1
Exhibit 10a
COMMERCIAL FINANCING AGREEMENT
Commercial Financing Agreement (the "Agreement") made this ____ day of
June, 1998, between ABLE LABORATORIES, INC., a New Jersey corporation, with an
office for the transaction of business at ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ (the "Company"), And ▇▇▇▇▇▇ CAPITAL CORPORATION, an Alabama corporation
with offices for the transaction of business located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇,
▇▇▇▇▇; ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; and ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇▇ Capital"). Company and ▇▇▇▇▇▇ Capital agree
and shall be legally bound as follows:
1. Purpose of Agreement. Company desires to obtain short-term financing by
selling, transferring, setting over and assigning to ▇▇▇▇▇▇ Capital certain
accounts receivable and invoices held by Company at a discount below their face
value.
2. Definitions.
2.1 "Account Receivable" shall mean any right to payment for goods
sold, or leased, and delivered, or services rendered, which is not evidenced by
an instrument or chattel paper.
2.2 "Acceptable Account" shall mean an account conforming to the
warranties and terms set forth herein.
2.3 "Customer" shall mean Company's customer or account debtor.
2.4 "Collateral" shall mean the intangible or tangible property given
as security for the obligations of Company under this agreement.
2.5 "Warranty" shall mean to guarantee, as a material element of this
agreement. Each separate warranty herein shall be deemed to be an independent
condition to ▇▇▇▇▇▇ Capital's duties and obligations under this agreement.
2.6 "Credit Problem" shall mean a Customer unable to pay its debts
because of financial problems or insolvency or both, the appointment of any
receiver or trustee for all or a substantial portion of the assets of has been
appointed, has filed a general assignment for the benefit of creditors or had
filed against it an involuntary or voluntary Bankruptcy proceeding.
2.7 "Customer Dispute" shall mean a claim or disagreement, by
Customer against Company at any time, of any kind whatsoever, whether valid or
invalid that reduces the amount collectible from a Customer by ▇▇▇▇▇▇ Capital.
3. Tender of Accounts Receivable; Invoices.
3.1 The Company will tender to ▇▇▇▇▇▇ Capital for purchase pursuant
to this Agreement all of the Accounts Receivable from its Customers with respect
to goods sold and delivered to, or services performed for, such Customers by the
Company by delivering to ▇▇▇▇▇▇ Capital all invoices to such Customers promptly
after the creation thereof. ▇▇▇▇▇▇ Capital will forward said invoices to the
Company's Customers, in accordance with ▇▇▇▇▇▇ Capital's standard procedures,
together with a notice by the Company to its Customers, in the form prescribed
by ▇▇▇▇▇▇ Capital, of the assignment of payment of said invoices to ▇▇▇▇▇▇
Capital.
3.2 In each instance where the Company delivers its Accounts
Receivable to ▇▇▇▇▇▇ Capital, the Company must simultaneously deliver to ▇▇▇▇▇▇
Capital an original, a copy of each invoice, and satisfactory proof of delivery.
3.3 ▇▇▇▇▇▇ Capital will conduct such examination, verification, and
credit investigation of the invoices and the account debtors as it considers
necessary, and will notify the Company within 48 hours of receipt of such
invoices as to which of the individual Accounts Receivable tendered by the
Company, if any, ▇▇▇▇▇▇ Capital elects to purchase from the Company. ▇▇▇▇▇▇
Capital shall have the absolute right, in its sole discretion, to reject any or
all of the Accounts Receivable tendered to it by the Company.
4. Assignment. Those Accounts Receivable which ▇▇▇▇▇▇ Capital elects to
purchase from the Company shall be listed in an "Invoice Delivery Schedule",
substantially in the form of Exhibit "A" annexed hereto (such form, together
with any schedules and attachments thereto is hereinafter referred to as an
"Invoice Schedule"), executed by the Company and accepted by ▇▇▇▇▇▇ Capital from
time to time throughout the term of this Agreement. Upon acceptance by ▇▇▇▇▇▇
Capital of an Invoice Schedule, the Company shall have been deemed to have sold,
assigned, transferred, conveyed and delivered to ▇▇▇▇▇▇ Capital, and ▇▇▇▇▇▇
Capital shall be deemed to have purchased and received from the Company, all
right, title, and interest of the Company in and to the Accounts Receivable
listed on the Invoice Schedule. Upon the assignment of an Account Receivable,
▇▇▇▇▇▇ Capital shall have all of the rights of an unpaid seller of any goods,
the sale of which gives rise to each receivable, including the right of stoppage
in
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COMMERCIAL FINANCING AGREEMENT
transmit, reclamation and replevin. Notwithstanding the foregoing, if the
Company or ▇▇▇▇▇▇ Capital fails to include in any Invoice Schedule a particular
Account Receivable tendered by the Company to ▇▇▇▇▇▇ Capital, but ▇▇▇▇▇▇ Capital
nonetheless pays to the Company the "Purchase Price" (as hereinafter defined)
for such Account Receivable, then ▇▇▇▇▇▇ Capital shall be presumed conclusively
to have purchased, and the Company shall be presumed conclusively to have sold,
such Account Receivable pursuant to this Agreement, and such Account Receivable
shall be governed by the terms and conditions (including, without limitation,
the Company's representations and warranties to ▇▇▇▇▇▇ Capital) of this
Agreement. It is understood and agreed that ▇▇▇▇▇▇ Capital is not assuming any
of the responsibilities or obligations of Company under such Accounts Receivable
but that it is simply taking an assignment of the right to be paid on such
Accounts Receivable which Company has fulfilled in the ordinary course of its
business operations. It is also understood and agreed that ▇▇▇▇▇▇ Capital will
have no obligation whatsoever to buy any Accounts Receivable from the Company at
any time.
5. PURCHASE PRICE, RESERVE ACCOUNT.
5.1 Purchase Price. ▇▇▇▇▇▇ Capital agrees to buy the Accounts Receivable
set forth on the Invoice Schedule from the Company at the Purchase Price
Percentage on Exhibit B attached of the face value of each such acceptable
invoice (respectively the "Purchase Price" and "Purchased Receivable"). The
Purchase Price for each Purchased Receivable, less the reserve amount described
in Exhibit B, shall be paid to the Company in immediately available funds at
the time of purchase.
5.2 Reserve Account. ▇▇▇▇▇▇ Capital shall establish and maintain a
reserve account (see Exhibit B) for the Company and withhold from each
Purchased Receivable an amount equal to the Purchase Price in paragraph 5.1
above, less the amount advanced to the Company (the "Reserve Account"). ▇▇▇▇▇▇
Capital may increase the reserve amount taken on each Purchased Receivable in
its sole discretion. The Reserve Account may be held and applied by ▇▇▇▇▇▇
Capital in its sole discretion against charge backs or any Obligations of the
Company to ▇▇▇▇▇▇ Capital.
5.3 Rebates. As an inducement to secure full and prompt payment of the
Accounts Receivable upon which ▇▇▇▇▇▇ Capital agrees to pay the Company, a
rebate on each Purchased Receivable paid in full in accordance with the rebate
schedule annexed hereto as Exhibit "B", ▇▇▇▇▇▇ Capital shall deliver a Monthly
Reserve Statement and pay any reserves and rebate due on or before the seventh
business day of each month for the prior month. Notwithstanding the previous
sentence, ▇▇▇▇▇▇ Capital may, in its sole discretion, withhold from time to
time any rebate sums due Company as further security for the re-payment of any
and all Obligations of Company. In the event of any conflict between the
wording in Exhibit B and this agreement, this agreement shall prevail.
