Exhibit 10.42
LOAN AND SECURITY AGREEMENT
EQUINOX BUSINESS CREDIT CORP.,
as Lender
and
TITAN PCB EAST, INC.
as Borrower
Dated: May 9, 2003
TABLE OF CONTENTS
Page(s)
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1. (a)....................................................................................................1
(a) General Definitions...........................................................................1
(b) Accounting Terms.............................................................................12
(c) Other Terms..................................................................................12
(d) Rules of Construction........................................................................12
2. Revolving Credit Advances.............................................................................12
3. Repayment of the Revolving Credit Advances............................................................14
4. Procedure for Revolving Credit Advances...............................................................14
5. Interest and Fees.....................................................................................14
(a) Interest.....................................................................................14
(b) Fees.........................................................................................15
(i) Minimum Loan Fee....................................................................15
(ii) Closing Fee.........................................................................15
(iii) Service Fee.........................................................................15
(iv) Facility Fee........................................................................15
(v) Collateral Monitoring Fee...........................................................16
(vi) Default Loan Fee....................................................................16
(vii) Overadvance Fee.....................................................................16
(viii) Financial Information Default.......................................................16
(ix) Collateral Account Fee..............................................................16
6. Security Interest.....................................................................................16
7. Representations, Warranties and Covenants Concerning the Collateral...................................17
8. Collateral Accounts...................................................................................20
9. Collection and Maintenance of Collateral..............................................................21
10. Inspections...........................................................................................21
11. Financial Reporting...................................................................................21
12. Additional Representations, Warranties and Covenants..................................................23
13. Intentionally Omitted.................................................................................28
14. Further Assurances....................................................................................28
15. Power of Attorney.....................................................................................28
16. Term of Agreement.....................................................................................28
17. Termination of Lien...................................................................................29
18. Events of Default.....................................................................................29
19. Remedies..............................................................................................31
20. Waivers...............................................................................................32
21. Expenses..............................................................................................33
22. Assignment By Lender..................................................................................33
23. No Waiver; Cumulative Remedies........................................................................33
24. Application of Payments...............................................................................34
25. Indemnity.............................................................................................34
26. Revival...............................................................................................34
27. Notices...............................................................................................34
28. Governing Law, Jurisdiction and Waiver of Jury Trial..................................................35
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Page(s)
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29. Limitation of Liability...............................................................................36
30. Entire Understanding..................................................................................36
31. Severability..........................................................................................36
32. Captions..............................................................................................37
33. Counterparts; Telecopier Signatures...................................................................37
34. Construction..........................................................................................37
35. Publicity.............................................................................................37
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement is made as of May 9, 2003 by and
between EQUINOX BUSINESS CREDIT CORP., a New Jersey corporation ("Lender") and
TITAN PCB EAST, INC., a Delaware corporation ("Borrower").
BACKGROUND
Borrower has requested that Lender make loans and advances available to
Borrower; and
Lender has agreed to make such loans and advances to Borrower on the
terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings and the terms and conditions contained herein, the parties hereto
agree as follows:
1. (a) General Definitions. When used in this Agreement, the following
terms shall have the following meanings:
"Account Debtor" means any Person who is or may be obligated with
respect to, or on account of, an Account, Chattel Paper or General Intangibles
(including a Payment Intangible).
"Accountants" has the meaning given to such term in Section 11(a).
"Accounts" means all "accounts", as such term is defined in the
UCC, now owned or hereafter acquired by any Person, including: (a) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper or Instruments) (including
any such obligations that may be characterized as an account or contract right
under the UCC); (b) all of such Person's rights in, to and under all purchase
orders or receipts for goods or services; (c) all of such Person's rights to any
goods represented by any of the foregoing (including unpaid sellers' rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods); (d) all rights to payment due to such
Person for Goods or other property sold, leased, licensed, assigned or otherwise
disposed of, for a policy of insurance issued or to be issued, for a secondary
obligation incurred or to be incurred, for energy provided or to be provided,
for the use or hire of a vessel under a charter or other contract, arising out
of the use of a credit card or charge card, or for services rendered or to be
rendered by such Person or in connection with any other transaction (whether or
not yet earned by performance on the part of such Person); (e) all Health Care
Insurance Receivables; and (f) all collateral security of any kind given by any
Account Debtor or any other Person with respect to any of the foregoing.
"Accounts Availability" means the amount of Revolving Credit
Advances against Eligible Accounts Lender may from time to time make available
to Borrower up to seventy percent (70%) of the net face amount of Borrower's
Eligible Accounts.
"Affiliate" of any Person means (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (i) to vote five
percent (5.00%) or more of the securities having ordinary voting power for the
election of directors of such Person, or (ii) to direct or cause the direction
of the management and policies of such Person whether by contract or otherwise.
"Amortizing Availability" means the lesser of (i) $441,330 less
$12,259.17 per month commencing June 1, 2003 and on the first day of each month
thereafter, subject to adjustment as provided in Section 7(q) and (ii)
commencing July 9, 2003, the amount of Accounts Availability.
"Ancillary Agreements" means the Note, the Letter of Credit
Supplement, each Guaranty Agreement, each Validity Agreement, each Guaranty
Security Agreement, each Mortgage, each Subordination Agreement, and all other
agreements, instruments, documents, mortgages, pledges, powers of attorney,
consents, assignments, contracts, notices, security agreements, trust agreements
and guarantees whether heretofore, concurrently, or hereafter executed by or on
behalf of Borrower or any other Person or delivered to Lender, relating to this
Agreement or to the transactions contemplated by this Agreement.
"Applicable Percentage" means (i) three percent (3%) from the Closing
Date through May 8, 2004, (ii) two percent (2%) from May 9, 2004 through May 8,
2005 and (iii) one percent (1%) from May 9, 2005 and thereafter.
"Books and Records" means all books, records, board minutes,
contracts, licenses, insurance policies, environmental audits, business plans,
files, computer files, computer discs and other data and software storage and
media devices, accounting books and records, financial statements (actual and
pro forma), filings with Governmental Authorities and any and all records and
instruments relating to the Collateral or otherwise necessary or helpful in the
collection thereof or the realization thereupon.
"Borrowing Base Certificate" means a certificate in the form of
Exhibit A.
"Business Day" means a day on which Lender is open for business
and that is not a Saturday, a Sunday or other day on which banks are required or
permitted to be closed in the State of New Jersey or the State of Massachusetts.
"Change of Control" means, with respect to any Person on or after
the Closing Date, that any change in the composition of such Person's
stockholders as of the Closing Date shall occur which would result in any
stockholder or group acquiring 49.9% or more of any class of Stock of such
Person, or that any Person (or group of Persons acting in concert) shall
otherwise acquire, directly or indirectly (including through Affiliates), the
power to elect a majority of the board of directors of such Person or otherwise
direct the management or affairs of such Person by obtaining proxies, entering
into voting agreements or trusts, acquiring securities or otherwise.
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"Chattel Paper" means all "chattel paper," as such term is defined in
the UCC, including electronic chattel paper, now owned or hereafter acquired by
any Person.
"Closing Date" means May 9, 2003 or such other date as may be agreed
upon by the parties hereto.
"Collateral" means all of Borrower's property and assets, whether real
or personal, tangible or intangible, and whether now owned or hereafter
acquired, or in which it now has or at any time in the future may acquire any
right, title or interest including all of the following property in which it now
has or at any time in the future may acquire any right, title or interest:
(i) all Inventory;
(ii) all Equipment;
(iii) all Fixtures;
(iv) all General Intangibles; (v) all Accounts;
(vi) all Deposit Accounts, other bank accounts and all funds
on deposit therein;
(vii) all Investment Property;
(viii) all Stock;
(ix) all Chattel Paper;
(x) all Letter-of-Credit Rights;
(xi) all Instruments;
(xii) all commercial tort claims set forth on Exhibit 1(A);
(xiii) all Books and Records;
(xiv) all Supporting Obligations including letters of credit and
guarantees issued in support of Accounts, Chattel Paper, General Intangibles and
Investment Property;
(xv) (i) all money, cash and cash equivalents and (ii) all cash
held as cash collateral to the extent not otherwise constituting Collateral, all
other cash or property at any time on deposit with or held by Lender for the
account of Borrower (whether for safekeeping, custody, pledge, transmission or
otherwise); and
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(xvi) all products and Proceeds of all or any of the foregoing,
tort claims and all claims and other rights to payment including insurance
claims against third parties for loss of, damage to, or destruction of, and (ii)
payments due or to become due under leases, rentals and hires of any or all of
the foregoing and Proceeds payable under, or unearned premiums with respect to
policies of insurance in whatever form.
"Collateral Account" means an account in Lender's name under the
dominion and control of Lender maintained at a financial institution acceptable
to Lender into which all cash, checks, notes, drafts and other similar items
relating to or constituting Proceeds of or payments made in respect of any
Collateral shall be deposited.
"Contract Rate" means an interest rate per annum equal to the greater
of (A) eight and one half percent (8.50%) or (B) the sum of (i) the Prime Rate
plus (ii) three and one half percent (3.50%).
"Default" means any act or event which, with the giving of notice or
passage of time or both, would constitute an Event of Default.
"Default Rate" means (a) as long as the average closing daily unpaid
balance of all Loans during any calendar month is equal to or exceeds the
Minimum Default Average Monthly Loan Amount, five percentage points (5.00%) per
annum above the applicable Contract Rate and Letter of Credit Fee and (b) as
long as the average closing daily unpaid balance of all Loans during any
calendar month is less than the Minimum Default Average Monthly Loan Amount,
seven percentage points (7.00%) per annum above the applicable Contract Rate and
Letter of Credit Fee.
"Deposit Accounts" means all "deposit accounts" as such term is defined
in the UCC, now or hereafter held in the name of any Person.
"Documents" means all "documents", as such term is defined in the UCC,
now owned or hereafter acquired by any Person, wherever located, including all
bills of lading, dock warrants, dock receipts, warehouse receipts, and other
documents of title, whether negotiable or non-negotiable.
"Eligible Accounts" means and includes each Account of Borrower which
conforms to the following criteria: (a) shipment of the merchandise or the
rendition of services has been completed; (b) no return, rejection or
repossession of the merchandise has occurred; (c) merchandise or services shall
not have been rejected or disputed by the Account Debtor and there shall not
have been asserted any offset, defense or counterclaim; (d) continues to be in
full conformity with the representations and warranties made by Borrower to
Lender with respect thereto; (e) Lender is, and continues to be, satisfied with
the credit standing of the Account Debtor in relation to the amount of credit
extended; (f) there are no facts existing or threatened which are likely to
result in any adverse change in an Account Debtor's financial condition; (g) is
documented by an invoice acceptable to Lender in its reasonable business
judgment and shall not be unpaid more than 90 days from invoice date; (h) less
than twenty five percent (25%) of the unpaid amount of invoices due from such
Account Debtor remain unpaid more than 90 days from invoice date; (i) is not
evidenced by chattel paper or an instrument of any kind with
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respect to or in payment of the Account unless such instrument is duly endorsed
to and in possession of Lender or represents a check in payment of a Account;
(j) if the Account Debtor is located outside of the United States, the goods
which gave rise to such Account were shipped after receipt by Borrower from or
on behalf of the Account Debtor of an irrevocable letter of credit, assigned and
delivered to Lender and confirmed by a financial institution acceptable to
Lender and is in form and substance acceptable to Lender, payable in the full
amount of the Account in United States dollars at a place of payment located
within the United States; (k) Lender has a first priority perfected Lien in such
Account and such Account is not subject to any other Lien other than Permitted
Liens; (l) does not arise out of transactions with any employee, officer, agent,
director, stockholder or Affiliate of Borrower; (m) is payable to Borrower; (n)
does not arise out of a ▇▇▇▇ and hold sale prior to shipment and, if the Account
arises out of a sale to any Person to which Borrower is indebted, the amount of
such indebtedness, and any anticipated indebtedness, is deducted in determining
the face amount of such Account; (o) is net of any returns, discounts, claims,
credits and allowances; (p) if the Account arises out of contracts between
Borrower and the United States, any state, or any department, agency or
instrumentality of any of them, Borrower has so notified Lender, in writing,
prior to the creation of such Account, and, if Lender so requests, there has
been compliance with any governmental notice or approval requirements, including
compliance with the Federal Assignment of Claims Act; (q) is a good and valid
account representing an undisputed bona fide indebtedness incurred by the
Account Debtor therein named, for a fixed sum as set forth in the invoice
relating thereto with respect to an unconditional sale and delivery upon the
stated terms of goods sold by Borrower, or work, labor and/or services rendered
by Borrower; (r) the total unpaid Accounts from such Account Debtor does not
exceed twenty percent (20%) of all Eligible Accounts; (s) does not arise out of
progress ▇▇▇▇▇▇▇▇ prior to completion of the order; (t) Borrower's right to
payment is absolute and not contingent upon the fulfillment of any condition
whatsoever; (u) Borrower is able to bring suit and enforce its remedies against
the Account Debtor through judicial process; (v) does not represent interest
payments, late or finance charges or service charges owing to Borrower; and (w)
is otherwise satisfactory to Lender as determined in good faith by Lender in the
reasonable exercise of its discretion.
