Exhibit 10.19
PROMISSORY NOTE
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Principal Loan Date Maturity Loan No Call / Coll Account Officer Initials
$200,000.00 04-02-2002 04-02-2007 2920 KS
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References in the shaded area are for Lender's use only and do not limit the applicability
of this document to any particular loan or item. Any item above containing "***" has been
omitted due to text length limitations.
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Borrower: OURPET'S COMPANY Lender: FIRSTMERIT BANK, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ #▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Cosigner: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Principal Amount: $200,000.00 Initial Rate: 6.750% Date of Note: 4-12-02
PROMISE TO PAY. OURPET'S COMPANY and all cosigners signing this Note
("Borrower") jointly and severally promise to pay to FIRSTMERIT BANK, N.A.
("Lender"), or order, in lawful money of the United States of America, the
principal amount of Two Hundred Thousand & 00/100 Dollars ($200,000.00),
together with interest on the unpaid principal balance from 4-12-02, until paid
in full.
PAYMENT. Subject to any payment changes resulting from changes in the Index,
Borrower will pay this loan in accordance with the following payment schedule:
Borrower will pay this loan in 59 principal payments of $3,334.00 plus
accrued interest monthly beginning 5-15-02, the 60th payment will be a
balloon payment for all principal and all accrued interest not yet paid.
Unless otherwise agreed or required by applicable law, payments will be applied
first to accrued unpaid interest, then to principal, and any remaining amount to
any unpaid collection costs and late charges. The annual interest rate for this
Note is computed on a 365/360 basis; that is, by applying the ratio of the
annual interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Lender at ▇▇▇▇▇▇'s address shown above or at
such other place as Lender may designate in writing.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is ▇▇▇▇▇▇'s Prime Rate (the
"Index"). This is the rate Lender charges, or would charge, on 90-day unsecured
loans to the most creditworthy corporate customers. This rate may or may not be
the lowest rate available from Lender at any given time. Lender will tell
Borrower the current Index rate upon ▇▇▇▇▇▇▇▇'s request. The interest rate
change will not occur more often than each DAY AS PRIME CHANGES. Borrower
understands that Lender may make loans based on other rates as well. The Index
currently is 4.750% per annum. The interest rate to be applied to the unpaid
principal balance of this Note will be at a rate of 2.000 percentage points over
the Index, resulting in an initial rate of 6.750% per annum. NOTICE: Under no
circumstances will the interest rate on this Note be more than the maximum rate
allowed by applicable law. Whenever increases occur in the interest rate,
Lender, at its option, may do one or more of the following: (A) increase
Borrower's payments to ensure Borrower's loan will pay off by its original final
maturity date, (B) increase Borrower's payments to cover accruing interest, (C)
increase the number of Borrower's payments, and (D) continue Borrower's payments
at the same amount and increase Borrower's final payment.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by ▇▇▇▇▇▇ in
writing, relieve ▇▇▇▇▇▇▇▇ of ▇▇▇▇▇▇▇▇'s obligation to continue to make payments
under the payment schedule. Rather, early payments will reduce the principal
balance due and may result in Borrower's making fewer payments. ▇▇▇▇▇▇▇▇ agrees
not to send Lender payments marked "paid in full", "without recourse", or
similar language. If Borrower sends such a payment, ▇▇▇▇▇▇ may accept it without
losing any of ▇▇▇▇▇▇'s rights under this Note, and Borrower will remain
obligated to pay any further amount owed to Lender. All written communications
concerning disputed amounts, including any check or other payment instrument
that indicates that the payment constitutes "payment in full" of the amount owed
or that is tendered with other conditions or limitations or as full satisfaction
of a disputed amount must be mailed or delivered to: FIRSTMERIT BANK, N.A.;
COMMERCIAL BANKING #36300; ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇; ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
7.000% of the regularly scheduled payment or $35.00, whichever is greater.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, Lender, at its option, may, if permitted under applicable law,
increase the variable interest rate on this Note to 8.000 percentage points over
the Index. The interest rate will not exceed the maximum rate permitted by
applicable law.
DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note:
Payment Default. Borrower fails to make any payment when due under this
Note.
Other Defaults. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Note or in any of the
related documents or to comply with or to perform any term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.
False Statements. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this Note or
the related documents is false or misleading in any material respect,
either now or at the time made or furnished or becomes false or misleading
at any time thereafter.
Insolvency. The dissolution or termination of ▇▇▇▇▇▇▇▇'s existence as a
going business, the insolvency of ▇▇▇▇▇▇▇▇, the appointment of a receiver
for any part of ▇▇▇▇▇▇▇▇'s property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the loan. This includes
a garnishment of any of ▇▇▇▇▇▇▇▇'s accounts, including deposit accounts,
with Lender. However, this Event of Default shall not apply if there is a
good faith dispute by ▇▇▇▇▇▇▇▇ as to the validity or reasonableness of the
claim which is the basis of the creditor or forfeiture proceeding and if
Borrower gives ▇▇▇▇▇▇ written notice of the creditor or forfeiture
proceeding and deposits with Lender monies or a surety bond for the
creditor or forfeiture proceeding, in an amount determined by Lender, in
its sole discretion, as being an adequate reserve or bond for the dispute.
PROMISSORY NOTE
(Continued) Page 2
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Events Affecting Guarantor. Any of the preceding events occurs with respect
to any guarantor, endorser, surety, or accommodation party of any of the
indebtedness or any guarantor, endorser, surety, or accommodation party
dies or becomes incompetent, or revokes or disputes the validity of, or
liability under, any guaranty of the indebtedness evidenced by this Note.
In the event of a death, Lender, at its option, may, but shall not be
required to, permit the guarantor's estate to assume unconditionally the
obligations arising under the guaranty in a manner satisfactory to Lender,
and, in doing so, cure any Event of Default.
Change In Ownership. Any change in ownership of Fifty Percent (5O%) or more
of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial
condition, or ▇▇▇▇▇▇ believes the prospect of payment or performance of
this Note is impaired.
Insecurity. Lender in good faith believes itself insecure.
Cure Provisions. If any default, other than a default in payment is curable
and if Borrower has not been given a notice of a breach of the same
provision of this Note within the preceding twelve (12) months, it may be
cured (and no event of default will have occurred) if Borrower, after
receiving written notice from Lender demanding cure of such default: (1)
cures the default within fifteen (15) days; or (2) if the cure requires
more than fifteen (15) days, immediately initiates steps which Lender deems
in ▇▇▇▇▇▇'s sole discretion to be sufficient to cure the default and
thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, ▇▇▇▇▇▇ may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, and then
Borrower will pay that amount.
ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Borrower will pay Lender that amount. This
includes, subject to any limits under applicable law, ▇▇▇▇▇▇'s attorneys' fees
and ▇▇▇▇▇▇'s legal expenses, whether or not there is a lawsuit, including
attorneys' fees, expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), and appeals. If not
prohibited by applicable law, ▇▇▇▇▇▇▇▇ also will pay any court costs, in
addition to all other sums provided by law.
JURY WAIVER. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either ▇▇▇▇▇▇ or Borrower against
the other.
GOVERNING LAW. This Note will be governed by, construed and enforced in
accordance with federal law and the laws of the State of Ohio. This Note has
been accepted by ▇▇▇▇▇▇ in the State of Ohio.
CHOICE OF VENUE. If there is a lawsuit, ▇▇▇▇▇▇▇▇ agrees upon ▇▇▇▇▇▇'s request to
submit to the jurisdiction of the courts of LAKE County, State of Ohio.
CONFESSION OF JUDGMENT. ▇▇▇▇▇▇▇▇ hereby irrevocably authorizes and empowers any
attorney-at-law, including an attorney hired by ▇▇▇▇▇▇, to appear in any court
of record and to confess judgment against ▇▇▇▇▇▇▇▇ for the unpaid amount of this
Note as evidenced by an affidavit signed by an officer of Lender setting forth
the amount then due, attorneys' fees plus costs of suit, and to release all
errors, and waive all rights of appeal. If a copy of this Note, verified by an
affidavit, shall have been filed in the proceeding, it will not be necessary to
file the original as a warrant of attorney. Borrower waives the right to any
stay of execution and the benefit of all exemption laws now or hereafter in
effect. No single exercise of the foregoing warrant and power to confess
judgment will be deemed to exhaust the power, whether or not any such exercise
shall be held by any court to be invalid, voidable, or void; but the power will
continue undiminished and may be exercised from time to time as Lender may elect
until all amounts owing on this Note have been paid in full. ▇▇▇▇▇▇▇▇ waives any
conflict of interest that an attorney hired by ▇▇▇▇▇▇ may have in acting on
behalf of ▇▇▇▇▇▇▇▇ in confessing judgment against ▇▇▇▇▇▇▇▇ while such attorney
is retained by ▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ expressly consents to such attorney acting for
▇▇▇▇▇▇▇▇ in confessing judgment.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $27.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or ▇▇▇▇▇ accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes ▇▇▇▇▇▇, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts, and, at ▇▇▇▇▇▇'s option, to
administratively freeze all such accounts to allow Lender to protect ▇▇▇▇▇▇'s
charge and setoff rights provided in this paragraph.
COLLATERAL. Borrower acknowledges this Note is secured by blanket filings on
corporate assets of Virtu Company and Ourpet's Company as previously filed, more
fully described in Commercial Security Agreements of even date.
FEE PROVISION. UPON RECEIPT OF BILLING FROM LENDER, I AGREE TO PAY A LOAN FEE OF
$1,000.00.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon ▇▇▇▇▇▇▇▇, and
upon ▇▇▇▇▇▇▇▇'s heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.
NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES.
Please notify us if we report any inaccurate information about your account(s)
to a consumer reporting agency. Your written notice describing the specific
inaccuracy(ies) should be sent to us at the following address: FIRSTMERIT
CORPORATION FirstMerit Bank, N.A. III Cascade Plaza Akron, OH 44308.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. Borrower does not agree or intend to pay, and
▇▇▇▇▇▇ does not agree or intend to contract for, charge, collect, take, reserve
or receive (collectively referred to herein as "charge or collect"), any amount
in the nature of interest or in the nature of a fee for this loan, which would
in any way or event (including demand, prepayment, or acceleration) cause Lender
to charge or collect more for this loan than the maximum Lender would be
permitted to charge or collect by federal law or the law of the State of Ohio
(as applicable). Any such excess interest or unauthorized fee shall, instead of
anything stated to the contrary, be applied first to reduce the principal
balance of this loan, and when the principal has been paid in full, be refunded
to Borrower. Lender may delay or forgo enforcing any of its rights or remedies
under this Note without losing them. Borrower and any other person who signs,
guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, and notice of dishonor. Upon any change in the
terms of this Note, and unless otherwise expressly stated in writing, no party
who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this loan or release
any party or guarantor or collateral; or impair, fail to realize upon or perfect
▇▇▇▇▇▇'s security interest in the collateral; and take any other action deemed
necessary by ▇▇▇▇▇▇ without the consent of or notice to anyone. All such parties
also agree that ▇▇▇▇▇▇ may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.
PROMISSORY NOTE
(Continued) Page 3
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PRIOR TO SIGNING THIS NOTE, ▇▇▇▇▇▇▇▇ READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS AND THE
NOTICE TO COSIGNER SET FORTH BELOW. ▇▇▇▇▇▇▇▇ AGREES TO THE TERMS OF THE
NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE,
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NOTICE: FOR THIS NOTICE "YOU" MEANS THE BORROWER AND "CREDITOR" AND "HIS"
MEANS LENDER.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY
WITH THE AGREEMENT, OR ANY OTHER CAUSE.
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BORROWER:
OURPET'S COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, PRESIDENT of OURPET'S
COMPANY
COSIGNER:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------- ---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Individually ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
LENDER:
FIRSTMERIT BANK.N.A.
/s/ ▇▇▇ ▇▇▇▇▇
---------------------
Authorized Signer
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NOTICE TO COSIGNER
You are being asked to guarantee this debt. Think carefully before you do. If
the borrower doesn't pay the debt, you will have to. Be sure you can afford to
pay if you have to, and that you want to accept this responsibility.
You may have to pay up to the full amount of the debt if the borrower does not
pay. You may also have to pay late fees or collection costs, which increase this
amount.
The Lender can collect this debt from you without first trying to collect from
the borrower. The Lender can use the same collection methods against you that
can be used against the borrower, such as suing you, garnishing your wages, etc.
If this debt is ever in default, that fact may become a part of YOUR credit
record.
This notice is not the contract that makes you liable for the debt.
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ACKNOWLEDGMENT OF PRIME RATE
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Principal Loan Date Maturity Loan No. Call/Coll Account Officer Initials
$200,000.00 04-02-2002 04-02-2007 2920 KS
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References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item. Any item above
containing "***" has been omitted due to text length limitations.
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Borrower: OURPET'S COMPANY Lender: FIRSTMERIT BANK, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ #▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
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FIRSTMERIT BANK, N.A.'s Prime Rate is a benchmark rate which Lender
establishes from time to time and uses to compute an appropriate rate of
interest for a particular loan contract.
