FINOVA to have the Equipment and any other Collateral assembled and made
available to it is of the essence of this Agreement and FINOVA may, at its
election, enforce such right in equity for specific performance.
6.4.6 FINOVA shall have no duty as to the collection or
protection of the Collateral or any part thereof or any income thereon, or
as to the preservation of any rights pertaining thereto, beyond exercising
reasonable care in the custody of any Collateral actually in the possession
of FINOVA. FINOVA shall be deemed to have exercised reasonable care in the
custody and preservation of such of the Collateral as may be in its
possession if it takes such action for that purpose as Borrower shall
request in writing, provided that such requested action shall not, in the
judgment of FINOVA, impair FINOVA's security interest in the Collateral or
its rights in, or the value of, the Collateral, and provided further that
such written request is received by FINOVA in sufficient time to permit it
to take the requested action.
ARTICLE 7. DEFAULTS
7.1 Events of Default.
The occurrence of one or more of the following described events is an
Event of Default:
7.1.1 Borrower fails to pay when due and payable any portion of the
Obligations at stated maturity, upon acceleration or otherwise:
7.1.2 Borrower or any other Loan Party fails or neglects to perform,
keep, or observe any Obligation including, but not limited to, any term,
provision, condition, covenant or agreement contained in any Loan Document
to which Borrower or such other Loan Party is a party;
7.1.3 Any material adverse change occurs in Borrowers business,
assets, operations, prospects or condition, financial or otherwise;
7.1.4 The prospect of repayment of any portion of the Obligations or
the value or priority of FINOVA's security interest in the Collateral is
materially impaired;
7.1.5 Any portion of Borrower's assets is seized, attached, subjected
to a writ or distress warrant, is levied upon or comes into the possession
of any judicial officer;
7.1.6 Borrower shall generally not pay its debts as they become due or
shall enter into any agreemen5t (whether written or oral), or offer to enter
into any agreement, with all or a significant number of its creditors
regarding any moratorium or other indulgence with respect to its debts or
the participation of such creditors or their representatives in the
supervision, management or control of the business of Borrowers.
7.1.7 Any bankruptcy or other insolvency proceeding is commenced by
Borrower, or any such proceeding is commenced against Borrower and remains
undischarged or unstayed for forty-five (45) days;
7.1.8 Any notice of lien, levy or assessment is filed of record with
respect to any of Borrower's assets;
7.1.9 Any judgments are entered against Borrower in an aggregate
amount exceeding $25,000 in any fiscal year:
7.1.10 Any default shall occur under (i) any material agreement
between Borrower and any third party including, without limitation, any
default which would result in a right by such third party to accelerate the
maturity of any Indebtedness of Borrower to such third party, or (ii) any
Subordinated Debt;
7.1.11 Any representation or warranty made or deemed to be made by
Borrower, any Affiliate or any other Loan Party in any Loan Document or any
other statement, document or report made or delivered to FINOVA in
connection therewith shall prove to have been misleading in any material
respect;
7.1.12 Any Guarantor becomes incapacitated, dies, terminates or
attempts to terminate its Guaranty or any security therefor or becomes
subject to any bankruptcy or other insolvency proceeding;
7.1.13 Any Prohibited Transaction or Reportable Event shall occur
with respect to a Plan which could have a material adverse effects on the
financial condition of Borrower; any lien upon the assets of Borrower in
connection with any Plan shall arise; Borrower or any of its ERISA
Affiliates shall fail to make full payment when due of all amounts which
Borrower or any of its ERISA Affiliates may be required to pay to any Plan
or any Multi employer Plan as one or more contributions thereto; Borrower or
any of its ERISA Affiliates creates or permits the creation of any
accumulated funding deficiency, whether or not waived; or
7.1.14 Any transfer of more than ten percent (10%) of the issued
and outstanding shares of common stock or other evidence of ownership of
Borrower without the prior written consent of FINOVA which consent shall not
be unreasonably withheld.
