LOAN AND SECURITY AGREEMENT
Dated May 1, 1997
by and between
▇▇▇▇ TECHNOLOGY GROUP, LTD.
as Borrower
▇▇-▇▇▇▇▇▇▇
(Federal Tax ID No. of Borrower)
and
FINOVA CAPITAL CORPORATION
as Lender
$873,609.79
Amount of Loan
COMMERCIAL EQUIPMENT FINANCE
LOAN AND SECURITY AGREEMENT
AGREEMENT, dated as of May 1, 1997, by and between ▇▇▇▇ TECHNOLOGY
GROUP, LTD. a Delaware corporation ("BORROWER"), having its principal place of
business at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and FINOVA CAPITAL
CORPORATION, a Delaware corporation ("LENDER"), having a place of business at ▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H :
WHEREAS, Borrower has requested Lender to make a loan to Borrower and
Lender is willing to make such loan to Borrower upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and intending to be legally bound hereby, the parties
hereto covenant and agree as follows:
ARTICLE 1. DEFINITIONS; CONSTRUCTION
1.1 Definitions.
In addition to other words and terms defined elsewhere in this
Agreement, as used herein the following words and terms have the following
meanings, respectively, unless the context hereof otherwise clearly requires:
"AGREEMENT" means this Loan and Security Agreement as amended, modified
or supplemented from time to time.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day
on which banking institutions are authorized or obligated to close in New Jersey
or Arizona.
"CAPITAL EXPENDITURES" means any expenditure for fixed assets,
leasehold improvements, capital leases under GAAP, installment purchases of
machinery and equipment, acquisitions of real estate and other similar
expenditures.
"CLOSING DATE" means the date on which the parties enter into this
Agreement.
"COLLATERAL" means all assets of Borrower in which Borrower has granted
or will ▇▇▇▇▇ ▇ ▇▇▇▇ to Lender, pursuant to this Agreement, or otherwise,
including those assets described and defined as Collateral in Section 3.1
"CONSTITUENT DOCUMENTS" means the certificate of incorporation,
agreement of partnership or limited partnership, organizational agreement,
operating agreement, by-laws, or such other similar document pursuant to which
Borrower and/or the Guarantors were organized or their affairs are governed.
"DEFAULT" means an event which with notice or lapse of time, or both,
would constitute an Event of Default.
"DISBURSEMENT DATE" means the date on which all conditions to the Loan
are satisfied by Borrower (which shall not be later than the Outside Date) and
the Loan proceeds are disbursed to Borrower or to other Persons at Borrower's
direction.
"EQUIPMENT" means the equipment described on Schedule A annexed hereto,
wherever located, and which forms part of the Collateral.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EVENT OF DEFAULT" means any of the Events of Default
described in Section 7.1 hereof.
"EXECUTIVE OFFICER" means the President, the Chief Executive
Officer, or the Chief Financial Officer of Borrower elected from
time to time.
"GAAP" means generally accepted accounting principles in the United
States of America (as such principles may change from time to time) applied on a
consistent basis (except for changes in application in which Borrower's
independent certified public accountants concur), applied both to classification
of items and amounts.
"GUARANTEE(S)" means the unconditional Guarantees of the due payment
and performance of all of the Obligations of Borrower to Lender, executed by
each of the Guarantors, in form and substance satisfactory to Lender.
"GUARANTOR(S)" means PFM Communications, Inc., a New York corporation,
Bluestreak Digital, Inc., a New York corporation, NAFT International Ltd., a New
York corporation, and NAFT Computer Service Corp., a New York corporation.
"INTEREST RATE" means the Index Rate plus five and sixty three
hundredths (5.63%) percent. The "INDEX RATE" shall be the highest yield, as
published in The Wall Street Journal, on the first (1st) Business Day preceding
the Disbursement Date, for Treasury Notes having a maturity date on or closest
to the Maturity Date. Interest shall be calculated on the basis of a
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year of 360 days and twelve months of thirty (30) days each and charged on a
daily basis.
"LAW" means any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of
any government or governmental agency.
"LEGAL REQUIREMENTS" means any and all present and future judicial, and
administrative rulings or decisions, and any and all present and future federal,
state, and local laws, ordinances, rules, regulations, permits and certificates,
in each case, in any way applicable to Borrower (or the ownership or use of the
Collateral or its other assets) and/or the Guarantors, or this transaction.
"LIEN" means any mortgage, pledge, lien, security interest (including
without limitation any conditional sale or other title retention agreement),
grant of a leasehold, charge or other encumbrance of any nature whatsoever, and
also means the filing of or the agreement to give any financing statement or
analogous document under the UCC or analogous law of any jurisdiction.
"LOAN" has the meaning given to such term in Section 2.1
hereof.
"LOAN DOCUMENTS" means this Agreement, the Note, the Guaranties, the
Insurance Letter, and any other agreements, instruments and documents required
to be, or which are, executed by Borrower or the Guarantors in connection with
this Agreement or the Loan (as the same may from time to time be amended,
modified or supplemented).
"MATURITY DATE" means the date upon which the thirty-sixth (36th)
consecutive monthly payment of principal and interest is scheduled to be due.
"NOTE" means the promissory note of Borrower executed and delivered by
Borrower under this Agreement, in substantially the form annexed hereto as
Exhibit A with the blanks appropriately filled in.
"OBLIGATIONS" means all of the indebtedness, liabilities and
obligations of every kind and nature of Borrower to Lender, whether now existing
or hereafter arising, whether or not currently contemplated, howsoever arising,
including, without limitation, all indebtedness, liabilities and obligations
arising under, in connection with or evidenced by this Agreement, the Note, the
other Loan Documents, or otherwise.
"OFFICE", when used in connection with Lender, means its office located
at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
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07652, or such other office of Lender as may be designated in writing from time
to time by Lender to Borrower.
"OUTSIDE DATE" means May 30, 1997.
"PERSON" means an individual, corporation, national banking
association, partnership, trust, unincorporated association, joint venture,
joint-stock company, government (including political subdivisions), governmental
authority or agency, or any other entity.
"PLAN" means any employee benefit plan which is covered by ERISA and
which is maintained by Borrower or, in the case of a plan to which more than one
employer contributes, to which Borrower made contributions at any time within
the five plan years preceding the date of termination.
"PREMISES" means ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
"TERM" means the period beginning on the first payment date following
the Disbursement Date and ending on the Maturity Date.
"UCC" means the Uniform Commercial Code as adopted in the
State of Arizona.
1.2 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
herein or unless the context otherwise requires:
(i) any pronoun used shall be deemed to cover
both gender forms as well as the neuter form;
(ii) all references to the plural shall include
the singular, the singular the plural and the part the whole;
(iii) the word "or" has the inclusive meaning
frequently identified by the phrase "and/or";
(iv) accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with
GAAP;
(v) the words "herein", "herewith", "hereunder"
and "hereof" and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this
Agreement;
(vi) references herein to "Articles",
"Sections", "Subsections", "Paragraphs", and other subdivisions
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without reference to a document are to designated Articles,
Sections, Subsections, Paragraphs and other subdivisions of this
Agreement;
(vii) a reference to a Subsection without further
reference to a Section is a reference to such Subsection as contained in the
same Section in which the reference appears, and this rule shall also apply to
Paragraphs and other subdivisions;
(viii) the term "include" or "including" shall
mean, without limitation, by reason of enumeration; and
(ix) the term "satisfactory to Lender" or
"satisfaction of Lender" or "satisfactory to counsel" or "satisfaction of
counsel" or other similar terms means satisfactory to Lender or its counsel in
its sole and absolute discretion.
ARTICLE 2. THE LOAN
2.1 The Loan.
Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, including, without limitation,
the fulfillment of each and every condition of lending, Lender agrees to make a
Loan to Borrower in the principal amount of Eight Hundred Seventy-Three Thousand
Six Hundred Nine and 79/100 Dollars ($873,609.79) (the "Loan").
2.2 Use of Proceeds.
The proceeds of the Loan shall be used by Borrower solely for its
working capital.
2.3 The Note.
The obligation of Borrower to repay the Loan and to pay interest
thereon shall be evidenced by the Note. The Note shall be dated the Closing Date
and shall be executed by Borrower delivered to Lender on the Closing Date.
2.4 Disbursement.
Subject to the conditions set forth herein, Lender shall, on the
Disbursement Date, credit, by wire transfer, the amount of the Loan to the
account of Borrower or the Person or Persons specified in writing by Borrower.
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2.5 Loan Account.
Lender shall maintain a loan account on its books in the name of
Borrower for the Loan in which will be recorded all payments of principal
thereof and all accruals and payments of interest thereon. The entries in the
loan account (in the absence of manifest error in the making thereof) shall be
conclusive evidence of the outstanding principal thereof and accrued interest
thereon from time to time. Lender shall provide Borrower with statements of said
account from time to time on request.
2.6 Interest Rates.
2.6.1 Interest Prior to Maturity. Prior to maturity
(whether by acceleration or otherwise) the unpaid principal
amount of the Loan shall bear interest at the Interest Rate.
2.6.2 Interest After Maturity. Commencing with the day after
the principal amount of any part of the Loan shall have become due and payable
(by acceleration or otherwise), such part of the Loan or the entire Loan (as the
case may be) shall bear interest at the daily rate of four percent (4%) per
annum above the Interest Rate (the "Default Rate").
