Exhibit 10.6
SECURITY AGREEMENT
[Accounts, Contract Rights, Instruments, and Goods pertaining thereto] between
PHOENIX LABORATORIES, INC. and GREAT EARTH DISTRIBUTION, INC.
(each hereafter sometimes referred to individually as "Debtor"
and collectively as "Debtors")
and
FIDELCOR BUSINESS CREDIT CORPORATION (hereafter referred to as "Trefoil")
TREFOIL AGREES:
1. That it will from time to time make advances to Debtor upon the
security of accounts receivable, accounts, contract rights, general intangibles
and other choses in action (all of which, whether secured or unsecured and
whether or not evidenced by instruments or other writings, together with the
proceeds thereof and the merchandise pertaining thereto, are designated
collectively as "Collateral").*
2. That it will advance to Phoenix Laboratories, Inc. up to 80%, and to
Great Earth Distribution, Inc. up to 40% of the net amounts of acceptable
Collateral, as Trefoil in its sole discretion may determine, and will pay the
remainder (less the compensation specified in paragraph 6, plus any overpayments
by account debtors, and less deductions by account debtors and any unpaid
compensation, charges or expenses), after actual receipt of payment upon such
Collateral and at such times as Trefoil may determine; however, no payment of
such remainder need be made by Trefoil if Debtor shall have breached any
provision hereof or shall be otherwise indebted to Trefoil, in either of which
events Trefoil may retain and apply such remainder upon any indebtedness then as
thereafter due from Debtor.
3. That, subject to the provisions of paragraph 5, Debtor shall be
privileged to collect the proceeds of Collateral for Trefoil at Debtor's
expense, but such privilege may be terminated by Trefoil at any time in its
discretion, and shall automatically terminate upon the happening of an event of
default as hereinafter defined.
DEBTOR WARRANTS, COVENANTS AND AGREES:
4. That all Collateral will arise from the bona fide sale and delivery of
goods or the due performance of services by Debtor, and will be for a liquidated
amount subject to no offset, deduction, counterclaim, discount, condition, or
conflicting security interest. Debtor shall deliver to Trefoil such invoices,
shipping or other receipts, and other papers and instruments as Trefoil may
require.
5. That Debtor will receive in trust and deliver to Trefoil, in original
form and on the day of receipt, all checks, drafts, notes, acceptances, cash and
other evidences of payment, applicable to any Collateral. Trefoil shall not be
required to take any affirmative steps to collect Collateral or to preserve
rights against prior parties to any instruments or chattel paper.
6. That Debtor will pay Trefoil for its advances made hereunder a charge
of ---3 1/2%--- per annum plus the prime rate announced by the Fidelity Bank,
Philadelphia, Pennsylvania, whether or not said rate is the best rate available
at said bank.
In the event of a change in the prime rate charged at the Fidelity Bank,
Philadelphia, Pennsylvania, adjustments hereunder shall be made on the day of
such change in the prime rate. The prime rate as of the date of this agreement
is 8 1/2% per annum. All charges shall be computed upon the average daily cash
balances outstanding and charged to Debtor's account or paid monthly.
7. That with respect to all Collateral now existing or hereafter created,
Debtor will execute and deliver all papers and instruments, and do all things
necessary to effectuate Trefoil's prime security interest therein. Trefoil shall
be vested with all Debtor's rights, security interests, insurance, and
guarantees with respect to all Collateral, its proceeds, and the goods
represented thereby, including the rights of stoppage in transit, seller's lien,
and resale.
8. That Debtor is solvent and will so remain and induces Trefoil to make
advances hereunder upon Debtor's written representations concerning its
financial condition, which it agrees to deliver to Trefoil upon reasonable
request from time to time. Debtor will make due and timely payment or deposit of
all Federal, State and local taxes, assessments or contributions required by
law, including employee FICA and withholding taxes, and will execute and deliver
to Trefoil, on demand, proof satisfactory to Trefoil of the payment or deposit
thereof, and in the event that the Debtor shall be in default in payment or
deposit above described, Trefoil shall have the right to make said payments or
contributions and to charge Debtor's account under this agreement or any other
agreement.
9. That all Collateral, and any evidence of debt received thereon, will be
paid in full at maturity. If any Collateral should not be so paid in whole or in
part, Debtor will, upon demand, pay Trefoil the full amount remaining unpaid
thereon or, at Trefoil's option, such amount may be charged against and deducted
from any payment then or thereafter due from Trefoil to Debtor. Notwithstanding
such payment or deduction, Trefoil may retain the Collateral as security for the
obligations of Debtor to Trefoil.
10. That if any account debtor shall reject or return any of the goods
represented by Collateral, Debtor will forthwith deliver the same to Trefoil, or
notify Trefoil and hold the same segregated in trust for and subject to the
order of Trefoil, and Trefoil may take and sell the same, Debtor to remain
liable for any difference between the original invoice price and the net
proceeds of re-sale, after expenses. At Trefoil's option, Debtor will pay to
Trefoil the original invoice price of such goods. In case any such goods should
be resold, the Collateral thereby created shall be Trefoil's property and shall
be deemed pledged hereunder.
11. Until Trefoil shall have been paid in full for all loans, obligations,
debts or indebtedness owing to it by the Debtor, Trefoil shall have a continuing
Security Interest in all of Debtor's present and future Collateral, whether or
not specifically assigned or pledged to Trefoil, the proceeds thereof and all
books and records pertaining to the Collateral and equipment containing said
records; none thereof will be sold or subjected to any security interest in
favor of any person other than Trefoil, and Debtor's merchandise inventory shall
not be or become subject to any purchase money or other lien or security
interest except in favor of Trefoil.
12. Any money now or hereafter due or owing from Trefoil to the Debtor
hereunder shall at all times be security for each and every debt, liability,
obligation or indebtedness of the Debtor to Trefoil due or owing under this or
any other agreement, arrangement or transaction of any kind, nature or
description, including, but not limited to, any bond, mortgage, chattel
mortgage, pledge, factor's lien, trust receipt, guarantee, sale, purchase note,
xxxx draft, loan, discount or credit. Trefoil shall have the right to apply any
sums otherwise due or owing to the Debtor hereunder, in whole or in part, to the
payment of any such debt, liability, obligation or indebtedness, at such times
and in such order of application as Trefoil, in its sole discretion, may
determine. Any money which may at any time be due or owing from Trefoil to the
Debtor by reason of any such other agreement, arrangement or transaction between
them, as aforesaid, shall be security for any and all sums at any time due or
owing from the Debtor to Trefoil hereunder and may be applied by Trefoil to the
payment of any such sums, at such times and in such order of application as
Trefoil in its sole discretion may determine.
* Whenever the term "Collateral" appears in paragraphs 1 through 36 of this
Agreement, the term "Accounts Collateral" shall be substituted therefor.
13. That Trefoil's auditors shall have the right at any time during
business hours to inspect Debtor's premises and to audit, check and make
extracts from Debtor's books, accounts, records, order, correspondence and all
other papers.
14. That Trefoil is authorized and empowered to compromise or extend the
time for payment of any Collateral, for such amounts and upon such terms as
Trefoil may determine, and to accept the return of goods represented by any
Collateral, all without notice to or consent by Debtor and without discharging
or affecting Debtor's obligations hereunder.
15. That Debtor hereby constitutes Trefoil and each of Trefoil's officers
and agents as Debtor's attorney-in-fact, with power to receive, open and dispose
of all mail addressed to Debtor; to notify the Post Office authorities to change
the address for delivery of mail addressed to Debtor; to endorse the name of
Debtor upon any instruments or other media of payment or evidences of security
interest that may come into Trefoil's possession; to sign Debtor's name on any
invoice or xxxx of lading relating to Collateral, on drafts against account
debtors, assignments and verifications of Collateral, and notices to account
debtors; to send verification requests to any account debtor; to execute and
file financing statements and other instruments or documents; and to do all
other acts and things necessary to carry out this Agreement and to perfect and
protect Trefoil's security interest. All acts of said attorneys are hereby
satisfied and approved, and they shall not be liable for any acts of commission
or omission, nor for any error of judgment or mistake of fact or law. This
power, being coupled with an interest, is irrevocable while any Collateral shall
remain uncollected and Debtor shall remain indebted to Trefoil.
16. If any representation or warranty made by the Debtor, either in
connection with this agreement or any assignment hereunder shall be false, or if
the debtor shall default in the performance of any term, covenant or condition
hereof; or if the Debtor shall suspend its business, or call any meeting of its
creditors, or make a general assignment for the benefit of its creditors; or if
any petition shall be filed by or against the Debtor under any provision of the
Bankruptcy Code, or if any receiver or trustee shall be appointed for the Debtor
or for its assets; or if any judgment shall be entered against the debtor which
shall not be paid or bonded on appeal within 5 days thereafter, then and in any
such event Trefoil shall have the right to retain counsel to represent it and
protect its rights and interest hereunder, and the Debtor shall and hereby
covenants that it will pay to Trefoil the fees of such counsel, the amount of
which fees is hereby expressly fixed at a sum which shall be equal to 15% of
Trefoil's cash advances to the Debtor, which may be outstanding at the time of
the first of the aforesaid events which may occur. The Debtor shall also pay any
and all disbursements incurred by Trefoil in connection with any of such events,
including, but not limited to, all court costs and expenses, stenographers
minutes, fees of public officers, printing expenses and premiums on bonds or
undertakings. The entire amount of such counsel fees and disbursements shall be
a lien upon and charge against and shall be deducted from any money which
otherwise become due to the Debtor hereunder. The foregoing counsel fees and
disbursements shall be exclusive of and in addition to the fees and expenses of
any attorney, Trefoil's collection department or collection agencies that are
employed in collection of any assigned Accounts not paid when due, which the
Debtor shall pay at the rate of 15% of the amount collected. All rights and
remedies of Trefoil hereunder are cumulative.
17. That Debtor waives presentment, demand, protest and notice thereof as
to any instrument, as well as all other notices to which it might otherwise be
entitled. The foregoing waiver applies to notices which may be waived by
operation of law. Where Trefoil is required to give reasonable notice the
parties agree that the same shall be deemed to mean written notice by certified
mail, return receipt requested, addressed to the Debtor at the address below set
forth which notice shall be deemed effective upon posting two days prior to the
time of any act requiring such notice. No check, note, draft or other instrument
for the payment of money which may be received shall be considered to be payment
thereon for any purpose hereunder, unless and until the same has actually been
collected by Trefoil's bank and credited as collected to Trefoil's account. In
order to avoid the necessity for separate computation of the time of clearance
of each collection item, clearance time of five business days shall be allowed
upon every check and such note or draft or other instrument for the payment of
money before the same shall be deemed so collected.
18. That Trefoil's express or implied waiver of a particular breach by
Debtor of any covenant or warranty herein contained, or Trefoil's failure at any
particular time to exercise a right or remedy available to it, shall not be or
constitute or be deemed to be a waiver of any subsequent breach or of such or
any other right or remedy.
19. Debtor represents and covenants that its chief place of business, and
the office where its records concerning accounts and contract rights are kept,
is that below set forth and that Debtor has no other place of business except if
such other place of business exists, then as set forth below such chief place of
business and that Trefoil may rely upon the foregoing until it has received
written notice to the contrary. Debtor authorizes Trefoil to file a financing
statement or any other document or instrument that may be required by law in any
jurisdiction, and said financing statement shall not require the signature of
the Debtor.
20. Debtor will provide Trefoil with: monthly ageings of its accounts
receivable not later than the 10th day of each month; financial statements
certified by an officer of the debtor not less frequently than quarter-annually;
financial statements certified by an independent certified public accountant not
less frequently than annually.
21. Any documents, schedules, invoices or other paper delivered to Trefoil
by Debtor, may be destroyed or otherwise disposed of by Trefoil six (6) months
after they are delivered to or received by Trefoil, unless Debtor requests, in
writing, the return of said documents, schedules, invoices or other paper and
makes arrangements, at Debtor's expense, for their delivery or destruction.
23. That Debtor's obligations to Trefoil hereunder shall be payable on
demand, and Trefoil's prior recourse to Collateral shall not constitute a
condition of such demand. All rights and remedies of Trefoil shall be cumulative
and may be exercised concurrently or seriatim.
BOTH PARTIES AGREE:
24. That Trefoil will render Debtor monthly or other periodic statements,
each of which shall be binding upon Debtor unless written objection is given by
Debtor to Trefoil within 15 days after rendition.
25. That no party hereto shall be bound by anything not expressed herein
or in other writings between them, nor shall this Agreement be modified orally.
26. That this Agreement shall remain in effect for a period of two (2)
years from the date hereof, and shall be deemed automatically renewed for
successive periods of one year. Either party may terminate as of the end of the
contract term or any renewal year upon at least 60 days' written notice of
termination by certified mail, return receipt requested. Termination shall not
affect transactions having their inception prior to the effective date of
termination. Upon date of termination unpaid principal and interest shall be
paid to Trefoil.
27. That inasmuch as the transactions hereunder will take place at
Trefoil's office in New York, this Agreement and all transactions, assignments
and transfers hereunder, and all rights of the parties, shall be governed as to
validity, construction, enforcement and in all other respects by the laws of the
State of New York.
28. In addition to any other events of default herein specified, Trefoil
may, at its option declare the following to be events of default:
a. Prospect of Debtor's payment or performance is unsecure, unsafe
or at risk;
b. The collateral is unsecure, unsafe or at risk;
c. An adverse change has occurred in the financial condition of the
debtor;
d. Any guarantor has cancelled, revoked or terminated his guaranty
agreement; or
29. In the event of any default under this Security Agreement, or any
Amendment thereto, all actions or proceedings arising directly or indirectly
from this Security Agreement, including any Amendment or Supplement thereto,
shall be litigated only in Courts having situs within the State of New York and
the Debtor hereby consents to the jurisdiction of any Local, State or federal
Court located within the State of New York and waives personal service of any
and all process upon Debtor and consents that all such service of process shall
be made by certified mail, return receipt
requested, directed to Debtor at the address listed above or at which Debtor
advises Trefoil, in writing, and service so made shall be deemed complete three
days after the same shall have been posted.
30. Debtor may, on five days' notice, prior to the end of any calendar
month, prepay and terminate this Security Agreement by paying to Trefoil in cash
or certified check, the entire unpaid principal balance plus accrued charges,
together with a sum equal to 50% of the average monthly charges for the
immediately proceeding six months or from the date of the agreement whichever is
less, multiplied by the number of months of the unexpired balance of the term of
this agreement but in no event less than $150.00 per month for each month of the
unexpired term occurs during the second year of the term of this Agreement the
aforesaid percentage shall be 25%. In the event of a breach or default by the
debtor hereunder, the parties agree that damages sustained by Trefoil shall be
computed as provided in this paragraph. Prior to actual receipt of moneys due
under this paragraph, Trefoil may at its option exercise all of its rights under
the Security Agreement.
31. In no event shall interest charges provided for in any agreement
between the parties hereto exceed the legal rate that may be charged
corporations in the State of New York.
32. That in the event of logistics between the parties over any matter
connected with this Agreement or resulting from transactions hereunder, the
right to a trial by jury is hereby waived, and that Debtor, in any action or
proceeding which Trefoil may institute, will not impose any counterclaim of any
nature.
33. That this Agreement shall inure to the benefit of and be binding upon
the parties and their successors and assigns.
34. That this Agreement shall not become effective until accepted by
Trefoil at its office in New York.
35. As used herein the term "Trefoil" shall mean Fidelcor Business Credit
Corporation, its parent and all of its subsidiaries, affiliates and
participants.
36. See Rider attached hereto and made a part hereof for additional
provisions.
Dated: February 17, 1988 PHOENIX LABORATORIES, INC., Debtor
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
and
ATTEST: 000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
By: /s/ XXXXXX XXXX By: /s/ XXXXXX XXXX
------------------------------- -------------------------------------
Xxxxxx Xxxx, Secretary Xxxxxx Xxxx, President
ATTEST: GREAT EARTH DISTRIBUTION, INC., Debtor
00000 Xxxxxx Xxxxxx
Xx Xxxxxx, Xxxxxxxxxx 00000
By: /s/ XXXXXX XXXX By: /s/ XXXXXX XXXX
------------------------------- -------------------------------------
Xxxxxx Xxxx, Secretary Xxxxxx Xxxx, President
ACCEPTED:
FIDELCOR BUSINESS CREDIT CORPORATION, Secured Party
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
By: /s/ [illegible]
---------------------------------------------
Title: VP
---------------------------------------------
RIDER TO SECURITY AGREEMENT
(Accounts, Contract Rights, Instruments
and Goods Pertaining Thereto)
between
Debtors: PHOENIX LABORATORIES, INC. ("Phoenix")
GREAT EARTH DISTRIBUTION, INC. ("GED")
(each hereafter referred to individually as "Debtor"
and collectively as "Debtors")
and
Secured Party: FIDELCOR BUSINESS CREDIT CORPORATION
(hereafter referred to as "Trefoil")
In addition to and not in limitation of any and all rights granted to
Trefoil and obligations incurred by Debtor in the printed portion of this
Agreement, Debtor further warrants, covenants and agrees as follows:
A. Each of the Debtors shall be jointly and severally liable for the
Obligations (as hereafter defined) of all of the Debtors.
B. The term "Financing Agreements" shall mean and include, without
limitation, this Agreement, the Security Agreement (Inventory), the Security
Agreement (Equipment), and any other agreements, documents and guaranties
granting collateral security or creating or evidencing indebtedness, each
executed by Debtor or related parties in favor of Trefoil and all other present
and future related agreements or instruments, as now existing or as hereafter
renewed, extended, amended, modified or supplemented.
C. The term "Obligations" or obligations shall mean and include,
without limitation, any and all of Debtor's indebtedness and/or liabilities to
Trefoil of every kind, nature and description, direct or indirect, secured or
unsecured, joint and/or several, absolute or contingent, due or to become due,
now existing or hereafter arising, related or unrelated, regardless of how they
arise or by what agreement or instrument they may be evidenced or whether
evidenced by any agreement or instrument, including, but not limited to all
amounts owing by Debtor to Trefoil under this Agreement, the other Financing
Agreements, or any other security agreement, guaranty or note and all
obligations to perform acts or refrain from taking any action.
D. The term "Collateral" or "collateral" shall mean and include,
without limitation, that which is set forth in Paragraph I of the printed
portion of this Agreement and any and all other items of real or personal
property in which
Debtor has granted or may in the future grant a security interest to Trefoil
under the Financing Agreements, or any supplement or supplements thereto, and/or
under any other security agreement, or other agreement, all of Debtor's right,
title and interest in and to the goods of other property represented by or
securing any of the foregoing, all of Debtor's rights as an unpaid vendor or
lienor, including stoppage in transit, replevin or reclamation, all additional
amounts due to Debtor from any account debtor irrespective of whether such
additional amounts have been specifically assigned to Trefoil, all other
agreements on property securing or relating to any of the items referred to
above or acquired for the purposes of securing or enforcing any of such items,
all present and future chattel paper, motor vehicles, licenses patents,
trademarks, copyrights, license agreements, tax and duty claims and refunds,
computer software, goodwill, customer lists, all documents, monies, deposits,
securities, instruments, credits, and other property now or hereafter held by
Trefoil or any entity which at any time participates in Trefoil's financing
transactions with Debtor, and all products, proceeds and accessions of all of
the foregoing in whatever form. Debtor hereby grants Trefoil a continuing first
priority security interest in and general lien upon all of the Collateral to
secure payment and performance of all of the Obligations, except for prior
security interests set forth on Schedule A attached hereto.
E. In addition to any other security interest granted in the Financing
Agreements and not in limitation of any of the foregoing, and to secure the
payment and performance of all of the Obligations, Debtor hereby pledges and
assigns to Trefoil and grants to Trefoil a continuing general security interest
in all of the Debtor's ledger sheets, files, records and documents relating to
the Collateral, which shall, until delivered to or removed by Trefoil, be kept
by Debtor in trust for Trefoil and without cost to Trefoil in appropriate
containers in safe places, bearing suitable legends disclosing Trefoil's
security interest. Each confirmatory assignment schedule or other form of
Assignment hereafter executed by Debtor, shall be deemed to include the
foregoing, whether or not same appears therein.
F. The Debtor will pay all costs and expenses and all taxes, recording
and filing fees (including Uniform Commercial Code Financing Statements) in
connection with the preparation, execution, delivery, administration (including
wire transfer charges in amounts that Trefoil may from time to time establish if
Debtor requests wire transfers) and enforcement of this Agreement and all other
documents contemplated herein or related hereto, including any amendments,
supplements or consents which may be hereafter made or entered into in
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respect hereof, including appraisal fees, and lien searches in connection
herewith and fees and disbursements of in-house and outside counsel to Trefoil.
Debtor will pay all out-of-pocket costs of field examinations to be conducted by
Trefoil as provided in Paragraph 13 of the printed portion of the Agreement plus
$450 per man per day. Trefoil is hereby authorized to charge any amounts payable
hereunder (including principal, interest, fees, charges and expenses) directly
to any account of the Debtor maintained with Trefoil.
G. Trefoil agrees that in addition to the advances made with reference
to the formula set forth in Paragraph 2 of the printed portion of this agreement
("Accounts Advances"), Trefoil shall make additional advances to Debtor, in such
amounts from time to time determined by Trefoil in its sole discretion, of up to
twenty-five (25%) percent of the value of Phoenix's acceptable and eligible raw
material inventory and of up to twenty-five (25%) percent of the value of GED's
acceptable and eligible finished goods inventory (collectively the "Inventory
Advances"). As used herein, "value" shall mean the lower of cost or market, as
determined by Trefoil. Except in Trefoil's sole discretion, (1) the aggregate
principal amount of Accounts Advances to GED shall not exceed, at any time
outstanding, the lesser of (a) $500,000, or (b) an amount equal to (i)
twenty-five (25%) percent of the value of Phoenix's acceptable and eligible raw
material inventory, plus (ii) twenty-five (25%) percent of the value of GED's
acceptable and eligible finished good's inventory, and (2) the aggregate
principal amount of the Inventory Advances to Debtors shall not exceed
$1,000,000 at any time outstanding.
H. Except in Trefoil's sole discretion the aggregate principal amount
of the advances made by Trefoil to Debtors under the Financing Agreements,
including the Accounts Advances and the Inventory Advances, shall not exceed the
principal amount of $3,000,000 at any time outstanding (the "Credit Line").
I. In consideration of Trefoil entering into this Agreement and
allocating funds to have available to advance to Debtors, Debtor shall pay to
Trefoil, upon the execution of this Agreement, in immediately available funds, a
facility fee of $15,000 (1/2 of 1% of the Credit Line).