6. COLLECTION OF ACCOUNTS RECEIVABLE. Commencing on the date of this
Agreement, ▇▇▇▇▇▇ Capital shall administer the collection of all Accounts
Receivable originated by the Company and shall forward an Aged Accounts
Receivable Schedule to the Company weekly. ▇▇▇▇▇▇ Capital shall have the right
of endorsement on all payments received in connection with each Account
Receivable and the Company hereby appoints ▇▇▇▇▇▇ Capital the attorney-in-fact
and agent of the Company for this purpose, which appointment is coupled with an
interest and is irrevocable during the term of this Agreement. ▇▇▇▇▇▇ Capital
shall have no liability to the Company for any mistake in the application of any
payment received by it with respect to any Account Receivable, so long as it
acts in good faith without gross negligence.
7. CROSS-COLLATERALIZATION. If a "Default" (as defined in this Agreement)
shall have occurred and be continuing, ▇▇▇▇▇▇ Capital shall have the right,
which may be exercised in its sole and absolute discretion at any time and from
time to time during the continuance of such Default, to apply all amounts
collected with respect to Accounts Receivable as follows, before any payment
from such collections shall be made to the Company: (i) against the
un-reimbursed balance of the Purchase Price made by ▇▇▇▇▇▇ Capital to the
Company with respect to Purchased Receivables; (ii) to the payment of all fees
accrued with respect to the Accounts Receivable purchased by ▇▇▇▇▇▇ Capital from
the Company, whether or not such fees have become due and payable pursuant to
the terms of this Agreement; and (iii) to the payment of any and all other
liabilities and obligations of the Company to ▇▇▇▇▇▇ Capital pursuant to this
Agreement, the "Security Agreement" and any other agreement entered into between
▇▇▇▇▇▇ Capital and the Company concurrently herewith (the "Transaction
Documents"). For purposes of this paragraph, "Company" shall mean and include
each person named as the Company in the preamble of this Agreement and any
shareholder, parent, subsidiary, controlling person or other affiliate.
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COMMERCIAL FINANCING AGREEMENT
8. NEGATIVE RESERVES. While it is anticipated that the Reserve Account will
carry a positive balance most if not all the time, ▇▇▇▇▇▇ Capital may, as part
of this Commercial Financing Agreement and to ease the Company's short-term
cash-flow problems, permit the Company to carry a negative-balance on its
Reserve Account. Upon the establishment of each such negative balance amount,
▇▇▇▇▇▇ Capital shall have the right to charge the Company a one-time processing
and administrative fee of up to two percent of each such amount so established
as a negative balance. ▇▇▇▇▇▇ Capital may withhold from the Accounts Receivable
such sums as it deems necessary to satisfy any negative balance in the Reserve
Account. Notwithstanding anything contained herein to the contrary, ▇▇▇▇▇▇
Capital may terminate the negative reserve facility at any time without notice
to the Company as it deems fit. Interest shall accrue on the outstanding
negative balance at the rate of forty/one-hundredths percent per week.
9. COLLECTION OF ACCOUNTS RECEIVABLE.
9.1 The Company will instruct all of its Customers obligated with
respect to its Accounts Receivable to mail or deliver payments on such Accounts
Receivable directly to ▇▇▇▇▇▇ Capital at its address set forth in the preamble
of this Agreement or to such other address that ▇▇▇▇▇▇ Capital may specify in a
written notice to the Company. Such instructions shall not be rescinded or
modified without ▇▇▇▇▇▇ Capital's prior written consent. If, despite such
instructions, the Company shall receive any payments with respect to any
Accounts Receivable purchased by ▇▇▇▇▇▇ Capital, it shall receive such payments
in trust for the benefit of ▇▇▇▇▇▇ Capital, shall segregate such payments from
its other funds, and shall deliver or cause to be delivered to ▇▇▇▇▇▇ Capital,
in the same form as so received with all necessary endorsements, all such
payments received as soon as practicable, but in no event later than two
business days after the receipt thereof by the Company. If the Company fails to
turn over to ▇▇▇▇▇▇ Capital any checks or other form of payment received by it
or in the event the Company deposit any such checks into its own account, this
shall be an event of default of this contract, and in addition the Company
shall pay to ▇▇▇▇▇▇ Capital the entire invoice amount at once plus liquidated
damages equal to twenty percent of the amount so deposited.
9.2 ▇▇▇▇▇▇ Capital shall have the full power and authority to
collect each Account Receivable, through legal action or otherwise, and may, in
its sole discretion, settle, compromise, or assign (in whole or in part) the
claim for any of the Accounts Receivable, or otherwise exercise any other right
now existing or hereafter arising with respect to any of the Accounts
Receivable, if such action will facilitate collection. The amount of any
reduction resulting from any such settlement, compromise, assignment or other
collection action shall reduce the balance otherwise due to the Company
hereunder. The Company acknowledges and agrees that ▇▇▇▇▇▇ Capital shall have
the sole and exclusive right to commence legal action to collect any Account
Receivable.
9.3 If ▇▇▇▇▇▇ Capital shall agree that certain Account Debtors'
invoices be eligible for financing between the thirty-first and sixtieth days
beyond their net-thirty due date (i.e., during the period from sixty to ninety
days after their origination date), then these invoices shall be deemed
"Special Risk," and a further charge of two percent for each thirty-day period
in which each of these invoices is outstanding will be collected by ▇▇▇▇▇▇
Capital, but ninety days after the origination date these Special Risk invoices
shall be deemed a Customer Dispute and shall be charged back to the Company's
account.
10. PAYMENT OF EXPENSES AND TAXES; INDEMNIFICATION. The Company will (a) pay
or reimburse ▇▇▇▇▇▇ Capital for all of ▇▇▇▇▇▇ Capital's out-of-pocket costs and
expenses incurred in connection with the preparation and execution of, and any
amendment, supplement or modification to, the Transaction Documents and the
consummation of the transactions contemplated hereby and thereby, including,
without limitation, the fees and disbursements of counsel to ▇▇▇▇▇▇ Capital,
(b) pay or reimburse ▇▇▇▇▇▇ Capital for all its costs and expenses incurred with
the enforcement or preservation of any rights under the Transaction Documents,
and the verification of the Accounts Receivable and the credit worthiness of
the Customers, including without limitation, fees and disbursements of counsel
to ▇▇▇▇▇▇ Capital; (c) pay, indemnify, and hold ▇▇▇▇▇▇ Capital harmless from,
any and all recording and filing fees and any and all liabilities with respect
to, or resulting from, any delay in paying any stamp, excise, and other taxes,
if any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, the Transaction Documents; (d) pay for
monthly statements at $0.53 each plus all postage expended by ▇▇▇▇▇▇ Capital to
mail invoices and otherwise collect the accounts; (e) pay a processing and
administration fee of no percent of the value
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COMMERCIAL FINANCING AGREEMENT
of each invoice; (f) pay, indemnify and hold ▇▇▇▇▇▇ Capital harmless from and
against any and all claims, liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever, whether threatened, pending or determined (including
attorney's fees and court costs now or hereafter arising from this Agreement or
any activities of the Company (referred to as the "indemnified liabilities");
provided that the Company shall have no obligation hereunder to ▇▇▇▇▇▇ Capital
with respect to indemnified liabilities arising from the gross negligence or
willful misconduct of ▇▇▇▇▇▇ Capital. The covenants of this paragraph shall
survive the termination of this Agreement.