2.6.3 Maximum Rate. Lender and Borrower intend the Loan
Documents to comply in all respects with all provisions of Law and not to
violate, in any way, any legal limitations on interest charges. Accordingly, if,
for any reason, Borrower is required to pay, or has paid, interest at a rate in
excess of the highest rate of interest which may be charged by Lender or which
Borrower may legally contract to pay under applicable law (the "Maximum Rate"),
then the Interest Rate shall be deemed to be reduced, automatically and
immediately, to the Maximum Rate, and interest payable hereunder shall be
computed and paid at the Maximum Rate and the portion of all prior payments of
interest in excess of the Maximum Rate shall be deemed to have been prepayments
of the outstanding principal of the Loan and applied to the installments in the
inverse order of their maturities.
2.7 Payments.
2.7.1 Time; Place; Manner. All payments to be made in respect
of principal, interest, or other amounts due from Borrower hereunder or under
the Note shall become due at 12:00 o'clock noon, New Jersey time, on the day
when due without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived. Such payments shall be made to Lender in
lawful money of the United States of America in immediately available funds.
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2.7.2 Payments of Principal and Interest. The Loan, together
with interest thereon at the Interest Rate, shall be repaid in thirty-six (36)
equal consecutive monthly payments of principal and interest each in an amount
which will fully amortize the Loan at the Interest Rate over the Term. The first
such monthly payment of principal and interest shall be due and payable on the
first day of the second month succeeding the Disbursement Date and the payments
shall continue on a like day in each and every month thereafter through and
including the Maturity Date; provided that (i) if the Disbursement Date is the
first day of a month, the first such monthly payment of principal and interest
shall be due on the first day of the immediately succeeding month, and (ii) if
the Disbursement Date is not the first day of the month, Borrower shall pay, on
the first day of the month immediately succeeding the Disbursement Date,
interest only, at the Interest Rate, from the Disbursement Date to the last day
of the month in which the Disbursement Date occurs. Lender shall compute the
amount of each payment and advise Borrower of such amount. The entire unpaid
principal balance which was not payable earlier, whether due to regularly
scheduled payments, acceleration or otherwise, together with any unpaid
interest, fees, costs and charges shall be due and payable on the Maturity Date.
After the maturity of all or any part of the Loan (by acceleration or
otherwise), interest on the Loan or such part thereof shall be due and payable
at the Default Rate on demand.
2.7.3 Application of Payments. Each payment under this
Agreement and the other Loan Documents shall be applied, first to fees, costs,
expenses and charges, if any, owing to Lender, then to interest as may be due
hereunder, and the balance of such payment shall be applied to the principal
balance of the Loan.
2.7.4 Net Payments. All payments hereunder and under the Note
shall be made by Borrower to Lender without defense, set-off, claim or
counterclaim and without deduction for any present or future income, stamp or
other taxes, levies, imposts, deductions, charges or withholdings whatsoever
imposed, assessed, levied or collected by or for the benefit of any jurisdiction
or taxing authority. In addition, Borrower shall pay any and all taxes (stamp or
otherwise) payable or determined to be payable in connection with the execution
and delivery of this Agreement, the Note and the other Loan Documents and on all
payments to be made by Borrower hereunder and under the Note and the other Loan
Documents (other than Lender's income taxes) and all taxes payable in connection
with or related to the Collateral.
2.8 Prepayments.
Borrower shall have the right, upon not less than ten (10) days prior
written notice to Lender, on any regularly scheduled payment date occurring
after the Disbursement Date, to prepay the
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outstanding principal balance of the Loan in whole, but not in part, provided
that Borrower shall pay to Lender, together with the principal balance of the
Loan, (i) all accrued and unpaid interest on the amount prepaid through the date
of prepayment, (ii) all outstanding fees, charges and other amounts then due
under the Loan Documents, and (iii) a prepayment fee in an amount equal to the
product of (A) the outstanding principal balance of the Loan at the time of
prepayment, times (B) the applicable percentage set forth opposite the year of
the Term in which the prepayment is made, as set forth below:
Year of Term of Loan in
Which Prepayment is Made Percentage
1 5%
2 4%
3 3%
Once given, the notice of prepayment shall be irrevocable. Any acceleration of
the Loan as a consequence of the occurrence of an Event of Default shall be
presumed to be a mechanism to avoid the requirements of this provision and shall
be deemed a prepayment and subject to the appropriate prepayment premium set
forth above, in addition to all other amounts otherwise due under this Agreement
and the other Loan Documents. If the Loan is accelerated prior to the date upon
which prepayment is permitted to be made hereunder, the applicable percentage
shall be 5%.
2.9 Administrative Costs.
If Borrower shall fail to make any payment of principal or interest
within ten (10) days after the same is due, Borrower shall pay a late charge of
five percent (5%) of the unpaid amounts, but in no event greater than the
maximum rate permitted by law, and such amount shall be payable upon demand.
Such payment is not interest for the use of money, but is solely to cover
Lender's administrative costs occasioned by such delay.
ARTICLE 3. SECURITY
3.1 Security.
As security for the full and timely payment and performance of all of
the Obligations of Borrower to Lender, Borrower hereby assigns, pledges,
transfers and sets over to Lender, and hereby agrees that Lender shall have, and
hereby grants to and creates in favor of Lender, a first security interest under
the UCC subject to no other Liens, in and to the following, in each case
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whether now existing or hereafter arising, now owned or hereafter acquired,
wherever located ("Collateral"):
3.1.1 The Equipment; and
3.1.2 All accessions and additions thereto, substitutions for,
and all replacements of, any and all of the foregoing, and all proceeds of the
foregoing, cash and non-cash, including insurance proceeds.
3.2 Lender Has Rights and Remedies of a Secured Party.
In addition to all rights and remedies given to Lender by this
Agreement, Lender shall have all the rights and remedies of a secured party
under the UCC.
3.3 Additional Provisions Applicable to the Collateral.
The parties agree that, at all times during the term of this Agreement,
the following provisions shall be applicable to the Collateral:
3.3.1 Borrower covenants and agrees that it will keep accurate
and complete books and records concerning the Collateral owned or acquired by it
in accordance with GAAP.
3.3.2 Lender shall have the right to review the books and
records of Borrower pertaining to the Collateral and to copy the same and to
make excerpts therefrom, all at such reasonable times upon reasonable notice and
as often as Lender may reasonably request.
3.3.3 Borrower shall maintain and keep its principal place of
business and its chief executive office at the address set forth at the
beginning of this Agreement, and at no other location without giving Lender at
least thirty (30) days prior written notice of any move. Borrower shall maintain
and keep its records concerning the Collateral at such address and at no other
location without giving Lender at least thirty (30) days prior written notice of
any move. Borrower shall keep all Collateral only at the Premises. Borrower may
not move the Collateral without the prior written consent of Lender.
3.3.4 Except for Liens granted to Lender Borrower shall not
sell, lease, transfer or otherwise dispose of or encumber any of the Collateral;
provided that Borrower may sell, transfer or otherwise dispose of any worn out
or obsolete Equipment in the ordinary course of business, so long as it is
replaced with equipment having a fair market value not less than the replaced
Equipment.
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3.3.5 Borrower shall cause the Collateral to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and shall promptly make or cause to be made all repairs,
replacements and other improvements in connection therewith which are necessary
or desirable to that end.
3.3.6 Borrower shall not affix or permit the Collateral to
become affixed to real estate or to any other goods, and such Collateral shall
remain personal property, whether or not so affixed.
3.4 Certain Covenants.
Borrower covenants and agrees with Lender for the benefit of Lender
that:
3.4.1 Borrower has and will have good and merchantable title
to all of its assets, including the Collateral, in each case as from time to
time owned or acquired by it, and shall keep the Collateral free and clear of
all Liens, other than those granted to Lender. Borrower will defend such title
against the claims and demands of all Persons whomsoever.
3.4.2 Borrower will faithfully preserve and protect Lender's
Liens in the Collateral and will, at its own cost and expense, cause said Liens
to be perfected and continued perfected, and for such purpose Borrower will from
time to time at the request of Lender and at the expense of Borrower, make,
execute, acknowledge and deliver, and file or record, or cause to be filed or
recorded, in the proper filing places, all such instruments, documents and
notices, including without limitation financing statements and continuation
statements, as Lender may deem necessary or advisable from time to time in order
to perfect and continue perfected said security interest. Borrower will do all
such other acts and things and make, execute, acknowledge and deliver all such
other instruments and documents, including without limitation further security
agreements, pledges, endorsements, assignments and notices, as Lender may deem
necessary or advisable from time to time in order to perfect and preserve the
priority of said Liens as a first and only Lien on and security interest in the
Collateral prior to the rights of all other Persons therein or thereto.
3.4.3 Borrower will not, without the prior written consent of
Lender, (i) borrow or permit any Person to borrow against the Collateral other
than the Loan to Borrower from Lender pursuant to this Agreement; (ii) create,
incur, assume or suffer to exist any Lien with respect to any of the Collateral;
(iii) permit any levy or attachment to be made against any of the Collateral
except any levy or attachment relating to this Agreement; or (iv) permit any
financing statement to be on file
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with respect to any of the Collateral, except financing statements in favor of
Lender.
