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Exhibit 1.1
LOAN AND SECURITY AGREEMENT
Dated August 16, 1996
by and between
CROWN LABORATORIES, INC.,
a Delaware corporation,
as Borrower,
and
FINOVA CAPITAL CORPORATION
as Lender
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LOAN AND SECURITY AGREEMENT
AGREEMENT, dated as of August 16, 1996, by and between CROWN
LABORATORIES, INC., a Delaware corporation ("BORROWER"), having its principal
place of business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇; and FINOVA
CAPITAL CORPORATION, a Delaware corporation ("LENDER"), having a place of
business at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H :
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WHEREAS, Borrower has requested Lender to make a loan to Borrower and
Lender 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 1. 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
Jersey or Arizona.
"CASH FLOW COVERAGE RATIO" means, as at any measurement date, the
ratio of (a) the sum of (i) the net income of Borrower after income taxes plus
(ii) depreciation and amortization of intangibles and other non-cash charges in
accordance with GAAP, but only to the extent such items shall have been
deducted in determining Borrower's net income, to (b) the sum of (i) the
Current Portion of Long Term Debt plus (ii) to the extent not included in
(b)(i), scheduled payments on capitalized leases under which Borrower is the
obligor.
"CLOSING DATE" means the date on which the parties enter into this
Agreement.
"COLLATERAL" means all assets of Borrower in which Borrower
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has granted or will ▇▇▇▇▇ ▇ ▇▇▇▇ to Lender, pursuant to this Agreement or
otherwise, including those assets described and defined as Collateral 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.
"CURRENT PORTION OF LONG TERM DEBT" means, as at any measurement date,
the sum of all payments of principal which are due and payable by Borrower
during the twelve (12) months immediately succeeding such date, on all
indebtedness for borrowed money (including capitalized leases) having an
original maturity of more than one (1) year.
"DEFAULT" means an event which with notice or lapse of time, or both,
would constitute an Event of Default.
"EQUIPMENT" means the aseptic food processing line and related
equipment located at the Premises.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" means any of the Events of Default described in
Section 7.1 hereof.
"EXECUTIVE OFFICER" means the President, the Chief Executive Officer,
or the Chief Financial Officer of Borrower elected from time to time.
"FIRST LOAN DISBURSEMENT DATE" means the date on which all conditions
to the First Loan are satisfied by Borrower (which shall not be later than
September 30, 1996) and the proceeds of the First Loan are disbursed to
Borrower or to other Persons at Borrower's direction.
"FIRST LOAN INTEREST RATE" means the Index Rate plus five and
sixty-one hundredths (5.61%) percent. The "INDEX RATE" shall be the highest
yield, as published in The Wall Street Journal, on the first (1st) Business Day
preceding the First Loan Disbursement Date, for Treasury Notes having a
maturity date on or closest to the First Loan Maturity Date. Interest shall be
calculated on the basis of a year of 360 days and twelve months of thirty (30)
days each and charged on a daily basis.
"FIRST LOAN NOTE" means one of the two promissory notes of Borrower
executed and delivered under this Agreement, in substantially the form annexed
hereto as Exhibit A-1 with the blanks appropriately filled in and which
evidences the repayment
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obligations of the Borrower with respect to the First Loan.
"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 Borrower's
independent certified public accountants concur), applied both to
classification of items and amounts.
"LAW" means any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award
of any government or governmental agency.
"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 Collateral or its other assets) 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 First Loan and the Second Loan, collectively.
"LOAN DOCUMENTS" means this Agreement, the First Loan Note, the Second
Loan Note, the Warrant (as hereinafter defined), the Environmental Certificate
(as hereinafter defined), the Insurance Letter (as hereinafter defined), and
any other agreements, instruments and documents required to be, or which are,
executed by Borrower in connection with this Agreement or the Loan (as the same
may from time to time be amended, modified or supplemented).
"NOTE" means the First Loan Note and the Second Loan Note,
collectively.
"OBLIGATIONS" means all of the indebtedness, liabilities and
obligations of every kind and nature of Borrower to Lender, whether now
existing or hereafter arising, whether or not currently contemplated, howsoever
arising, including, without limitation, all indebtedness, liabilities and
obligations arising under, in connection with or evidenced by this Agreement,
the Note, the other Loan Documents, or otherwise.
"OFFICE", when used in connection with Lender, means its office
located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, or such other
office of Lender as may be designated in
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writing from time to time by Lender to Borrower.
"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, or any other entity.
"PLAN" means any employee benefit plan which is covered by 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.
"PREMISES" means ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇.
"REQUEST FOR SECOND LOAN" means a Request For Second Loan in the form
of Exhibit B annexed hereto.
"SECOND LOAN DISBURSEMENT DATE" means the date on which all conditions
to the Second Loan are satisfied by Borrower (which shall not be later than
December 31, 1996) and the proceeds of the Second Loan are disbursed to
Borrower or to other Persons at Borrower's direction.
"SECOND LOAN INTEREST RATE" means the Index Rate plus five and
sixty-one hundredths (5.61%) percent. The "INDEX RATE" shall be the highest
yield, as published in The Wall Street Journal, on the first (1st) Business Day
preceding the Second Loan Disbursement Date, for Treasury Notes having a
maturity date on or closest to the Second Loan Maturity Date. Interest shall
be calculated on the basis of a year of 360 days and twelve months of thirty
(30) days each and charged on a daily basis.
"SECOND LOAN NOTE" means one of the two promissory notes of Borrower
executed and delivered under this Agreement, in substantially the form annexed
hereto as Exhibit A-2 with the blanks appropriately filled in and which
evidences the repayment obligations of the Borrower with respect to the Second
Loan.
"SENIOR DEBT" means the senior debt of Borrower, as determined in
accordance with GAAP.
"TANGIBLE NET WORTH" means the sum of Borrower's capital surplus,
earned surplus and capital stock, minus its deferred charges, intangibles and
treasury stock.
"UCC" means the Uniform Commercial Code as adopted in the State of
Arizona.
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1.2 General Interpretive Principals.
For purposes of this Agreement, except as otherwise expressly provided
herein or unless the context otherwise requires:
(i) any pronoun used shall be deemed to cover both gender
forms as well as the neuter form;
(ii) all references to the plural shall include the singular,
the singular the plural and the part the whole;
(iii) the word "or" has the inclusive meaning frequently
identified by the phrase "and/or";
(iv) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(v) 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;
(vi) references herein to "Articles", "Sections",
"Subsections", "Paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
(vii) a reference to a Subsection without further reference to
a Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(viii) the term "include" or "including" shall mean, without
limitation, by reason of enumeration; and
(ix) the term "satisfactory to Lender" or "satisfaction of the
Lender" or "satisfaction to counsel" or other similar terms means satisfactory
to Lender or its counsel in its sole and absolute discretion.
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ARTICLE 2. THE CREDIT
2.1 The Loan.
(a) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, including, without limitation,
the fulfillment of each and every condition of lending, Lender agrees to make,
on the First Loan Disbursement Date, a loan to Borrower in the principal amount
of Three Million Dollars ($3,000,000) (the "First Loan").
(b) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, including, without limitation,
the fulfillment of each and every condition of lending, Lender agrees to make,
on the Second Loan Disbursement Date, a loan to Borrower in the principal
amount of One Million Five Hundred Thousand Dollars ($1,500,000) (the "Second
Loan").
2.2 Use of Proceeds.
The proceeds of the Loan shall be used by Borrower solely to repay
certain indebtedness of Borrower or for its working capital.
2.3 The Note.
(a) The obligation of Borrower to repay the First Loan and to pay
interest thereon shall be evidenced by the First Loan Note. The First Loan
Note shall be dated the Closing Date and shall be executed by Borrower and
delivered to Lender on the Closing Date.