Generally, this benchmark rate is based on numerous factors, including
Lender's supply of funds, its cost of funds, its administrative cost and
competition from other suppliers of credit.
The Prime Rate is only one reference device among several used by Lender to
price loans. The Interest rate actually charged to a customer for a
specific loan may be above or below Lender's Prime or benchmark rate; that
actual rate will be determined based on several variables including
perceived risks, nature of collateral, term and amount of the loan,
competition, and the overall customer relationship.
The undersigned acknowledges that the foregoing has been read and
understood and that this document shall be a part of the terms and
conditions of the loan contract and any renewals, extensions, or
consolidations thereof.
BORROWER:
OURPET'S COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, PRESIDENT OF OURPET'S
COMPANY
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COMMERCIAL SECURITY AGREEMENT
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Principal Loan Date Maturity Loan No. Call/Coll Account Officer Initials
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$200,000.00 04-02-2002 04-02-2007 2920 KS
References in the shaded area are for Lender's use only and do not limit
the applicability of this document to any particular loan or item.
Any item above containing "***" has been omitted due to
text length limitations.
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Grantor: OURPET'S COMPANY Lender: FIRSTMERIT BANK, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ #▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
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THIS COMMERCIAL SECURITY AGREEMENT dated 4-12-02, is made and executed
between OURPET'S COMPANY ("Grantor") and FIRSTMERIT BANK, N.A. ("Lender").
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to
Lender a security interest in the Collateral to secure the Indebtedness and
agrees that ▇▇▇▇▇▇ shall have the rights stated in this Agreement with
respect to the Collateral, in addition to all other rights which Lender may
have by law.
COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement
means the following described property, whether now owned or hereafter
acquired, whether now existing or hereafter arising, and wherever located,
in which Grantor is giving to Lender a security interest for the payment of
the Indebtedness and performance of all other obligations under the Note
and this Agreement:
All inventory, equipment, accounts (including but not limited to all
health-care-insurance receivables), chattel paper, instruments
(including but not limited to all promissory notes), letter-of-credit
rights, letters of credit, documents, deposit accounts, investment
property, money, other rights to payment and performance, and general
intangibles (including but not limited to all software and all payment
intangibles); all oil, gas and other minerals before extraction; all
oil, gas, other minerals and accounts constituting as-extracted
collateral; all fixtures; all timber to be cut; all attachments,
accessions, accessories, fittings, increases, tools, parts, repairs,
supplies, and commingled goods relating to the foregoing property, and
all additions, replacements of and substitutions for all or any part
of the foregoing property; all insurance refunds relating to the
foregoing property; all good will relating to the foregoing property;
all records and data and embedded software relating to the foregoing
property, and all equipment, inventory and software to utilize,
create, maintain and process any such records and data on electronic
media; and all supporting obligations relating to the foregoing
property; all whether now existing or hereafter arising, whether now
owned or hereafter acquired or whether now or hereafter subject to any
rights in the foregoing property; and all products and proceeds
(including but not limited to all insurance payments) of or relating
to the foregoing property as previously filed with the Colorado
Secretary of State on January 2, 2002 as Document Number 2002000347.
In addition, the word "Collateral" also includes all the following, whether
now owned or hereafter acquired, whether now existing or hereafter arising,
and wherever located:
(A) All accessions, attachments, accessories, tools, parts, supplies,
replacements and additions to any of the collateral described herein,
whether added now or later.
(B) All products and produce of any of the property described in this
Collateral section.
(C) All accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, or other
disposition of any of the property described in this Collateral
section.
(D) All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property
described in this Collateral section, and sums due from a third party
who has damaged or destroyed the Collateral or from that party's
insurer, whether due to judgment, settlement or other process.
(E) All records and data relating to any of the property described in
this Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of
Grantor's right, title, and interest in and to all computer software
required to utilize, create, maintain, and process any such records or
data on electronic media.
Despite any other provision of this Agreement, Lender is not granted, and
will not have, a nonpurchase money security interest in household goods, to
the extent such a security interest would be prohibited by applicable law.
In addition, if because of the type of any Property, Lender is required to
give a notice of the right to cancel under Truth in Lending for the
Indebtedness, then Lender will not have a security interest in such
Collateral unless and until such a notice is given.
CROSS-COLLATERALIZATION. In addition to the Note, this Agreement secures
all obligations, debts and liabilities, plus interest thereon, of Grantor
to Lender, or any one or more of them, as well as all claims by Lender
against Grantor or any one or more of them, whether now existing or
hereafter arising, whether related or unrelated to the purpose of the Note,
whether voluntary or otherwise, whether due or not due, direct or indirect,
determined or undetermined, absolute or contingent, liquidated or
unliquidated whether Grantor may be liable individually or jointly with
others, whether obligated as guarantor, surety, accommodation party or
otherwise, and whether recovery upon such amounts may be or hereafter may
become barred by any statute of limitations, and whether the obligation to
repay such amounts may be or hereafter may become otherwise unenforceable.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves
a right of setoff in all Grantor's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Grantor holds
jointly with someone else and all accounts Grantor may open in the future.
However, this does not include any IRA or ▇▇▇▇▇ accounts, or any trust
accounts for which setoff would be prohibited by law. Grantor authorizes
▇▇▇▇▇▇, to the extent permitted by applicable law, to charge or setoff all
sums owing on the Indebtedness against any and all such accounts, and, at
▇▇▇▇▇▇'s option, to administratively freeze all such accounts to allow
Lender to protect ▇▇▇▇▇▇'s charge and setoff rights provided in this
paragraph.
▇▇▇▇▇▇▇'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL.
With respect to the Collateral, Grantor represents and promises to Lender
that:
Perfection of Security Interest. ▇▇▇▇▇▇▇ agrees to execute financing
statements and to take whatever other actions are requested by ▇▇▇▇▇▇
to perfect and continue ▇▇▇▇▇▇'s security interest in the Collateral.
Upon request of ▇▇▇▇▇▇, Grantor will deliver to Lender any and all of
the documents evidencing or constituting the Collateral, and Grantor
will note ▇▇▇▇▇▇'s interest upon any and all chattel paper if not
delivered to Lender for possession by ▇▇▇▇▇▇.