3.4.4 Risk of loss of, damage to or destruction of the
Collateral is and shall remain upon Borrower. Borrower will insure the
Collateral as provided in Section 6.3 of this Agreement. If Borrower fails to
effect and keep in full force and effect such insurance or fails to pay the
premiums thereon when due, Lender may do so for the account of Borrower and add
the cost thereof to the Obligations and the same shall be payable to Lender on
demand. Borrower hereby assigns and sets over unto Lender for the benefit of
Lender all moneys which may become payable on account of such insurance,
including without limitation any return of unearned premiums which may be due
upon cancellation of any such insurance, and directs the insurers to pay Lender
any amount so due. Lender, its officers, employees and authorized agents and its
successors and assigns, are hereby appointed attorneys-in-fact of Borrower, for
the purpose of endorsing any draft or check which may be payable to Borrower in
order to collect the proceeds of such insurance or any return of unearned
premiums. Such appointment is irrevocable and coupled with an interest. The
proceeds of insurance shall be applied to reduction of the Obligations in any
order Lender may choose or, in Lender's sole discretion, to the repair or
replacement of the Collateral, or any part thereof, in which case Lender may
impose such conditions on the disbursement of the proceeds as Lender in its sole
discretion deems appropriate.
3.4.5 Upon the occurrence and during the continuation or
existence of any Event of Default, Borrower shall promptly upon demand by Lender
assemble the Collateral and make it available to Lender at the place or places
to be designated by Lender. The right of Lender to have the Collateral assembled
and made available to it is of the essence of this Agreement and Lender may, at
its election, enforce such right in equity for specific performance.
3.4.6 Lender shall have no duty as to the collection or
protection of the Collateral or any part thereof or any income thereon, or as to
the preservation of any rights pertaining thereto, beyond exercising reasonable
care in the custody of any Collateral actually in the possession of Lender.
Lender shall be deemed to have exercised reasonable care in the custody and
preservation of such of the Collateral as may be in its possession if it takes
such action for that purpose as Borrower shall request in writing, provided that
such requested action shall not, in the judgment of Lender, impair Lender's
security interest in the Collateral or its rights in, or the value of, the
Collateral, and provided further that such written request is received by Lender
in sufficient time to permit it to take the requested action.
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ARTICLE 4. CONDITIONS OF CLOSING
The obligation of Lender to make the Loan hereunder is subject to the
accuracy, as of the date hereof and the Disbursement Date, of the
representations and warranties herein contained, to the performance by Borrower
of its obligations to be performed hereunder on or before such Disbursement Date
and to the fulfillment (to the satisfaction of Lender and its counsel) of the
following further conditions. If all conditions contained herein are not so
satisfied by the Outside Date, Lender shall have no obligation whatsoever to
make the Loan and shall have no liability for its refusal to do so.
4.1 Representations and Warranties.
The representations and warranties contained in Article 5 hereof shall
be true on the Closing Date and on and as of the Disbursement Date with the same
effect as if made on and as of such date.
4.2 Corporate Action.
On the Closing Date, Borrower shall deliver to Lender a certificate in
form and substance satisfactory to Lender, dated the Closing Date, signed by a
duly authorized officer of Borrower and each Guarantor, as applicable,
certifying as to (a) true copies of the Constituent Documents of Borrower and
the Guarantors, all as in effect on such date, (b) true copies of all action
taken by Borrower and the Guarantors relative to this Agreement, the Note and
the other Loan Documents, and (c) the names, true signatures and incumbency of
the officer or officers of Borrower and the Guarantors authorized to execute and
deliver this Agreement, the Note and the other Loan Documents on behalf of
Borrower and the Guarantors (and Lender may conclusively rely on such
certificate unless and until a later certificate revising the prior certificate
has been furnished to Lender). Borrower shall also deliver to Lender good
standing certificates for Borrower and the Guarantors issued by the Secretary of
State of its State of incorporation and each state in which it is required by
Law to be qualified.
4.3 Opinion of Counsel.
On the Closing Date, Lender shall have received a favorable written
opinion of counsel for Borrower and the Guarantors, dated the Closing Date and
in form and substance satisfactory to Lender and its counsel, ▇▇▇▇▇▇ & Rich,
P.C.
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4.4 No Change of Law or Facts.
No change shall have occurred after the date of execution and delivery
of this Agreement in applicable Law or regulations thereunder or interpretations
thereof by appropriate regulatory authorities which, in the opinion of Lender or
its counsel, would make it illegal for Lender to acquire the Note, make the
Loan, or otherwise to participate in the Loan, nor shall any facts come to the
attention of Lender, concerning Borrower, its business or financial condition
which, in the opinion of Lender would increase the risk to Lender of repayment
of the Loan by Borrower.
4.5 Documents.
The following documents shall have been duly authorized, executed and
delivered by the respective party or parties thereto, shall be in form and
substance satisfactory to Lender and its counsel and shall be in full force and
effect on the Closing Date and on the Disbursement Date, and an executed
counterpart of each thereof shall have been delivered to Lender and its counsel:
4.5.1 this Agreement;
4.5.2 the Note;
4.5.3 the Guaranties;
4.5.4 insurance certificates or policies of insurance
evidencing the coverages required by Section 6.3
hereof; and
4.5.5 other Loan Documents, if any.
4.6 Collateral.
Borrower shall provide to Lender a complete description of the
Collateral, together with evidence, in form and substance satisfactory to Lender
in its sole discretion, that Borrower owns legal title to the Collateral, free
and clear of all Liens.
4.7 Financing Statements.
On the Closing Date, UCC financing statements covering the security
interest created by this Agreement in the Collateral shall have been duly filed
in the office of the Secretary of State of the State where the Collateral is
located (i.e. New york) and in all other places as, in the opinion of Lender, or
its counsel, are necessary or desirable to perfect such Liens, and Lender shall
have been granted a perfected first and only Lien covering the Collateral.
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4.8 Licenses and Permits.
All appropriate action shall have been taken prior to the Closing Date
in order to permit consummation of the transactions contemplated herein and
hereby and enforcement of all of the terms hereof and thereof, and all licenses,
permits, waivers, exemptions, authorizations and approvals required (or, in the
opinion of Lender or its counsel, advisable) to be in effect on the Closing Date
shall have been issued and shall be in full force and effect on such date, and
copies thereof shall have been delivered to Lender.
4.9 Additional Conditions.
4.9.1 Lender shall have received all other agreements,
instruments, financing statements, certificates, waivers, searches, releases,
terminations, reports, confirmations, corporate or other action, opinion
letters, copies of acquisition documents, copies of all leases, evidence of
delivery and acceptance of the Collateral, evidence of performance of work,
evidence of payment of obligations, agreements with suppliers and contractors,
evidence of ownership of the Collateral and other documents as Lender or its
counsel shall have requested (each in form and substance satisfactory to Lender
and its counsel), including, without limitation, certificates of incorporation
and by-laws, UCC-1 financing statements, lien waivers, credit references,
consents, approvals, authorization to date documents, casualty and liability
insurance policies and endorsements related to such insurance, and other
financial information.
4.9.2 There shall have been no material adverse change in the
business, operations or financial condition of Borrower or any Guarantor or in
the Collateral.
4.9.3 After giving effect to the Loan, there shall be no
Default or Event of Default hereunder or under the other Loan Documents.
4.9.4 All legal matters incident to the Loan shall be
satisfactory to Lender and its counsel.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
5.1 Organization and Qualification.
Borrower is duly organized, validly existing and in good standing as a
corporation under the Laws of the State of Delaware with full power and
authority to own its properties and to transact its business as now transacted
and as contemplated to be
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transacted. Borrower is qualified and in good standing to transact business in
the State of New York, which is the only jurisdiction where the ownership of its
properties or the transaction of its business requires such qualification. Each
Guarantor is duly organized, validly existing and in good standing as a
corporation under the Laws of the State of its incorporation with full power and
authority to own its properties and to transact its business as now transacted
and as contemplated to be transacted.
5.2 Authority and Authorization.
Borrower has full power and authority to execute, deliver and carry out
the provisions of this Agreement, the Note and the other Loan Documents to which
it is a party, to borrow hereunder and under the other Loan Documents and to
create the Liens provided for herein, and to perform its obligations hereunder
and thereunder, and all such action has been duly and validly authorized by all
necessary proceedings on its part. Each Guarantor has full power and authority
to execute, deliver and carry out the provisions of its Guaranty and the other
Loan Documents to which it is a party and to perform its obligations thereunder,
and all such action has been duly and validly authorized by all necessary
proceedings on its part.
5.3 Execution and Binding Effect.
This Agreement, the Note, and the other Loan Documents to which
Borrower is a party have been duly and validly executed and delivered by
Borrower and constitute the legal, valid and binding obligation of Borrower
enforceable in accordance with their respective terms. The Guaranties and the
other Loan Documents to which the Guarantors are parties have been duly and
validly executed and delivered by the Guarantors and each constitutes the legal,
valid and binding obligation of the Guarantor executing the same, enforceable in
accordance with its respective terms.
5.4 Authorizations and Filings.
Except for the filing of UCC financing statements, no authorization,
consent, approval, license, exemption or other action by, and no registration,
qualification, designation, declaration or filing with, any governmental
authority is or will be necessary or advisable in connection with the execution
and delivery of this Agreement, the Note, the Guaranties, the other Loan
Documents or the consummation by Borrower and the Guarantors of the transactions
herein and therein contemplated, or performance by Borrower and the Guarantors
of or compliance by Borrower and the Guarantors with, the terms and conditions
hereof or thereof.