"Environmental Complaint" shall have the meaning given to such
term in Section 12(f)(iv).
"Equipment" means all "equipment" as such term is defined in
the UCC, now owned or hereafter acquired by any Person, wherever located,
including any and all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles and other tangible personal property (other than
Inventory) of every kind and description that may be now or hereafter used in
such Person's operations or that are owned by such Person or in which such
Person may have an interest, and all parts, accessories and accessions thereto
and substitutions and replacements therefor.
"ERISA" shall have the meaning given to such term in Section
12(g).
"Event of Default" means the occurrence of any of the events
set forth in Section 18.
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"Fixtures" means all "fixtures" as such term is defined in the
UCC, now owned or hereafter acquired by any Person.
"Formula Amount" shall have the meaning given to such term in
Section 2(a).
"GAAP" means generally accepted accounting principles,
practices and procedures in effect from time to time in the United States of
America.
"General Intangibles" means all "general intangibles" as such
term is defined in the UCC, now owned or hereafter acquired by any person
including all right, title and interest that such Person may now or hereafter
have in or under any contract, all Payment Intangibles, customer lists,
Licenses, Intellectual Property, interests in partnerships, joint ventures and
other business associations, permits, proprietary or confidential information,
inventions (whether or not patented or patentable), technical information,
procedures, designs, knowledge, know-how, Software, data bases, data, skill,
expertise, experience, processes, models, drawings, materials, Books and
Records, Goodwill (including the Goodwill associated with any Intellectual
Property), all rights and claims in or under insurance policies (including
insurance for fire, damage, loss, and casualty, whether covering personal
property, real property, tangible rights or intangible rights, all liability,
life, key-person, and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit accounts, rights
to receive tax refunds and other payments, rights to received dividends,
distributions, cash, Instruments and other property in respect of or in exchange
for pledged Stock and Investment Property, and rights of indemnification.
"Goods" means all "goods", as such term is defined in the UCC,
now owned or hereafter acquired by any Person, wherever located, including
embedded software to the extent included in "goods" as defined in the UCC,
manufactured homes, standing timber that is cut and removed for sale and unborn
young of animals.
"Goodwill" means all goodwill, trade secrets, proprietary or
confidential information, technical information, procedures, formulae, quality
control standards, designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter acquired by any Person.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guarantor" means any Person who may guarantee payment or
performance of the whole or any part of the Obligations and "Guarantors" means
collectively all such Persons.
"Guarantor Security Agreements" means collectively, all
security agreements, mortgages, cash collateral deposit letters, pledges, and
other agreements which are executed by any Guarantor in favor of Lender.
"Guaranty Agreements" means collectively, the Guaranty
Agreements which are executed by each Guarantor in favor of Lender.
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"Hazardous Discharge" shall have the meaning given to such
term in Section 12(f)(iv).
"Health Care Insurance Receivables" means all
"health-care-insurance receivables" as such term is defined in the UCC, now
owned or hereafter acquired by any Person including an interest in or claim
under a policy of insurance which is a right to payment of a monetary obligation
for health-care good or services provided.
"Indemnified Person" shall have the meaning given to such term
in Section 25.
"Instruments" means all "instruments", as such term is defined
in the UCC, now owned or hereafter acquired by any Person, wherever located,
including all certificated securities and all promissory notes and other
evidences of indebtedness, other than instruments that constitute, or are a part
of a group of writings that constitute, Chattel Paper.
"Intellectual Property" means any and all Licenses, patents,
patent registrations, copyrights, copyright registrations, trademarks, trademark
registrations, trade secrets and customer lists.
"Intercreditor Agreement" means collectively, any
intercreditor and subordination agreement accepted by Lender from time to time.
"Inventory" means all "inventory", as such term is defined in
the UCC, now owned or hereafter acquired by any Person, wherever located,
including all inventory, merchandise, goods and other personal property that are
held by or on behalf of such Person for sale or lease or are furnished or are to
be furnished under a contract of service or that constitute raw materials, work
in process, finished goods, returned goods, or materials or supplies of any
kind, nature or description used or consumed or to be used or consumed in such
Person's business or in the processing, production, packaging, promotion,
delivery or shipping of the same, including all supplies and embedded software.
"Investment Property" means all "investment property", as such
term is defined in the UCC, now owned or hereafter acquired by any Person,
wherever located.
"Letters of Credit" means any and all documentary or standby
letters of credit and guarantees by Lender of letters of credit opened or caused
to be opened by Lender for Borrower's account and any drafts and acceptances
thereunder.
"Letter of Credit Fee" has the meaning given to such term in
the Letter of Credit Supplement.
"Letter of Credit Obligations" means all outstanding
obligations incurred by Lender, whether direct or indirect, contingent or
otherwise, due or not due in connection with the issuance or guarantee by Lender
of Letters of Credit or Letters of Guaranty.
"Letter of Credit Supplement" means the Supplement Letter of
Credit Security Agreement between Borrower and Lender.
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"Letters of Guaranty" means all letters of guarantee entered
into by Lender for Borrowers account.
"Letter-of-Credit Rights" means "letter-of-credit rights" as
such term is defined in the UCC, now owned or hereafter acquired by any Person,
including rights to payment or performance under a letter of credit, whether or
not such Person, as beneficiary, has demanded or is entitled to demand payment
or performance.
"License" means any rights under any written agreement now or
hereafter acquired by any Person to use any trademark, trademark registration,
copyright, copyright registration or invention for which a patent is in
existence or other license of rights or interests now held or hereafter acquired
by any Person.
"Lien" means any mortgage, security deed, deed of trust,
pledge, hypothecation, assignment, security interest, lien (whether statutory or
otherwise), charge, claim or encumbrance, or preference, priority or other
security agreement or preferential arrangement held or asserted in respect of
any asset of any kind or nature whatsoever including any conditional sale or
other title retention agreement, any lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement under the UCC or comparable law of any
jurisdiction.
"Loans" means the Revolving Credit Advances and all extensions
of credit hereunder or under any Ancillary Agreement, including Letter of Credit
Obligations.
"Material Adverse Effect" means a material adverse effect on
(a) the condition, operations, assets, business or prospects of Borrower, (b)
Borrower's ability to pay or perform the Obligations in accordance with the
terms hereof or any Ancillary Agreement, (c) the value of the Collateral, the
Liens on the Collateral or the priority of any such Lien or (d) the practical
realization of the benefits of Lender's rights and remedies under this Agreement
and the Ancillary Agreements.
"Maximum Legal Rate" shall have the meaning given to such term
in Section 5(a)(iv).
"Maximum Revolving Amount" means $1,200,000.
"Minimum Average Monthly Loan Amount" means (a) for the period
commencing on the Closing Date and ending on July 8, 2003, $600,000 and (b) at
all other times, $900,000.
"Minimum Default Average Monthly Loan Amount" means $450,000.
"Mortgage" means collectively, any mortgage or deed of trust
which is executed in favor of Lender to secure the Obligations.
"Note" means the promissory note of Borrower executed in favor
of Lender substantially in the form of Exhibit B.
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"Obligations" means all Loans, all advances, debts,
liabilities, obligations, covenants and duties owing by Borrower to Lender (or
any corporation that directly or indirectly controls or is controlled by or is
under common control with Lender) of every kind and description (whether or not
evidenced by any note or other instrument and whether or not for the payment of
money or the performance or non-performance of any act), direct or indirect,
absolute or contingent, due or to become due, contractual or tortious,
liquidated or unliquidated, whether existing by operation of law or otherwise
now existing or hereafter arising including any debt, liability or obligation
owing from Borrower to others which Lender may have obtained by assignment or
otherwise and further including all interest (including interest accruing at the
then applicable rate provided in this Agreement after the maturity of the Loans
and interest accruing at the then applicable rate provided in this Agreement
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding), charges or
any other payments Borrower is required to make by law or otherwise arising
under or as a result of this Agreement and the Ancillary Agreements, together
with all reasonable expenses and reasonable attorneys' fees chargeable to
Borrower's account or incurred by Lender in connection with Borrower's account
whether provided for herein or in any Ancillary Agreement.
"Payment Intangibles" means all "payment intangibles" as such
term is defined in the UCC, now owned or hereafter acquired by any Person,
including, a General Intangible under which the Account Debtor's principal
obligation is a monetary obligation.
"Permitted Liens" means (a) Liens of carriers, warehousemen,
artisans, bailees, mechanics and materialmen incurred in the ordinary course of
business securing sums not overdue; (b) Liens incurred in the ordinary course of
business in connection with workmen's compensation, unemployment insurance or
other forms of governmental insurance or benefits, relating to employees,
securing sums (i) not overdue or (ii) being diligently contested in good faith
provided that adequate reserves with respect thereto are maintained on the books
of Borrower in conformity with GAAP; (c) Liens in favor of Lender; (d) Liens for
taxes (i) not yet due or (ii) being diligently contested in good faith by
appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of Borrower in conformity with GAAP; provided, that,
the Lien shall have no effect on the priority of Liens in favor of Lender or the
value of the assets in which Lender has a Lien; (e) Purchase Money Liens
securing Purchase Money Indebtedness to the extent permitted in this Agreement
and (f) Liens specified on Exhibit 1(B) hereto.
"Person" means any individual, sole proprietorship,
partnership, limited liability partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, institution,
public benefit corporation, entity or government (whether federal, state,
county, city, municipal or otherwise, including any instrumentality, division,
agency, body or department thereof), and shall include such Person's successors
and assigns.
"Prime Rate" means the "prime rate" which is normally
published in the "Money Rates" of The Wall Street Journal (Eastern Edition, New
York Metro); provided, however, if the Money Rates Column of The Wall Street
Journal (Eastern Edition, New York Metro) ceases to be published or otherwise
does not designate a "prime rate" as of a Business Day, Lender shall have the
right to obtain such information from a similar business publication of its
selection.
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The Prime Rate shall be increased or decreased as the case may be for each
increase or decrease in the Prime Rate in an amount equal to such increase or
decrease in the Prime Rate; each change to be effective as of the day of the
change in such rate.