Notices to Lender. Grantor will promptly notify ▇▇▇▇▇▇ in writing at
▇▇▇▇▇▇'s address shown above (or such other addresses as Lender may
designate from time to time) prior to any (1) change in Grantor's
name; (2) change in Grantor's assumed business name(s); (3) change
COMMERCIAL SECURITY AGREEMENT
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in the management of the Corporation Grantor; (4) change in the
authorized signer(s); (5) change in Grantor's principal office
address; (6) change in Grantor's state of organization; (7) conversion
of Grantor to a new or different type of business entity; or (8)
change in any other aspect of Grantor that directly or indirectly
relates to any agreements between Grantor and Lender. No change in
Grantor's name or state of organization will take effect until after
▇▇▇▇▇▇ has received notice
No Violation. The execution and delivery of this Agreement will not
violate any law or agreement governing Grantor or to which Grantor is
a party, and its certificate or articles of incorporation and bylaws
do not prohibit any term or condition of this Agreement.
Enforceability of Collateral. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, as defined by the
Uniform Commercial Code, the Collateral is enforceable in accordance
with its terms, is genuine, and fully complies with all applicable
laws and regulations concerning form, content and manner of
preparation and execution, and all persons appearing to be obligated
on the Collateral have authority and capacity to contract and are in
fact obligated as they appear to be on the Collateral. At the time any
Account becomes subject to a security interest in favor of ▇▇▇▇▇▇, the
Account shall be a good and valid account representing an undisputed,
bona fide indebtedness incurred by the account debtor, for merchandise
held subject to delivery instructions or previously shipped or
delivered pursuant to a contract of sale, or for services previously
performed by Grantor with or for the account debtor. So long as this
Agreement remains in effect, Grantor shall not, without ▇▇▇▇▇▇'s prior
written consent, compromise, settle, adjust, or extend payment under
or with regard to any such Accounts. There shall be no setoffs or
counterclaims against any of the Collateral, and no agreement shall
have been made under which any deductions or discounts may be claimed
concerning the Collateral except those disclosed to Lender in writing.
Location of the Collateral. Except in the ordinary course of ▇▇▇▇▇▇▇'s
business, ▇▇▇▇▇▇▇ agrees to keep the Collateral (or to the extent the
Collateral consists of intangible property such as accounts or general
intangibles, the records concerning the Collateral) at Grantor's
address shown above or at such other locations as are acceptable to
Lender. Upon Lender's request, Grantor will deliver to Lender in form
satisfactory to Lender a schedule of real properties and Collateral
locations relating to Grantor's operations, including without
limitation the following: (1) all real property Grantor owns or is
purchasing; (2) all real property Grantor is renting or leasing; (3)
all storage facilities Grantor owns, rents, leases, or uses; and (4)
all other properties where Collateral is or may be located.
Removal of the Collateral. Except in the ordinary course of ▇▇▇▇▇▇▇'s
business, including the sales of inventory, Grantor shall not remove
the Collateral from its existing location without Lender's prior
written consent. To the extent that the Collateral consists of
vehicles, or other titled property, Grantor shall not take or permit
any action which would require application for certificates of title
for the vehicles outside the State of Colorado, without ▇▇▇▇▇▇'s prior
written consent. Grantor shall, whenever requested, advise Lender of
the exact location of the Collateral.
Transactions Involving Collateral. Except for inventory sold or
accounts collected in the ordinary course of Grantor's business, or as
otherwise provided for in this Agreement, Grantor shall not sell,
offer to sell, or otherwise transfer or dispose of the Collateral.
While Grantor is not in default under this Agreement, Grantor may sell
inventory, but only in the ordinary course of its business and only to
buyers who qualify as a buyer in the ordinary course of business. A
sale in the ordinary course of ▇▇▇▇▇▇▇'s business does not include a
transfer in partial or total satisfaction of a debt or any bulk sale.
Grantor shall not pledge, mortgage, encumber or otherwise permit the
Collateral to be subject to any lien, security interest, encumbrance,
or charge, other than the security interest provided for in this
Agreement, without the prior written consent of Lender. This includes
security interests even if junior in right to the security interests
granted under this Agreement. Unless waived by ▇▇▇▇▇▇, all proceeds
from any disposition of the Collateral (for whatever reason) shall be
held in trust for Lender and shall not be commingled with any other
funds; provided however, this requirement shall not constitute consent
by Lender to any sale or other disposition. Upon receipt, Grantor
shall immediately deliver any such proceeds to Lender.
Title. Grantor represents and warrants to Lender that Grantor holds
good and marketable title to the Collateral, free and clear of all
liens and encumbrances except for the lien of this Agreement. *No
financing statement covering any of the Collateral is on file in any
public office other than those which reflect the security interest
created by this Agreement or to which Lender has specifically
consented. Grantor shall defend ▇▇▇▇▇▇'s rights in the Collateral
against the claims and demands of all other persons.
Repairs and Maintenance. Grantor agrees to keep and maintain, and to
cause others to keep and maintain, the Collateral in good order,
repair and condition at all times while this Agreement remains in
effect. ▇▇▇▇▇▇▇ further agrees to pay when due all claims for work
done on, or services rendered or material furnished in connection with
the Collateral so that no lien or encumbrance may ever attach to or be
filed against the Collateral.
Inspection of Collateral. Lender and ▇▇▇▇▇▇'s designated
representatives and agents shall have the right at all reasonable
times to examine and inspect the Collateral wherever located.
Taxes, Assessments and Liens. Grantor will pay when due all taxes,
assessments and liens upon the Collateral, its use or operation, upon
this Agreement, upon any promissory note or notes evidencing the
Indebtedness, or upon any of the other Related Documents. Grantor may
withhold any such payment or may elect to contest any lien if Grantor
is in good faith conducting an appropriate proceeding to contest the
obligation to pay and so long as ▇▇▇▇▇▇'s interest in the Collateral
is not jeopardized in ▇▇▇▇▇▇'s sole opinion. If the Collateral is
subjected to a lien which is not discharged within fifteen (15) days,
Grantor shall deposit with Lender cash, a sufficient corporate surety
bond or other security satisfactory to Lender in an amount adequate to
provide for the discharge of the lien plus any interest, costs,
attorneys' fees or other charges that could accrue as a result of
foreclosure or sale of the Collateral. In any contest Grantor shall
defend itself and ▇▇▇▇▇▇ and shall satisfy any final adverse judgment
before enforcement against the Collateral. Grantor shall name ▇▇▇▇▇▇
as an additional obligee under any surety bond furnished in the
contest proceedings. ▇▇▇▇▇▇▇ further agrees to furnish Lender with
evidence that such taxes, assessments, and governmental and other
charges have been paid in full and in a timely manner. Grantor may
withhold any such payment or may elect to contest any lien if Grantor
is in good faith conducting an appropriate proceeding to contest the
obligation to pay and so long as ▇▇▇▇▇▇'s interest in the Collateral
is not jeopardized.