(b) The obligation of Borrower to repay the Second Loan and to pay
interest thereon shall be evidenced by the Second Loan Note. The Second Loan
Note shall be dated the Second Loan Disbursement Date and shall be executed by
Borrower and delivered to Lender on the Second Loan Disbursement Date.
2.4 Disbursements.
(a) Subject to the conditions set forth herein, Lender shall, on the
First Disbursement Date, credit, by wire transfer, the amount of the First Loan
to the account of Borrower or the Person or Persons specified in writing by
Borrower.
(a) Subject to the conditions set forth herein, Lender shall, on the
Second Disbursement Date, credit, by wire transfer, the amount of the Second
Loan to the account of Borrower or the Person or Persons specified in writing by
Borrower.
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2.5 Loan Account.
Lender 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. Lender shall provide Borrower with statements of
said account from time to time on request.
2.6 Interest Rates.
2.6.1 Interest Prior to Maturity Applicable to First Loan. Prior
to maturity (whether by acceleration or otherwise) the unpaid principal amount
of the First Loan shall bear interest at the First Loan Interest Rate.
2.6.2 Interest Prior to Maturity Applicable to Second Loan.
Prior to maturity (whether by acceleration or otherwise) the unpaid principal
amount of the Second Loan shall bear interest at the Second Loan Interest Rate.
2.6.3 Interest After Maturity. 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 or the entire Loan (as the
case may be) shall bear interest at the daily rate of four percent (4%) per
annum above the applicable First Loan Interest Rate or Second Loan Interest Rate
(as the case may be) (the "Default Rate").
2.6.4 Maximum Rate. Lender and Borrower intend the Loan
Documents to comply in all respects with all provisions of Law and not to
violate, in any way, any legal limitations on interest charges. Accordingly, if,
for any reason, Borrower is required to pay, or has paid, interest at a rate in
excess of the highest rate of interest which may be charged by Lender or which
Borrower may legally contract to pay under applicable law (the "Maximum Rate"),
then the First Loan Interest Rate or the Second Loan Interest Rate (as the case
may be) shall be deemed to be reduced, automatically and immediately, to the
Maximum Rate, and interest payable hereunder shall be computed and paid at the
Maximum Rate and the portion of all prior payments of interest in excess of the
Maximum Rate shall be deemed to have been prepayments of the outstanding
principal of the Loan and applied to the installments in the inverse order of
their maturities.
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2.7 Payments.
2.7.1 Time; Place; Manner. All payments to be made in respect of
principal, interest, or other amounts due from Borrower hereunder or under the
Note shall become due at 12:00 o'clock noon, New Jersey 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 Lender in lawful money
of the United States of America in immediately available funds.
2.7.2 Payments of Principal and Interest.
(a) The First Loan, together with interest thereon at the First
Loan Interest Rate, shall be repaid in sixty (60) consecutive monthly payments
commencing on the first day of the first month immediately succeeding the First
Loan Disbursement Date and continuing on a like day in each and every month
thereafter through and including the date upon which the sixtieth (60th)
consecutive monthly payment is due (the "First Loan Maturity Date"), as follows:
(i) six (6) consecutive monthly payments of interest only on the First Loan, in
arrears, calculated at the First Loan Interest Rate; followed by (ii) fifty-four
(54) equal consecutive monthly payments of principal and interest each in an
amount which will fully amortize the First Loan at the First Loan Interest Rate
over such fifty-four (54) month period; provided, that the entire unpaid
principal balance which was not payable earlier, whether due to regularly
scheduled payments, acceleration or otherwise, together with any unpaid
interest, fees, costs and charges shall be due and payable on the First Loan
Maturity Date. After the maturity of all or any part of the First Loan (by
acceleration or otherwise), interest on the First Loan or such part thereof
shall be due and payable at the Default Rate on demand.
(b) The Second Loan, together with interest thereon at the Second
Loan Interest Rate, shall be repaid in sixty (60) consecutive monthly payments
commencing on the first day of the first month immediately succeeding the Second
Loan Disbursement Date and continuing on a like day in each and every month
thereafter through and including the date upon which the sixtieth (60th)
consecutive monthly payment is due (the "Second Loan Maturity Date"), as
follows: (i) six (6) consecutive monthly payments of interest only on the Second
Loan, in arrears, calculated at the Second Loan Interest Rate; followed by (ii)
fifty-four (54) equal consecutive monthly payments of principal and interest
each in an amount which will fully amortize the Second Loan at the Second Loan
Interest Rate over such fifty-four (54) month period; provided, that the entire
unpaid principal balance which was not payable earlier, whether due to regularly
scheduled payments, acceleration or otherwise, together with any unpaid
interest, fees, costs and charges shall
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be due and payable on the Second Loan Maturity Date. After the maturity of all
or any part of the Second Loan (by acceleration or otherwise), interest on the
Second Loan or such part thereof shall be due and payable at the Default Rate
on demand.
2.7.3 Net Payments. All payments hereunder and under the Note
shall be made by Borrower to Lender without defense, set-off, claim 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 the other Loan Documents
and on all payments to be made by Borrower hereunder and under the Note and the
other Loan Documents (other than the Lender's income taxes) and all taxes
payable in connection with or related to the Collateral.
2.8 Application of Payments. All payments received by Lender shall be
applied first, to costs and expenses of Lender incurred in connection with this
Agreement, the Note and the other Loan Documents; second, to any late payment
fees, prepayment fees and other fees and charges; third, to interest; and
fourth, to the outstanding principal of the Loan and any other amounts due
under this Agreement, the Note and the other Loan Documents.
2.9 Prepayments. Provided there shall be no Default or Event of
Default, Borrower shall have the right, upon not less than ten (10) days prior
written notice to Lender, on any regularly scheduled payment date, to prepay
the outstanding principal balance of the Loan in whole, but not in part,
provided that Borrower shall pay to Lender, together with the principal balance
of the entire Loan, (i) all accrued and unpaid interest on the amount prepaid
through the date of prepayment, (ii) all outstanding fees, charges and other
amounts then due under the Loan Documents, and (iii) a prepayment fee in an
amount equal to the product of (A) the outstanding principal balance of the
Loan at the time of prepayment, times (B) the applicable percentage set forth
opposite the Loan Year in which the prepayment is made, as set forth below:
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First Loan
Loan Year of First Loan Percentage
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First Loan Year 5%
Second Loan Year 4%
Third Loan Year 3%
Fourth Loan Year 2%
Fifth Loan Year 1%
Second Loan
Loan Year of Second Loan Percentage
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First Loan Year 5%
Second Loan Year 4%
Third Loan Year 3%
Fourth Loan Year 2%
Fifth Loan Year 1%
Once given, the notice of prepayment shall be irrevocable. Any acceleration of
the Obligations or any part thereof as a consequence of the occurrence of an
Event of Default, shall be presumed to be a mechanism to avoid the requirements
of this provision and shall be deemed a prepayment and subject to the
appropriate prepayment premium set forth above, in addition to all other
amounts otherwise due under this Agreement and the other Loan Documents,
including, without limitation, interest at the Default Rate.
2.10 Administrative Costs.
If Borrower shall fail to make any payment of principal or interest
within ten (10) days after the same is due, Borrower shall pay a late charge of
five percent (5%) of the unpaid amounts, but in no event greater than the
maximum rate permitted by law, and such amount shall be payable upon demand.
Such payment is not interest for the use of money, but is solely to cover
Lender's administrative costs occasioned by such delay.
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ARTICLE 3. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
3.1 Organization and Qualification.
Borrower is duly organized, validly existing and in good standing as a
corporation under the Laws of the State of Delaware with full power and
authority to own its properties and to transact its business as now transacted
and as contemplated to be transacted. Borrower is qualified and in good
standing to transact business in each jurisdiction where the ownership of its
properties or the transaction of its business requires such qualification.