"Proceeds" means "proceeds", as such term is defined in the
UCC and, in any event, shall include: (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to Borrower or any other Person from
time to time with respect to any Collateral; (b) any and all payments (in any
form whatsoever) made or due and payable to Borrower from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of any Collateral by any governmental body, governmental authority,
bureau or agency (or any person acting under color of governmental authority);
(c) any claim of Borrower against third parties (i) for past, present or future
infringement of any Intellectual Property or (ii) for past, present or future
infringement or dilution of any trademark or trademark license or for injury to
the goodwill associated with any trademark, trademark registration or trademark
licensed under any trademark License; (d) any recoveries by Borrower against
third parties with respect to any litigation or dispute concerning any
Collateral, including claims arising out of the loss or nonconformity of,
interference with the use of, defects in, or infringement of rights in, or
damage to, Collateral; (e) all amounts collected on, or distributed on account
of, other Collateral, including dividends, interest, distributions and
Instruments with respect to Investment Property and pledged Stock; and (f) any
and all other amounts, rights to payment or other property acquired upon the
sale, lease, license, exchange or other disposition of Collateral and all rights
arising out of Collateral.
"Projections" means the projected balance sheets, statements
of income and cash flow for Borrower and its Subsidiaries by month for the next
fiscal year prepared in a manner consistent with GAAP and accompanied by senior
management's discussion and analysis of such plan.
"Purchase Money Indebtedness" means (a) any indebtedness
incurred for the payment of all or any part of the purchase price of any fixed
asset, (b) any indebtedness incurred for the sole purpose of financing or
refinancing all or any part of the purchase price of any fixed asset, and (c)
any renewals, extensions or refinancings thereof (but not any increases in the
principal amounts thereof outstanding at that time).
"Purchase Money Lien" means any Lien upon any fixed assets
that secures the Purchase Money Indebtedness related thereto but only if such
Lien shall at all times be confined solely to the asset the purchase price of
which was financed or refinanced through the incurrence of the Purchase Money
Indebtedness secured by such Lien and only if such Lien secures only such
Purchase Money Indebtedness.
"Revolving Credit Advances" shall have the meaning given to
such term in Section 2(a).
"Software" means all "software" as such term is defined in the
UCC, now owned or hereafter acquired by any Person, including all computer
programs and all supporting information provided in connection with a
transaction related to any program.
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"Stock" means all certificated and uncertificated shares,
options, warrants, membership interests, general or limited partnership
interests, participation or other equivalents (regardless of how designated) of
or in a corporation, partnership, limited liability company or equivalent entity
whether voting or nonvoting, including common stock, preferred stock, or any
other "equity security" (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934).
"Subordinated Debt" means any note, document, instrument or
agreement now or any time hereafter executed and/or delivered by Borrower with
or in favor of any Subordinated Lender which evidences the principal, interest
and other amounts owed by Borrower to such Subordinated Lender.
"Subordinated Lender" means collectively, Ventures-National
Incorporated and any other Person who enters into a Subordination Agreement with
Lender with respect to amounts owed by Borrower to such Subordinated Lender.
"Subordination Agreement" means collectively, the
Subordination Agreement executed by the applicable Subordinated Lender and
acknowledged by Borrower, and any and all other subordination agreements
accepted by Lender from time to time with respect to indebtedness of Borrower.
"Subsidiary" of any Person means a corporation or other entity
whose shares of stock or other ownership interests having ordinary voting power
(other than stock or other ownership interests having such power only by reason
of the happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"Supporting Obligations" means all "supporting obligations" as
such term is defined in the UCC, including letters of credit and guaranties
issued in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments, or Investment Property.
"Term" means the Closing Date through the Termination Date
subject to acceleration upon the occurrence of an Event of Default hereunder or
other termination hereunder.
"Termination Date" means May 9,2006.
"UCC" means the Uniform Commercial Code as the same may, from
time be in effect in the State of New Jersey; provided, that in the event that,
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of, or remedies with respect to, Lender's Lien on any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New Jersey, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions of this Agreement relating to such attachment, perfection,
priority or remedies and for purposes of definitions related to such provisions;
provided further, that to the extent that UCC is used to define any term herein
or in any Ancillary Agreement and such term is defined differently in different
Articles or Divisions of the UCC, the definition of such term contained in
Article or Division 9 shall govern.
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"Validity Agreements" means the Validity Guaranty Agreements
executed by each Validity Guarantor in favor of Lender.
"Validity Guarantor" means ▇▇▇▇▇▇ ▇. ▇▇▇▇ and any other Person
who may hereafter execute a Validity Agreement and "Validity Guarantors" means
collectively all such Persons.
(b) Accounting Terms. Any accounting terms used in this
Agreement which are not specifically defined shall have the meanings customarily
given them in accordance with GAAP and all financial computations shall be
computed, unless specifically provided herein, in accordance with GAAP
consistently applied.
(c) Other Terms. All other terms used in this Agreement and
defined in the UCC, shall have the meaning given therein unless otherwise
defined herein.
(d) Rules of Construction. All Schedules, Addenda and Exhibits
hereto or expressly identified to this Agreement are incorporated herein by
reference and taken together with this Agreement constitute but a single
agreement. The words "herein", hereof" and "hereunder" or other words of similar
import refer to this Agreement as a whole, including the Exhibits and Schedules
thereto, as the same may be from time to time amended, modified, restated or
supplemented, and not to any particular section, subsection or clause contained
in this Agreement. Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter. The term "or" is not
exclusive. The term "including" (or any form thereof) shall not be limiting or
exclusive. All references to statutes and related regulations shall include any
amendments of same and any successor statutes and regulations. All references in
this Agreement or in the Schedules to this Agreement to sections, schedules,
disclosure schedules, exhibits, and attachments shall refer to the corresponding
sections, schedules, disclosure schedules, exhibits, and attachments of or to
this Agreement. All references to any instruments or agreements, including
references to any of this Agreement or the Ancillary Agreements shall include
any and all modifications or amendments thereto and any and all extensions or
renewals thereof.
2. Revolving Credit Advances.
(a) Subject to the terms and conditions set forth herein and in the
Ancillary Agreements, Lender may, in its sole discretion, make revolving credit
advances (the "Revolving Credit Advances") to Borrower from time to time during
the Term which, in the aggregate at any time outstanding together with all
outstanding Letter of Credit Obligations, will not exceed the lesser of (x) the
Maximum Revolving Amount or (y) an amount equal to the sum of:
(i) Accounts Availability, plus
(ii) Amortizing Availability, minus
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(iii) such reserves as Lender may reasonably deem proper and
necessary from time to time, including the outstanding amount of Letter of
Credit Obligations.
The amount derived at any time from Section 2(a)(y)(i), plus
(ii), minus (iii) shall be referred to as the "Formula Amount".
(b) Notwithstanding the limitations set forth above, Lender
retains the right to lend Borrower from time to time such amounts in excess of
such limitations as Lender may determine in its sole discretion.
(c) Borrower acknowledges that the exercise of Lender's
discretionary rights hereunder may result during the term of this Agreement in
one or more increases or decreases in the advance percentages used in
determining Accounts Availability and Amortizing Availability, and Borrower
hereby consents to any such increases or decreases which may limit or restrict
advances requested by Borrower.
(d) If Borrower does not pay any interest, fees, costs or
charges to Lender when due, Borrower shall thereby be deemed to have requested,
and Lender is hereby authorized at its discretion to make and charge to
Borrower's account, a Revolving Credit Advance to Borrower as of such date in an
amount equal to such unpaid interest, fees, costs or charges.
(e) If Borrower at any time fails to perform or observe any of
the covenants contained in this Agreement or any Ancillary Agreement, Lender
may, but need not, perform or observe such covenant on behalf and in the name,
place and stead of Borrower (or, at Lender's option, in Lender's name) and may,
but need not, take any and all other actions which Lender may deem necessary to
cure or correct such failure (including the payment of taxes, the satisfaction
of Liens, the performance of obligations owed to Account Debtors, lessors or
other obligors, the procurement and maintenance of insurance, the execution of
assignments, security agreements and financing statements, and the endorsement
of instruments). The amount of all monies expended and all costs and expenses
(including attorneys' fees and legal expenses) incurred by Lender in connection
with or as a result of the performance or observance of such agreements or the
taking of such action by Lender shall be charged to Borrower's account as a
Revolving Credit Advance and added to the Obligations. To facilitate Lender's
performance or observance of such covenants of Borrower in the event that
Borrower fails to do so, Borrower hereby irrevocably appoints Lender, or
Lender's delegate, acting alone, as Borrower's attorney in fact (which
appointment is coupled with an interest) with the right (but not the duty) from
time to time to create, prepare, complete, execute, deliver, endorse or file in
the name and on behalf of Borrower any and all instruments, documents,
assignments, security agreements, financing statements, applications for
insurance and other agreements and writings required to be obtained, executed
delivered or endorsed by Borrower. Lender shall promptly notify Borrower
following the exercise by Lender of any action taken by Lender pursuant to the
power of attorney granted to Lender by Borrower in the immediately preceding
sentence; provided, however, the failure by Lender to provide such notice shall
not limit Lender's rights under this Agreement or the Ancillary Agreements or
result in any liability to Lender.
(f) Lender will account to Borrower monthly with a statement
of all Loans and other advances, charges and payments made pursuant to this
Agreement, and such account
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rendered by Lender shall be deemed final, binding and conclusive unless Lender
is notified by Borrower in writing to the contrary within thirty (30) days of
the date each account was rendered specifying the item or items to which
objection is made.
(g) During the Term, Borrower may borrow, prepay and reborrow
Revolving Credit Advances, all in accordance with the terms and conditions
hereof.
(h) Notwithstanding anything to the contrary contained in this
Agreement Lender shall not incur Letter of Credit Obligations unless Lender and
Borrower shall have entered into a Letter of Credit Supplement.
3. Repayment of the Revolving Credit Advances. Borrower shall be
required to (a) make a mandatory prepayment hereunder at any time that the
aggregate outstanding principal balance of the Revolving Credit Advances made by
Lender to Borrower hereunder is in excess of the Formula Amount, in an amount
equal to such excess, and (b) repay on the expiration of the Term (i) the then
aggregate outstanding principal balance of Revolving Credit Advances made by
Lender to Borrower hereunder together with accrued and unpaid interest, fees and
charges and (ii) all other amounts owed Lender under this Agreement and the
Ancillary Agreements. Any payments of principal, interest, fees or any other
amounts payable hereunder or under any Ancillary Agreement shall be made prior
to 11:00 a.m. (New York time) on the due date thereof in immediately available
funds.
4. Procedure for Revolving Credit Advances. Borrower may by written or
telephonic notice request a borrowing of Revolving Credit Advances prior to
10:00 a.m. (New York time) on the Business Day of its request to incur, on that
day, a Revolving Credit Advance. All Revolving Credit Advances shall be
disbursed from whichever office or other place Lender may designate from time to
time and, together with any and all other Obligations of Borrower to Lender,
shall be charged to Borrower's account on Lender's books. The proceeds of each
Revolving Credit Advance made by Lender shall be made available to Borrower on
the Business Day so requested by way of credit to Borrower's operating account
maintained with such bank as Borrower designated to Lender. Any and all
Obligations due and owing hereunder may be charged to Borrower's account and
shall constitute Revolving Credit Advances.
5. Interest and Fees.
(a) Interest.
(i) Except as modified by Section 5(a)(iii) below, Borrower
shall pay interest on the unpaid principal balance of the Loans for each day
they are outstanding at the Contract Rate.
(ii) Interest and fees shall be computed on the basis of
actual days elapsed in a year of 360 days. Interest shall be payable in arrears
on the last day of each month and upon termination of this Agreement, or, at
Lender's option, Lender may charge Borrower's account for said interest.
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(iii) Effective upon the occurrence of any Event of Default
and for so long as any Event of Default shall be continuing, the Contract Rate
and the Letter of Credit Fee shall automatically be increased by the applicable
Default Rate, and all outstanding Obligations, including unpaid interest and
Letter of Credit Fees, shall continue to accrue interest from the date of such
Event of Default at the applicable Default Rate.