J. In consideration of Trefoil entering into this Agreement and
incurring accounting, operating and management expenses, Debtors shall pay to
Trefoil each calendar month a minimum charge equal to the amount of interest
Debtors would pay Trefoil if they at all times had an aggregate average daily
cash balance outstanding of $500,000 bearing interest at the rate provided for
in Paragraph 6 of the printed portion of this Agreement. Trefoil shall reduce
such minimum charge by
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the amounts actually paid by Debtors to Trefoil as interest pursuant to said
Paragraph 6, so that for each calendar month Debtors shall pay Trefoil Interest
as provided for in said Paragraph 6, plus the amount, if any, by which the
minimum charge provided for in this paragraph exceeds the amount of interest
payable pursuant to said Paragraph 6 for such month. If this Agreement shall be
terminated, such minimum charge shall continue and be paid by the Debtor for any
unexpired term of this Agreement, except if such termination is made pursuant to
Paragraph 26 or 30 of the printed portion of this Agreement or by mutual
agreement of Trefoil and the Debtor.
K. All advances by Trefoil pursuant to this Agreement shall bear
interest at the variable rate provided for in Paragraph 6 of the printed portion
of this Agreement and shall be calculated on the basis of a 360-day year for
actual days elapsed.
L. Should Trefoil commence a proceeding to take possession of any of
the Collateral under this Agreement or any of the Financing Agreements, Debtor
waives the requirement, if any, that Trefoil post a bond or any other type of
security.
M. In addition to all of the covenants set forth in the Financing
Agreements and without limiting any of the terms or provisions thereof, Debtor
hereby covenants and agrees as follows:
(1) Debtor will pay all Obligations when due and will perform all
of the terms, conditions, covenants and agreements of Debtor
to be per-formed under the Financing Agreements, and will make
punctual payment of all monies and will perform all of the
terms, conditions, covenants and agreements on its part to be
paid, kept or performed under the terms of any lease or
mortgage of the premises where any of the Collateral is now or
hereafter located, wherein Debtor is lessee or mortgagor, and
will promptly notify Trefoil in the event of any default by
Debtor or receipt by Debtor of any notice or alleged default
under any such lease or mortgage.
(2) Debtor will pay and discharge at or before maturity, all
taxes, assessments, rents, claims, debts and charges except
where the same are being contested in good faith and Debtor is
maintaining, in accordance with generally accepted accounting
principles and practice, appropriate reserves for accrual
thereof.
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(3) Debtor will promptly give notice in writing to Trefoil of the
occurrence of any event which constitutes or which with notice
or lapse of time, or both, would constitute a default under
any of the Financing Agreements. As used in the Paragraph (3),
the word "promptly" shall be determined in relation to the
point in time at which Debtor, exercising sound management
practices, has actual knowledge or should have discovered the
occurrence of such event.
(4) Debtor will provide Trefoil with such other information
concerning the financial or business affairs of Debtor as
Trefoil, in its sole discretion, requests from time to time.
(5) Debtor will not without the prior written consent of Trefoil,
declare or pay any dividend, return any capital to any of its
stockholders, loan any sum to any of its stockholders,
employees, officers or directors redeem, repurchase or
otherwise acquire any of its outstanding capital stock.
(6) Notwithstanding Paragraph 3 of the printed portion of this
Agreement, Debtor shall direct that all proceeds of accounts
receivable, letters of credit, banker's acceptances and other
proceeds of Collateral shall be payable to a post office box
or a lock box designated by and in control of Trefoil and in
connection therewith shall execute such agreements as Trefoil
in its sole discretion shall specify.
(7) Debtor will duly execute and deliver, or will cause to be
executed and delivered, such further instruments and
documents, including, without limitation, additional security
agreements, collateral assignments, Uniform Commercial Code
financing statements or amendments, or continuations thereof,
landlord's or mortgagee's waivers of liens, and consents to
the exercise by Trefoil of all of its rights and remedies
under the Financing Agreements with respect to the Collateral
and will do such further acts as may be necessary or proper in
Trefoil's opinion to effectuate the provisions or purposes of
the Financing Agreements.
(8) Debtor will not, without the prior written consent of Trefoil,
directly or indirectly
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sell, lease, abandon or otherwise dispose of all or any
substantial portion of its property or assets or consolidate
with or merge with or into any other entity, or permit any
other entity to consolidate with or merge with or into it.
(9) Debtor will at all times preserve and keep in full force and
effect its corporate existence, licenses, permits, rights and
franchises.
(10) Debtor will comply with the requirements of all applicable
laws, rules, regulations, orders of any governmental
authority, and all agreements to which Debtor is a party, the
non-compliance with which laws, rules, regulations, orders and
agreements would materially adversely affect its business,
properties or credit.
N. Any default by Debtor under the Financing Agreements or under any
other present or future agreements with Trefoil, or instruments hereunder or
thereunder (as this Agreement or any other such Agreements or instruments now
exist or may hereafter be supplemented or amended) or any default under any
material obligation for the payment of money to any person, firm or corporation
shall constitute and be deemed a default by the Debtor and shall be a default
under all such other agreements and instruments.
0. Debtor hereby further represents and warrants to Trefoil the
following:
(1) Debtor has the corporate power to borrow and to execute,
deliver and carry out the terms and provisions of the
Financing Agreements, and all other instruments and documents
delivered by it pursuant hereto and thereto, and Debtor has
taken or caused to be taken all necessary corporate action to
authorize the execution, delivery and performance of the
Financing Agreements, and such other agreements, the
borrowings hereunder and the execution, delivery and
performance of the instruments and documents delivered and to
be delivered by it pursuant hereto and thereto, and the
Financing Agreements constitute and will constitute legal,
valid and binding obligations of Debtor, enforceable in
accordance with their respective terms.
(2) Debtor is not in default in any material respect under any
indenture, mortgage, deed of trust, lease agreement, or other
instrument to which
-6-
it is a party or by which it or its properties may be bound.
Neither the execution nor delivery of the Financing
Agreements, nor any of the instruments or documents to be
delivered pursuant hereto or thereto, nor the consummation of
the transactions herein or therein contemplated nor compliance
with the provisions hereof or thereof, will violate any law or
regulation, or any order or decree of any court or
governmental instrumentality in any respect, or will conflict
with, or result in the breach of, or constitute a default in
any material respect under, any mortgage, deed of trust,
agreement or other instrument to which Debtor is party or by
which it or its properties may be bound, or result in the
creation or imposition of any lien, charge or encumbrance upon
any of the property of Debtor (except as contemplated
hereunder or under any of the other Financing Agreements) or
violate any provision of Certificate of Incorporation or
By-Laws of Debtor.
(3) No action of, or filing with, any governmental or public body
or authority (other than the filing or recording of Uniform
Commercial Code financing statements) is required in
connection with the execution, delivery and performance of the
Financing Agreements or any of the instruments or documents to
be delivered pursuant hereto or thereto.
(4) Debtor has obtained all necessary licenses and approvals and
is in compliance in all material respects with all applicable
state and Federal laws and regulations relating to the conduct
of its business as presently conducted or contemplated.
(5) There are no strikes or other labor disputes against Debtor,
pending, or to Debtor's knowledge, threatened.
(6) None of the information contained in the representations and
warranties made by Debtor set forth in the Financing
Agreements, or in any other instruments, documents, lists,
certificate, statement, schedule or exhibit heretofore
delivered or to be delivered to Trefoil on the date hereof, as
contemplated in the Financing Agreements, contains or will
contain any untrue statement of a material fact or omit or
will
-7-
omit to state a fact necessary in order to make the statements
contained herein or therein not misleading.
P. Trefoil shall have the right, in its discretion, to withhold and
reserve from the amount of its advances under this Agreement such amount as
Trefoil shall establish as a reasonable reserve upon the occurrence of any
breach of any warranty, covenant, or agreement under the Financing Agreements or
for any default under the Financing Agreements.
Dated: February 17, 1988
ATTEST: PHOENIX LABORATORIES, INC.
/s/ Xxxxxx Xxxx By: /s/ Xxxxxx Xxxx,
--------------------------- ---------------------------------------
Xxxxxx Xxxx, Secretary Xxxxxx Xxxx, President
ATTEST: GREAT EARTH DISTRIBUTION, INC.
/s/ Xxxxxx Xxxx By: /s/ Xxxxxx Xxxx,
--------------------------- ---------------------------------------
Xxxxxx Xxxx, Secretary Xxxxxx Xxxx, President
ACCEPTED:
FIDELCOR BUSINESS CREDIT CORP.
By: [illegible]
------------------------
Title: VP
---------------------
-8-
SCHEDULE A Page 1 of 2
Unterminated Security Interests
----------------------------------------------------------------------------------------------------------------------------------
Amendments
(Releases,
Debtor Secured Party Jurisdiction UCC # Filing Date Collateral Assignments, etc.)
----------------------------------------------------------------------------------------------------------------------------------
Phoenix Laboratories, Inc. Xxxxxxx-Xx Xxxxx, Inc. N.Y. S/S 390298 12/24/88 All Equipment (now
X.X. Xxx 000 000 Xxxxxxxxx Xxxxxx owned, hereafter
000 Xxxxx Xxxxxx Xxxxxx, X.X. 00000 acquired)
Xxxxxxxx, Xxx Xxxx 00000
----------------------------------------------------------------------------------------------------------------------------------
Phoenix Laboratories, Inc. Long Island Trust Co. N.Y. S/S 348550 11/10/86 2 Machines
000 Xxxxxx Xxxx Industrial Finance Dept.
Xxxxxxxxxx, Xxx Xxxx 00000 11 Broadway Debtor has no power
Xxxxxxxxxx, XX 00000 to sell or dispose of
collateral
----------------------------------------------------------------------------------------------------------------------------------
Phoenix Laboratories, Inc. Xxxxxxx-Xx Xxxxx, Inc. Nassau 87-001408 1/16/87 All equipment (now
X.X. Xxx 000 000 Xxxxxxxxx Xxxxxx Xxxxxx owned & hereafter
000 Xxxxx Xxxxxx Xxxxxx, X.X. 00000 Clerk acquired.)
Xxxxxxxx, Xxx Xxxx 00000
----------------------------------------------------------------------------------------------------------------------------------
Phoenix Laboratories, Inc. Xxxxxxx-Xx Xxxxx, Inc. Nassau 87-027548 11/25/87 All equipment (now
X.X. Xxx 000 000 Xxxxxxxxx Xxxxxx Xxxxxx owned & hereafter
000 Xxxxx Xxxxxx Xxxxxx, X.X. 00000 Clerk acquired.)
Xxxxxxxx, Xxx Xxxx 00000
----------------------------------------------------------------------------------------------------------------------------------
Phoenix Laboratories, Inc. Equilease Corporation Nassau 86-030440 12/19/86 Field for Info. Only. Assigned to:
000 Xxxxxx Xxxx 000 Xxxxx Xxxxxx Xxxxxx Property (not describ- Textron Capitol Corp.
Xxxxxxxxxx, Xxx Xxxx 00000 Xxx Xxxx, XX 00000 Clerk ed) subject to Lease 1410 Hospital Trust
Tower Providence,
Rhode Island
----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE A
Page 2 of 2
(Cont'd)
------------------------------------------------------------------------------------------------------------------------------------
Amendments
(Releases,
Debtor Secured Party Jurisdiction UCC # Filing Date Collateral Assignments, etc.)
------------------------------------------------------------------------------------------------------------------------------------
Phoenix Laboratories, Inc. WASCO Funding Corp. Nassau 86-021181 8/25/86 Machines (3) leased to Assigned to:
000 Xxxxxx Xxxx 000 X. 00xx Xxxxxx County debtor who has no right Xxxxxx Financial
Xxxxxxxxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000 Clerk to sell or dispose. Corp.
0 Xxxxxxx Xxxxxx
Xxxxxx Xxxxxxx,
XX 00000
------------------------------------------------------------------------------------------------------------------------------------
Phoenix Laboratories, Inc. L.I. Trust Co., N.A. Nassau 86-027280 11/18/86 2 Machines
000 Xxxxxx Xxxx Industrial Finance Dept. County
Xxxxxxxxxx, Xxx Xxxx 00000 00 Xxxxxxxx Xxxxx
Xxxxxxxxxx, X.X. 00000
------------------------------------------------------------------------------------------------------------------------------------
Great Earth Distribution, The Lease Factor, Inc. S/S 87-128909 5/28/87 Equipment Lease
Inc. The Beaumont Building Calif.
00000 Xxxxxx Xxxxxx X.X. Xxx 00
Xx Xxxxxx, XX 00000 Xxxxx Xxxxxxx
Xxxxxxxxxx, Xxxx. 00000
------------------------------------------------------------------------------------------------------------------------------------
Great Earth Distribution, Pitney Xxxxx Credit S/S 86-146811 6/11/86 Lease - re: Postal
Corporation Corporation Calif. Equipment
00000 Xxxxxx Xxxxxx 00000 Xxxxxxxxx Xxxx.
Xx Xxxxxx, XX 00000 Xxxxx 000
Xxxxxxxx, XX 00000
------------------------------------------------------------------------------------------------------------------------------------
Great Earth Distribution, Pitney Xxxxx Credit S/S 86-146812 6/11/86 Lease - re: Postal
Inc. Corporation Calif. Equipment
00000 Xxxxxx Xxxxxx 00000 Xxxxxxxxx Xxxx.
Xx Xxxxxx, XX 00000 Xxxxx 000
Xxxxxxxx, XX 00000
------------------------------------------------------------------------------------------------------------------------------------
[INVENTORY]
Fidelcor Business Credit Corporation February 17, 1988
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Gentlemen:
This Letter, when accepted by you, will become a security agreement
supplementing and forming part of the Security Agreement [Accounts, Contract
Rights, etc.] between us dated February 12, 1988:
1.* We hereby grant a continuing Security Interest in your favor upon all
of our present and hereafter-acquired Inventory, and the products and proceeds
thereof. The term "Inventory" includes all our present raw materials,
components, work in process, finished merchandise, and packing and shipping
materials, wherever located; and all such chattels hereafter acquired by us by
way of substitution, replacement, return, repossession or otherwise: and all
additions and accessions thereto, and the resulting product or mass: and any
documents of title representing any thereof. Your Security Interest shall attach
to all of the foregoing without further act on your or our part. Upon your
request, we will from time to time at our expense pledge and deliver such
Inventory to you or to a third party as your bailee; or hold the same in trust
for your account; or store the same in warehouse in your name: or deliver to you
documents of title representing the same; or evidence your Security Interest in
some other acceptable manner. The advances made and to be made hereunder are
primarily to enable us to purchase raw materials and defray the cost of labor
and similar manufacturing expenses which add to the value and marketability of
the finished product manufactured, processed, or otherwise dealt in by us; and
since such advances will be used for the foregoing purposes, your Security
Interest shall be deemed to be a Purchase Money Security Interest.
2. Your said Security Interest shall secure (a) any advances which you may
make hereunder, and (b) any other indebtedness which we may from time to time
owe to you, fixed or contingent, whether arising under the aforesaid Security
Agreement or after the termination thereof, or otherwise arising or acquired by
you, and (c) all interest, charges, commissions, expenses (including attorneys'
fees and legal expenses) and other items chargeable against us by reason of any
of the foregoing. The term "advances" means moneys paid to us or to others for
our account, or obligations to third parties incurred by you at our request.
3. We agree that the making of Inventory advances is always wholly
discretionary on your part, and that you shall be the sole judge of the amount
of such advances and of the total of such advances to be outstanding at any
particular time. All such advances shall be repayable on demand, and shall bear
interest at the same rate as specified in the aforesaid Security Agreement.
4. We warrant, covenant, and agree that:
(a) All Inventory is and shall remain free from all purchase-money or
other liens or encumbrances except such as are held by you.
(b) You shall have the right at all times to immediate possession of
all Inventory and its products and proceeds, and to inspect the Inventory and
our records pertaining thereto.
(c) We shall insure and keep insured all Inventory for full value, with
such coverage and in such companies as you may approve, at our expense, and the
policies shall be duly endorsed in your favor and delivered to you. If we
default in this regard, you shall have the right to insure and charge the cost
to us. You assume no risk or responsibility in connection with the payment or
non-payment of losses, your only responsibility being to credit us with any
insurance payments received on account of losses.
(d) All excise, floor, sales and any other taxes that may be assessed
upon or paid by you with respect to any of the Inventory shall be charged to and
paid by us, and we agree to indemnify you against loss by reason of any such
taxes. We will make due and timely payment or deposit of all Federal, State, and
local taxes, assessments or contributions required of us by law, and will
execute and deliver to you, on demand, appropriate Certificates attesting to the
payment or deposit thereof.
(e) None of the Inventory shall be removed or disposed of without your
written consent, except to bona fide purchasers thereof in the ordinary course
of our business and on orders approved by you in writing. All our sales shall be
promptly reported to you, and the accounts or other proceeds thereof shall be
subject to you security interest in accordance with the aforesaid Security
Agreement.
(f) You shall not be liable or responsible in any way for the
safekeeping of any of the Inventory, or for any loss or damage thereto, or for
any diminution in the value thereof, or for any act or default of warehousemen
or of any carrier, forwarding agency, or other person whomsoever, of for the
collection of any process, but the same shall be at our sole risk at all times.
(g) You shall have the right (but shall not be obliged) to pay and to
charge as an advance to us hereunder any dyeing, finishing, processing, or
warehousing charges, landlord's bills, or other claims against or liens upon the
Inventory.
5. Our default in the payment or performance of any obligation or
undertaking on our part hereunder, or the happening of any even specified as an
event of default in the aforesaid Security Agreement, shall be an event of
default hereunder. Upon the happening of such or any other event of default, you
shall have, in addition to all rights and remedies of a Secured Party under the
Uniform Commercial Code or other applicable statute or rule, the following
rights and remedies:
(a) You may peaceably by your own means or with judicial assistance
enter our or any other premises and take possession of the Inventory, and remove
or dispose of it on our premises, and we will not resist or interfere with such
action.
(b) You may require us to assemble all or any part of the Inventory and
make it available to you at any place designated by you and reasonably
convenient to both parties.
(c) We agree that a notice sent to us at least 5 days before the date
of any intended public sale or the date after which any private sale or other
intended disposition of the Inventory is to be made, shall be deemed to be
reasonable notice of such sale or other disposition. All notice is waived if the
Inventory is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market.
(d) In the event of any such public or private sale or other
disposition, we will pay to you on demand any deficiency remaining after
crediting the net proceeds of sale, less all expenses of taking, handling, and
sale including reasonable counsel fee. All rights of redemption are waived. You
shall account to us for any surplus.
6. Until we shall notify you in writing to the contrary, you shall be
justified in assuming that our Inventory is and will continue to be principally
kept at our address specified in the aforesaid Security Agreement.
ATTEST: PHOENIX LABORATORIES, INC.
By: By: /s/ XXXXXX XXXX
------------------------------ ---------------------------------
Xxxxxx Xxxx, Secretary Xxxxxx Xxxx, President
ATTEST: GREAT EARTH DISTRIBUTION, INC.
By: /s/ XXXXXX XXXX By:
------------------------------ ---------------------------------
Xxxxxx Xxxx, Secretary Xxxxxx Xxxx, President
ACCEPTED:
FIDELCOR BUSINESS CREDIT CORPORATION
Secured Party
By:
---------------------------------------
Title:
------------------------------------
PHOENIX LABORATORIES, INC. AND GREAT EARTH
DISTRIBUTION, INC. were individually called
and "Debtor and collectively "Debtors")
FIDELCORE BUSINESS CREDIT CORPORATION herein called "Secured
Party" hereby agrees as follows:
1. Debtor grants to Secured Party a security interest in the following
Equipment (herein called "Collateral"):
A. All of Debtor's present machinery, equipment furniture, tools,
dies, figs and attachments (including, but not limited to, the items
listed and described on the Schedule of Equipment annexed); and
B. All of the Debtor's additional Equipment, of like or unlike
nature, to be acquired hereafter pursuant to this Security Agreement or
otherwise, and all replacements, accessions, and improvements to any of
the foregoing.
2. Said security interest shall secure the Obligations of Debtor as
defined in the Security Agreement (Accounts, etc.) between Debtor and
Secured Party of even date herewith.
(2) a other existing debts and liabilities of Debtor to Secured Party; (3) all
future advances made by Secured Party to or for the account of Debtor, including
advances for insurance, repairs to and maintenance of the Collateral, taxes and
discharge of any other lien, security interest or encumbrance; (4) other
indebtedness, however created, arising or acquired by Secured Party which debtor
may now or hereafter owe to a Secured Party; and (5)all costs and expenses
incurred in the collection of any of the foregoing, including reasonable
attorney's fees.
3. Until default hereunder, Debtor shall be entitled to possession of
the Collateral, which shall be kept only at Debtor's address specified in said
Security Agreement (Accounts, etc.)
4. Debtor warrants, covenants and agrees that: (1) Debtor is the sole
owner of the Collateral free from any lien, security interest or encumberance,
has the right to grant Secured Party a security interest therein, and will
defend the Collateral against the claims and demands of all persons; (2) Debtor
shall not sell, lease, encumber, remove, conceal or grant or permit any further
security interest in the Collateral, nor part with possession of any thereof,
not permit the same to be used for hire nor in violation of any law or
ordinance; (3) Debtor shall maintain the Collateral in good condition and repair
at Debtor's sole expense; Debtor will pay all taxes levied on the Collateral,
and will make due and timely payment or deposit of all Federal, State and local
assessments or contributions required by law and will execute and deliver to
Secured Party, on demand, appropriate _____________ attesting to the payment
or deposit thereof; (5) No financing statement covering the collateral, or any
part thereof, on file in any public office, and Debtor's present or hereafter-
acquired Collateral is and shall not be or become subject to any purchase -money
or other lien or security interest except in favor of Secured Party; (6) Debtor
shall procure and maintain insurance on the Collateral for the full term of this
security agreement, against the risks of fire, theft and such other risks as
Secured Party may require (including the risk of collision in case any part of
the Collateral is a motor vehicle) by insurers satisfactory to Secured Party,
and shall deliver to secured Party a fully paid policy or policies of insurance
property endorsed in favor of Secured Party; (7) Debtor will permit Secured
Party to inspect the Collateral at any time: (8) Loss, theft, damage,
destruction or seizure of the Collateral shall not relieve the Debtor for the
payment of any indebtedness secured hereby: (9) The collateral is not now and
will not hereafter be affixed to realty as to become a part thereof or a
fixture; (10) The execution and delivery hereof, if Debtor is a corporation, has
been duly authorized by all necessary action of Debtor's directors and
shareholders; (11) Secured Party is authorized to execute and file, at Debtor's
cost, such financing statements and other instruments or documents as may be
necessary to perfect and protect Secured Party's security interest; and (12) In
case of Debtor's default in performing any warranty covenant, or undertaking
hereunder, Secured Party may (but shall not be obliged to) procure the
performance thereof and add the cost thereof, with interest, to the indebtedness
secured hereby.