Compliance with Governmental Requirements. Grantor shall comply
promptly with all laws, ordinances, rules and regulations of all
governmental authorities, now or hereafter in effect, applicable to
the ownership, production, disposition, or use of the Collateral.
Grantor may contest in good faith any such law, ordinance or
regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as ▇▇▇▇▇▇'s interest in the Collateral,
in ▇▇▇▇▇▇'s opinion, is not jeopardized.
Hazardous Substances. Grantor represents and warrants that the
Collateral never has been, and never will be so long as this Agreement
remains a lien on the Collateral, used in violation of any
Environmental Laws or for the generation, manufacture, storage,
transportation, treatment, disposal, release or threatened release of
any Hazardous Substance. The representations and warranties contained
herein are based on Grantor's due diligence in investigating the
Collateral for Hazardous Substances. Grantor hereby (1) releases and
waives any future claims against ▇▇▇▇▇▇ for indemnity or contribution
in the event Grantor becomes liable for cleanup or other costs under
any Environmental Laws, and (2) agrees to indemnify and hold harmless
Lender against any and all claims and losses resulting from a breach
of this provision of this Agreement. This obligation to indemnify
shall survive the payment of the Indebtedness and the satisfaction of
this Agreement.
Maintenance of Casualty Insurance. Grantor shall procure and maintain
all risks insurance, including without limitation fire, theft and
* AND SBA
COMMERCIAL SECURITY AGREEMENT
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liability coverage together with such other insurance as Lender may
require with respect to the Collateral, in form, amounts, coverages
and basis reasonably acceptable to Lender and issued by a company or
companies reasonably acceptable to Lender. Grantor, upon request of
▇▇▇▇▇▇, will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished
without at least ten (10) days' prior written notice to Lender and not
including any disclaimer of the insurer's liability for failure to
give such a notice. Each insurance policy also shall include an
endorsement providing that coverage in favor of Lender will not be
impaired in any way by any act, omission or default of Grantor or any
other person. In connection with all policies covering assets in which
Lender holds or is offered a security interest, Grantor will provide
Lender with such loss payable or other endorsements as Lender may
require. If Grantor at any time fails to obtain or maintain any
insurance as required under this Agreement, Lender may (but shall not
be obligated to) obtain such insurance as Lender deems appropriate,
including if Lender so chooses "single interest insurance," which will
cover only ▇▇▇▇▇▇'s interest in the Collateral.
Application of Insurance Proceeds. Grantor shall promptly notify
Lender of any loss or damage to the Collateral. Lender may make proof
of loss if Grantor fails to do so within fifteen (15) days of the
casualty. All proceeds of any insurance on the Collateral, including
accrued proceeds thereon, shall be held by Lender as part of the
Collateral. If Lender consents to repair or replacement of the damaged
or destroyed Collateral, Lender shall, upon satisfactory proof of
expenditure, pay or reimburse Grantor from the proceeds for the
reasonable cost of repair or restoration. If Lender does not consent
to repair or replacement of the Collateral, Lender shall retain a
sufficient amount of the proceeds to pay all of the Indebtedness, and
shall pay the balance to Grantor. Any proceeds which have not been
disbursed within six (6) months after their receipt and which Grantor
has not committed to the repair or restoration of the Collateral shall
be used to prepay the Indebtedness.
Insurance Reports. Grantor, upon request of ▇▇▇▇▇▇, shall furnish to
Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request including the following:
(1) the name of the insurer; (2) the risks insured; (3) the amount of
the policy; (4) the property insured; (5) the then current value on
the basis of which insurance has been obtained and the manner of
determining that value; and (6) the expiration date of the policy.
▇▇▇▇▇▇▇'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and
except as otherwise provided below with respect to accounts, Grantor may
have possession of the tangible personal property and beneficial use of all
the Collateral and may use it in any lawful manner not inconsistent with
this Agreement or the Related Documents, provided that Grantor's right to
possession and beneficial use shall not apply to any Collateral where
possession of the Collateral by Lender is required by law to perfect
Lender's security interest in such Collateral. Until otherwise notified by
▇▇▇▇▇▇, Grantor may collect any of the Collateral consisting of accounts.
At any time and even though no Event of Default exists, Lender may exercise
its rights to collect the accounts and to notify account debtors to make
payments directly to Lender for application to the Indebtedness. If Lender
at any time has possession of any Collateral, whether before or after an
Event of Default, Lender shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral if Lender takes such
action for that purpose as Grantor shall request or as Lender, in ▇▇▇▇▇▇'s
sole discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be deemed to be
a failure to exercise reasonable care. Lender shall not be required to take
any steps necessary to preserve any rights in the Collateral against prior
parties, nor to protect, preserve or maintain any security interest given
to secure the Indebtedness.
▇▇▇▇▇▇'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect ▇▇▇▇▇▇'s interest in the Collateral or if Grantor fails
to comply with any provision of this Agreement or any Related Documents,
including but not limited to Grantor's failure to discharge or pay when due
any amounts Grantor is required to discharge or pay under this Agreement or
any Related Documents, Lender on Grantor's behalf may (but shall not be
obligated to) take any action that Lender deems appropriate, including but
not limited to discharging or paying all taxes, liens, security interests,
encumbrances and other claims, at any time levied or placed on the
Collateral and paying all costs for insuring, maintaining and preserving
the Collateral. All such expenditures incurred or paid by Lender for such
purposes will then bear interest at the rate charged under the Note from
the date incurred or paid by Lender to the date of repayment by Grantor.
All such expenses will become a part of the Indebtedness and, at Lender's
option, will (A) be payable on demand; (B) be added to the balance of the
Note and be apportioned among and be payable with any installment payments
to become due during either (1) the term of any applicable insurance
policy; or (2) the remaining term of the Note; or (C) be treated as a
balloon payment which will be due and payable at the Note's maturity. The
Agreement also will secure payment of these amounts. Such right shall be in
addition to all other rights and remedies to which ▇▇▇▇▇▇ may be entitled
upon Default.
DEFAULT. Each of the following shall constitute an Event of Default under
this Agreement:
Payment Default. Grantor fails to make any payment when due under the
Indebtedness.
Other Defaults. Grantor fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or
in any of the Related Documents or to comply with or to perform any
term, obligation, covenant or condition contained in any other
agreement between Lender and Grantor.
False Statements. Any warranty, representation or statement made or
furnished to Lender by Grantor or on Grantor's behalf under this
Agreement or the Related Documents is false or misleading in any
material respect, either now or at the time made or furnished or
becomes false or misleading at any time thereafter.
Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of
any collateral document to create a valid and perfected security
interest or lien) at any time and for any reason.