(iv) Notwithstanding the foregoing, in no event shall the
aggregate interest exceed the maximum rate permitted under any applicable law or
regulation, as in effect from time to time (the "Maximum Legal Rate") and if any
provision of this Agreement or Ancillary Agreement is in contravention of any
such law or regulation, interest payable under this Agreement and each Ancillary
Agreement shall be computed on the basis of the Maximum Legal Rate (so that such
interest will not exceed the Maximum Legal Rate) and once the amount of interest
payable hereunder or under the Ancillary Agreements is less than the Maximum
Legal Rate, Lender shall not reduce interest payable hereunder or any Ancillary
Agreement below the amount computed based upon the Maximum Legal Rate until the
aggregate amount of interest paid equals the amount of interest which would have
been payable if the Maximum Legal Rate had not been imposed.
(v) Borrower shall pay principal, interest and all other
amounts payable hereunder, or under any Ancillary Agreement, without any
deduction whatsoever, including any deduction for any set-off or counterclaim.
(b) Fees.
(i) Minimum Loan Fee. In the event the average closing daily
unpaid balances of all Loans hereunder during any calendar month is less than
the Minimum Average Monthly Loan Amount, Borrower shall pay to Lender a minimum
loan fee at a rate per annum equal to the Contract Rate on the amount by which
the Minimum Average Monthly Loan Amount exceeds such average closing daily
unpaid balances. Such fee shall be charged to Borrower's account on the first
day of each month with respect to the prior month.
(ii) Closing Fee. Upon execution of this Agreement by Borrower
and Lender, Borrower shall pay to Lender a closing fee in an amount equal to one
and three quarters of one percent (1.75%) of the Maximum Revolving Amount. The
closing fee shall be deemed earned as of the Closing Date and shall not be
subject to rebate or proration for any reason.
(iii) Service Fee. Borrower shall pay Lender, in arrears, on
the first Business Day of each month which occurs prior to the Termination Date
and on the Termination Date, a service fee equal to one-quarter of one percent
(0.25%) of the average outstanding amount of Revolving Credit Advances during
such immediately preceding month or that portion of such month in which the
Termination Date occurs in the event the Termination Date occurs prior to the
end of a month.
(iv) Facility Fee. Borrower hereby agrees to pay Lender a
facility fee in an amount equal to one percent (1.00%) of the Maximum Revolving
Amount for each anniversary of the Closing Date which occurs prior to the
Termination Date. The facility fee for the period ending on the Termination Date
shall be deemed fully earned on the Closing Date and shall be payable by a
charge to Borrower's account upon the earlier of each anniversary of the Closing
Date or the termination of this Agreement for any reason.
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(v) Collateral Monitoring Fee. Upon Lender's performance of
any collateral monitoring and/or verification including any field examination,
collateral analysis or other business analysis, the need for which is to be
determined by Lender and which monitoring is undertaken by Lender or for
Lender's benefit, an amount equal to the established rate by Lender from time to
time (which rate on the Closing Date is $850 per person per day), per person,
for each person employed to perform such monitoring together with all costs,
disbursements and expenses incurred by Lender and the person performing such
collateral monitoring and/or verification shall be charged to Borrower's
account.
(vi) Default Loan Fee. In the event that following the
occurrence of an Event of Default the average closing daily unpaid balance of
all Loans during any calendar month is less than the Minimum Default Average
Monthly Loan Amount, Borrower shall pay to Lender a fee equal to $1,000.00 for
each month or portion thereof that the average closing daily unpaid balance of
all Loans during any calendar month is less than the Minimum Default Average
Monthly Loan Amount. Such fee shall be charged to Borrower's account on the
first day of each month with respect to the prior month.
(vii) Overadvance Fee. Without affecting Borrower's obligation
to immediately repay any Loans which exceed the amounts permitted by Section 2
("Overadvances"), in the event an Overadvance occurs or is made by Lender,
Borrower shall pay interest on the unpaid balance of the Loans at the Default
Rate for as long as such Overadvance remains outstanding and shall pay Lender a
fee in the amount of $1,000.00 for each month or part thereof that an
Overadvance exists. Such fee shall be charged to Borrower's account upon the
occurrence of each Overadvance and on the first day of each month thereafter.
(viii) Financial Information Default. Without affecting Lender's other rights
and remedies, in the event Borrower fails to deliver the financial information
required by Section 11 on the date required by this Agreement, Borrower shall
pay Lender a fee in the amount of $100.00 per day for each such failure until
such failure is cured to Lender's satisfaction or waived in writing by Lender.
Such fee shall be charged to Borrower's account upon the occurrence of each such
failure.
(ix) Collateral Account Fee. Borrower agrees to pay to Lender
a fee in connection with the transfer of funds to the Collateral Account in the
amount of $250.00 per month. Such fee shall be charged to Borrower's account on
the Closing Date and on the first day of each month thereafter.
6. Security Interest.
(a) To secure the prompt payment to Lender of the Obligations,
Borrower hereby assigns, pledges and grants to Lender a continuing security
interest in and Lien upon all of the Collateral. All of Borrower's Books and
Records relating to the Collateral shall, until delivered to or removed by
Lender, be kept by Borrower in trust for Lender until all Obligations have been
paid in full. Each confirmatory assignment schedule or other form of assignment
hereafter executed by Borrower shall be deemed to include the foregoing grant,
whether or not the same appears therein.
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(b) As additional security for the payment and performance of
the Obligations, Borrower hereby assigns to Lender any and all monies (including
proceeds of insurance and refunds of unearned premiums) due or to become due
under, and all other rights of Borrower with respect to, any and all policies of
insurance now or at any time hereafter covering the Collateral or any evidence
thereof or any business records or valuable papers pertaining thereto, and
Borrower hereby directs the issuer of any such policy to pay all such monies
directly to Lender. At any time, whether or not a Default or Event of Default
then exists, Lender may (but need not), in Lender's name or in Borrower's name,
execute and deliver proof of claim, receive all such monies, endorse checks and
other instruments representing payment of such monies, and adjust, litigate,
compromise or release any claim against the issuer of any such policy.
(c) Borrower hereby (i) authorizes Lender to file any
financing statements, continuation statements or amendments thereto that (x)
indicate the Collateral (1) as all assets of Borrower (or any portion of
Borrower's assets) or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9
of the UCC of such jurisdiction, or (2) as being of an equal or lesser scope or
with greater detail, and (y) contain any other information required by Part 5 of
Article 9 of the UCC for the sufficiency or filing office acceptance of any
financing statement, continuation statement or amendment and (ii) ratifies its
authorization for Lender to have filed any initial financial statements, or
amendments thereto if filed prior to the date hereof. Borrower acknowledges that
it is not authorized to file any financing statement or amendment or termination
statement with respect to any financing statement without the prior written
consent of Lender and agrees that it will not do so without the prior written
consent of Lender, subject to Borrower's rights under Section 9-509(d)(2) of the
UCC.
(d) Borrower hereby grants to Lender an irrevocable,
non-exclusive license (exercisable upon the occurrence and during the
continuance of an Event of Default without payment of royalty or other
compensation to Borrower) to use, transfer, license or sublicense any
Intellectual Property now owned, licensed to, or hereafter acquired by Borrower,
and wherever the same may be located, and including in such license access to
all media in which any of the licensed items may be recorded or stored and to
all computer and automatic machinery software and programs used for the
compilation or printout thereof, and represents, promises and agrees that any
such license or sublicense is not and will not be in conflict with the
contractual or commercial rights of any third Person; provided, that such
license will terminate on the termination of this agreement and the payment in
full of all Obligations.
7. Representations, Warranties and Covenants Concerning the Collateral.
Borrower represents, warrants (each of which such representations and warranties
shall be deemed repeated upon the making of each request for a Revolving Credit
Advance and made as of the time of each and every Revolving Credit Advance
hereunder) and covenants as follows:
(a) All of the Collateral (i) is owned by Borrower free and
clear of all Liens (including any claims of infringement) except those in
Lender's favor and Permitted Liens and (ii) is not subject to any agreement
prohibiting the granting of a Lien or requiring notice of or consent to the
granting of a Lien.
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(b) Borrower shall not encumber, mortgage, pledge, assign or
grant any Lien in any Collateral or any of Borrower's other assets to anyone
other than Lender and except for Permitted Liens. (c) The Liens granted pursuant
to this Agreement, upon completion of the filings and other actions listed on
Exhibit 7(c) (which, in the case of all filings and other documents referred to
in said Exhibit, have been delivered to Lender in duly executed form) constitute
valid perfected security interests in all of the Collateral in favor of Lender
as security for the prompt and complete payment and performance of the
Obligations, enforceable in accordance with the terms hereof against any and all
creditors of and any purchasers from Borrower (other than purchasers of
Inventory in the ordinary course of business) and such security interests are
prior to all other Liens on the Collateral in existence on the date hereof
except for Permitted Liens that have priority by operation of law.
(d) No effective security agreement, mortgage, deed of trust,
financing statement, equivalent security or Lien instrument or continuation
statement covering all or any part of the Collateral is or will be on file or of
record in any public office, except those relating to Permitted Liens.
(e) Borrower shall not dispose of any of the Collateral
whether by sale, lease or otherwise except for (i) the sale of Inventory in the
ordinary course of business, and (ii) the disposition or transfer in the
ordinary course of business during any fiscal year of obsolete and worn-out
Equipment having an aggregate fair market value of not more than $25,000 and
only to the extent that (x) the proceeds of any such disposition are used to
acquire replacement Equipment which is subject to Lender's first priority
security interest or (y) the proceeds of which are remitted to Lender in
reduction of the Obligations.
(f) Borrower shall defend the right, title and interest of
Lender in and to the Collateral against the claims and demands of all Persons
whomsoever, and take such actions, including (i) all actions necessary to grant
Lender "control" of any Investment Property, Deposit Accounts, Letter-of-Credit
Rights or electronic Chattel Paper owned by Borrower, with any agreements
establishing control to be in form and substance satisfactory to Lender, (ii)
the prompt delivery to Lender of all original Instruments, Chattel Paper,
negotiable Documents and certificated Stock owned by Borrower (in each case,
accompanied by stock powers, allonges or other instruments of transfer executed
in blank), (iii) notification of Lender's interest in Collateral at Lender's
request, and (iv) the institution of litigation against third parties as shall
be prudent in order to protect and preserve Borrower's and Lender's respective
and several interests in the Collateral.
(g) Borrower shall promptly, and in any event within two (2)
Business Days after the same is acquired by it, notify Lender of any commercial
tort claim (as defined in the UCC) acquired by it and unless otherwise consented
by Lender, Borrower shall enter into a supplement to this Loan Agreement
granting to Lender a Lien in such commercial tort claim.
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(h) If Borrower retains possession of any Chattel Paper or
Instrument with Lender's consent, such Chattel Paper and Instruments shall be
marked with the following legend: "This writing and the obligations evidenced or
secured hereby are subject to the security interest of Equinox Business Credit
Corp."
(i) Borrower shall perform all other steps requested by Lender
to create and maintain in Lender's favor a valid perfected first Lien in all
Collateral subject only to Permitted Liens.
(j) As of the date of each Borrowing Base Certificate
delivered to Lender, each Account listed thereon as an Eligible Account shall be
an Eligible Account. Borrower shall notify Lender promptly and in any event
within two (2) Business Days after obtaining knowledge thereof (i) of any event
or circumstance that to Borrower's knowledge would cause Lender to consider any
then existing Account as no longer constituting an Eligible Account; (ii) of any
material delay in Borrower's performance of any of its obligations to any
Account Debtor; (iii) of any assertion by an Account Debtor of any material
claims, offsets or counterclaims; (iv) of any allowances, credits and/or monies
granted by Borrower to any Account Debtor; (v) of all material adverse
information relating to the financial condition of an Account Debtor; (vi) of
any material return of goods; and (vii) of any loss, damage or destruction of
any of the Collateral.