11. Term.
11.1 This Agreement shall be effective for a period commencing on the
date hereof and continuing until the close of business on last day of the
sixth month (the "Initial Term"). This Agreement shall be deemed to be
automatically renewed for an additional term of six months at the expiration of
the Initial Term, and thereafter to be automatically renewed for succeeding six
month terms at the end of the first and each succeeding renewal term, unless
the Company shall deliver written notice of cancellation to ▇▇▇▇▇▇ Capital not
earlier than ninety days and not later than thirty days prior to the expiration
date of the Initial Term or any succeeding renewal term. No such termination
shall terminate or otherwise affect Company's obligations hereunder incurred or
accrued prior to such termination.
11.2 The Company shall pay ▇▇▇▇▇▇ Capital an application and due diligence
fee in the amount of $350.00 (waived) on the first day of each term hereunder,
which amount, at the option of ▇▇▇▇▇▇ Capital, may be deducted from any amounts
otherwise due from ▇▇▇▇▇▇ Capital to the Company.
11.3 The representations, warranties and covenants of the Company and the
remedies of ▇▇▇▇▇▇ Capital for a breach of such representations, warranties
and/or covenants, shall survive the termination of this Agreement, and such
termination shall not effect the rights of ▇▇▇▇▇▇ Capital to enforce its
remedies under the Transaction Documents against the Company or against any
collateral after a default by the Company. Upon termination, the Company shall
remain fully responsible to ▇▇▇▇▇▇ Capital for any Purchased Receivables
purchased prior to such termination. Additionally, ▇▇▇▇▇▇ Capital shall maintain
its security interest in the Property (as hereinafter defined) of the Company
until all of its Obligations (as hereinafter defined) to ▇▇▇▇▇▇ Capital have
been paid in full.
12. Facility Fee; Credits.
12.1 The rebates set forth in the rebate schedule attached hereto have
been established after negotiations between the Company and ▇▇▇▇▇▇ Capital on
the assumption that the Company will tender to ▇▇▇▇▇▇ Capital for purchase
hereunder acceptable Accounts Receivable averaging at least two hundred
thousand dollars a month (the "Base Purchase Amount") during the Initial Term
and each renewal term.
12.2 In further consideration of ▇▇▇▇▇▇ Capital's undertakings in this
Agreement, the Company shall pay to ▇▇▇▇▇▇ Capital a fee in an amount equal to
four percent of the Base Purchase Amount (the "Facility Fee") as of the
termination date of the Initial Term and of each renewal term, but the amount
thereof shall be reduced by the total fees paid by the Company to ▇▇▇▇▇▇
Capital.
13. Disputed Accounts Receivable, Re-Purchase, etc.
13.1 Non-Recourse. ▇▇▇▇▇▇ Capital shall not have any recourse against
Company for unpaid Accounts Receivable, if the reason for non-payment is
related to a Customer's Credit Problem, except under the following
circumstances, where ▇▇▇▇▇▇ Capital will have immediate recourse against the
Company:
13.1.1 if Company mails invoices on Accounts Receivable directly to
a Customer;
13.1.2 if Company breaches any warranties, representations, or
promises in this Agreement, and which breaches shall have a
material adverse effect on the Company;
13.1.3 if Company has contributed to or aggravated Customer's credit
problem;
13.1.4 if Company and Customer are involved in a Customer Dispute of
any kind, regardless of its validity; or
13.1.5 if Customer asserts a claim of loss or offset of any kind
against Company.
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COMMERCIAL FINANCING AGREEMENT
13.2 Notice of Dispute. Company agrees to promptly notify ▇▇▇▇▇▇ Capital of
any Customer Dispute between Company and any of its Customers within 48 hours
that may lead to the non-payment of an invoice.
13.3 Re-payment of Disputed Purchased Receivable. Company shall immediately
pay to ▇▇▇▇▇▇ Capital the full amount of any Purchased Receivable subject to a
Customer Dispute of any kind, whether or not the same is valid or with merit. If
Company fails to fully settle any Customer Dispute within thirty (30) days,
▇▇▇▇▇▇ Capital may, in addition to any other remedy it may have under this
Agreement, charge or sell back the Purchased Receivable to the Company. Invoices
unpaid after seventy days from any Customer without a Credit Problem shall be
deemed to be in dispute and shall be charged back to the Company or sold back to
the Company.
14. Warranties By Company. As an inducement to and as a condition of ▇▇▇▇▇▇
Capital's willingness to enter into this Agreement, and with full knowledge that
the truth and accuracy of the warranties in this Agreement are being relied
upon by ▇▇▇▇▇▇ Capital, Company warrants as follows:
14.1 By its execution of each Invoice Schedule with respect to Accounts
Receivable or acceptance of the Purchase Price with respect to a Purchased
Receivable that:
14.1.1 The Company is the sole owner of such Purchased Receivable and
such Purchased Receivable has not been previously assigned or encumbered in any
manner; the Company has the full power and authority to sell such Purchased
Receivable and its sale to ▇▇▇▇▇▇ Capital has been duly authorized;
14.1.2 The goods or services listed or referred to in the Purchased
Receivable have been shipped or rendered to the Customer, and the prices and
terms of shipment set forth therein conform in all material respects to the
terms of any related purchase order or agreement with the Customer;
14.1.3 The invoice representing the Purchased Receivable correctly
sets forth the full purchase price of the goods and services covered thereby,
and such amount, less only the applicable trade discounts and allowances stated
therein, if any, is due and owing from the Customer, subject to no set-offs,
deductions, disputes, contingencies or counterclaims against the Company or the
invoice, and payment thereof is not contingent upon fulfillment of any
obligation other than delivery of the goods or services referred to in such
invoice; and Company represents that its invoices do not represent a delivery of
merchandise or services upon consignment, guaranteed sale, or similar term.
14.2 Company is validly existing and in good standing under the laws of
the state in which it is incorporated and is properly licensed and authorized
to operate the business it conducts under its corporate name or any trade name
of and is authorized to do business in every jurisdiction in which it conducts
business. By reason of this Agreement the Company is conducting business in the
State of New York.
14.3 Each Customer's business is solvent to best of Company's information
and knowledge.
14.4 Company is, or will be at the time of the purchase by ▇▇▇▇▇▇ Capital,
the lawful owner of and have good and undisputed title to the Purchased
Receivables.
14.5 Company does not own, control or exercise dominion over, in any way
whatsoever, the business of any account-debtor/Customer whose Accounts
Receivable are to be purchased by ▇▇▇▇▇▇ Capital and shall not change or modify
the terms of any Account Receivable with any Customer unless ▇▇▇▇▇▇ Capital
first consents to such change in writing. By way of example only, Company shall
not extend a Customer's credit beyond thirty (30) days without ▇▇▇▇▇▇ Capital's
prior written consent.
14.6 All financial records, statements, books or other documents of
Company furnished to ▇▇▇▇▇▇ Capital for review at any time, either before or
after the signing of this Agreement, are true and accurate. Company has no
outstanding state, federal, or local tax liabilities, and has filed all tax
returns or other documents as required by law.