5. The occurrence of any of the following events or conditions shall,
at the option of Secured Party and without notices or demand, constitute an
event of default hereunder: (1) Default in the due payment of any indebtedness
secured hereby: or (2) Failure of Debtor to perform any covenant or undertaking
on Debtor's part herein; or (3) Breach of any warranty or falsity of any
representation made by Debtor to Secured Party; or (4) Attachment or seizure of
or levy upon the Collateral; (5) Institution of any proceeding by or against
Debtor or Debtor's business under any bankruptcy or insolvency statute, or
Debtors's assignment for benefit of creditors, or the appointment of a receiver
for Debtor or the Collateral or the filing of a tax lien notice against Debtor
by any taxing authority; or (6) Reasonable insecurity of Secured Party: or (7)
Loss, theft, substantial damage, destruction, sale, encumbrance, concealment
removal, or forfeiture of the Collateral or any material portion thereof.
6. Upon the occurrence of any event of default, Secured Party may
declare all Debtor's indebtedness secured hereby immediately due and payable,
and thereupon Secured Party shall have the right to take possession of the
Collateral and shall have all other rights and remedies of a Secured Party under
the Uniform Commercial Code. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, Secured party shall give or threatens to decline speedily in value or is
of a type customarily sold on a recognized market, Secured Party shall give
Debtor reasonable notice of the time and place of any public sale thereof or of
the time after which any private sale or other intended disposition thereof is
to be made. Debtor agrees that the requirements of reasonable notice shall be
met if notice is mailed to Debtor at the address of the Debtor shown below not
less than (5) days prior to the sale or other disposition. Expenses or retaking,
holding, preparing for sale, selling, or the like shall include Secured Party's
reasonable attorneys' fees and legal expenses. Secured Party may require Debtor
to assemble the Collateral and make it available to Secured Party at a place to
be designated by Secured Party which is reasonably convenient to both parties.
Secured Party is authorized to maintain, sell or dispose of the Collateral on
the premises of the Debtor. Secured Party's rights and remedies shall be
cumulative and alternative.
7. This Security Agreement shall be constructed and enforced according
to the laws of the State of New York. Waiver of any default shall not constitute
waiver of any subsequent or other default. All rights of Secured Party shall
inure to the benefit of its successors and assigns, and all obligations of
Debtor shall bind his or its heirs, executors, personal representatives,
successors and assigns.
ATTEST: PHOENIX LABORATORIES, INC.
By: By: /s/ XXXXXX XXXX
------------------------------ ---------------------------------
Xxxxxx Xxxx, Secretary Xxxxxx Xxxx, President
ATTEST: GREAT EARTH DISTRIBUTION, INC.
By: /s/ XXXXXX XXXX By:
------------------------------ ---------------------------------
Xxxxxx Xxxx, Secretary Xxxxxx Xxxx, President
ACCEPTED:
FIDELCOR BUSINESS CREDIT CORPORATION
By:
---------------------------------------
Title:
------------------------------------
PROMISSORY NOTE
$800,000.00 February 17, 0000
Xxx Xxxx, Xxx Xxxx
For Value Received, PHOENIX LABORATORIES, INC. and GREAT EARTH
DISTRIBUTION, INC. (individually and collectively, the "Maker") jointly and
severally promise to pay to the order of FIDELCOR BUSINESS CREDIT CORPORATION
("Fidelcor") the principal sum of EIGHT HUNDRED THOUSAND ($800,000.00) DOLLARS
payable in eighteen (18) consecutive monthly installments as follows: seventeen
(17) installments in the amount of $13,333.33 each commencing September 1, 1988
and continuing on the first day of each month thereafter, through and including
January 1, 1990 and a final eighteenth (18th) installment in the amount of
$573,333.39 being due and payable on February l7, 1990. Interest on the
outstanding principal balance shall be paid by Maker at the rate of three and
one-half (3 1/2%) percent per annum plus the prime rate so announced from time
to time (effective as of the date of each change, so announced) by Fidelity
Bank, N.A., Philadelphia, Pennsylvania, whether or not said rate is the best
rate available by said bank, payable monthly on the first day of every month
commencing March 1, 1988 and at maturity of this Note, whether by acceleration
or otherwise. Interest shall be calculated on the basis of a 360-day year and
actual days elapsed. In no event shall the interest charged hereunder exceed the
maximum permitted by law.
Payments shall be made to the office of Fidelcor 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, or at such other place as the holder of this Note may
designate. At the option of Fidelcor, principal and interest may be charged to
the Maker's account with Fidelcor. This Note may not be prepaid in whole or in
part without the prior written consent of Fidelcor or any holder, except upon
full compliance with the provisions of the Security Agreement (Accounts,
Contract Rights, Instruments and Goods pertaining thereto) referred to below
governing termination of all, but not less than all, financing arrangements
between Maker and Fidelcor.
Reference is made to the Security Agreement (Accounts, Contract
Rights, Instruments and Goods pertaining thereto), the Security Agreement
(Inventory) and Security Agreement (Equipment), and other agreements, guaranties
and mortgages granting collateral security and creating or evidencing
indebtedness, all of even date herewith between Maker or related parties and
Fidelcor and to all present and future supplements and amendments relating
thereto ("Collateral
Agreements"). As security for payment of this Note and any other present or
future obligations or liability of the Maker to Fidelcor of any kind, nature of
description, the Maker has granted Fidelcor a security interest in the
collateral described in the Collateral Agreements.
Upon the occurrence of one or more of the following events:
A. Maker's failure to pay when due any amounts required to be paid
hereunder; or
B. Any other event of default under the terms and provisions of
the Collateral Agreements; or
C. The termination or non-renewal of the Security Agreement
(Accounts, Contract Rights, Instruments and Goods pertaining
thereto);
then, and in any such event, it is agreed that the entire unpaid principal
balance of this Note shall, without notice or demand, at Fidelcor's or any
holder's option, become immediately due and payable, together with interest
accrued and accruing at the rate set forth above until this Note is fully paid,
plus all costs and expenses of the collection and enforcement of this Note
including reasonable attorneys' fees, all of which shall be added to the amount
due under this Note.
In addition to the foregoing, upon the occurrence of any of the
events set forth above, Fidelcor or any holder shall have the right, immediately
and without notice or further action by it, to set off against this Note and/or
all other obligations of the Maker, all money owed to Maker by Fidelcor (or any
person or entity which may participate with Fidelcor in the advances to the
Maker pursuant to the Collateral Agreements) or such holder whether or not due,
and Fidelcor or such holder shall be deemed to have exercised such right of
set-off and to have made a charge against any such money immediately upon the
occurrence of any of the foregoing events even though such charge is made or
entered on the books of Fidelcor or such holder subsequent thereto. Further,
Fidelcor or such holder may proceed to enforce payment of all obligations of the
Maker and exercise any of or all of the rights and remedies afforded to Fidelcor
or such holder by the Uniform Commercial Code or the Collateral Agreements. All
rights and remedies afforded to Fidelcor or such holder pursuant to the terms
hereof, the Collateral Agreements or by law shall be cumulative and may be
exercised in any manner Fidelcor or such holder may determine without limiting
or restricting Fidelcor's or such holder's rights to subsequently exercise any
of its other rights or remedies.
-2-
The Maker hereby agrees not to deduct, set off or seek to
counterclaim for or recoup any amounts which are or may be owed to Maker by
Fidelcor (or any person or entity which may participate with Fidelcor in the
advances to Maker pursuant to the Collateral Agreements) or any holder. The
books and records of Fidelcor or any holder showing the account between Maker
and Fidelcor or any holder shall be admissible in evidence in any action or
proceeding as PRIMA FACIE proof of the items therein set forth.
The provisions of this Note shall be construed and interpreted, and
all rights and obligations hereunder determined, in accordance with the laws of
the State of New York. The Maker hereby irrevocably consents to the jurisdiction
of the Supreme Court of New York, County of New York, and of the United States
District Court for the Southern District of New York in any actions or
proceedings with respect to this Note. Maker hereby waives trial by jury in any
action and/or proceeding arising on, out of or by reason of this Note.
No modification or waiver of any of the provisions of this Note
shall be effective unless in writing, signed by Fidelcor or other holder hereof
and only to the extent set forth in said writing, nor shall any such waiver be
applicable except in the specific instance for which it is given. The Maker of
this Note hereby waives presentment for payment, demand, notice of non-payment
and dishonor, protest and notice of protest.
ATTEST: PHOENIX LABORATORIES, INC.
By: /s/ By: /s/
--------------------------- -----------------------------
Xxxxxx Xxxx, Secretary Xxxxxx Xxxx, President
ATTEST: GREAT EARTH DISTRIBUTION, INC.
By: /s/ By: /s/
--------------------------- -----------------------------
Xxxxxx Xxxx, Secretary Xxxxxx Xxxx, President
-3-
GUARANTY
In order to induce to now or hereafter make advances, loans, extend its
credit to or enter into security agreement with EVERGOOD PRODUCTS CORPORATION,
PHOENIX LABORATORIES, INC. and GREAT EARTH DISTRIBUTION INC. (individually and
collectively "Debtor") and knowing that Trefoil will rely upon this guaranty,
the undersigned and each of them jointly and severally guarantee the due payment
and performance by said Debtor described in said financing agreement, or in any
supplement thereto, or any other transaction or agreement, as well as the due
payment of all other obligations which said Debtor may at any time owe to
Trefoil, however created; and the undersigned hereby indemnify Trefoil, and
covenant to hold it harmless against all obligations, demands, losses or
liabilities, by whomsoever asserted, suffered, incurred or paid by Trefoil as a
result of, or in any way arising out of, or following, or consequential to
transactions under the aforesaid security agreement or any other agreement. This
guaranty shall be absolute, continuing, unconditional, and unlimited. Trefoil
shall be under no obligation to proceed first against the Debtor, or against any
collateral security which Trefoil may hold, before proceeding against the
undersigned hereunder. The undersigned agree that any collateral held as
security by Trefoil, whether under an agreement with the Debtor, or pursuant to
this guaranty, may be sold at public or private sale, and the undersigned
further agree that Trefoil shall have the right to bid at such sale. The
undersigned agree to indemnify and save Trefoil harmless for any costs and
expenses that Trefoil shall have the right to bid at such sale. The undersigned
agree to indemnify and save Trefoil whether under agreement with the Debtor or
the undersigned, and they further agree to pay all attorneys fees agreed to by
the Debtor, and the reasonable attorneys fees incurred in connection with
enforcement of this guaranty agreement, which the parties shall be a sum equal
to 15% of the moneys due Trefoil upon placement of the claim with such attorney.
The undersigned agree: that this guaranty shall not be impaired by any
modification to which the parties to said security agreement may hereafter
agree, nor by any modification, release or other alteration of any of the
obligations hereby guaranteed, or of any security therefor, or failure to
perfect and security interest, to all of which the undersigned hereby consent;
that their liability hereunder is direct and unconditional and may be enforced
without requiring Trefoil first to any other right, remedy or security; and that
this guaranty shall continue in force until Secured Party shall receive 30 days
prior written notice by registered mail revoking it only as to future
transactions.
The undersigned waive: notice of acceptance hereof, notice of adverse
change in Debtor's financial condition; the right to a jury trial in any action
hereunder; presentment and protest of any instrument and notice thereof; notice
of default; and all other notices to which they might otherwise be entitled. As
security, they hereby assign to Trefoil all claims of any nature which they, or
any of them, may now or hereafter have against Debtor.
All actions or proceedings arising directly or indirectly on account of
this guaranty agreement shall be litigated only in courts having situs within
the State of New York and each guarantor for himself hereby consents to the
jurisdiction of any Local, State or Federal Court located within the State of
New York and each guarantor for himself waives personal service of any and all
process upon him and consents that all such service of process be made by
certified mail, return receipt requested directed to such guarantor at the
address set forth below or the home address of such guarantor, if different, and
service so made shall be deemed complete three days after the same shall be
posted.
This guaranty, all acts and transactions hereunder, and the rights and
obligations of the parties hereto, shall be governed, construed and interpreted
according to the laws of the State of New York. This guaranty cannot be changed
or discharged orally, nor shall the same be terminated by death of any
guarantor, in which event deceased guarantor's estate shall be bound by the
obligations hereunder. Release of any guarantor, or the Debtor herein, shall not
affect the obligations hereunder of the remaining guarantors.
IN WITNESS WHEREOF, we have signed and sealed these presents this 17th
day of February 1988.
ATTEST: SEE RIDER ATTACHED HERETO AND EVERGOOD PRODUCTS CORPORATION
MADE A PART HEREOF
By: /s/ XXXXXXX XXXXXXXX By: /s/ XXXXXX XXXX
---------------------------- -----------------------------
Xxxxxxx Xxxxxxxx, Secretary Xxxxxx Xxxx, President
ATTEST: PHOENIX LABORATORIES
By: /s/ XXXXXX XXXX By: /s/ XXXXXX XXXX
------------------------------- ----------------------------
Xxxxxx Xxxx, Secretary Xxxxxx Xxxx, President
ATTEST: GREAT EARTH DISTRIBUTION, INC.
By: /s/ XXXXXX XXXX By: /s/ XXXXXX XXXX
------------------------------- ----------------------------
Xxxxxx Xxxx, Secretary Xxxxxx Xxxx, President
RIDER TO GUARANTY
by
EVERGOOD PRODUCTS CORPORATION,
PHOENIX LABORATORIES, INC. and
GREAT EARTH DISTRIBUTION, INC.
of
THE OBLIGATIONS OF EACH OF THE OTHER OF THEM
to
FIDELCOR BUSINESS CREDIT CORPORATION
To secure all of its obligations to Trefoil under this guaranty, Evergood
Products Corporation hereby grants to Trefoil a continuing security interest in
the following property:
(i) all present and future accounts, contract rights, chattel paper and general
intangibles (including, but not limited to all of Debtor's now existing or
hereafter arising tax and duty claims and refunds, franchises, permits, customer
lists, goodwill and artwork, all now owned or hereafter acquired patents,
trademarks, copyrights, tradestyles, licenses or license agreements relative to
the rendering of services of the manufacture of goods and all Debtor's now
existing or hereafter arising interest in real and personal property),
documents, instruments, monies, deposits, securities, credits and letters of
credit, whether now owned or hereafter acquired by Debtor; Debtor's interest in
the goods represented by all accounts and all returned, reclaimed or repossessed
goods with respect thereto; all rights and remedies of Debtor under or in
connection with such collateral;
(ii) all present and future goods, including, without limitation:
(a) all inventory, wherever located, whether now owned or hereafter
acquired by Debtor, including, without limitation, raw materials, materials used
or consumed in the Debtor's business, work in process and finished goods of
whatever kind, nature and description and whether in the possession of Control
of a third party and all right, title and interest of Debtor therein and
thereto, all Debtor's rights as a seller of goods, and all inventory which may
be returned to Debtor by its customers, stopped in transit by Debtor or
repossessed by Debtor;
(b) all machinery, equipment, tools, furniture, fixtures and all
accessions and attachments thereto, wherever located whether now owned or
hereafter acquired by Debtor, all Debtor's rights to acquire any of the
foregoing, whether by exercise of purchase options or otherwise;
(iii) all Debtor's books and records, equipment and computer software relating
to any of the above; and
1 of 2
(iv) any and all products and proceeds of the foregoing in any form, including,
without limitation, any claims by Debtor, against third parties for loss of or
damage to or destruction of any or all of the foregoing, and all insurance
proceeds relating to all of the above.
All terms used above which are defined in the Uniform Commercial Code shall have
the meanings therein stated.
EVERGOOD PRODUCTS CORPORATION
By: /s/ Xxxxxx Xxxx
------------------------------------------
Xxxxxx Xxxx, President
2 of 2
Resolutions of the Board of Directors of
EVERGOOD PRODUCTS CORPORATION
Dated February 8, 1988
The undersigned being the members of the Board of Directors of
Evergood Products Corporation (the "Company") hereby consent to the following
actions to be taken in lieu of a special meeting of its Board of Directors.
WHEREAS, Evergood Products Corporation ("Company") is parent of
Phoenix Laboratories, Inc. and Great Earth Distribution, Inc. (collectively the
"Debtors") and it is in the business interest of the Company that Debtors obtain
financing; and
WHEREAS, said Debtors are desirous of obtaining funds, credit or
other financial assistance from Fidelcor Business Credit Corporation (herein
referred to as "Trefoil") and Trefoil is unwilling to extend credit or to render
such assistance to the Debtors unless the Company shall enter into a guaranty
agreement with Trefoil substantially in the form of the draft of said agreement
submitted to the undersigned and attached to this consent; and
WHEREAS, in view of the premises aforesaid and because of the
inter-corporate relations between this Company and said Debtors it is deemed to
be to the direct
interests and advantage of this Company that it enter into said agreement with
Trefoil. NOW, THEREFORE, be it
RESOLVED, that the President, any Vice
President, Secretary, Treasurer or other officer or any
agent of this corporation, or any one or more of them, be
and they are hereby authorized, empowered and directed to
enter into and execute on behalf of the Company an
agreement with Trefoil substantially in the form of a
draft of said agreement submitted to the undersigned and
attached to this consent, and to do and perform all such
acts and things deemed by any such officer or agent
necessary, convenient or proper to carry out or modify
any such agreement, hereby ratifying, approving and
confirming all that any said officers or agents have done
or may do or cause to be done in the premises and said
agreement may contain such terms, conditions, provisions
and undertakings as the officer executing the same deems
necessary and proper.
/s/ XXXXXX XXXX
-----------------------------------
Xxxxxx Xxxx
-----------------------------------
Xxxxx Xxxxxxxx
/s/ XXXXXXX X. XXXXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ XXXXXXXXX XXXX
-----------------------------------
Xxxxxxxxx Xxxx
-----------------------------------
Xxxxxx Xxxx
-----------------------------------
Xxxxxx Xxxxxxxxx
/s/ Xxxxxxxx Xxxxxxx
-----------------------------------
Xxxxxxxx Xxxxxxx
2
interests and advantage of this Company that it enter into said
agreement with Trefoil. NOW, THEREFORE, be it
RESOLVED, that the President, any Vice
President, Secretary, Treasurer or other officer or any
agent of this corporation, or any one or more of them, be
and they are hereby authorized, empowered and directed to
enter into and execute on behalf of the Company an
agreement with Trefoil substantially in the form of a
draft of said agreement submitted to the undersigned and
attached to this consent, and to do and perform all such
acts and things deemed by any such officer or agent
necessary, convenient or proper to carry out or modify
any such agreement, hereby ratifying, approving and
confirming all that any said officers or agents have done
or may do or cause to be done in the premises and said
agreement may contain such terms, conditions, provisions
and undertakings as the officer executing the same deems
necessary and proper.
-----------------------------------
Xxxxxx Xxxx
/s/ XXXXX XXXXXXXX
-----------------------------------
Xxxxx Xxxxxxxx
/s/ XXXXXXX X. XXXXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxxxx Xxxx
-----------------------------------
Xxxxxx Xxxx
-----------------------------------
Xxxxxx Xxxxxxxxx
-----------------------------------
Xxxxxxxx Xxxxxxx
2
interests and advantage of this Company that it enter into said
agreement with Trefoil. NOW, THEREFORE, be it
RESOLVED, that the President, any Vice
President, Secretary, Treasurer or other officer or any
agent of this corporation, or any one or more of them, be
and they are hereby authorized, empowered and directed to
enter into and execute on behalf of the Company an
agreement with Trefoil substantially in the form of a
draft of said agreement submitted to the undersigned and
attached to this consent, and to do and perform all such
acts and things deemed by any such officer or agent
necessary, convenient or proper to carry out or modify
any such agreement, hereby ratifying, approving and
confirming all that any said officers or agents have done
or may do or cause to be done in the premises and said
agreement may contain such terms, conditions, provisions
and undertakings as the officer executing the same deems
necessary and proper.
-----------------------------------
Xxxxxx Xxxx
-----------------------------------
Xxxxx Xxxxxxxx
/s/ XXXXXXX X. XXXXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxxxx Xxxx
-----------------------------------
Xxxxxx Xxxx
/s/ XXXXXX XXXXXXXXX
-----------------------------------
Xxxxxx Xxxxxxxxx
-----------------------------------
Xxxxxxxx Xxxxxxx
2
GUARANTY
In order to induce FIDELCOR BUSINESS CREDIT CORPORATION (hereinafter
referred to as "Trefoil") to now or hereafter make advances, loans, extend its
credit to, or enter into security agreements with EVERGOOD PRODUCTS CORPORATION,
PHOENIX LABORATORIES, INC. and GREAT EARTH DISTRIBUTION INC. (individually and
collectively "Debtor") and knowing that Trefoil will rely upon this guaranty,
the undersigned and each of them jointly and severally guarantee the due payment
and performance by said Debtor described in said financing agreement of all
moneys to be paid, and all things to be done, pursuant to each and every
condition and covenant contained in said agreement, or in any supplement
thereto, or any other transaction or agreement, as well as the due payment of
all other obligations which said Debtor may at any time owe to Trefoil, however
created; and the undersigned hereby indemnify Trefoil, and covenant to hold it
harmless against all obligations, demands, losses or liabilities, by whomsoever
asserted, suffered, incurred or paid by Trefoil as a result of, or in any way
arising out of, or following, or consequential to transactions under the
aforesaid security agreement or any other agreement. This guaranty shall be
absolute, continuing, unconditional and unlimited. Trefoil shall be under no
obligation to proceed first against the Debtor, or against any collateral
security which Trefoil may hold, before proceeding against the undersigned
hereunder. The undersigned agree that any collateral held as security by
Trefoil, whether under an agreement with the Debtor, or pursuant to this
guaranty, may be sold at public or private sale, and the undersigned further
agree that Trefoil shall have the right to bid at such sale. The undersigned
agree to indemnify and save Trefoil harmless for any costs and expenses that
Trefoil may incur in connection with the liquidation of collateral held by
Trefoil whether under agreement with the Debtor or the undersigned, and they
further agree to pay all attorneys fees agreed to by the Debtor, and the
reasonable attorneys fees incurred in connection with enforcement of this
guaranty agreement, which the parties agree shall be a sum equal to 15% of the
moneys due Trefoil upon placement of the claim with such attorney.
The undersigned agree: that this guaranty shall not be impaired by any
modification to which the parties to said security agreement may hereafter
agree, nor by any modification, release or other alteration of any of the
obligations hereby guaranteed, or of any security therefor or failure to perfect
any security interest, to all of which the undersigned hereby consent; that
their liability hereunder is direct and unconditional and may be enforced
without requiring Trefoil first to resort to any other right, remedy or
security; and that this guaranty shall continue in force until Secured Party
shall receive 30 days prior written notice by registered mail revoking it only
as to future transactions.