3.2 Authority and Authorization.
Borrower has full power and authority to execute, deliver and carry
out the provisions of this Agreement, the Note and the other Loan Documents to
which it is a party, to borrow hereunder and under the other Loan Documents and
to create the Liens provided for herein, and to perform its obligations
hereunder and thereunder, and all such action has been duly and validly
authorized by all necessary proceedings on its part.
3.3 Execution and Binding Effect.
This Agreement, the Note and the other Loan Documents have been duly
and validly executed and delivered by Borrower and constitute the legal, valid
and binding obligation of Borrower enforceable in accordance with their
respective terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other similar laws, now
or hereafter in effect, relating to or affecting the enforcement of creditors'
rights generally and except that the remedy of specific performance and other
equitable remedies are subject to judicial discretion.
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, the 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.
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Neither the execution and delivery of this Agreement, the Note or the
other Loan Documents, nor consummation of the transactions herein or therein
contemplated nor performance of, or compliance with the terms and conditions
hereof or thereof will (a) result in any violation or breach of (i) the
provisions of Borrower's Constituent Documents, or (ii) any Law, or the order,
rule or regulation of any court or governmental agency or body having
jurisdiction over Borrower, or any of its properties, or (iii) any agreement,
bond, note, instrument or indenture to which Borrower is a party or pursuant to
which any of its properties are affected, 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 Lender 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 date of the balance sheet contained therein,
and the results of its operations for the period 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 Defaults.
There is no Default under the Loan Documents.
3.8 Litigation.
There is no pending or threatened claim or 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 Borrower or on the ability of Borrower to perform its
obligations under this Agreement, the Note or the other Loan Documents or on
the Collateral.
3.9 Title to Collateral.
Borrower has good title to all of its assets, including, without
limitation, the Collateral and all assets reflected in the most recent balance
sheet referred to in Section 3.6 hereof, free and clear of all Liens covering
the Collateral, other than the Liens granted hereunder to Lender covering the
Collateral, which are and will at all times be first perfected Liens covering
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the Collateral.
3.10 Taxes.
All tax returns required to be filed by Borrower have been properly
prepared, executed and filed. Except as set forth on Schedule 3.10 hereto, 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, 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 Lender'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 GAAP 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 or the Collateral.
3.11 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.
3.12 Power To Carry On Business.
Borrower has all requisite power and authority to own and operate its
properties and to carry on its business as now conducted and as presently
planned to be conducted.
3.13 No Material Adverse Change.
Since the date of the most recent Financial Statements referred to in
Section 3.6, there has been no material adverse change in the business,
operations or financial condition of Borrower.
3.14 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 or on the Collateral.
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3.15 Compliance with Agreements.
Borrower is not in default under any agreement, bond, note, indenture
or contract, except for defaults which in the aggregate do not have a material
adverse effect on the business, operation or financial condition of Borrower or
on the Collateral.
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, or any certificate, report, exhibit or
document furnished by Borrower to Lender pursuant to or in connection with this
Agreement or the Loan 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 and U.
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 or U 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), 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 Liens of
Lender in the Collateral. Upon such filings, Lender will be granted a first
perfected Lien covering the Collateral. There are no other Liens covering 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.
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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 and at all times shall be located at the Premises.
ARTICLE 4. CONDITIONS OF LENDING
(a) Conditions to First Loan. The obligation of Lender to make the
First Loan hereunder shall be subject to the fulfillment (to the satisfaction
of Lender) of the following conditions precedent (provided that if all
conditions contained herein are not satisfied by September 30, 1996 (or any
portion thereof), Lender shall have no obligation whatsoever to make the Loan
and shall have no liability for its refusal to do so).
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 First Loan Disbursement Date
with the same effect as if made on and as of such date, and on such date no
Default or 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 Lender a certificate in
form and substance satisfactory to Lender, 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, and (c) 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 on behalf of Borrower (and
Lender may conclusively rely on such certificate unless and until a later
certificate revising the prior certificate has been furnished to Lender).
Borrower shall also deliver to Lender good standing certificates for Borrower
issued by the Secretary of State of its State of incorporation and each state
in which it is required by Law to be qualified.
4.3 Opinion of Counsel.
On the Closing Date, Lender shall have received a favorable written
opinion of counsel for Borrower, dated the Closing Date and in form and
substance satisfactory to Lender and its counsel, ▇▇▇▇▇▇ & Rich, P.C.
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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
reasonable opinion of Lender or its counsel, would make it illegal for Lender
to acquire the Note, make the Loan, or otherwise to participate in the Loan,
nor shall any facts come to the attention of Lender, concerning Borrower, its
business or financial condition which, in the reasonable opinion of Lender
would increase the risk to Lender that Borrower will not repay the Loan.
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 Lender and its counsel and shall be in full force and
effect on the Closing Date and on the First Loan Disbursement Date, and an
executed counterpart of each thereof shall have been delivered to Lender and
its counsel:
4.5.1 this Agreement;
4.5.2 the First Loan Note;
4.5.3 insurance certificates or policies of insurance evidencing
the coverages required by Section 5.3 hereof;
4.5.4 an environmental certificate with representations,
covenants and warranties in form and substance
satisfactory to Lender (the "Environmental Certificate");
and
4.5.5 other Loan Documents, if any.
4.6 Collateral. Borrower shall provide to Lender a complete
description of the Collateral, together with evidence, in form and substance
reasonably satisfactory to Lender in its sole discretion, that Borrower owns
legal title to the Collateral, free and clear of all Liens.
4.7 Financing Statements. On the Closing Date, UCC financing
statements covering the security interest created by this Agreement in the
Collateral shall have been duly filed in the office of the Secretary of State
of the State where the Collateral is located (i.e. Nevada) and in all other
places as, in the opinion of Lender, or its counsel, are necessary or
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desirable to perfect such Liens.
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 hereby and enforcement of all of the terms
hereof and thereof and for the operation of Borrower's business as conducted and
as presently contemplated to be conducted, and all licenses, permits, waivers,
exemptions, authorizations and approvals required (or, in the reasonable opinion
of Lender 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 (including,
without limitation, the approval of the U.S. Food and Drug Administration of the
Equipment and the food production and processing line in connection therewith),
and copies thereof shall have been delivered to Lender.
4.9 Warrant. Borrower shall have, for a purchase price of $10.00,
issued to Lender a warrant or option to purchase 300,000 shares of Borrower's
common stock having an exercise price per share equal to the price per share at
which Borrower's common shares trade on the American Stock Exchange at the
close of business on the day immediately preceding the First Loan Disbursement
Date, which warrant shall contain terms (including, without limitation,
anti-dilution provisions) and otherwise be in form and substance satisfactory
to Lender (the "Warrant").
4.10 Other Matters.
4.10.1 Lender shall have received all other agreements,
instruments, certificates, waivers, releases, searches, terminations, reports,
confirmations, evidence of payment of obligations, evidence of ownership of the
Collateral and other documents as Lender or its counsel shall have requested
(each in form and substance satisfactory to the Lender and its counsel),
including, without limitation, lien waivers, consents, approvals, authorization
to date documents, covenants and warranties, casualty and liability insurance
policies and endorsements related thereto, appraisals, and other financial
information.
4.10.2 There shall be no Default hereunder or under the other
Loan Documents.
4.10.3 All legal matters incident to the First Loan shall be
satisfactory to Lender and its counsel.
(b) Conditions to Second Loan. The obligation of Lender to make the
Second Loan hereunder shall be subject to the fulfillment (to the satisfaction
of Lender) of the following conditions precedent (provided that if all
conditions contained herein are not satisfied by December 31, 1996, Lender
shall have
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no obligation whatsoever to make the Second Loan and shall have no liability
for its refusal to do so).
4.11 Borrowing Notice. Borrower shall have, not later than the fifth
Business Day preceding the requested Second Loan Disbursement Date, delivered to
Lender a Request for Second Loan.