7.1.15 Any default by Borrower of any-term, condition or payment to
be made under this Agreement, the Note or any other agreement by and between
Borrower and FINOVA.
7.1.16 Any default by JH & BC Corp. under the Note, executed by JH&
BC Corp., dated as of June 16, 1998, and delivered to FINOVA, the Deed of
Trust, dated as of June 16, 4998, covering the premises located at ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ and Interstate 820 in Lake Worth, Texas, naming
JH & BC Corp. as Grantor and FINOVA as Beneficiary, and any other agreement
entered into by and, between JH & BC corp. and FINOVA.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, FINOVA RESERVES THE
RIGHT TO CEASE MAKING ANY LOANS DURING ANY CURE PERIOD STATED ABOVE, AND
THEREAFTER IF AN EVENT OF DEFAULT HAS OCCURRED.
7.2 Consequences of Event of Default.
Upon the occurrence of an Event of Default, FINOVA may. at its option
and in its sole and absolute discretion and in addition to all of its other
rights under the Loan Documents, cease making Loans, terminate this
Agreement and/or declare all of the Obligations to be immediately payable in
full. Borrower agrees that FINOVA shall also have all of its rights and
remedies under applicable law, including, without limitation, the default
rights and remedies of a secured party under the UCC, and upon the
occurrence of an Event of Default Borrower hereby consents to the
appointment of a receiver by FINOVA in any action initiated by FINOVA
pursuant to this Agreement and to the jurisdiction and venue set forth in
Section 9.26 hereof, and Borrower waives notice and posting of a bond in
connection therewith. Further, FINOVA may, at anytime, take possession of
the Collateral and keep it on Borrowers premises, at no cost to FINOVA, or
remove any part of it to such other place(s) as FINOVA may desire, or
Borrower shall, upon FINOVA's demand, at Borrower's sole cost assemble the
Collateral and make it available to FINOVA at a place reasonably convenient
to FINOVA. FINOVA may sell and deliver any Collateral at public or private
sales, for cash, upon credit or otherwise, at such prices and upon such
terms as FINOVA deems advisable, at FINOVA's sole and absolute discretion,
and may, if FINOVA deems it reasonable, postpone or adjourn any sale of the
Collateral by an announcement at the time and place of sale or of such
postponed or adjourned sale without giving a new notice of sale. Borrower
agrees that FINOVA has no obligation to preserve rights to the Collateral or
marshal any Collateral for the benefit of any Person. FINOVA is hereby
granted a license or other right to use, without charge, Borrowers labels,
patents, copyrights, name, trade secrets, trade names, trademarks and
advertising matter, or any similar property, in completing production,
advertising or selling any Collateral and Borrower's rights under all
licenses and all franchise agreements shall inure to FINOVA's benefit. Any
requirement of reasonable notice shall be met if such notice is mailed
postage prepaid to Borrower at its address set forth in the heading to this
Agreement at least five (5) days before sale or other disposition. The
proceeds of sale shall be applied, first, to all attorneys fees and other
expenses of sale, and second, to the Obligations in such order as FINOVA
shall elect, in its sole and absolute discretion. FINOVA shall return any
excess to Borrower and Borrower shall remain liable for any deficiency to
the by law fullest extent permitted
ARTICLE 8. MISCELLANEOUS
8.1 Indemnity.
BORROWER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS FINOVA FROM AND
AGAINST, AND, UPON DEMAND, REIMBURSE FINOVA FOR, ALL CLAIMS, DEMANDS,
LIABILITIES, LOSSES, DAMAGES, JUDGMENTS, PENALTIES, COSTS AND EXPENSES,
INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES AND DISBURSEMENTS,
WHICH MAY BE IMPOSED UPON, ASSERTED AGAINST OR INCURRED OR PAID BY FINOVA,
ON ACCOUNT OF ANY ACT PERFORMED OR OMITTED TO BE PERFORMED UNDER THIS
AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS OR ON ACCOUNT OF ANY
TRANSACTION ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE COLLATERAL OR
THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS, OR ANY OTHER AGREEMENT
BY AND BETWEEN FINOVA AND BORROWER, EXCEPT AS A RESULT OF THE WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE OF FINOVA.