(k) All Accounts (i) represent complete bona fide transactions
which require no further act under any circumstances on Borrower's part to make
such Accounts payable by the Account Debtors, (ii) to the best of Borrower's
knowledge, are not subject to any present, future or contingent offsets or
counterclaims, and (iii) do not represent ▇▇▇▇ and hold sales, consignment
sales, guaranteed sales, sale or return or other similar understandings or
obligations of any Affiliate or Subsidiary of Borrower. Borrower has not made,
and will not make, any agreement with any Account Debtor for any extension of
time for the payment of any Account, any compromise or settlement for less than
the full amount thereof, any release of any Account Debtor from liability
therefor, or any deduction therefrom except a discount or allowance for prompt
or early payment allowed by Borrower in the ordinary course of its business
consistent with historical practice and as previously disclosed to Lender in
writing. Exhibit 7(l) sets forth each contract of Borrower with any Account
Debtor that gives such Account Debtor the right (under such contract, under
common law or otherwise) to offset any Accounts for Borrower's failure to
perform under such contract and Borrower has obtained an offset waiver for each
such contract in form and substance satisfactory to Lender.
(l) Borrower shall keep and maintain the Equipment in good
operating condition, except for ordinary wear and tear, and shall make all
necessary repairs and replacements thereof so that the value and operating
efficiency shall at all times be maintained and preserved. Borrower shall not
permit any such items to become a Fixture to real estate or accessions to other
personal property.
(m) All Inventory manufactured by Borrower in the United
States of America shall be produced in accordance with the requirements of the
Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations
and orders related thereto or promulgated thereunder.
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(n) Borrower shall maintain and keep all of Borrower's Books
and Records concerning the Collateral at Borrower's executive offices listed in
Exhibit 12(d).
(o) Borrower shall maintain and keep the Collateral at the
addresses listed in Exhibit 12(d), provided, that Borrower may change such
locations or open a new location provided, that Borrower provides Lender thirty
(30) days prior written notice of such change or new location and (ii) prior to
such change or opening of a new location it executes and delivers to Lender such
financing statements and other agreements as Lender may request, including
landlord agreements, mortgagee agreements and warehouse agreements, each in form
and substance satisfactory to Lender.
(p) Exhibit 7(p) lists all banks and other financial
institutions at which Borrower maintains deposits and/or other accounts, and
such Exhibit correctly identifies the name, address and telephone number of each
such depository, the name in which the account is held, a description of the
purpose of the account, and the complete account number. Borrower shall not
establish any depository or other bank account of any with any financial
institution (other than the accounts set forth on Exhibit 7(p) without Lender's
prior written consent.
(q) Upon Lender's request, which shall not be more than once
every calendar year (provided that such limitation shall not be effective during
the occurrence or continuance of any Default or Event of Default), Borrower
shall cause, at least annually, an appraisal to be performed by an appraiser
satisfactory to Lender, of its Equipment and Lender shall have the right in its
sole discretion based on such appraisal to decrease the amount of Amortizing
Availability to a sum not greater than sixty percent (60%) of the knockdown
liquidation value of the Equipment which is acceptable to Lender in its sole
discretion and on which Lender has a first priority perfected Lien, amortizable
at a rate to be determined by Lender.
8. Collateral Accounts.
(a) Borrower will irrevocably direct all present and future
Account Debtors and other Persons obligated to make payments constituting
Collateral to make such payments directly to the Collateral Account. All of
Borrower's invoices, account statements and other written or oral communications
directing, instructing, demanding or requesting payment of any Account of
Borrower or any other amount constituting Collateral shall conspicuously direct
that all payments be made to the Collateral Account and shall include the
address for the Collateral Account. If, notwithstanding the instructions to
Account Debtors to make payments to the Collateral Account, Borrower receives
any payments, Borrower shall deposit such payments into the Collateral Account.
Until so deposited, Borrower shall hold all such payments in trust for and as
the property of Lender and shall not commingle such payments with any of its
other funds or property. Commencing sixty (60) days after the Closing Date, to
the extent any Account Debtor does not make a payment directly to the Collateral
Account, Borrower shall pay Lender a fee equal to five percent (5%) of the
amount of such payment not so remitted to the Collateral Account with a minimum
fee of $25 per payment.
(b) All deposits in the Collateral Account shall constitute
Proceeds. Lender from time to time at may apply deposited funds in the
Collateral Account to the payment of the Obligations, in any order or manner of
application satisfactory to Lender.
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(c) All items deposited in the Collateral Account shall be
subject to final payment. If any such item is returned uncollected, Borrower
will immediately pay Lender, or, for items deposited in the Collateral Account,
the bank maintaining such account, the amount of that item, or such bank at its
discretion may charge any uncollected item to Borrower's commercial account or
other account at such bank. Borrower shall be liable as an endorser on all items
deposited in the Collateral Account, whether or not in fact endorsed by
Borrower.
9. Collection and Maintenance of Collateral.
(a) Lender may at any time verify Borrower's Accounts
utilizing an audit control company or any other agent of Lender. Lender or
Lender's designee may notify Account Debtors, at any time at Lender's sole
discretion, of Lender's security interest in Accounts, collect them directly and
charge the collection costs and expenses to Borrower's account, but, unless and
until Lender does so or gives Borrower other instructions, Borrower shall
collect all Accounts for Lender, receive all payments thereon for Lender's
benefit in trust as Lender's trustee and immediately deliver them to Lender in
their original form with all necessary endorsements or, as directed by Lender,
deposit such payments as directed by Lender pursuant to Section 8.
(b) For purposes of determining the balance of the Loans
outstanding, Lender will credit (conditional upon final collection) all such
payments to Borrower's account upon receipt by Lender of good funds in dollars
of the United States of America in Lender's account, provided, however, for
purposes of computing interest on the Obligations, Lender will credit
(conditional upon final collection) all such payments to Borrower's account in
the case of a payment in the form of federal funds or other immediately
available funds three (3) Business Days after receipt by Lender of such funds in
dollars of the United States of America in Lender's account and in the case of
payments in any other form five (5) Business Days after receipt by Lender of
good funds in dollars of the United States of America in Lender's account. Any
amount received by Lender after 11:00 a.m. (New York time) on any Business Day
shall be deemed received on the next Business Day.
10. Inspections. At all times during normal business hours and so long
as no Event of Default shall have occurred and be continuing upon reasonable
notice, Lender shall have the right to (a) have access to, visit, inspect,
review, evaluate and make physical verification and appraisals of Borrower's
properties and the Collateral, (b) inspect, audit and copy (or take originals if
necessary) and make extracts from Borrower's Books and Records, including
management letters prepared by independent accountants, and (c) discuss with
Borrower's principal officers, and independent accountants, Borrower's business,
assets, liabilities, financial condition, results of operations and business
prospects. Borrower will deliver to Lender any instrument necessary for Lender
to obtain records from any service bureau maintaining records for Borrower. If
any internally prepared financial information, including that required under
this paragraph is unsatisfactory in any manner to Lender, Lender may request
that the Accountant's review the same.
11. Financial Reporting. Borrower will deliver, or cause to be
delivered, to Lender each of the following, which shall be in form and detail
acceptable to Lender:
21
(a) As soon as available, and in any event within one hundred
and twenty (120) days after the end of each fiscal year of Borrower, Borrower's
audited financial statements with the unqualified opinion of independent
certified public accountants of recognized standing selected by Borrower and
acceptable to Lender (the "Accountants"), which annual financial statements
shall include Borrower's balance sheet as at the end of such fiscal year and the
related statements of Borrower's income, retained earnings and cash flows for
the fiscal year then ended, prepared, if Lender so requests, on a consolidating
and consolidated basis to include any Affiliates, all in reasonable detail and
prepared in accordance with GAAP, together with (i) copies of all management
letters prepared by such accountants; (ii) a report signed by the Accountants
stating that in making the investigations necessary for said opinion they
obtained no knowledge, except as specifically stated, of any Default or Event of
Default; and (iii) a certificate of Borrower's President or Chief Financial
Officer stating that such financial statements have been prepared in accordance
with GAAP and whether or not such officer has knowledge of the occurrence of any
Default or Event of Default hereunder and, if so, stating in reasonable detail
the facts with respect thereto;
(b) As soon as available, drafts of the financial statements
referred to in Section (a) above prepared by Borrower and/or the Accountants;
(c) As soon as available and in any event within forty five
(45) days after the end of each month, an unaudited/internal balance sheet and
statements of income, retained earnings and cash flows of Borrower as at the end
of and for such month and for the year to date period then ended, prepared, if
Lender so requests, on a consolidating and consolidated basis to include any
Affiliates, in reasonable detail and stating in comparative form the figures for
the corresponding date and periods in the previous year, all prepared in
accordance with GAAP, subject to year-end audit adjustments; and accompanied by
a certificate of Borrower's President or Chief Financial Officer, stating (i)
that such financial statements have been prepared in accordance with GAAP,
subject to year-end audit adjustments, and (ii) whether or not such officer has
knowledge of the occurrence of any Default or Event of Default hereunder not
theretofore reported and remedied and, if so, stating in reasonable detail the
facts with respect thereto;
(d) Within ten (10) days after the end of each month or more
frequently if Lender so requests, agings of Borrower's Accounts and its accounts
payable, a perpetual Inventory certification report, and a calculation of
Borrower's Accounts, Eligible Accounts, Inventory as at the end of such month or
shorter time period;
(e) At least thirty (30) days before the beginning of each
fiscal year of Borrower, the Projections, each in reasonable detail,
representing Borrower's good faith Projections and certified by Borrower's
President or Chief Financial Officer as being the most accurate Projections
available and identical to the Projections used by Borrower for internal
planning purposes, together with such supporting schedules and information as
Lender may in its discretion require;
(f) Together with each request for a Loan (but in no event
later than the first day of each week) and at such intervals as Lender may
request a Borrowing Base Certificate in the form of Exhibit A as of the last day
of the previous Borrowing Base Certificate detailing ineligible Accounts of
adjustment to the Formula Amount, certified as true and correct by the President
or Chief Financial Officer of Borrower;
22
(g) Together with each request for a Loan (but in no event
later than the first day of each week) and at such other intervals as Lender may
require: (i) copies of all entries to the sales journal and the cash receipt
journal; (ii) copies of all credit memos; and (iii) copies of all invoices in
excess of five thousand dollars ($5,000), together with proof of delivery, in
each case as and for the immediately preceding week;
(h) Promptly following Lender's request, receivable schedules,
copies of invoices to Account Debtors, shipping documents, delivery receipts and
such other material, reports, records or information as Lender may request;
(i) Promptly upon their distribution, copies of all financial
statements, reports and proxy statements which Borrower shall have sent to its
stockholders, promptly after the sending or filing thereof, copies of all
regular and periodic reports which Borrower shall file with the Securities and
Exchange Commission or any national securities exchange; and
(j) Borrower will cause each Guarantor to comply with the
financial reporting requirements set forth in their respective Guaranties.
12. Additional Representations, Warranties and Covenants. Borrower
represents, warrants (each of which such representations and warranties shall be
deemed repeated upon the making of a request for a Revolving Credit Advance and
made as of the time of each Revolving Credit Advance made hereunder), and
covenants as follows:
(a) Borrower is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorporation and duly
qualified and in good standing in every other state or jurisdiction in which the
nature of Borrower's business requires such qualification.