14.7 Company will not, under any circumstances or in any manner
whatsoever, interfere with any of ▇▇▇▇▇▇ Capital's rights under this Agreement.
14.8 Company shall not factor, finance, give a security interest or sell
any of its Accounts Receivable or any of its property, fixtures or inventory to
any person or entity other than ▇▇▇▇▇▇ Capital during the term of this
Agreement, nor shall any Accounts Receivable to be purchased under this
Agreement be previously sold, pledged or encumbered by Company or any other
person or entity in any manner whatsoever.
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COMMERCIAL FINANCING AGREEMENT
14.9 Company shall not permit the placement of any lien, security interest,
or encumbrance on its fixtures, inventory, or other personal property and
chattels except with the prior written consent of ▇▇▇▇▇▇ Capital and shall
maintain its property, inventory, and fixtures in good order and in an
operating state, condition, and repair, except
(1) for taxes not delinquent or being contested in good faith and by
proper proceedings, as to which adequate reserves with respect thereto are
maintained on the books of such Borrower or its Subsidiary, as the case may be,
in accordance with GAAP;
(2) carriers', warehousemen's, mechanics', materialmen's or similar liens
imposed by law incurred in the ordinary course of business in respect of
obligations not overdue, or if being contested in good faith and by proper
proceedings, which shall be bonded or discharged within thirty (30) days of
filing;
(3) pledges or deposits in connection with workers' compensation,
unemployment insurance and other types of social security, if incurred in the
ordinary course of business;
(4) security deposits made in the ordinary course of business.
Upon the breach of any of the warranties above, the Company will immediately
pay to ▇▇▇▇▇▇ Capital the entire unpaid balance of the Purchased Receivables
purchased pursuant to this Agreement and any other Obligations of the Company
to ▇▇▇▇▇▇ Capital.
15. Security Interest. To secure the payment of any sums which have or may
become due by the Company to ▇▇▇▇▇▇ Capital under this Agreement and also to
secure any other indebtedness or liability of the Company to ▇▇▇▇▇▇ Capital,
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, including all future advances or loans which may be made
at the option of ▇▇▇▇▇▇ Capital to the Company (hereinafter referred to as
"Obligations"), Company hereby grants, conveys and mortgages to ▇▇▇▇▇▇ Capital
the Property as defined in the Security Agreement.
16. Financing Statements and Security Agreement. The Company and/or its
principals shall execute such security agreements as ▇▇▇▇▇▇ Capital may
reasonably request to perfect the security interest granted hereunder,
including but not limited to the Security Agreement, (a true copy of which is
annexed hereto, made a part hereof and is marked Exhibit "C"), Corporate
Resolutions (a true copy of which is annexed hereto, made a part hereof and is
marked Exhibit "D"; and the Performance Covenant and Waiver (a true copy of
which is annexed hereto, made a part hereof and is marked Exhibit "E"). The
Company hereby authorizes ▇▇▇▇▇▇ Capital or its agents or assigns to sign and
execute on its behalf, any and all necessary forms to perfect the security
interest granted hereunder.
17. Financial Records. During the term of this Agreement, Company agrees to
provide ▇▇▇▇▇▇ Capital with such financial statements and records and such
other information as may be reasonably requested by ▇▇▇▇▇▇ Capital from time to
time, and each quarter shall furnish an updated customer list with customer
names, contact names, addresses, and phone numbers, as well as a complete and
current payables-aging report.
18. Notice of Levy. Company shall promptly notify ▇▇▇▇▇▇ Capital of any
attachment or any other legal process levied against Company or any of
Company's Customers. Company's failure to do so shall be a material default
hereunder.
19. No Pledge. Company shall not, at any time during the term of this
Agreement, pledge the credit of ▇▇▇▇▇▇ Capital to any person or business for
any purpose whatsoever.
20. Book Entry. Company shall, immediately upon the sale of an Account
Receivable to ▇▇▇▇▇▇ Capital, make proper entries on its books and records
disclosing the absolute sale and assignment of such Account to ▇▇▇▇▇▇ Capital.
21. Power of Attorney. Company irrevocably appoints ▇▇▇▇▇▇ Capital, or any
person designated by ▇▇▇▇▇▇ Capital, its special attorney-in-fact, or agent,
with power to: (1) strike out Company's address on all invoices or statements
of account mailed to Customers and substitute ▇▇▇▇▇▇ Capital's address; (2)
receive and open all mail addressed to Company or to Company's trade name via
▇▇▇▇▇▇ Capital address; (3) endorse the name of Company or Company's trade name
on any checks or other evidences of payment, invoices or other documents that
may come into the possession of ▇▇▇▇▇▇ Capital on Accounts Receivable or on
which ▇▇▇▇▇▇ Capital holds a security interest; (4) in Company's name, or
otherwise, demand, ▇▇▇ for, collect, and subject to Company's prior written
approval, compromise, prosecute, or
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7
COMMERCIAL FINANCING AGREEMENT
defend any action, claim, or proceedings and give releases for any and all
monies due or to become due; (5) do any and all things reasonably necessary and
proper to carry out the purpose intended by this Agreement. The authority
granted ▇▇▇▇▇▇ Capital shall remain in full force and effect until all Accounts
Receivable sold and/or assigned to ▇▇▇▇▇▇ Capital have been paid in full.
22. Default. Any one or more of the following shall constitute a default
hereunder (a "Default"):
22.1 Company's failure to pay any indebtedness or Obligations to ▇▇▇▇▇▇
Capital when due or any other default under the Commercial Financing
Agreement between ▇▇▇▇▇▇ Capital and the Company;
22.2 Company's breach of any material term, provision, warranty, or
representation under this Agreement, or under any other agreement or
contract between Company and ▇▇▇▇▇▇ Capital, or Obligation of Company
to ▇▇▇▇▇▇ Capital;
22.3 ▇▇▇▇▇▇ Capital shall reasonably believe that Company is failing to
tender all of its Accounts Receivable to ▇▇▇▇▇▇ Capital for purchase;
or the Company shall have failed to tender Accounts Receivable
aggregating at least twenty percent of the Annual Base Purchase
Amount during any Calendar Quarter; of the Company shall have failed
to tender Accounts Receivable to ▇▇▇▇▇▇ Capital for purchase for a
period of fifteen or more consecutive business days;
22.4 The Company shall instruct any Customer to mail or deliver payment on
Accounts Receivable to the Company or to any person other than ▇▇▇▇▇▇
Capital;
22.5 The appointment of any receiver or trustee for all or a substantial
portion of the assets of Company, the filing of a general assignment
for the benefit of creditors by Company or a voluntary or involuntary
filing under any bankruptcy or similar law which is not dismissed
with prejudice within 60 days;
22.6 The issuance of any levies of attachment, execution, tax assessments,
or similar process against the Accounts Receivable which is not
released within ten days;
22.7 If any financial statements, profits-and-loss statements, borrowing
certificates or schedules, or other statements furnished by Company
to ▇▇▇▇▇▇ Capital prove false or incorrect in any material respect.
22.8 Failure of the Company to pay all taxes to every government agency in
a timely manner.
