EXHIBIT 10.07
LOAN AND SECURITY AGREEMENT
Crestmark: Crestmark Bank,
a Michigan banking corporation
Borrower: Seville Plastics, Inc.
a Michigan corporation
Type/Amount: Line of Credit Loan ($350,000)
Date: April ___, 1999
LOAN ND SECURITY AGREEMENT
This Agreement is made this ___ day of April, 1999 by and between
Crestmark Bank, a Michigan banking corporation, whose address is ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Crestmark") and Seville Plastics, Inc., whose
address is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ 48309("Borrower").
W I T N E S S E T H
WHEREAS, Borrower desires to borrow, from time to time, certain sums
of money from Crestmark on the terms and conditions as hereinafter set forth;
WHEREAS, Crestmark is willing to lend such sums to Borrower, provided
Borrower complies with all terms and conditions hereinafter set forth; and
WHEREAS, the repayment of the Loan will be secured by all assets of the
Borrower.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter contained, and in reliance upon the representations and warranties
hereinafter contained, and subject to the terms and conditions hereinafter
contained, it is hereby agreed between the parties as follows:
1. DEFINITIONS:
In this Agreement and in the Collateral Documents (unless the context
thereof requires a contrary definition or unless the word is defined therein, in
which case, the definitions shall be cumulative and not exclusive), the
following words, phrases, and expressions have the respective meanings
attributed to them, to be equally applicable to both the singular and plural
forms, unless the plural form is the term so defined.
1.1 "Account Receivable" or "Account" has the meaning ascribed to such
terms under the Uniform Commercial Code, and, without limiting the foregoing,
will also mean and include any and all other forms of obligations now owned or
hereafter arising or acquired by Borrower evidencing any obligation for payment
for goods of any kind, nature, or description sold or leased or services
rendered, and all proceeds of any of the foregoing.
1.2 "Account Debtor" means any party liable to Borrower for the
payment of an Account.
1.3 "Agreement" means this Loan and Security Agreement, and all
amendments, modifications, extensions and renewals hereof.
1.4 "Borrower" means as defined in the preamble to this Agreement.
1.5 "Business Days" means each weekday on which Crestmark is open
during Crestmark's normal course of business.
1.6 "Collateral" means any and all of the following now or hereafter
owned by Borrower, wherever located, including but not by way of limitation,:
(a) all Accounts Receivable and/or Accounts, cash, documents,
chattel paper, certificates of deposit, instruments, contract rights, general
intangibles, goodwill, patents, tradenames, trademarks, copyrights, licenses,
brands, trade secrets, customer lists, route lists, computer software, report
catalogs, choses in action, notes, drafts, acceptances, tax refunds, claims
under chapter 5 of the Bankruptcy Code, judgments, sums due and any other form
of obligation requiring the payment of money to Borrower, and any claim by
Borrower for any of the foregoing;
(b) all Inventory, goods, merchandise, products, supplies,
commodities, raw materials, finished goods and work in process;
(c) all Equipment, including all machinery, furniture, fixtures,
trade fixtures, tools, dies, leasehold improvements, furnishings,
trucks, cars and other titled vehicles and all repossessions and returns of any
of the foregoing;
(d) all other property (real, personal, tangible, intangible, or
any combination thereof) of Borrower, including, monies, deposit, accounts,
claims and credit balances;
(e) all property, collateral or security described in the
Collateral Documents;
(f) all accessions, accessories, parts, attachments, additions,
substitutions and replacements of any of the foregoing, used or intended for use
in connection with any of the foregoing; and
(g) all proceeds, products, proceeds of insurance, proceeds of
eminent domain proceedings and condemnation awards arising from or relating to
all of the foregoing, now or hereafter owned or claimed by Borrower or others
pledging same to Crestmark pursuant hereto or pursuant to the Collateral
Documents.
It is expressly agreed by Borrower and Crestmark that the foregoing
description is meant to cover all of Borrower's assets.
1.7 "Collateral Documents" means any and all documents, instruments,
notes, agreements, and written memoranda, referred to in this Agreement or
executed in connection herewith or therewith, now or hereafter existing, and
specifically, but not by way of limitation, the Note and those documents
identified in Section 6.
1.8 "Consistent Basis" means, in reference to the application of
Generally Accepted Accounting Principles, that the accounting principles
observed in the current period are comparable in all material respects to those
applied in the preceding periods.
1.9 "Crestmark" means as defined in the preamble to this Agreement.
1.10 "Default" means and exists upon the occurrence of any breach,
omission, violation, misstatement, non-observance or non-performance by Borrower
or Guarantor of any representation, warranty, covenant, term, condition,
obligation, provision or undertaking under this Agreement or any of the
Collateral Documents, including, but not limited to, Borrower's failure to pay
any Indebtedness immediately on demand by Crestmark.
1.11 "Eligible Account Receivable" means the face value stated on each
Account of Borrower arising in the ordinary course of business and represented
by an invoice of Borrower, which invoice is due and owing to Borrower, is free
of any dispute and which invoice must have all conditions precedent thereto
completely fulfilled. Excluded from an Eligible Account Receivable is any
Account which meets any of the following:
(a) any Account that is unpaid more than ninety (90) days after the
date of the invoice; and
(b) any Account which does not comply with the warranties set forth
in Section 7.10; and
(c) any Account in which the Account Debtor is a parent, subsidiary
or affiliate of Borrower, including, any Account from either Guarantor; and
(d) all Accounts due from any one Account Debtor which Crestmark
determines to be in excess of an acceptable percentage of the total outstanding
Accounts of Borrower; and
(e) all Accounts due from any Account Debtor from whom ten (10%)
percent or more of the total accounts of said Account Debtor remain unpaid more
than ninety (90) days after the date of the invoice; and
(f) any Account in which the Account Debtor is the United States
government, any state of the United States, any city, town, or
municipality, or any foreign government, non-United States company, or a United
States company located outside of the United States; and
(g) any Account arising as a result of a sale to the Account Debtor
on a ▇▇▇▇-and-hold, guaranteed sale, C.O.D., sale-and-return, sale-on-approval,
consignment or any other situation where payment by the account debtor may be
conditional; and
(h) any Account which is a contra account or any Account from an
Account Debtor who is also Borrower's creditor or supplier, to the extent of the
amount owing by Borrower to the Account Debtor; and
(i) any Account representing tooling;
(j) any Account or Account Debtor that is unacceptable to Crestmark
in its sole discretion.
1.12 "Eligible inventory" means Inventory of the Borrower which meets
the following criteria in the sole discretion of Crestmark:
(a) Ownership: it is owned by Borrower free of all encumbrances and
security interests, and is not Inventory subject to a purchase money security
interest or Inventory held by Borrower on consignment; and
(b) Other Financing: No financing statement is on file covering it
or its products or proceeds, except in favor of Crestmark, and Crestmark has
received a Landlord's Consent, satisfactory to Crestmark, from the owner of the
premises where the Inventory is located; and
(c) Documents: If it is represented or covered by documents of
title, Borrower is the owner of the documents free of all encumbrances and
security interests; and
(d) Condition: It is in good condition and in case of goods held
for sale, it is new and unused and saleable in the ordinary course of business
(except as Crestmark may otherwise consent in writing). Any inventory held for
over twelve (12) months will automatically be deemed not in good condition; and
(e) Location: It is located at Borrower's address set forth above
(f) Type: It is raw material, or finished goods;
(g) Value: It is valued at the lower of cost or market value; and
(h) Discretion: It is Inventory that is acceptable to Crestmark in
its sole discretion.
1.13 "Equipment" has the meaning ascribed to such term under the
Uniform Commercial Code, and without limiting the foregoing, also means and
includes all goods, equipment, computers, furniture, fixtures, trade fixtures,
leasehold improvements, machinery, tools, contrivances and other items of
personal property (other than inventory) of every kind and description, and
wheresoever located, together with all additions, attachments, accessions,
parts, replacements, substitutions and renewals thereof or therefore, and all
proceeds of any of the foregoing, now owned or hereafter acquired by any party,
person or entity pledging same to Crestmark.
1.14 "Generally Accepted Accounting Principles" means those principles
set forth in Opinion of the Accounting Principles Board of the American
Institute of Certified Public Accountants and the Financial Accounting Standards
Board, or which have other substantial authoritative support and are applicable
in the circumstances as of the date of the report.
1.15 "Guarantor" means G.P. Plastics, Inc. and Inmold, Inc., each
individually and together collectively.
1.16 "Indebtedness" means and includes by way of example, but not by
way of limitation:
(a) the Loan, and all loans, indebtedness, expenses and liabilities
of Borrower and/or Guarantor to Crestmark whether arising under this Agreement,
any of the Collateral Documents, or any other agreement of whatsoever kind,
nature and description, primary or secondary, direct, absolute or contingent,
due or to become due, and whether now existing or hereafter arising and
howsoever evidenced or acquired, and whether joint, several, or joint and
several; and
(b) all present and future Money Advances made by Crestmark in
connection with the Loan or any loan and the Collateral Documents, or otherwise,
and whether made at Crestmark's option or otherwise, and the Loan, the Note and
all notes now or hereafter executed or existing in connection herewith, and
interest accrued thereon, from time to time; and
(c) all future advances made by Crestmark for the protection or
preservation of Crestmark's rights and interests in the Collateral, or arising
under this Agreement or the Collateral Documents, including, but not by way of
limitation, advances for taxes, levies, assessments, insurance or maintenance of
the Collateral, and reasonable attorneys fees; and
(d) all costs and expenses, including without limitation reasonable
attorneys' fees, incurred by Crestmark in connection with or arising out of the
protection, enforcement or collection of the Indebtedness or expenses incurred
in answering general legal issues involving the Borrower; and
(e) all costs and expenses incurred by Crestmark in connection
with, or arising out of, the sale, disposition, liquidation or other realization
(including, but not by way of limitation, the taking, retaking or holding, and
all proceedings (judicial or otherwise)) of the Collateral, including, without
limitation, reasonable attorneys' fees.
1.17 "Inventory" has the meaning ascribed to such term under the
Uniform Commercial Code, and without limiting the foregoing, also means and
includes all goods, merchandise, products and commodities, held, acquired or
processed by Borrower and intended for sale or lease, and all raw materials,
goods in process and finished goods and supplies of every nature used or usable
in connection with the processing, shipping and sale thereof, regardless of
where the same may be situated, kept or stored, and whether now owned or
hereafter acquired by Borrower, and all of the proceeds of any of the foregoing.
1.18 "Line of Credit Loan Base" means an amount which is the lesser of:
(a) THREE HUNDRED FIFTY THOUSAND AND NO/100 ($350,000) DOLLARS, OR
(b) the aggregate of:
(i) EIGHTY FIVE (85*) PERCENT of Eligible Accounts Receivable;
plus
(ii) the Borrowing Base (as hereinafter defined); plus
(iii) the lesser of:
(1) SEVENTY FIVE THOUSAND AND NO/100 ($75,000.00)
DOLLARS; or
(2) The Inventory Advance Rate multiplied by the dollar
value of Eligible Inventory;
The inventory advance rate is FIFTY PERCENT (50%) as of the date
hereof, but commencing on May 1, 1999 and continuing on the first day of each
month thereafter the inventory advance rate will decrease by ONE PERCENT (1%)
per month down to a minimum of THIRTY PERCENT (30%) (the "Inventory Advance
Rate")
The borrowing base as of the date of this Agreement is ONE HUNDRED
TWENTY TWO THOUSAND TWO HUNDRED EIGHTY FIVE AND 25/100 ($122,285.25) DOLLARS,
and the borrowing base shall hereafter be reduced by TWO THOUSAND SEVEN HUNDRED
TWENTY NINE AND NO/100 ($2729.00) DOLLARS each month commencing on May 15, 1999
and continuing on the fifteenth day of each month thereafter while the Loan is
outstanding (the "Borrowing Base"). If the Small Business Administration
releases its liens on both 1973 ▇▇▇ ▇▇▇▇ Molding Machines, the Borrowing Base
will receive a one time increase of EIGHT THOUSAND SEVEN HUNDRED FOURTEEN AND
75/100 ($8714.75) DOLLARS.
The Line of Credit Loan Base shall be computed daily. Ineligible
Accounts Receivable are to be determined once per month based on the most recent
Accounts Receivable Aging Report and Payable Report. Ineligible Inventory is to
be determined once per month based on the most recent monthly Inventory listing
or at such other times as Crestmark reasonably deems necessary.
1.19 "Loan" means the Line of Credit Loan as hereinafter set forth in
Section 2, any Money Advances made thereunder, and the Note, collectively.
1.20 "Money Advance" means a loan or disbursement of money by
Crestmark, or any other advance of credit by Crestmark, including, but not
limited to, amounts for the payment of interest, fees and expenses of Borrower
under the Loan or any loan.
1.21 "Note" means the Promissory Note (Line of credit) and any other
note executed by Borrower evidencing the Loan or a loan, including all renewals,
extensions, amendments, modifications, restatements, roll-overs or substitutions
thereof, from time to time.
1.22 "Permitted Encumbrance" means and include any of the existing
agreements and obligations set forth or described on Exhibit "A" attached
hereto and made a part hereof, if any, without increase, amendment,
modification, extension thereto, or refinancing thereof. If Exhibit "A" is
left blank, no Permitted Encumbrances exist.
1.23 "Person" means, by way of example but not by way of limitation, an
individual, partnership, limited partnership, corporation, limited liability
company, trust, unincorporated organization, entity, government, governmental
agency or governmental subdivision.