The undersigned waive: notice of acceptance hereof, notice of adverse
change in Debtor's financial condition; the right to a jury trial in any action
hereunder; presentment and protest of any instrument and notice thereof; notice
of default; and all other notices to which they might otherwise be entitled. As
security, they hereby assign to Trefoil all claims of any nature which they, or
any of them, may now or hereafter have against Debtor.
All actions or proceedings arising directly or indirectly on account of
this guaranty agreement shall be litigated only in courts having situs within
the State of New York and each guarantor for himself hereby consents to the
jurisdiction of any Local State or Federal Court located within the State of New
York and each guarantor for himself waives personal service of any and all
process upon him and consents that all such service of process be made by
certified mail, return receipt requested directed to such guarantor at the
address set forth below or the home address of such guarantor, if different, and
service so made shall be deemed complete three days after the same shall be
posted.
This guaranty, all acts and transactions hereunder, and the rights and
obligations of the parties hereto, shall be governed, construed and interpreted
according to the laws of the State of New York. This guaranty cannot be changed
or discharged orally, nor shall the same be terminated by death of any
guarantor, in which event deceased guarantor's estate shall be bound by the
obligations hereunder. Release of any guarantor, or the Debtor herein, shall not
affect the obligations hereunder of the remaining guarantors.
IN WITNESS WHEREOF, we have signed and sealed these presents this
__________ day of ____________ 1988.
ATTEST: SEE RIDER ATTACHED EVERGOOD PRODUCTS CORPORATION
HERETO AND MADE A
PART HEREOF
By: /s/ XXXXXXX XXXXXXXX By:
------------------------------ ---------------------------------
Xxxxxxx Xxxxxxxx, Secretary Xxxxxx Xxxx, President
ATTEST: PHOENIX LABORATORIES, INC.
By:
------------------------------ ---------------------------------
Xxxxxx Xxxx, Secretary Xxxxxx Xxxx, President
ATTEST: GREAT EARTH DISTRIBUTION, INC.
By: By:
------------------------------ ---------------------------------
Xxxxxx Xxxx, Secretary Xxxxxx Xxxx, President
RIDER TO GUARANTY
by
EVERGOOD PRODUCTS CORPORATION,
PHOENIX LABORATORIES, INC. and
GREAT EARTH DISTRIBUTION, INC.
of
THE OBLIGATIONS OF EACH OF THE OTHER OF THEM
to
FIDELCOR BUSINESS CREDIT CORPORATION
To secure all of its obligations to Trefoil under this guaranty, Evergood
Products Corporation hereby grants to Trefoil a continuing security interest in
the following property:
(i) all present and future accounts, contract rights, chattel paper and general
intangibles (including, but not limited to, all of Debtor's now existing or
hereafter arising tax and duty claims and refunds, franchises, permits, customer
lists, goodwill and artwork, all now owned or hereafter acquired patents,
trademarks, copyrights, tradestyles, licenses or license agreements relative to
the rendering of services of the manufacture of goods and all Debtor's now
existing or hereafter arising interest in real and personal property),
documents, instruments, monies, deposits, securities, credits and letters of
credit, whether now owned or hereafter acquired by Debtor; Debtor's interest in
the goods represented by all accounts and all returned, reclaimed or repossessed
goods with respect thereto; all rights and remedies of Debtor under or in
connection with such collateral;
(ii) all present and future goods, including without limitation:
(a) all inventory, wherever located, whether now owned or hereafter
acquired by Debtor, including, without limitation, raw materials, materials used
or consumed in the Debtor's business, work in process and finished goods of
whatever kind, nature and description and whether in the possession or control
of a third party and all right, title and interest of Debtor therein and
thereto, all Debtor's rights as a seller of goods, and all inventory which may
be returned to Debtor by its customers, stopped in transit by Debtor or
repossessed by Debtor;
(b) all machinery, equipment, tools, furniture, fixtures and all
accessions and attachments thereto, wherever located whether now owned or
hereafter acquired by Debtor, all Debtor's rights to acquire any of the
foregoing, whether by exercise of purchase options or otherwise;
(iii) all Debtor's books and records, equipment and computer software relating
to any of the above; and
(iv) any and all products and proceeds of the foregoing in any form, including,
without limitation, any claims by Debtor against third parties for loss of or
damage to or destruction of any or all of the foregoing, and all insurance
proceeds relating to all of the above.
All terms used above which are defined in the Uniform Commercial Code shall have
the meanings therein stated.
RESOLUTION
WHEREAS PHOENIX LABORATORIES, INC. and GREAT EARTH DISTRIBUTION, INC.
(individually "Debtor") is engaged (a) in business as a corporate affiliate of
this corporation or (b) in the business of selling, marketing, using or
otherwise dealing in merchandise, supplies, equipment, products or other
articles sold to it or bought from it by that corporation or it is in the
businesses interest of this corporation that "Debtor" obtain financing.
WHEREAS, said Debtor is desirous of obtaining funds, credit or other
financial assistance from FIDELCOR BUSINESS CREDIT CORPORATION herein referred
to as Trefoil and Trefoil is unwilling to extend credit or to render such
assistance to the Debtor unless this corporation shall enter into a guaranty
agreement with Trefoil substantially in the form of the draft of said agreement
submitted to this meeting; and
WHEREAS, in view of the provisions aforesaid and because of the inter-
corporate or business relations between this corporation and said Debtor it is
deemed to be to the direct interests and advantage of this corporation that it
enter into said agreement with Trefoil.
RESOLVED, that the President, any Vice-President, Secretary, Treasurer or
other officer or any agent of this corporation, or any one or more of them, be
and they are hereby authorized, empowered and directed to enter into and execute
on behalf of the corporation an agreement with Trefoil substantially in the form
of a draft of said agreement submitted to the meeting, and to do and perform all
such acts and things deemed by any such officer or agent necessary, convenient
or proper to carry out or modify any such agreement, hereby ratifying, approving
and confirming all that any said officers or agents have done or may do or cause
to be done is the premises and said agreement may contain such terms,
conditions, provisions and undertakings as the officer executing the same deems
necessary and proper.
The undersigned does hereby certify that I am Secretary and the keeper of
the corporate records and the seal of each of the corporation listed below that
the foregoing is a true and correct copy of resolutions duly and unanimously
adopted and ratified at a special meeting of the Board of Directors of said
corporation duly convened and held in accordance with its by-laws at the office
of said corporations on the date hereof as taken and transcribed by me from the
minutes of said meeting and compared by me with the original of said resolutions
recorded in said minutes and that the same has not in any way been modified,
repealed or rescinded but is in full force and effect; that the within and
foregoing agreement was duly executed pursuant thereto.
Witness any hand and seal of said corporation this 8th day of February,
1988.
PHOENIX LABORATORIES, INC.
By: /s/ XXXXXX XXXX
-----------------------------------
Xxxxxx Xxxx, Secretary
GREAT EARTH DISTRIBUTION, INC.
By: /s/ XXXXXX XXXX
--------------------------
Xxxxxx Xxxx, Secretary
We consent to the above resolution and the guaranty executed pursuant
thereto and represent that we are the holders of all of the outstanding shares
of stock of PHOENIX LABORATORIES INC. and GREAT EARTH DISTRIBUTION, INC.
EVERGOOD PRODUCTS CORPORATION
By: /s/ XXXXXXX X. XXXXXXXX
-----------------------------------------
Xxxxxxx X. Xxxxxxxx, Secretary
GUARANTY
In order to induce FIDELCOR BUSINESS CREDIT CORPORATION (hereafter
"Trefoil") to now or hereafter make advances, loans, extend its credit to, or
enter into security agreements with PHOENIX LABORATORIES, INC. and GREAT EARTH
DISTRIBUTION, INC. (hereafter individually and collectively, "Debtor") and
knowing that Trefoil will rely upon this guaranty, the undersigned and each of
them jointly and severally guarantee the due payment and performance by said
Debtor described in said financing agreement of all moneys to be paid, and all
things to be done, pursuant to each and every condition and covenant contained
in said agreement, or in any supplement thereto, or any other transaction or
agreement, as well as the due payment of all other obligations which said Debtor
may at any time owe to Trefoil, however created; and the undersigned hereby
indemnify Trefoil, and covenant to hold it harmless against all obligations,
demands, losses or liabilities, by whomsoever asserted, suffered, incurred or
paid by Trefoil as a result of, or in any way arising out of, or following, or
consequential to transactions under the aforesaid security agreement or any
other agreement. This guaranty shall be absolute, continuing, unconditional and
unlimited. Trefoil shall be under no obligation to proceed first against the
Debtor, or against any collateral security which Trefoil may hold, before
proceeding against the undersigned hereunder. The undersigned agree that any
collateral held as security by Trefoil, whether under an agreement with the
Debtor, or pursuant to this guaranty, may be sold at public or private sale, and
the undersigned further agree that Trefoil shall have the right to bid at such
sale. The undersigned agree to indemnify and save Trefoil harmless for any costs
and expenses that Trefoil may incur in connection with the liquidation of
collateral held by Trefoil whether under agreement with the Debtor or the
undersigned, and they further agree to pay all attorneys fees agreed to by the
Debtor, and the reasonable attorneys fees incurred in connection with
enforcement of this guaranty agreement, which the parties agree shall be a sum
equal to 15% of the moneys due Trefoil upon placement of the claim with such
attorney.
The undersigned agree: that this guaranty shall not be impaired by any
modification to which the parties to said security agreement may hereafter
agree, nor by any modification, release or other alteration of any of the
obligations hereby guaranteed, or of any security therefor or failure to perfect
any security interest, to all of which the undersigned hereby consent; that
their liability hereunder is direct and unconditional and may be enforced
without requiring Trefoil first to resort to any other right, remedy or
security; and that this guaranty shall continue in force until Secured Party
shall receive 30 days prior written notice by registered mail revoking it only
as to future transactions.
The undersigned waive: notice of acceptance hereof, notice of adverse
change in Debtor's financial condition; the right to a jury trial in any action
hereunder; presentment and protest of any instrument and notice thereof; notice
of default; and all other notices to which they might otherwise be entitled. As
security, they hereby assign to Trefoil all claims of any nature which they, or
any of them, may now or hereafter have against Debtor.
All actions or proceedings arising directly or indirectly on account of
this guaranty agreement shall be litigated only in courts having situs within
the State of New York and each guarantor for himself hereby consents to the
jurisdiction of any Local State or Federal Court located within the State of New
York and each guarantor for himself waives personal service of any and all
process upon him and consents that all such service of process be made by
certified mail, return receipt requested directed to such guarantor at the
address set forth below or the home address of such guarantor, if different, and
service so made shall be deemed complete three days after the same shall be
posted.
This guaranty, all acts and transactions hereunder, and the rights and
obligations of the parties hereto, shall be governed, construed and interpreted
according to the laws of the State of New York. This guaranty cannot be changed
or discharged orally, nor shall the same be terminated by death of any
guarantor, in which event deceased guarantor's estate shall be bound by the
obligations hereunder. Release of any guarantor, or the Debtor herein, shall not
affect the obligations hereunder of the remaining guarantors.
Notwithstanding anything to the contrary contained in this guaranty, (1)
the joint and several liability of the guarantors hereunder shall in no event
exceed $150,000, plus the costs and expenses of collection, including attorneys
fees, as provided for herein. Such limitation on the liability of the guarantors
shall not be deemed to be a limitation on the amount of credit which may be
extended to the Debtor and (2) Trefoil shall not commence any action against any
guarantor to enforce this guaranty until six months after Trefoil makes demand
upon such guarantor for payment under this guaranty.
IN WITNESS WHEREOF, we have signed and sealed these presents this 19th day
of February 1988.
/s/ XXXXXXX XXXXX /s/ XXXXXX XXXX
---------------------------------- --------------------------------------
Witness XXXXXX XXXX
00 Xxxxxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000
--------------------------------------
Address
/s/ XXXXXXX XXXXX /s/ XXXXXX XXXX
---------------------------------- --------------------------------------
Witness XXXXXX XXXX
00 Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
--------------------------------------
Address
FIDELCOR BUSINESS CREDIT CORPORATION
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
February 16, 0000
Xxxxxxx - Xx Xxxxx, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Re: PHOENIX LABORATORIES, INC. ("Borrower")
Gentlemen:
Reference is made to certain agreements entered into between
Borrower and Xxxxxxx - Xx Xxxxx, Inc. ("Roche") pursuant to which Borrower has
granted to Roche a security interest in all of Borrower's now owned and
hereafter acquired Equipment and the Proceeds thereof as collateral security for
certain obligations of Borrower to Roche (said agreements, together with all
agreements and instruments related thereto or delivered in connection therewith,
as the same may now exist or hereafter be amended or supplemented, are
hereinafter collectively referred to as the "Roche Agreements" and all
obligations of Borrower to Roche arising under or in connection with the Roche
Agreements are hereinafter collectively referred to as the "Roche Obligations").
Reference is also made to certain financing agreements entered or
about to be entered into between Borrower and Fidelcor Business Credit
Corporation ("Fidelcor"), including, without limitation, the Security Agreement
[Accounts, Contract Rights, Instruments and Goods pertaining thereto], the
Inventory Security Agreement, the Equipment Security Agreement, and all other
agreements creating or evidencing indebtedness or granting collateral security
or guarantees with respect thereto (all of the foregoing, together with all
agreements and instruments related thereto or delivered in connection therewith,
as the same may now exist or hereafter be amended or supplemented, are
hereinafter collectively referred to as the "Fidelcor Agreements").
This letter sets forth our agreement concerning the respective
interests of Roche and Fidelcor notwithstanding the terms and provisions of any
agreements or arrangements heretofore, now or hereafter entered into with
Borrower and irrespective of any rule of law.
1. FIDELCOR SECURITY INTEREST.
(a) Roche hereby acknowledges that Fidelcor, pursuant to the
Fidelcor Agreements, has been or is about to be granted by Borrower a security
interest in and lien upon, among other things, all of Borrower's Equipment and
the Proceeds thereof (collectively, the "Collateral") to secure all present and
future obligations of Borrower to Fidelcor (hereinafter, the "Fidelcor
Obligations").
(b) Fidelcor hereby acknowledges that Roche, pursuant to the Roche
Agreements, has been granted by Borrower a security interest in a lien upon the
Collateral to secure the Roche Obligations.
2. PRIORITIES
Notwithstanding any provision to the contrary contained in the Roche
Agreements or the Fidelcor Agreements or any other agreement granting a security
interest to Roche or Fidelcor, and notwithstanding the time, date, order or
method of attachment or perfection of the security interests granted thereby,
and notwithstanding anything contained in any filing or agreement to which Roche
or Fidelcor may now or hereafter be a party and notwithstanding any provisions
of the Uniform Commercial Code or other applicable law, all perfected security
interests and liens of Fidelcor in and upon the Collateral, are and shall be
prior in right and interest to the security interests and liens of Roche in and
upon the Collateral and the security interests and liens of Roche in and upon
the Collateral are and shall be, in all respects, subject and subordinate to the
security interests and liens of Fidelcor in and upon the Collateral to the full
extent of the Fidelcor Obligations outstanding at any time and from time to
time.
3. STANDSTILL AND RELEASE.
Roche agrees that unless and until all of the Fidelcor Obligations
have been fully and indefeasibly paid and satisfied, Roche shall not, without
the prior written consent of Fidelcor, exercise any rights or assert any claims
with respect to any Collateral, nor seek to foreclose on its security interest
therein, nor take any action, directly or indirectly, that would interfere with
the rights of Fidelcor with respect to the Collateral. Roche agrees to release
or otherwise terminate its security interest in and lien upon the Collateral,
but not the Proceeds thereof, which may be sole or otherwise disposed of either
by Fidelcor, its agents, or Borrower with Fidelcor's consent, whether in the
ordinary course of business or after the declaration of any event of default
pursuant to the Fidelcor Agreements, immediately upon
-2-
Fidelcor's request, and to immediately deliver Uniform Commercial Code financing
or termination statements and such other documents as Fidelcor may reasonably
require in connection therewith. In connection with any such sale or
disposition, Fidelcor shall proceed in a commercially reasonable manner and
shall give Roche written notice of any such sale or disposition (ATTN:
Treasurer) at the same time Fidelcor gives Borrower such notice.
4. FURTHER ASSURANCES.
The parties hereto shall execute and deliver such additional
documents and take such additional action as shall be reasonably necessary to
effectuate the provisions and purposes of this Agreement.
5. SUCCESSORS AND ASSIGNS.
All terms covenants and conditions herein contained shall inure to
the benefit of, and be binding upon, the parties hereto, their successor and
assigns.
6. ENTIRE AGREEMENT.
This Agreement sets forth the entire agreement of the parties hereto
with respect to the subject matter hereof, neither this Agreement nor any term
hereof may be modified, altered, waived, discharged or terminated orally, but
only by an instrument in writing executed by the parties hereto.
7. UNIFORM COMMERCIAL CODE DEFINITIONS.
All capitalized terms used herein which are defined in the Uniform
Commercial Code in effect in the State of New York shall have the meanings set
forth therein unless otherwise defined herein.
8. GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
-3-
If the foregoing correctly states our understanding and agreement,
kindly sign the counterpart of this letter in the space provided below.
Very truly your,
FIDELCOR BUSINESS CREDIT
CORPORATION
By: /s/ XXXXXX XXXXXX
--------------------------------
Xxxxxx Xxxxxx
Title: VP
--------------------------------
Approved As To Form
____ DEPT.
By: RAG
READ AND ACCEPTED:
XXXXXXX-XX XXXXX INC.
By: /s/ XXXXXXX X. XXXXXXXX
-------------------------------
Xxxxxxx X. Xxxxxxxx
Title: Treasurer
----------------------------
-4-
[LOGO]
FIDELCOR BUSINESS 000 Xxxxxxx Xxxxxx
XXXXXX XXXXXXXXXXX Xxx Xxxx, XX 00000
(000) 000-0000
--------------------------------------------------------------------------------
June 29, 1988
Phoenix Laboratories, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Great Earth Distribution, Inc.
00000 Xxxxxx Xxxxxx
Xx Xxxxxx, Xxxxxxxxxx 00000
RE: Security Agreement (Accounts, etc.) executed
February 17, 1988, by and between Phoenix
Laboratories, Inc., and Great Earth Distribution,
Inc. (collectively, "Debtors"), on the one hand, and
Fidelcor Business Credit Corporation, on the other
hand (the "Agreement")
------------------------------------------------------
Gentlemen:
We have agreed to temporarily increase our outstanding advances to
you under the Agreement to an amount which is Three Hundred Thousand Dollars
($300,000.00) in excess of the maximum amount allowable pursuant to the formulas
set forth in paragraph 2 of the Agreement and paragraph G of the rider thereto.
In consideration of the foregoing, you hereby agree to pay us a fee
in the amount of Three Thousand Dollars ($3,000.00).
All other terms and conditions of the Agreement shall remain in full
force and effect.
Please evidence your agreement to the terms of this letter by
signing in the space provided below and returning this letter to us at the above
address. A Copy of this letter is enclosed for your records.
Very truly yours,
FIDELCOR BUSINESS CREDIT
CORPORATION
By: /s/ XXXXX X. XXXXX
----------------------------------
Xxxxx X. Xxxxx
Its: VP
------------------------------
Read and Agreed to:
PHOENIX LABORATORIES, INC.
By: /s/ XXXXXXX XXXX
-------------------------------
Its President
-------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/ XXX XXXX
-------------------------------
Its President
-------------------------
[LOGO]
FIDELCOR BUSINESS 000 Xxxxxxx Xxxxxx
XXXXXX XXXXXXXXXXX Xxx Xxxx, XX 00000
(000) 000-0000
--------------------------------------------------------------------------------
October 4, 1989
Phoenix Laboratories, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Great Earth Distribution, Inc.
00000 Xxxxxx Xxxxxx
Xx Xxxxxx, Xxxxxxxxxx 00000
RE: Security Agreement (Accounts, etc.) executed
February 17, 1988, by and between Phoenix
Laboratories, Inc. and Great Earth Distribution,
Inc. on the one hand, and Fidelcor Business Credit
Corporation, on the other hand (the "Agreement")
-----------------------------------------------------
Gentlemen:
This will confirm the following amendments to the referenced
agreement:
1. Effective on February 17, 1990, the interest rate will be
reduced from 3 1/2% plus the announced Fidelity Bank, N.A.
prime rate to 3 1/4% plus the announced Fidelity Bank, N.A.
prime rate. Accordingly, the first sentence of paragraph 6
of the printed portion of the Agreement is amended to read:
"That Debtor will pay Trefoil for its advances made hereunder
a charge 3 1/4% per annum plus the prime rate announced by
Fidelity Bank, N.A., Philadelphia, Pennsylvania, whether or
not said rate is the best rate available at said bank."
2. Effective as of the date hereof, the initial contract term is
extended to February 17, 1991. Accordingly, the first
sentence of Paragraph 26 of the printed portion of the
Agreement is amended to read:
"That this Agreement shall remain in effect until February
17, 1991 and shall be deemed automatically renewed for
successive periods of one year."
3. Effective as of the date hereof the prepayment premium set
forth in Paragraph 30 of the printed portion of the Agreement
is amended so that the first sentence of said paragraph shall
read:
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
October 4, 1989
Page Two
"Debtor may on five days notice, prior to the end of any
calendar month, prepay and terminate this Security Agreement
by paying to Trefoil in cash or certified check, the entire
unpaid principal balance plus accrued charges, together with
a sum equal to 25% of the average monthly charges for the
immediately preceding six months or from the date of the
agreement whichever is less, multiplied by the number of
months of the unexpired balance of the term of this agreement
(the "prepayment premium"). However, if the prepayment occurs
between February 17, 1990 and August 17, 1990, then the
prepayment premium shall be the lesser of the amount computed
in the preceding sentence or the fixed sum of $62,500,000.00,
and if the prepayment occurs between August 18, 1990 and
February 17, 1991, then the prepayment premium shall be the
lesser of the amount computed in the preceding sentence or
the fixed sum of $37,000.00."
4. Effective as of the date hereof the inventory advance rate
for the Phoenix Laboratories, Inc. inventory shall be
increased to 30% and the sublimit on Accounts Advances to
Great Earth Distribution, Inc. shall be increased to
$600,000.00. Accordingly, paragraph G of the Rider to the
Agreement shall be amended to read:
"G. Trefoil agrees that in addition to the advances made
with reference to the formula set forth in Paragraph 2
of the printed portion of this agreement ("Accounts
Advances"), Trefoil shall make additional advances to
Debtor, in such amounts from time to time determined by
Trefoil in it sole discretion, of up to thirty percent
(30%) of the value of Phoenix's acceptable and eligible
raw material inventory and of up to twenty-five percent
(25%) of the value of GED's acceptable and eligible
finished goods inventory (collectively the "Inventory
Advances"). As used herein, "value" shall mean the
lower of cost or market, as determined by Trefoil.
