Exhibit 10.9
SECURITY AGREEMENT
By
THE MAJESTIC COMPANIES, LTD.,
a Delaware corporation
and
MAJESTIC TRANSPORTATION PRODUCTS, LTD.,
a Delaware corporation
To
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
($100,000 Line of Credit)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") is made as of the 27 day
of August, 1999 by and among THE MAJESTIC COMPANIES, LTD., a Delaware
corporation and MAJESTIC TRANSPORTATION PRODUCTS, LTD., a Delaware corporation
(collectively the "Borrower"), jointly and severally and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, an
individual (the "Lender").
RECITALS
A. The Lender has, as of this date, extended to the Borrower a line of
credit in the maximum principal amount of One Hundred Thousand Dollars
($100,000.00) (the "Loan"), which Loan is to be evidenced by a promissory note
of even date herewith from the Borrower to the Lender in the principal amount of
the Loan (the "Note"). The Note is to be secured by this Agreement and by
various other documents, instruments and writings executed and delivered by the
Borrower to the Lender in connection with the Note (collectively, the "Loan
Documents").
B. The Lender agreed to extend the Loan to the Borrower on the
condition that this Agreement be executed and delivered by the Borrower to the
Lender and the security interests contained herein be granted by the Borrower to
the Lender.
C. The parties have entered into this Security Agreement to
effectuate the above stated purposes.
W I T N E S S E T H
NOW THEREFORE, in consideration of the premises, the covenants and
agreements of the parties hereinafter set forth, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
set forth as definitions, unless the specific context of this Agreement clearly
requires a different meaning, and all terms defined in this Article, or
elsewhere in this Agreement, shall be in initial capital letters throughout this
Agreement. The plural use of any defined term shall include the singular and the
singular use of any defined term shall include the plural:
Section 1.1. Accounts, Chattel Paper Documents, Fixtures, General
Intangibles, Goods, Instruments and Inventory. The terms "Accounts," "Chattel
Paper," "Documents," "Equipment," "General Intangibles," "Goods," "Instruments"
and "Inventory" shall have the same respective meanings as are given to those
terms in the Maryland Uniform Commercial Code-Secured Transactions, Title 9,
Commercial Law Article, Annotated Code of Maryland, as amended. The term
"Fixtures" shall have the meaning provided by the common law of the State of
Maryland.
Section 1.2. Agreement. The term "Agreement" shall mean this Security
Agreement, as amended, extended, or modified by the parties hereto
from time to time, together with all attachments and exhibits thereto.
Section 1.3. Collateral. The term "Collateral" shall mean all of the
tangible and intangible property with respect to which the Borrower or the
Guarantor has assigned an interest to the Lender or has granted a security
interest or lien to the Lender pursuant to the terms of this Agreement or any of
the other Loan Documents.
Section 1.4. ERISA. The term "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended.
Section 1.5. Event of Default. The term "Event of Default" shall mean
the events constituting defaults under this Agreement as set forth in
Article VI of the Agreement.
Section 1.6. Guarantor. The term "Guarantor" shall mean any guarantor
of the obligations of the Borrower with respect to the Loan.
Section 1.7. Guaranty Agreement. The term "Guaranty Agreement" shall
mean any guaranty agreement executed by the Guarantor in favor of the
Lender, pursuant to which the Guarantor has guaranteed the Obligations
of the Borrower to the Lender.
Section 1.8. Indebtedness. The term indebtedness shall mean all items
of indebtedness, obligation or liability, whether matured or unmatured,
liquidated or unliquidated, direct or contingent, joint or several, including,
but not limited to: (a) all indebtedness guaranteed, directly or indirectly, in
any manner, or endorsed (other than for collection or deposit in the ordinary
course of business) or discounted with recourse; (b) all indebtedness in effect
guaranteed, directly or indirectly, through agreements, contingent or otherwise:
(1) to purchase such indebtedness; or (2) to purchase, sell or lease (as lessee
or lessor) property, products, materials, or supplies or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such indebtedness or to assure the owner of the indebtedness against loss; or
(3) to supply funds to or in any other manner invest in the debtor; (c) all
indebtedness secured by (or for which the holder of such indebtedness has a
right, contingent or otherwise, to be secured by) any mortgage, deed of trust,
pledge, lien, security interest or other charge or encumbrance upon property
owned or acquired subject thereto, whether or not the liabilities secured
thereby have been assumed; and (d) all indebtedness incurred as the lessee of
goods or services under leases that, in accordance with generally accepted
accounting principles, should not be reflected as leases on the balance sheet of
the lessee.
Section 1.9 Laws. The term "Laws" shall mean all ordinances, statutes,
rules, regulations, orders, injunctions, writs or decrees of any government or
political subdivision or agency thereof, or any court or similar entity
established by any thereof
Section 1.10. Loan. The term "Loan" shall mean the indebtedness
evidenced by the Note.
Section 1.11. Loan Documents. The term "Loan Documents" shall mean all
documents executed by the Borrower in connection with the Loan, including, but
not limited to, the Note, the Guaranty Agreement, this Agreement, appropriate
financing statements and continuation statements, or any amendments or
modifications thereto.
Section 1.12. Note. The term "Note" shall mean the promissory note in
the amount of $100,000 from the Borrower to the Lender.