1.24 "Uniform Commercial Code" means Act 174 of the Michigan Public
Acts 1962, as amended, and except as otherwise expressly provided herein all
other terms used herein, but not defined herein, have the meanings assigned to
them in Article 9, or absent definition in Article 9, in any other Article of
the Uniform Commercial Code.
1.25 "Wall Street Journal Prime Rate" means that rate of interest
reported daily in the Wall Street Journal as the Prime Rate, as such rate may
vary from time to time.
1.26 Accounting Terms: Any accounting terms used in this Agreement
unless otherwise indicated, have the meanings customarily given to them in
accordance with CAAP.
2. LOAN COMMITMENT:
Subject to the terms and conditions contained herein, and upon the
condition that no Default exists, Crestmark agrees that it will make Money
Advances under the Loan pursuant to the following commitment:
2.1 Line of Credit Loan Commitment:
(a) Use of Proceeds: Borrower agrees to use the proceeds of the
Loan, which is due and payable on demand, to (i) payoff, in full, all of
Borrower's indebtedness with Greenfield Commercial Credit, LLC; and (ii) the
balance, if any, to be used solely as working capital.
(b) Repayment: Interest on the Note will be paid monthly. Principal
and expenses will be repaid from time to time from funds in the lockbox and cash
collateral account. Provided no Default exists, the interest rate will be at a
per annum rate equal to the Wall Street Journal Prime Rate plus Two (2%)
Percent; during the existence of a Default, the interest rate will be the wall
Street Journal Prime Rate plus Eight (8%) percent (the "Default Interest Rate").
(c) Commitment to Lend: Subject to the terms and conditions
contained in this Agreement, and upon the condition that no Default exists,
including, but not limited to, the fact that demand has not been made by'
Crestmark, and further provided all conditions precedent have been met as of
the date of any request for a Money Advance hereunder, Crestmark agrees that it
will, from time to time, make Money Advances to Borrower pursuant to the terms
of this Agreement.
(d) Maximum Commitment: Notwithstanding the loan commitment made in
Section 2.1(c), at no time will the aggregate of all Money Advances outstanding
exceed the Line of Credit Loan Base. Any Money Advances outstanding in excess of
the Line of Credit Loan Base must be immediately repaid to Crestmark by
Borrower.
2.2 Commitment Fee: Borrower has paid or will pay to Crestmark a
non-refundable Commitment Fee in the aggregate amount of THREE THOUSAND FIVE
HUNDRED AND NO/100 DOLLARS ($3500) for the extension of the Loan, which fee has
been fully earned by Crestmark.
2.3 Monthly Service Fee: Borrower will pay to Crestmark a monthly
service charge of FORTY FIVE ONE HUNDREDTHS OF ONE(.45%) PERCENT of the monthly
average Indebtedness outstanding from the preceding month as a service fee (the
"Service Feel") commencing on the tenth (10th) day of May, 1999 and continuing
on the tenth (10th ) day of each month thereafter until Borrower has no
Indebtedness outstanding and this Agreement is terminated as provided herein.
2.4 Exit Fee: Borrower will pay Crestmark an exit fee as set forth more
fully in the Note.
2.5 Reserves Against Availability: Crestmark, in its sole discretion,
may establish reserves against the advances which Borrower is otherwise entitled
to borrow under this Agreement in such amounts as Crestmark, in its sole
discretion deems necessary or appropriate.
3. LOAN ACCOUNT:
3.1 Debits to Loan Account: All Indebtedness under this Agreement will
be charged to a loan account ("Loan Account") in Borrower's name on Crestmark's
books. Crestmark will render to Borrower, a monthly statement of the Loan
Account, which will be deemed to be correct and accepted by and binding upon
Borrower and Guarantor, unless Crestmark receives a written statement of
exception within ten (10) Business Days of mailing such statement. Crestmark
will debit the Loan Account the amount of each Money Advance or expense when
made or incurred.
3.2 Credits to Loan Account: After allowing two Business Days for
collection of checks and other credit instruments (and subject to final
collection), Crestmark will credit Borrower's Loan Account the net amount of
cash received by Crestmark; provided, however, Crestmark will give Borrower
immediate credit on such funds for calculating availability under the Line of
Credit Loan Base. If any check or other credit instrument for which Crestmark
has given the Borrower credit is not paid, any credit so given will be reversed,
and the Indebtedness restored. Crestmark will have the right, in its sole
discretion, to extend the holding periods set forth above based upon concerns
about the receipt of good funds.
4. EVIDENCE OF INDEBTEDNESS:
Borrower will execute a Promissory Note (Line of Credit) in the
principal amount of THREE HUNDRED FIFTY THOUSAND AND NO/100 ($350,000) DOLLARS,
evidencing the maximum amount provided for under the Loan.
5. GRANT OF SECURITY INTEREST:
5.1 Grant of Security Interest: Borrower grants to Crestmark a
continuing security interest in and first lien on the Collateral, now existing
or hereafter arising, and all proceeds and products thereof, as security for
the timely repayment of all Indebtedness, as herein provided for, or as provided
for in the Collateral Documents. Borrower acknowledges that nothing contained in
this Agreement will be (i) construed as an agreement by Crestmark to resort to
or look to a particular type of the Collateral as security for the repayment of
the Indebtedness or (ii) deemed to limit or reduce any security interest in or
lien upon any portion of the Collateral for the Indebtedness. While this
Agreement is in effect, Borrower will not sell any Collateral, provided,
however, Borrower may sell Inventory in the ordinary course of business.
5.2 Perfection of Security Interest: Borrower will execute and deliver
to Crestmark, concurrently with Borrower's execution of this Agreement and at
any time or times hereafter at the request of Crestmark (and pay the cost of
filing or recording same in all public offices deemed necessary by Crestmark)
all financing statements, assignments, certificates of title, applications for
vehicle titles, affidavits, reports, notices, schedules of Accounts,
designations of Inventory, letters of authority and all other documents that
Crestmark may reasonably request, in form satisfactory to Crestmark, to perfect
and maintain the perfection of Crestmark's security interests in the Collateral.
Borrower will also make appropriate entries on its books and records disclosing
Crestmark's security interests in the Collateral.
5.3 Borrower Remains Liable: Anything contained herein to the contrary
notwithstanding, (a) Borrower will remain liable for all damages, obligations,
and liabilities under the contracts and agreements included in the Collateral to
perform all of its duties and obligations to the same extent as if this
Agreement had not been executed, (b) the exercise by Crestmark of any of its
rights under this Agreement or the Collateral Documents will not release the
Borrower from any of its duties or obligations under the contracts and
agreements included in the Collateral and (c) Crestmark will have no obligation
or liability under the contracts and agreements included in the Collateral, nor
will Crestmark be obligated to perform any of the obligations or duties of
Borrower thereunder or to take any action to collect or enforce any claim for
payment. Borrower will pay all taxes, levies, assessments and charges of any
kind upon or related to the Collateral, Borrower's business, income, revenues
and assets.
6. COLLATERAL DOCUMENTS:
Borrower and others herein required have also executed and delivered to
Crestmark the following documents, which are part of the Collateral Documents:
6.1 Financing Statements: A Uniform Commercial Code Financing Statement
executed by Borrower and satisfactory to Crestmark, sufficient to perfect a
valid and enforceable security interest and lien of the first priority, in and
to the Collateral.
6.2 Guaranty: An unlimited Guaranty of all Indebtedness executed by
each Guarantor dated of even date herewith.
6.3 Landlord's Consent: A Landlord's Consent executed by Borrower and
Borrower's landlord covering the premises leased by Borrower in form and
substance satisfactory to Crestmark.
6.4 Resolutions: Certified Corporate Resolutions authorizing the
Borrower to enter into the Loan Agreement and the Collateral Documents.
Certified Corporate Resolutions authorizing each Guarantor to execute each
Corporate Guaranty.
7. REPRESENTATIONS AND WARRANTIES:
Borrower represents and warrants to Crestmark that:
7.1 Organization and Authority: Borrower is a corporation, duly
organized and in good standing under the laws of the State of Michigan and has
the corporate power and authority to own its assets and transact its business.
The Person executing this Agreement has full power and complete authority to
execute this Agreement and all Collateral Documents on behalf of Borrower.
7.2 Transactions Legal and Authorized: The Execution, delivery and
performance of this Agreement, the Collateral Documents and the other
instruments and documents related thereto have been duly authorized by
appropriate corporate action of Borrower, and the execution, delivery and
performance of this Agreement, the Collateral Documents and other instruments
related thereto are not in contravention of Borrower's Articles of Incorporation
or By-Laws, or of the terms of any contract, indenture, agreement or undertaking
to which Borrower is a party or by which it is bound.
7.3 Enforceability of Obligations: Borrower's Indebtedness to
Crestmark, this Agreement and all Collateral Documents have been duly executed,
are valid, binding upon, in full force and effect and fully enforceable against
Borrower, Guarantor or any other party thereto in accordance with their
respective terms.
7.4 Permissions: Borrower has all requisite permissions, licenses,
registrations and permits required to conduct its business under the laws of the
United States as well as the laws of any state or any foreign country in which
it conducts business. The foregoing constitute all of the authorizations
required by any Person for the operation of Borrower's business in the same
manner as presently conducted, and as proposed to be conducted or conducted from
and after the date hereof. All of the foregoing have been validly issued and are
in full force and effect. To the best of the knowledge and belief of Borrower,
after due investigation, no event has occurred which permits, or after notice or
lapse of time, or both, would permit, revocation or termination of any of the
foregoing or which materially and adversely affects, or in the future may (so
far as Borrower can now reasonably foresee) materially and adversely affect, the
rights of Borrower.
7.5 Litigation: No litigation or other proceeding before any court or
administrative agency, domestic or foreign, is pending, or threatened.
Furthermore, Borrower is not in default with respect to any order, writ,
injunction, decree or demand of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
which might have consequences which would impair the business or properties of
Borrower.
7.6 Financial Statements/Report/Certificates:
(a) Existing Financial Information/No Adverse Changes: The
financial statements furnished to Crestmark are true and correct and have been
prepared in accordance with Generally Accepted Accounting Principles applied on
a Consistent Basis throughout the periods involved. The balance sheet fairly
presents the condition of Borrower as of the date thereof, and the profit and
loss statement fairly presents the results of operations. There have been no
material adverse changes in the condition of Borrower, financial or otherwise
subsequent to the date of the most recent financial statement furnished to
Crestmark.
(b) Future Financial information. All financial information,
statements, reports and certificates required by this Agreement including, but
not by way of limitation, by section 10 hereof, will be true and accurate.
7.7 Ownership of Collateral; No Liens: Borrower is the owner of and has
good and indefeasible title to all of the Collateral. The Collateral is
not subject to any liens, purchase options, mortgages, Pledges, encumbrances,
claims (legal or equitable), or charges of any kind except Permitted
Encumbrances. As of the date hereof, Borrower has not sold any Collateral except
in the ordinary course of business. All Collateral is, and will be located at
Borrower's address specified above, unless disclosed to Crestmark from time to
time in writing, prior to being moved. Crestmark's security interest in the
Collateral is a first priority security interest, and Borrower will defend and
indemnify Crestmark against the claims and demands of all other persons claiming
an interest in the Collateral.
7.8 Location of Collateral: All of the Collateral is located in
Michigan at the address of Borrower set forth above, and Borrower will not move
the Collateral outside of Michigan without the prior written consent of
Crestmark. Borrower will not change its name, adopt an assumed name, or move its
chief executive office without giving Crestmark at least thirty (30) days prior
written notice.
7.9 Tax Returns/Taxes: Borrower has filed all federal, state, local and
foreign tax returns which are required to be filed and has paid all taxes,
withholdings, assessments and other government charges which have become due.
Borrower does not know of any proposed material additional tax assessment
against it, or any of its properties, or any basis therefore.
7.10 Accounts Receivable: With respect to Accounts Receivable,
Borrower, based upon its information, knowledge and belief, represents and
warrants as of the date hereof, and as of the date of each request for a Money
Advance, and so long as this Agreement is in effect that:
(a) Each Account Receivable represents a bona fide existing, valid
and legally enforceable indebtedness of the Account Debtor named therein,
payable in the amount, time and manner stated in the invoice therefor;
(b) Each Account Receivable and invoice represents a bona fide
account due in the ordinary course of Borrower's business and Borrower further
represents that the kind, quality and quantity of the goods or services
described therein have been completely delivered or performed and, at time of
delivery or performance, have been accepted by the Account Debtor and for which
proper receipts have been received by, and all in the possession of Borrower;
(c) Each Account Receivable is free from any claim for credit,
deduction, allowance, dispute, defense, set-off or counter-claim except discount
for prompt payment, and the same is valid and enforceable according to its terms
in the full amount stated;
(d) Each Account Receivable is not subject to an interest, security
interest or claim of interest, by any party not a party to this Agreement;
(e) Borrower has not received any complaint by the Account Debtor
as to Account Debtor's liability for payment, nor has there been any
notification received by Borrower of any returns of the goods or services giving
rise to each Account Receivable;
(f) Borrower has no knowledge of the insolvency of an Account
Debtor or of any action or proceeding by or against an Account Debtor under any
federal or state debtor's relief statute; and
(g) Each Account Receivable is assignable by law and also by the
terms of the contract or agreement giving rise thereto.