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5.5 Absence of Conflicts.
Neither the execution and delivery of this Agreement, the Note, the
Guaranties or the other Loan Documents, nor consummation of the transactions
herein or therein contemplated nor performance of, or compliance with the terms
and conditions hereof or thereof will (a) result in any violation or breach of
(i) the provisions of Borrower's or any Guarantor's Constituent Documents, or
(ii) any Law, or the order, rule or regulation of any court or governmental
agency or body having jurisdiction over Borrower or any Guarantor, or any of
their respective properties, or (iii) any agreement, bond, note, instrument or
indenture to which Borrower or any Guarantor is a party or pursuant to which any
of their respective properties are affected, or (b) result in the creation or
imposition of any Lien upon any property (now owned or hereafter acquired) of
Borrower or any Guarantor, except for the Lien created by this Agreement.
5.6 Financial Statements.
Borrower and the Guarantors have heretofore furnished to Lender certain
financial statements and related financial information ("Financial Statements").
Such Financial Statements (including the notes thereto) present fairly the
financial condition of Borrower or the Guarantors (as the case may be) as of the
dates of the balance sheets contained therein, and the results of their
respective operations for the periods then ended, all in conformity with GAAP on
a basis consistent with that of Financial Statements for corresponding prior
periods. Except as disclosed therein, neither Borrower nor any Guarantor has any
material contingent liabilities (including liabilities for taxes), unusual
forward or long-term commitments or unrealized or anticipated losses from
unfavorable commitments.
5.7 No Defaults.
There is no Default under the Loan Documents.
5.8 Litigation.
There is no pending or threatened claim or proceeding by or before any
court or governmental agency against or affecting Borrower or any Guarantor
which, if adversely decided would have a material adverse effect on the
business, operations or financial condition of Borrower or any Guarantor or on
the ability of Borrower or any Guarantor to perform their respective obligations
under this Agreement, the Note or the other Loan Documents or on the Collateral.
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5.9 Title to Collateral.
Borrower has good title to all of its assets, including, without
limitation, the Collateral and all assets reflected in the most recent balance
sheet referred to in Section 5.6 hereof, free and clear of all Liens covering
the Collateral, other than the Liens granted hereunder to Lender covering the
Collateral, which are and will at all times be perfected first Liens covering
the Collateral.
5.10 Taxes.
All tax returns required to be filed by Borrower have been properly
prepared, executed and filed. All taxes, assessments, fees and other
governmental charges upon Borrower or upon any of its properties, incomes, sales
or franchises which are due and payable have been paid.
5.11 Financial Accounting Practices.
Borrower makes and keeps books, records and accounts which, in
reasonable detail, accurately and fairly reflect Borrower's transactions and
dispositions of its assets.
5.12 Power To Carry On Business.
Borrower and each Guarantor have all requisite power and authority to
own and operate their respective properties and to carry on their businesses as
now conducted and as presently planned to be conducted.
5.13 No Material Adverse Change.
Since the date of the Financial Statements referred to in Section 5.6,
there has been no material adverse change in the business, operations or
financial condition of Borrower or any Guarantor.
5.14 Compliance with Laws.
Neither Borrower nor any Guarantor is in violation of any Law, except
for violations which in the aggregate do not have a material adverse effect on
the business, operations or financial condition of Borrower or any Guarantor or
on the Collateral.
5.15 Compliance with Agreements.
Neither Borrower nor any Guarantor is in default under any agreement,
bond, note, indenture or contract, except for defaults which in the aggregate do
not have a material adverse effect on the business, operation or financial
condition of Borrower or any Guarantor or on the Collateral.
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5.16 Bankruptcy.
Neither Borrower nor the Guarantors have made or contemplate an
assignment for the benefit of creditors. No application or petition has been
filed for the appointment of a custodian, trustee, receiver or agent to take
possession of the Collateral, or to take possession of any of the other
properties or assets of Borrower or the Guarantors. Borrower and the Guarantors
are generally paying their respective debts as such debts become due. Neither
Borrower nor the Guarantors are "insolvent" as that term is defined in Section
101(26) of the "Bankruptcy Code" (Title 11 of the United States Code, 11 U.S.C.
Section 101, et seq.) or would be insolvent after giving effect to the Loan and
the transactions contemplated by the Loan Documents. Neither Borrower nor the
Guarantors have filed a petition with the Bankruptcy Court under the Bankruptcy
Code, or commenced any proceeding relating to Borrower or the Guarantors under
any bankruptcy or reorganization statute or under any arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction. No
petition or application of the type described above has been filed or commenced
against Borrower or the Guarantors, in which (i) Borrower or any Guarantor, by
any act, has indicated or intends to indicate its approval thereof, consent
thereto, or acquiescence therein; (ii) an order has been or is expected to be
entered appointing any such custodian, trustee, receiver or agent, adjudicating
Borrower or Guarantors bankrupt or insolvent, or approving such petition or
application in any such proceeding; (iii) the Bankruptcy Court has ordered or is
expected to order relief against Borrower or Guarantors under the Bankruptcy
Code; or (iv) such petition or application was not dismissed within ninety (90)
days of such filing or commencement.
5.17 Accurate and Complete Disclosure.
No representation or warranty made by Borrower in this Agreement and no
statement made by Borrower or any Guarantor in the Financial Statements
furnished pursuant to Section 5.6 hereof or otherwise, or any certificate,
report, exhibit or document furnished by Borrower or any Guarantor to Lender
pursuant to or in connection with this Agreement or the Loan is false or
misleading in any material respect (including by omission of material
information necessary to make such representation, warranty or statement not
misleading).
5.18 Regulations G and U.
Borrower is not engaged in the business of extending credit for the
purpose of purchasing or carrying "margin stock", as such term is used in
Regulations G or U promulgated by the Board of Governors of the Federal Reserve
System as amended from time to time. No part of the proceeds of the Loan will be
used to purchase or carry any margin stock or to extend credit to others
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for the purpose of purchasing or carrying any "margin stock". Borrower does not
own any "margin stock".
5.19 Perfection.
Except for the filings under Article 9 of the UCC specified in Section
4.7 hereof (and continuation statements at periodic intervals), no further
filing or recording is necessary under the UCC or under any other Laws of any
jurisdiction, in order to perfect in all applicable jurisdictions the Liens of
Lender in the Collateral. Upon such filings, Lender will be granted a perfected
first Lien covering the Collateral. There are no other Liens covering the
Collateral.
5.20 Place of Business.
Both the place of business (or chief executive office if there is more
than one place of business) of Borrower and the place where it keeps its
corporate records concerning the Collateral and all of its interest in, to and
under this Agreement are located at the address set forth at the beginning of
this Agreement.
5.21 Location of Collateral.
For all purposes, including, without limitation, perfection of security
interests therein under Article 9 of the UCC, the Collateral is deemed located
and at all times shall be located at the Premises.
5.22 Name Changes, Mergers, Acquisitions. Except as set forth on
Schedule 5.22 hereof, Borrower has not within the six-year period immediately
preceding the Closing Date, changed its name, been the surviving entity of a
merger or consolidation, or acquired all or substantially all of the assets of
any Person.
ARTICLE 6. COVENANTS
Borrower covenants that from and after the date hereof and until
payment in full of the Note and interest thereon and all other amounts due from
Borrower hereunder or under the Note or the other Loan Documents, unless Lender
shall otherwise consent in writing:
6.1 Reporting and Information Requirements.
6.1.1 Annual Financial Statements. Borrower shall deliver its
Form 10-K (or the equivalent) to Lender and any assignee throughout the term of
this Agreement, in no event later than ninety (90) days after the end of each
fiscal year.
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6.1.2 Quarterly Financial Statements. Borrower shall deliver
its Forms 10-Q (or the equivalent) to Lender and any assignee throughout the
term of the Agreement, in no event later than sixty (60) days after the end of
each fiscal quarter.
6.1.3 Further Requests. Borrower will promptly furnish to
Lender such other information (financial or otherwise) concerning Borrower, its
assets or the Collateral in such form as Lender may reasonably request.
6.1.4 Compliance Certificates. At the same time Borrower
delivers the financial statements required under the provisions of Sections
6.1.1 and 6.1.2, Borrower shall furnish to Lender a certificate of an Executive
Officer to the effect that no Default or Event of Default exists, or, if such
cannot be so certified, specifying in reasonable detail the exceptions, if any,
to such statement.
6.1.5 Notice of Event of Default. Promptly upon becoming aware
of any Default or Event of Default, Borrower shall give Lender notice thereof,
together with a written statement of a Chief Executive Officer of Borrower
setting forth the details thereof and any action with respect thereto taken or
contemplated to be taken by Borrower.
6.1.6 Notice of Material Adverse Change. Promptly upon
becoming aware thereof, Borrower shall give Lender written notice about any
material adverse change in the business, operations or financial condition of
Borrower or any Guarantor or on the Collateral or on the ability of Borrower or
any Guarantor to perform their obligations under this Agreement, the Note or the
other Loan Documents.
6.1.7 Notice of Material Proceedings. Promptly upon becoming
aware thereof Borrower shall give Lender written notice of the commencement,
existence or threat of any proceeding by or before any court or administrative
agency against or affecting Borrower, any Guarantor or the Collateral which, if
adversely decided, would have a material adverse effect on the business,
operations or financial condition of Borrower or any Guarantor or on the ability
of Borrower or any Guarantor to perform its obligations under this Agreement,
the Note, the other Loan Documents or on the Collateral.