(b) The execution, delivery and performance of this Agreement
and the Ancillary Agreements (i) have been duly authorized, (ii) are not in
contravention of Borrower's certificate of incorporation, by-laws or of any
indenture, agreement or undertaking to which Borrower is a party or by which
Borrower is bound and (iii) are within Borrower's corporate powers.
(c) This Agreement and the Ancillary Agreements executed and
delivered by Borrower are Borrower's legal, valid and binding obligations,
enforceable in accordance with their terms.
(d) Exhibit 12(d) sets forth Borrower's name as it appears in
official filing in the state of its incorporation, the type of entity of
Borrower, the organizational identification number issued by Borrower's state of
incorporation or a statement that no such number has been issued, Borrower's
state of incorporation, and the location of Borrower's chief executive office,
corporate offices, warehouses, other locations of Collateral and locations where
records with respect to Collateral are kept (including in each case the county
of such locations) and, except as set forth in such Exhibit 12(d), such
locations have not changed during the preceding twelve months. As of the Closing
Date, during the prior five years, except as set forth in Exhibit 12(d),
Borrower has not been known as or conducted business in any other name
(including trade names). Borrower has only one state of incorporation or
organization.
23
(e) Borrower will not change (i) its name as it appears in the official
filings in the state of its incorporation, (ii) the type of legal entity it is,
(iii) its organization identification number, if any, issued by its state of
incorporation, (iv) its state of incorporation or (v) amend its certificate of
incorporation, by-laws or other organizational document.
(f) (i) Borrower has delivered to Lender all environmental assessments,
audits, reports, permits, licenses and other documents describing or relating in
any way to Borrower's business or its property.
(ii) The operation of each Borrower's business is and will
continue to be in compliance in all material respects with all applicable
federal, state and local laws, rules and ordinances, including to all laws,
rules, regulations and orders relating to taxes, payment and withholding of
payroll taxes, employer and employee contributions and similar items,
securities, employee retirement and welfare benefits, employee health safety and
environmental matters.
(iii) Borrower will establish and maintain a system to assure and
monitor continued compliance with all applicable environmental laws, which
system shall include periodic reviews of such compliance.
(iv) In the event Borrower obtains, gives or receives notice of
any release or threat of release of a reportable quantity of any hazardous
substances on its property (any such event being hereinafter referred to as a
"Hazardous Discharge") or receives any notice of violation, request for
information or notification that it is potentially responsible for investigation
or cleanup of environmental conditions on its property, demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of any environmental laws affecting its property or
Borrower's interest therein (any of the foregoing is referred to herein as an
"Environmental Complaint") from any Person or entity, including any Governmental
Authority responsible in whole or in part for environmental matters in the state
in which such property is located or the United States Environmental Protection
Agency, then Borrower shall, within seven (7) days, give written notice of same
to Lender detailing facts and circumstances of which Borrower is aware giving
rise to the Hazardous Discharge or Environmental Complaint and periodically
inform Lender of the status of the matter. Such information is to be provided to
allow Lender to protect its security interest in the Collateral and is not
intended to create nor shall it create any obligation upon Lender with respect
thereto.
(v) Borrower shall respond promptly to any Hazardous Discharge or
Environmental Complaint and take all necessary action in order to safeguard the
health of any Person and to avoid subjecting the Collateral to any Lien. If
Borrower shall fail to respond promptly to any Hazardous Discharge or
Environmental Complaint or Borrower shall fail to comply with any of the
requirements of any environmental laws, Lender may, but without the obligation
to do so, for the sole purpose of protecting Lender's interest in Collateral:
(A) give such notices or (B) enter onto Borrower's property (or authorize third
parties to enter onto such
24
property) and take such actions as Lender (or such third parties as directed by
Lender) deems reasonably necessary or advisable, to clean up, remove, mitigate
or otherwise deal with any such Hazardous Discharge or Environmental Complaint.
All reasonable costs and expenses incurred by Lender (or such third parties) in
the exercise of any such rights, including any sums paid in connection with any
judicial or administrative investigation or proceedings, fines and penalties,
together with interest thereon from the date expended at the Default Rate for
Revolving Credit Advances shall be paid upon demand by Borrower, and until paid
shall be added to and become a part of the Obligations secured by the Liens
created by the terms of this Agreement or any other agreement between Lender and
Borrower.
(vi) Borrower shall defend and indemnify Lender and hold Lender
harmless from and against all loss, liability, damage and expense, claims,
costs, fines and penalties, including attorney's fees, suffered or incurred by
Lender under or on account of any environmental laws, including, without
limitation, the assertion of any Lien thereunder, with respect to any Hazardous
Discharge, the presence of any hazardous substances affecting Borrower's
property, whether or not the same originates or emerges from Borrower's property
or any contiguous real estate, including any loss of value of the Collateral as
a result of the foregoing except to the extent such loss, liability, damage and
expense is attributable to any Hazardous Discharge resulting from actions on the
part of Lender. Borrower's obligations under this Section 12(f) shall arise upon
the discovery of the presence of any hazardous substances on Borrower's
property, whether or not any federal, state, or local environmental agency has
taken or threatened any action in connection with the presence of any hazardous
substances. Borrower's obligation and the indemnifications hereunder shall
survive the termination of this Agreement;
(vii) For purposes of Section 12(f), all references to Borrower's
property shall be deemed to include all of Borrower's right, title and interest
in and to all owned and/or leased premises.
(viii) Based upon the Employee Retirement Income Security Act of
1974 ("ERISA"), and the regulations and published interpretations thereunder:
(i) Borrower has not engaged in any Prohibited Transactions as defined in
Section 406 of ERISA and Section 4975 of the Internal Revenue Code, as amended;
(ii) Borrower has met all applicable minimum funding requirements under Section
302 of ERISA in respect of its plans; (iii) Borrower has no knowledge of any
event or occurrence which would cause the Pension Benefit Guaranty Corporation
to institute proceedings under Title IV of ERISA to terminate any employee
benefit plan(s); (iv) Borrower has no fiduciary responsibility for investments
with respect to any plan existing for the benefit of persons other than
Borrower's employees; and (v) Borrower has not withdrawn, completely or
partially, from any multi-employer pension plan so as to incur liability under
the Multiemployer Pension Plan Amendments Act of 1980.
(g) Borrower is solvent, able to pay its debts as they mature, has
capital sufficient to carry on its business and all businesses in which Borrower
is about to engage and the fair saleable value of its assets (calculated on a
going concern basis) is in excess of the amount of its liabilities.
25
(h) There is no pending or threatened litigation, action or proceeding
which involves the possibility of having a Material Adverse Effect.
(i) All balance sheets and income statements which have been delivered
to Lender fairly, accurately and properly state Borrower's financial condition
on a basis consistent with that of previous financial statements and there has
been no material adverse change in Borrower's financial condition as reflected
in such statements since the date thereof and such statements do not fail to
disclose any fact or facts which might have a Material Adverse Effect on
Borrower's financial condition.
(j) Borrower possesses all of the Intellectual Property necessary to
conduct its business. There has been no assertion or claim of violation or
infringement with respect to any Intellectual Property. Exhibit 12(j) sets forth
all Intellectual Property of Borrower.
(k) Borrower will pay or discharge when due all taxes, assessments and
governmental charges or levies imposed upon Borrower or any of the Collateral
unless such amounts are being diligently contested in good faith by appropriate
proceedings provided that (i) adequate reserves with respect thereto are
maintained on the books of Borrower in conformity with GAAP and (ii) the related
Lien shall have no effect on the priority of the Liens in favor of Lender or the
value of the assets in which Lender has a Lien.
(l) Borrower will promptly inform Lender in writing of: (i) the
commencement of all proceedings and investigations by or before and/or the
receipt of any notices from, any governmental or nongovernmental body and all
actions and proceedings in any court or before any arbitrator against or in any
way concerning any event which might singly or in the aggregate, have a Material
Adverse Effect; (ii) any amendment of Borrower's certificate of incorporation,
by-laws, certification of formation, operating agreement or other organizational
document; (iii) any change which has had or might have a Material Adverse
Effect; (iv) any Event of Default or Default; (v) any default or any event which
with the passage of time or giving of notice or both would constitute a default
under any agreement for the payment of money to which Borrower is a party or by
which Borrower or any of Borrower's properties may be bound which would have a
Material Adverse Effect and (vii) any change in Borrower's name or any other
name used in its business.
(m) Borrower will not (i) create, incur, assume or suffer to exist any
indebtedness (exclusive of trade debt) whether secured or unsecured other than
Borrower's indebtedness to Lender and as set forth on Exhibit 12(m) attached
hereto and made a part hereof; (ii) cancel any debt owing to it; (iii) not
assume, guarantee, endorse or otherwise become directly or contingently liable
in connection with any obligations of any other Person, except the endorsement
of negotiable instruments by Borrower for deposit or collection or similar
transactions in the ordinary course of business; (iv) directly or indirectly
declare, pay or make any dividend or distribution on any class of its Stock or
apply any of its funds, property or assets to the purchase, redemption or other
retirement of any Stock of Borrower; (v) purchase or hold beneficially any Stock
or other securities or evidences of indebtedness of, make or permit to exist any
loans or advances to, or make any investment or acquire any interest whatsoever
in, any other Person, including any partnership or joint venture, except travel
advances or loans to Borrower's officers and employees not exceeding at any one
time an aggregate of $5,000; (vi)
26
create or permit to exist any Subsidiary, other than any Subsidiary in existence
on the date hereof and listed in Exhibit 12(m); (vii) directly or indirectly,
prepay any indebtedness (other than to Lender), or repurchase, redeem, retire or
otherwise acquire any indebtedness; (viii) enter into any merger, consolidation
or other reorganization with or into any other Person or acquire all or a
portion of the assets or Stock of any Person or permit any other Person to
consolidate with or merge with it; (ix) materially change the nature of the
business in which it is presently engaged; (x) change its fiscal year or make
any changes in accounting treatment and reporting practices without prior
written notice to Lender except as required by GAAP or in the tax reporting
treatment or except as required by law; (xi) enter into any transaction with any
employee, director or Affiliate, except in the ordinary course on arms-length
terms; (xii) ▇▇▇▇ Accounts under any name except the present name of Borrower;
(xiii) directly or indirectly, redeem, redeem, repurchase, retire or otherwise
acquire or make any payment or distribution with respect to the Subordinated
Debt except to the extent permitted pursuant to the applicable Subordination
Agreement; or (xiv) change or modify the terms of any Subordinated Debt (or any
indenture or agreement in connection therewith).
(n) All Projections of Borrower's performance prepared by Borrower or
at Borrower's direction and delivered to Lender will represent, at the time of
delivery to Lender, Borrower's best estimate of Borrower's future financial
performance and will be based upon assumptions which are reasonable in light of
Borrower's past performance and then current business conditions.
(o) None of the proceeds of the Loans hereunder will be used directly
or indirectly to "purchase" or "carry" "margin stock" or to repay indebtedness
incurred to "purchase" or "carry" "margin stock" within the respective meanings
of each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect.