Section 1.13. Obligations. The terms "Obligation" or "Obligations"
shall mean the obligation(s) of the Borrower to pay: (a) any and all sums due to
the Lender under the Loan otherwise under the terms of this Agreement, the Note
and the Loan Documents; (b) any and all sums advanced by the Lender to preserve
or protect the Collateral and the value of the Collateral or to preserve,
protect, or perfect the Lender's security interest in the Collateral; (c) in the
event of any proceeding to enforce the collection of the Obligations or any of
them, after default, the reasonable expenses of retaking, holding, preparing for
sale, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Lender of the Lender's rights in the event of default,
together with reasonable attorneys' fees, expenses of collection, and court
costs as provided in the Loan Documents; and (d) any other indebtedness or
liability of the Borrower to the Lender, whether direct or indirect, joint or
several, absolute or contingent, now or hereafter arising while this Agreement
is in effect.
Section 1.14. Person. The term "Person" shall mean any individual,
corporation, partnership, association, joint-stock company, trust,
unincorporated organization, joint venture, court, or government or political
subdivision or agency thereof.
Section 1.15. Records. The term "Records" shall mean correspondence,
memoranda, tapes, discs, papers, books and other documents, or transcribed
information of any type, whether expressed in ordinary or machine language.
ARTICLE II
SECURITY FOR THE LOAN
The repayment of the Loan, the satisfaction of the Obligations, and
the full complete and absolute performance by the Borrower of each of the terms
and conditions of the Agreement, the Note and the Loan Documents shall be
secured by the granting by the Borrower to the Lender of the following described
security interests, liens, guarantees, and assignments:
Section 2.1. Grant of Security Interest. The Borrower hereby assigns
to the Lender all right, title, and interest in and to, and grants to the Lender
a continuing security interest in and to all of the tangible and intangible
assets owned by the Borrower, wherever located, whether now owned or hereafter
acquired, together with all substitutions therefor, and replacements and
renewals thereof, including but not limited to the following:
(a) Accounts;
(b) Cash on hand and in any deposit, passbook, savings or checking
account;
(c) Chattel Paper;
(d) Documents;
(e) Contracts and Contract rights;
(f) General Intangibles;
(g) Goods;
(h) Instruments;
(i) Inventory; and
(j) All Records relating to or pertaining to any of the above
listed Collateral.
Section 2.2. Proceeds and Products. The Lender's security interests
provided for herein shall apply to the proceeds, including but not
limited to insurance proceeds, and the products of the Collateral.
Section 2.3. Priority of Security Interest. Each of the assignments
and security interests granted pursuant to this Agreement at the time of any
disbursement hereunder shall be a first lien priority assignment of and security
interest on the Collateral.
Section 2.4. Future Advances. The security interest granted by the
Borrower shall secure all current and all future advances made by the Lender to
the extent such current and future advances constitute Obligations and any such
advancement or readvancement shall be fully secured by the security interests
created by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Lender to make the Loan and enter into the Agreement,
the Borrower makes the following representations and warranties and acknowledges
the Lender's justifiable reliance upon the representations and warranties and
the Lender's full right to so rely:
Section 3.1. Accuracy and Completeness of Information. All
information, documents, reports, statements, financial statements, and data
submitted by or on behalf of the Borrower in connection with the Loan, or in
support thereof, are true, accurate, and complete in all material respects and
contain no knowingly false, incomplete or misleading statements.
Section 3.2. Non-Existence of Defaults, etc. Except to the extent
disclosed to the Lender as of the date hereof the Borrower, to the best of its
knowledge, information and belief, is not in material default with respect to
any of its existing Indebtedness, and the making and performance of this
Agreement, and the Loan Documents will not immediately, or with the passage of
time, the giving of notice, or both: (a) violate the charter or bylaw provisions
of the Borrower, violate any Laws or result in a default under any contract,
agreement, or instrument to which the Borrower is a party or by which it or its
property is bound; or (b) result in the creation or imposition of any security
interest in, or lien or encumbrance upon, any of the assets of the Borrower,
except in favor of the Lender.
Section 3.3. Litigation. Except to the extent disclosed to the Lender
as of the date hereof, there is no action, suit, investigation, or
proceeding against or pending against the Borrower.
Section 3.4. Liabilities or Adverse Changes. The Borrower has, to the
best of its knowledge, information and belief, no direct or contingent liability
or Indebtedness known to them and not previously disclosed to the Lender, or
which is shown on the books and records of the Borrower, nor does the Borrower
know of or expect any circumstance or event which would result in a material and
adverse change in the assets, liabilities, properties, business, or condition,
financial or otherwise, of the Borrower.
Section 3.5. Corporate Status. Each corporation comprising the
Borrower is a corporation validly incorporated under the Laws of the State of
Delaware and has the power to own its properties, conduct its business and
affairs, enter into the Loan and perform the Obligations. The Borrower's entry
in the Loan with the Lender has been validly and effectively approved by its
Board of Directors and shareholders as may be required by their respective
charter, bylaws, or applicable law. All copies of the charter, bylaws, and
corporate resolutions, as the case may be, of the Borrower shown to the Lender
are true, accurate, and complete and no action has been taken in diminution or
abrogation thereof.
Section 3.6. Validity, Binding Nature, and Enforceability of the Loan
Documents. The Loan Documents executed by the Borrower are the valid and binding
obligations thereof, fully enforceable against it in accordance with its terms,
except as may be limited by bankruptcy, insolvency or other laws affecting
enforcement of creditors rights generally.
Section 3.7. Defaults Under Loan Documents. There is not currently
existing any action, event, or condition which would constitute a default on the
part of the Borrower under this Agreement or of the Borrower under any other
Loan Document, and no action, event or condition has occurred and is continuing
to occur which, with notice or the passage of time or both, would constitute a
default by the Borrower under any provision of this Agreement or by the Borrower
under any other Loan Document.