7.11 Eligible Inventory: Each item of Eligible Inventory, as of the
date of each request for a Money Advance with respect thereto, meets the
criteria set forth in Section 1.12.
7.12 Non-Reliance: Crestmark has not undertaken to advise Borrower with
respect to the adequacy of the financial accommodations herein set forth, but
the financial accommodations are solely the decision of Crestmark as to the type
and amount of credit Crestmark is willing to extend and
Borrower has made the decision, exclusive of any statements of Crestmark, or any
of its officers or employees, to accept the same without inducement and/or
reliance upon Crestmark and/or any of its officers and employees.
7.13 Indebtedness: On the date hereof, Borrower does not have any
indebtedness for borrowed money, except such indebtedness giving rise to a
Permitted Encumbrance or Subordinated Debt, to any Person that will not be paid
off by the use of he proceeds of the Loan, except for the Loan, and Borrower
has no commitment, understanding, agreement or arrangement to incur any such
indebtedness, except that which is a Permitted Encumbrance.
7.14 Full Disclosure: Neither this Agreement nor any written statement
furnished by or on behalf of Borrower to Crestmark in connection with the
negotiation or the making of the Loan contemplated hereby, taken as a whole,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein or herein not
misleading. There is no fact relating to Borrower or its business which Borrower
has not disclosed to Crestmark in writing, which materially and adversely
affects, or as far as Borrower can now foresee, will materially and adversely
affect any of the properties, business, prospects, profits or conditions
(financial or otherwise) of Borrower, or the ability of Borrower to consummate
the transactions or perform its obligations contemplated by or provided for in
this Agreement.
7.15 Solvency: The Borrower is solvent, able to pay its debts as they
mature, does not have unreasonably small capital and has assets the fair market
value of which exceeds its liabilities. The Borrower will not be rendered
insolvent, undercapitalized or unable to pay maturing debts as a result of the
execution of this Agreement or the Collateral Documents.
7.16 Bankruptcy: The Borrower is not the subject of any bankruptcy,
reorganization, arrangement, insolvency or other similar proceeding.
7.17 Casualty Loan or Judgment: The Collateral has not suffered any
loss, substantial damage, or destruction and no attachment, lien, levy,
garnishment or commencement of any related proceeding has occurred against the
Collateral.
7.18 No Material Adverse Change: No material adverse change has
occurred in the existing or prospective financial condition, business, assets or
liabilities of the Borrower.
7.19 Year 2000: Borrower has completed a Year 2000 assessment and a Year
2000 corrective plan, and completely and accurately completed all questionnaires
supplied by Crestmark regarding Year 2000 issues. Copies of all of the foregoing
will be delivered to Crestmark upon request. Borrower has eliminated all Year
2000 problems that could have a material adverse effect, individually or in the
aggregate, on the business or financial condition of Borrower.
8. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees, that so long as any Money Advances
are outstanding or commitments therefore exist under this Agreement and until
all Indebtedness due Crestmark is paid in full, Borrower will:
8.1 Payments on Indebtedness: Pay all Indebtedness when due, including
the principal amount of each Money Advance and accrued interest thereon, in
accordance with the terms of the Note and this Loan Agreement, whether by
acceleration or otherwise. Furthermore, Borrower will not have any Money
Advances outstanding under the Loan contrary to any provisions, limitations or
restrictions of the Loan Agreement or the Collateral Documents, including, but
not limited to, any Money Advances in excess of the Line of Credit Loan Base
which are not immediately repaid to Crestmark.
8.2 Performance of Obligations: Perform or cause to be performed, all
of the terms, conditions, obligations and covenants of Borrower or any other
Person as required by this Agreement, the Collateral Documents or any other
agreement, note or other document executed between Crestmark and
Borrower and/or another Person, whether now existing or hereafter created and
take all action (or not fail to take any action or suffer or permit any
omission) necessary to maintain the representations and warranties made as true
and accurate.
8.3 Maintenance of Existence: Maintain its corporate existence and all
rights, licenses, leases, agreements and franchises helpful in continuing the
operation of its business in the same manner as of the date of execution hereof.
8.4 Information: Furnish promptly and in a form satisfactory to
Crestmark, such information as Crestmark may request, from to time, and to
permit a representative of Crestmark access to any of its premises, computer
systems and financial records.
8.5 Notification of Disputes: Notify Crestmark promptly of any claim
adverse to, litigation, or administrative or tax proceeding, or other action
threatened or instituted against Borrower or any property of Borrower or any
other material matter which is not fully covered by insurance which could
adversely impair Borrower's financial condition or its ability to conduct its
business including, but not limited to, any inquiry or proceedings initiated by
any state, federal or foreign regulatory agency. For the purposes of this
Agreement, any single such claim, litigation, proceeding, matter, action or
inquiry in which the sum in dispute is Ten Thousand ($10,000.00) Dollars, or all
such claims, litigation, proceedings, matters, actions or inquiries in which the
aggregate sums in dispute are Ten Thousand ($10,000.00) Dollars or more, will be
deemed to be material and adverse.
8.6 Payment of Taxes: Pay when due all taxes, assessments, and other
governmental charges to which Borrower or it's property is or will be subject
before such charges become delinquent, except that no such charge need be paid
so long as its validity or amount is being contested in good faith by
appropriate proceedings and Borrower has established a cash reserve with respect
thereto; provided, however, that any such tax, assessment, or charge shall be
paid forthwith (under protest) upon the filing of any lien securing the same,
commencement of levy, other form of execution, or any other collection action.
Borrower shall, in any case involving a contested payment due from Borrower in
excess of Five Thousand ($5,000.00) Dollars, give written notice thereof to
Crestmark.
8.7 Payment of Expenses: Pay, on demand, all pre-closing expenses
incurred by Crestmark in consummating this Agreement and the Collateral
Documents, including reasonable attorneys' fees. Pay the Service Fee on the date
when due and any and all post-closing expenses, on demand, that may arise or
relate to this Agreement, the Collateral. Documents or the Borrower, including
reasonable attorneys' fees.
8.8 Insurance: Maintain and/or cause any other Person pledging any of
the Collateral to maintain with respect to the Collateral pledged by such Person
insurance in such form and amount as is satisfactory to Crestmark, with loss
payable clauses in favor of Crestmark and providing that any losses under the
policies shall be payable to Crestmark. If Borrower fails to obtain or maintain
any required policies, then Crestmark, without waiving any Default by Borrower
relating thereto, may (but without any obligation) at any time thereafter make
such payment or obtain such coverage and take such other actions as Crestmark
deems advisable. Borrower shall not take out separate insurance concurrent in
form or contributing in the event of a loss. Borrower shall also maintain
insurance pursuant to all applicable Worker's Compensation laws, and liability
insurance for damage to persons. All such insurance shall be in such form, with
such companies and in such amounts as shall be acceptable to Crestmark and each
policy shall provide that the insurance company will provide at least thirty
(30) days notice to Crestmark prior to any cancellation or material alteration
or amendment of any policy. In the event any proceeds shall be payable to
Borrower, or otherwise become available, as a result of a casualty to any
Collateral, all such proceeds shall be the property of Crestmark, immediately
turned over to Crestmark and applied to the Indebtedness due Crestmark.
8.9 Compliance with Law: Continue at all times to comply with all
laws, ordinances, regulations or requirements of any governmental authority
relating to Borrower's business, property or affairs, including, without
limitation, all environmental laws and the Fair Labor Standards Act of 1938, 29
U.S.C. 200, et seq., as amended from time to time.
8.10 Continuation of Business: Maintain and conduct its business in
substantially the same manner as such business is now or has heretofore been
carried on.
8.11 Preservation of Collateral: Maintain the Collateral and every part
thereof, in good repair, working order and condition and, from time to time,
make all repairs, renewals, replacements, additions, improvements and perform
such other maintenance on the Collateral so that at all times the efficiency and
operation of the Collateral shall be fully preserved and maintained. With
respect to Accounts, Borrower shall pursue collections diligently and present
evidence thereof to Crestmark, if requested. Borrower shall, upon request,
immediately deliver to Crestmark evidence of ownership and/or certificates of
title relative to the Collateral and shall place on or otherwise identify the
Collateral with such marks or other methods of identification sufficient to give
notice of Borrower's ownership thereof.
8.12 Dominion of Funds:
(a) The Loan shall be on dominion of funds. Borrower shall direct
all Account Debtors to mail all payments due Borrower to a post office box owned
by Crestmark at a bank acceptable to Crestmark ("Lockbox Bank"). The Lockbox
Bank shall periodically pick up, open and process the contents of the envelopes
mailed to the post office box. All payments shall be deposited into a cash
collateral account owned by Crestmark ("CCA"); Borrower shall have no right to
withdraw any funds from the CCA, all of Borrower's funds therein belong to
Crestmark. All other documents included in the envelopes shall be delivered to
Borrower. Crestmark shall deduct the funds deposited into the CCA and apply the
same toward payment of the Indebtedness, whether or not then due, in such order
of application as Crestmark shall determine. Borrower grants Crestmark and its
representatives an irrevocable power of attorney, coupled with an interest, to
endorse any checks or items, in Borrower's name, delivered or required to be
delivered to the post office box. If, notwithstanding Crestmark's instructions
to an Account Debtor, Borrower receives payments directly from an Account
Debtor, Borrower agrees not to commingle such remittances with any of its other
funds or property, and will hold the funds separate and apart from its own funds
or property, in trust for Crestmark, and immediately deliver same to the post
office box in the form received. Crestmark shall process the envelope and its
contents as if same had been mailed directly to the post office box by the
Account Debtor. Any Account Debtors that remit payments to Borrower
electronically shall be instructed to remit funds to the CCA. If Borrower
receives any funds into its operating account via electronic transfer, it will
immediately wire those funds to the CCA.
(b) Whenever Borrower requests a Money Advance, it shall furnish to
Crestmark a Borrowing Certificate, which shall be in form and substance
acceptable to Crestmark. This Borrowing Certificate shall reflect the Line of
Credit Loan Base and the Loan Account under the Loan as of the activity date of
the report. All activity occurring since the last Borrowing Certificate and the
request for the Money Advance will be supported by documentation and
verification that is acceptable to Crestmark in its sole discretion--by way of
illustration, but not limitation, such supporting documentation might include:
sales journals, copies of invoices, copies of delivery evidence, cash receipts
journals, copies evidencing all changes to inventory accounts (if applicable)
and such other documentation as more fully set forth in Section 10 of this
Agreement. A Borrowing Certificate is required at least once a week, but can be
submitted more frequently.
(c) Borrower shall promptly notify Crestmark of any invoices which
have been rejected by any Account Debtor, which shall thereupon be eliminated as
an Eligible Account Receivable.
(d) Immediately upon learning thereof, Borrower shall inform
Crestmark in writing of the rejection of goods or services by any Account
Debtor, delays in delivery of goods, non-performance of contracts or services,
and of any assertion or threatened assertion of any claims, offsets or
counterclaims by Account Debtors.
(e) Borrower shall furnish to, and inform Crestmark of, all
material or adverse information relating to the financial condition Of any
Account Debtor, immediately upon Borrower's learning thereof.
(f) Borrower acknowledges that the maintenance of the CCA pursuant
to this section is solely for Crestmark's convenience in facilitating its own
operations pursuant hereto, and that Borrower has not and shall not have any
right, title, or interest in said CCA or in the amounts deposited therein at any
time thereof.
(g) Borrower shall reimburse Crestmark for any and all charges and
expenses relating to the lockbox and the CCA.
(h) Deposits in the CCA are owned by Crestmark and shall constitute
payment on the Indebtedness when so applied by Crestmark as provided above.
Crestmark shall have no duty as to the collection or protection of checks or
instruments or the proceeds thereof, nor as to the preservation of any rights
pertaining thereto, beyond avoiding gross negligence or fraud in the custody and
preservation of items in the possession of Crestmark.
8.13 Opening Accounts: Upon request by Crestmark, Borrower shall open
and maintain its corporate accounts with Crestmark.
8.14 Notice of Default: Immediately upon becoming aware of any Default
under this Agreement, give written notice thereof to Crestmark, specifying the
nature and period of existence thereof, and what action Borrower is taking or
proposes to take with respect thereto, but such notice shall not cure the
existence of a Default or prohibit Crestmark from exercising its remedies
hereunder.
8.15 Financial Information/Reports: Within the time periods specified
and if no time period is specified, five (5) Business Days shall be deemed the
time period, deliver to Crestmark, all financial information, reports,
certificates, notices and other information herein required of Borrower,
pursuant to any provision of this Agreement or the Collateral Documents.
8.16 Verification of Accounts: Always allow Crestmark or any of its
officers, employees and agents, including Financial Control Systems, to contact
Account Debtors, in the name of Crestmark, Financial Control Systems or in the
name of Borrower, to verify the validity, amount or any other matter relating to
any Account or Collateral. Crestmark may choose to verify the Collateral and
Accounts by mail, telephone, fax or any other manner it chooses and in any
frequency Crestmark elects.
9. NEGATIVE COVENANTS:
Borrower covenants and agrees, that so long as any Money Advances
are outstanding or commitments therefore exist under this Agreement, and until
all Indebtedness due Crestmark is paid in full, it will not:
9.1 Acquisitions/Merger: Purchase or acquire obligations or stock of,
or any other interest in, any Person, or purchase all or substantially all of
the assets of any Person without the prior written consent of Crestmark.