6.1.8 Visitation. Borrower shall permit such persons as Lender
may designate to visit and inspect the Collateral and to examine the books and
records of Borrower and take copies and extracts therefrom, and to discuss its
affairs with officers of Borrower and its independent accountants, at such
reasonable times and as often as Lender may reasonably request.
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6.1.9 Other Deliveries. Promptly upon their becoming
available, Borrower shall furnish to Lender, copies of all registration
statements and any amendments and supplements thereto and any regular and
periodic reports filed by Borrower or any Guarantor with any securities exchange
or with the Securities and Exchange Commission or any governmental authority
succeeding to any or all of the functions of said commissions and all letters of
comment or correspondence sent to Borrower or any Guarantor from such exchanges
or to such exchanges from Borrower or any Guarantor.
6.2 Preservation of Existence and Franchises.
6.2.1 Neither Borrower nor any Guarantor shall enter into any
merger, reorganization or consolidation, or wind up, liquidate or dissolve, nor
agree to do any of the foregoing without giving Lender prior written notice.
Neither Borrower nor any Guarantor shall enter into any merger, reorganization
or consolidation in which Borrower is not the surviving entity, or wind up,
liquidate or dissolve, nor agree to do any of the foregoing without the prior
written consent of Lender, which consent will not unreasonably be withheld or
delayed.
6.2.2 Borrower will qualify to do business and will remain in
good standing under the laws of each jurisdiction in which it is required to be
qualified by reason of the location of the properties owned or leased by it or
the conduct of its business. Each Guarantor will qualify to do business and will
remain in good standing under the laws of each jurisdiction in which it is
required to be qualified by reason of the location of the properties owned or
leased by it or the conduct of its business.
6.2.3 Borrower shall do, or cause to be done, all things
reasonably necessary to preserve and keep in full force and effect its corporate
existence and all permits, licenses, rights and privileges necessary or
appropriate for the conducting of its business as now and hereafter conducted.
Borrower shall not change its name, without giving Lender at least thirty (30)
days prior written notice and without executing and delivering such instruments,
documents and notices, including, without limitation, amendments to any
previously filed financing statements, as Lender may deem necessary or advisable
to preserve and protect Lender's interest in the Collateral and the Loan, within
ten (10) days of the effective date of such change. Borrower shall continue to
engage in the same kind of business and shall not make any material change in
its business or in the nature of its operations or engage in any unrelated line
of business. Each Guarantor shall do, or cause to be done, all things reasonably
necessary to preserve and keep in full force and effect its corporate existence
and all permits, licenses, rights and privileges necessary or appropriate for
the conducting
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of its business as now and hereafter conducted. No Guarantor shall change its
name without giving Lender at least thirty (30) days prior written notice and
without executing and delivering such instruments, documents and notices,
including, without limitation, amendments to any previously filed financing
statements, as Lender may deem necessary or advisable to preserve and protect
Lender's interest in the Collateral and the Loan, within ten (10) days after the
effective date of such change. Each Guarantor shall continue to engage in the
same kind of business and shall not make any material change in its business or
in the nature of its operations or engage in any unrelated line of business.
6.2.4 Borrower will comply with all Laws relative to the
conduct of its business or the location of the properties owned or leased by it,
the non-compliance with which could have a material adverse effect on the
business, operations, assets or financial or other condition of Borrower, as
contemplated hereby, or the ability of Borrower to perform its Obligations under
this Agreement, the Note or the other Loan Documents and will obtain or cause to
be obtained as promptly as possible any permit, license, consent, privilege or
approval of any governmental authority and make any filing or registration
therewith which at the time shall be required with respect to the performance of
its Obligations under this Agreement, the Note or the other Loan Documents or
for the operation of its business as presently conducted or as contemplated by
it. Each Guarantor will comply with all Laws relative to the conduct of its
business or the location of the properties owned or leased by it, the
non-compliance with which could have a material adverse effect on the business,
operations, assets or financial or other condition of the Guarantor, as
contemplated hereby, or the ability of the Guarantor to perform its Obligations
under its Guaranty or the other Loan Documents and will obtain or cause to be
obtained as promptly as possible any permit, license, consent, privilege or
approval of any governmental authority and make any filing or registration
therewith which at the time shall be required with respect to the performance of
its Obligations under this Agreement, its Guaranty or the other Loan Documents
or for the operation of its business as presently conducted or as contemplated
by it.
6.2.5 Borrower shall not convey, assign, sell, mortgage,
encumber, pledge, hypothecate, grant a security interest in, grant options with
respect to, lease or otherwise dispose of all or any part of any legal or
beneficial interest in any part or all of the Collateral or any interest
therein.
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6.3 Insurance.
Borrower shall, at its own expense, maintain and deliver evidence to
Lender of such insurance required by Lender, written by insurers and in amounts
satisfactory to Lender.
6.4 Maintenance of Properties.
Borrower shall maintain or cause to be maintained in good repair,
working order and condition the properties now or hereafter owned, leased or
otherwise possessed by it, including the Collateral, and shall make or cause to
be made all needful and proper repairs, renewals, replacements and improvements
thereto so that the business carried on in connection therewith may be properly
and advantageously conducted at all times.
6.5 Payment of Taxes and Other Potential Charges.
Borrower shall pay or discharge
6.5.1 all taxes, assessments and other governmental charges or
levies imposed upon it or any of its properties, including the Collateral, or
income (including such as may arise under ERISA or any similar provision of
law), on or prior to the date on which penalties attach thereto; and
6.5.2 all lawful claims of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons which, if unpaid, might result in
the creation of a Lien upon any such property, on or prior to the date when due;
provided, that unless and until foreclosure, distraint, levy, sale or similar
proceedings shall have been commenced, Borrower need not pay or discharge any
such tax, assessment, charge, levy, claim or current liability so long as (i)
the validity thereof is contested in good faith and by appropriate proceedings
diligently pursued, (ii) in Lender's sole judgment there is no reasonably
foreseeable risk of forfeiture of the Collateral, and (iii) such reserves or
other appropriate provisions as may be required by GAAP shall have been made
therefor, and so long as such failure to pay or discharge does not have a
material adverse effect on the business, operations or financial condition of
Borrower or the Collateral.
6.6 Financial Accounting Practices.
Borrower shall make and keep books, records and accounts which, in
reasonable detail, accurately and fairly reflect its business, including all
transactions and dispositions of its assets, all prepared in accordance with
GAAP. Lender and/or its agents shall have the right to review the books and
records of Borrower and to photocopy the same and to make excerpts
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therefrom, at all reasonable times and upon reasonable notice and as often as
Lender may reasonably request.
6.7 Compliance with Laws.
Borrower shall comply with all applicable Laws in all respects,
provided, that Borrower shall not be deemed to be in violation of this Section
6.7 as a result of any failures to comply which would not result in fines,
penalties, injunctive relief or other civil or criminal liabilities which, in
the aggregate, would not materially affect the business or operations of
Borrower or the ability of Borrower to perform its obligations under this
Agreement, the Note or the other Loan Documents or the Collateral.
6.8 Material Obligations.
Borrower shall pay and satisfy, when due, all material liabilities and
obligations, including, without limitation, all obligations under all leases
(real or personal property) to which it is a party.
6.9 Maintenance of Collateral.
Borrower will maintain and preserve the Collateral in good condition,
repair and working order, promptly repairing, replacing or rebuilding any part
of the Collateral which may be destroyed by any casualty, or become damaged,
worn or dilapidated.
6.10 Maintenance of Principal Place of Business.
Borrower shall maintain and keep its principal place of business and
chief executive office at the address set forth at the beginning of this
Agreement, and at no other location without giving Lender at least thirty (30)
days prior written notice of any move. Borrower shall maintain and keep its
records at such address and at no other location without giving Lender at least
thirty (30) days prior written notice of any move.
6.11 Amendment to Constituent Documents.
Borrower shall not amend or modify any of its Constituent Documents in
any manner which will materially adversely affect Borrower's ability to satisfy
the Obligations or materially adversely affect the Collateral.
6.12 Name.
Borrower shall not use any corporate or fictitious name other than its
corporate name as set forth in its Articles or Certificate of Incorporation on
the date hereof or as set forth
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on the Schedule, without giving Lender at least thirty (30) days prior written
notice and without executing and delivering such instruments, documents and
notices, including, without limitation, amendments to any previously filed
financing statements, as Lender may deem necessary of advisable to preserve and
protect Lender's interest in the Collateral and the Loan, within ten (10) days
after the effective date of the filing of the corporate or fictitious name
certificate.
6.13 Prepayment.
Borrower shall not prepay any indebtedness, other than trade payables
or the Obligations.
6.14 Margin Security.
Borrower shall not own, purchase or acquire (or enter into any contract
to purchase or acquire) any "margin security" as defined by any regulation of
the Federal Reserve Board as now in effect or as the same may hereafter be in
effect.