Insolvency. The dissolution or termination of ▇▇▇▇▇▇▇'s existence as a
going business, the insolvency of Grantor, the appointment of a
receiver for any part of Grantor's property, any assignment for the
benefit of creditors, any type of creditor workout, or the
commencement of any proceeding under any bankruptcy or insolvency laws
by or against Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any
governmental agency against any collateral securing the Indebtedness.
This includes a garnishment of any of Grantor's accounts, including
deposit accounts, with ▇▇▇▇▇▇. However, this Event of
COMMERCIAL SECURITY AGREEMENT
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Default shall not apply if there is a good faith dispute by Grantor as
to the validity or reasonableness of the claim which is the basis of
the creditor or forfeiture proceeding and if Grantor gives ▇▇▇▇▇▇
written notice of the creditor or forfeiture proceeding and deposits
with Lender monies or a surety bond for the creditor or forfeiture
proceeding, in an amount determined by Lender, in its sole discretion,
as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with
respect to guarantor, endorser, surety, or accommodation party of any
of the Indebtedness or guarantor, endorser, surety, or accommodation
party dies or becomes incompetent or revokes or disputes the validity
of, or liability under, any Guaranty of the Indebtedness.
Adverse Change. A material adverse change occurs in Grantor's
financial condition, or ▇▇▇▇▇▇ believes the prospect of payment or
performance of the Indebtedness is impaired.
Insecurity. Lender in good faith believes itself insecure.
Cure Provisions. If any default, other than a default in payment is
curable and if Grantor has not been given a notice of a breach of the
same provision of this Agreement within the preceding twelve (12)
months, it may be cured (and no event of default will have occurred)
if Grantor, after receiving written notice from Lender demanding cure
of such default: (1) cures the default within fifteen (15) days; or
(2) if the cure requires more than fifteen (15) days, immediately
initiates steps which Lender deems in ▇▇▇▇▇▇'s sole discretion to be
sufficient to cure the default and thereafter continues and completes
all reasonable and necessary steps sufficient to produce compliance as
soon as reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a
secured party under the Colorado Uniform Commercial Code. In addition and
without limitation, Lender may exercise any one or more of the following
rights and remedies:
Accelerate Indebtedness. ▇▇▇▇▇▇ may declare the entire Indebtedness,
including any prepayment penalty which Grantor would be required to
pay, immediately due and payable, without notice of any kind to
Grantor.
Assemble Collateral. Lender may require Grantor to deliver to Lender
all or any portion of the Collateral and any and all certificates of
title and other documents relating to the Collateral. Lender may
require Grantor to assemble the Collateral and make it available to
Lender at a place to be designated by Lender. ▇▇▇▇▇▇ also shall have
full power to enter upon the property of Grantor to take possession of
and remove the Collateral. If the Collateral contains other goods not
covered by this Agreement at the time of repossession, Grantor agrees
Lender may take such other goods, provided that ▇▇▇▇▇▇ makes
reasonable efforts to return them to Grantor after repossession.
Sell the Collateral. Lender shall have full power to sell, lease,
transfer, or otherwise deal with the Collateral or proceeds thereof in
▇▇▇▇▇▇'s own name or that of Grantor. Lender may sell the Collateral
at public auction or private sale. Unless the Collateral threatens to
decline speedily in value or is of a type customarily sold on a
recognized market, Lender will give Grantor, and other persons as
required by law, reasonable notice of the time and place of any public
sale, or the time after which any private sale or any other
disposition of the Collateral is to be made. However, no notice need
be provided to any person who, after Event of Default occurs, enters
into and authenticates an agreement waiving that person's right to
notification of sale. The requirements of reasonable notice shall be
met if such notice is given at least ten (10) days before the time of
the sale or disposition. All expenses relating to the disposition of
the Collateral, including without limitation the expenses of retaking,
holding, insuring, preparing for sale and selling the Collateral,
shall become a part of the Indebtedness secured by this Agreement and
shall be payable on demand, with interest at the Note rate from date
of expenditure until repaid.
Appoint Receiver. Lender shall have the right to have a receiver
appointed to take possession of all or any part of the Collateral,
with the power to protect and preserve the Collateral, to operate the
Collateral preceding foreclosure or sale, and to collect the Rents
from the Collateral and apply the proceeds, over and above the cost of
the receivership, against the Indebtedness. The receiver may serve
without bond if permitted by law. ▇▇▇▇▇▇'s right to the appointment of
a receiver shall exist whether or not the apparent value of the
Collateral exceeds the Indebtedness by a substantial amount.
Employment by ▇▇▇▇▇▇ shall not disqualify a person from serving as a
receiver. Receiver may be appointed by a court of competent
jurisdiction upon ex parte application and without notice, notice
being expressly waived.
Collect Revenues, Apply Accounts. Lender, either itself or through a
receiver, may collect the payments, rents, income, and revenues from
the Collateral. Lender may at any time in ▇▇▇▇▇▇'s discretion transfer
any Collateral into ▇▇▇▇▇▇'s own name or that of ▇▇▇▇▇▇'s nominee and
receive the payments, rents, income, and revenues therefrom and hold
the same as security for the Indebtedness or apply it to payment of
the Indebtedness in such order of preference as Lender may determine.
Insofar as the Collateral consists of accounts, general intangibles,
insurance policies, instruments, chattel paper, choses in action, or
similar property, Lender may demand, collect, receipt for, settle,
compromise, adjust, sue for, foreclose, or realize on the Collateral
as Lender may determine, whether or not Indebtedness or Collateral is
then due. For these purposes, ▇▇▇▇▇▇ may, on behalf of and in the name
of Grantor, receive, open and dispose of mail addressed to Grantor;
change any address to which mail and payments are to be sent; and
endorse notes, checks, drafts, money orders, documents of title,
instruments and items pertaining to payment, shipment, or storage of
any Collateral. To facilitate collection, ▇▇▇▇▇▇ may notify account
debtors and obligors on any Collateral to make payments directly to
Lender.
Obtain Deficiency. If ▇▇▇▇▇▇ chooses to sell any or all of the
Collateral, Lender may obtain a judgment against Grantor for any
deficiency remaining on the Indebtedness due to Lender after
application of all amounts received from the exercise of the rights
provided in this Agreement. Grantor shall be liable for a deficiency
even if the transaction described in this subsection is a sale of
accounts or chattel paper.
Other Rights and Remedies. Lender shall have all the rights and
remedies of a secured creditor under the provisions of the Uniform
Commercial Code, as may be amended from time to time. In addition,
Lender shall have and may exercise any or all other rights and
remedies it may have available at law, in equity, or otherwise.