Section 3.8. Compliance With Laws. Except as otherwise disclosed to
the Lender, or except to the extent that the failure to comply would not
materially interfere with the conduct of the business of the Borrower or a
Guarantor, as the case may be, the Borrower and such Guarantor have complied
with all applicable Laws with respect to: (a) any restrictions, specifications,
or other requirements pertaining to the Borrower or such Guarantor; (b) the
conduct of their business; and (c) the use, maintenance, and operation of the
real and personal properties owned or leased by them in the conduct of their
business.
Section 3.9. Accuracy of Representations and Warranties. No
representation or warranty made by the Borrower contained herein or in any
certificate or other document furnished by the Borrower pursuant hereto contains
any untrue statement of material fact or omits to state a material fact
necessary to make such representation or warranty not misleading in light of the
circumstances under which it was made.
Section 3.10. Consents. Approvals, and Authorizations. Each consent,
approval or authorization of, or filing, registration or qualification with, any
Person which is required to be obtained or effected by the Borrower or any
Guarantor in connection with the execution and delivery of this Agreement and
the Loan Documents, or the undertaking or performance of any obligation
hereunder or thereunder, has been duly obtained or effected.
Section 3.11. Title to Assets Other Than Collateral. The Borrower has
good and marketable title to all of their assets, subject to no security
interest, encumbrance, lien, or claim of any Person, excepting only those
granted to the Lender hereunder.
Section 3.12. Place of Business. The chief executive office and chief
place of business of the Borrower is located at ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. All Collateral shall be maintained only at
one of the addresses and shall not be moved or relocated, except in the ordinary
course of business, without prior written notice from the Borrower to the Lender
thereof.
ARTICLE IV
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees, during the term of this Agreement
and while any Obligations are outstanding and unpaid, to do and perform the
following:
Section 4.1. Payments. All Obligations shall be paid in full when and
as due, subject to any applicable notice requirements and cure or
grace periods.
Section 4.2. Performance. All Obligations shall be fully and
completely performed, when and as required, subject to any applicable
notice requirements and cure or grace periods.
Section 4.3. Protection of Security. The value of the Collateral shall
at all times be protected and preserved.
Section 4.4. Insurance. The Borrower shall obtain and maintain the
following insurance coverage:
Section 4.4.1. Casualty Insurance. The Borrower shall obtain
and maintain during the term of the Loan for all of its respective assets and
properties, both real, personal, and mixed, including but not limited to the
Collateral, fire and extended coverage casualty insurance, in amounts reasonably
satisfactory to the Lender and sufficient to prevent any co-insurance liability
(which amount shall be the full insurable value of their respective assets and
properties unless the Lender in writing agrees to a lesser amount). The Lender,
on request, shall be supplied with the originals or copies of the aforementioned
insurance policies and paid receipts evidencing payment of the premiums due on
the same. The aforementioned policies shall be endorsed so as to make them
noncancellable unless thirty (30) days prior notice of cancellation is provided
to the Lender. The proceeds of any loss payable under the aforementioned
policies of the Borrower shall be used to replace or repair the damaged or
destroyed assets or properties of the Borrower. If the proceeds are not applied
to replace or repair assets or properties of the Borrower, they shall be paid,
first, to satisfy any and all Indebtedness of the Borrowers to lenders which
hold liens or security interests superior to those of the Lender, second, to the
payment of any and all Indebtedness of the Borrowers to the Lender and, third,
to the Borrowers.
Section 4.4.2. Liability and Worker's Compensation Insurance.
The Borrower shall obtain and maintain during the term of the Loan public
liability and property damage insurance in such amounts, with insurance
companies, and upon policy forms reasonably acceptable to and reasonably
approved by the Lender. The Borrower shall obtain and maintain during the term
of the Loan, worker's compensation insurance, in such amounts, with insurance
companies, and in forms reasonably acceptable to and reasonably approved by the
Lender. The Borrower, on request, shall supply the Lender with copies of the
liability and worker's compensation insurance policies and receipts evidencing
the payment of premiums due thereon or, alternatively, certificates from the
insurance companies certifying to the existence of policies, summarizing the
terms of the policies, and indicating the payment of premiums due thereon.
Section 4.5. Sale or Transfer of Assets. The Borrower shall not sell,
transfer or dispose of any of the assets of the Borrower without the
prior written consent of the Lender.
Section 4.6. Maintenance of Existence. The Borrower shall take all
necessary steps to preserve its existence, franchise and good standing in the
applicable state of incorporation and in any other state where it may be
qualified as a foreign corporation, and shall comply with all present and future
Laws applicable in the operation and conduct of its businesses, and all material
agreements to which it is subject.
Section 4.7. Notice of Litigation and Proceedings. The Borrower shall
give immediate notice to the Lender of: (a) any litigation or proceeding in
which it is a party if an adverse decision therein would require it to pay more
than Ten Thousand Dollars ($10,000.00) or deliver assets the value of which
equals or exceeds such sum (whether or not the claim is considered to be covered
by insurance); and (b) the institution of any other suit or proceeding which
might materially and adversely affect the Collateral.
Section 4.8. Payment of Indebtedness to Third Persons. The Borrower
shall pay when and as due, or within applicable grace periods, all Indebtedness
due third persons, except when the amount thereof is being contested in good
faith by appropriate proceedings and with adequate reserves therefor being set
aside by the Borrower.