9.2 Negative Pledge: Create, assume or otherwise suffer to exist any
mortgage, pledge or other encumbrance, or claim therefore, upon any of its
property (tangible, intangible, personal, real) or Collateral, now owned or
hereafter acquired, or increase, modify, amend, change or alter any
indebtedness, or security interest securing any such indebtedness, giving rise
to a Permitted Encumbrance, if any.
9.3 Dividends: Declare or pay any dividend, or make any other
distribution of, or with regard to, its capital stock or other equity security,
or purchase or retire any of its capital stock or other equity security.
Provided, however, with respect to any year in which Borrower is taxed by the
Internal Revenue Service as an "S" corporation, Borrower may make a
distribution of profits to its shareholders in an amount not to exceed
the sum necessary to enable its shareholders to pay their personal state and
federal taxes directly attributable to the profits earned by Borrower for the
year.
9.4 Loans/Liabilities: Make a loan, or incur or assume any obligations
or liability as lender, guarantor, surety, indemnitor or otherwise with respect
to any indebtedness or other obligation of any Person.
9.5 Disposition of Assets: Voluntarily or involuntarily sell, convey,
lease or otherwise dispose of any portion of the Collateral, its Properties, or
assets, not in the ordinary course of business without the prior written consent
of Crestmark.
9.6 Capital Assets: Become obligated for the purchase or lease of real
property or other capital assets, in addition to any such arrangement now in
effect, the purchase price of which or annual rental of which, is or will be in
excess of Fifty Thousand ($50,000) Dollars in any consecutive twelve (12) month
period without the prior written consent of Crestmark.
9.7 Distributions: Make, directly or indirectly, any disbursements,
loans, advances or distributions, in money or otherwise, other than customary
salary and bonuses, to any stockholders, officers or directors.
9.8 Transactions with Affiliates/No Subsidiaries: Enter into any
transaction with any stockholders of Borrower or such stockholders, affiliates,
except on terms not less favorable than would be usual and customary in similar
transactions between persons or entities dealing at arm's length. Borrower does
not have and will not organize or acquire any subsidiaries.
9.9 Management Services: Enter into any contract for personal services
or obtaining management or special consulting or advisory services other than in
the ordinary course of business.
9.10 Other Obligations: Incur any other additional obligations by way
of loans from any other Person, without the prior written consent of Crestmark,
but no obligation of Crestmark to consent thereto shall be implied herefrom.
9.11 Redemption/Issuance: Release, redeem, retire, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or other
equity security without the prior written consent of Crestmark.
9.12 Default in Payment of Other Debt: Default in the payment of any
indebtedness owed to any Person for borrowed money.
9.13 Judgment: Suffer or permit any judgment, decree or order not fully
covered by insurance to be entered by a court of competent jurisdiction against
Borrower or Guarantor or permit or suffer any writ or warrant of attachment or
any similar process to be filed against Borrower or Guarantor or against any
property or asset of Borrower or Guarantor.
10. BOOKS/RECORDS/FINANCIAL REPORTS/CERTIFICATES:
Borrower covenants and agrees, that so long as any Money Advances
are outstanding or commitments therefore exist under this Agreement, and until
all Indebtedness due Crestmark is paid in full, it will keep proper books of
accounts in a manner satisfactory to Crestmark. Crestmark shall have the right,
at any time, to verify any of the Collateral, documentation or books, whether
such documentation is furnished weekly, monthly or annually in whatever manner
and in whatever frequency it deems necessary, including through telephone
contact with customers or vendors.
10.1 Borrowing Certificates: Borrower will also furnish to Crestmark a
Borrowing Certificate, in form satisfactory to Crestmark, may be submitted
daily to Crestmark, but in all events, shall be submitted at least on a weekly
basis. The Borrowing Certificate shall be supported by invoices, a sales
journal, cash receipts journal, inventory sold and purchased journal, evidence
of delivery of goods, proof of shipment, proof of performance of services, time
sheets or any other documentation Crestmark requests in its
sole discretion. With each Borrowing Certificate, Borrower will also submit to
Crestmark an updated Inventory certification listing Borrower's Inventory by
catalog and location as of the date of the report. By signing the Borrowing
Certificate, Borrower is reaffirming that no Default exists under this Agreement
and/or under any Collateral Documents an of the data of the requested borrowing.
10.2 Monthly Statements: Borrower and Inmold, Inc. will also furnish to
Crestmark monthly management prepared financial statements, balance sheets, and
profit and loss statements for the month then ended, certified to by the chief
executive or chief financial officer of Borrower. Such reports shall set forth
the financial affairs and true condition of Borrower for each month and shall be
delivered to Crestmark no later than thirty (30) days after the end of each
month. In addition, Borrower shall furnish to Crestmark the following certified
to by the chief executive or chief financial officer of Borrower within the
time periods set forth:
(a) Accounts Receivable Reports: Monthly detailed Accounts
Receivable Aging Reports no later than fifteen (15) days after the end of each
month; and
(b) Accounts Payable Reports: Monthly detailed Accounts Payable
Aging Reports no later than fifteen (15) days after the end of each month; and
10.3 Field Examinations: Borrower will also permit Crestmark to perform
quarterly field examinations of Borrower's assets and liabilities, to be
performed by Crestmark's inspector, whether a Crestmark officer or an
independent party, with fees and expenses thereof to be paid by Borrower. The
information compiled by the field examination is for Crestmark's internal use,
and Crestmark has no obligation to share the field examination, in whole or in
part, with Borrower.
10.4 Annual Statements/Projections: Borrower will also furnish and
deliver to Crestmark annual consolidating audited financial statements of
Inmold, Inc. and its subsidiaries prepared by a certified public accountant
acceptable to Crestmark. Such reports shall set forth in detail Borrower's true
condition as of the end of each of Borrower's fiscal years no later than ninety
(90) days after the end of each of Borrower's fiscal years.
10.5 Officer's Certificates: Borrower will deliver to Crestmark with
each set of financial statements delivered pursuant to Sections 10.2 and 10.3, a
certificate signed by the President, or the chief executive or chief financial
officer of Borrower (if not the President), setting forth:
(a) the information (including detailed calculations) required in
order to establish whether Borrower was in compliance with the financial
requirements set forth in this Agreement during and as of the end of the period
covered by the financial statement then being furnished; and
(b) that the signer has reviewed all of the relevant terms of this
Agreement and has made, or has caused to be made, under his or her supervision,
a review of the transactions and conditions of Borrower from the beginning of
the accounting period covered by the financial statements being delivered
therewith to the date of the certificate, and that such review has not disclosed
the existence during such period of any Default.
10.6 Inspection of Books and Records: At any reasonable time and from
time to time, Borrower will permit Crestmark or its agents to inspect and
examine Borrower's books, records and papers. Crestmark shall have the right to
make copies and abstracts thereof. Borrower will also make its officers,
accountants and consultants available to discuss Borrower's business, operations
and financial condition.
10.7 Tax Returns: Guarantor and Borrower shall each provide Crestmark
with current annual tax returns prior to April 15 of each year or if an
extension is filed, at the earlier of (a) the filing thereof or (b) the
extension deadline.
11. REMEDIES UPON DEFAULT:
Upon the occurrence of any Default, Crestmark can charge the Default
Interest Rate on the Note, and Crestmark has the following rights and remedies,
provided further that the rights or remedies contained herein or otherwise
available shall be cumulative and not exclusive, together with any and all other
rights and remedies which may be available, whether, contained in this
Agreement, the Collateral Documents, or available by virtue of law or equity,
including the Uniform Commercial Code and any action by Crestmark shall not
serve to release or discharge any other security, property or Collateral held by
Crestmark in connection with this transaction.
11.1 Acceleration: Crestmark can accelerate all or part of the
Indebtedness without notice or demand, and declare such amount to be immediately
be due and payable, without presentation, notice or demand, notwithstanding the
maturity or due date, if any, therein to the contrary, all of which are
expressly waived by Borrower and Guarantor.
11.2 Access to Premises/Repossession of Collateral: Crestmark or any of
its agents or representatives shall have the right to enter the premises of
Borrower or any other place(s) where the books, records and Collateral of
Borrower may then be kept and maintained, and remove all such books, records and
Collateral for such time as Crestmark may desire in order to effectively collect
and liquidate the Collateral. All expenses relating thereto, including moving
expenses, the leasing of additional facilities and the hiring of security guards
shall be borne by Borrower. Upon request by Crestmark, Borrower shall assemble
the Collateral and make it available to Crestmark at a time and place to be
designated by Crestmark which is reasonably convenient to Crestmark and
Borrower; Borrower shall fully cooperate with all of Crestmark's efforts to
preserve the Collateral and will take such actions to preserve the Collateral as
Crestmark may direct. Borrower also agrees that Crestmark shall also have the
right to peacefully retake the Collateral, and Borrower waives any right it may
have in such instances, to a judicial hearing prior to such retaking.
11.3 Disposition of the Collateral: Crestmark or any of its agents or
representatives shall have the right to sell and deliver the Collateral at a
public or private sale (by way of one or more contracts or transactions), by way
of parcels or in bulk, for cash, credit or otherwise, at such prices and upon
such terms as Crestmark or its agents deem advisable. Crestmark shall have no
obligation to preserve any rights to the Collateral or marshal any Collateral
for the benefit of any Person, including Guarantor.
11.4 Waivers: To the extent permitted by applicable law, Borrower
agrees to waive and does hereby absolutely and irrevocably waive and relinquish
the benefits and advantages of any valuation, stay, appraisement, extension or
redemption laws now or hereafter existing which, but for this provision, might
be applicable to any sale made under the judgment, order or decree of any court,
or otherwise, based on any note contemplated hereby, or on any claim for
interest on such notes, or any security interest set forth in this Agreement.
11.5 Appointment of Receiver: Crestmark shall be entitled, to the
extent provided by law, to the appointment of a receiver of the business and
premises of Borrower, and of the rents and profits derived therefrom, and all
Collateral. This appointment shall be in addition to any other rights, relief or
remedies afforded Crestmark. Such receiver, in addition to any other rights to
which he shall be entitled, shall be authorized to sell any and all property of
Borrower for the benefit of Crestmark pursuant to provisions of Michigan law and
the Uniform Commercial Code of Michigan. In the event of any deficiency,
Borrower and Guarantor shall remain liable therefor.
11.6 Injunctions: Borrower and Guarantor acknowledge that upon the
occurrence of a Default, no remedy at law will provide adequate relief to
Crestmark; therefore, Borrower agrees that Crestmark shall be entitled to
temporary and permanent injunctive, or other equitable relief in any such case
without proving actual damages, it being acknowledged that the nature of
Borrower's business dictates such relief is necessary in order to preserve the
Collateral and rights of Crestmark.
11.7 Expenses: Borrower shall pay to Crestmark, on demand, any and all
expenses, including reasonable attorneys' fees and collection expenses, incurred
or paid by Crestmark in protecting or enforcing its rights under this
Agreement, the Collateral Documents or pursuant to any other document or
agreement relating to the Loan. Crestmark shall apply the net proceeds of any
sale, disposition or holding of Collateral, after deducting all costs and
expenses of every kind incurred arising from the retaking, holding, preparing
for sale, selling, leasing or collecting or in any way relating to the rights
of Crestmark hereunder, to the payment of any portion of the Indebtedness, in
whole or in part, whether due or not due, absolute or contingent, making proper
rebate for interest or discount on items not then due, and only after so
applying such net proceeds and ascertainment by Crestmark of any other amounts
required by any existing or future provision of law, need Crestmark account to
Borrower for surplus, if any. Borrower shall remain liable to Crestmark for the
payment of any deficiency of any Indebtedness, together with interest thereon,
until paid. Crestmark shall not be required to proceed against any other party,
or against any other security for any Indebtedness or pursue any other right or
remedy hereunder, or under any other instrument or agreement, but all such
rights and remedies shall be cumulative and in addition to all other rights and
remedies of Crestmark.
11.8 Enforcement of Rights: Crestmark shall be entitled to enforce its
rights hereunder and to avail itself of its security interests in the
Collateral, simultaneously or successively, in such order and priority as
Crestmark shall determine. All rights, remedies and security interests in the
Collateral shall continue in full force and effect until all Indebtedness of
Borrower and Guarantor shall be satisfied in full, and no single action or
actions shall be deemed an election of remedies.
11.9 Right of Offset: Crestmark or its assigns shall have the right of
offset against any funds (i) of Borrower or Guarantor on deposit with or in the
possession of Crestmark, (ii) of Borrower or Guarantor on deposit in any account
of Borrower established pursuant to this Agreement or the Collateral Documents.
11.10 Accounts and/or Accounts Receivable:
(a) Crestmark shall have the right to notify any and all Account
Debtors to make payment directly to Crestmark.
(b) Crestmark shall have the right in its own name or in the name
of Borrower:
(i) to demand, collect, receive payment of, receipt for and
give discharges and releases, upon payment of all or any of the Accounts and any
monies due or to become due in respect 'thereof and to notify all Account
Debtors of the Default and to direct all Account Debtors to pay Crestmark
directly; and
(ii) to reasonably settle, compromise, compound, or adjust all
or any of the Accounts which are legitimately in dispute; and
(iii) to commence and prosecute any and all suits, actions, or
proceedings in law or in equity in any court of competent jurisdiction to
collect or otherwise realize on all or any of the Accounts or to enforce any
rights in respect thereof; and
(iv) to reasonably settle, compromise, compound, adjust or
defend any actions, suits, or proceedings relating or pertaining to all or any
of the Accounts; and
(v) to file any claim or take any other action or proceeding
which Crestmark may deem necessary or appropriate to protect and preserve and
realize upon the security interest of Crestmark in the Accounts and the proceeds
thereof; and
(vi) generally to sell, assign, transfer, pledge, make any
agreement with respect to or otherwise reasonably deal with all or any of the
Accounts as fully and completely as though Crestmark were the absolute owner
thereof for all purposes. Borrower hereby waives any statutory rule or
constitutional restriction, prohibition, or procedure in connection with the
rights granted Crestmark in this subsection and gives Crestmark the right to
peaceful repossession of the Collateral without hearing or court order.