Election of Remedies. Except as may be prohibited by applicable law,
all of Lender's rights and remedies, whether evidenced by this
Agreement, the Related Documents, or by any other writing, shall be
cumulative and may be exercised singularly or concurrently. Election
by ▇▇▇▇▇▇ to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to
perform an obligation of Grantor under this Agreement, after ▇▇▇▇▇▇▇'s
failure to perform, shall not affect ▇▇▇▇▇▇'s right to declare a
default and exercise its remedies.
FEE PROVISION. UPON RECEIPT OF BILLING FROM LENDER, I AGREE TO PAY A LOAN
FEE OF $1,000.00.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Agreement. No alteration of or
amendment to this Agreement shall be effective unless given in writing
and signed by the party or parties sought to be charged or bound by
the alteration or amendment.
Attorneys' Fees; Expenses. ▇▇▇▇▇▇▇ agrees to pay upon demand all of
▇▇▇▇▇▇'s costs and expenses; including ▇▇▇▇▇▇'s attorneys' fees and
COMMERCIAL SECURITY AGREEMENT
(Continued) Page 5
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▇▇▇▇▇▇'s legal expenses, incurred in connection with the enforcement
of this Agreement. Lender may hire or pay someone else to help enforce
this Agreement, and Grantor shall pay the costs and expenses of such
enforcement. Costs and expenses include ▇▇▇▇▇▇'s attorneys' fees and
legal expenses whether or not there is a lawsuit, including attorneys'
fees and legal expenses for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), appeals, and
any anticipated post-judgment collection services. Grantor also shall
pay all court costs and such additional fees as may be directed by the
court.
Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Agreement.
Governing Law. This Agreement will be governed by, construed and
enforced in accordance with federal law and the laws of the State of
Ohio, except and only to the extent of procedural matters related to
the perfection and enforcement of ▇▇▇▇▇▇'s rights and remedies against
the Collateral, which matters shall be governed by the laws of the
State of Colorado. However, in the event that the enforceability or
validity of any provision of this Agreement is challenged or
questioned, such provision shall be governed by whichever applicable
state or federal law would uphold or would enforce such challenged or
questioned provision. The loan transaction which is evidenced by the
Note and this Agreement has been applied for, considered, approved and
made, and all necessary loan documents have been accepted by Lender in
the State of Ohio.
Choice of Venue. If there is a lawsuit, ▇▇▇▇▇▇▇ agrees upon ▇▇▇▇▇▇'s
request to submit to the jurisdiction of the courts of LAKE County,
State of Ohio.
No Waiver by ▇▇▇▇▇▇. Lender shall not be deemed to have waived any
rights under this Agreement unless such waiver is given in writing and
signed by ▇▇▇▇▇▇. No delay or omission on the part of Lender in
exercising any right shall operate as a waiver of such right or any
other right. A waiver by ▇▇▇▇▇▇ of a provision of this Agreement shall
not prejudice or constitute a waiver of Lender's right otherwise to
demand strict compliance with that provision or any other provision of
this Agreement. No prior waiver by ▇▇▇▇▇▇, nor any course of dealing
between ▇▇▇▇▇▇ and Grantor, shall constitute a waiver of any of
Lender's rights or of any of Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance
shall not constitute continuing consent to subsequent instances where
such consent is required and in all cases such consent may be granted
or withheld in the sole discretion of Lender.
Notices. Any notice required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered, when
actually received by telefacsimile (unless otherwise required by law),
when deposited with a nationally recognized overnight courier, or, if
mailed, when deposited in the United States mail, as first class,
certified or registered mail postage prepaid, directed to the
addresses shown near the beginning of this Agreement. Any party may
change its address for notices under this Agreement by giving formal
written notice to the other parties, specifying that the purpose of
the notice is to change the party's address. For notice purposes,
▇▇▇▇▇▇▇ agrees to keep ▇▇▇▇▇▇ informed at all times of ▇▇▇▇▇▇▇'s
current address. Unless otherwise provided or required by law, if
there is more than one Grantor, any notice given by Lender to any
Grantor is deemed to be notice given to all Grantors.
Power of Attorney. Grantor hereby appoints ▇▇▇▇▇▇ as ▇▇▇▇▇▇▇'s
irrevocable attorney-in-fact for the purpose of executing any
documents necessary to perfect, amend, or to continue the security
interest granted in this Agreement or to demand termination of filings
of other secured parties. Lender may at any time, and without further
authorization from Grantor, file a carbon, photographic or other
reproduction of any financing statement or of this Agreement for use
as a financing statement. Grantor will reimburse Lender for all
expenses for the perfection and the continuation of the perfection of
▇▇▇▇▇▇'s security interest in the Collateral.
Severability. If a court of competent jurisdiction finds any provision
of this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision
illegal, invalid, or unenforceable as to any other circumstance. If
feasible, the offending provision shall be considered modified so that
it becomes legal, valid and enforceable. If the offending provision
cannot be so modified, it shall be considered deleted from this
Agreement. Unless otherwise required by law, the illegality,
invalidity, or unenforceability of any provision of this Agreement
shall not affect the legality, validity or enforceability of any other
provision of this Agreement.
Successors and Assigns. Subject to any limitations stated in this
Agreement on transfer of Grantor's interest, this Agreement shall be
binding upon and inure to the benefit of the parties, their successors
and assigns. If ownership of the Collateral becomes vested in a person
other than Grantor, Lender, without notice to Grantor, may deal with
Grantor's successors with reference to this Agreement and the
Indebtedness by way of forbearance or extension without releasing
Grantor from the obligations of this Agreement or liability under the
Indebtedness.
Survival of Representations and Warranties. All representations,
warranties, and agreements made by Grantor in this Agreement shall
survive the execution and delivery of this Agreement, shall be
continuing in nature, and shall remain in full force and effect until
such time as Grantor's Indebtedness shall be paid in full.
Time is of the Essence. Time is of the essence in the performance of
this Agreement.
Waive Jury. All parties to this Agreement hereby waive the right to
any jury trial in any action, proceeding, or counterclaim brought by
any party against any other party.
DEFINITIONS. The following capitalized words and terms shall have the
following meanings when used in this Agreement. Unless specifically stated
to the contrary, all references to dollar amounts shall mean amounts in
lawful money of the United States of America. Words and terms used in the
singular shall include the plural, and the plural shall include the
singular, as the context may require. Words and terms not otherwise defined
in this Agreement shall have the meanings attributed to such terms in the
Uniform Commercial Code:
Account. The word "Account" means a trade account, account receivable,
other receivable, or other right to payment for goods sold or services
rendered owing to Grantor (or to a third party grantor acceptable to
Lender).