Section 4.9. Notice of Change of Business Location. The Borrower shall
notify the Lender thirty (30) days in advance of: (a) any change in the location
of its existing offices or place of business; (b) the establishment of any new,
or the discontinuance of any existing, place of business; and (c) any change in
or addition to the location of the place where the Inventory or Records are
kept.
Section 4.10. Payment of Taxes. The Borrower shall pay or cause to be
paid when and as due, all taxes, assessments and charges or levies imposed upon
it or on any of its property or which it is required to withhold and pay over to
the taxing authority or which it must pay on its income, except where contested
in good faith by appropriate proceedings with adequate reserves therefor having
been set aside by it. The Borrower shall pay or cause to be paid all such taxes,
assessments, charges or levies forthwith whenever foreclosure on any lien that
attaches (or security therefor) appears imminent, unless such foreclosure has
been enjoined by appropriate proceedings.
Section 4.11. Further Assurances. The Borrower agrees to execute such
confirmatory deeds and continuation statements as may from time to time be
necessary to perfect, confirm, establish, or continue the security interest in
the Collateral.
Section 4.12. Maintain Records and Make Available to Lender for
Inspection. The Borrower shall maintain Records pertaining to the Collateral,
and the conduct and operation of its business, in such detail, form and scope as
the Lender shall require. At all reasonable times, the Lender and its duly
authorized representatives shall have full access to, and the right to audit,
check, inspect and make abstracts and copies from, such Records. The Lender or
the Lender's agents may enter upon any of the Borrower's premises at any
reasonable time during business hours and from time to time for the purpose of
inspecting the Collateral and any and all such Records, and at any time upon the
occurrence of an Event of Default the Lender may take possession of and remove
any of all such Records.
Section 4.13. Financial Statements. The Borrower shall furnish the
Lender, within ninety (90) days after the close of each fiscal year: (1) a
statement of stockholders' equity and a statement of changes in the financial
positions for such fiscal year; (2) an income statement of each Borrower for
such fiscal year; and (3) a balance sheet of each Borrower as of the end of such
fiscal year, all in reasonable detail, including all supporting schedules and
comments and prepared on a compilation basis by an independent certified public
accountant.
ARTICLE V
NEGATIVE COVENANTS
The Borrower covenants and agrees during the term of this Agreement
and while any Obligations are outstanding and unpaid not to do or to permit to
be done or to occur any of the acts or happenings set forth below:
Section 5.1. Change of Name. The Borrower shall not change its name
without providing thirty (30) days prior written notice to the Lender.
Section 5.2. Encumbrance of Assets. The Borrower shall not mortgage,
pledge, grant or permit to exist a security interest in or lien upon any of its
assets of any kind, whether now owned or hereafter acquired.
Section 5.3. Indebtedness. The Borrower shall not incur, create,
assume, or permit to exist any Indebtedness except: (1) the Loan; (2) trade
Indebtedness incurred in the ordinary course of business; (3) Indebtedness for
the acquisition of capital assets for the operation of the business of the
Borrower; (4) Indebtedness to its shareholders, provided such Indebtedness is
subordinated as to lien priority to the Lender; and (7) other Indebtedness
approved in writing by the Lender.
ARTICLE VI
EVENTS OF DEFAULT
The following shall constitute Events of Default and shall entitle the
Lender to exercise the Lender's rights and remedies under Article VII:
Section 6.1. Failure to Pay. The failure by the Borrower to pay any
Obligation, when and as due, which failure shall remain uncured for a period of
more than five (5) days after written notice thereof from the Lender.
Section 6.2. Failure to Perform. The failure of the Borrower to
perform or observe any material Obligation (which failure is not specifically
enumerated in this Article VI as an Event of Default), when and as required,
which failure shall remain uncured for a period of more than thirty (30) days
after receipt of written notice thereof from the Lender, provided, that if the
failure or default is of a nature that it cannot be cured or discharged within
such thirty (30) day period, then the Borrower shall have an additional period
of time subsequent thereto within which to cure such failure or default. So long
as the Borrower is working reasonably diligently to cure such default, the
additional time to cure shall be for a period extending for ninety (90) days.
Section 6.3. Failure of Warranty or Representation to be True. The
failure of any representation or warranty provided in this Agreement to be true
and accurate as of the date hereof.
Section 6.4. Default Under Loan Documents. A material breach of or
material default by the Borrower under the terms, covenants, and conditions set
forth in any other Loan Documents which is not cured within any applicable cure
or grace period.
Section 6.5. Cross-Default. A breach of or default by the Borrower or
any Guarantor under the terms, covenants, or conditions of any present or future
agreements, loans, guarantees, or other transactions with the Lender.
Section 6.6. Judgments. The Borrower shall suffer final judgments for
payment of money aggregating in excess of One Hundred Thousand Dollars
($100,000.00) and shall not discharge the same within a period of thirty (30)
days unless, pending further proceedings, execution has not been commenced or if
commenced has been effectively stayed.
Section 6.7. Levy By Judgment Creditor. A judgment creditor of the
Borrower shall obtain possession of any of the Collateral by any
means, including, but without limitation, levy, distraint, replevin or
self-help.
Section 6.8. Failure to Pay Debts to Third Persons. The Borrower shall
fail to pay any Indebtedness of any material nature due any third Person, if
such failure shall continue beyond any applicable grace period and a default
with respect thereto shall be actually declared or such Indebtedness shall be
accelerated prior to maturity.