11.11 Application of Proceeds: The proceeds of any sale or other
disposition of the Collateral shall be applied by Crestmark, first upon all
expenses authorized by this Agreement, the Collateral Documents or by law,
including reasonable attorney's fees incurred by Crestmark; the balance of the
proceeds of such sale or other disposition shall be applied to the payment of
the Indebtedness, first to interest, then to principal, then to other
Indebtedness, and the surplus, if any, shall be paid over to the Borrower or to
such other Person or Persons as may be entitled thereto under applicable law.
The Borrower and Guarantor shall remain liable for any deficiency, which the
Borrower or Guarantor shall pay to Crestmark immediately upon demand.
Nothing herein contained shall be construed to make Crestmark an
agent or trustee of Borrower or guarantor for any purpose whatsoever, and
Crestmark shall not be responsible or liable for any shortage, discrepancy,
damage, loss or destruction of any part of the Collateral wherever the same may
be located and regardless of the cause thereof (except to the extent it is
determined by final judicial decision that Crestmark's act or omission
constituted gross negligence or willful misconduct). Crestmark will not, under,
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Accounts, liquidation of the Collateral or any instrument received
in payment thereof or for any damage resulting therefrom (except to the extent
it is determined by a final judicial decision that Crestmark's error, omission
or delay constituted gross negligence or willful misconduct). Crestmark does
not, by anything herein or in any assignment or otherwise, assume any of the
Borrower's or Guarantor's obligations under any contract or agreement assigned
to Crestmark, and Crestmark shall not be responsible in any way for the
performance by the Borrower or Guarantor of any kind of the terms and conditions
thereof.
12. NOTICE:
Any notice served to or upon Borrower shall be given to Borrower for
all purpose by being sent certified mail, return receipt requested, postage
prepaid, or other expedited mail service, addressed to Borrower at the address
hereinabove set forth, or at such other address as shall be designated by
Borrower to Crestmark in writing, and any such notice shall be given to
Crestmark, for all purposes, by being sent certified mail, return receipt
requested, postage prepaid, or other expedited mail service, to ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Michigan, or' at such other address as Crestmark
may designate to Borrower in writing.
13. TERMINATION:
Crestmark may terminate this Agreement and its obligations hereunder
upon demand, at its sole discretion and absent the existence of a Default. All
of Borrower's and Guarantor's obligations, duties, promises, covenants,
representations or warranties under this Agreement and Borrower's and
Guarantor's obligations, duties, promises, covenants, representations or
warranties under the Collateral Documents, shall continue and remain in full
force and effect until (i) the Indebtedness is irrevocably paid in full in cash
and (ii) Borrower receives written notification of the termination of Loan from
Crestmark. Upon demand, the Indebtedness, the Note, Money Advances, Loan, and
all other obligations due Crestmark from Borrower, shall then be immediately due
and payable, regardless of any date, if any, to the contrary, plus the interest
accrued thereon until payment in full.
14. MISCELLANEOUS:
14.1 Binding Effect: This Agreement shall be binding upon and shall
inure to the benefit of Borrower and Crestmark, and their respective successors
and assigns, provided that the foregoing shall not authorize any assignment by
Borrower of its rights or duties hereunder, which assignment,
in whole or in part, by Borrower shall not be permissible.
14.2 Delay/Waiver: No delay or failure of Crestmark in exercising any
right, remedy, power or privilege hereunder shall affect such right, remedy,
power or privilege, nor shall any single or partial exercise thereof preclude
the exercise of any other right, remedy, power or privilege. No delay or failure
of Crestmark at any time to demand strict adherence to the terms of this
Agreement shall be deemed to constitute a course of conduct inconsistent with
Crestmark's right at any time to demand strict adherence to the terms of this
Agreement or the Collateral Documents.
14.3 Incorporation by Reference: The Collateral Documents are
incorporated herein by reference, and in the event any provision thereof is
inconsistent with the provisions of this Agreement, then this Agreement shall be
deemed paramount unless the rights and remedies of Crestmark would be adversely
affected or diminished thereby.
14.4 Applicable Law: This Agreement and the Collateral Documents shall
be interpreted, and the rights of the parties hereunder shall be determined,
under the laws of the State of Michigan.
14.5 Further Assurances: Borrower, from time to time, upon written
request of Crestmark, will make, execute, acknowledge and deliver all such
further and additional instruments and take all such further action as may be
required, to carry out the intent and purpose of this Agreement and to provide
for the payment of the Loan, note(s), borrowings and Money Advances, according
to the intent and purpose herein and therein expressed.
14.6 Hold Harmless/Indemnity: Borrower hereby assumes responsibility
and liability for, and hereby holds harmless and indemnifies Crestmark from and
against, any and all liabilities, demands, obligations, injuries, costs, damages
(direct, indirect or consequential), awards, loss of interest, principal, or any
portion of the Indebtedness, charges, expenses, payments of monies and
reasonable attorney fees, incurred or suffered, directly or indirectly, by
Crestmark and/or asserted against Crestmark by any Person whatsoever, including
Borrower or Guarantor, which arise in whole or in part out of this Agreement, or
the Collateral Documents, or the relationship herein set forth or the exercise
of any right or remedy including the realization, disposition or sale of the
Collateral, or any portion thereof, or the exercise of any right in connection
therewith even if the above are caused by the sole action, inaction, omission or
negligence of Crestmark, but Borrower or Guarantor shall not be liable if the
damages result solely from the fraud or gross negligence of Crestmark.
14.7 Limitation of Liability: Neither Crestmark nor any of its
affiliates, directors, officers, agents, attorneys or employees shall be liable
to Borrower, Guarantor or any of Borrower's affiliates for any action taken, or
omitted to be taken, by it or them or any of them under this Agreement or any of
the Collateral Documents or in connection herewith or therewith, except that no
person shall be relieved of any liability imposed by law for gross negligence or
fraud. Except for claims of gross negligence or fraud, no claim may be made by
Borrower, Guarantor or by any of Borrower's affiliates, directors, officers,
agents, attorneys or employees, for any special, indirect or punitive damages in
respect of any breach or wrongful conduct (whether the claim is based on
contract or tort or duty imposed by law) arising out of or related to this
Agreement or any other Collateral Documents, or the transactions contemplated
hereby or thereby, or any act, omission or event occurring in connection
herewith or therewith. Except for claims of gross negligence or fraud, Borrower,
on its behalf and on behalf of its affiliates, and Guarantor hereby waive,
release and agree not to ▇▇▇ upon any claim for any such damages, whether or not
accrued, and whether or not known or suspected to exist in its favor.
14.8 Survival and Continuation: All representations, warranties,
covenants, indemnifications, consents and agreements contained in this Agreement
and/or any of the Collateral Documents shall survive the execution of this
Agreement, the Collateral Documents and any investigations by Crestmark and
shall be, and continue at all times while any Indebtedness is outstanding, to be
true and accurate. Borrower shall immediately notify Crestmark, in writing, if
any of the foregoing are or have become untrue.
14.9 Complete Agreement: This Agreement incorporates and/or contains
the entire agreement of the parties hereto and none of the parties shall be
bound by anything not expressed in writing.
14.10 Severability: If any provision of this Agreement is in conflict
with any statute or rule of law or is otherwise unenforceable for any reason,
then that provision shall be deemed null and void to the extent of the conflict
or unenforceability and shall be deemed severable. The offending provision shall
not invalidate any other provision of this Agreement.
14.11 Amendment: This Agreement and the Collateral Documents may only
be amended, modified or extended by written instrument executed by Crestmark and
Borrower.
14.12 Duplicate Originals: Two or more duplicate originals of this
Agreement may be signed by the parties, each of which shall be an original but
all of which together shall constitute one and the same instrument.
14.13 Time of Essence: Time shall be of the essence in this Agreement.
14.14 Reinstatement: Borrower further agrees that to the extent
Borrower makes a payment or payments to Crestmark, which payment or payments or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy act, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment, the obligation
or part thereof intended to be satisfied shall be revived and continued in full
force and effect as if said payment had not been made.
14.15 Payable an Demand: The Loan is payable on demand. Nothing
contained in this Agreement or the Collateral Documents, including, but not
limited to, the reference to a Default, shall be construed to prevent Crestmark
from making demand, without notice and without reason, for immediate payment of
all or any part of the Loan whether or not a Default has occurred. Demand for
repayment of the Loan by Crestmark can be made at any time or times.
14.16 CONSENT TO JURISDICTION: BORROWER AND GUARANTOR HEREBY WAIVE ANY
PLEA OF JURISDICTION OR VENUE ON THE GROUNDS THAT BORROWER OR GUARANTOR ARE NOT
RESIDENTS OF OAKLAND COUNTY, MICHIGAN, AND HEREBY SPECIFICALLY AUTHORIZE, AT THE
OPTION OF CRESTMARK, ANY ACTION BROUGHT TO ENFORCE BORROWER'S AND/OR GUARANTOR'S
OBLIGATIONS TO CRESTMARK TO BE INSTITUTED AND PROSECUTED IN EITHER THE CIRCUIT
COURT OF OAKLAND 'COUNTY, MICHIGAN, OR IN THE UNITED STATES DISTRICT COURT FOR
THE EASTERN DISTRICT OF MICHIGAN, AT THE' OPTION OF CRESTMARK, AND BORROWER AND
GUARANTOR HEREBY SUBMIT TO THE JURISDICTION OF SUCH COURT.
14.17 Release of Claims Against Crestmark: in consideration of
Crestmark's making the Loan described in this Agreement, Borrower and the
Guarantor do each hereby release and discharge Crestmark of and from any and all
claims, harm, injury, and damage of any and every kind, known or unknown, legal
or equitable, which Borrower or Guarantor have against Crestmark from the date
of Borrower's first contact with Crestmark up to the date of this Agreement.
Borrower and the Guarantor confirm to Crestmark that they have reviewed the
effect of this release with competent legal counsel of their choice, or have
been afforded the opportunity to do so, prior to execution of this Agreement and
the Collateral Documents and each acknowledges and agree that Crestmark is
relying upon this release in extending the Loan to Borrower.
14.18 Waiver of Jury Trial: BORROWER AND GUARANTOR DO EACH KNOWINGLY
AND VOLUNTARILY AND INTELLIGENTLY WAIVE THEIR CONSTITUTIONAL RIGHT TO A TRIAL BY
JURY WITH RESPECT TO ANY CLAIM, DISPUTE, CONFLICT OR CONTENTION, IF ANY, AS MAY
ARISE UNDER THIS AGREEMENT OR UNDER THE COLLATERAL DOCUMENTS, AND AGREE THAT ANY
LITIGATION BETWEEN THE PARTIES CONCERNING THIS AGREEMENT AND THE COLLATERAL
DOCUMENTS SHALL BE HEARD BY A COURT OF COMPETENT JURISDICTION SITTING WITHOUT A
JURY. BORROWER AND GUARANTOR HEREBY, CONFIRM TO CRESTMARK THAT THEY HAVE
REVIEWED THE EFFECT OF THIS WAIVER OF JURY TRIAL WITH
COMPETENT LEGAL COUNSEL OF THEIR CHOICE, OR HAVE BEEN AFFORDED THE OPPORTUNITY
TO DO SO, PRIOR TO SIGNING THIS AGREEMENT AND THE COLLATERAL DOCUMENTS AND EACH
ACKNOWLEDGE AND AGREE THAT CRESTMARK IS -RELYING UPON THIS WAIVER IN EXTENDING
THE LOAN TO BORROWER.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first appearing above.
CRESTMARK: BORROWER:
Crestmark Bank, Seville Plastics, Inc.
a Michigan banking Corporation a Michigan corporation
By: ▇▇▇▇▇ ▇. ▇▇▇▇ By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------- ------------------------
▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Vice President Its: Chairman
AGREEMENT OF GUARANTOR
By executing this Agreement Guarantor: (1) acknowledges and agrees that
the Guarantor has completely read and understands this Agreement; (2) consents
to all of the provisions of this Agreement relating to Borrower; (3)
acknowledges and agrees that the Guaranty executed and delivered by the
undersigned shall continue in full force and effect; (4) acknowledges receipt of
good and lawful consideration for the execution of the guaranty agreement; (5)
agrees promptly to furnish the financial statements and information required by
this Agreement; (6) agrees to all of those portions of this Agreement which
apply to Guarantor; (7) acknowledges and agrees that this Agreement has been
freely executed without duress and after an opportunity was provided to
Guarantor for review of this Agreement and the guaranty agreement by competent
legal counsel of Guarantor's choice; and (8) acknowledges that Bank has provided
Guarantor with a copy of this Agreement, the guaranty agreement and the other
Collateral Documents.