6.15 Satisfaction of Certain Obligations.
In the event Borrower fails to make any payment or do any act as herein
provided (including, but not limited to, maintaining any insurance required to
be maintained under the Loan Documents or paying all taxes in accordance with
the terms hereof) or there shall be a claim or Lien asserted or filed against
the Collateral, Lender may, but shall not be obligated to (and without releasing
Borrower from any obligation hereunder), make all such payments and perform all
such acts or otherwise satisfy such obligations. All sums paid by Lender in
respect thereof and all costs, fees and expenses, including reasonable
attorneys' fees, court costs, expenses and other charges relating thereto, which
are incurred by Lender on account thereof, shall bear interest at the Default
Rate, shall be payable on demand by Borrower to Lender, and shall be additional
Obligations hereunder secured by the Collateral.
6.16 Guarantees and Contingent Liabilities.
Borrower shall not directly or indirectly assume, guarantee, endorse,
become or remain directly or contingently liable upon or with respect to any
obligations or liability of any other Person or entity other than in connection
with the endorsement or deposit of checks in the ordinary course of business.
6.17 Distributions, Dividends.
Borrower shall not declare or pay any dividends or make any
distributions of any kind or make any other similar payments or set aside any
sum for any such purpose, except that Borrower may
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declare and make dividends payable solely in shares of its common stock.
6.18 Redemptions.
Borrower shall not purchase, redeem, retire or otherwise acquire,
directly or indirectly, or make any sinking fund payments with respect to, any
shares of any class of stock of Borrower, now or hereafter existing, or set
apart any sum for such purposes.
6.19 Stock Issuance.
Borrower shall not issue any additional shares or any right or option
to acquire any shares, or any security convertible into any shares, of the
capital stock of Borrower or any Guarantor without the prior written consent of
Lender, which consent will not be unreasonably withheld; provided, however,
Lender's consent shall not be required if, after giving effect to such issuance,
▇▇▇▇ ▇▇▇▇ owns not less than twenty percent (20%) of all outstanding shares of
stock of Borrower and directly or indirectly controls or has the power to
direct, by contract or otherwise, not less than forty percent (40%) of the
voting rights with respect to all outstanding shares of stock of Borrower.
6.20 Investments, Loans, Advances.
Borrower shall not directly or indirectly make or have outstanding at
any time any investments in or loans to any other Person (except any Guarantor),
whether by way of advance, loan, guaranty, extension of credit, capital
contribution, purchase of stock, notes, bonds or other securities or evidence of
indebtedness, or acquisition of limited or general partnership or other
interests, except that Borrower may make loans to ▇▇▇▇ ▇▇▇▇ in an aggregate
amount of not greater than $120,000, provided ▇▇▇▇ ▇▇▇▇ executes and delivers a
subordination agreement in form satisfactory to Lender.
6.21 Capital Expenditures.
Borrower shall make no Capital Expenditures in excess of $20,000,000
during any of its fiscal years.
6.22 Transactions With Affiliates.
Borrower shall not, and shall not permit any of its subsidiaries or
Guarantors, to, directly or indirectly, enter into any purchase, sale, lease or
other transaction with any affiliate, except in the ordinary course of business
on terms that are no less favorable than those which might be obtained at the
time in a comparable arm's length transaction with any Person who is not an
affiliate.
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6.23 Further Assurances.
Borrower shall cause to be done, executed, acknowledged and delivered
all and every such further act, conveyance and assurance as Lender shall require
for accomplishing the purposes of this Agreement, the Note and the other Loan
Documents. Borrower will defend and protect its title with respect to the
Collateral and will indemnify Lender with respect thereto. Any payment in
respect of such indemnity shall be made directly to Lender on demand in
immediately available funds. Forthwith after notice from Lender, Borrower shall
promptly, without further consideration, execute, acknowledge and deliver such
further instruments and documents and will take such other actions as Lender may
deem necessary or advisable from time to time to ensure the enforceability or
priority of the Liens granted hereby, or otherwise to confirm and carry out the
intent and purpose of this Agreement.
ARTICLE 7. DEFAULTS AND REMEDIES
7.1 Events of Default.
The occurrence of one or more of the following described events is an
Event of Default:
7.1.1 Borrower fails to make any payment of principal
of or interest on the Note, when due; or
7.1.2 Borrower fails to perform or observe any of its
covenants or agreements contained herein or in any other Loan Documents which
cannot be cured; or
7.1.3 Borrower fails to perform or observe any other covenant
or agreement to be performed or observed by it hereunder or under the other Loan
Documents and such failure continues unremedied for a period of fifteen (15)
days after such failure; or
7.1.4 Borrower voluntarily creates, suffers to exist, incurs
or assumes any Lien, security interest, charge or encumbrance on, or with
respect to, any part of or all the Collateral (other than Liens permitted under
this Agreement), or the Liens held by Lender in and to the Collateral shall
cease to be the first perfected Lien in and to the Collateral; or
7.1.5 Borrower sells, assigns, leases, or otherwise disposes
of or relinquishes possession of, any Collateral, provided, however, Borrower
may sell, transfer or otherwise dispose of any worn out or obsolete Equipment in
the ordinary course of business, so long as it is replaced with equipment
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having a fair market value not less than the replaced Equipment; or
7.1.6 any representation or warranty made by Borrower or a
Guarantor herein or in any other Loan Document or in any document or certificate
furnished by Borrower to Lender in connection herewith or therewith at any time
proves to have been incorrect in any material respect when made; or
7.1.7 this Agreement or any Loan Document at any time for any
reason ceases to be in full force and effect or is declared by a court or
governmental agency of competent jurisdiction to be null and void; or
7.1.8 Borrower breaches or defaults under the terms of any
agreement, instrument or document with or for the benefit of Lender which is not
a Loan Document or under any other loan, credit facility or other financial
accommodation made by Lender to Borrower, including, without limitation, all
promissory notes, guarantees, equipment leases, security agreements, mortgages
and deeds of trust; or
7.1.9 Borrower or any Guarantor is indicted or threatened with
indictment by a governmental authority under any criminal statute or there is
commenced against Borrower or any Guarantor a criminal or civil proceeding
pursuant to which the proceedings, penalties or remedies sought or available
include forfeiture of any of the Collateral or a material portion of the assets
of Borrower or any Guarantor; or
7.1.10 any Guarantor fails to perform or observe any of its
covenants or agreements contained in the Guaranties or any other Loan Documents
to which they are a party which cannot be cured; or
7.1.11 any Guarantor fails to perform or observe any other
covenant or agreement to be performed or observed by it under the Loan Documents
to which they are a party and such failure continues unremedied for a period of
fifteen (15) days after such failure; or
7.1.12 any Guarantor breaches or defaults under the terms of
any agreement, instrument or document with or for the benefit of Lender which is
not a Loan Document or under any other loan, credit facility or other financial
accommodation made by Lender to any or all of the Guarantors, including, without
limitation, all promissory notes, guarantees, equipment leases, security
agreements, mortgages and deeds of trust; or
7.1.13 there is a material adverse change in the
business, operations or financial condition of Borrower or any
Guarantor or in the Collateral; or
- 28 -
7.1.14 a proceeding is instituted seeking a decree or order
for relief in respect of Borrower or any Guarantor in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect or for the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of Borrower or any Guarantor,
or for any substantial part of its properties or for the dissolution, winding-up
or liquidation of its affairs or any substantial part of any of its properties
and such proceeding remains undismissed or unstayed for a period of sixty (60)
consecutive days or such court enters a decree or order granting the relief
sought in such proceeding; or
7.1.15 Borrower or any Guarantor voluntarily suspends
transaction of its business, commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, consents
to the entry of an order for relief in an involuntary case under any such law or
consents to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official) of
Borrower or any Guarantor for any substantial part of any of its properties, or
makes a general assignment for the benefit of creditors, or takes any action in
furtherance of any of the foregoing; or
7.1.16 there shall be a judgment or judgments against Borrower
or any Guarantor for any amount in excess of $25,000 in the aggregate, which
shall remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed
for a period of thirty (30) days or more; or
7.1.17 Borrower shall have conveyed, sold, assigned,
encumbered or otherwise transferred all or substantially all of its assets (or
any interest therein) or any stock of Borrower is sold, conveyed, transferred or
encumbered, except as otherwise provided in Sections 6.2.1 and 6.19 hereof; or
7.1.18 Borrower fails to perform or observe any of its
covenants or agreements contained in Section 6.3 hereof or in the letter
regarding insurance requirements delivered by Borrower in connection with the
Loan or the Loan Documents (the "Insurance Letter") or any such insurance shall
at any time cease to be in full force and effect; or
7.1.19 Borrower ceases to operate its business at the
Premises.
7.1.20 Borrower fails to deliver a lien waiver from NTFC
Capital Corporation with respect to the Collateral in form satisfactory to
Lender in its sole discretion.
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7.2 Consequences of Event of Default.
7.2.1 If an Event of Default occurs, Lender may, by notice to
Borrower, declare the unpaid principal amount of the Note and interest accrued
thereon and all other Obligations and liabilities of Borrower hereunder or under
the Note or the Loan Documents to be immediately due and payable and the same
shall thereupon become and be immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived, and an action therefor shall immediately accrue.