Section 6.9. Involuntary Bankruptcy. The entry of a decree or order
for relief by a court having jurisdiction against or with respect to the
Borrower or any Guarantor in an involuntary case under the federal bankruptcy
laws or any state insolvency or similar laws ordering: (I) the liquidation of
the Borrower or any Guarantor; (2) a reorganization of the Borrower or any
Guarantor or the Borrower's or any Guarantors business and affairs, or (3) the
appointment of a receiver, liquidator, assignee, custodian, trustee, or similar
official for the Borrower or any Guarantor or any of the Borrower s or any
Guarantor's property including, but not limited to, the Collateral, and the
failure to have such decree, order or appointment discharged or dismissed within
one hundred eighty (180) days from the date of entry.
Section 6.10. Voluntary Bankruptcy. The commencement by the Borrower
or any Guarantor of a voluntary case under the federal bankruptcy laws or any
state insolvency or similar laws or the consent by the Borrower or any Guarantor
to the appointment for taking possession by a receiver, liquidator, assignee,
custodian, trustee, or similar official for the Borrower or any Guarantor or any
of the Borrower's or Guarantor's property including, but not limited to, the
Collateral, or the making by Borrower or any Guarantor of any assignment for the
benefit of creditors or the failure by Borrower or any Guarantor generally to
pay its debts as they become due either as to the amount of such debts or the
number of such debts.
ARTICLE VII
RIGHTS AND REMEDIES ON THE OCCURRENCE
OF AN EVENT OF DEFAULT
Section 7.1. Rights and Remedies. In addition to all other rights and
remedies provided by Law and the Loan Documents, the Lender, on the
occurrence of any Event of Default, may:
a. Accelerate and call due the unpaid principal balance of the Loan, and
all accrued interest and other sums due as of the date of default;
b. Impose the default rate of interest provided in the Note, with or
without acceleration of the Note;
c. Foreclose any security interest, lien, assignment, or pledge created by
any Loan Document or the Agreement;
d. Confess judgment or file suit against the Borrower on the Note;
e. File suit against the Borrower on this Agreement, or any other Loan
Document;
f. Seek specific performance or injunctive relief to enforce performance of
the undertakings, duties, and agreements provided in the Loan Documents, whether
or not a remedy at law exists or is adequate;
g. Exercise any rights of a secured creditor under the Maryland Uniform
Commercial Code-Secured Transactions, Title 9, Commercial Law Article, Annotated
Code of Maryland, as amended, including the right to take possession of the
Collateral without the use of judicial process and the right to require the
Borrower to assemble the Collateral at such place as the Lender may specify; or
h. Set-off any amounts owed to the Borrower.
Section 7.2. Sale of Collateral. In addition to any other remedy
provided herein, the Lender may immediately, without advertisement, sell at
public or private sale or otherwise realize upon, in Baltimore, Maryland, or
elsewhere, the whole or, from time to time, any part of the Collateral, or any
interest which the Borrower may have therein. After deducting from the proceeds
of sale or other disposition of the Collateral all expenses, including all
expenses for legal services, the Lender shall apply such proceeds toward the
satisfaction of the Obligations. Any remainder of the proceeds after
satisfaction in full of the Obligations shall be distributed as required by
applicable Law. Notice of any sale or other disposition shall be given to the
Borrower at least ten (10) days before the time of any intended public sale or
of the time after which any intended private sale or other disposition of the
Collateral is to be made, which the Borrower hereby agrees shall be reasonable
notice of such sale or other disposition. The Borrower agrees to assemble, or to
cause to be assembled, at the Borrower's own expense, the Collateral at such
place or places as the Lender shall designate. At any such sale or other
disposition, the Lender may, to the extent permissible under applicable law,
purchase the whole or any part of the Collateral, free from any right of
redemption on the part of the Borrower, which right is hereby waived and
released. Without limiting the generality of any of the rights and remedies
conferred upon the Lender under this Section, the Lender may, to the full extent
permitted by applicable law: (a) enter upon the premises of the Borrower,
exclude therefrom the Borrower or any entity connected therewith, and take
immediate possession of the Collateral, either personally or by means of a
receiver appointed by a court of competent jurisdiction, using all necessary
force to do so; (b) at the Lender's option, use, operate, manage, and control
the Collateral in any lawful manner; (c) collect and receive all rents, income,
revenue, earnings, issues, and profits therefrom; and (d) maintain, repair,
renovate, alter or remove the Collateral as the Lender may determine in the
Lender's discretion.
Section 7.3. Collection of Accounts. The Lender, at any time or from
time to time following the occurrence of an Event of Default which is a
continuing Event of Default, and unless and until the same is cured (if Borrower
has the right to cure such Event of Default hereunder) may terminate the
Borrower's authority to collect the Accounts and-may exercise any or all of the
rights contained herein to directly collect all Accounts. Upon such a
termination of the Borrower's authority, the Lender shall have the right to send
notice of assignment or notice of the Lender's security interest to any and all
customers or any third party holding or otherwise concerned with any of the
Accounts, and thereafter the Lender shall have the sole right to collect the
Receivables and take possession of the Accounts and Records relating thereto.