22.9 Any false or misleading representations or warranties made or given
by the Company in connection with this Agreement;
22.10 Upon the non-payment by Company of any charges of rent under the
premises or equipment leases used by the Company to operate its
business, or the failure to comply with any terms of any such lease,
which is not cured within the time and in the manner provided for in
the lease;
22.11 Upon the further surrender, transfer, pledging, assignment, or
granting of a security interest by Company in the Property without
the prior written consent of ▇▇▇▇▇▇ Capital; or
22.12 Upon the attachment of any further lien on the Property.
23. Remedies Upon Default. In the event of any default ▇▇▇▇▇▇ Capital shall
have the following cumulative rights and remedies:
23.1 Declare any Obligations (including any sums still due and owing under
any Purchased Receivable) immediately due and payable;
23.2 Enforce the security interest given hereunder;
23.3 Require Company to assemble any Collateral secured hereunder and the
records pertaining thereto and make them available to ▇▇▇▇▇▇ Capital
at a place designated by ▇▇▇▇▇▇ Capital;
23.4 Enter the premises of Company and take possession of any Collateral
not then in its possession and of the records pertaining thereto and
any other collateral;
23.5 Grant extensions, compromise claims, and settle Accounts Receivable
for less than face value;
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8
COMMERCIAL FINANCING AGREEMENT
23.6 Use, in connection with any assembly or disposition of the
collateral, any trademark, trade name, trade style, copyright, patent right, or
technical process used or utilized by Company; and
23.7 Return any surplus realized and hold Company liable for any
deficiency.
24. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the heirs, executors, administrators, successors, and assigns of
both Company and ▇▇▇▇▇▇ Capital.
25. Cumulative Rights. All rights, remedies, and powers granted to ▇▇▇▇▇▇
Capital in this Agreement, or in any note or other Agreement given by Company
to ▇▇▇▇▇▇ Capital, are cumulative and may be exercised singularly or
concurrently with such other rights as ▇▇▇▇▇▇ Capital may have. These rights
may be exercised from time to time as to all or any part of the pledged
collateral as ▇▇▇▇▇▇ Capital in its discretion may determine.
26. Written Waiver. ▇▇▇▇▇▇ Capital shall not be deemed to have waived any
right or remedy it may have hereunder unless such waiver is in writing and
signed by ▇▇▇▇▇▇ Capital. A waiver by ▇▇▇▇▇▇ Capital of a right or remedy under
this Agreement on one occasion shall not be deemed a waiver of a right or
remedy on any subsequent occasion.
27. Governing Law and Jurisdiction.
27.1 This Agreement is, and shall be deemed to be, a contract entered
into under and pursuant to the laws of the State of New York and shall be in all
respects governed, construed, applied and enforced in accordance with the laws
of the State of New York. No defense given or allowed by the laws of any other
state or country shall be interposed in any action or proceeding hereon unless
such defense is also given or allowed by the laws of the State of New York.
27.2 The parties hereto agree to submit to personal jurisdiction and
acknowledge they are doing business in the State of New York in any action or
proceeding arising out of this Agreement and, in furtherance of such agreement,
they hereby agree and consent that without limiting other methods of obtaining
jurisdiction, that personal jurisdiction in any such action or proceeding may
be obtained within or without the jurisdiction of any court located in New York
and that any process or notice or motion or other application to any such court
in connection with any such action or proceeding may be served by registered or
certified mail, return receipt requested, to or by personal service at their
last known address whether such address be within or without the jurisdiction
of any such court.
28. Invalid Provisions. If any provision of this Agreement shall be declared
illegal or contrary to law, it is agreed that such provision shall be
disregarded and this Agreement shall continue in force as though such
provisions had not been incorporated herein. If a law, which applies to this
Agreement and which sets maximum loan charges, is finally interpreted so that
the fees and commissions charged by ▇▇▇▇▇▇ Capital to Company or other charges
collected or to be collected in connection with this Agreement exceed the
permitted limits under any applicable law or statute, then: (i) any such fee or
commission shall be reduced by the amount necessary to reduce the charges to
the permitted limit; and (ii) any sums already collected from the Company which
exceed permitted limits will be applied and shall be deemed to have been
payments in reduction of the obligations hereunder.
29. Further Instruments. Company agree that, upon request from time to time
of ▇▇▇▇▇▇ Capital, it will, at its expense, execute, acknowledge and deliver
all such additional instruments and further assurances and will do or cause to
be done all such further acts and things as may be reasonably necessary to
fully establish, confirm or perfect from time to time the security interest of
▇▇▇▇▇▇ Capital in the Collateral and to fully establish, confirm or perfect
from time to time the intention of this Agreement.
30. No Jury Trial. The Company hereby irrevocably and unconditionally waives,
and ▇▇▇▇▇▇ Capital by its acceptance of this Agreement irrevocably and
unconditionally waives, any and all right to trial by jury in any action, suit
or counterclaim arising in connection with, out of or otherwise relating to
this Agreement.
31. Entire Agreement. This instrument contains the entire Agreement between
the parties. Any addendum or modification hereto must be signed by both parties
in order to have any force or effect.
32. Notices. All notices, demands or requests (collectively, "Notice") made
pursuant to, under or by virtue of this Agreement must be in writing and sent
to the party or parties to whom or to which such Notice is being sent, by
certified or registered mail, return receipt requested, reputable overnight
courier or delivered by hand with receipt acknowledged in writing to the
addresses first hereinabove set forth.
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9
COMMERCIAL FINANCING AGREEMENT
All notices shall (a) be deemed given when received in accordance herewith and
(b) may be given either by a party or such party's attorneys.
33. Effective Date. This Agreement shall be effective only upon its execution
by a duly authorized officer of ▇▇▇▇▇▇ Capital.
34. Duplicate Originals. This Agreement may be executed in any number of
duplicate originals and each such duplicate original shall be deemed to
constitute but one and the same instrument.
35. Headings, Etc. The headings, titles and captions of various paragraphs of
this Agreement are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
ABLE LABORATORIES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇
-------------------------------------------
▇▇▇▇ ▇▇▇▇, President, a duly authorized officer
▇▇▇▇▇▇ CAPITAL CORPORATION,
By:
-------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, CEO, a duly authorized officer
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10
COMMERCIAL FINANCING AGREEMENT
EXHIBIT "B-1"
Rebate Schedule
The "Purchased Receivables" shall be bought at a discount of ninety-four
percent of their face amount. A rebate for prompt payment will be paid to
the Company by ▇▇▇▇▇▇ Capital as follows:
If the Invoice is paid The amount rebated The net charge
by the customer to the Company to the Company
between: will be: will be:
---------------------- ------------------ --------------
01-30 days 4.0% 2.0%
31-60 days 2.0% 4.0%
61-90 days 0.0% 6.0%
Advances and Reserves
The Advance Amount shall be seventy percent of each invoice, and the
Reserve Amount shall be twenty-four percent of each invoice. Invoices
aged 60 days or older shall be bought back by the Company as Disputed
Invoices, unless ▇▇▇▇▇▇ Capital grants a 30-day extension, after which
such invoices shall be repurchased by the Company.
From time to time, the underwriting department of ▇▇▇▇▇▇ Capital may
require the invoice verification form in Exhibit B-2 signed by the
Company's Account Debtors. The Company will use its best efforts to
have its Account Debtors sign this form acknowledging the invoice.
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11
EXHIBIT "C" SECURITY AGREEMENT
Agreement (the "Agreement") made this day of June, 1998, between ABLE
LABORATORIES INC., a State of New Jersey Corporation with an office for the
transaction of business at ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, (the
"Company"), and ▇▇▇▇▇▇ CAPITAL CORPORATION, an Alabama corporation with an
office for the transaction of business located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇ ▇▇▇▇▇;
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "▇▇▇▇▇▇ Capital").