7.2.2 In addition, if an Event of Default occurs, Lender shall
have all rights and remedies granted herein and in the other Loan Documents and
all rights or remedies available at law (including, without limitation, the UCC)
or equity, whether as a secured party or otherwise (including specifically those
granted by the Uniform Commercial Code as in effect in the jurisdiction or
jurisdictions where the Collateral is located) and, except as limited by Law,
all remedies of Lender (i) shall be cumulative and concurrent; (ii) may be
pursued separately, successively or concurrently against Borrower or against all
or any portion of the Collateral, at the sole discretion of Lender; (iii) may be
exercised as often as occasion therefor shall arise, it being agreed by Borrower
that the exercise or failure to exercise any rights or remedies shall in no
event be construed as a waiver or release thereof or of any other right, remedy
or recourse; and (iv) are intended to be, and shall be, nonexclusive. To the
fullest extent permitted by applicable Law, Lender may resort to the rights,
remedies and recourses set forth herein and any other security therefor in such
order and manner as Lender may elect.
7.2.3 Without limiting any of the foregoing, Borrower agrees
that (i) Lender may, with or without notice and without legal process, enter
upon any property owned, leased or otherwise under the real or apparent control
of Borrower or any agent thereof or any other location where the Collateral may
be located and disassemble, disconnect, render unusable or repossess all or any
item of the Collateral; (ii) written notice mailed to Borrower, as provided in
this Agreement for the giving of notice, shall be reasonable if given ten (10)
days prior to (a) any public sale or (b) the date after which a private sale may
be made; (iii) a sale of the Collateral may be made as a unit or in parcels and
for cash and upon terms; (iv) Lender may buy the Collateral at any public sale
and at any private sale as permitted by the UCC; and (v) such public or private
sale or sales may be held or adjourned from time to time, and Lender shall have
the right to conduct such sale or sales on Borrower's premises (including,
without limitation, the Premises) or elsewhere where the Collateral is located,
and shall have the right to use Borrower's premises without charge for such sale
or sales for such time or times as Lender may determine.
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ARTICLE 8. EXPENSES AND INDEMNITIES
8.1 Expenses.
Borrower shall promptly reimburse Lender for all costs, fees and
expenses incurred by Lender in connection with the negotiation, preparation,
execution, delivery, administration, operation and enforcement of each of the
Loan Documents, including, but not limited to, the attorneys' and paralegals'
fees of in-house and outside counsel, expert witness fees, lien, title search
and insurance fees, appraisal fees, all charges and expenses incurred in
connection with any and all environmental reports and environmental remediation
activities, and all other costs, expenses, taxes and filing or recording fees
payable in connection with the transactions contemplated by this Agreement,
including, without limitation, all such costs, fees and expenses as Lender shall
incur or for which Lender shall become obligated in connection with (i) any
inspection or verification of the Collateral, (ii) any proceeding relating to
the Loan Documents or the Collateral, (iii) actions taken with respect to the
Collateral and Lender's security interest therein, including, without
limitation, the defense or prosecution of any action involving Lender and
Borrower or any third party, (iv) enforcement of any of Lender's rights and
remedies with respect to the Obligations or Collateral, (v) consultation with
Lender's attorneys and participation in any workout, bankruptcy or other
insolvency or other proceeding involving any Borrower or any Guarantor or any
affiliate, whether or not suit is filed, and (vi) any other matters relating to
or arising out of the Loan and/or the Loan Documents.
ARTICLE 9. MISCELLANEOUS
9.1 Further Assurances.
Borrower shall at any time and from time to time upon the written
request of Lender, execute and deliver such further agreements, instruments and
documents and do such further acts and things as Lender may reasonably request
in order to effect the purposes of this Agreement.
9.2 General Indemnity.
Borrower shall indemnify, defend and hold harmless Lender from
and against, and, upon demand, reimburse Lender for, all claims, demands,
liabilities, losses, damages, judgments, penalties, costs and expenses,
including, without limitation, reasonable attorneys' fees and disbursements,
which may be imposed upon, asserted against or incurred or paid by Lender, on
account of any act performed or omitted to be performed under this Agreement,
the Note or the other Loan Documents or on
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account of any transaction arising out of or in any way connected with the
Collateral or this Agreement, the Note or the other Loan Documents (including,
without limitation, any litigation matter involving claims or alleged claims by
or disputes with third parties), except as a result of the willful misconduct or
gross negligence of Lender.
9.3 No Implied Waiver; Cumulative Remedies.
No course of dealing and no delay or failure of Lender in exercising
any right, power or privilege under this Agreement, the Note or any of the other
Loan Documents shall affect such right, power or privilege except as and to the
extent that the assertion of any such right, power or privilege shall be barred
by an applicable statute of limitations; nor shall any single or partial
exercise thereof or any abandonment or discontinuance of steps to enforce such a
right, power or privilege preclude any further exercise thereof or of any other
right, power or privilege. The rights and remedies of Lender under this
Agreement, the Note or the other Loan Documents are cumulative and not exclusive
of any rights or remedies which Lender would otherwise have.
9.4 Taxes.
Borrower agrees to pay or reimburse Lender for any and all stamp,
document, transfer, recording or filing taxes or fees and all similar
impositions payable or hereafter determined by Lender to be payable in
connection with this Agreement, the Note or the other Loan Documents (including
but not limited to those necessary or advisable to record or to ensure the
enforceability or priority of this Agreement, the Note or the other Loan
Documents), as determined by Lender in its sole discretion from time to time,
and any other documents, instruments or transactions pursuant to or in
connection herewith, and Borrower agrees to save Lender harmless from and
against any and all present or future claims or liabilities with respect to or
resulting from any delay in paying or omission to pay any such taxes, fees or
similar impositions.
9.5 Time of Essence.
Time is of the essence for the performance by Borrower of the
Obligations set forth in this Agreement and the other Loan Documents.
9.6 Modifications, Amendments or Waivers.
Lender and Borrower may from time to time enter into written agreements
amending, modifying or supplementing this Agreement, the Note or the other Loan
Documents or changing the rights of Lender or Borrower hereunder or thereunder,
and Lender may from
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time to time grant waivers or consents to a departure from the due performance
of the obligations of Borrower thereunder. Any such agreement, waiver or consent
must be in writing and shall be effective only to the extent set forth in such
writing. In the case of any such waiver or consent, any Event of Default so
waived or consented to shall be deemed to be cured and not continuing, but no
such waiver or consent shall extend to any subsequent or other Event of Default
or impair any right consequent thereto.
9.7 Holidays.
Except as otherwise provided herein, whenever any payment or action to
be made or taken hereunder or the Note or any other Loan Document shall be
stated to be due on a day which is not a Business Day, such payment or action
shall be made or taken on the next following Business Day (and such day shall be
included in the calculation of interest due), unless such next succeeding
Business Day falls in a different calendar month, in which case payment or
action shall be made or taken on the next preceding Business Day.
9.8 Notices.
9.8.1 Except as otherwise provided herein, all notices and
other communications required under the terms and provisions of this Agreement,
the Note or the other Loan Documents shall be in writing and shall become
effective when delivered by hand or received by overnight courier, telex,
facsimile, telegram or registered first class mail, postage prepaid, addressed
as follows:
If to Lender, at:
FINOVA Capital Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President
with a copy to: Winick & Rich, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
- 33 -
If to Borrower, at:
▇▇▇▇ Technology Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Bershad et. al.
▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as either party may, from time to time, designate in
writing to the other party hereto.
9.8.2 If any notice is given by telex, facsimile transmission,
or telegram, the party giving such notice shall confirm such notice by a writing
delivered by hand or overnight courier; provided, however, that for all purposes
hereunder, notice shall be deemed effective at the time given by telex,
telecopier or telegram.
9.9 Governing Law.
THIS AGREEMENT, THE NOTE, THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO AND THERETO SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARIZONA.
9.10 Personal Jurisdiction and Service of Process.
BORROWER IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING
AGAINST BORROWER UNDER, ARISING OUT OF, OR IN ANY MANNER RELATING TO THIS
AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN ANY STATE
COURT OF THE STATE OF ARIZONA LOCATED IN MARICOPA COUNTY OR IN THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF ARIZONA. BORROWER, BY ITS EXECUTION AND
DELIVERY OF THIS AGREEMENT, EXPRESSLY AND IRREVOCABLY CONSENTS AND SUBMITS TO
THE PERSONAL JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR
PROCEEDING. BORROWER FURTHER AGREES THAT ANY LEGAL ACTION OR PROCEEDING BORROWER
MAY BRING, ARISING OUT OF OR IN ANY MANNER RELATING TO THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS, SHALL ONLY BE BROUGHT IN ANY STATE COURT OF THE STATE OF
ARIZONA LOCATED IN MARICOPA COUNTY OR IN THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF ARIZONA. BORROWER ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF
ANY COMPLAINT, SUMMONS, NOTICE OR OTHER PROCESS RELATING TO SUCH ACTION OR
PROCEEDING BY DELIVERY THEREOF TO BORROWER IN THE
- 34 -
MANNER PROVIDED FOR NOTICES IN THIS AGREEMENT. BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH ACTION OR PROCEEDING BASED
ON ANY ALLEGED LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS OR ANY SIMILAR BASIS. BORROWER SHALL NOT BE ENTITLED IN ANY SUCH
ACTION OR PROCEEDING TO ASSERT ANY DEFENSE GIVEN OR ALLOWED UNDER THE LAWS OF
ANY STATE OTHER THAN THE STATE OF ARIZONA, UNLESS SUCH DEFENSE IS ALSO GIVEN OR
ALLOWED BY THE LAWS OF THE STATE OF ARIZONA. NOTHING HEREIN SHALL AFFECT OR
IMPAIR IN ANY MANNER OR TO ANY EXTENT THE RIGHT OF LENDER TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION OR
TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.