Agreement. The word "Agreement" means this Commercial Security
Agreement, as this Commercial Security Agreement may be amended or
modified from time to time, together with all exhibits and schedules
attached to this Commercial Security Agreement from time to time.
Borrower. The word "Borrower" means OURPET'S COMPANY, and all other
persons and entities signing the Note in whatever capacity.
Collateral. The word "Collateral" means all of Grantor's right, title
and interest in and to all the Collateral as described in the
Collateral Description section of this Agreement.
Default. The word "Default" means the Default set forth in this
Agreement in the section titled "Default".
Environmental Laws. The words "Environmental Laws" mean any and all
state, federal and local statutes, regulations and ordinances relating
to the protection of human health or the environment, including
without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section
9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986, Pub. L. No. 99-499 ("▇▇▇▇"), the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or
other applicable state or federal laws, rules, or
COMMERCIAL SECURITY AGREEMENT
(Continued) Page 6
================================================================================
regulations adopted pursuant thereto.
Event of Default. The words "Event of Default" mean any of the events
of default set forth in this Agreement in the default section of this
Agreement.
Grantor. The word "Grantor" means OURPET'S COMPANY.
Guaranty. The word "Guaranty" means the guaranty from guarantor,
endorser, surety, or accommodation party to Lender, including without
limitation a guaranty of all or part of the Note.
Hazardous Substances. The words "Hazardous Substances" mean materials
that, because of their quantity, concentration or physical, chemical
or infectious characteristics, may cause or pose a present or
potential hazard to human health or the environment when improperly
used, treated, stored, disposed of, generated, manufactured,
transported or otherwise handled. The words "Hazardous Substances" are
used in their very broadest sense and include without limitation any
and all hazardous or toxic substances, materials or waste as defined
by or listed under the Environmental Laws. The term "Hazardous
Substances" also includes, without limitation, petroleum and petroleum
by-products or any fraction thereof and asbestos.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced
by the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which
Grantor is responsible under this Agreement or under any of the
Related Documents.
Lender. The word "Lender" means FIRSTMERIT BANK, N.A., its successors
and assigns.
Note. The word "Note" means the Note executed by Grantor and any
cosigners in the principal amount of $200,000.00 dated 4-12-02,
together with all renewals of, extensions of, modifications of,
refinancings of, consolidations of, and substitutions for the note or
credit agreement.
Related Documents. The words "Related Documents" mean all promissory
notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security
deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection
with the Indebtedness.
GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL
SECURITY AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
4-12-02.
GRANTOR:
OURPET'S COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, PRESIDENT of OURPET'S
COMPANY
LENDER:
FIRSTMERIT BANK, N.A.
/s/ ▇▇▇ ▇▇▇▇▇
----------------------------------------
Authorized Signer
================================================================================
AGREEMENT TO PROVIDE INSURANCE
------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call/Coll Account Officer Initials
$200,000.00 04-02-2002 04-02-2007 2920 KS
------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability
of this document to any particular loan or item.
Any item above containing "***" has been omitted due to text length limitations.
------------------------------------------------------------------------------------------
Grantor: OURPET'S COMPANY Lender: FIRSTMERIT BANK, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ #▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
==========================================================================================
INSURANCE REQUIREMENTS. Grantor, OURPET'S COMPANY ("Grantor"), understands that
insurance coverage is required in connection with the extending of a loan or the
providing of other financial accommodations to Grantor by ▇▇▇▇▇▇. These
requirements are set forth in the security documents for the loan. The following
minimum insurance coverages must be provided on the following described
collateral (the "Collateral"):
Collateral: All inventory, equipment, accounts (including but not limited to all
health-care-insurance receivables), chattel paper, instruments
(including but not limited to all promissory notes),
letter-of-credit rights, letters of credit, documents, deposit
accounts, investment property, money, other rights to payment and
performance, and general intangibles (including but not limited to
all software and all payment intangibles); all oil, gas and other
minerals before extraction; all oil, gas, other minerals and
accounts constituting as-extracted collateral; all fixtures; all
timber to be cut; all attachments, accessions, accessories,
fittings, increases, tools, parts, repairs, supplies, and commingled
goods relating to the foregoing property, and all additions,
replacements of and substitutions for all or any part of the
foregoing property; all insurance refunds relating to the foregoing
property; all good will relating to the foregoing property; all
records and data and embedded software relating to the foregoing
property, and all equipment, inventory and software to utilize,
create, maintain and process any such records and data on electronic
media; and all supporting obligations relating to the foregoing
property; all whether now existing or hereafter arising, whether now
owned or hereafter acquired or whether now or hereafter subject to
any rights in the foregoing property; and all products and proceeds
(including but not limited to all insurance payments) of or relating
to the foregoing property as previously filed with the Colorado
Secretary of State on January 2, 2002 as Document Number
2002000347.
Type. All risks, including fire, theft and liability.
Amount. Full Insurable Value.
Basis. Replacement value.
Endorsements. Lender loss payable clause with stipulation that
coverage will not be cancelled or diminished without a minimum of 10
days prior written notice to Lender.
Latest Delivery Date: By the loan closing date.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance company
Grantor may choose that is reasonably acceptable to Lender. ▇▇▇▇▇▇▇ understands
that credit may not be denied solely because insurance was not purchased through
Lender.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Lender, on the latest
delivery date stated above, proof of the required insurance as provided above,
with an effective date of 4-12-02, or earlier. Grantor acknowledges and agrees
that if Grantor fails to provide any required insurance or fails to continue
such insurance in force, Lender may do so at Grantor's expense as provided in
the applicable security document. The cost of any such insurance, at the option
of Lender, shall be added to the indebtedness as provided in the security
document. GRANTOR ACKNOWLEDGES THAT IF LENDER SO PURCHASES ANY SUCH INSURANCE,
THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE TO THE
COLLATERAL, UP TO AN AMOUNT EQUAL TO THE LESSER OF (1) THE UNPAID BALANCE OF
THE DEBT, EXCLUDING ANY UNEARNED FINANCE CHARGES, OR (2) THE VALUE OF THE
COLLATERAL; HOWEVER, GRANTOR'S EQUITY IN THE COLLATERAL MAY NOT BE INSURED. IN
ADDITION, THE INSURANCE MAY NOT PROVIDE ANY PUBLIC LIABILITY OR PROPERTY DAMAGE
INDEMNIFICATION AND MAY NOT MEET THE REQUIREMENTS OF ANY FINANCIAL
RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral, Grantor
authorizes Lender to provide to any person (including any insurance agent or
company) all information Lender deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO PROVIDE
INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED 4-12-02.
GRANTOR:
OURPET'S COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, PRESIDENT OF OURPET'S
COMPANY