8.2 No Implied Waiver; Cumulative Remedies.
No course of dealing and no delay or failure of FINOVA in exercising
any right, power or privilege under this Agreement, the Note or any of the
other Loan Documents shall affect such right, power or privilege except as
and to the extent that the assertion of any such right, power or privilege
shall be barred by an applicable statute of limitations; nor shall any
single or partial exercise thereof or any abandonment or discontinuance of
steps to enforce such a right, power or privilege preclude any further
exercise thereof or of any other right, power or privilege. The rights and
remedies of FINOVA under this Agreement, the Note or the other Loan
Documents are cumulative and not exclusive of any rights or remedies which
FINOVA would otherwise have.
8.3 Taxes.
Borrower agrees to pay or reimburse FINOVA for any and all stamp,
document, transfer, recording or filing taxes or fees and all similar
impositions payable or hereafter determined by FINOVA to be payable in
connection with this Agreement, the Note or the other Loan Documents
(including but not limited to those necessary or advisable to record or to
ensure the enforceability or priority of this Agreement, the Note or the
other Loan Documents), as determined by FINOVA in its sole discretion from
time to time, and any other documents, instruments or transactions pursuant
to or in connecu6n herewith, and Borrower agrees to save FINOVA harmless
from and against any and all present or future claims or liabilities with
respect to or resulting from any delay in paying or omission to pay any such
taxes, fees or similar impositions.
8.4 Modifications, Amendments or Waivers.
FINOVA and Borrower may from time to time enter into written
agreements amending, modifying or supplementing this Agreement, the Note or
the other Loan Documents or changing the rights of FINOVA or Borrower
hereunder or thereunder, and FINOVA may from time to time grant waivers or
consents to a departure from the due performance of the obligations of
Borrower thereunder. Any such agreement, waiver or consent must be in
writing and shall be effective only to the extent set forth in such writing.
In the case of any such waiver or consent, any Event of Default so waived or
consented to shall be deemed to be cured and not continuing, but no such
waiver or consent shall extend to any subsequent or other Event of Default
or impair any right consequent thereto.
8.5 Holidays.
Except as otherwise provided herein, whenever any payment or action to
be made or taken hereunder or the Note or any other Loan Document shall be
stated to be due on a day which is not a Business Day, such payment or
action shall be made or taken on the next following Business Day, unless
such next succeeding Business Day falls in a different calendar month, in
which case payment or action shall be made or taken on the next preceding
Business Day.
8.6 Notices.
8.6.1 Any notice required hereunder shall be in writing and
addressed to the Borrower and FINOVA at their addresses set forth at the
beginning of this Agreement with a copy to yard ▇▇▇▇▇▇▇▇, ▇▇, at ▇▇▇ ▇.
▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and a copy to ▇▇▇▇▇▇ ▇.
D'Arnore, VP-Associate General Counsel, at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Notices hereunder shall be deemed received on the
earlier of receipt, whether by mail, personal delivery, facsimile, or
otherwise, or upon deposit in the United States mail, postage pre paid.
8.6.2 If any notice is given by telex, facsimile transmission, or
telegram, the party giving such notice shall confirm such notice by a
writing delivered by hand or overnight courier; provided, however, that for
all purposes hereunder, notice shall be deemed effective at the time given
by telex, facsimile transmission or telegram.
8.7 Reimbursement for Certain Expenses.
Borrower agrees to pay or cause to be paid and to save FINOVA harmless
against liability for the payment of all reasonable out-of-pocket expenses,
including counsel fees, incurred by FINOVA from time to time (i) arising in
connection with the negotiation, execution, delivery, and recordation of
this Agreement, the Note or the other Loan Documents (ii) relating to
any requested amendments, waivers or consents to or in connection with this
Agreement, the Note or any other Loan Document, and (iii) arising in
connection with FINOVA's enforcement or preservation of rights under this
Agreement, The Note or any other Loan Document, including but not limited to
such expenses as may be incurred by FINOVA in the collection of the Note.