4.12 Continued Conditions Precedent. Borrower shall have satisfied
all of the conditions contained in subsection (a) above, all of which shall
continue to be true and correct and in full force and effect.
4.13 Second Loan Note. Borrower shall have executed and delivered to
Lender the Second Loan Note.
4.14 Annual Revenues. Borrower shall have delivered to Lender true
and correct copies of agreements (certified as true and correct by a Chief
Executive Officer) with customers of Borrower satisfactory to Lender for the
sale to and purchase by such customers of products manufactured using the
Equipment, which agreements will, in the reasonable determination of Lender,
generate annual revenues for Borrower of not less than $7,000,000 in the
aggregate, and which agreements shall be non-cancelable by either party and
shall otherwise be in form and substance satisfactory to Lender.
4.15 Representations and Warranties. The representations and
warranties contained in Article 3 hereof shall be true on the Second
Disbursement Date with the same effect as if made on and as of such date.
4.16 No Defaults. Borrower shall be in compliance with all of the
terms and conditions of this Agreement and all other Loan Documents and there
shall be no Default or Event of Default hereunder or under the other Loan
Documents.
4.17 Due Diligence. Lender shall have completed such environmental
investigations, studies and due diligence (which may include, without
limitation, inspections of the Equipment) as Lender shall have deemed
appropriate.
4.18 Sales Taxes. Borrower shall have entered into an agreement with
the State of Nevada ("Nevada") providing for the payment by Borrower of sales
taxes due relating to the construction of Borrower's plant and equipment, and
such agreement shall be in substance satisfactory to Lender, in its sole and
absolute discretion, including, without limitation, acknowledgements by Nevada
that all sales taxes due are current and the absence of Liens covering the
Collateral.
4.19 Legal Matters. All legal matters incident to the Second Loan
shall be satisfactory to Lender and its counsel.
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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 Lender
shall otherwise consent in writing:
5.1 Reporting and Information Requirements.
5.1.1 Annual Financial Statements. As soon as practicable, and
in any event within ninety (90) days after the close of each fiscal year of
Borrower, Borrower shall furnish to Lender its Form 10-KSB filed with the
Securities and Exchange Commission, which shall contain the annual audit report
for such year, including audited statements of income, retained earnings and
changes in financial position of Borrower for such fiscal year and an audited
balance sheet of Borrower as of the close of such fiscal year, and notes to
each, all in reasonable detail, setting forth in comparative form the
corresponding figures for the preceding fiscal year where such presentation is
appropriate under GAAP, certified without qualification by independent certified
public accountants of recognized standing selected by Borrower and satisfactory
to Lender, 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 GAAP 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 Financial Statements. Within sixty (60) days
after the end of each of the first three fiscal quarters of each fiscal year,
Borrower shall furnish to Lender a copy of its interim financial statements of
the type described in Section 5.1 above, certified by the Chief Executive
Officer of Borrower or if Borrower chooses, audited, as set forth in Section
5.1.1 above, and certified by an executive officer of Borrower.
5.1.3 Compliance Certificate. At the same time Borrower delivers
the financial statements required under the provisions of paragraphs 5.1.1 and
5.1.2, Borrower shall furnish to Lender a certificate of an Executive Officer to
the effect
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that no Default or Event of Default exists, or, if such cannot be so certified,
specifying in reasonable detail the exceptions, if any, to such statement.
Such certificate shall be accompanied by a detailed calculation indicating
compliance with the covenants contained in Paragraph 5.12 hereof.
5.1.4 Securities Filings. Promptly upon their becoming
available, copies of any registration statements and any amendments and
supplements thereto, and any regular and periodic reports filed by Borrower or
any of its subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental authority succeeding to any or all of
the functions of said Commission or state securities regulatory agencies, and
letters of comment or other correspondence sent to Borrower or any of its
subsidiaries by any such securities exchange or Commission or agency in relation
to Borrower, any of its subsidiaries or its affairs.
5.1.5 Further Requests. Borrower will promptly furnish to Lender
such other information (financial or otherwise) concerning Borrower, its assets
or the Collateral in such form as Lender may reasonably request.
5.1.6 Notice of Event of Default. Promptly upon becoming aware
of any Default or Event of Default, Borrower shall give Lender 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.
5.1.7 Notice of Material Adverse Change. Promptly upon becoming
aware thereof Borrower shall give Lender written notice about any material
adverse change in the business, operations or financial condition of Borrower or
on the Collateral or on the ability of Borrower to perform its obligations under
this Agreement, the Note or the other Loan Documents.
5.1.8 Notice of Material Proceedings. Promptly upon becoming
aware thereof Borrower shall give Lender written notice of the commencement,
existence or threat of any proceeding by or before any court or administrative
agency against or affecting Borrower or the Collateral which, if adversely
decided, 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 or on
the Collateral.
5.1.9 Visitation. Borrower shall permit such persons as Lender
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
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times and as often as Lender may reasonably request.
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 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,
including, the Equipment, the non-compliance with which could have a material
adverse effect on the business, operations, assets or financial or other
condition of Borrower or the Equipment, 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, privilege 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 or for the operation of its
business as presently conducted or as contemplated by it. Borrower shall
continue to engage in the same line of business.
5.2.4 Borrower shall not (a) 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 (b) directly or indirectly sell, assign, lease or otherwise dispose
of or permit the sale, assignment or other disposition of (i) any legal or
beneficial interest in the stock or other ownership interest of any corporation
or other entity which is either Borrower or is a beneficial owner of all or part
of Borrower or of the Collateral or (ii) 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, limited liability company or other type of
entity; or (c) convey, assign, transfer or otherwise dispose of a material
portion of its assets (other than the Collateral, the prohibition on transfer of
which is governed by subparagraph (a) above).
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5.3 Insurance.
Borrower shall, at its own expense, maintain and deliver evidence to
Lender of such insurance required by Lender, written by insurers and in amounts
as is set forth in the letter agreement dated August 5, 1996 (the "Insurance
Letter"), between Lender and Borrower relating to such insurance requirements.
5.4 Maintenance of Properties.
Borrower shall maintain or cause to be maintained in good repair,
working order and condition the properties now or hereafter owned, leased or
otherwise possessed by it, including the Collateral, and shall make or cause to
be made all needful and proper repairs, renewals, replacements and improvements
thereto so that the business carried on in connection therewith may be properly
and advantageously conducted at all times.
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 Lender'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 GAAP 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 or the Collateral.
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5.6 Financial Accounting Practices.
Borrower shall make and keep books, records and accounts which, in
reasonable detail, accurately and fairly reflect its business, including all
transactions and dispositions of its assets, all prepared in accordance with
GAAP. Lender and/or its agents shall have the right to review the books and
records of Borrower and to photocopy the same and to make excerpts therefrom,
at all reasonable times and upon reasonable notice and as often as Lender may
reasonably request.
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 or the Collateral.
5.8 Material Obligations. Borrower shall pay and satisfy, when due,
all material liabilities and obligations, including, without limitation, all
obligations under all leases (real or personal property) to which it is a party.
5.9 Maintenance of Collateral.
Borrower will maintain and preserve the Collateral in good condition,
repair and working order, promptly repairing, replacing or rebuilding any part
of the Collateral which may be destroyed by any casualty, or become damaged,
worn or dilapidated.
5.10 Maintenance of Principal Place of Business.
Borrower shall maintain and keep its principal place of business and
chief executive office at the address set forth at the beginning of this
Agreement, and at no other location without giving Lender at least thirty (30)
days prior written notice of any move. Borrower shall maintain and keep its
records at such address and at no other location without giving Lender at least
thirty (30) days prior written notice of any move.
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5.11 Further Assurances.