All of the Lender's collection expenses shall be charged to the Borrower's
account and added to the Obligations. If the Lender is collecting the Accounts
as provided, the Lender shall have the right to receive, indorse, assign and
deliver in the Lender's name or the Borrower's name any and all checks, drafts
and other instruments for the payment of money relating to the Accounts, and the
Borrower hereby waives notice of presentment, protest and non-payment of any
instrument so endorsed. If the Lender is collecting the Accounts, directly as
above provided, the Borrower hereby constitutes the Lender or the Lender's
designee as the Borrower's attorney-in-fact with power with respect to the
Accounts: (a) to indorse the Borrower's name upon any note, acceptances, checks,
drafts, money orders or other evidences of payment that may come into the
Lender's possession; (b) to sign the Borrower's name on any invoice relating to
any of the Accounts, drafts against customers, assignments and verifications of
Accounts and notices to Customers; (c) to send verifications of Accounts to any
customer; (d) to notify the Post Office authorities to change the address for
delivery of mail addressed to the Borrower; (f) to do all other acts and things
necessary, proper, or convenient to carry out the terms and conditions and
purposes and intent of this Agreement. All acts of such attorney or designee are
hereby ratified and approved, and such attorney or designee shall not be liable
for any acts of omission or commission other than acts of intentional
wrongdoing, nor for any error of judgment or mistake of fact of law in
accordance with this Agreement. The power of attorney hereby granted, being
coupled with an interest, is irrevocable while any of the Obligations remain
unpaid. The Lender may, without notice to or consent from the Borrower, ▇▇▇ upon
or otherwise collect, extend the time of payment of or compromise or settle for
cash, credit or otherwise upon any terms, any of the Accounts or any securities,
instruments or insurances applicable thereto or release the obligor thereon. The
Lender is authorized and empowered to accept the return of the goods represented
by any of the Accounts, without notice to or consent by the Borrower, all
without discharging or in any way affecting the Borrower's liability hereunder.
The Lender does not, by anything herein or in any assignment or otherwise,
assume any of the Borrower's obligations under any contract or agreement
assigned to the Lender, and the Lender shall not be responsible in any way for
the performance by the Borrower of any of the terms and conditions thereof.
Section 7.4. Attorneys' Fees and Expenses. The Borrower shall pay all
reasonable attorneys' fees and expenses which the Lender may incur as a result
or in Consequence of the happening of an Event of Default, provided the Event of
Default is not cured and the Loan is placed in good standing.
Section 7.5. Remedies Cumulative. The rights and remedies provided in
this Agreement or in the Loan Documents or under applicable Laws shall be
cumulative and the exercise of any particular right or remedy shall not preclude
the exercise of any other rights or remedies in addition to, or as an
alternative of, such right or remedy.
ARTICLE VIII
GENERAL CONDITIONS AND TERMS
Section 8.1. Waivers. The Lender may at any time or from time to time
waive all or any rights under this Agreement or any other Loan Document, but any
waiver or inducement by the Lender at any time or from time to time shall not
constitute, unless specifically so expressed by the Lender in writing (except to
the extent an express waiver need not be in writing under the provisions of
another section of this Agreement), a future waiver of performance or exact
performance by the Borrower.
Section 8.2. No Third Parts Beneficiary Rights. No person not a party
to this Agreement shall have any benefit hereunder nor have third party
beneficiary rights as a result of this Agreement or any other Loan Documents,
nor shall any party be entitled to rely on any actions or inactions of the
Lender or the Lender's agents, all of which are done for the sole benefit and
protection of the Lender.
Section 8.3. Continuing Obligation of Borrower. The terms, conditions,
and covenants set forth herein and in the Loan Documents shall survive closing
and shall constitute a continuing obligation of the Borrower during the course
of the transaction contemplated herein. The obligations of the Borrower under
this Agreement shall remain in effect so long as any Obligation is outstanding,
unpaid or unsatisfied between the Borrower or any Guarantor and the Lender.
Section 8.4. Binding Obligation. This Agreement shall be binding upon
the parties and their successors and assigns.
Section 8.5. Notices. Any notice or consent required or permitted by
or in connection with this Agreement or any other Loan Document shall be in
writing and made by hand delivery, by wire, by overnight courier service for
next day delivery or by certified mail, return receipt requested, postage
prepaid, addressed to the Lender or the Borrower at the appropriate address set
forth below or to such other address as may be hereafter specified by written
notice by the Lender or the Borrower, and shall be considered given as of the
date of hand delivery or wire, as of the date following delivery to the
overnight courier service, or as of two (2) business days after the date of
mailing, as the case may be:
If to the Lender:
==================
==================
If to the Borrower:
The Majestic Companies, Ltd.
▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Majestic Transportation Products, Ltd.
▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Section 8.6. Final Agreement. This Agreement and the Loan Documents
contain the final and entire agreement and understanding of the parties, and any
terms and conditions not set forth in this Agreement or the Loan Documents are
not a part of this Agreement and the understanding of the parties hereof.
Section 8.7. Amendment. This Agreement may be amended or altered only
in writing signed by the party to be bound by the amendment or
alteration.
Section 8.8. Time. Time is of the essence of this Agreement.
----
Section 8.9. Choice of Law. The laws of the State of Maryland shall
govern the fights and obligations of the parties to this Agreement and all other
Loan Documents, and the interpretation and construction and enforceability
thereof and any and all issues relating to the transactions contemplated herein.
The Borrower consents to the jurisdiction of the Courts of the State of
Maryland, including the jurisdiction of the United States District Court for the
District of Maryland (to the extent diversity of citizenship or other
jurisdictional basis exists) and agrees that venue shall be proper in any county
or the City of Baltimore if suit is filed by the Lender to enforce or construe
the Loan Documents in the courts of the State of Maryland.
Section 8.10. Number. Gender, and Captions. As used herein, the
singular shall include the plural and the plural may refer to only the
singular. The use of any gender shall be applicable to all genders.