GUARANTOR:
G.P. Plantics, Inc.
a Michigan corporation
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
BY: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chairman
Inmold, Inc.
an Indiana corporation
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
BY: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chairman
EXHIBIT A
PERMITTED EMCUMBRANCES
1. That certain financing statement filed March 5, 1999 with the
Michigan Secretary of State, showing Borrower as debtor and the U.S. Small
Business Administration as secured party relating to two 1973 ▇▇▇ ▇▇▇▇ Molding
Machines.
PROMISSORY NOTE
(LINE OF CREDIT)
Principal Amount: Troy, Michigan
$350,000
Due Date: ON DEMAND Dated: April 6, 1999
FOR VALUE RECEIVED, the undersigned, (hereinafter referred to as
"Borrower") promises to pay ON DEMAND to the order of Crestmark Bank, a Michigan
banking corporation (hereinafter referred to as "Crestmark"), at its offices
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place
as Crestmark may designate in writing, the principal sum of up to THREE HUNDRED
FIFTY THOUSAND AND NO/100 ($350,000) DOLLARS, plus interest and other charges as
hereinafter provided, in lawful money of the United States.
The unpaid principal balance outstanding from time to time under this
Note shall bear interest on the basis of a year of 360 days for the actual
number of days the principal is outstanding, at a rate of interest (the
"Effective Interest Rate") which is equal to TWO PERCENT (2%) per annum in
excess of the Wall Street Journal Prime Rate (the "Index") as such index may
vary from time to time (but not in excess of the maximum rate permitted by law).
The term "Wall Street Journal Prime Rate" as used herein shall mean that rate of
interest reported daily in the Wall Street Journal as the Prime Rate, as such
rate may vary from time to time. Borrower understands and agrees that the
Effective Interest Rate payable to Crestmark under this Note shall be determined
by reference to the Index and not by reference to the actual rate of interest
charged by Crestmark or any other bank to any particular (borrowers). If the
Index shall be decreased or increased, then the Effective Interest Rate under
this Note shall be decreased or increased by a like amount effective the day of
each increase or decrease in the Index.
Interest on amounts disbursed and outstanding from time to time shall
be paid monthly, in arrears, commencing on the tenth (10th) day of May, 1999,
and continuing on the tenth (10th) day of each month thereafter for as long as
any Indebtedness remains outstanding. Payments due and payable on a day on which
Crestmark is not open for business are due on the next succeeding business day.
Principal and all other Indebtedness shall be repaid from Account collections
and any other funds of Borrower deposited in the lockbox and cash collateral
account in accordance with the terms of the Dominion of Funds section of the
Loan Agreement (as hereinafter defined), but in all events, all outstanding
Indebtedness shall be due and payable on demand.
All Money Advances, accrued interest thereon and expenses due hereunder
and/or under the Loan Agreement shall be charged to a Loan Account in Borrower's
name on Crestmark's books, and Crestmark shall debit to such account the amount
of each loan or advance when made and credit to such account the amount of each
repayment as provided for in the Loan Agreement. Crestmark shall render Borrower
from time to time a statement of account setting forth the Borrower's loan
balance in said Loan Account which statement shall be deemed to be correct and
accepted by and binding upon Borrower, unless Crestmark receives a written
statement of exceptions within ten (10) Business Days after such statement has
been rendered to Borrower. Such statement of account shall be prima facie
evidence of the Money Advances, accrued interest thereon and expenses due
hereunder and/or under the Loan Agreement and owing to Crestmark by Borrower.
This Note is a Note under which Money Advances, repayment and
readvances may be made from time to time. Money Advances and readvances shall be
made in accordance with the provisions of the Loan Agreement at the sole
discretion of Crestmark. If, and in the event at any time(s) prior to demand,
Borrower repays all Money Advances outstanding hereunder and all interest
accrued thereon, a readvance hereunder shall automatically reinstate this Note
and its terms.
Any payment made by mail will be deemed tendered and received only upon
actual receipt, promptly on the date due for each such payment as herein
required (time being of the essence), at the address of Crestmark designated for
such payment whether or not Crestmark has authorized payment by mail or
any other manner. Borrower hereby expressly assumes all risk of loss or
liability resulting from non-delivery or delay in delivery of any payment
transmitted by mail or in any other manner.
No delay or failure of Crestmark in exercising any right, remedy, power
or privilege hereunder shall affect such right, remedy, power or privilege, nor
shall any single or partial exercise thereof preclude the exercise of any other
right, remedy, power or privilege. No delay or failure of Crestmark at any time
to demand strict adherence to the terms of this Note shall be deemed to
constitute a course of conduct inconsistent with Crestmark's right at any time
to demand strict adherence to the terms of this Note.
If Crestmark has not demanded payment on this Note, and Borrower elects
to pay this Note, in full or in part, by refinancing with a source of funds
other than Borrower's operations, Borrower may do so, but only upon the
simultaneous payment of the following exit fee (i) prior to may 1, 2000 the exit
fee is SEVENTEEN THOUSAND FIVE HUNDRED AND NO/100 ($17,500) DOLLARS, (ii) on and
after May 1, 2000, but prior to May 1, 2001, the exit fee is TEN THOUSAND FIVE
HUNDRED AND NO/100 ($10,500) DOLLARS. Notwithstanding the foregoing, if
Crestmark is a participating lender in the re-financing of G.P. Plastics, Inc.,
a sister company of Borrower, the foregoing exit fees will be waived. No partial
prepayment shall affect the obligation of 'the Borrower to continue the regular
payments hereinbefore mentioned.
Nothing herein contained, nor any transaction relating thereto, or
hereto, shall be construed or operate to require Borrower to pay, or be charged,
interest at a rate greater than the maximum allowed by law. Should any interest
charged, paid or payable by Borrower in connection with this Note or any other
document delivered in connection herewith, result in the charging, payment or
earning of interest in excess of the maximum allowed by law, then any and all
such excess shall be and the same is hereby waived by Crestmark, and any and all
such excess paid shall be automatically credited against and in reduction of the
principal due under this Note.
Upon the occurrence of a Default as set forth in the Loan Agreement,
which includes failure to pay the Indebtedness on demand, Crestmark may declare
all or part of the Indebtedness, including, without limitation, the principal
balance and all accrued interest, to be immediately due an payable, together
with (to the extent permitted under applicable law) the costs, expenses,
attorney's fees, and outside consultants, fees reasonably incurred by Crestmark
in collecting or enforcing payment. During any period of a Default, the
outstanding amount of the Indebtedness shall bear interest at a rate which is
equal to SIX PERCENT (6%) per annum greater than the Effective Interest Rate
otherwise charged hereunder (the "Default Rate") Furthermore, upon the
occurrence of a Default, Crestmark has all of the rights and remedies provided
at law or equity or by agreement, including, without limit, those under the Loan
Agreement. These remedies are cumulative and not exclusive. If any required
installment is not paid within ten (10) days from the date same is due, then, at
the option of Crestmark, in addition to all other sums due hereunder, including
the Default Rate, a late charge of not more than FIVE CENTS ($.05) for each
dollar of the installment so overdue may be charged in order to compensate
Crestmark for additional costs and expenses which will be incurred by Crestmark
as a result of such late payment.
Borrower acknowledges that this Note matures upon issuance and that
Crestmark, at any time, without notice and with or without reason, may demand
that this Note be immediately paid in full or in part. The demand nature of this
Note shall not be modified by reference to a Default in this Note or in the Loan
Agreement or Collateral Documents. For purposes of this Note, to the extent
there is reference to a Default such reference is for the purpose of permitting
Crestmark to accelerate the Indebtedness not on a demand basis and/or to receive
interest at the Default Rate provided in this Note or in the document evidencing
the relevant Indebtedness. It is expressly agreed that Crestmark may exercise
its demand rights under this Note whether or not a Default has occurred.
Crestmark, with or without reason and without notice, may from time to time make
demand for partial payments under this Note and these demands shall not preclude
Crestmark from demanding at any time that this Note be immediately paid in full.
All payments under this Note shall be in immediately available United States
funds, without setoff or counterclaim. Crestmark shall have the right to collect
and apply any
payments due under this Note by directly deducting, applying, off setting or
debiting any funds in the commercial account ("CCA") established in the
Dominion of Funds section of the Loan Agreement.
Borrower hereby grants to Crestmark a security interest in Crestmark's
own indebtedness or liability to Borrower, if any, however evidenced, including
a security interest in all of Borrower's bank deposits, instruments, negotiable
documents and chattel paper which at any time are in the possession or control
of Crestmark as further security for repayment of the Indebtedness of the
Borrower.
All payments hereunder shall, at option of Crestmark, first be applied
against all expenses of Crestmark, then accrued interest, and the balance
against principal. Acceptance by Crestmark of any payment in an amount less than
the amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be a Default,
and at any time thereafter and until the entire amount then due has been paid,
Crestmark shall be entitled to exercise any and all rights it possesses.
Borrower hereby waives presentment for payment, demand, notice of
non-payment, notice of protest and protest of this Note, diligence in collection
or bringing suit. The liability of Borrower shall be absolute and unconditional,
without regard to the liability of any other party hereto.
This Note is executed pursuant to and secured by a Loan and Security
Agreement dated of even date herewith as the same may be amended, restated,
modified or altered from time to time (the "Loan Agreement") and the Collateral
and Collateral Documents therein defined and described. Reference is hereby made
to said Loan Agreement and Collateral Documents for additional terms relating to
the transaction giving rise to this instrument, the security given for this
instrument and additional terms and conditions under which this instrument
matures, accelerates or may be prepaid.
ADDRESS: BORROWER:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ Plastics, Inc.,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ a Michigan Corporation
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chairman
Tax ID Number: ▇▇-▇▇▇▇▇▇▇
CORPORATE
GUARANTY
DATED: April 6, 1999
PARTICULAR TERMS - DEFINITIONS
As used in this Guaranty, the following terms and expressions have the
respective meanings indicated opposite each of them:
Guarantor:
Name: G.P. Plastics, Inc.,
a Michigan Corporation
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Bank:
Name: Crestmark Bank, a Michigan banking corporation
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Borrower:
Name: Seville Plastics, Inc.,
a Michigan corporation
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Note:
Type: Promissory Note (Line of Credit)
Amount: $350,000.00
Date: Dated of even date herewith, including any extensions,
renewals, amendments or modifications thereof
Loan Agreement: Loan and Security Agreement dated of even date
herewith, including any extensions, renewals amendments
or modifications thereof
Collateral: As defined in the Loan Agreement
Collateral
Documents: As defined in the Loan Agreement
Indebtedness: As defined in the Loan Agreement
THIS GUARANTY, above-dated, by Guarantor to Bank is made to induce Bank
to make the loan evidenced by the Note to Borrower and because Guarantor, who is
an affiliate of Borrower and whose economic success is linked to Borrower
through various working relationships, has determined that executing and
delivering this Guaranty is in the Guarantor's best interest and is to the
financial benefit of Guarantor, and for other good and valuable consideration,
the receipt of which is hereby acknowledged. THE GUARANTOR AGREES AS FOLLOWS:
1. Consideration/Nature of Guaranty: In consideration of and in order
to induce Bank to make the loan evidenced by the Note to Borrower and other good
and valuable consideration, the receipt of which is hereby acknowledged,
Guarantor hereby absolutely, irrevocably and unconditionally guaranties to Bank:
(a) the full, prompt and unconditional payment, and not just the collectability
of, the indebtedness, including, but not limited to, principal and interest on,
the Note when due, whether on demand, at maturity, pursuant to mandatory or
optional prepayments, by acceleration or
otherwise, at the time, place and at the rate described in, and otherwise
according to the terms of the Loan Documents (as defined in Paragraph 3); and
(b) the punctual and faithful performance and observation by Borrower of all
duties, agreements, covenants, representations and obligations of Borrower
contained in the Loan Documents, including but not by way of limitation, the
affirmative covenants, the negative covenants and the truth and accuracy of all
representations and warranties therein set forth.
2. Absolute and Unconditional obligation: This Guaranty is an
absolute, continuing, unconditional, and irrevocable guaranty and Guarantor
shall not be relieved from any obligations under this Guaranty until such time
as this Guaranty has been terminated in accordance with Paragraph 14. The
obligations of Guarantor shall continue notwithstanding any defect in the
genuineness, validity, regularity or enforceability of the Indebtedness or the
Loan Documents, or any other circumstances whether or not referred to herein,
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor.
3. The Loan Documents: The Loan Agreement and Collateral Documents and
all other related instruments, documents and writings (sometimes hereinafter
collectively referred to as the "Loan Documents") are hereby incorporated into
and made a part of this Guaranty by reference, with the same force and effect as
if fully set forth herein.
4. Continuation of Liability: The liability and obligations of
Guarantor shall in no way be affected, impaired, diminished or released by: (a)
any amendment, amendment and restatement, alteration, extension, consolidation,
renewal, waiver, indulgence, extension of time regarding performance or other
modification of the Indebtedness or the Loan Documents; (b) any settlement,
release, discharge or compromise whatsoever relating to the Loan Documents, the
Indebtedness or relating to Borrower, any other guarantor or any other party
liable for the Indebtedness; (c) any subordination of payments under the
Indebtedness, the Collateral or the Loan Documents to any other debt or claim;
(d) any substitution, exchange, release or other disposition of all or any part
of the Indebtedness or the Loan Documents; (e) any failure, delay, neglect, or
omission to act by Bank in connection with the Indebtedness, the Loan Documents
or the Collateral; (f) any advances for the purpose of performing any covenant
or agreement of Borrower, or curing any breach or event of default in the Loan
Documents; (g) the filing by or against Borrower or the discharge or release of
any obligations of Borrower, any other guarantor or of any other person now or
hereafter liable on the Indebtedness by reason of bankruptcy, insolvency,
reorganization or other debtor's relief afforded Borrower pursuant to the
present or future provisions of the Bankruptcy Code or any other state or
federal statute or by the decision of any court; or (h) any other matter whether
similar or dissimilar to the foregoing.