W I T N E S S E T H
WHEREAS, ▇▇▇▇▇▇ Capital and Company have this day entered into a commercial
financing agreement and other related documents wherein ▇▇▇▇▇▇ Capital has
agreed to purchase, at a discount, certain accounts receivables and/or invoices
of the Company under certain terms and conditions (collectively the "Commercial
Financing Agreement"); and WHEREAS, in order to secure the Company's payment of
any sums which may become due under the Commercial Financing Agreement, Company
is granting ▇▇▇▇▇▇ Capital a security interest in all of its personal property
and assets of any nature, including but not limited to its inventory,
equipment, trade fixtures, good will, and accounts receivables all as more
particularly set forth below; NOW, THEREFORE, it is agreed as follows:
1. GRANTING OF SECURITY INTEREST. To secure the payment of any sums
which have or may become due by the Company to ▇▇▇▇▇▇ Capital pursuant to the
Commercial Financing Agreement and also to secure any other indebtedness or
liability of the Company to ▇▇▇▇▇▇ Capital, direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, including
all future advances or loans which may be made at the option of ▇▇▇▇▇▇
Capital to the Company (hereinafter referred to as "Obligations"), Company
hereby grants and conveys to ▇▇▇▇▇▇ Capital a security interest in, and
mortgages to ▇▇▇▇▇▇ Capital the "Property" as defined in paragraph 2 below.
2. "THE PROPERTY". All of the following, whether now existing or
hereafter arising, shall be deemed secured and mortgaged by this Agreement (the
"Property"): (a) all of the Company's accounts, proceeds from accounts,
contract rights, instruments, documents, chattel paper and general intangibles,
as such terms are defined in the Uniform Commercial Code, as enacted in the
State of New York ("UCC"); (b) all forms of obligations owing to the Company,
including but not limited to all tax refunds and tax refund claims, letters of
credit and all proceeds thereof; (c) all guarantees, security, and liens which
the Company may hold for the payment or performance of any item of Property
(including, without limitation, all rights of stoppage in transit, replevin,
and reclamation and as an unpaid vendor or lienor); (d) all rights to goods
represented by any item of Property or the sale of which goods gave rise to any
item of Property including, without limitation, all rights upon return,
replevin, or repossession of such goods, all documents of title, warehouse
receipts, bills of lading, books, records and other documents relating to any
of the Property; (e) the Company's goodwill; (f) all books, records, and lists,
in whatever form maintained; (g) all the Company's inventory, wherever located,
whether in the Company's or some other person's possession, including, without
limitation, all raw materials, supplies work in process, and finished products
manufactured by and/or held for sale or lease or to be furnished in connection
with the Company's business. (h) all equipment (as defined in the UCC), whether
in the Company's or some other person's possession, including, without
limitation, all machinery, accessories, motors, controls, engines, dies, tools,
jigs, benches, tables, computers and data fixtures, and all substitutions,
accretions, replacements, and additions thereto and all other component and
auxiliary parts used in connection therewith or attached thereto; (i) any other
property of the Company of any kind or nature coming into ▇▇▇▇▇▇ Capital's
actual or constructive possession, custody or control, or in transit to ▇▇▇▇▇▇
Capital or his agent for whatever purpose, and all proceeds of any item of
Property and all proceeds of such proceeds (including, without limitation, all
payments under any indemnity, warrant or guaranty payable with respect to the
Property, all awards for taking by eminent domain, and all proceeds of fire or
other insurance.) Permitted liens shall be: (1) for taxes not delinquent or
being contested in good faith and by proper proceedings, as to which adequate
reserves with respect thereto are maintained on the books of such Borrower or
its Subsidiary, as the case may be, in accordance with GAAP; (2) carriers',
warehousemen's, mechanics', materialmen's or similar liens imposed by law
incurred in the ordinary course of business in respect of obligations not
overdue, or if being contested in good faith and by proper proceedings, which
shall be bonded or discharged within thirty (30) days of filing; (3) pledges or
deposits in connection with workers' compensation, unemployment insurance and
other types of social security, if incurred in the ordinary course of business;
(4) security deposits made in the ordinary course of business.
3. REPRESENTATIONS AND WARRANTIES. Company represents and warrants to
▇▇▇▇▇▇ Capital as follows:
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12
SECURITY AGREEMENT
(a) To pay and perform all of the Obligations secured by this
Agreement in accordance with their respective terms.
(b) To defend title to the Property against all persons and against
all claims and demands whatsoever, which Property, except for the security
interest granted hereby, is lawfully owned by the Company and is now free and
clear of any and all liens, security interests, claims, charges, encumbrances,
taxes and assessments except as may be set forth specifically herein.
(c) On demand of ▇▇▇▇▇▇ Capital to do the following: (i) furnish
further assurances of title; (ii) execute any written agreement or do any other
acts necessary to effectuate the purposes and provisions of this Agreement; and
(iii) execute any instrument or statement required by law or otherwise in order
to perfect, continue or terminate the security interest of ▇▇▇▇▇▇ Capital in
the Property and pay all costs of filing in connection therewith.
(d) To retain possession of the Property during the existence of this
Agreement and not to sell, exchange, assign, loan, deliver, lease, mortgage or
otherwise dispose of same, other than in the ordinary course of business,
without the written consent of ▇▇▇▇▇▇ Capital.
(e) To keep the Property at the principal office of the Company and
not to remove the same, except in the ordinary course of business, without the
prior written consent of ▇▇▇▇▇▇ Capital.
(f) To keep the Property free and clear of all liens, charges,
encumbrances, taxes and assessments.
(g) To pay, when due, all taxes, assessments, and license fees
relating to the Property.
(h) To keep the Property, at the Company's own cost and expense, in
good repair and condition and not to misuse, abuse, waste, or allow to
deteriorate except for normal wear and tear and to make the same available for
inspection by ▇▇▇▇▇▇ Capital at all reasonable times.
(i) To keep the Property insured against loss by fire (including
extended coverage), theft and other hazards as ▇▇▇▇▇▇ Capital may require and
to obtain collision insurance if applicable. Policies shall be in such form and
amounts and with such companies as ▇▇▇▇▇▇ Capital may designate. Policies shall
be obtained from responsible insurers authorized to do business in the state in
which the Property is located. Certificates of insurance or policies, payable
to the respective parties as their interest may appear, shall be deposited with
▇▇▇▇▇▇ Capital who is authorized, but under no duty, to obtain such insurance
upon the failure of the Company to do so. Company shall give immediate written
notice to ▇▇▇▇▇▇ Capital and to insurers of loss or damage to the Property and
shall promptly file proofs of loss with insurers. Company hereby appoints
▇▇▇▇▇▇ Capital its attorney-in-fact in obtaining, adjusting and canceling any
such insurance and endorsing settlement drafts and hereby assigns to ▇▇▇▇▇▇
Capital all sums which may become payable under such insurance, including
return premiums and dividends, as additional security for the Obligations.
(j) To immediately notify ▇▇▇▇▇▇ Capital in writing of any change in
or discontinuance of Company's place or places of business and/or residence.