Except in Trefoil's sole discretion, (1) the aggregate
principal amount of Accounts Advances to GED shall not
exceed, at any time outstanding, the lesser of (a)
$600,000, or (b) an amount equal to (i) thirty percent
(30%) of the value of Phoenix's acceptable and eligible
raw material inventory, plus (ii) twenty-five percent
(25%) of the value of GED's
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
October 4, 1989
Page Three
acceptable finished goods inventory, and (2) the
aggregate principal amount of the Inventory Advances to
Debtors shall not exceed $1,000,000 at any time
outstanding."
All other terms and conditions of the Agreement shall remain in full
force and effect. Please evidence your agreement to the foregoing by signing in
the space provided below and returning this letter to us. A copy is enclosed for
your records.
Very truly yours,
FIDELCOR BUSINESS CREDIT
CORPORATION
By: /s/ Xxxx [illegible]
--------------------------------
Its: AVP
--------------------------------
Read and Agreed to:
PHOENIX LABORATORIES, INC.
By: /s/ XXX XXXX
-------------------------------
Its: Vice President
------------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/ XXX XXXX
-------------------------------
Its: President
------------------------------
THE CIT GROUP/CREDIT FINANCE
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
000 000-0000
FAX: 000 000-0000
THE
CIT
GROUP
August 13, 1991
Phoenix Laboratories, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Great Earth Distribution, Inc.
00000 Xxxxxx Xxxxxx
Xx Xxxxxx, Xxxxxxxxxx 00000
RE: Security Agreement (Accounts, etc.) executed
February 17, 1988, by and between Phoenix
Laboratories, Inc. ("Phoenix") and Great Earth
Distribution, Inc. ("GED") on the one hand, and The
CIT Group/Credit Finance, Inc., assignee of Fidelcor
Business Credit Corporation, on the other hand (the
"Accounts Agreement") Promissory Note in the
original principal balance of $800,000.00 and all
related agreements, documents, and instruments
(collectively the "Financing Agreements")
------------------------------------------------------
Gentlemen:
As you are aware, The CIT Group/Credit Finance, Inc. ("CIT")
purchased substantially all of the assets of Fidelcor Business Credit
Corporation on February 4, 1991, including its loans to Phoenix and GED. In
connection therewith, you consent to the assignment to CIT and agree that all
rights and privileges under the Financing Agreements have been transferred and
assigned to CIT.
As additional collateral to secure your Obligations to CIT, as that
term is defined in the Rider to the Accounts Agreement, we have been granted a
security interest in among other things, all of the personal property, including
but not limited to service marks and trademarks of Great Earth International,
Inc., Great Earth International Franchising Corp., Great Earth Stores, Inc., and
Great Earth International Licensing Corp. (the "Great Earth Companies"). The
Great Earth Companies are presently wholly owned subsidiaries of Evergood
Products Corporation ("Evergood"), the sole shareholder of Phoenix and GED, and
a guarantor of CIT's loans to GED and Phoenix. You have requested that we
consent to the sale by Evergood of the stock of the Great Earth Companies to
Great Earth Vitamins, Ltd. ("GEV") release our
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
August 13, 1991
Page 2
liens on the assets of the Great Earth Companies and grant you a three month
moratorium on payments due on your term loan from CIT. As partial consideration
for the sale of the stock of the Great Earth Companies to GEV, Evergood will
receive two notes in the aggregate amount of $1,200,000.00. The obligations
under the GEV notes will be secured by a grant of a security interest in and
pledge of the stock of the Great Earth Companies, a security interest in all of
the general intangibles, including but not limited to service marks and
trademarks of the Great Earth Companies and GEV, and a security interest and
assignment of all royalty payments due to any of the Great Earth Companies or
GEV from any stores operating under the Great Earth franchise system. CIT has
agreed to release its liens on the assets of the Great Earth Companies, provided
that: (a) it receives an assignment from Evergood of the foregoing security
interests it obtains from GEV and/or any of the Great Earth Companies which will
further secure Evergood's guaranty of the obligations of Phoenix and GED to CIT,
(b) CIT's accounts receivable advance to GED decreases at the rate of $25,000.00
per mouth until the entire advance is zero, (c) GEV and the Great Earth
Companies agree that CIT shall have the right to use any of the trademarks or
service marks of the Great Earth Companies to sell any of the GED or Phoenix
inventory as provided in the Financing Agreements and letter dated even date
herewith between GEV and the Great Earth Companies and (d) the other amendments
set forth below are implemented:
Accordingly, this will confirm our agreement to amend the Financing
Agreements as follows:
(1) All references to Fidelcor Business Credit Corporation or
Trefoil shall mean The CIT Group/Credit Finance, Inc.
(2) Paragraph 6 of the printed portion of the accounts Agreement
is hereby deleted in its entirety and the following is
substituted therefor:
"6. That Debtor will pay Trefoil for its advances made
hereunder a charge of three and one-quarter percent (3 1/4%)
plus the rate of interest publicly announced by Manufacturers
Hanover Trust Company in New York, New York or its successors
from time to time as its reference rate (the reference rate
is not intended to be the lowest rate of interest charged by
Manufacturers Hanover Trust Company to its borrowers),
computed on a 360 day year. In the event of a change in the
reference rate charged at the Manufacturers Hanover Trust
Company, adjustment hereunder shall be made on the day of
such change in the reference rate. All charges shall be
computed upon the average daily balances outstanding and
charged to Debtor's account or paid monthly."
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
August 13, 1991
Page 3
(3) Paragraph G. of the Rider to the Accounts Agreement is
amended to read:
"G. Trefoil agrees that in addition to the advances made
with reference to the formula set forth in Paragraph
of the printed portion of this agreement ("Accounts
Advances"), Trefoil shall make additional advances to
Debtor, in such amounts from time to time determined
by Trefoil in its sole discretion, of up to thirty
percent (30%) of the value of Phoenix's acceptable and
eligible raw material inventory and of up to
twenty-five percent (25%) of the value of GED's
acceptable and eligible finished goods inventory
(collectively, the "Inventory Advances"). As used
herein, "value" shall mean the lower of cost or
market, as determined by Trefoil. Except in Trefoil's
sole discretion, (1) the aggregate principal amount of
Accounts Advances to GED shall not exceed, at any time
outstanding, the lesser of (a) $465,000.00 (the "GED
Accounts Sublimit"), or (b) an amount equal to (i)
thirty percent (30%) of the value of Phoenix's
acceptable and eligible raw material inventory, plus
(ii) twenty-five percent (25%) of the value of GED's
acceptable and eligible finished foods inventory, and
(2) the aggregate principal amount of the Inventory
Advances to Debtors shall not exceed $1,000,000.00 at
any time outstanding. The GED Accounts Sublimit shall
decrease by the amount of $25,000.00 on the first day
of each month, commencing on September 1, 1991 until
the GED Accounts Sublimit is zero."
(4) On February 17, 1988, you executed a Promissory Note (the
"Note") in the original principal balance of $800,000.00 to
evidence a term loan advance against your machinery and
equipment. This will confirm that the Note is amended to
provide that interest will be paid at the rate of 3 1/4% plus
the announced reference rate of Manufacturers Hanover Trust
Company, or its successors, that the consecutive monthly
installments of principal shall be in the amount of
$14,166.66, that there will be a three month moratorium on
the principal amortization of the Note commencing September
1, 1991 (for the principal payments due on September 1, 1991,
October 1, 1991 and November 1, 1991) with the next principal
payment due on December 1, 1991, and that the entire
outstanding balance of the Note will be due and payable on
February 17, 1992.
(5) In consideration of our agreement to release our liens
against the Great Earth Companies, you have agreed to
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
August 13, 1991
Page 4
pay us a facility fee equal to $5,000.00, which shall be
charged into your loan on the date hereof.
All other terms and conditions of the Financing Agreements shall
remain in full force and effect.
Please evidence your agreement to the foregoing by signing below and
returning this letter to us.
Very truly your,
CIT GROUP/CREDIT FINANCE, INC.
By: /s/
--------------------------------
Title: VP
--------------------------------
Agreed and Acknowledged:
PHOENIX LABORATORIES, INC. GREAT EARTH DISTRIBUTION, INC.
By: /s/ XXX XXXX By: /s/ XXX XXXX
---------------------------- --------------------------------
Title: Vice President Title: President
---------------------------- --------------------------------
Each of the undersigned acknowledges the above amendments and the
assignment to CIT and confirms and agrees that all rights and privileges under
the guaranty dated February 17, 1998 executed by each will inure to the benefit
of CIT.
Confirmed
/s/ XXXXXX XXXX /s/ XXX XXXX /s/ XXXXXX XXXX
------------------------ ------------------ ---------------------
XXXXXX XXXX XXXXXX XXXX XXXXXX XXXX 10/7/
by Xxx Xxxx as attorney-in-fact
The undersigned acknowledges the above amendments and the assignment to
CIT and confirms and agrees that all rights and privileges under its guaranty
dated February 17, 1988, of the obligations of Phoenix Laboratories, Inc. and
Great Earth Distribution, Inc. executed by the undersigned and its grant of a
security interest to secure the guaranty will inure to the benefit of CIT. As
further security to secure the undersigned's obligations to CIT under its
guaranty, the undersigned specifically grants a security interest to CIT in all
of the security interests granted to the undersigned by Great Earth
International, Inc., Great Earth International Franchising Corp., Great Earth
Stores, Inc. and Great Earth International Licensing Corp. (the "Great Earth
Vitamins Subsidiaries") and assigns to CIT all of the notes due to the
undersigned from Great Earth Vitamins, Ltd. in connection with that certain
Stock Purchase Agreement dated June 8, 1991 and all collateral which secures
said notes including the stock of the Great Earth Vitamins Subsidiaries.
EVERGOOD PRODUCTS CORPORATION
By: /s/ XXX XXXX
----------------------------
Title: V.P.
----------------------------
THE CIT GROUP/CREDIT FINANCE
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
000 000-0000
FAX: 000 000-0000
THE
CIT
GROUP
December 16, 1991
Phoenix Laboratories, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Great Earth Distribution, Inc.
00000 Xxxxxx Xxxxxx
Xx Xxxxxx, Xxxxxxxxxx 00000
RE: Security Agreement (Accounts, etc.) executed
February 17, 1988, by and between Phoenix
Laboratories, Inc., ("Phoenix") and Great Earth
Distribution, Inc. ("GED") and The CIT Group/Credit
Finance, Inc., ("CIT"), assignee of Fidelcor
Business Credit Corporation (the "Account
Agreement") Promissory Note in the original
principal balance of $800,000.00 (the "Note") and
all related agreements, documents, and instruments
(collectively the "Financing Agreements")
------------------------------------------------------
Gentlemen:
The present term of your Financing Agreements with CIT expires on
February 17, 1992. We have now agreed to an extension of the Financing
Agreements and modifications of the Note as reflected by the Amended and
Restated Promissory Note to be executed on the date hereof in the form annexed
hereto under the terms and conditions set forth below.
Accordingly, this will confirm our agreement to amend the Financing
Agreements as follows:
(1) Paragraph 6 of the printed portion of the Accounts Agreement
is hereby deleted in its entirety and the following is
substituted therefor:
"6. That Debtor will pay Trefoil for its advances made
hereunder a charge of three and one-half percent (3 1/2%) per
annum plus the rate of interest publicly announced by
Manufacturers Hanover Trust Company in New York, New York, or
its successor, from time to time as its reference rate (the
reference rate is not intended to be the lowest rate of
interest charged by
A company of
Dai-ichi Kangyo Bank and
Manufacturer's Hanover
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
December 16, 1991
Page 2
Manufacturers Hanover Trust Company to its borrowers),
computed on a 360 day year. In the event of a change in the
reference rate charged at the Manufacturers Hanover Trust
Company, or its successor, adjustment hereunder shall be made
on the day of such change in the reference rate. All charges
shall be computed upon the average daily balances outstanding
and charged to Debtor's account or paid monthly."
(2) Paragraph G. of the Rider to the Accounts Agreement is
amended to read:
"G. Trefoil agrees that in addition to the advances made
with reference to the formula set forth in Paragraph
2 of the printed portion of this agreement ("Accounts
Advances"), Trefoil shall make additional advances to
Debtor, in such amounts from time to time determined
by Trefoil in its sole discretion, of up to thirty
percent (30%) of the value of Phoenix's acceptable
and eligible raw material inventory and of up to
twenty-five percent (25%) of the value of GED's
acceptable and eligible unfinished goods inventory
(collectively, the "Inventory Advances"). As used
herein, "value" shall mean the lower of cost or
market price, as determined by Trefoil. Except in
Trefoil's sole discretion, (1) the aggregate
principal amount of Accounts Advances to GED shall
not exceed, at any time outstanding, the lesser of
(a) $365,000.00 (the "GED Accounts Sublimit"), or (b)
an amount equal to (i) thirty percent (30%) of the
value of Phoenix's acceptable and eligible raw
material inventory, plus (ii) twenty-five percent
(25%) of the value of GED's acceptable and eligible
finished goods inventory, and (2) the aggregate
principal amount of the Inventory Advances to Debtors
shall not exceed $500,000.00 at any time
outstanding. The GED Accounts Sublimit shall
decrease by the amount of $25,000.00 on the first day
of each month, commencing on January 1, 1992 until
the GED Accounts Sublimit is zero."
(3) The second sentence of paragraph F. of the Rider to the
Accounts Agreement is amended to read:
"Debtor will pay all out-of-pocket costs of field
examinations to be conducted by Trefoil as provided in
paragraph 13 of the printed portion of the agreement plus
$550.00 per person per day."
(4) Paragraph H. of the Rider to the Accounts Agreement is
amended to read:
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
December 16, 1991
Page 3
"Except in Trefoil's sole discretion, the aggregate principal
amount of the advances made by Trefoil to Debtors under the
Financing Agreements, including the Accounts Advances and the
Inventory Advances shall not exceed the principal amount of
$2,500,000.00 at any time outstanding (the "Credit Line")."
(5) The first sentence of paragraph 26 of the printed portion of
the Accounts Agreement is amended to read:
"That this Agreement shall remain in effect until February
17, 1994 and shall be deemed automatically renewed for
successive periods of one year."
In addition to all other fees at any time payable by Debtors to CIT,
Debtors shall pay CIT on the date hereof and subsequently on each anniversary
date of the Accounts Agreement, commencing with the February 17, 1993
anniversary date, a Facility Fee in the amount of $18,750.00, which fee is fully
earned as of the date hereof and may be charged by CIT to any account of the
Debtors maintained by CIT.
All other terms and conditions of the Financing Agreements shall
remain in full force and effect.
Please evidence your agreement to the foregoing by signing below and
returning this letter to us.
Very truly your,
THE CIT GROUP/CREDIT
FINANCE, INC.
By: /s/
--------------------------------
Title: VP
--------------------------------
Agreed and Acknowledged:
PHOENIX LABORATORIES, INC. GREAT EARTH DISTRIBUTION, INC.
By: /s/ By: /s/ XXX XXXX
---------------------------- --------------------------------
Title: Pres Title: President
---------------------------- --------------------------------
Confirmed:
---------------------------------- /s/ XXXXXX XXXX
Xxxxxx Xxxx ---------------------------------------
Xxxxxx Xxxx
EVERGOOD PRODUCTS CORPORATION
By: /s/
----------------------------
Title: Pres
THE CIT GROUP/CREDIT FINANCE
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
000 000-0000
FAX: 000 000-0000
THE
CIT
GROUP
June 19, 1992
Phoenix Laboratories, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Great Earth Distribution, Inc.
00000 Xxxxxx Xxxxxx
Xx Xxxxxx, Xxxxxxxxxx 00000
RE: Security Agreement (Accounts, etc.) executed
February 17, 1988, by and between Phoenix
Laboratories, Inc. ("Phoenix") and Great Earth
Distribution, Inc. ("GED") and The CIT Group/Credit
Finance, Inc., ("CIT"), assignee of Fidelcor
Business Credit Corporation, (the "Accounts
Agreement") Second Amended and Restated Promissory
Note in the original principal balance of
$740,000.00 (the "Note") and all related agreements,
documents, and instruments (collectively the
"Financing Agreements")
------------------------------------------------------
Gentlemen:
You have requested that we grant you a $250,000.00 advance in excess
of the contractual formulas set forth in the Financing Agreements. We have
agreed to do so based on the amended terms and conditions set forth below and in
the Second Amended and Restated Promissory Note which you have executed even
date herewith:
(1) Paragraph G. of the Rider to the Accounts Agreement is
amended to read:
"G. Trefoil agrees that in addition to the advances made
with reference to the formula set forth in Paragraph
2 of the printed portion of this agreement
("Accounts Advances"), Trefoil shall make additional
advances to Debtor, in such amounts from time to
time determined by Trefoil in its sole discretion,
of up to thirty percent (30%) of the value of
Phoenix's acceptable and eligible raw material
inventory and of up to twenty-five percent (25%) of
the value GED's acceptable and eligible finished
goods inventory (collectively,
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
June 19, 1992
Page 2
the "Inventory Advances"). As used herein, "value"
shall mean the lower of cost or market price, as
determined by Trefoil. Except in Trefoil's sole
discretion, (1) the aggregate principal amount of
Accounts Advances to GED shall not exceed, at any time
outstanding, the lesser of (a) $365,000.00 (the "GED
Accounts Sublimit"), or (b) an amount equal to (i)
thirty percent (30%) of the value of Phoenix's
acceptable and eligible raw material inventory, plus
(ii) twenty-five percent (25%) of the value of GED's
acceptable and eligible finished goods inventory, and
(2) the aggregate principal amount of the Inventory
Advances to Debtors shall not exceed $500,000.00 at
any time outstanding."
In addition to all other fees at any time payable by you to CIT, you
shall pay CIT on the date hereof a facility fee in the amount of $2,000.00 which
fee is fully earned as of the date hereof and may be charged by CIT to any
account of yours maintained by CIT.
All other terms and conditions of the Financing Agreements shall
remain in full force and effect.
Please evidence your agreement to the foregoing by signing below and
returning this letter to us.
Very truly your,
THE CIT GROUP/CREDIT
FINANCE, INC.
By: /s/
--------------------------------
Title: VP
--------------------------------
Agreed and Acknowledged:
PHOENIX LABORATORIES, INC. GREAT EARTH DISTRIBUTION, INC.
By: /s/ XXXXXX XXXX By: /s/ XXX XXXX
---------------------------- --------------------------------
Title: President Title: President
-------------------------- -------------------------------
EVERGOOD PRODUCTS CORPORATION
By: /s/
------------------------------
Title: President
----------------------------
-1-
SECOND AMENDED AND RESTATED PROMISSORY NOTE
$740,000.00 New York, New York
June ___, 1992
FOR VALUE RECEIVED, PHOENIX LABORATORIES, INC. and GREAT EARTH
DISTRIBUTION, INC. (individually and collectively the "Payor"), jointly and
severally hereby promise to pay to the order of THE CIT GROUP/CREDIT FINANCE,
INC., a Delaware corporation ("Payee"), at its offices located at 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as Payee or any holder
hereof may from time to time designate, the principal sum of SEVEN HUNDRED FORTY
THOUSAND DOLLARS ($740,000.00) in lawful money of the United States, in twenty
one (21) installments, with the first three monthly installments in the amount
of SIX THOUSAND ONE HUNDRED SIXTY SIX AND SIXTY SEVEN ONE HUNDREDTHS DOLLARS
($6,166.67) and thereafter the next seventeen consecutive monthly installments
in the amount of TWELVE THOUSAND THREE HUNDRED THIRTY THREE AND THIRTY FOUR ONE
HUNDREDTHS DOLLARS ($12,333.34) each payable on the first (1st) day of each
consecutive month, commencing July 1, 1992, and one (1) final installment in the
amount of the entire unpaid principal balance of this Note, payable February 17,
1994. Payor hereby further promises to pay interest to Payee in like money at
said office or place on the unpaid principal balance hereof, computed at the
rate of three and one-half percent (3 1/2%) per annum plus the reference rate as
announced by Manufacturers Hanover Trust Company or its successor, in New York,
New York from time to time as its reference rate (the reference rate is not
intended to be the lowest rate of interest charged by Manufacturers Hanover
Trust Company to its borrowers) and such interest shall be payable monthly on
the first (1st) day of each month, commencing July 1, 1992. Interest shall be
calculated on the basis of a 360-day year and actual days elapsed. In no
-2-
event shall the interest charged hereunder exceed the maximum permitted under
the laws of the State of New York.
This Note is secured by (i) the collateral described in the Security
Agreement (Accounts, Contract Rights, Instruments and Goods pertaining thereto),
the Inventory Security Agreement and the Equipment Security Agreement, each
executed February 17, 1988 by and between Payor and Fidelcor Business Credit
Corporation ("Fidelcor"), assignor of Payee, and all related agreements,
instruments (including but not limited to this Note) and documents granting
collateral security to Payee or evidencing or creating indebtedness of Payor to
Payee, all guaranties executed by third parties guaranteeing Payor's obligations
to Payee, including those executed by: Xxxxxx Xxxx, Xxxxxx Xxxx and Evergood
Products Corporation (the "Guarantors") (the foregoing, as the same may now
exist and have been and may hereafter be amended, modified, replaced or
supplemented, are hereafter collectively referred to as the "Financing
Agreements").
This Note supercedes and replaces but does not extinguish any of the
unpaid liabilities and obligations under the Amended and Restated Promissory
Note dated December 16, 1991, as amended, in the original principal amount of
$740,000.00 by Payor in favor of Payee (the "Existing Note"). The indebtedness
of Payor to Payee evidenced hereby shall be deemed to include the unpaid balance
of the indebtedness including unpaid interest heretofore evidenced by the
Existing Note and shall be repayable together with interest accrued and accruing
and other sums in accordance with the terms hereof. Payor hereby acknowledges
that Payor is as of the date hereof indebted to Payee, in the principal amount
hereof, together with interest accrued and accruing through and after the date
hereof, without offset, defense or counterclaim of any kind, nature or
description whatsoever. The amendment and restatement contained herein shall
not, in any manner be construed to constitute payment of, or impair, limit,
cancel or extinguish the indebtedness evidenced by the Existing Note and the
liens and security interests securing such indebtedness shall not in any manner
be impaired, limited, terminated, waived or released hereby.
At the time any payment is due hereunder, Payee may, at its option, charge
the amount thereof to any account of Payor maintained by Payee.