5. Unconditional Waiver of all Defenses: Guarantor unconditionally,
absolutely and irrevocably waives each and every defense which under principles
of guaranty or suretyship law would otherwise operate to impair or diminish the
liability of Guarantor for the Indebtedness. without limiting the generality of
the foregoing waiver, Guarantor agrees that none of the following acts,
omissions or occurrences shall diminish or impair the liability of Guarantor in
any respect and Guarantor waives: (a) notice of acceptance of this Guaranty and
of creations of Indebtedness of Borrower to Bank; (b) presentment and demand for
payment of any Indebtedness of Borrower; (c) protest, notice of protest, and
notice of dishonor or default with respect to any of the Indebtedness or the
Loan Documents; (d) all other notices to which Guarantor might otherwise be
entitled; (e) any demand for payment under this Guaranty; (f) any defense
arising by reason of any disability or any other defense of Borrower; and (g)
any right or claim of right to cause a marshaling of Borrower's assets, and it
is agreed that Bank shall be under no duty to marshal the assets of Borrower for
Guarantor's benefit or any third party. No notice to or demand on Guarantor
shall be deemed to be a waiver of the obligation of Guarantor or of the right of
Bank to take further action without notice or demand as provided herein. No
modification or waiver of the provisions of this Guaranty shall be effective
unless in writing and no waiver shall be applicable except in the specific
instance for which it is given.
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6. Immediate Liability/Exercise of Rights By Bank: This is an
irrevocable, unconditional and absolute guaranty of payment and performance and
Guarantor agrees that the liability of Guarantor on this Guaranty shall be
immediate and shall not be contingent upon (i) the exercise or enforcement by
Bank of whatever remedies it may have against Borrower, any other guarantor, or
any other person or entity, or (ii) the enforcement of any lien or realization
upon any security or Collateral Bank may at any time possess. At the election of
Bank, any one or more successive and/or concurrent actions may be brought hereon
against Guarantor, either in the same action, if any, brought against Borrower,
or another guarantor, or in separate actions, as often as Bank, in its sole
discretion, may deem advisable. No election to proceed in one form of action or
proceeding, or against any party, or on any obligation, shall constitute a
waiver of Bank's right to proceed in any other form of action or proceeding or
against other parties unless Bank has expressly waived such right in writing.
Specifically, but without limiting the generality of the foregoing, no action or
proceeding by Bank against Borrower, or another guarantor under any document or
instrument evidencing or securing the Indebtedness, or this Guaranty, including
but not by way of limitation, the Loan Documents shall serve to diminish the
liability of Guarantor, except to the extent Bank irrevocably realized payment
in cash by such action or proceeding. Receipt by Bank of payment or payments
with knowledge of the breach of any provision of the Loan Documents shall not be
deemed a waiver of such breach. All rights, powers and remedies of Bank
hereunder and under any other agreement now or at any time hereafter in force
between Bank and Guarantor shall be cumulative and not alternative and shall be
in addition to all rights, powers and remedies given to Bank by law.
7. Subordination/Subrogation: In the event that Guarantor shall
advance or become obligated to pay any sums to Borrower, or in the event that
for any reason Borrower or any subsequent owner of any Collateral is now or
shall hereafter become indebted to Guarantor, the amount of such indebtedness
shall at all times be subordinate as to lien, time of payment and all other
respects, to the amounts owing to Bank by Borrower. Furthermore, until the
Indebtedness is paid in full, Guarantor hereby absolutely, irrevocably and
unconditionally waives all rights Guarantor may have, at law or in equity to
seek or claim subrogation (including any right of subrogation hereafter arising
against Borrower resulting from a right of contribution from any other
Guarantor) contribution, indemnification, or any other form of reimbursement
from Borrower or from any other Guarantor by virtue of any payment(s) made to
Bank under this Guaranty or otherwise. Interest will accrue from the date(s) the
payment(s) upon the Indebtedness was originally made. Guarantor agrees to
indemnify and hold Bank harmless from and against any and all claims, actions,
damages, costs, fees and expenses including, without limitation, reasonable
attorney fees incurred by Bank in connection with Guarantor's exercise of any
right of subrogation, contribution, indemnification or recourse with respect to
this Guaranty, and also with respect to Bank's defending any preference or
fraudulent conveyance claim or action brought against Bank in any bankruptcy
proceeding concerning Borrower or any Guarantor. Bank has no duty to enforce or
protect any rights which the undersigned may have against Borrower or any other
Person and Guarantor assumes full responsibility for enforcing and protecting
these rights.
8. Representations and Warranties/N6tice/Financial Statements:
Guarantor represents, warrants and covenants to Bank that, as of the date of
this Guaranty: (a) the fair salable value of Guarantor's assets exceeds its
liabilities; (b) Guarantor is meeting its current liabilities as they mature;
(c) any financial statements of Guarantor furnished Bank are true and correct
and include all contingent liabilities of Guarantor; (d) since the date of any
financial statements furnished to Bank, no material adverse change has occurred
in the financial condition of Guarantor; (e) there are no pending or threatened
material court or administrative proceedings or undischarged judgments against
Guarantor, and no federal or state tax liens have been filed or threatened
against Guarantor, nor is Guarantor in default or claimed default under any
agreement for borrowed money. Guarantor agrees to immediately give Bank written
notice of any material adverse change in its financial condition, including but
not limited to litigation commenced, tax liens filed, default claimed under
indebtedness for borrowed money or bankruptcy proceedings commenced by or
against Guarantor. Guarantor shall
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deliver, timely to Bank, its annual financial statements for the preceding
fiscal year; and at such reasonable times as Bank requests shall furnish its
current financial statements to Bank. Guarantor is fully aware of the financial
condition of Borrower. Guarantor delivers this Guaranty based solely upon its
own independent investigation and in no part upon any representation or
statement of Bank with respect thereto. Guarantor is in a position to and hereby
assumes full responsibility for obtaining any additional information concerning
Borrower's financial condition as Guarantor may deem material to its obligations
hereunder; and Guarantor is not relying upon, nor expecting, Bank to furnish it
any information in Bank's possession concerning Borrower's financial condition.
9. Expenses/Preferential Payments: Guarantor further agrees to pay all
expenses incurred by Bank in connection with the enforcement of Bank's rights
under the Loan Documents, this Guaranty, the collection of the Indebtedness or
in the event Bank is a party to any litigation because of the existence of the
Indebtedness, the Loan Documents or this Guaranty, as well as court costs,
collection charges and reasonable attorney fees and disbursements. Guarantor
further agrees that to the extent Borrower makes a payment or payments to Bank,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy act, state
or federal law, common law or equitable cause, then to the extent of such
payment or repayment, the obligation or part thereof intended to be satisfied
shall be revived and continued in full force and effect as if said payment had
not been made.
10. Transfer of Assets: Guarantor further agrees that until Borrower's
Indebtedness to Bank is paid in full, Guarantor will not, without Bank's prior
written consent: (i) make any voluntary transfer of any of Guarantor's assets
which would have the effect of materially diminishing Guarantor's present net
worth or (ii) guaranty the debts or obligations of any other Person.
11. Reduction of Indebtedness: Guarantor agrees that any Indebtedness
from revolving loans will not be deemed repaid or reduced by collection and
subsequent relending of the proceeds of accounts, chattel paper and similar
Collateral.
12. Assignability/Binding Effect: This Guaranty shall be assignable by
Bank without notice to Guarantor and shall inure to the benefit of Bank and to
any subsequent successors and assigns. Each reference herein to Bank shall be
deemed to include its successors and assigns, in whose favor the provisions of
this Guaranty shall also run. in the event of the death of Guarantor, this
Guaranty shall continue in effect against the estate of said Guarantor. The
pronouns and relative words herein used shall be read as if written in the
plural, feminine, masculine or neuter form so as to appropriately refer to the
parties designated.
13. Joint and Several Liability: The term "Guarantor" shall mean each
person executing this Guaranty, each individually and together collectively, and
the Guarantor's and any other guarantor's obligations, including, those of
Inmold, Inc., an Indiana corporation, to Bank shall be joint and several.
14. Termination. Notwithstanding anything contained herein to the
contrary, the liability of Guarantor shall be terminated only in the event that
(i) Borrower has irrevocably paid Bank in cash and in full the Indebtedness and
(ii) the Loan Agreement is terminated. The revocation, termination, discharge or
release, for any reason, of a guaranty of the Indebtedness by or on behalf of
another guarantor, or by the executors or administrators of any deceased
guarantor, will not affect Guarantor's continuing liability under this Guaranty.
-4-
15. Severability: If any provision of this Guaranty is in conflict with
any statute or rule of law or is otherwise unenforceable for any reason, then
that provision shall be deemed null and void to the extent of the conflict or
unenforceability and shall be deemed severable, but shall not invalidate any
other provision of this Guaranty.
16. Governing Law: This Guaranty shall be governed by and construed in
accordance with the internal laws of the State of Michigan, without regard to
any choice of law principles which would otherwise require the application of
the law of any other jurisdiction.
17. Jurisdiction: GUARANTOR HEREBY WAIVES ANY PLEA OF JURISDICTION OR
VENUE ON THE GROUND THAT SUCH GUARANTOR IS NOT A RESIDENT OF OAKLAND COUNTY,
MICHIGAN, AND HEREBY SPECIFICALLY AUTHORIZES ANY ACTION BROUGHT TO ENFORCE
GUARANTOR'S OBLIGATIONS TO THE BANK TO BE INSTITUTED AND PROSECUTED IN EITHER
THE CIRCUIT COURT OF OAKLAND COUNTY OR A DISTRICT COURT WITHIN THE BOUNDARIES OF
OAKLAND COUNTY, AS APPROPRIATE, OR IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF MICHIGAN AT THE ELECTION OF THE, BANK, AND GUARANTOR HEREBY
SUBMITS TO THE JURISDICTION OF SUCH COURT.
18. Waiver of Jury Trial: GUARANTOR ACKNOWLEDGES THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT THAT IT MAY BE WAIVED. GUARANTOR,
AFTER CONSULTING WITH, OR HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL OF ITS
CHOICE, KNOWINGLY WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION
REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS
GUARANTY, THE INDEBTEDNESS OR THE COLLATERAL DOCUMENTS.
19. Counterparts: This Guaranty may be executed in several
counterparts, and each executed counterpart shall constitute an original
instrument, but such counterparts shall together constitute but one and the same
instrument.
20. Complete Agreement: This Guaranty is intended by Guarantor to be
the final, complete and exclusive expression of the agreement between Guarantor
and Bank with respect to the subject matter of this Guaranty. Guarantor
acknowledges and agrees with Bank that this Guaranty cannot be modified or
amended in any respect except by an additional writing signed by both Guarantor
and Bank.
IN WITNESS WHEREOF, Guarantor hereto has executed this Guaranty as of
the day and year first above written.
WITNESSES: GUARANTOR:
G.P. Plastics, Inc., a
Michigan Corporation
By: Filipp Kelssi
------------------------
Filipp Kelssi
Its: Chairman
Guarantor's Tax I.D. Number: ▇▇-▇▇▇▇▇▇▇
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CORPORATE
GUARANTY
DATED: April 6, 1999
PARTICULAR TERMS - DEFINITIONS
As used in this Guaranty, the following terms and expressions have the
respective meanings indicated opposite each of them:
Guarantor:
Name: Inmold, Inc.
an Indiana Corporation
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Bank:
Name: Crestmark Bank, a Michigan banking corporation
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Borrower:
Name: Seville Plastics, Inc.,
a Michigan corporation
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Note:
Type: Promissory Note (Line of Credit)
Amount: $350,000.00
Date: Dated of even date herewith, including any extensions,
renewals, amendments or modifications thereof
Loan Agreement: Loan and Security Agreement dated of even date herewith,
including any extensions, renewals amendments or
modifications thereof
Collateral: As defined in the Loan Agreement
Collateral
Documents: As defined in the Loan Agreement
Indebtedness: As defined in the Loan Agreement
THIS GUARANTY, above-dated, by Guarantor to Bank is made to induce Bank
to make the loan evidenced by the Note to Borrower and because Guarantor, who is
the sole shareholder of Borrower, has determined that executing and delivering
this Guaranty is in the Guarantor's best interest and is to the financial
benefit of Guarantor, and for other good and valuable consideration, the receipt
of which is hereby acknowledged.
THE GUARANTOR AGREES AS FOLLOWS:
1. Consideration/Nature of Guaranty: in consideration of and in order
to induce Bank to make the loan evidenced by the Note to Borrower and other good
and valuable consideration, the receipt of which is hereby acknowledged,
Guarantor hereby absolutely, irrevocably and unconditionally guaranties to Bank:
(a) the full, prompt and unconditional payment, and not just the collectability
of, the Indebtedness, including, but not limited to, principal and interest on,
the Note when due, whether on demand, at maturity, pursuant to mandatory or
optional prepayments, by acceleration or otherwise, at the time, place and at
the rate described in, and otherwise
according to the terms of the Loan Documents (as defined in Paragraph 3); and
(b) the punctual and faithful performance and observation by Borrower of all
duties, agreements, covenants, representations and obligations of Borrower
contained in the Loan Documents, including but not by way of limitation, the
affirmative covenants, the negative covenants and the truth and accuracy of all
representations and warranties therein set forth.