The captions contained herein are for purposes of convenience only and
are not a part of this Agreement.
IN WITNESS WHEREOF, the Lender, the Borrower and the Guarantor execute
and seal this Agreement as of the 27th day of August, 1999, with the specific
intention that this Agreement constitute a document under seal.
WITNESS: LENDER:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
WITNESS: BORROWER:
THE MAJESTIC COMPANIES, LTD.,
a Delaware corporation
By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
and
/s/▇▇▇▇ ▇. ▇▇▇▇▇ Chief Executive Office
MAJESTIC TRANSPORTATION PRODUCTS,LTD.
a Delaware corporation
/s/▇▇▇▇ ▇. ▇▇▇▇▇ By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
and
Chief Executive Officer
PROMISSORY NOTE
[$100,000 Line of Credit]
From
THE MAJESTIC COMPANIES, LTD.,
a Delaware corporation
and
MAJESTIC TRANSPORTATION PRODUCTS, LTD.,
a Delaware corporation
to the Order of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Baltimore, Maryland $100,000.00
August 27, 1999
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned THE MAJESTIC COMPANIES, LTD., a
Delaware corporation and MAJESTIC TRANSPORTATION PRODUCTS, LTD., a Delaware
corporation (the "Borrower") jointly and severally promise to pay to the order
of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and its successors and assigns (the "Lender") at
theLender's offices at c/o ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, or at
such other place as the Lender may from time to time designate, the principal
sum of One Hundred Thousand Dollars ($100,000.00) or so thereof as has been
advanced by the Lender to the Borrower under a line of credit (the "Line of
Credit") extended, pursuant to the provisions of this promissory note (the
"Promissory Note") and certain documents and writings executed and delivered to
the Lender by the Borrower and other signatory parties (the "Loan Documents") in
connection with the obligation evidenced herein (the "Loan"), together with
interest thereon at the rate hereafter specified and any and all other sums
which may be owing to the Lender by the Borrower under this Promissory Note, on
August 26, 2000 (the "Maturity Date"), which is the final and absolute due date
of this Promissory Note, subject to acceleration as herein set forth. The
following terms shall apply to this Promissory Note:
Section 1. Interest Rate. For the period from the date hereof until
all sums due hereunder, whether principal, interest, penalties, fees or other
sums have been paid in full, interest shall accrue on the disbursed and unpaid
principal balance of this Promissory Note at a fixed rate equal to ten percent
(10%) per annum.
Section 2. Calculation of Interest. Interest shall be calculated on
the basis of a three hundred sixty (360) days per year factor applied
to the number of actual days elapsed.
Section 3. Term. The term of this Promissory Note shall be for a
period (the "Term") extending from the date of this Promissory Note and
continuing until the Maturity Date, which Maturity Date is subject to
acceleration as set forth herein.
Section 4. Repayment. This Promissory Note shall be repaid in monthly
installments of accrued interest only, payable on the first day of the month
preceding the month, beginning on September 1, 1999 and continuing on the first
day of each succeeding month until the Maturity Date as above set forth, or such
earlier date arising by acceleration, at which time the unpaid principal balance
and any and all sums due under this Promissory Note and the other Loan
Documents, including accrued interest, late fees and penalties shall be due and
payable in full. Notwithstanding the foregoing, revenues of the Borrower which
are not to be immediately expended shall be paid by the Borrower to the Lender
as, principal payments under the Line of Credit.
Section 5. Application of Payments. All payments made hereunder shall
be applied first to any fees or expenses incurred by Lender hereunder, if any,
next to accrued interest, and then to principal or, during any default by the
Borrower, in such other order or proportion as the Lender, in its discretion,
may determine.
Section 6. Manner and Method of Payment. All payments called for in
this Promissory Note shall be made in lawful money of the United States of
America. If made by check, draft, or other payment instrument, such check,
draft, or other payment instrument shall represent immediately available funds.
Section 7. Prepayment. The Borrower may prepay this Promissory Note at
any time without additional penalty or interest.
Section 8. Warrants. As an inducement to the Lender to provide the
Loan, as set forth in this Promissory Note and the other Loan Documents, The
Majestic Companies, Ltd. ("Majestic") shall issue to the Lender a warrant or
warrants (the "Warrant") for one hundred thousand (100,000) shares of the common
stock of Majestic upon the execution and delivery of the Loan Documents. The
Warrant shall provide for an exercise price equal to the average of the Closing
Price for shares of Majestic's common stock for the ten (10) trading days
immediately preceding the date of issuance of the Warrant and the Warrant may be
exercised on a cash or cashless basis, for a period extending for two (2) years
from the date of issuance of the Warrant.
Section 9. Late Payment Penalty. Should any payment of interest, or of
principal and interest, or any other sum due hereunder be received by the Lender
more than five (5) days following receipt of written notice therefor, the
Borrower shall pay a late payment penalty equal to five percent (5%) of the
amount of the payment then due.
Section 10. Acceleration Upon Default. Upon the failure to pay any
amount when due under this Promissory Note, which failure is not cured or
discharged within a period of five (5) days following receipt of written notice
therefor, or upon any default under any other Loan Document, which default is
not cured within the applicable cure period following written notice thereof,
the Lender may, in the Lender's sole and absolute discretion and without notice
or demand, declare the entire unpaid balance of principal plus accrued interest
and any other sums due hereunder immediately due and payable.