Borrower shall cause to be done, executed, acknowledged and delivered
all and every such further act, conveyance and assurance as Lender 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 Lender with respect thereto. Any payment
in respect of such indemnity shall be made directly to Lender on demand in
immediately available funds. Forthwith after notice from Lender, Borrower
shall promptly, without further consideration, execute, acknowledge and deliver
such further instruments and documents and will take such other actions as
Lender 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.
5.12 Financial Covenants.
Borrower shall, at and as of the last day of each of its fiscal
quarters, have or maintain:
(a) A Tangible Net Worth of not less than $5,000,000;
(b) A Cash Flow Coverage Ratio of not less than 2.0 to 1.00,
commencing with the four (4) fiscal quarter period ending December 31, 1997; and
(c) A ratio of Senior Debt to Tangible Net Worth of not greater than
1.0 to 1.0.
The financial covenants set forth in this paragraph 5.12 shall be tested
quarterly and calculated on a rolling four (4) fiscal quarter basis.
ARTICLE 6. SECURITY INTEREST
6.1 Security.
As security for the full and timely payment and performance of all of
the Obligations of Borrower to Lender, Borrower hereby assigns, pledges,
transfers and sets over to Lender, and hereby agrees that Lender shall have,
and hereby grants to and creates in favor of Lender, a first security interest
under the UCC subject to no other Liens, in and to the following, in each case
whether now existing or hereafter arising, now owned or hereafter acquired,
wherever located ("Collateral"):
6.1.1 All personal property and fixtures of Borrower, of every
kind and description, tangible or intangible, wherever
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located (excluding the 1,500 gallon grease trap and 12,000 gallon waste water
treatment system which are parts of the Equipment), excluding inventory and
accounts, but expressly including, without limitation, all goods, equipment
(including, without limitation, the Equipment other than the 1,500 gallon
grease trap and 12,000 gallon waste water treatment system which are parts of
the Equipment), furniture, machinery, chattel paper, trademarks, tradenames,
tradestyles and general intangibles; and
6.1.2 All proceeds of, and accessions thereto, substitutions for,
and all replacements of, any and all of the foregoing, cash and non-cash,
including insurance proceeds.
6.2 Lender Has Rights and Remedies of a Secured Party.
In addition to all rights and remedies given to Lender by this
Agreement, Lender shall have all the rights and remedies of a secured party
under the UCC.
6.3 Additional 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 Lender shall have the right to 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 Lender 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 Lender 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 Lender at least thirty (30) days prior written
notice of any move. Borrower shall keep all Collateral only at the Premises.
Borrower may not move the Collateral without the prior written consent of
Lender.
6.3.4 Except for Liens granted to Lender, Borrower shall not
sell, lease, transfer or otherwise dispose of or encumber any of the Collateral.
6.3.5 Borrower shall cause the Collateral to be maintained and
preserved in the same condition, repair and
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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 affix or permit the Collateral to become
affixed to real estate or to any other goods, and such Collateral shall remain
personal property, whether or not so affixed.
6.4 Certain Covenants.
Borrower covenants and agrees with Lender for the benefit of Lender
that:
6.4.1 Borrower has and will have good and merchantable title to
all of its assets, including the Collateral, in each case as from time to time
owned or acquired by it, and shall keep the Collateral free and clear of all
Liens, other than those granted to Lender. Borrower will defend such title
against the claims and demands of all Persons whomsoever.
6.4.2 Borrower will faithfully preserve and protect Lender's
Liens in the Collateral and will, at its own cost and expense, cause said Liens
to be perfected and continued perfected, and for such purpose Borrower will from
time to time at the request of Lender 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 Lender 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 Lender may deem
necessary or advisable from time to time in order to perfect and preserve the
priority of said Liens as a first Lien on and 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
Lender, (i) borrow or permit any Person to borrow against the Collateral other
than the Loan to Borrower from Lender 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 Lender.
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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, Lender may do so for the account of Borrower and add the cost thereof
to the Obligations and the same shall be payable to Lender on demand. Borrower
hereby assigns and sets over unto Lender for the benefit of Lender 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 Lender any amount so due.
Lender, 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 Lender
may choose or, in Lender's sole discretion, to the repair or replacement of the
Collateral, or any part thereof, in which case Lender may impose such conditions
on the disbursement of the proceeds as Lender 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 Lender
assemble the Collateral and make it available to Lender at the place or places
to be designated by Lender. The right of Lender to have the Collateral
assembled and made available to it is of the essence of this Agreement and
Lender may, at its election, enforce such right in equity for specific
performance.
6.4.6 Lender 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 Lender.
Lender 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 Lender, impair Lender'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 Lender
in sufficient time to permit it to take the requested action.
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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 make any payment of principal of or
interest on the Note, within ten (10) days after the date that the same is due;
or
7.1.2 Borrower fails to perform or observe any of its covenants
or agreements contained herein or in any other Loan Documents which cannot be
cured; or
7.1.3 Borrower fails to perform or observe the covenants
contained in Paragraph 5.3 hereof; or
7.1.4 Borrower fails to perform or observe any other covenant or
agreement to be performed or observed by it hereunder or under the other Loan
Documents and such failure continues unremedied for a period of fifteen (15)
days after such failure; or
7.1.5 Borrower voluntarily creates, suffers to exist, incurs or
assumes any Lien, security interest, charge or encumbrance on, or with respect
to, any part of or all the Collateral (other than Liens permitted under this
Agreement), or the Liens held by Lender in and to the Collateral shall cease to
be first perfected Liens in and to the Collateral; or
7.1.6 Borrower sells, assigns, leases, or otherwise disposes of
or relinquishes possession of, any Collateral; or
7.1.7 any representation or warranty made by Borrower herein or
in any Loan Document or in any document or certificate furnished by Borrower to
Lender in connection herewith or therewith at any time proves to have been
incorrect in any material respect when made; or
7.1.8 this Agreement or any Loan Document at any time for any
reason ceases to be in full force and effect or is declared by a court or
governmental agency of competent jurisdiction to be null and void; or
7.1.9 Borrower breaches or defaults under the terms of any
agreement, instrument or document with or for the benefit of Lender which is not
a Loan Document or under any other loan, credit facility or other financial
accommodation made by Lender to Borrower, including, without limitation, all
promissory notes, guarantees, equipment leases, security agreements, mortgages
and deeds of trust; or
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7.1.10 Borrower is indicted or threatened with indictment by a
governmental authority under any criminal statute or there is commenced against
Borrower a criminal or civil proceeding pursuant to which the proceedings,
penalties or remedies sought or available include forfeiture of any of the
Collateral or a material portion of the assets of Borrower; or
7.1.11 there is a material adverse change in the financial
condition of Borrower or the Collateral; or
7.1.12 a proceeding is instituted seeking a decree or order for
relief in respect of Borrower in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect or for
the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of Borrower, or for any substantial
part of its properties or for the dissolution, winding-up or liquidation of its
affairs or any substantial part of any of its properties and such proceeding
remains undismissed or unstayed for a period of sixty (60) consecutive days or
such court enters a decree or order granting the relief sought in such
proceeding; or
7.1.13 Borrower voluntarily suspends transaction of its business,
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, consents to the entry of an order for
relief in an involuntary case under any such law or consents to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of Borrower for any substantial part of
any of its properties, or makes a general assignment for the benefit of
creditors, or takes any action in furtherance of any of the foregoing; or
7.1.14 there shall be a judgment or judgments against Borrower
for any amount in excess of $25,000 in the aggregate, which shall remain unpaid,
unstayed on appeal, undischarged, unbonded or undismissed for a period of thirty
(30) days or more; or
7.1.15 Borrower shall have conveyed, sold, assigned, encumbered
or otherwise transferred all or substantially all of its assets; or
7.1.16 the Warrant shall be amended or modified or at any time
cease to be in full force and effect, without the consent of Lender.
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7.2 Consequences of Event of Default.