If an event of default shall occur for any reason under any of the
Financing Agreements, or if any of the Financing Agreements shall be terminated
or not be renewed for any reason whatsoever, then and in any such event, in
addition to all rights and remedies of Payee under the Financing Agreements,
applicable law or otherwise (all such rights and remedies being cumulative, not
exclusive and enforceable alternatively, successively and concurrently) Payee
may, at its option, declare any or all of Payor's obligations under the
Financing Agreements, including, but not limited to, all amounts owing under
this Note, to be due
-3-
and payable, whereupon the then unpaid balance hereof together with all interest
accrued thereon, shall forthwith become due and payable, together with costs and
expenses of collection, including reasonable attorney's fees.
Payee shall not be required to resort to any of the aforementioned
collateral for payment, but may proceed against Payor and/or the Guarantors in
such order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof. Payor
hereby waives diligence, demand, presentment, protest and notice of any kind and
assents to extensions of time of payment, release, surrender or substitution of
collateral security, or forbearance or other indulgence, without notice.
In the event of any litigation with respect to any of the Financing
Agreements, Payor waives the right to a trial by jury, all rights of set-off,
and any right to interpose permissive counterclaims and cross-claims, and Payor
consents to the jurisdiction of the courts of the State of New York and of any
federal court locate din such State. Payor further waives personal service of
any and all process upon Payor and consents that all such service of process may
be made by certified mail, return receipt requested, directed to Payor at the
address listed above or of which Payor advises Payee, in writing, and service so
made shall be deemed complete three days after the same shall have been posted.
This Note shall be governed by and construed, and all rights and obligations
hereunder determined, in accordance with the laws of the State of New York, and
shall be binding upon the successors and assigns of Payor and inure to the
benefit of Payee, its successors, endorsees and assigns.
If any term or provision of this Note shall be held invalid, illegal or
unenforceable, the validity of all other terms and provisions hereof shall in no
way be affected thereby.
The execution and delivery of this Note has been authorized by the
board of directors of Payor.
PHOENIX LABORATORIES, INC.
By:
------------------------------------
Title:
------------------------------------
GREAT EARTH DISTRIBUTION, INC.
By:
------------------------------------
Title:
------------------------------------
EVERGOOD PRODUCTS CORPORATION
000 XXXXXX XXXX
XXXXXXXXXX, XXX XXXX 00000
June _, 1992
Great Earth Vitamins, Ltd.
c/o Xxxxxxxx Xxxxxxxx
00 Xxx Xxxxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
Re: $675,000.00 Secured Promissory Note dated July 12, 1991
$500,000.00 Secured Promissory Note Dated July 12, 1991
-------------------------------------------------------
Gentlemen:
We have assigned all of our rights under the above notes to The CIT
Group/Credit Finance, Inc. ("CIT"). Accordingly, until you receive written
notice from CIT directing you otherwise, all payments due on the above notes
shall be made directly to CIT at its office at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, attention 19th floor.
Very truly yours,
EVERGOOD PRODUCTS CORPORATION
By:
------------------------------------
Title:
------------------------------------
The CIT Group/Credit Finance
810 Seventh Avenue
New York, NY 00000 000-000-0000 FAX: 000-000-0000
THE
CIT
GROUP
June 19, 1992
Phoenix Laboratories, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Re: $50,000.00 Merchandise Guaranty (in the form annexed hereto) in
Favor of Xxxxxxx XxXxxxx, Inc. (the "Merchandise Guaranty")
-----------------------------------------------------------
Gentlemen:
You have requested that we open the Merchandise Guaranty and we have agreed to
do so. In consideration of our opening the Merchandise Guaranty it is agreed
that:
1. You shall pay us a charge equal to three and one-half percent (3 1/2%)
of the face amount of the Merchandise Guaranty from the date of
issuance thereof to the date we are released from any obligation
therefor.
2. We shall have the right to charge your account, maintained with us,
for any amount that we are called upon to pay under the Merchandise
Guaranty.
3. We shall have the right to reserve from your accounts receivable
availability an amount which we may determine, in our sole discretion,
to be sufficient to pay for' the Merchandise Guaranty.
4. We shall not be responsible to you for the accuracy or propriety of
any claim made or any payment made by us and our sole responsibility
to you shall be for willful misconduct.
5. In order to induce us to open the Merchandise Guaranty now or in the
future, you hereby agree to indemnify us and hold us harmless against
all claims, actions, demands, loss, damages and expenses (including
attorney's fees), which may be made against us or which we may incur
in connection with the Merchandise Guaranty.
6. We shall be entitled to make payment under the Merchandise Guaranty to
your supplier upon its demand, and all such payments shall be
conclusive upon you according to the terms of the Merchandise
Guaranty. Your sole recourse, in the event that we make payment under
the Merchandise Guaranty, shall be against your supplier to whom the
Merchandise Guaranty was extended.
7. We shall have no responsibility to you for the quality or quantity of
merchandise you have ordered and/or received, and your sole recourse
with respect thereto shall be against your supplier.
8. Our opening of the Merchandise Guaranty shall be secured by the
security interest you have heretofore granted to us in your accounts
receivable, inventory, equipment, real estate and any other
collateral, as evidenced by the financing agreements executed between
us on February 17, 1988 and any and all amendments thereto
(collectively, the "Agreements").
All other terms and conditions of the Agreements shall continue in full force
and effect.
Very truly yours,
THE CIT GROUP/CREDIT
FINANCE, INC.
By: /s/
------------------------------------
Title: VP
------------------------------------
Agreed to:
PHOENIX LABORATORIES, INC.
By:
------------------------------------
Title:
------------------------------------
CASH COLLATERAL AGREEMENT
June 24, 1992
The CIT Group/Credit Finance, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Reference is made to certain financing agreements between you and
Phoenix Laboratories, Inc. and Great Earth Distribution, Inc. (individually and
collectively the "Debtor"), including, but not limited to, that certain Security
Agreement (Accounts, Contract Rights, Instruments and Goods pertaining thereto)
dated February 17, 1988 as amended (the foregoing, together with all other
related agreements, documents or instruments, as the same may now exist or may
hereafter be created, amended or supplemented, are collectively referred to
herein as the "Financing Agreements").
Reference is also made to the undersigned's guaranty of the obligations
of the Debtor under the Financing Agreements (the "Guaranty").
As an inducement for and in consideration of your extending financial
accommodations to the Debtor and to secure the undersigned's guaranty, the
undersigned hereby agrees as follows:
(1) The undersigned hereby pledges to you, as cash collateral securing
the Guaranty, the sum of $100,000.00 (the "Cash Collateral");
(2) Your rights to the Cash Collateral shall be governed by the
Guaranty and you shall have all rights and remedies afforded by
law, including, but not limited to, all rights of a secured party
under the Uniform Commercial Code.
Page Two
CIT agrees that provided that no event of default has occurred under
the Financing Agreements or the Guaranty, CIT shall pay interest on the first
day of each month (commencing July 1, 1992) to the undersigned based on the rate
of interest paid for thirty day certificates of deposit by Chemical Bank, in New
York, New York on the last day of the preceding month.
This Agreement shall be governed and construed by the laws of the State
of New York and shall be binding upon and inure to the benefit of the successors
and assigns of CIT and the undersigned.
Very truly yours,
/s/ XXXXXX XXXX
------------------------------
XXXXXX XXXX
Agreed and accepted:
THE CIT GROUP/CREDIT
FINANCE, INC.
By: /s/
--------------------------------
Title: Vice President
--------------------------------
The CIT Group/Credit Finance
810 Seventh Avenue
New York, NY 00000 000-000-0000 FAX: 000-000-0000
THE
CIT
GROUP
August 27, 1993
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx x000x
Re: Security Agreement (Accounts, etc.) executed February 17,1988, by and
between Phoenix Laboratories, Inc. ("Phoenix") and Great Earth
Distribution, Inc. ("GED") and The CIT Group/Credit Finance, Inc.
("CIT'"), assignee of Fidelcor Business Credit Corporation (the
"Accounts Agreement"), Second Amended and Restated Promissory Note in
the original principal balance of $740,000 (the "Note"), as amended,
and all related agreements, amendments, documents and instruments
collectively, the "Financing Agreements")
---------------------------------------------------------------------
Gentlemen:
The present term of your Financing Agreements with CIT expires February
17, 1994. We have now agreed to an extension of the Financing Agreements and
modifications of the Note as reflected by the Third Amended and Restated
Promissory Note to be executed on the date hereof in the form annexed hereto
under the terms and conditions set forth below.
Accordingly, this will confirm our agreement to amend the Financing
Agreements as follows:
1. Paragraph 6 of the printed portion of the Accounts Agreement is hereby
deleted in its- entirety and the following is substituted therefor:
"6. That Debtor will pay Trefoil for its advances made hereunder a
charge of three and one-half percent (3 1/2%) per annum plus the rate
of interest publicly announced by Chemical Bank, New York, New York
from time to time as it prime rate (the prime rate is not intended to
be the lowest rate of interest charged by Chemical Bank to its
borrowers), computed on a 360 day year. In the event of a change in the
prime rate charged at Chemical Bank, adjustment hereunder
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
August 27, 1993
Page 2
shall be made on the day of such change in the prime rate. All charges
shall be computed upon the average daily balances outstanding and
charged to Debtor' s account or paid monthly."
2. Paragraph G. of the Rider to the Accounts Agreement is amended to read:
"G. Trefoil agrees that in addition to the advances made with reference
to the formula set forth in Paragraph 2 of the printed portion of this
agreement ("Accounts Advances"), Trefoil shall make additional advances
to Debtor, in such its sole discretion, of up to thirty percent (30%)
of the value of Phoenix's acceptable and eligible raw material
inventory and of up to thirty-five percent (35%) of the value of GED's
acceptable and eligible finished goods inventory (collectively, the
"Inventory Advances"). As used herein, "value" shall mean the lower of
cost or market price, as determined by Trefoil. Except in Trefoil's
sole discretion,(1) the aggregate principal amount of Accounts Advances
to GED shall not exceed, at any time outstanding, the lesser of (a)
$365,000 the "GED Accounts Sublimit"), or (b) an amount equal to (i)
thirty percent (30%) of the value of Phoenix's acceptable and eligible
raw material inventory, plus (ii) thirty-five percent (35%) of the
value of GED's acceptable and eligible finished goods inventory, and
(2) the aggregate principal amount of the Inventory Advances to Debtors
shall not exceed $750,000 at any time outstanding with a further
sublimit at any time outstanding of $460,000 against the GED acceptable
and eligible finished goods inventory. The GED Accounts sublimit shall
reduce by $10,000 per month commencing December 1, 1993."
3. Paragraph H. of the Rider to the Accounts Agreement is amended to read:
"Except in Trefoil's sole discretion, the aggregate principal amount of
the advances made by Trefoil to Debtors under the Financing Agreements,
including the Accounts Advances and the Inventory Advances shall not
exceed the principal amount of $3,500,000 at any time outstanding (the
"Credit Line")."
4. The first sentence of paragraph J. of the Rider to the Accounts
Agreement is amended to read:
"In consideration of Trefoil entering into this Agreement and incurring
accounting, operating and management expenses. Debtors shall pay to
Trefoil each calendar month a minimum charge equal to the amount of
interest Debtors would pay
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
August 27, 1993
Page 3
Trefoil if they at all times had an aggregate average daily cash
balance outstanding of $1,500,000 bearing interest at the rate
provided for in Paragraph 6 of the printed portion of this
Agreement."
5. The first sentence of paragraph 26 of the printed portion of the
Accounts Agreement is amended to read:
"That this Agreement shall remain in effect until February 17, 1995
and shall be deemed automatically renewed for successive terms of one
year."
6. After the first sentence of paragraph P. of the Rider to the Accounts
Agreement the following sentence is hereby added:
"Without in any way limiting Trefoil's rights to withhold and set up
reserves, in its sole discretion, Trefoil shall have the right to
establish a reserve from Debtor's availability upon a default by GED
pursuant to its lease agreement with Xxxxxxxxxx Pharmaceutical
Distribution, Inc. for any amount in excess of $100,000 at any time
outstanding."
7. Paragraph Q. is hereby added after Paragraph P. of the Rider to the
Accounts Agreement:
"Q. Trefoil agrees that in addition to the Accounts Advances and
Inventory Advances, Trefoil shall make additional advances to Debtor
of up to 100% against any cash collateral pledged by any guarantor of
the obligations to secure his guaranty. Such advances shall not
exceed $200,000 in the aggregate at any time outstanding."
8. You agree to execute a cash collateral agreement on the date hereof
in the form annexed hereto, in connection with monies pledged by
Xxxxxx Xxxx to CIT in the amount of $200,000 which monies are and
shall continue to be placed in certificates of deposit in the name of
CIT.
9. Phoenix and GED agree to execute on or about the date hereof a Letter
of Credit Agreement (the "L/C Agreement") in the form annexed hereto
by which Phoenix and GED can open letters of credit, banker's
acceptances and/or merchandise guaranties in accordance with the
terms of said L/C Agreement in the aggregate amount of $150,000.
10. Phoenix and GED to direct Xxxxxxxxxx Pharmaceutical Distribution,
Inc. ("LPD") to execute a warehouse agreement, including but not
limited to a provision, in which LPD agrees
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
August 27, 1993
Page 4
to give CIT a monthly report of all distribution service charges and
other fees which are owed by GED (the "LPD charges") and LPD's
agreement that it shall subordinate all of its rights in and to GED's
inventory, located at LPD's warehouse until all advances against the
GED inventory have been repaid. After CIT's advances against the GED
inventory are repaid in full, LPD's claim (including any statutory
lien) against the GED inventory shall be limited to $100,000.
In addition to all other fees at any time payable by Debtors to CIT,
Debtors shall pay CIT on each anniversary date of the Accounts Agreement,
commencing with the February 17, 1994 anniversary date, a Facility Fee in the
amount of $35,000, which fee is fully earned as of the date hereof and may be
charged by CIT to any account of the Debtors maintained by CIT.
All other terms and conditions of the Financing Agreements shall
remain in full force and effect.
Please evidence your agreement to the foregoing by signing in the
space provided below and returning this letter to us.
Very truly yours,
THE CIT GROUP/CREDIT
FINANCE, INC.
By: /s/
-----------------------------------
Title: VP
--------------------------------
Agreed to:
PHOENIX LABORATORIES, INC. GREAT EARTH DISTRIBUTION, INC.
By: /s/ By: /s/
-------------------------------- --------------------------------
Title: Pres Title: V. Pres.
-------------------------------- --------------------------------
Confirmed:
/s/ XXXXXX XXXX
--------------------------------- ------------------------------------
XXXXXX XXXX XXXXXX XXXX
EVERGOOD PRODUCTS CORPORATION
By: /s/
-----------------------------
Title: Pres
---------------------------
The CIT Group/Credit Finance
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
LETTER OF CREDIT AGREEMENT
August __, 1993
THE
CIT
GROUP
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Gentlemen:
This Agreement shall supplement the Security Agreement (Accounts, etc.)
dated February 17, 1988 (the "Loan Agreement") and the other security and/or
financing agreements, each executed by you and/or related parties in our favor
(all of the foregoing, including, but not limited to, this Agreement, together
with all related documents, instruments, notes, guaranties and agreements as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed or replaced, are collectively referred to herein as the "Agreements").
We may, from time to time, in our sole discretion, at your request and for
your account: (i) issue or open letters of credit and/or merchandise purchase
guaranties for the purchase of goods and services in the ordinary course of your
business or for any other purpose approved by us, (ii) assist you in
establishing or opening letters of credit for such purposes by indemnifying the
issuer thereof or guaranteeing your payment and performance to such issuer in
connection therewith, and/or (iii) issue or guarantee drafts and acceptances
relating to the foregoing or otherwise. All such letters of credit, merchandise
purchase or other guaranties and other such financial accommodations are
referred to herein individually as a "Credit" and collectively as "Credits".
These arrangements shall be handled by us subject to the following terms and
conditions:
1. The opening or issuance of any Credit shall at all times and in all
respects be in our sole discretion. The amount and extent of any
Credits and the terms and conditions thereof, shall in all respects
be determined solely by us and shall be subject to change,
modification and revision by us, at any time and from time to time.
2. Any indebtedness, liability or obligation of any sort whatsoever
however arising, whether present or future,
fixed or contingent, secured or unsecured, due or to become due,
paid or incurred, arising or incurred in connection with any Credit,
or otherwise (herein the "Obligations") shall be incurred solely as
an accommodation to you and for your account. Obligations shall
include, without limitation, (a) all amounts due or which may become
due under any Credit: (b) all amounts charged or chargeable to you
or to us by any bank, other financial institution or correspondent
bank which opens, issues or is involved with such Credits; (c) any
other charges of an issuer of any Credit; (d) our fees and
commissions and all fees and commissions of an issuer of any Credit;
(e) duties, freight, taxes, costs, insurance and all such other
charges and expenses which may pertain directly or indirectly to any
Obligations or Credits or to the goods or documents relating
thereto: and (f) our charges as herein provided. We shall have the
right, at any time and without notice to you, to charge your account
on our books with the amount of any and all such Obligations. All
Obligations are to be repaid to us solely in United States currency.
3. As additional security for the prompt and indefeasible payment in
full of all of your present and future obligations, liabilities and
indebtedness, whether under the Agreements, any other agreement
between us or otherwise, as well as to secure the payment in full of
all of the Obligations, you hereby pledge and grant to us a
continuing security interest in and general lien upon the following
property acquired by you in connection with any Credits, whether now
owned or hereafter acquired by you, wherever located, whether in
transit or not (collectively, the "Collateral"): (a) all raw
materials, work-in-process, finished goods and all other inventory
and goods of whatsoever kind or nature, wherever located, including
inventory or goods in transit; (b) documents of payment, transport
and title or the equivalents thereof, including, without limitation,
all warehouse receipts, bills of lading, shipping documents, chattel
paper and instruments, all whether negotiable or not; and (c) all
cash and non-cash proceeds thereof of whatever sort and however
arising. All collateral granted to us under the Agreements shall
also secure all Obligations hereunder.
4. You warrant and represent that we have and shall have at all times a
valid and effective first and paramount lien on and security
interest in all said Collateral and that your title to said
Collateral is unencumbered by any other liens except as permitted
under the Agreements. You also warrant and represent that all sales
of any goods or inventory covered hereby shall be made by you in the
ordinary course of business and the
Page 3
accounts arising from such sales and proceeds thereof shall be
transferred and assigned to us pursuant to the Agreements; and you
confirm that our lien and security interest extends and attaches to
those accounts and proceeds. Further, you warrant and represent
that, except as you otherwise advise us in writing at the time of
your request for such accommodations, all Credits are being opened
to cover actual purchase of goods and inventory solely for your
account, and said goods will not be sold or transferred, other than
as herein provided without our specific, prior written consent. You
agree to comply with the requirements of any and all laws in order
to grant to us and maintain in our favor, a valid first lien upon
and security interest in the Collateral and to do whatever we may
request from time to time in order to effect the purposes of this
Agreement, including, but without limitation, filing financing
statements, keeping records and making reports on the Collateral to
us, advising us of the location of all Collateral, marking,
labeling, and segregating such Collateral and obtaining any
necessary agreements or waivers with regard to the Collateral.
5. You unconditionally agree to indemnify us and hold us harmless from
any and all loss, claim or liability arising from any transactions
or occurrences relating to any Credit established or opened for your
account, the Collateral relating thereto and any drafts or
acceptances thereunder, and all Obligations hereunder, including any
such loss or claim due to any action taken by an issuer of any
Credit. You further agree to hold us harmless for any errors or
omissions, whether caused by us, by the issuer of a Credit or
otherwise. Your unconditional obligation to us hereunder shall not
be modified or diminished for any reason or in any manner
whatsoever. You agree that any charges made to us for your account
by an issuer of any Credit shall be conclusive on us and may be
charged to your account.
6. We shall not be responsible for: the existence, character, quality,
condition, packing, value or delivery of the goods purporting to be
represented by any documents; any difference or variation in the
character, quality, quantity, condition, packing, value or delivery
of the goods from that expressed in the documents; the validity,
sufficiency or genuineness of any documents or of any endorsements
thereon, even if such documents should in fact prove to be in any or
all respects invalid, insufficient, fraudulent or forged; the time,
place, manner or order in which shipment is made; partial or
incomplete shipment, or failure or omission to ship any or all of
the goods referred to in the Credits or documents; any deviation
from
Page 4
instructions; delay, default, or fraud by the shipper and/or anyone
else in connection with the Collateral or the shipping thereof; or
any breach of contract between the shipper or vendors and
yourselves. Furthermore, without being limited by the foregoing, we
shall not be responsible for any act or omission with respect to or
in connection with any Collateral.
7. You agree that any action taken by us, if taken in good faith, or
any action taken by an issuer of any Credit, under or in connection
with any Credit or the Collateral, shall be binding on you and shall
not create any resulting liability to us. In furtherance thereof, we
shall have the full right and authority to clear and resolve any
questions of non-compliance of documents; to give any instructions
as to acceptance or rejection of any documents or goods; to execute
any and all applications for steamship or airways guarantees,
indemnities or delivery orders: to grant any extensions of the
maturity of, time of payment for, or time of presentation of, any
drafts, acceptances, or documents; and to agree to any amendments,
renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications or Credits; or
all in our sole name, and the issuer thereof shall be entitled to
comply with and honor any and all such documents or instruments
executed by or received solely from us, all without any notice to or
any consent from you.
8. Without our express consent and endorsement in writing, you agree
not to clear and resolve any questions of non-compliance of
documents; to give any instructions as to acceptance or rejection of
any documents or goods; to execute any and all applications for
steamship or airways guarantees, indemnities or delivery orders; to
grant any extensions of the maturity of, time of payment for, or
time of presentation of, any drafts, acceptances or documents; or to
agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any of
the applications or Credits.
9. You warrant and represent that all shipments made under any Credit
are in accordance with the governmental laws and regulations of the
countries in which the shipments originate and terminate, and are
not prohibited by any such laws and regulations. You assume all
risk, liability and responsibility for, and agree to pay and
discharge, all present and future local, state, federal or foreign
taxes, duties, or levies. Any embargo, restriction, laws, customs or
regulations of any country, state, city, or other political
subdivision,
Page 5
where the Collateral is or may be located, or wherein payments are
to be made, or wherein drafts may be drawn, negotiated, accepted, or
paid, shall be solely your risk, liability and responsibility.
10. Any rights, remedies, duties or obligations granted or undertaken by
you to any issuer of a Credit in any application for a Credit, or
any standing agreement relating to the Credits or otherwise, shall
be deemed to have been granted to us and apply in all respects to us
and shall be in addition to any rights, remedies, duties or
obligations contained herein.