Section 11. Default Interest Rate. Upon the failure to pay any amount
when due under this Promissory Note, which failure is not cured or discharged
within a period of five (5) days following receipt of written notice therefor,
or upon any default under any other Loan Document, which default is not cured
within the applicable cure period following written notice thereof, the Lender
may, in addition to any other remedy the Lender may exercise, raise the rate of
interest accruing on the disbursed unpaid principal balance by four (4)
percentage points above the rate of interest otherwise applicable, until such
default is cured.
Section 12. Confession of Judgment. Upon the failure to pay any amount
when due under this Promissory Note, which failure is not cured or discharged
within a period of five (5) days following receipt of written notice therefor,
or upon any default under any other Loan Document, which default is not cured
within the applicable cure period following written notice thereof, the Borrower
authorizes the clerk of any court and any attorney admitted to practice before
any court of record in the United States, on behalf of the Borrower, to then
confess judgment against the Borrower in favor of the Lender in the full amount
due on this Promissory Note plus attorneys' fees in an amount equal to fifteen
percent (15%) of the outstanding balance hereof, including principal, interest
and other costs and expenses other than attorneys fees. The Borrower consents to
the jurisdiction of and agrees that venue shall be proper in the United States
District Court for the District of Maryland, if jurisdiction exists, and/or in
any Circuit Court for any county or the City of Baltimore, Maryland. The
Borrower waives all errors, defects and imperfections in the entry of judgment
as aforesaid or in any proceeding pursuant thereto and the benefit of any and
every statute, ordinance or rule of court which may be lawfully waived
conferring upon the Borrower any right or privilege of exemption, stay of
execution, or supplementary proceedings, or other relief from the enforcement or
immediate enforcement of a judgment or related proceedings on a judgment. The
authority and power to appear for and to enter judgment against the Borrower
shall not be extinguished by any judgment entered pursuant thereto; such
authority and power may be exercised on one or more occasions from time to time,
in the same or different courts or jurisdictions, as often as the Lender shall
deem necessary or advisable until all sums due under this Promissory Note have
been paid in full.
Section 13. Expenses of Collection. Should this Promissory Note be
referred to an attorney for collection following a default by the Borrower, the
Borrower shall pay all of the Lender's costs, fees and expenses (including
reasonable attorneys' fees) resulting from such referral, even if judgment has
not been confessed or suit filed.
Section 14. Waivers by the Borrower. The Borrower waives presentment,
notice of dishonor and protest, notice of intention to accelerate the maturity
hereof and notice of the actual acceleration of the maturity hereof.
Section 15. Extensions of Maturity. The Borrower hereby agrees that
the Maturity Date, or any payment due hereunder, may be extended at any time or
from time to time by the Lender without releasing, discharging, or affecting the
liability of such party.
Section 16. Commercial Loan. The Borrower represents and warrants that
the debt evidenced hereby is a commercial loan transaction within the meaning of
Sections 12-101(c) and 12-103(e), Commercial Law Article, Annotated Code of
Maryland.
Section 17. Notices. Any notice or demand required or permitted in
connection with this Promissory Note shall be in writing and made by hand
delivery, by wire or facsimile transmission, by overnight courier service for
next day delivery or by certified mail, return receipt requested, postage
prepaid, addressed to the Lender or the Borrower at the appropriate address set
forth below or to such other address as may be hereafter specified by written
notice by the Lender or the Borrower, and shall be considered given as of the
date of hand delivery, wire or facsimile transmission, as of the date specified
for delivery if by overnight courier service, or as of two (2) days after the
date of mailing, as the case may be:
If to the Lender:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
If to the Borrower:
The Majestic Companies, Ltd.
▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Majestic Transportation Products, Ltd.
▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Section 18. Governing Law. This Promissory Note shall be strictly
governed by and construed under the laws of the State of Maryland, and the
undersigned expressly acknowledges that this Promissory Note was executed and
delivered to the Lender within the geographic boundaries of the State of
Maryland. Jurisdiction and venue in the enforcement or interpretation of this
Promissory Note shall be appropriate in any court of competent jurisdiction in
the State of Maryland, or in the United States District Court for the District
of Maryland, if jurisdiction exists, and the undersigned expressly consents
thereto.
Section 19. Tense and Gender. As used herein, the term "Borrower"
includes the singular and the plural and refers to all genders.
Section 20. Binding Nature. This Promissory Note shall inure to the
benefit of and be enforceable by the Lender and the Lender's successors and
assigns and any other person to whom the Lender may grant an interest in the
Borrower's obligations to the Lender, and shall be binding and enforceable
against the Borrower and the Borrower's successors and assigns.
Section 21. Joint and Several Obligation. In the event there exists
more than one person described by the term "Borrower," the liabilities and
obligations of each such person hereunder shall be joint and several liabilities
and obligations.
Section 22. Invalidity of Any Part. If any provision or part of any
provision of this Promissory Note shall for any reason be held invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Promissory Note and this
Promissory Note shall be construed as if such invalid, illegal or unenforceable
provision or part hereof had never been contained herein, but only to the extent
of its invalidity, illegality or unenforceability.
IN WITNESS WHEREOF, the Borrower has executed this Promissory Note
under seal as of this 27 day of August, 1999, with the specific intention that
this Promissory Note constitute an instrument under seal.
WITNESS/ATTEST:
BORROWER:
THE MAJESTIC COMPANIES, LTD., a Delaware corporation
/s/▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President and
Chief Executive Officer
THE MAJESTIC COMPAMES, LTD.,
a Delaware corporation
/s/▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President and
Chief Executive Officer