7.2.1 If an Event of Default occurs, Lender may, by notice to
Borrower, declare the unpaid principal amount of the Note and interest accrued
thereon and all other Obligations and liabilities of Borrower hereunder or under
the Note or the Loan Documents to be immediately due and payable and the same
shall thereupon become and be immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived, and an action therefor shall immediately accrue.
7.2.2 In addition, if an Event of Default occurs, Lender shall
have all rights and remedies granted herein and in the other Loan Documents and
all rights or remedies available at law or equity (including specifically those
granted by the Uniform Commercial Code as in effect in the jurisdiction or
jurisdictions where the Collateral is located) and, except as limited by Law,
all remedies of Lender (i) shall be cumulative and concurrent; (ii) may be
pursued separately, successively or concurrently against Borrower or against all
or any portion of the Collateral, at the sole discretion of Lender; (iii) may be
exercised as often as occasion therefor shall arise, it being agreed by Borrower
that the exercise or failure to exercise any rights or remedies shall in no
event be construed as a waiver or release thereof or of any other right, remedy
or recourse; and (iv) are intended to be, and shall be, nonexclusive. To the
fullest extent permitted by applicable Law, Lender may resort to the rights,
remedies and recourses set forth herein and any other security therefor in such
order and manner as Lender may elect.
7.2.3 Without limiting any of the foregoing, Borrower agrees that
(i) Lender may, with or without notice and without legal process, enter upon any
property owned, leased or otherwise under the real or apparent control of
Borrower or any agent thereof or any other location where the Collateral may be
located and disassemble, disconnect, render unusable or repossess all or any
item of the Collateral; (ii) written notice mailed to Borrower, as provided in
this Agreement for the giving of notice, shall be reasonable if given ten (10)
days prior to (a) any public sale or (b) the date after which a private sale may
be made; (iii) a sale of the Collateral may be made as a unit or in parcels and
for cash and upon terms; and (iv) Lender may buy the Collateral at any public
sale and at any private sale as permitted by the UCC.
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ARTICLE 8. MISCELLANEOUS
8.1 Further Assurances.
Borrower shall at any time and from time to time upon the written
request of Lender, execute and deliver such further agreements, instruments and
documents and do such further acts and things as Lender may reasonably request
in order to effect the purposes of this Agreement. If Borrower fails to
perform any obligations contained in this Agreement, Lender may, but shall not
be obligated to, perform such obligations and pay such sums as shall be
necessary or appropriate in connection therewith, and all such sums expended
shall become part of the Obligations, secured hereunder and payable upon
demand.
8.2 Indemnity.
Borrower shall indemnify, defend and hold harmless Lender from and
against, and, upon demand, reimburse Lender 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 Lender, 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 (including, without limitation, any litigation
matter involving claims by third parties), except as a result of the willful
misconduct or gross negligence of Lender.
8.3 No Implied Waiver; Cumulative Remedies.
No course of dealing and no delay or failure of Lender 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 Lender under this
Agreement, the Note or the other Loan Documents are cumulative and not
exclusive of any rights or remedies which Lender would otherwise have.
8.4 Taxes.
Borrower agrees to pay or reimburse Lender for any and all stamp,
document, transfer, recording or filing taxes or fees and all similar
impositions payable or hereafter determined by Lender
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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 Lender in its sole discretion from time
to time, and any other documents, instruments or transactions pursuant to or in
connection herewith, and Borrower agrees to save Lender 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.
8.5 Modifications, Amendments or Waivers.
Lender 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 Lender or Borrower hereunder or
thereunder, and Lender 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.
8.6 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 (and such day shall
be included in the calculation of interest due), 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.
8.7 Notices.
8.7.1 Except as otherwise provided herein, all notices and other
communications required under the terms and provisions of this Agreement, the
Note or the other Loan Documents shall be in writing and shall become effective
when delivered by hand or received by overnight courier, telex, facsimile,
telegram or registered first class mail, postage prepaid, addressed as follows:
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If to Lender, at:
FINOVA Capital Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President
with a copy to: Winick & Rich, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to Borrower, at:
Crown Laboratories, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
or at such other address as either party may, from time to time, designate in
writing to the other party hereto.
8.7.2 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,
telecopier or telegram.
8.8 Reimbursement for Certain Expenses.
Borrower agrees to pay or cause to be paid and to save Lender harmless
against liability for the payment of all reasonable out-of-pocket costs and
expenses, including, without limitation, all reasonable counsel fees and costs,
incurred by Lender from time to time (i) arising in connection with the
negotiation, execution, delivery, and recordation of this Agreement, the Note
and the other Loan Documents, and the transactions contemplated hereby and
thereby and all recording or filing fees, (ii) relating to any requested
amendments, waivers or consents to or in connection with this Agreement, the
Note or any other Loan Document, (iii) arising in connection with Lender'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 Lender in the collection of the Note and (iv) any other matters
relating to the Loan, the Loan Documents or Borrower.
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8.9 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.
8.10 Personal Jurisdiction and Service of Process.
BORROWER IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING
AGAINST BORROWER UNDER, ARISING OUT OF, OR IN ANY MANNER RELATING TO THIS
AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN ANY STATE
COURT OF THE STATE OF ARIZONA LOCATED IN MARICOPA COUNTY OR ANY UNITED STATES
DISTRICT COURT LOCATED IN THE STATE OF ARIZONA. BORROWER, BY ITS EXECUTION AND
DELIVERY OF THIS AGREEMENT, EXPRESSLY AND IRREVOCABLY CONSENTS AND SUBMITS TO
THE PERSONAL JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR
PROCEEDING. BORROWER FURTHER AGREES THAT ANY LEGAL ACTION OR PROCEEDING
BORROWER MAY BRING, ARISING OUT OF OR IN ANY MANNER RELATING TO THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS, SHALL ONLY BE BROUGHT IN ANY COURT OF THE STATE OF
ARIZONA LOCATED IN MARICOPA COUNTY OR IN THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF ARIZONA. BORROWER ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF
ANY COMPLAINT, SUMMONS, NOTICE OR OTHER PROCESS RELATING TO SUCH ACTION OR
PROCEEDING BY DELIVERY THEREOF TO BORROWER IN THE MANNER PROVIDED FOR NOTICES
IN THIS AGREEMENT. BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM
OR DEFENSE IN ANY SUCH ACTION OR PROCEEDING BASED ON ANY ALLEGED LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS OR ANY SIMILAR
BASIS. BORROWER SHALL NOT BE ENTITLED IN ANY SUCH ACTION OR PROCEEDING TO
ASSERT ANY DEFENSE GIVEN OR ALLOWED UNDER THE LAWS OF ANY STATE OTHER THAN THE
STATE OF ARIZONA, UNLESS SUCH DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF
THE STATE OF ARIZONA. NOTHING HEREIN SHALL AFFECT OR IMPAIR IN ANY MANNER OR
TO ANY EXTENT THE RIGHT OF LENDER TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION OR TO SERVE PROCESS IN ANY
MANNER PERMITTED BY LAW.
8.11 Waiver of Jury Trial.
BORROWER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY AGREEMENT, INSTRUMENT OR
DOCUMENT EXECUTED AND DELIVERED IN CONNECTION HEREWITH OR THEREWITH, INCLUDING
THE LOAN DOCUMENTS.
8.12 Severability.
The provisions of this Agreement, the Note and any other Loan Document
are intended to be severable. If any such provision is held invalid or
unenforceable in whole or in part in
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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.
8.13 Prior Understandings.
This Agreement supersedes all prior understandings and agreements and
the other Loan Documents, whether written or oral, between the parties hereto
relating to the transactions provided for herein or therein.
8.14 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 Lender,
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 the Obligations.
Borrower's 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.