(p) Borrower will bear the full risk of loss from any loss of any
nature whatsoever with respect to the Collateral. At Borrower's own cost and
expense in amounts and with carriers acceptable to Lender, Borrower shall (i)
keep all its insurable properties and properties in which it has an interest
insured against the hazards of fire, flood, sprinkler leakage, those hazards
covered by extended coverage insurance and such other hazards, and for such
amounts, as is customary in the case of companies engaged in businesses similar
to Borrower's including business interruption insurance; (ii) maintain insurance
in such amounts as is customary in the case of companies engaged in businesses
similar to Borrower's insuring against larceny, embezzlement or other criminal
misappropriation of insured's officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of Borrower
either directly or through Governmental Authority to draw upon such funds or to
direct generally the disposition of such assets; (iii) maintain public and
product liability insurance against claims for personal injury, death or
property damage suffered by others; (iv) maintain all such worker's compensation
or similar insurance as may be required under the laws of any state or
jurisdiction in which Borrower is engaged in business; and (v) furnish Lender
with (x) copies of all policies and evidence of the maintenance of such policies
at least thirty (30) days before any expiration date, (y) endorsements to such
policies naming Lender as "co-insured" or "additional insured" and appropriate
loss payable endorsements in form and substance
27
satisfactory to Lender, naming Lender as loss payee, and (z) evidence that as to
Lender the insurance coverage shall not be impaired or invalidated by any act or
neglect of Borrower and the insurer will provide Lender with at least thirty
(30) days notice prior to cancellation. Borrower shall instruct the insurance
carriers that in the event of any loss thereunder, the carriers shall make
payment for such loss to lender and not to Borrower and Lender jointly. If any
insurance losses are paid by check, draft or other instrument payable to
Borrower and Lender jointly, Lender may endorse Borrower's name thereon and do
such other things as Lender may deem advisable to reduce the same to cash.
Lender is hereby authorized to adjust and compromise claims. All loss recoveries
received by Lender upon any such insurance may be applied to the Obligations, in
such order as Lender in its sole discretion shall determine. Any surplus shall
be paid by Lender to Borrower or applied as may be otherwise required by law.
Any deficiency thereon shall be paid by Borrower to Lender, on demand.
13. Intentionally Omitted.
14. Further Assurances. At any time and from time to time, upon the
written request of Lender and at the sole expense of Borrower, Borrower shall
promptly and duly execute and deliver any and all such further instruments and
documents and take such further action as Lender may request (a) to obtain the
full benefits of this Agreement and the Ancillary Agreements, (b) to protect,
preserve and maintain Lender's rights in the Collateral and under this Agreement
or any Ancillary Agreement, or (c) to enable Lender to exercise all or any of
the rights and powers herein granted or any Ancillary Agreement.
15. Power of Attorney. Borrower hereby appoints Lender or any other
Person whom Lender may designate as Borrower's attorney, with power to: (a)
endorse Borrower's name on any checks, notes, acceptances, money orders, drafts
or other forms of payment or security that may come into Lender's possession;
(b) sign Borrower's name on any invoice or ▇▇▇▇ of lading relating to any
Accounts, drafts against Account Debtors, schedules and assignments of Accounts,
notices of assignment, financing statements and other public records,
verifications of Accounts and notices to or from Account Debtors; (c) verify the
validity, amount or any other matter relating to any Account by mail, telephone,
telegraph or otherwise with Account Debtors; (d) execute customs declarations
and such other documents as may be required to clear Inventory through Customs;
(e) do all things necessary to carry out this Agreement, any Ancillary Agreement
and all related documents; and (f) on or after the occurrence and continuation
of an Event of Default, notify the post office authorities to change the address
for delivery of Borrower's mail to an address designated by Lender, and to
receive, open and following taking a reasonable period of time under the
circumstances dispose of all mail addressed to Borrower. Borrower hereby
ratifies and approves all acts of the attorney. Neither Lender nor the attorney
will be liable for any acts or omissions or for any error of judgment or mistake
of fact or law. This power, being coupled with an interest, is irrevocable so
long as Lender has a security interest and until the Obligations have been fully
satisfied.
16. Term of Agreement. Any obligation of Lender to make Loans and
extend their financial accommodations under this Agreement or any Ancillary
Agreement shall continue in full force and effect until the expiration of the
Term. The termination of the Agreement shall not affect any of Lender's rights
hereunder or any Ancillary Agreement and the provisions hereof and thereof shall
continue to be fully operative until all transactions entered into, rights or
28
interests created and the Obligations have been disposed of, concluded or
liquidated. The Termination Date shall be automatically extended for successive
periods of two (2) years each unless Borrower shall have provided Lender with a
written notice of termination, at least sixty (60) days prior to the expiration
of the Termination Date or any renewal of the Termination Date. Upon any
extension of the Termination Date or any renewal of the Termination Date,
Borrower shall pay Lender an extension fee in an amount equal to the product of
(a) the Maximum Revolving Amount times (b) one percent (1.0%). Notwithstanding
the foregoing, Lender shall release its security interests at any time after
thirty (30) days notice upon payment to it of all Obligations if Borrower shall
have (a) provided Lender with an executed release of any and all claims which
Borrower may have or thereafter have under this Agreement and/or any Ancillary
Agreement and (b) paid to Lender an early payment fee in an amount equal to the
product of (i) the Applicable Percentage multiplied by (ii) the Maximum
Revolving Amount; such fee being intended to compensate Lender for its costs and
expenses incurred in initially approving this Agreement or extending same. Such
early payment fee shall also be due and payable by Borrower to Lender upon
termination of this Agreement by Lender after the occurrence of an Event of
Default.
17. Termination of Lien. The Liens and rights granted to Lender
hereunder and any Ancillary Agreements and the financing statements filed in
connection herewith or therewith shall continue in full force and effect,
notwithstanding the termination of this Agreement or the fact that Borrower's
account may from time to time be temporarily in a zero or credit position, until
(a) all of the Obligations of Borrower have been paid or performed in full after
the termination of this Agreement or Borrower has executed a payoff letter in
form and substance and on terms and conditions satisfactory to Lender.
Accordingly, Borrower waives any rights which it may have under the UCC to
demand the filing of termination statements with respect to the Collateral, and
Lender shall not be required to send such termination statements to Borrower, or
to file them with any filing office, unless and until this Agreement and the
Ancillary Agreements shall have been terminated in accordance with their terms
and all Obligations paid in full in immediately available funds.
18. Events of Default. The occurrence of any of the following shall
constitute an Event of Default:
(a) failure to make payment of any of the Obligations when
required hereunder;
(b) failure to pay any taxes when due unless such taxes are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been provided on Borrower's books;
(c) (i) failure to perform under and/or committing any breach of
paragraphs 3, 7, 9, 11, 12(d), 12(e), 12(g), 12(l), 12(m), 12(n), 12(o) and
12(p) of this Agreement or (ii)failure to perform under and/or committing any
breach of this Agreement or any Ancillary Agreement or any other agreement
between any Borrower and Lender (other than those set forth in clause (i)
immediately above or otherwise covered by another clause of this paragraph 18)
and such breach is not remediable, if remediable, continues unremedied for a
period of ten (10) Business Days after the date on which Lender shall have
notified Borrowing Agent of such breach;
29
(d) the occurrence of a default under any agreement to which
Borrower is a party with third parties which has a Material Adverse Effect;
(e) any representation, warranty or statement made by Borrower
hereunder, in any Ancillary Agreement, any certificate, statement or document
delivered pursuant to the terms hereof, or in connection with the transactions
contemplated by this Agreement should at any time be false or misleading in any
material respect;
(f) if any Guarantor or Validity Guarantor attempts to terminate,
challenges the validity of, or its liability under any Guaranty Agreement, any
Guarantor Security Agreement or any Validity Agreement or if any individual
Guarantor or Validity Guarantor shall die and Borrower shall fail to provide
Lender with a replacement Guarantor acceptable to Lender within forty five (45)
days of such occurrence or if any other Guarantor shall cease to exist;
(g) should any Guarantor default in its obligations under any
Guaranty Agreement, any Guarantor Security Agreement or any Validity Guarantor
or if any proceeding shall be brought to challenge the validity, binding effect
of any Guaranty Agreement, or any Guarantor Security Agreement or any Validity
Guaranty, or should any Guarantor or Validity Guarantor breach any
representation, warranty or covenant contained in any Guaranty Agreement, any
Validity Agreement or any Guarantor Security Agreement or should any Guaranty
Agreement or Guarantor Security Agreement cease to be a valid, binding and
enforceable obligation;
(h) an attachment or levy is made upon any of Borrower's assets
having an aggregate value in excess of $1,000, or a judgment is rendered against
Borrower or any of Borrower's property involving a liability of more than
$1,000, which shall not have been vacated, discharged, stayed or bonded pending
appeal within thirty (30) days from the entry thereof;
(i) any material change in Borrower's condition or affairs
(financial or otherwise) which in Lender's commercially reasonable opinion
impairs the Collateral or the ability of Borrower to perform its Obligations;
(j) any Lien created hereunder or under any Ancillary Agreement
for any reason ceases to be or is not a valid and perfected Lien having a first
priority interest;
(k) if Borrower shall (i) apply for, consent to or suffer to exist
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property,
(ii) make a general assignment for the benefit of creditors, (iii) commence a
voluntary case under the federal bankruptcy laws (as now or hereafter in
effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(vii) take any action for the purpose of effecting any of the foregoing;
(l) Borrower shall admit in writing its inability, or be generally
unable to pay its debts as they become due or cease operations of its present
business;
30
(m) any Subsidiary or any Guarantor shall (i) apply for, consent
to or suffer to exist the appointment of, or the taking possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a substantial
part of its property, (ii) admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business, (iii) make a general assignment for the benefit of creditors, (iv)
commence a voluntary case under the federal bankruptcy laws (as now or hereafter
in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed, within forty five (45) days, any
petition filed against it in any involuntary case under such bankruptcy laws or
(viii) take any action for the purpose of effecting any of the foregoing;
(n) Borrower directly or indirectly sells, assigns, transfers,
conveys, or suffers or permits to occur any sale, assignment, transfer or
conveyance of any assets of Borrower or any interest therein, except as
permitted herein;
(o) Borrower fails to operate in the ordinary course of business;
(p) Lender shall in good ▇▇▇▇▇ ▇▇▇▇ itself insecure or unsafe or
shall fear diminution in value, removal or waste of the Collateral;
(q) a default by Borrower in the payment, when due, of any
principal of or interest on any indebtedness for money borrowed which is not
cured within any applicable grace period;
(r) the occurrence of a Change of Control or a change in senior
management of Borrower;
(s) the indictment of Borrower, any officer of Borrower or any
Guarantor under any criminal statute, or commencement or threatened commencement
of criminal or civil proceeding against Borrower, any officer of Borrower or any
Guarantor pursuant to which statute or proceeding penalties or remedies sought
or available include forfeiture of any of the property of Borrower or any
Guarantor; or
(t) Borrower shall take or participate in any action which would
be prohibited under the provisions of any Subordination Agreement or
Intercreditor Agreement or make any payment on the Subordinated Debt that any
Person was not entitled to receive under the provisions of the applicable
Subordination Agreement or Intercreditor Agreement.