11. You hereby agree that prior to your repayment of the Obligations, we
may be deemed to be the absolute owner of, with unqualified rights
to possession and disposition of, all Collateral, all of which may
be held by us as security as herein provided. Should possession of
any such Collateral be transferred to you, it shall continue to
serve as security as herein provided, and any goods or inventory
covered hereby may be sold, transferred or disposed of only as
herein above provided.
12. You agree to maintain insurance on the Collateral and we shall have
rights with respect thereto as provided in the Loan Agreement.
13. On breach by you of any of the terms or provisions of this
Agreement, or the occurrence of an event of default under the other
Agreements or any other agreement now or hereafter entered into
between us, or on the nonpayment when due of any Obligations or
other indebtedness owing to us, whether or not the Agreements shall
continue, or upon your calling a meeting of your creditors, making a
general assignment for the benefit of creditors or if there is filed
by or against you a petition in bankruptcy or for the appointment of
a receiver or there is commenced under any bankruptcy or insolvency
law proceedings for your relief or for the composition, extension,
arrangement or adjustment of any of your obligations, or your
business is discontinued as a going concern, we shall have the
right, with or without notice to you, to foreclose the lien and
security interest created herein by any available judicial
procedure, or to take possession of the Collateral without judicial
process, and to enter any premises where the Collateral may be
located for the purpose of taking possession of or removing the
Collateral. In the event we or any issuer of a Credit institute an
action to recover any of the Collateral or seek recovery of the
Collateral by way of prejudgment remedy, you hereby waive the
posting of any bond which might otherwise by required. We shall have
the right
Page 6
to sell, lease. or otherwise dispose of all or any part of the
Collateral, whether the goods have arrived or are to arrive, in its
then condition or after further preparation or processing, in your
name or in ours, or in the name of such party as we may designate,
either at public or private sale or at any broker's board, in lots
or in bulk, for cash or for credit, with or without warranties or
representations, and upon such other terms and conditions as we in
our sole discretion may deem advisable, and we shall have the right
to purchase at any such sale. You agree, at our request, to assemble
the Collateral and to make it available to us at places which we
shall select, whether your premises or elsewhere, and to make it
available to us all of your premises and facilities for the purpose
of our taking possession of, removing or putting the Collateral in
saleable form. The proceeds of any such sale, lease or other
disposition of the Collateral shall be applied first to the expenses
of retaking, holding, storing, processing and preparing for sale,
selling, and the like, and then to the satisfaction of the
Obligations or other indebtedness to us, application as to
particular Obligations or as to principal or interest to be in our
absolute and sole discretion. You shall be liable to us for, and
shall pay to us on demand, any deficiency which may remain after
such sale, lease or other disposition, and we in turn agree to remit
to you any surplus resulting therefrom. We shall have all rights of
a secured party under the Uniform Commercial Code. The enumeration
of the foregoing rights is not intended to be exhaustive and the
exercise of any right shall not preclude the exercise of any other
rights, all of which shall be cumulative.
14. In addition to any charges, fees or expenses charged to us for your
account by an issuer of any Credit in connection with these
transactions (all of which will be charged to your account and when
made by the issuer shall be conclusive on us) we shall be entitled
to charge your account monthly with the following commissions for
our services hereunder: (a) a charge of three and one-half percent
(3 1/2%) per annum on all amounts available under any Credits
(except the fee shall be four percent (4%) per annum for any standby
letters of credit). The principal amount of Credits outstanding at
any time shall not exceed $150,000 subject to your availability
under the Loan Agreement.
15. This Agreement, which is subject to modification only in writing, is
supplementary to, and is to be considered as a part of the
Agreements and shall take effect when dated, accepted and signed in
the State of New York by one of our officers.
Page 7
If the foregoing is in accordance with your understanding, please so
indicate by signing and returning the enclosed copies of this letter, after
which we will return a fully executed copy to you for your files.
Very truly yours,
THE CIT GROUP/CREDIT
FINANCE, INC.
By: /s/
---------------------------------------
Title: VP
---------------------------------------
Read and Agreed to:
PHOENIX LABORATORIES, INC.
By: /s/
----------------------------------
Title: Pres.
-------------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/
----------------------------------
Title: V. Pres.
-------------------------------
THIRD AMENDED AND RESTATED PROMISSORY NOTE
$740,000 New York, New York
August __, 1993
FOR VALUE RECEIVED, PHOENIX LABORATORIES, INC. and GREAT EARTH
DISTRIBUTION, INC. (individually and collectively the "Payor"), jointly and
severally hereby promise to pay to the order of THE CIT GROUP/CREDIT FINANCE,
INC., a Delaware corporation ("Payee"), at its offices located at 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as Payee or any holder
hereof may from time to time designate, the principal sum of SEVEN HUNDRED FORTY
THOUSAND DOLLARS ($740,000.00) in lawful money of the United States, in nineteen
(19) installments, with the first six monthly installments in the amount of SIX
THOUSAND ONE HUNDRED SIXTY SIX AND SIXTY SEVEN ONE HUNDREDTHS DOLLARS
($6,166.67) and thereafter the next twelve consecutive monthly installments in
the amount of TWELVE THOUSAND THREE HUNDRED THIRTY THREE AND THIRTY FOUR ONE
HUNDREDTHS DOLLARS ($12,333.34) each payable on the first (1st) day of each
consecutive month, commencing September 1, 1993, and one (1) final installment
in the amount of the entire unpaid principal balance of this Note, payable
February 17, 1995. Payor hereby further promises to pay interest to Payee in
like money at said office or place on the unpaid principal balance hereof,
computed at the rate of three and one-half percent (3 1/2%) per annum plus the
prime rate as announced by Chemical Bank or its successor, in New York, New York
from time to time as its prime rate (the prime rate is not intended to be the
lowest rate of interest charged by Chemical Bank to its borrowers) and such
interest shall be payable monthly on the first (1st) day of each month,
commencing September 1, 1993. Interest shall be calculated on the basis of a
360-day year and actual days elapsed. In no event shall the interest charged
hereunder exceed the maximum permitted under the laws of the State of New York.
This Note is secured by (i) the collateral described in the Security
Agreement (Accounts, Contract Rights, Instruments and Goods pertaining thereto),
the Inventory Security Agreement and the Equipment Security Agreement, each
executed February 17, 1988 by and between Payor and Fidelcor Business Credit
Corporation ("Fidelcor"), assignor of payee, and all related agreements,
instruments (including but not limited to this Note) and documents granting
collateral security to Payee or evidencing or creating indebtedness of Payor to
Payee, all guaranties executed by third parties guaranteeing Payor's obligations
to Payee, including those executed by: Xxxxxx Xxxx, Xxxxxx Xxxx and Evergood
Products Corporation (the "Guarantors") (the foregoing, as the same may now
exist and have been and may hereafter be amended, modified, replaced or
supplemented, are hereafter collectively referred to as the "Financing
Agreements").
This Note supercedes and replaces but does not extinguish any of the
unpaid liabilities and obligations under the Second Amended and Restated
Promissory Note dated June 19, 1992, in the original principal. amount of
$740,000.00 by Payor in favor of Payee (the "Existing Note"). The indebtedness
of Payor to Payee evidenced hereby shall be deemed to include the unpaid balance
of the indebtedness including unpaid interest heretofore evidenced by the
Existing Note and shall be repayable together with interest accrued and accruing
and other sums in accordance with the terms hereof. Payor hereby acknowledges
that Payor is as of the date hereof indebted to Payee, in the principal amount
hereof, together with interest accrued and accruing through and after the date
hereof, without offset, defense or counterclaim of any kind, nature or
description whatsoever. The amendment and restatement contained herein shall
not, in any manner be construed to constitute payment of, or impair, limit,
cancel or extinguish the indebtedness evidenced by the Existing Note and the
liens and security interests securing such indebtedness shall not in any manner
be impaired, limited, terminated, waived or released hereby.
At the time any payment is due hereunder, Payee may, at its option, charge
the amount thereof to any account of Payor maintained by Payee.
If an event of default shall occur for any reason under any of the
Financing Agreements, or if any of the Financing Agreements shall be terminated
or not be renewed for any reason whatsoever, then and in any such event, in
addition to all rights and remedies of Payee under the Financing Agreements,
applicable law or otherwise (all such rights and remedies being cumulative, not
exclusive and enforceable alternatively, successively and concurrently) Payee
may, at its option, declare any or all of Payor's obligations under the
Financing Agreements, including, but not limited to, all amounts owing under
this Note, to be due and payable, whereupon the then unpaid balance hereof
together with all interest accrued thereon, shall forthwith become due and
payable, together with costs and expenses of collection, including reasonable
attorney's fees.
Payee shall not be required to resort to any of the aforementioned
collateral for payment, but may proceed against Payor and/or the Guarantors in
such order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof. Payor
hereby
waives diligence, demand, presentment, protest and notice of any kind and
assents to extensions of time of payment, release, surrender or substitution of
collateral security, or forbearance or other indulgence, without notice.
In the event of any litigation with respect to any of the Financing
Agreements, Payor waives the right to a trial by jury, all rights of set-off,
and any right to interpose permissive counterclaims and cross-claims, and Payor
consents to the jurisdiction of the courts of the State of New York and of any
federal court located in such State. Payor further waives personal service of
any and all process upon Payor and consents that all such service of process may
be made by certified mail, return receipt requested, directed to Payor at the
address listed above or of which Payor advises Payee, in writing, and service so
made shall be deemed complete three days after the same shall have been posted.
This Note shall be governed by and construed, and all rights and obligations
hereunder determined, in accordance with the laws of the State of New York, and
shall be binding upon the successors and assigns of Payor and inure to the
benefit of Payee, its successors, endorsees and assigns.
If any term or provision of this Note shall be held invalid, illegal or
unenforceable, the validity of all other terms and provisions hereof shall in no
way be affected thereby.
The execution and delivery of this Note has been authorized by the board
of directors of Payor.
PHOENIX LABORATORIES, INC.
By: /s/
-----------------------------
Title: Pres.
---------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/
-----------------------------
Title: V. Pres.
---------------------------
CASH COLLATERAL AGREEMENT
August __, 1993
The CIT Group/Credit Finance, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Reference is made to certain financing agreements between you and Phoenix
Laboratories, Inc. and Great Earth Distribution, Inc. (individually and
collectively the "Debtor"), including, but not limited to, that certain Security
Agreement (Accounts, Contract Rights, Instruments and Goods pertaining thereto)
dated February 17, 1988 as amended (the foregoing, together with all other
related agreements, documents or instruments, as the same may now exist or may
hereafter be created, amended or supplemented, are collectively referred to
herein as the "Financing Agreements").
Reference is also made to the undersigned's replacement guaranty of the
obligations of the Debtor under the Financing Agreements executed on or about
June 1992 (the "Guaranty").
As an inducement for and in consideration of your extending financial
accommodations to the Debtor and to secure the undersigned's guaranty, the
undersigned hereby agrees as follows:
1. The undersigned has pledged to you, as cash collateral securing the
Guaranty, the sum of $200,000 (the "Cash Collateral");
2. Your rights to the Cash Collateral shall be governed by the Guaranty
and you shall have all rights and remedies afforded by law,
including, but not limited to, all rights of a secured party under
the Uniform Commercial Code.
3. The Cash Collateral shall be invested in a thirty day certificate of
deposit in CIT's name at Chemical Bank, New York, New York.
The CIT Group/Credit Finance, Inc.,
August __, 1993
Page Two
CIT agrees that provided that no event of default has occurred under the
Financing Agreements or the Guaranty, CIT shall pay interest on the first day of
each month (commencing September 1, 1993) to the undersigned based on the rate
of interest paid for thirty day certificates of deposit by Chemical Bank, in New
York, New York on the last day of the preceding month.
This Agreement shall be governed and construed by the laws of the State of
New York and shall be binding upon and inure to the benefit of the successors
and assigns of CIT and the undersigned
Very truly yours,
/s/ XXXXXX XXXX
--------------------------------
XXXXXX XXXX
Agreed and Accepted:
THE CIT GROUP/CREDIT
FINANCE, INC.
By: /s/
------------------------------
Title: VP
---------------------------
[LETTERHEAD OF RAICH ENDE XXXXXX XXXXXX & CO.
CERTIFIED PUBLIC ACCOUNTANTS
MEMORANDUM
TO: XXXX XXXXXX
From: XXXXXXX X. XXXXX
Date: SEPTEMBER 9, 1993
Re: AGREEMENT WITH CIT
--------------------------------------------------------------------------------
I would suggest that you add the following language at the bottom of page two
(2) of the CIT agreement entitled Notification of security Interest:
It is mutually agreed that all charges due LFDI from the date of
notification of LFDI by CIT of default by the borrower will be paid to
LPDI by CIT in accordance with the terms of the contract then in effect
between GED and LPDI.
If this language is satisfactory please have it added to the copy of the CIT
agreement you now have and fax the same to me at (000) 000-0000 so that we can
expedite our closing at which time CIT will wire to you on GED's behalf,
$100,000.
BY FAX
/jam
THE CIT GROUP/CREDIT FINANCE
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
THE
CIT
GROUP
August __, 1993
Xxxxxxxxxx Pharmaceutical Distribution, Inc.
000 Xxxxxxxxxxx Xxxxx, Xxx. 000
Xxxxxx, Xxxxxxxx 00000
Re: NOTIFICATION OF SECURITY INTEREST
Gentlemen:
Please be advised that Great Earth Distribution, Inc. ("GED") has granted to us
a security interest in all of its inventory and goods stored at any time at your
warehouse, as part of our secured financing arrangements.
You are to abide solely by our written instructions regarding the release of any
of said goods and inventory.
For the present, we instruct you to continue to release cases of inventory and
goods daily, pursuant to directions given to you by GED. The foregoing shall
remain subject to our right to change such instructions at any time by giving
you written notice of any such change.
You hereby acknowledge receipt of the foregoing notice and agree to abide by all
written instructions that The CIT Group/Credit Finance, Inc. ("CIT") may from
time to time hereafter give to the undersigned with respect to goods and
inventory which are at any time stored by GED in the undersigned's warehouse.
The undersigned certifies: that it does not now know of any security interest or
claim with respect to said goods other than the security interest which is the
subject of this agreement; that no negotiable warehouse receipts have been or
will be issued by the undersigned with respect to said goods; and that no
non-negotiable warehouse receipts have been or will be issued by the undersigned
with respect to such goods, except non-negotiable warehouse receipts in the name
of GED or in the name of CIT.
You subordinate your warehouseman's lien in favor of CIT. You have agreed that
you will not assert any claim (including any
A company of
Dai-Ichi Kangyo Bank and
Chemical Banking Corporation
warehouseman's lien) against the inventory until the advance by CIT to GED
against the GED inventory (in a maximum amount of $460,000) has been repaid in
full. You agree on a monthly basis to provide CIT with an accounting of all
charges owed to you by GED.
After the QED inventory loan has been repaid in full, you may assert a claim
against any inventory remaining in your warehouse for up to $100,000. Any
inventory remaining after satisfaction of your $100, 000 claim shall be subject
to CIT's first priority security interest and any further claims you have shall
be subordinate to CIT.
Please sign your agreement to all of the terms of this letter in the space
provided below and return this letter to us at the address set forth above. A
copy is enclosed for your records.
Very truly yours,
THE CIT GROUP CREDIT
FINANCE, INC.
By: /s/
-----------------------------------
Title: VP
--------------------------------
Agreed to and accepted:
XXXXXXXXXX PHARMACEUTICAL GREAT EARTH DISTRIBUTION, INC.
DISTRIBUTION, INC.
By: By:
------------------------------ ---------------------------------
Title: Title:
------------------------------ ---------------------------------
warehouseman's lien) against the inventory until the advance by CIT to GED
against the GED inventory (in a maximum amount of $460,000) has been repaid in
full. You agree on a monthly basis to provide CIT with an accounting of all
charges owed to you by GED.
After the GED inventory loan has been repaid in full, you may assert a claim
against any inventory remaining in your warehouse for up to $1000,000. Any
inventory remaining after satisfaction of your $100,000 claim shall be subject
to CIT's first priority security interest and any further claims you have shall
be subordinate to CIT.
Please sign your agreement to all of the terms of this letter in the space
provided below and return this letter to us at the address set forth above. A
copy is enclosed for your records.
Very truly yours,
THE CIT GROUP CREDIT
FINANCE, INC.
By: /s/
-----------------------------------
Title: VP
--------------------------------
Agreed to and accepted:
XXXXXXXXXX PHARMACEUTICAL GREAT EARTH DISTRIBUTION, INC.
DISTRIBUTION, INC.
By: /s/ By:
---------------------------- --------------------------------
Title: President Title:
------------------------- --------------------------------
B9EVERGOOD
It is mutually agreed that all charges which arise after the date of
notification of LPDI by CIT of default by the borrower will be paid to LPDI by
CIT in accordance with the terms of the contract then in effect between GED and
LPDI.
THE CIT GROUP CREDIT GREAT EARTH DISTRIBUTION, INC.
FINANCE, INC.
By: By:
---------------------------- --------------------------------
Title: Title:
------------------------- --------------------------------
XXXXXXXXXX PHARMACEUTICAL DISTRIBUTION, INC.
By: /s/
-------------------------
Title: President
-------------------------
THE CIT GROUP/CREDIT FINANCE
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
THE
CIT
GROUP
December 23, 1994
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Re: Security Agreement (Accounts, etc.) executed February 17, 1988, by and
between Phoenix Laboratories, Inc. ("Phoenix") and Great Earth
Distribution, Inc. ( "GED") and The CIT Group/Credit Finance, Inc. ("CIT),
assignee of Fidelcor Business Credit Corporation (the "Accounts
Agreement"), Second Amended and Restated Promissory Note in the original
principal balance of $740,000 (the "Note"), as amended, and all related
agreements, amendments, documents and instruments collectively, the
"Financing Agreements")
--------------------------------------------------------------------------
Gentlemen:
As you are aware, your present contract term expires on February 17, 1995.
Pursuant to paragraph 26 of the Accounts Agreement and our December 15, 1994
letter agreement, in order to give you notice of termination of the contract
effective February 17, 1995, CIT must notify you on or before December 28, 1994.
We are discussing an amendment and extension to the financing agreements. Please
confirm our agreement to extend the time period in which we have to give you
notice of termination to January 6, 1995. This will give us time to finalize the
amendment to the financing agreements and avoid our having to send you notice of
termination today.
Please evidence your agreement to the foregoing by signing in the space
provided below and returning this letter to us.
Very truly yours,
THE CIT GROUP/CREDIT FINANCE, INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------------------
Title: AVP
--------------------------------------
Agreed to and accepted:
PHOENIX LABORATORIES, INC. GREAT EARTH DISTRIBUTION, INC.
By: /s/ By: /s/ XXX XXXX
---------------------------- -----------------------------------------
Title: Pres. Title: Pres.
------------------------- --------------------------------------
A company of
Dai-Ichi Kangyo Bank and
Chemical Banking Corporation
THE CIT GROUP/CREDIT FINANCE
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
THE
CIT
GROUP
January 4, 1995
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Re: Security Agreement (Accounts, etc.) executed February 17, 1988, by and
between Phoenix Laboratories, Inc. ("Phoenix") and Great Earth
Distribution, Inc. ("GED") and The CIT Group/Credit Finance, Inc. ("CIT),
assignee of Fidelcor Business Credit Corporation (the "Accounts
Agreement"), Third Amended and Restated Promissory Note in the original
principal balance of $740,000 (the "Note"), as amended, and all related
agreements, amendments, documents and instruments, collectively, the
"Financing Agreements") GED and Phoenix may be hereinafter referred to as
the "Debtors"
--------------------------------------------------------------------------
Gentlemen:
The present term of your Financing Agreements with CIT expires February
17, 1995. We have now agreed to an extension of the Financing Agreements and
modifications of the Note as reflected by the Fourth Amended and Restated
Promissory Note to be executed on the date hereof in the form annexed hereto
under the terms and conditions set forth below.
Accordingly, this will confirm our agreement to amend the Financing
Agreements as follows:
1. The second sentence of paragraph F. of the rider to the Accounts Agreement
is amended to read:
"Debtor will pay all out-of-pocket costs of field examinations to be
conducted by Trefoil as provided in paragraph 13 of the printed portion of
the agreement plus $650.00 per person per day."
2. Paragraph G. of the Rider to the Accounts Agreement is amended to read:
A company of
Dai-Ichi Kangyo Bank and
Chemical Banking Corporation
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
January 4, 1995
Page 2
"G. Trefoil agrees that in addition to the advances made with reference to
the formula set forth in Paragraph 2 of the printed portion of this
agreement ("Accounts Advances"), Trefoil shall make additional advances to
Debtor, in its sole discretion, of up to thirty percent (30%) of the value
of Phoenix's acceptable and eligible raw material inventory and of up to
thirty-five percent (35%) of the value of GED's acceptable and eligible
finished goods inventory (collectively, the "Inventory Advances"). As used
herein, "value" shall mean the lower of cost or market price, as
determined by Trefoil. Except in Trefoils sole discretion, (1) the
aggregate principal amount of Accounts Advances to GED shall not exceed,
at any time outstanding, the lesser of (a) $450,000 (the "GED Accounts
Sublimit"), or (b) an amount equal to (i) thirty percent (30%) of the
value of Phoenix's acceptable and eligible raw material inventory, plus
(ii) thirty-five percent (35%) of the value of GED's acceptable and
eligible finished goods inventory, and (2) the aggregate principal amount
of the Inventory Advances to Debtors shall not exceed $750,000 at any time
outstanding with a further sublimit at any time outstanding of $460,000
against the GED acceptable and eligible finished goods inventory. In the
event that Borrower has negative Cash Flow (defined below) in excess of
$25,000 for any quarter of its fiscal year calculated commencing with the
quarter ending December 31, 1994, then the GED Accounts Sublimit shall be
reduced by $100,000, with subsequent reductions of $100,000 for each
subsequent quarter in which there is negative Cash Flow in excess of
$25,000. Cash Flow is defined as: Net income plus depreciation and
amortization less capital expenditures and debt service."
3. The first sentence of paragraph J. of the Rider to the Accounts Agreement
is amended to read:
"In consideration of Trefoil entering into this Agreement and incurring
accounting, operating and management expenses, Debtors shall pay to
Trefoil each calendar month a minimum charge equal to the amount of
interest Debtors would pay Trefoil if they at all times had an aggregate
average daily cash balance outstanding of $2,000,000 bearing interest at
the rate provided for in Paragraph 6 of the printed portion of this
Agreement."
4. Paragraph 20 of the printed portion of the Accounts Agreement is amended
to provide that you will provide CIT with quarterly financial statements
compiled by an independent certified public accountant and annual
financial statements reviewed by
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
January 4, 1995
Page 3
a certified public accountant and accompanied by a certified opinion on
the fiscal year end accounts receivable and inventory balances.