4. EVENTS OF DEFAULT. If any of the following occur ("Event of Default"),
▇▇▇▇▇▇ Capital may, but shall not be required to, without presentment or
demand, declare the immediate payment of the Obligations, with all accrued
interest, if any, and all applicable charges due thereunder:
4.1 Company's failure to pay any indebtedness or Obligations to ▇▇▇▇▇▇
Capital when due or any other default under the Commercial Financing
Agreement between ▇▇▇▇▇▇ Capital and the Company;
4.2 Company's breach of any material term, provision, warranty, or
representation under this Agreement, or under any other agreement or
contract between Company and ▇▇▇▇▇▇ Capital, or Obligation of Company
to ▇▇▇▇▇▇ Capital;
4.3 ▇▇▇▇▇▇ Capital shall reasonably believe that Company is failing to
tender all of its Accounts Receivable to ▇▇▇▇▇▇ Capital for purchase;
or the Company shall have failed to tender Accounts Receivable
aggregating at least twenty percent of the Annual Base Purchase Amount
during any Calendar Quarter; of the Company shall have failed to
tender Accounts Receivable to ▇▇▇▇▇▇ Capital for purchase for a period
of fifteen or more consecutive business days;
4.4 The Company shall instruct any Customer to mail or deliver payment on
Accounts Receivable to the Company or to any person other than ▇▇▇▇▇▇
Capital;
4.5 The appointment of any receiver or trustee for all or a substantial
portion of the assets of Company, the filing of a general assignment
for the benefit of creditors by Company or a volun-
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13
Security Agreement
tary or involuntary filing under any bankruptcy or similar law
which is not dismissed with prejudice within 60 days;
4.6 The issuance of any levies of attachment, execution, tax
assessments, or similar process against the Accounts Receivable
which is not released within ten days;
4.7 If any financial statements, profits-and-loss statements,
borrowing certificates or schedules, or other statements
furnished by Company to ▇▇▇▇▇▇ Capital prove false or incorrect
in any material respect.
4.8 Failure of the Company to pay all taxes to every government
agency in a timely manner.
4.9 Any false or misleading representations or warranties made or
given by the Company in connection with this Agreement;
4.10 Upon the non-payment by Company of any charges of rent under the
premises or equipment leases used by the Company to operate its
business, or the failure to comply with any terms of any such
lease, which is not cured within the time and in the manner
provided for in the lease;
4.11 Upon the further surrender, transfer, pledging, assignment, or
granting of a security interest by Company in the Property
without the prior written consent of ▇▇▇▇▇▇ Capital; or
4.12 Upon the attachment of any further lien on the Property.
5. ACCELERATION. In the event Company shall have failed to cure an
Event of Default within the specified time period and ▇▇▇▇▇▇ Capital has
declared the Obligations due, interest on the Obligations and any other amounts
due under the Continuing Guaranty or this Agreement shall accrue at the rate of
eighteen percent per annum or the highest legal interest rate, whichever is
greater. This shall not constitute an extension of time for the payment of any
Obligations or other sums due to ▇▇▇▇▇▇ Capital.
6. REMEDIES. If any Event of Default shall occur, which remains
uncured, ▇▇▇▇▇▇ Capital, in addition to any other rights and remedies it may
have at law, including those set forth below, and shall have and may exercise
immediately and without demand, any and all rights and remedies granted to a
secured party upon default under the UCC or such other measures as ▇▇▇▇▇▇
Capital deems necessary to preserve its security interest in the Property.
(a) If an Event of Default shall occur and the Company elects to
declare the Obligations due and payable in accordance with this Agreement, and
the Company fails to cure its default or pay the Obligations; ▇▇▇▇▇▇ Capital
may, but shall not be obligated to, sell, assign and deliver the Property at
public or private sale, for cash, upon credit or for future delivery with or
without advertisement of the time, place or terms of sale except that if the
sale be a private sale, ten (10) days notice in writing from ▇▇▇▇▇▇ Capital of
the time and place of sale and the terms of sale shall be given to the Company.
In case of any sale on credit or for future delivery, the Property sold shall be
retained by ▇▇▇▇▇▇ Capital until the sale price is paid, but ▇▇▇▇▇▇ Capital
shall incur no liability if the purchaser fails, to take up and pay for the
Property sold, in which event the Property may again be sold. At any sale,
▇▇▇▇▇▇ Capital may purchase the Property sold, free from all right of redemption
of the Company which is hereby waived and released.
(b) In case of any sale, ▇▇▇▇▇▇ Capital may first deduct all
expenses of collection, sale and delivery of the Property sold and any expenses
incidental thereto, including, but not limited to reasonable attorneys' fees,
brokerage commissions and transfer taxes, and may then apply the residue to any
liability of the Company under the Obligations, and shall return the surplus,
if any, to the Company. Any sale conducted upon the foregoing terms shall be
deemed commercially reasonable.
(c) The Company agrees that ▇▇▇▇▇▇ Capital shall have the right
to continue to retain the Property until such time that ▇▇▇▇▇▇ Capital in its
reasonable judgment believes that an advantageous price can be secured for the
Property; ▇▇▇▇▇▇ Capital shall not be liable to the Company for any loss in the
value of the Property by reason of any such retention of the Property by ▇▇▇▇▇▇
Capital. If ▇▇▇▇▇▇ Capital shall not commence to dispose of the Property within
ninety (90) days after the right to dispose of the Property shall have accrued,
then the Company shall have the right, at any time thereafter, and prior to the
time that ▇▇▇▇▇▇ Capital shall commence to dispose of the Property to request
of ▇▇▇▇▇▇ Capital that it dispose of the Property or the Company itself at its
own cost and expense, have the right to dispose of the Property provided,
however, that in the case of the former, ▇▇▇▇▇▇ Capital shall not be obligated
to dispose of the Property unless the net proceeds to be received therefrom
shall be sufficient to satisfy in full the then obligations of the Company to
▇▇▇▇▇▇ Capital, and that in the case of the latter, any disposition of the
Property by the Company must be upon terms and conditions consented to by
▇▇▇▇▇▇ Capital, and ▇▇▇▇▇▇ Capital shall be obligated to give such consent if
the net proceeds
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14
Security Agreement
to be received from such disposition shall be sufficient to satisfy in full the
then Obligations of the Company to ▇▇▇▇▇▇ Capital.
(d) ▇▇▇▇▇▇ Capital shall not be liable to the Company for any agents'
or brokers' fees incurred in connection with the sale of the Property.
7. Uniform Commercial Code. The UCC of the State of New York shall govern
the rights, duties and remedies of the parties and any provisions herein
declared invalid under any law shall not invalidate any other provisions of
this Agreement. The Company hereby authorizes ▇▇▇▇▇▇ Capital or its agents or
assigns to sign and execute on the Company's behalf any and all necessary UCC-1
forms to perfect the Security Agreement interest herein above granted to ▇▇▇▇▇▇
Capital.
8. No Offsets. The Company covenants and warrants that it is now the owner
of the Property and that there are no defenses or offsets to this Agreement or
to the Continuing Guaranty which it secures.
9. Attorney-in-Fact. The Company hereby irrevocably appoints ▇▇▇▇▇▇
Capital as its attorney-in-fact in connection with the Property and to execute
and file on its behalf any financing statements, or other statements in
connection therewith with the appropriate public office.
10. Joint and Several Liability. In the event this Agreement is executed
by more than one person, firm or corporation, the liability of the "Company"
hereunder shall be joint and several.