19. Remedies. Upon the occurrence of an Event of Default pursuant to
Section 18(k) herein, all Obligations shall be immediately due and payable and
this Agreement shall be deemed terminated; upon the occurrence and continuation
of any other of the Events of Default, Lender shall have the right to demand
repayment in full of all Obligations, whether or not otherwise due. Until all
Obligations have been fully satisfied, Lender shall retain its Lien in all
Collateral. Lender shall have, in addition to all other rights provided herein,
the rights and remedies of a secured party under the UCC, and under other
applicable law, all other legal and equitable rights to which Lender may be
entitled, including the right to take immediate possession of the Collateral, to
require Borrower to assemble the Collateral, at Borrower's
31
expense, and to make it available to Lender at a place designated by Lender
which is reasonably convenient to both parties and to enter any of the premises
of Borrower or wherever the Collateral shall be located, with or without force
or process of law, and to keep and store the same on said premises until sold
(and if said premises be the property of Borrower, Borrower agrees not to charge
Lender for storage thereof), and the right to apply for the appointment of a
receiver for Borrower's property. Further, Lender may, at any time or times
after default by Borrower, sell and deliver all Collateral held by or for Lender
at public or private sale for cash, upon credit or otherwise, at such prices and
upon such terms as Lender, in Lender's sole discretion, deems advisable or
Lender may otherwise recover upon the Collateral in any commercially reasonable
manner as Lender, in its sole discretion, deems advisable. The requirement of
reasonable notice shall be met if such notice is mailed postage prepaid to
Borrower at Borrower's address as shown in Lender's records, at least ten (10)
days before the time of the event of which notice is being given. Lender may be
the purchaser at any sale, if it is public. In connection with the exercise of
the foregoing remedies, Lender is granted permission to use all of Borrower's
trademarks, tradenames, tradestyles, patents, patent applications, licenses,
franchises and other proprietary rights which are used in connection with (a)
Inventory for the purpose of disposing of such Inventory and (b) Equipment for
the purpose of completing the manufacture of unfinished goods. The proceeds of
sale shall be applied first to all costs and expenses of sale, including
attorneys' fees, and second to the payment (in whatever order Lender elects) of
all Obligations (including the cash collateralization of any Letter of Credit
Obligations). After the indefeasible payment and satisfaction in full in cash of
all of the Obligations, and after the payment by Lender of any other amount
required by any provision of law, including Section 9-608(a)(1) of the UCC (but
only after Lender has received what Lender considers reasonable proof of a
subordinate party's security interest), the surplus, if any, shall be paid to
Borrower or its representatives or to whosoever may be lawfully entitled to
receive the same, or as a court of competent jurisdiction may direct. Borrower
shall remain liable to Lender for any deficiency. In addition to all other sums
due to Lender, Borrower shall pay Lender, for costs and expenses incurred by
Lender for internal collection efforts of Lender to obtain or enforce payment of
Accounts, an amount equal to fifteen percent (15%) of the net face amount of any
Accounts collected.
20. Waivers. To the full extent permitted by applicable law, Borrower
waives (a) presentment, demand and protest, and notice of presentment, dishonor,
intent to accelerate, acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all of this
Agreement and the Ancillary Agreements or any other notes, commercial paper,
Accounts, Contracts, Documents, Instruments, Chattel Paper and guaranties at any
time held by Lender on which Borrower may in any way be liable, and hereby
ratifies and confirms whatever Lender may do in this regard; (b) all rights to
notice and a hearing prior to Lender's taking possession or control of, or to
Lender's replevy, attachment or levy upon, any Collateral or any bond or
security that might be required by any court prior to allowing Lender to
exercise any of its remedies; and (c the benefit of all valuation, appraisal and
exemption laws. Borrower acknowledges that it has been advised by counsel of its
choices and decisions with respect to this Agreement, the Ancillary Agreements
and the transactions evidenced hereby and thereby.
32
21. Expenses. Borrower shall pay all of Lender's out-of-pocket costs
and expenses, including reasonable fees and disbursements of counsel and
appraisers, in connection with the preparation, execution and delivery of this
Agreement and the Ancillary Agreements, and in connection with the prosecution
or defense of any action, contest, dispute, suit or proceeding concerning any
matter in any way arising out of, related to or connected with this Agreement or
any Ancillary Agreement. Borrower shall also pay all of Lender's fees, charges,
out-of-pocket costs and expenses, including reasonable fees and disbursements of
counsel and appraisers, in connection with (a) the preparation, execution and
delivery of any waiver, any amendment thereto or consent proposed or executed in
connection with the transactions contemplated by this Agreement or the Ancillary
Agreements, (b) Lender's obtaining performance of the Obligations under this
Agreement and any Ancillary Agreement, including, but not limited to, the
enforcement or defense of Lender's security interests, assignments of rights and
Liens hereunder as valid perfected security interests, (c) any attempt to
inspect, verify, protect, collect, sell, liquidate or otherwise dispose of any
Collateral, (d) any appraisals or re-appraisals of any property (real or
personal) pledged to Lender by Borrower as Collateral for, or any other Person
as security for, Borrower's Obligations hereunder and (e) any consultations in
connection with any of the foregoing. Borrower shall also pay Lender's customary
bank charges for all bank services (including wire transfers) performed or
caused to be performed by Lender for Borrower at Borrower's request or in
connection with Borrower's loan account with Lender. All such costs and expenses
together with all filing, recording and search fees, taxes and interest payable
by Borrower to Lender shall be payable on demand and shall be secured by the
Collateral. If any tax by any Governmental Authority is or may be imposed on or
as a result of any transaction between Borrower and Lender which Lender is or
may be required to withhold or pay, Borrower agrees to indemnify and hold Lender
harmless in respect of such taxes, and Borrower will repay to Lender the amount
of any such taxes which shall be charged to Borrower's account; and until
Borrower shall furnish Lender with indemnity therefor (or supply Lender with
evidence satisfactory to it that due provision for the payment thereof has been
made), Lender may hold without interest any balance standing to Borrower's
credit and Lender shall retain its Liens in any and all Collateral.
22. Assignment By Lender. Lender may assign any or all of the
Obligations together with any or all of the security therefor and any transferee
shall succeed to all of Lender's rights with respect thereto. Upon such
transfer, Lender shall be released from all responsibility for the Collateral to
the extent same is assigned to any transferee. Lender may from time to time sell
or otherwise grant participations in any of the Obligations and the holder of
any such participation shall, subject to the terms of any agreement between
Lender and such holder, be entitled to the same benefits as Lender with respect
to any security for the Obligations in which such holder is a participant.
Borrower agrees that each such holder may exercise any and all rights of
banker's lien, set-off and counterclaim with respect to its participation in the
Obligations as fully as though Borrower were directly indebted to such holder in
the amount of such participation.
23. No Waiver; Cumulative Remedies. Failure by Lender to exercise any
right, remedy or option under this Agreement, any Ancillary Agreement or any
supplement hereto or thereto or any other agreement between Borrower and Lender
or delay by Lender in exercising the same, will not operate as a waiver; no
waiver by Lender will be effective unless it is in writing and then only to the
extent specifically stated. Lender's rights and remedies under this
33
Agreement and the Ancillary Agreements will be cumulative and not exclusive of
any other right or remedy which Lender may have.
24. Application of Payments. Borrower irrevocably waives the right to
direct the application of any and all payments at any time or times hereafter
received by Lender from or on Borrower's behalf and Borrower hereby irrevocably
agrees that Lender shall have the continuing exclusive right to apply and
reapply any and all payments received at any time or times hereafter against
Borrower's Obligations hereunder in such manner as Lender may deem advisable
notwithstanding any entry by Lender upon any of Lender's books and records.
25. Indemnity. Borrower agrees to indemnify and hold Lender and its
affiliates, and their respective employees, attorneys and agents (each, an
"Indemnified Person"), harmless from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses of any kind or
nature whatsoever (including attorneys' fees and disbursements and other costs
of investigation or defense, including those incurred upon any appeal) which may
be instituted or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or terminated under this
Agreement or any of the Ancillary Agreements or with respect to the execution,
delivery, enforcement, performance and administration of, or in any other way
arising out of or relating to, this Agreement, the Ancillary Agreements or any
other documents or transactions contemplated by or referred to herein or therein
and any actions or failures to act with respect to any of the foregoing, except
to the extent that any such indemnified liability is finally determined by a
court of competent jurisdiction to have resulted solely from such Indemnified
Person's gross negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL BE
RESPONSIBLE OR LIABLE TO BORROWER OR TO ANY OTHER PARTY OR TO ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY ANCILLARY
AGREEMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR
THEREUNDER.
26. Revival. Borrower further agrees that to the extent Borrower makes
a payment or payments to Lender, which payment or payments or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy act, state or federal law, common law or equitable cause,
then, to the extent of such payment or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if said payment had not been made.
27. Notices. Any notice or request hereunder may be given to Borrower
or Lender at the respective addresses set forth below or as may hereafter be
specified in a notice designated as a change of address under this Section. Any
notice or request hereunder shall be given by registered or certified mail,
return receipt requested, hand delivery, overnight mail or telecopy (confirmed
by mail). Notices and requests shall be, in the case of those by hand delivery,
deemed to have been given when delivered to any officer of the party to whom it
is addressed, in
34
the case of those by mail or overnight mail, deemed to have been given when
deposited in the mail or with the overnight mail carrier, and, in the case of a
telecopy, when confirmed.
Notices shall be provided as follows:
If to Lender: Equinox Business Credit Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Loeb & Loeb LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: Titan PCB East, Inc.
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇, O'▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
28. Governing Law, Jurisdiction and Waiver of Jury Trial. (a) THIS
AGREEMENT AND THE ANCILLARY AGREEMENTS SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE.
(b) BORROWER HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
COURTS LOCATED IN NEW JERSEY SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS
AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS; PROVIDED, THAT
LENDER AND BORROWER ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO
BE HEARD BY A COURT LOCATED OUTSIDE OF NEW JERSEY; AND FURTHER PROVIDED, THAT
NOTHING IN THIS AGREEMENT SHALL
35
BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF LENDER. BORROWER EXPRESSLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. BORROWER
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN SECTION 27 AND THAT SERVICE SO
MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID.
(c) THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE
ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN LENDER AND
BORROWER ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, ANY
ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED THERETO.
29. Limitation of Liability. Borrower acknowledges and understands that
in order to assure repayment of the Obligations hereunder Lender may be required
to exercise any and all of Lender's rights and remedies hereunder and agrees
that neither Lender nor any of Lender's agents shall be liable for acts taken or
omissions made in connection herewith or therewith except for actual bad faith.
30. Entire Understanding. This Agreement and the Ancillary Agreements
contain the entire understanding between Borrower and Lender and any promises,
representations, warranties or guarantees not herein contained shall have no
force and effect unless in writing, signed by Borrower's and Lender's respective
officers. Neither this Agreement, the Ancillary Agreements, nor any portion or
provisions thereof may be changed, modified, amended, waived, supplemented,
discharged, cancelled or terminated orally or by any course of dealing, or in
any manner other than by an agreement in writing, signed by the party to be
charged.
31. Severability. Wherever possible each provision of this Agreement or
the Ancillary Agreements shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement or the
Ancillary Agreements shall be prohibited by or invalid under applicable law such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
thereof.
36
32. Captions. All captions are and shall be without substantive meaning
or content of any kind whatsoever.
33. Counterparts; Telecopier Signatures. This Agreement may be executed
in one or more counterparts, each of which shall constitute an original and all
of which taken together shall constitute one and the same agreement. Any
signature delivered by a party via telecopier transmission shall be deemed to be
any original signature hereto.
34. Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
35. Publicity. Borrower hereby authorizes Lender to make appropriate
announcements of the financial arrangement entered into by and between Borrower
and Lender, including, without limitation, announcements which are commonly
known as tombstones, in such publications and to such selected parties as Lender
shall in its sole and absolute discretion deem appropriate.
[Signature Page to Follow]
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
TITAN PCB EAST, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
EQUINOX BUSINESS CREDIT CORP.
By: /s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇ ▇▇▇▇▇
Title: President
37
EXHIBITS
Exhibit 1(A) - Commercial Tort Claims
Exhibit 1(B) - Permitted Liens
Exhibit 7(c) - Actions for Perfection
Exhibit 7(l) - Offset Risk
Exhibit 7(q) - Bank Accounts Exhibit 12(d)
Official Name
Type of Entity: Corporation
State of Incorporation or Organization: Delaware
Organization Identification Number Issued by State of Incorporation [Or
Statement that no such number has been issued]
Chief Executive Office County/State [be sure to include names of counties]
---------------------- ------------
Locations of Inventory and other Collateral County/State [be sure to include
names of counties]
[other corporate names or trade names if any]
Exhibit 12(j) - Licenses, Patents, Trademarks and Copyrights
Exhibit 12(m) - Permitted Indebtedness; Existing Subsidiaries
Exhibit A
Borrowing Base Certificate
Exhibit B
Form of Promissory Note