2. Absolute and Unconditional obligation: This Guaranty is an absolute,
continuing, unconditional, and irrevocable qguaranty and Guarantor shall not be
relieved from any obligations under this Guaranty until such time as this
Guaranty has been terminated in accordance with Paragraph 14. The obligations of
Guarantor shall continue notwithstanding any defect in the genuineness,
validity, regularity or enforceability of the indebtedness or the Loan
Documents, or any other circumstances whether or not referred to herein, which
might otherwise constitute a legal or equitable discharge or defense of a surety
or guarantor.
3. The Loan Documents: The Loan Agreement and Collateral Documents and
all other related instruments, documents and writings (sometimes hereinafter
collectively referred to as the "Loan Documents") are hereby incorporated into
and made a part of this Guaranty by reference, with the same force and effect as
if fully set forth herein.
4. Continuation of Liability: The liability and obligations of
Guarantor shall in no way be affected, impaired, diminished or released by: (a)
any amendment, amendment and restatement, alteration, extension, consolidation,
renewal, waiver, indulgence, extension of time regarding performance or other
modification of the indebtedness or the Loan Documents; (b) any settlement,
release, discharge or compromise whatsoever relating to the Loan Documents, the
Indebtedness or relating to Borrower, any other guarantor or any other party
liable for the Indebtedness; (c) any subordination of payments under the
Indebtedness, the Collateral or the Loan Documents to any other debt or claim;
(d) any substitution, exchange, release or other disposition of all or any part
of the Indebtedness or the Loan Documents; (e) any failure, delay, neglect, or
omission to act by Bank in connection with the Indebtedness, the Loan Documents
or the Collateral; (f) any advances for the purpose of performing any covenant
or agreement of Borrower, or curing any breach or event of default in the Loan
Documents; (g) the filing by or against Borrower or the discharge or release of
any obligations of Borrower, any other guarantor or of any other person now or
hereafter liable on the Indebtedness by reason of bankruptcy, insolvency,
reorganization or other debtor's relief afforded Borrower pursuant to the
present or future provisions of the Bankruptcy Code or any other state or
federal statute or by the decision of any court; or (h) any other matter whether
similar or dissimilar to the foregoing.
5. Unconditional Waiver of all Defenses: Guarantor unconditionally,
absolutely and irrevocably waives each and every defense which under principles
of guaranty or suretyship law would otherwise operate to impair or diminish the,
liability of Guarantor for the Indebtedness. without limiting the generality of
the foregoing waiver, Guarantor agrees that none of the following acts,
omissions or occurrences shall diminish or impair the liability of Guarantor in
any respect and Guarantor waives: (a) notice of acceptance of this Guaranty and
of creations of Indebtedness of Borrower to Bank; (b) presentment and demand for
payment of any Indebtedness of Borrower; (c) protest, notice of protest, and
notice of dishonor or default with respect to any of the indebtedness or the
Loan Documents; (d) all other notices to which Guarantor might otherwise be
entitled; (e) any demand for payment under this Guaranty; (f) any defense
arising by reason of any disability or any other defense of Borrower; and (g)
any right or claim of right to cause a marshaling of Borrower's assets, and it
is agreed that Bank shall be under no duty to marshal the assets of Borrower for
Guarantor's benefit or any third party. No notice to or demand on Guarantor
shall be deemed to be a waiver of the obligation of Guarantor or of the right of
Bank to take further action without notice or demand as provided herein. No
modification or waiver of the provisions of this Guaranty shall be effective
unless in writing and no waiver shall be applicable except in the specific
instance for which it is given.
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6. Immediate Liability/Exercise of Rights By Bank: This is an
irrevocable, unconditional and absolute guaranty of payment and performance and
Guarantor agrees that the liability of Guarantor on this Guaranty shall be
immediate and shall not be contingent upon (i) the exercise or enforcement by
Bank of whatever remedies it may have against Borrower, any other guarantor, or
any other person or entity, or (ii) the enforcement of any lien or realization
upon any security or Collateral Bank may at any time possess. At the election of
Bank, any one or more successive and/or concurrent actions may be brought hereon
against Guarantor, either in the same action, if any, brought against Borrower,
or another guarantor, or in separate actions, as often as Bank, in its sole
discretion, may deem advisable. No election to proceed in one form of action or
proceeding, or against any party, or on any obligation, shall constitute a
waiver of Bank's right to proceed in any other form of action or proceeding or
against other parties unless Bank has expressly waived such right in writing.
Specifically, but without limiting the generality of the foregoing, no action or
proceeding by Bank against Borrower, or another guarantor under any document or
instrument evidencing or securing the Indebtedness, or this Guaranty, including
but not by way of limitation, the Loan Documents shall serve to diminish the
liability of Guarantor, except to the extent Bank irrevocably realized payment
in cash by such action or proceeding. Receipt by Bank of payment or payments
with knowledge of the breach of any provision of the Loan Documents shall not be
deemed a waiver of such breach. All rights, powers and remedies of Bank
hereunder and under any other agreement now or at any time hereafter in force
between Bank and Guarantor shall be cumulative and not alternative and shall be
in addition to all rights, powers and remedies given to Bank by law.
7. Subordination/Subrogation: In the event that Guarantor shall advance
or become obligated to pay any sums to Borrower, or in the event that for any
reason Borrower or any subsequent owner of any Collateral is now or shall
hereafter become indebted to Guarantor, the amount of such indebtedness shall at
all times be subordinate as to lien, time of payment and all other respects, to
the amounts owing to Bank by Borrower. Furthermore, until the Indebtedness is
paid in full, Guarantor hereby absolutely, irrevocably and unconditionally
waives all rights Guarantor may have, at law or in equity to seek or claim
subrogation (including any right of subrogation hereafter arising against
Borrower resulting from a right of contribution from any other Guarantor)
contribution, indemnification, or any other form of reimbursement from Borrower
or from any other Guarantor by virtue of any payment(s) made to Bank under this
Guaranty or otherwise. Interest will accrue from the date(s) the payment(s) upon
the Indebtedness was originally made. Guarantor agrees to indemnify and hold
Bank harmless from and against any and all claims, actions, damages, costs, fees
and expenses including, without limitation, reasonable attorney fees incurred by
Bank in connection with Guarantor's exercise of any right of subrogation,
contribution, indemnification or recourse with respect to this Guaranty, and
also with respect to Bank's defending any preference or fraudulent conveyance
claim or action brought against Bank in any bankruptcy proceeding concerning
Borrower or any Guarantor. Bank has no duty to enforce or protect any rights
which the undersigned may have against Borrower or any other Person and
Guarantor assumes full responsibility for enforcing and protecting these rights.
8. Representations and Warranties/Notice/Financial Statements:
Guarantor represents, warrants and covenants to Bank that, as of the date of
this Guaranty: (a) the fair salable value of Guarantor's assets exceeds its
liabilities; (b) Guarantor is meeting its current liabilities as they mature;
(c) any financial statements of Guarantor furnished Bank are true and correct
and include all contingent liabilities of Guarantor; (d) since the date of any
financial statements furnished to Bank, no material adverse change has occurred
in the financial condition of Guarantor; (e) there are no pending or threatened
material court or administrative proceedings or undischarged judgments against
Guarantor, and no federal or state tax liens have been filed or threatened
against Guarantor, nor is Guarantor in default or claimed default under any
agreement for borrowed money. Guarantor agrees to immediately give Bank written
notice of any material adverse change in its financial condition, including but
not limited to litigation commenced, tax liens filed, default claimed under
indebtedness for borrowed money or bankruptcy proceedings commenced by or
against Guarantor. Guarantor shall deliver, timely to Bank, its annual financial
statements for the preceding
-3-
fiscal year; and at such reasonable times as Bank requests shall furnish its
current financial statements to Bank. Guarantor is fully aware of the financial
condition of Borrower. Guarantor delivers this Guaranty based solely upon its
own independent investigation and in no part upon any representation or
statement of Bank with respect thereto. Guarantor is in a position to and
hereby assumes full responsibility for obtaining any additional information
concerning Borrower's financial condition as Guarantor may deem material to its
obligations hereunder; and Guarantor is not relying upon, nor expecting, Bank to
furnish it any information in, Bank's possession concerning Borrower's financial
condition.
9. Expenses/Preferential Payments: Guarantor further agrees to pay all
expenses incurred by Bank in connection with the enforcement of Bank's rights
under the Loan Documents, this Guaranty, the collection of the Indebtedness or
in the event Bank is a party to any litigation because of the existence of the
Indebtedness, the Loan Documents or this Guaranty, as well as court costs,
collection charges and reasonable attorney fees and disbursements. Guarantor
further agrees that to the extent Borrower makes a payment or payments to Bank,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy act, state
or federal law, common law or equitable cause, then to the extent of such
payment or repayment, the obligation or part thereof intended to be satisfied
shall be revived and continued in full force and effect as if said payment had
not been made.
10. Transfer of Assets: Guarantor further agrees that until Borrower's
Indebtedness to Bank is paid in full, Guarantor will not, without Bank's prior
written consent- (i) make any voluntary transfer of any of Guarantor's assets
which would have the effect of materially diminishing Guarantor's present net
worth or (ii) guaranty the debts or obligations of any other Person.
11. Reduction of Indebtedness: Guarantor agrees that any Indebtedness
from revolving loans will not be deemed repaid or reduced by collection and
subsequent relending of the proceeds of accounts, chattel paper and similar
Collateral.
12. Assignability/Binding Effect: This Guaranty shall be assignable by
Bank without notice to Guarantor and shall inure to the benefit of Bank and to
any subsequent successors and assigns. Each reference herein to Bank shall be
deemed to include its successors and assigns, In whose favor the provisions of
this Guaranty shall also run. In the event of the death of Guarantor, this
Guaranty shall continue in effect against the estate of said Guarantor. The
pronouns and relative words herein used shall be read as if written in the
plural, feminine, masculine or neuter form so as to appropriately refer to the
parties designated.
13. Joint and Several Liability: The term "Guarantor" shall mean each
person executing this Guaranty, each individually and together collectively, and
the Guarantor's and any other guarantor's obligations, including those of G.P.
Plastics, Inc., a Michigan corporation, to Bank shall be joint and several.
14. Termination. Notwithstanding anything contained herein to the
contrary, the liability of Guarantor shall be terminated only in the event that
(i) Borrower has irrevocably paid Bank in cash and in full the Indebtedness and
(ii) the Loan Agreement is terminated. The revocation, termination, discharge or
release, for any reason, of a guaranty of the Indebtedness by or on behalf of
another guarantor, or by the executors or administrators of any deceased
guarantor, will not affect Guarantor's continuing liability under this Guaranty.
15. Severability: If any provision of this Guaranty is in conflict with
any statute or rule of law or is otherwise unenforceable for any reason, then
that provision shall be deemed null and void to the extent of the conflict or
unenforceability and shall be deemed severable, but shall not invalidate any
other provision of this Guaranty.
-4-
16. Governing Law: This Guaranty shall be governed by and construed in
accordance with the internal laws of the State of Michigan, without regard to
any choice of law principles which would otherwise require the application of
the law of any other jurisdiction.
17. Jurisdiction: GUARANTOR HEREBY WAIVES ANY PLEA OF JURISDICTION OR
VENUE ON THE GROUND THAT SUCH GUARANTOR IS NOT A RESIDENT OF OAKLAND COUNTY,
MICHIGAN, AND HEREBY SPECIFICALLY AUTHORIZES ANY ACTION BROUGHT TO ENFORCE
GUARANTOR'S OBLIGATIONS TO THE BANK TO BE INSTITUTED AND PROSECUTED IN EITHER
THE CIRCUIT COURT OF OAKLAND COUNTY OR A DISTRICT COURT WITHIN THE BOUNDARIES OF
OAKLAND COUNTY, AS APPROPRIATE, OR IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF MICHIGAN AT THE ELECTION OF THE BANK, AND GUARANTOR HEREBY
SUBMITS TO THE JURISDICTION OF SUCH COURT.
18. Waiver of Jury Trial: GUARANTOR ACKNOWLEDGES THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT THAT IT MAY BE WAIVED. GUARANTOR,
AFTER CONSULTING WITH, OR HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL OF ITS
CHOICE, KNOWINGLY WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION
REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS
GUARANTY, THE INDEBTEDNESS OR THE COLLATERAL DOCUMENTS.
19. Counterparts: This Guaranty may be executed in several
counterparts, and each executed counterpart shall constitute an original
instrument, but such counterparts shall together constitute but one and the same
instrument.
20. Complete Agreement: This Guaranty is intended by Guarantor to be
the final, complete and exclusive expression of the agreement between Guarantor
and Bank with respect to the subject matter of this Guaranty. Guarantor
acknowledges and agrees with Bank that this Guaranty cannot be modified or
amended in any respect except by an additional writing signed by both Guarantor
and Bank.
IN WITNESS WHEREOF, Guarantor hereto has executed this Guaranty as of
the day and year first above written.
WITNESSES:
GUARANTOR:
Inmold, Inc.,
an Indiana Corporation
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ -------------------------
----------------- ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Its: Chairman
Guarantor's Tax I.D. Number: ▇▇-▇▇▇▇▇▇▇
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