8.15 Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit of
Lender 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 written consent of
Lender which Lender may withhold in its absolute discretion. Any actual or
attempted assignment by Borrower without Lender's consent shall be null, void
and of no effect whatsoever. Lender may assign its rights and obligations
hereunder and under the Note and the other Loan Documents in whole or in part.
If Lender makes such an assignment, the assignee shall have all of the rights
of the Lender and Borrower shall not assert against the assignee any defense,
counterclaims or setoff which Borrower may have against Lender. Except to the
extent otherwise required by its context, the word "Lender" where used in this
Agreement shall mean and include the holder of the Note originally issued to
Lender, 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. Lender agrees that neither Lender nor any assignee of Lender will
assign this Agreement or the Loan to an entity which is a competitor of
Borrower, including, without limitation, ▇▇▇▇▇▇ Laboratories, ▇▇▇▇
Laboratories, Bristol ▇▇▇▇▇
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Squibb, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Pharmaceuticals and Nestle, SA or their respective
subsidiaries.
8.16 Counterparts.
This Agreement may be executed in any number of counterparts and by
the different parties hereto on separate counterparts aech 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.
8.17 Publicity
The Lender and Borrower are hereby authorized to issue appropriate
press releases and to cause a tombstone to be pubkished announcing the
consumation of the transactions contemplated in this Agreement, including the
aggregate amount of the loan.
IN WITNESS THEREOF, the parties hereto, by their officers thereunto
dully authorized, have executed and delivered this Agreement effective as of
the day and year first above written.
CROWN LABORATORIES, INC.,
a Delaware corporation
By:________________________________
Name:______________________________
Title:_____________________________
Federal Tax Identification No. ▇▇▇▇▇▇▇▇▇
FINOVA CAPITAL CORPORATION
By:________________________________
Name:______________________________
Title:_____________________________
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38
EXHIBIT A-1
See attached.
39
FIRST LOAN SECURED PROMISSORY NOTE
$3,000,000 ________________, 1996
Phoenix, Arizona
FOR VALUE RECEIVED, the undersigned, CROWN LABORATORIES, INC., a
Delaware corporation ("Borrower"), hereby promises to pay to the order of
FINOVA CAPITAL CORPORATION ("Lender"), the principal sum of Three Million
Dollars ($3,000,000), together with interest on the unpaid principal balance
hereof from time to time outstanding at the rate per annum and on the dates and
all as otherwise provided in that certain Loan and Security Agreement dated as
of August 16, 1996 (the "Loan Agreement") by and between Lender and Borrower.
This Note is the Second Loan Note referred to in the Loan Agreement,
is secured as set forth in the Loan Agreement, may be prepaid only as provided
in the Loan Agreement and is entitled to the benefits of the Loan Agreement.
All capitalized terms used in this Note which are not otherwise defined herein
shall have the respective meanings ascribed to them in the Loan Agreement.
All payments of principal and interest on this Note are to be made in
lawful money of the United States of America in immediately available funds,
without setoff, counterclaim or deduction of any nature, at the office of
Lender at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (or such other
place as the holder hereof shall designate to the Borrower in writing), prior
to 12:00 Noon, local time, on the day when due.
If any payment of principal or interest becomes due on a day which is
not a Business Day, that payment shall be made on the next Business Day unless
such next Business Day falls in another calendar month in which event that
payment shall be made on the next preceding Business Day.
Lender and Borrower intend this Note to comply in all respects with
all provisions of law and not to violate, in any way, any legal limitations on
interest charges. Accordingly, if, for any reason, Borrower is required to
pay, or has paid, interest at a rate in excess of the highest rate of interest
which may be charged by Lender or which Borrower may legally contract to pay
under applicable law (the "Maximum Rate"), then the interest rate shall be
deemed to be reduced, automatically and immediately, to the Maximum Rate, and
interest payable hereunder shall be computed and paid at the Maximum Rate and
the portion of all prior payments of interest in excess of the
40
Maximum Rate shall be deemed to have been prepayments of the outstanding
principal of this Note and applied to the installments in the inverse order of
their maturities.
If Borrower fails to make any payment of principal or interest within
ten (10) days after the payment is due, Borrower shall pay a late charge of
five percent (5%) of the unpaid amount, but in no event more than the maximum
amount permitted by applicable law, and such amount shall be payable upon
demand. Such payment is not interest for the use of money, but is intended to
cover Lender's administrative costs occasioned by such delay.
Upon the occurrence of an Event of Default, Lender shall have all of
the rights and remedies contained in the Loan Agreement, including, without
limitation, the right, at its option, to declare all indebtedness under this
Note to be immediately due and payable.
Borrower hereby expressly waives presentment for payment, demand for
payment, notice of dishonor, protest, notice of protest, notice of non-payment,
and all lack of diligence or delays in collection or enforcement of this Note
or the Loan Agreement.
Lender may extend the time of payment of this Note, postpone the
enforcement hereof, release any Collateral, or grant any other indulgences
whatsoever, without affecting or diminishing Lender's right of recourse against
Borrower, as provided herein and in the Loan Agreement and in the other Loan
Documents, which right is hereby expressly reserved. The failure to assert any
right by Lender shall not be deemed a waiver thereof.
Borrower agrees to pay all costs, fees and expenses of collection,
including, without limitation, Lender's reasonable attorneys' fees and
disbursements, in the event that any action, suit or proceeding is brought by
the holder hereof to collect this Note or if an Event of Default occurs.
THIS NOTE IS DEEMED TO HAVE BEEN MADE IN, AND SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF, THE STATE OF ARIZONA. BORROWER IRREVOCABLY
CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING AGAINST BORROWER UNDER, ARISING
OUT OF, OR IN ANY MANNER RELATING TO THIS NOTE, THE LOAN AGREEMENT OR THE OTHER
LOAN DOCUMENTS MAY BE BROUGHT IN ANY STATE COURT OF THE STATE OF ARIZONA
LOCATED IN MARICOPA COUNTY OR ANY UNITED STATES DISTRICT COURT LOCATED IN THE
STATE OF ARIZONA. BORROWER, BY ITS EXECUTION AND DELIVERY OF THIS NOTE,
EXPRESSLY AND IRREVOCABLY CONSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF
ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING. BORROWER FURTHER AGREES
THAT ANY LEGAL ACTION OR PROCEEDING BORROWER MAY BRING, ARISING OUT OF OR IN
ANY MANNER
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RELATING TO THIS NOTE, THE LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS, SHALL
ONLY BE BROUGHT IN ANY COURT OF THE STATE OF ARIZONA LOCATED IN MARICOPA COUNTY
OR IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA. BORROWER
ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY COMPLAINT, SUMMONS, NOTICE OR
OTHER PROCESS RELATING TO SUCH ACTION OR PROCEEDING BY DELIVERY THEREOF TO
BORROWER IN THE MANNER PROVIDED FOR NOTICES IN THE LOAN AGREEMENT. BORROWER
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH ACTION
OR PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL JURISDICTION, IMPROPER
VENUE OR FORUM NON CONVENIENS OR ANY SIMILAR BASIS. BORROWER SHALL NOT BE
ENTITLED IN ANY SUCH ACTION OR PROCEEDING TO ASSERT ANY DEFENSE GIVEN OR
ALLOWED UNDER THE LAWS OF ANY STATE OTHER THAN THE STATE OF ARIZONA, UNLESS
SUCH DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF ARIZONA.
NOTHING HEREIN SHALL AFFECT OR IMPAIR IN ANY MANNER OR TO ANY EXTENT THE RIGHT
OF LENDER TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER
IN ANY OTHER JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.
IN WITNESS WHEREOF, Borrower has duly executed this Note on the date
first above written.
CROWN LABORATORIES, INC.,
a Delaware corporation
By:________________________________
Name:______________________________
Title:_____________________________
Federal Tax Identification No. ▇▇▇▇▇▇▇▇▇
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EXHIBIT A-2
See attached.