11. Reimbursement - The Company agrees that, with or without notice or
demand, it will reimburse ▇▇▇▇▇▇ Capital, for all costs and expenses
(including, without limitation, reasonable attorney's fees) incurred by ▇▇▇▇▇▇
Capital in connection with the collection of the Obligations or any portion
thereof or in any action or proceeding brought by ▇▇▇▇▇▇ Capital to enforce the
obligations of the Company under this Agreement. ▇▇▇▇▇▇ Capital shall have the
right but not the obligation to examine the Company's books and records at any
time during reasonable business hours once per quarter, the expense of such
audit to be charged against the Company. In the event of a default under this
agreement, ▇▇▇▇▇▇ Capital shall have the right to examine the Company's books
once a month and the Company shall pay for this expense.
12. Application of Payments - All moneys available to ▇▇▇▇▇▇ Capital for
application in payment or reduction of the Obligations may be applied by ▇▇▇▇▇▇
Capital in such manner and in such amounts and at such time or times and in
such order, priority and proportions as ▇▇▇▇▇▇ Capital may see fit to the
payment or reduction of such portion of the Obligations as ▇▇▇▇▇▇ Capital may
elect.
13. Successors and Assigns - Each reference herein to ▇▇▇▇▇▇ Capital shall
be deemed to include its successors and assigns, in whose favor the provisions
of this guaranty shall also inure. Each reference herein to the Company shall
be deemed to include the heirs, executors, administrators, legal
representatives, successors and assigns of the Company, all of whom shall be
bound by the provisions of this Agreement, provided, however, that the Company
shall in no event or under any circumstance have the right, without obtaining
the prior written consent of ▇▇▇▇▇▇ Capital, to assign or transfer the
Company's obligations and liabilities under this Agreement, in whole or in
part, to any other person, party or entity.
14. Non-Waiver - No delay on the part of ▇▇▇▇▇▇ Capital in exercising any
right or remedy under this Agreement or failure to exercise the same shall
operate as a waiver in whole or in part of any such right or remedy. No notice
to or demand on the Company shall be deemed to be a waiver of the obligation of
the Company or the right of ▇▇▇▇▇▇ Capital to take further action without
notice or demand as provided in this Agreement.
15. Further Modification - This Agreement may only be modified, amended,
changed or terminated by an agreement in writing signed by ▇▇▇▇▇▇ Capital and
the Company. No waiver of any term, covenant or provision of this Agreement
shall be effective unless given in writing by ▇▇▇▇▇▇ Capital and if so given by
▇▇▇▇▇▇ Capital shall only be effective in the specific instance in which given.
16. Unconditional Agreement - The Company acknowledges that this Agreement
and the Company's obligations under this Agreement are and shall at all times
continue to be absolute and unconditional in all respects, and shall at all
times be valid and enforceable irrespective of any other agreements or
circumstances of any nature whatsoever which might otherwise constitute a
defense to this Agreement and the obligations of the Company under this
Agreement or the obligations of any other person or party relating to this
Agreement or the obligations of the Company thereunder or otherwise with
respect to the Obligations. This Agreement sets forth the entire agreement and
understanding of ▇▇▇▇▇▇ Capital and the Company, and the Company absolutely,
unconditionally and irrevocably waives any and all rights to assert any
defense, set-off, counterclaim or cross claim of any nature whatsoever with
respect this Agreement or the obligations of any other person or party
(including, without limitation, Company) relating to this Agreement or the
obligations of the Company hereunder or otherwise with respect to the
Obligations in any action or proceeding brought by ▇▇▇▇▇▇ Capital to collect the
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15
SECURITY AGREEMENT
Obligations, or any portion thereof, or to enforce the obligations of the
Company under this Agreement. The Company acknowledges that no oral or other
agreements, understandings, representations or warranties exist with respect to
the obligations of the Company under this Agreement, except those specifically
set forth in this Agreement.
17. NO JURY TRIAL - The Company hereby irrevocably and unconditionally
waives, and ▇▇▇▇▇▇ Capital by its acceptance of this Agreement irrevocably and
unconditionally waives, any and all right to trial by jury in any action, suit
or counterclaim arising in connection with, out of or otherwise relating to
this Agreement.
18. NO SUBROGATION - Notwithstanding any payments made by the Company
pursuant to the provisions of this Agreement, the Company shall have no right
of subrogation in and to the Commercial Financing Agreement or any other
security held by or available to ▇▇▇▇▇▇ Capital for the Obligations or the
payment thereof until the Obligations have been paid in full to ▇▇▇▇▇▇ Capital.
19. ACTIONS AND PROCEEDINGS. ▇▇▇▇▇▇ Capital may, but shall not be
obligated to appear in and defend any action or proceeding brought with respect
to the Property and to bring any action or proceeding, in the name and on
behalf of Company, which ▇▇▇▇▇▇ Capital, in its discretion, feels should be
brought to protect its interest in the Property.
20. FURTHER INSTRUMENTS. Company agree that, upon request from time to
time of ▇▇▇▇▇▇ Capital, it will, at its expense, execute, acknowledge and
deliver all such additional instruments and further assurances and will do or
cause to be done all such further acts and things as may be reasonably necessary
to fully establish, confirm or perfect from time to time the security interest
of ▇▇▇▇▇▇ Capital in the Property.
21. GOVERNING LAW - This Agreement is, and shall be deemed to be, a
contract entered into under and pursuant to the laws of the State of New York
and shall be in all respects governed, construed, applied and enforced in
accordance with the laws of the State of New York. No defense given or allowed
by the laws of any other state or country shall be interposed in any action or
proceeding hereon unless such defense is also given or allowed by the laws of
the State of New York.
22. JURISDICTION - All of the parties hereto agree to submit to personal
jurisdiction and acknowledge they are doing business in the State of New York
for any action or proceeding arising out of this Agreement and, in furtherance
of such agreement, they hereby agree and consent that without limiting other
methods of obtaining jurisdiction, that personal jurisdiction in any such
action or proceeding may be obtained within or without the jurisdiction of any
court located in New York and that any process or notice or motion or other
application to any such court in connection with any such action or proceeding
may be served by registered or certified mail, return receipt requested, to or
by personal service at their last known address whether such address be within
or without the jurisdiction of any such court.
23. NOTICES - All notices, demands or requests (collectively, "Notice")
made pursuant to, under or by virtue of this Agreement must be in writing and
sent to the party or parties to whom or to which such Notice is being sent, by
certified or registered mail, return receipt requested, reputable overnight
courier or delivered by hand with receipt acknowledged in writing to the
addresses first hereinabove set forth. All notices (a) shall be deemed given
when received in accordance herewith and (b) may be given either by a party or
such party's attorneys.
24. DUPLICATE ORIGINALS - This Agreement may be executed in any number of
duplicate originals and each such duplicate original shall be deemed to
constitute but one and the same instrument.
25. HEADINGS, ETC. - The headings, titles and captions of various
paragraphs of this Agreement are for convenience of reference only and are not
to be construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
(This part of the page intentionally blank.)
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16
Security Agreement
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
ABLE LABORATORIES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇
-------------------------------------------
▇▇▇▇ ▇▇▇▇, President, a duly authorized officer
▇▇▇▇▇▇ CAPITAL CORPORATION
By:
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▇▇▇▇▇▇ ▇▇▇▇▇▇, CEO, a duly authorized officer
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