9.11 Waiver of Jury Trial.
BORROWER AND LENDER HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY AGREEMENT,
INSTRUMENT OR DOCUMENT EXECUTED AND DELIVERED IN CONNECTION HEREWITH OR
THEREWITH, INCLUDING THE LOAN DOCUMENTS.
9.12 Severability.
The provisions of this Agreement, the Note and any other Loan Document
are intended to be severable. If any such provision is held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
9.13 Prior Understandings.
This Agreement and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto relating to the transactions provided for herein or therein.
9.14 Survival.
All representations and warranties of Borrower contained in this
Agreement or any other Loan Document or made in writing in connection herewith
or therewith shall survive the execution and delivery of this Agreement, the
Note and the other Loan Documents, any investigation or inspection by Lender,
the making of the Loan hereunder, the payment of the Note or the expiration of
this Agreement. All covenants and agreements of Borrower contained herein shall
continue in full force until payment in full of the Obligations. Borrower's
obligation to pay the principal of and interest on the Note and all such other
amounts
- 35 -
shall be absolute and unconditional under any and all circumstances.
9.15 Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit of
Lender and Borrower and their respective successors and permitted assigns,
except that Borrower may not assign, delegate or transfer any of its rights or
obligations hereunder or any interest herein without the written consent of
Lender which Lender may withhold in its absolute discretion. Any actual or
attempted assignment by Borrower without Lender's consent shall be null, void
and of no effect whatsoever. Lender may assign or otherwise transfer any or all
of its rights, title, interests and obligations hereunder and under the Note and
the other Loan Documents in whole or in part. If Lender makes such an
assignment, the assignee shall have all of the rights of the Lender and Borrower
shall not assert against the assignee any defense, counterclaims or setoff which
Borrower may have against Lender. Except to the extent otherwise required by its
context, the word "Lender" where used in this Agreement shall mean and include
the holder of the Note originally issued to Lender, and the holder of such Note
shall be bound by and have the benefits of this Agreement to the same extent as
if such holder had been a signatory hereto, except that no assignee shall be
deemed to assume any obligation or duty imposed upon Lender hereunder or the
other Loan Documents and Borrower shall look only to Lender for performance
thereof. As used in this Section 9.16, "assign" shall be deemed to include a
pledge, sale of, or grant of a mortgage on, or a security interest in, any of
the Collateral or this Agreement or the other Loan Documents by Lender and the
term "assignee" shall be deemed to refer to the recipient of such pledge, sale,
mortgage or security interest.
9.16 Counterparts.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts each of which, when so
executed and delivered by the parties, constituting an original but all such
counterparts together constituting but one and the same instrument.
9.17 Publicity.
Lender is hereby authorized to issue appropriate press releases and to
cause a tombstone to be published announcing the consummation of the
transactions contemplated in this Agreement, including the aggregate amount of
the Loan.
- 36 -
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed and delivered this Agreement effective as of the
day and year first above written.
▇▇▇▇ TECHNOLOGY GROUP, INC.
By: ▇▇▇▇▇▇ ▇▇▇▇
Title: Executive Vice President
FINOVA CAPITAL CORPORATION
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: _______________________________
Title: Director, Contract Administrator
- 37 -
EXHIBIT A
Note
See attached.
SECURED PROMISSORY NOTE
$873,609.79 May 1, 1997
Phoenix, Arizona
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇ TECHNOLOGY GROUP, LTD., a
Delaware corporation ("Borrower"), hereby promises to pay to the order of FINOVA
CAPITAL CORPORATION ("Lender"), the principal sum of Eight Hundred Seventy-Three
Thousand Six Hundred Nine and 79/100 Dollars ($873,609.79), together with
interest on the unpaid principal balance hereof from time to time outstanding at
the rate per annum and on the dates and all as otherwise provided in that
certain Loan and Security Agreement of even date herewith (the "Loan Agreement")
by and between Lender and Borrower.
This Note is the Note referred to in the Loan Agreement, is secured as
set forth in the Loan Agreement, may not be prepaid except as provided in the
Loan Agreement and is entitled to the benefits of the Loan Agreement. All
capitalized terms used in this Note which are not otherwise defined herein shall
have the respective meanings ascribed to them in the Loan Agreement.
All payments of principal and interest on this Note are to be made in
lawful money of the United States of America in immediately available funds,
without setoff, counterclaim or deduction of any nature, at the office of Lender
at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (or such other place as
the holder hereof shall designate to Borrower in writing), prior to 12:00 Noon,
local time, on the day when due.
If any payment of principal or interest becomes due on a day which is
not a Business Day, that payment shall be made on the next Business Day unless
such next Business Day falls in another calendar month in which event that
payment shall be made on the next preceding Business Day.
Lender and Borrower intend this Note to comply in all respects with all
provisions of law and not to violate, in any way, any legal limitations on
interest charges. Accordingly, if, for any reason, Borrower is required to pay,
or has paid, interest at a rate in excess of the highest rate of interest which
may be charged by Lender or which Borrower may legally contract to pay under
applicable law (the "Maximum Rate"), then the interest rate shall be deemed to
be reduced, automatically and immediately, to the Maximum Rate, and interest
payable hereunder shall be computed and paid at the Maximum Rate and the portion
of all prior payments of interest in excess of the
Maximum Rate shall be deemed to have been prepayments of the outstanding
principal of this Note and applied to the installments in the inverse order of
their maturities.
If Borrower fails to make any payment of principal or interest within
ten (10) days after the payment is due, Borrower shall pay a late charge of five
percent (5%) of the unpaid amount, but in no event more than the maximum amount
permitted by applicable law, and such amount shall be payable upon demand. Such
payment is not interest for the use of money, but is intended to cover Lender's
administrative costs occasioned by such delay.
Upon the occurrence of an Event of Default, Lender shall have all of
the rights and remedies contained in the Loan Agreement, including, without
limitation, the right, at its option, to declare all indebtedness under this
Note to be immediately due and payable.
Borrower hereby expressly waives presentment for payment, demand for
payment, notice of dishonor, protest, notice of protest, notice of non-payment,
and all lack of diligence or delays in collection or enforcement of this Note or
the Loan Agreement.
Lender may extend the time of payment of this Note, postpone the
enforcement hereof, release any Collateral, or grant any other indulgences
whatsoever, without affecting or diminishing Lender's right of recourse against
Borrower, as provided herein and in the Loan Agreement and in the other Loan
Documents, which right is hereby expressly reserved. The failure to assert any
right by Lender shall not be deemed a waiver thereof.
Borrower agrees to pay all costs, fees and expenses of collection,
including, without limitation, Lender's reasonable attorneys' fees and
disbursements, in the event that any action, suit or proceeding is brought by
the holder hereof to collect this Note or if an Event of Default occurs.
THIS NOTE IS DEEMED TO HAVE BEEN MADE IN, AND SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF, THE STATE OF ARIZONA. BORROWER IRREVOCABLY CONSENTS
THAT ANY LEGAL ACTION OR PROCEEDING AGAINST BORROWER UNDER, ARISING OUT OF, OR
IN ANY MANNER RELATING TO THIS NOTE, THE LOAN AGREEMENT OR THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT IN ANY STATE COURT OF THE STATE OF ARIZONA LOCATED IN
MARICOPA COUNTY OR IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
ARIZONA. BORROWER, BY ITS EXECUTION AND DELIVERY OF THIS NOTE, EXPRESSLY AND
IRREVOCABLY CONSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF ANY OF SUCH
COURTS IN ANY SUCH ACTION OR PROCEEDING. BORROWER FURTHER AGREES THAT ANY LEGAL
ACTION OR PROCEEDING BORROWER MAY BRING, ARISING OUT OF OR IN ANY MANNER
- 2 -
RELATING TO THIS NOTE, THE LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS, SHALL
ONLY BE BROUGHT IN ANY STATE COURT OF THE STATE OF ARIZONA LOCATED IN MARICOPA
COUNTY OR IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA.
BORROWER ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY COMPLAINT, SUMMONS,
NOTICE OR OTHER PROCESS RELATING TO SUCH ACTION OR PROCEEDING BY DELIVERY
THEREOF TO BORROWER IN THE MANNER PROVIDED FOR NOTICES IN THE LOAN AGREEMENT.
BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE IN ANY
SUCH ACTION OR PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS OR ANY SIMILAR BASIS. BORROWER SHALL NOT
BE ENTITLED IN ANY SUCH ACTION OR PROCEEDING TO ASSERT ANY DEFENSE GIVEN OR
ALLOWED UNDER THE LAWS OF ANY STATE OTHER THAN THE STATE OF ARIZONA, UNLESS SUCH
DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF ARIZONA. NOTHING
HEREIN SHALL AFFECT OR IMPAIR IN ANY MANNER OR TO ANY EXTENT THE RIGHT OF LENDER
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER
JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.
IN WITNESS WHEREOF, Borrower has duly executed this Note on the date
first above written.
▇▇▇▇ TECHNOLOGY GROUP, LTD.
By: ▇▇▇▇▇▇ ▇▇▇▇
Title: Executive Vice President
Federal Tax Identification No.▇▇-▇▇▇▇▇▇▇
- 3 -
SCHEDULE 5.22
[TO BE PREPARED BY BORROWER'S COUNSEL]