43
FIRST LOAN SECURED PROMISSORY NOTE
$3,000,000 ________________, 1996
Phoenix, Arizona
FOR VALUE RECEIVED, the undersigned, CROWN LABORATORIES, INC., a
Delaware corporation ("Borrower"), hereby promises to pay to the order of FINOVA
CAPITAL CORPORATION ("Lender"), the principal sum of Three Million Dollars
($3,000,000), together with interest on the unpaid principal balance hereof from
time to time outstanding at the rate per annum and on the dates and all as
otherwise provided in that certain Loan and Security Agreement dated as of
August 16, 1996 (the "Loan Agreement") by and between Lender and Borrower.
This Note is the Second Loan Note referred to in the Loan Agreement,
is secured as set forth in the Loan Agreement, may be prepaid only as provided
in the Loan Agreement and is entitled to the benefits of the Loan Agreement.
All capitalized terms used in this Note which are not otherwise defined herein
shall have the respective meanings ascribed to them in the Loan Agreement.
All payments of principal and interest on this Note are to be made in
lawful money of the United States of America in immediately available funds,
without setoff, counterclaim or deduction of any nature, at the office of
Lender at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (or such other
place as the holder hereof shall designate to the Borrower in writing), prior
to 12:00 Noon, local time, on the day when due.
If any payment of principal or interest becomes due on a day which is
not a Business Day, that payment shall be made on the next Business Day unless
such next Business Day falls in another calendar month in which event that
payment shall be made on the next preceding Business Day.
Lender and Borrower intend this Note to comply in all respects with
all provisions of law and not to violate, in any way, any legal limitations on
interest charges. Accordingly, if, for any reason, Borrower is required to
pay, or has paid, interest at a rate in excess of the highest rate of interest
which may be charged by Lender or which Borrower may legally contract to pay
under applicable law (the "Maximum Rate"), then the interest rate shall be
deemed to be reduced, automatically and immediately, to the Maximum Rate, and
interest payable hereunder shall be computed and paid at the Maximum Rate and
the portion of all prior payments of interest in excess of the Maximum Rate
shall be deemed to have been prepayments of the
44
outstanding principal of this Note and applied to the installments in the
inverse order of their maturities.
If Borrower fails to make any payment of principal or interest within
ten (10) days after the payment is due, Borrower shall pay a late charge of
five percent (5%) of the unpaid amount, but in no event more than the maximum
amount permitted by applicable law, and such amount shall be payable upon
demand. Such payment is not interest for the use of money, but is intended to
cover Lender's administrative costs occasioned by such delay.
Upon the occurrence of an Event of Default, Lender shall have all of
the rights and remedies contained in the Loan Agreement, including, without
limitation, the right, at its option, to declare all indebtedness under this
Note to be immediately due and payable.
Borrower hereby expressly waives presentment for payment, demand for
payment, notice of dishonor, protest, notice of protest, notice of non-payment,
and all lack of diligence or delays in collection or enforcement of this Note
or the Loan Agreement.
Lender may extend the time of payment of this Note, postpone the
enforcement hereof, release any Collateral, or grant any other indulgences
whatsoever, without affecting or diminishing Lender's right of recourse against
Borrower, as provided herein and in the Loan Agreement and in the other Loan
Documents, which right is hereby expressly reserved. The failure to assert any
right by Lender shall not be deemed a waiver thereof.
Borrower agrees to pay all costs, fees and expenses of collection,
including, without limitation, Lender's reasonable attorneys' fees and
disbursements, in the event that any action, suit or proceeding is brought by
the holder hereof to collect this Note or if an Event of Default occurs.
THIS NOTE IS DEEMED TO HAVE BEEN MADE IN, AND SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF, THE STATE OF ARIZONA. BORROWER IRREVOCABLY
CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING AGAINST BORROWER UNDER, ARISING
OUT OF, OR IN ANY MANNER RELATING TO THIS NOTE, THE LOAN AGREEMENT OR THE OTHER
LOAN DOCUMENTS MAY BE BROUGHT IN ANY STATE COURT OF THE STATE OF ARIZONA
LOCATED IN MARICOPA COUNTY OR ANY UNITED STATES DISTRICT COURT LOCATED IN THE
STATE OF ARIZONA. BORROWER, BY ITS EXECUTION AND DELIVERY OF THIS NOTE,
EXPRESSLY AND IRREVOCABLY CONSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF
ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING. BORROWER FURTHER AGREES
THAT ANY LEGAL ACTION OR PROCEEDING BORROWER MAY BRING, ARISING OUT OF OR IN
ANY MANNER RELATING TO THIS NOTE, THE LOAN AGREEMENT OR THE OTHER LOAN
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45
DOCUMENTS, SHALL ONLY BE BROUGHT IN ANY COURT OF THE STATE OF ARIZONA LOCATED
IN MARICOPA COUNTY OR IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
ARIZONA. BORROWER ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY COMPLAINT,
SUMMONS, NOTICE OR OTHER PROCESS RELATING TO SUCH ACTION OR PROCEEDING BY
DELIVERY THEREOF TO BORROWER IN THE MANNER PROVIDED FOR NOTICES IN THE LOAN
AGREEMENT. BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR
DEFENSE IN ANY SUCH ACTION OR PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS OR ANY SIMILAR BASIS.
BORROWER SHALL NOT BE ENTITLED IN ANY SUCH ACTION OR PROCEEDING TO ASSERT ANY
DEFENSE GIVEN OR ALLOWED UNDER THE LAWS OF ANY STATE OTHER THAN THE STATE OF
ARIZONA, UNLESS SUCH DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE
OF ARIZONA. NOTHING HEREIN SHALL AFFECT OR IMPAIR IN ANY MANNER OR TO ANY
EXTENT THE RIGHT OF LENDER TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST BORROWER IN ANY OTHER JURISDICTION OR TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW.
IN WITNESS WHEREOF, Borrower has duly executed this Note on the date
first above written.
CROWN LABORATORIES, INC.,
a Delaware corporation
By:________________________________
Name:______________________________
Title:_____________________________
Federal Tax Identification No. ▇▇▇▇▇▇▇▇▇
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REQUEST FOR SECOND LOAN
_______________, 1996
To: FINOVA Capital Corporation
Attention: Loan Administration
Pursuant to Section 4(b) of the Loan Agreement, dated as of August 16,
1996 (the "Loan Agreement"), between CROWN LABORATORIES, INC., a Delaware
corporation ("Borrower"), and FINOVA CAPITAL CORPORATION, a Delaware
corporation ("Lender"), Borrower hereby requests that Lender make the Second
Loan to Borrower in the principal amount of $1,500,000, as follows:
1. The Business Day on which the proposed Second Loan is to be made
is ______________, 199___. Such date shall be the Second Disbursement Date for
purposes of the Loan Agreement. [Must be at least 5 Business Days from the date
of this Request.]
2. The proceeds of the Second Loan requested herein will be used only
for the purposes permitted by the Loan Agreement.
3. Lender is authorized to remit the proceeds of this Second Loan by
wire transfer to: ____________________________, Account No. ____________ at
________________________, ABA No. ____________, Attention:
__________________________ or to such other account or by such other means as
shall be designated on Schedule A hereto.
4. There is no Default or Event of Default under the Loan Agreement
or any other Loan Documents. Each of the representations and warranties of
Borrower set forth in Article 3 of the Loan Agreement is true and correct on the
date hereof, except to the extent any such representation and warranty relates
to a particular date.
Capitalized terms defined in the Loan Agreement are used herein as
therein defined.
WITNESS the due execution hereof by the undersigned Borrower on the
date first set forth above.
CROWN LABORATORIES, INC.,
a Delaware corporation
By:_______________________________
Name:_____________________________
Title:____________________________
47
SCHEDULE A
Equipment
See Attached.