8.8 Personal Jurisdiction and Service of Process.
Borrower hereby irrevocably consents to personal jurisdiction and
venue in any court of the State of Arizona or any federal court sitting in
the State of Arizona, and hereby waives any claim either may have that such
court is an inconvenient forum for the purposes of any suit, action or other
proceeding arising out of this Agreement, the Note or any other Loan
Document or any of the agreements or transactions contemplated hereby or
thereby, which is brought against Borrower by FINOVA, and hereby agrees that
all claims in respect of any such suit, action or proceeding may be heard or
determined in any such court; and Borrower further consents to the service
of process in any such suit, action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to Borrower at its
address set forth herein for the giving of notes, such service to become
effective on the earlier of the date of receipt as evidenced by a signed
return receipt or ten (10) days after mailing.
8.9 Severability.
The provisions of this Agreement, the Note and the other Loan
Documents are intended to be severable. If any such provision is held
invalid or unenforceable in whole or in part in any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the
validity or enforceability thereof in any other jurisdiction or the
remaining provisions hereof in any jurisdiction.
8.10 Governing Law.
This Agreement the Note, the other Loan Documents and the rights and
obligations of the parties hereto and thereto shall be governed by and
construed and enforced in accordance with the laws of the State of Arizona.
8.11 Prior Understandings.
This Agreement supersedes all prior understandings and agreements,
whether written or oral, between the parties hereto relating to the
transactions provided for herein.
8.12 Survival.
All representations and warranties of Borrower contained in this
Agreement or any other Loan Document or made in writing in connection
herewith or therewith shall survive the execution and delivery of this
Agreement, the Note and the other Loan Documents, any investigation or
inspection by FINOVA, the making of the Loan hereunder, the payment of the
Note or the expiration of this Agreement. All covenants and agreements of
Borrower contained herein shall continue in full force until payment in full
of all Obligations. Borrowers obligation to pay the principal of and
interest on the Note and all such other amounts shall be absolute and
unconditional under any and all circumstances.
8.13 Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit of
FINOVA and Borrower and their respective successors and permitted assigns,
except that Borrower may not assign or transfer any of its rights or
obligations hereunder or any interest herein without the consent of FINOVA
which FINOVA may withhold in its absolute discretion. Any actual or
attempted assignment by Borrower without FINOVA's consent shall be null,
void and of no effect whatsoever. FINOVA may assign its rights and
obligations hereunder and under the Note and the other Loan Documents in
whole or in part. If FINOVA makes such an assignment, the assignee shall
have all of the rights of the FINOVA and Borrower shall not assert against
the assignee any defense, counterclaims or setoff which Borrower may have
against FINOVA. Except to the extent otherwise required by its context, the
word "FINOVA" where used in this Agreement shall mean and include the holder
of the Note originally issued to FINOVA, and the holder of such Note shall
be bound by and have the benefits of this Agreement to the same extent as if
such holder had been a signatory hereto.
8.14 Counterparts.
This Agreement may be executed in any number of counterparts and by
the different parties hereto on separate counterparts each of which, when so
executed and delivered by the parties, constituting an original but all such
counterparts together constituting but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto, by the officers thereunto duly
authorized, have executed and delivered this Agreement effective as of the
day and year first above written.
PERFORMANCE INTERCONNECT CORP
By: /s/
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
Federal Tax ID No. ▇▇-▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
On this 12th day of August in the year 1998, before me, the
undersigned, a Notary Public in and for said state, personally appeared
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, personally known to me or proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that be/she/they executed
the same in his/her/their capacity(ies) and that by his/her/their
signature(s) on the instrument, the person(s) or the entity upon behalf of
which the person(s) acted, executed the instrument.
/s/
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Notary Public
FINOVA Capital Corporation
By: /s/
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▇▇▇▇ ▇▇▇▇▇▇▇, Vice President