5. The first sentence of paragraph 26 of the printed portion of the Accounts
Agreement is amended to read:
"That this Agreement shall remain in effect until February 17, 1997 and
shall be deemed automatically renewed for successive terms of one year."
6. [DELETED AND INITIALED BY /s/ SR; MR and AS
7. Within 30 days of the date hereof, GED to obtain a termination of the UCC
financing statements filed by Pharmachem Laboratories, Inc. ("Pharmachem")
in March, 1992 in New York State, Nassau County and California or a
subordination agreement executed by Pharmachem in which it acknowledges
that its security interest in any property of GED is subordinate to the
security interest of CIT and that it will not enforce its rights against
the property until all of GED's obligations to CIT are repaid in full.
This will confirm that in addition to all other fees at any time payable
by Debtors to CIT, Debtors shall pay CIT on each anniversary date of the
Accounts Agreement, a Facility Fee in the amount of $35,000, which Facility Fees
that are due to be paid on February 17, 1995 and February 17, 1996 (aggregating
$70,000) are fully earned as of the date hereof and shall become immediately
payable upon termination of the Financing Agreements. Each Facility Fee may be
charged by CIT to any account of the Debtors maintained by CIT.
All other terms and conditions of the Financing Agreements shall remain in
full force and effect.
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
January 4, 1995
Page 4
Please evidence your agreement to the foregoing by signing in the space
provided below and returning this letter to us.
Very truly yours,
THE CIT GROUP./CREDIT
FINANCE, INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------------------
Title: AVP
--------------------------------------
Agreed to and accepted:
PHOENIX LABORATORIES, INC. GREAT EARTH DISTRIBUTION, INC.
By: /s/ XXXXXX XXXX By: /s/ XXX XXXX
---------------------------- -----------------------------------------
Title: Pres. Title: Pres.
------------------------- --------------------------------------
Confirmed:
/s/ XXXXXX XXXX /s/ XXXXXX XXXX
-------------------------------- -----------------------------------------
XXXXXX XXXX XXXXXX XXXX
EVERGOOD PRODUCTS CORPORATION
By: /s/ XXXXXX XXXX
----------------------------
Title: President
-------------------------
The CIT Group/Credit Finance
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
THE
CIT
GROUP
January 6, 1995
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Re: Security Agreement (Accounts, etc.) executed February 17, 1988,
by and between Phoenix Laboratories, Inc. ("Phoenix") and Great
Earth Distribution, Inc. ("GED") and The CIT Group/Credit Finance,
Inc. ("CIT"), assignee of Fidelcor Business Credit Corporation
(the "Accounts Agreement"), Second Amended and Restated Promissory
Note in the original principal balance of $740,000 (the "Note"),
as amended, and all related agreements, amendments, documents and
instruments collectively, the "Financing Agreements")
-----------------------------------------------------------------
Gentlemen:
As you are aware, your present contract term expires on February 17, 1995.
Pursuant to paragraph 26 of the Accounts Agreement and our December 15, 1994 and
December 23, 1994 letter agreement, in order to give you notice of termination
of the contract effective February 17, 1995, CIT must notify you on or before
January 6, 1995. We are discussing an amendment and extension to the financing
agreements. Please confirm our agreement to extend the time period in which we
have to give you notice of termination to January 11, 1995. This will give us
time to finalize the amendment to the financing agreements and avoid our having
to send you notice of termination today.
Please evidence your agreement to the foregoing by signing in the space
provided below and returning this letter to us.
Very truly yours,
THE CIT GROUP/CREDIT FINANCE, INC.
By: /s/ XXXXXX XXXXX
---------------------------------
Title: AVP
-------------------------------
Agreed to:
PHOENIX LABORATORIES, INC. GREAT EARTH DISTRIBUTION, INC.
By: /s/ By: /s/ Xxx Xxxx
--------------------------------- ---------------------------------
Title: PRES. Title: PRES.
------------------------------- -------------------------------
The CIT Group/Credit Finance
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
THE
CIT
GROUP
June 21, 1996
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxx XX 00000
RE: Security Agreement (Accounts, Etc.) dated February 17, 1988 (the "Accounts
Agreement"), between Phoenix Laboratories, Inc. ("Phoenix") and Great Earth
Distribution, Inc. ("GED"), and The CIT Group/Credit Finance, Inc. ("CIT"),
assignee of Fidelcor Business Credit Corporation, and all related
agreements, amendments, documents and instruments (collectively, the
"Financing Agreements")
Gentlemen:
You have requested and we have agreed to grant you a $314,000 "reload" to the
machinery term loan, which advance of $314,000 shall be repayable in accordance
with the terms of the Fifth Amended and Restated Promissory Note, in the
original principal amount of $945,000 (the "New Note"), which shall be executed
by both Phoenix and GED.
The principal balance of the New Note shall be made up of a $314,000 advance to
repay the amount presently outstanding to you in excess of the contractual
formulas in your Financing Agreements and the sum of approximately $631,000,
representing the currently unpaid principal balance of the Fourth Amended and
Restated Promissory Note, in the original principal amount of $825,000, dated
January 11, 1995 (the "Old Note") on which both of you are liable as co-makers.
As an inducement to us to make the advance set forth above, you agree to pay to
us a facility fee in the amount of $3,000, which shall be charged to your
account on the date hereof.
Except as hereinabove set forth, the Financing Agreements shall remain
unmodified and in full force and effect.
Please indicate your agreement with the foregoing by signing and returning to us
the enclosed copy of this letter.
Very truly yours,
THE CIT GROUP/CREDIT FINANCE, INC.
By: /s/
---------------------------------
Title: VICE PRESIDENT
------------------------------
AGREED:
PHOENIX LABORATORIES, INC.
By: /s/ Xxx Xxxx
---------------------------------
Title: VP
------------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/ Xxx Xxxx
---------------------------------
Title: PRES.
------------------------------
CONFIRMED:
/s/ Xxxxxx Xxxx
-------------------------------------
Xxxxxx Xxxx
/s/ Xxxxxx Xxxx
-------------------------------------
Xxxxxx Xxxx
EVERGOOD PRODUCTS CORPORATION
By: /s/ Xxx Xxxx
---------------------------------
Title: VP
------------------------------
FIFTH AMENDED AND RESTATED PROMISSORY NOTE
$945,000 New York, New York
June ____, 1996
FOR VALUE RECEIVED, PHOENIX LABORATORIES, INC. and GREAT EARTH
DISTRIBUTION, INC. (individually and collectively the "Payor"), jointly and
severally hereby promise to pay to the order of THE CIT GROUP/CREDIT FINANCE,
INC., a Delaware corporation ("Payee"), at its offices located at 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as Payee or any holder
hereof may from time to time designate, the principal sum of NINE HUNDRED AND
FORTY-FIVE THOUSAND DOLLARS ($945,000.00) in lawful money of the United States,
in eight installments of FIFTEEN THOUSAND DOLLARS ($15,000) each payable on the
first (1st) day of each consecutive month, commencing July 1, 1996, and one (1)
final installment in the amount of the entire unpaid principal balance of this
Note, payable February 17, 1997. Payor hereby further promises to pay interest
to Payee in like money at said office or place on the unpaid principal balance
hereof, computed at the rate of three and one-half percent (3 1/2%) per annum
plus the prime rate as announced by Chemical Bank or its successor, in New York,
New York from time to time as its prime rate (the prime rate is not intended to
be the lowest rate of interest charged by Chemical Bank to its borrowers) and
such interest shall be payable monthly on the first (1st) day of each month,
commencing July 1, 1996. Interest shall be calculated on the basis of a 360-day
year and actual days elapsed. In no event shall the interest charged hereunder
exceed the maximum permitted under the laws of the State of New York.
This Note is secured by (i) the collateral described in the Security
Agreement (Accounts, Contract Rights, Instruments and Goods pertaining thereto),
the Inventory Security Agreement and the Equipment Security Agreement, each
executed February 17, 1988 by and between Payor and Fidelcor Business Credit
Corporation ("Fidelcor"), assignor of Payee, and all related agreements,
instruments (including but not limited to this Note) and documents granting
collateral security to Payee or evidencing or creating indebtedness of Payor to
Payee, all guaranties executed by third parties guaranteeing Payor's obligations
to Payee, including those executed by: Xxxxxx Xxxx, Xxxxxx Xxxx and Evergood
Products
Corporation (the "Guarantors") (the foregoing, as the same may now
exist and have been and may hereafter be amended, modified, replaced or
supplemented, are hereafter collectively referred to as the "Financing
Agreements").
This Note supersedes and replaces but does not extinguish any of the
unpaid liabilities and obligations under the Fourth Amended and Restated
Promissory Note dated January 11, 1995, in the original principal amount of
$825,000.00 by Payor in favor of Payee (the "Existing Note"). The indebtedness
of Payor to Payee evidenced hereby includes (i) the unpaid balance of the
indebtedness including unpaid interest heretofore evidenced by the Existing
Note; and (ii) an indebtedness of $314,000 representing an advance made by Payee
to Payor on the date hereof, all of which shall be repayable together with
interest accrued and accruing and other sums in accordance with the terms
hereof. Payor hereby acknowledges that Payor is as of the date hereof indebted
to Payee, in the principal amount hereof, together with interest accrued and
accruing through and after the date hereof, without offset, defense or
counterclaim of any kind, nature or description whatsoever. The amendment and
restatement contained herein shall not, in any manner be construed to constitute
payment of, or impair, limit, cancel or extinguish the indebtedness evidenced by
the Existing Note and the liens and security interests securing such
indebtedness shall not in any manner be impaired, limited, terminated, waived or
released hereby.
At the time any payment is due hereunder, Payee may, at its option, charge
the amount thereof to any account of Payor maintained by Payee.
If an event of default shall occur for any reason under any of the
Financing Agreements, or if any of the Financing Agreements shall be terminated
or not be renewed for any reason whatsoever, then and in any such event, in
addition to all rights and remedies of Payee under the Financing Agreements,
applicable law or otherwise (all such rights and remedies being cumulative, not
exclusive and enforceable alternatively, successively and concurrently) Payee
may, at its option, declare any or all of Payor's obligations under the
Financing Agreements, including, but not limited to, all amounts owing under
this Note, to be due and payable, whereupon the then unpaid balance hereof
together with all interest accrued thereon, shall forthwith become due and
payable, together with costs and expenses of collection, including reasonable
attorney's fees.
Payee shall not be required to resort to any of the aforementioned
collateral for payment, but may proceed against Payor and/or the Guarantors in
such order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof. Payor
hereby waives diligence, demand, presentment, protest and notice of any kind and
assents to extensions of time of payment, release, surrender or substitution of
collateral security, or forbearance or
other indulgence, without notice.
In the event of any litigation with respect to any of the Financing
Agreements, Payor waives the right to a trial by jury, all rights of set-off,
and any right to interpose permissive counterclaims and cross-claims, and Payor
consents to the jurisdiction of the courts of the State of New York and of any
federal court located in such State. Payor further waives personal service of
any and all process upon Payor and consents that all such service of process may
be made by certified mail, return receipt requested, directed to Payor at the
address listed above or of which Payor advises Payee, in writing, and. service
so made shall be deemed complete three days after the same shall have been
posted. This Note shall be governed by and construed, and all rights and
obligations hereunder determined, in accordance with the laws of the State of
New York, and shall be binding upon the successors and assigns of Payor and
inure to the benefit of Payee, its successors, endorsees and assigns.
If any term or provision of this Note shall be held invalid, illegal or
unenforceable, the validity of all other terms and provisions hereof shall in no
way be affected thereby.
The execution and delivery of this Note has been authorized by the board
of directors of Payor.
PHOENIX LABORATORIES, INC.
By: /s/ Xxx Xxxx
----------------------------
Title: Vice Pres.
----------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/ Xxx Xxxx
----------------------------
Title: Pres.
----------------------------
The CIT Group/Credit Finance
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
THE
CIT
GROUP
November 18, 1996
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxx XX 00000
RE: Security Agreement (Accounts, Etc.) dated February 17, 1988 (the "Accounts
Agreement"), between Phoenix Laboratories, Inc. ("Phoenix") and Great
Earth Distribution, Inc. ("GED"), and The CIT Group/Credit Finance, Inc.
("CIT"), assignee of Fidelcor Business Credit Corporation, and all related
agreements, amendments, documents and instruments (collectively, the
"Financing Agreements").
Gentlemen:
The Financing Agreements are hereby amended as follows, effective as of the date
hereof, unless a different effective date is specified below. Capitalized terms
appearing below shall have the meanings given in the Accounts Agreement, and the
Rider thereto, unless otherwise defined in this letter.
1. Bodyonics, Ltd., a Delaware corporation, with an office at 000 Xxxxxx
Xxxx, Xxxxxxxxxx, Xxx Xxxx 00000 ("Bodyonics") shall be (a) added as a
Debtor to the Accounts Agreement as fully as if Bodyonics had executed the
Accounts Agreement on the date hereof, and shall be jointly and severally
liable with Phoenix and GED for all Obligations arising thereunder; and
(b) shall be deemed a party, as Debtor, borrower or grantor, as the case
may be, to the other Financing Agreements executed by Phoenix and GED in
our favor, as fully as if such other Financing Agreements had been
executed by Bodyonics.
Accordingly, Bodyonics hereby grants to us all security interests in its
assets that Phoenix and GED have granted to us under the Financing
Agreements, including but not limited to a security interest in all of its
accounts, instruments, documents, chattel paper and general intangibles
and all inventory and equipment, wherever located and whenever acquired or
arising to secure all of its obligations to CIT.
2. The undersigned Evergood Products Corporation and Xxxxxx Xxxx and Xxxxxx
Xxxx, as well as Phoenix and GED, hereby affirm that Bodyonics shall be
deemed a guaranteed entity under the guaranties heretofore executed by
them in our favor and accordingly their liabilities under
such guaranties shall include liability for the Obligations of Bodyonics
to CIT.
3. Bodyonics hereby guaranties and agrees to be fully liable for all
Obligations of GED and Phoenix to us, whenever and however arising.
4. We may in our discretion make advances to Bodyonics under the Financing
Agreements but in no event shall any advance be made if an event of
default has occurred under the Financing Agreements or if, after the
making of any such advance, the aggregate outstanding Obligations of
Bodyonics to us exceeds the lesser of (a) 80% of the net amount
of outstanding acceptable and eligible accounts receivable of Bodyonics;
or (b) $1,250,000.
5. Section H of the Rider to the Accounts Agreement shall be amended so as to
increase the Line of Credit from $3,500,000 to $5,000,000.
6. This will confirm that CIT will not charge an additional facility fee
in consideration of this amendment.
Except as hereinabove set forth, the Financing Agreements shall remain
unmodified and in full force and effect.
Please indicate your agreement with the foregoing by signing and returning to us
the enclosed copy of this letter.
Very truly yours,
THE CIT GROUP/CREDIT FINANCE, INC.
By: /s/
----------------------------------
Title: Assistant Secretary
------------------------------
AGREED:
BODYONICS, LTD.
By: /s/ Xxx Xxxx
----------------------------------
Title: Pres.
------------------------------
PHOENIX LABORATORIES, INC.
By: /s/ Xxx Xxxx
----------------------------------
Title: Pres.
------------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/ Xxx Xxxx
----------------------------------
Title: Pres.
------------------------------
EVERGOOD PRODUCTS CORPORATION
By: /s/ Xxx Xxxx
----------------------------------
Title: Pres.
------------------------------
/s/ Xxxxxx Xxxx
--------------------------------------
Xxxxxx Xxxx
/s/ Xxxxxx Xxxx
--------------------------------------
Xxxxxx Xxxx
The CIT Group/Credit Finance
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
THE
CIT
GROUP
February 11, 1997
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
Bodyonics, Ltd.
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Re: Security Agreement (Accounts, etc.) executed February 17, 1988, by
and between Phoenix Laboratories, Inc. ("Phoenix") and Great Earth
Distribution, Inc. ("GED") and The CIT Group/Credit Finance, Inc.
("CIT"), assignee of Fidelcor Business Credit Corporation (the
"Accounts Agreement") to which Bodyonics, Ltd. became a party, as
Debtor, borrower or grantor, as the case may be by letter agreement
dated November 18, 1996, the Fifth Amended and Restated Promissory
Note in the original principal balance of $945,000 (the "Note"), as
amended, and all related agreements, amendments, documents and
instruments (collectively, the "Financing Agreements"). GED, Phoenix
and Bodyonics may be hereinafter referred to as the "Debtors".
Gentlemen:
The present term of the Financing Agreements expires February 17, 1997. We
have agreed to an extension of the Financing Agreements and modifications of the
Note as reflected by the Sixth Amended and Restated Promissory Note to be
executed on the date hereof in the form annexed hereto under the terms and
conditions set forth below.
Accordingly, this will confirm our agreement to amend the
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
Bodyonics, Ltd.
February 11, 1997
Page 2
Financing Agreements as follows:
1. In each place in the Financing Agreements where the word "Trefoil"
appears, the word "CIT" is substituted therefor.
2. Paragraph 6 of the printed portion of the Accounts Agreement is hereby
deleted, in its entirety and the following is substituted therefor:
"6. That Debtor will pay CIT for its advances made hereunder a charge of
two and one-half percent (2 1/2%) per annum plus the rate of interest
publicly announced by The Chase Manhattan Bank, New York, New York from
time to time as its prime rate (the prime rate is not intended to be the
lowest rate of interest charged by The Chase Manhattan Bank to its
borrowers), computed on a 360-day year. In the event of a change in the
prime rate charged at The Chase Manhattan Bank, adjustment hereunder shall
be made on the day of such change in the prime rate. All charges shall be
computed upon the average daily balances outstanding and charged to
Debtor's account or paid monthly."
3. Paragraph 2 of the printed portion of the Accounts Agreement is amended to
read:
"2. That it will advance to Phoenix Laboratories, Inc. and Bodyonics,
Ltd. up to 80%, and to Great Earth Distribution, Inc. up to 67.50%
of the net amounts of acceptable Collateral, as CIT in its sole
discretion may determine, and will pay the remainder (less the
compensation specified in paragraph 6, plus any overpayments by
account debtors, and less deductions by account debtors and any
unpaid compensation, charges or expenses), after actual receipt of
payment upon such Collateral and at such times as CIT may
determine; however, no payment of such remainder need be made by CIT
if Debtor shall have breached any provision hereof or
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
Bodyonics, Ltd.
February 11, 1997
Page 3
shall be otherwise indebted to CIT, in either of which events CIT
may retain and apply such remainder upon any indebtedness then or
thereafter due from Debtor.
4. The first sentence of Paragraph 30 of the printed portion of the Accounts
Agreement is amended to read:
"Debtor may, on thirty days prior written notice, prepay and terminate
this Security Agreement by paying to CIT in cash or certified check, the
entire then unpaid principal balance plus accrued charges, together with a
sum equal to 25% of the average monthly charges for the immediately
preceding six months or from the date of the agreement whichever is less,
multiplied by the number of months of the unexpired balance of the term of
this agreement (the "early termination fee"). However, in no event shall
the early termination fee be less than $100,000."
5. Paragraph G. of the Rider to the Accounts Agreement is amended to read:
"G. CIT agrees that in addition to the advances made with reference to the
formula set forth in Paragraph 2 of the printed portion of this agreement
("Accounts Advances"), CIT shall make additional advances to Debtor, in
its sole discretion, of up to thirty percent (30%) of the value of
Phoenix's acceptable and eligible raw material inventory and of up to
thirty-five percent (35%) of the value of GED's and Bodyonics' acceptable
and eligible finished goods inventory (collectively, the "Inventory
Advances"). As used herein, "value" shall mean the lower of cost or market
price, as determined by CIT. Except in CIT's sole discretion, (1) the
aggregate principal amount of Accounts Advances to GED shall not exceed,
at any time outstanding, the lesser of (a) $1,750,000 (the "GED Accounts
Sublimit"), or (b) an amount equal to one hundred and twenty-five (125%)
percent of the Phoenix Accounts Advances and (2) the aggregate principal
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
Bodyonics, Ltd.
February 11, 1997
Page 4
amount of the Inventory Advances to Debtors shall not exceed $1,250,000 at
any time outstanding. In the event that Borrower has negative Cash Flow
(defined below) to be calculated commencing with the six months ended June
30, 1997 and semi-annually thereafter, then the GED Accounts sublimit
shall be reduced to the lesser of $1,000,000 or 100% of Phoenix's eligible
accounts receivable and the advance rate percentage for GED set forth in
Paragraph 2 of the printed portion of the Accounts Agreement shall be
reduced from 67.5% to 50%. Cash Flow is defined as: Net income plus
depreciation and amortization less capital expenditures and principal
repayments of term debt on a consolidated basis. Except in CIT's sole
discretion, the aggregate principal amount of Accounts Advances to
Bodyonics shall not exceed an amount equal to the sum of one hundred
(100%) percent of the Phoenix Accounts Advances and one hundred (100%)
percent of the GED Accounts Advances."
6. The first sentence of paragraph J. of the Rider to the Accounts
Agreement is amended to read:
"In consideration of CIT entering into this Agreement and incurring
accounting, operating and management expenses, Debtors shall pay to CIT
each calendar month a minimum charge equal to the amount of interest
Debtors would pay CIT if they at all times had an aggregate average daily
loan balance outstanding of $2,500,000 bearing interest at the rate
provided for in Paragraph 6 of the printed portion of this Agreement."
7. The first sentence of paragraph 26 of the printed portion of the
Accounts Agreement is amended to read:
"That this Agreement shall remain in effect until February 17, 1999 and
shall be deemed automatically renewed for successive terms of two years
unless Debtor provides CIT with written notice of termination no later
than sixty (60) days before the
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
Bodyonics, Ltd.
February 11, 1997
Page 5
end of any term."
8. CIT has agreed to grant you an increase in the equipment term loan in the
amount of $314,800 which shall be repayable in accordance with the terms
of the Sixth Amended and Restated Promissory Note in the original
principal amount of $1,150,000.
9. In addition to the advance reflected by the Sixth Amended and Restated
Promissory Note, CIT, shall make additional advances to Debtors of up to
$200,000 per each year of each term for new purchases of equipment. The
new advances shall be limited to eighty percent (80%) of the cost of the
new equipment. All such advances shall amortize at an amortization
schedule to be determined by CIT.
10. Within 30 days of the date hereof, Debtors shall:
a. execute any assignment documents which are in addition to the
beneficiary loss endorsement already executed by the Debtors in
connection with a $750,000 credit insurance policy which was
obtained by the Borrowers as a condition of this extension.
b. obtain a letter in form attached herein as Exhibit A or B from
Xxxxxx Xxxxxx.
c. request Xxxxxxxxxx Pharmaceutical Distribution, Inc. ("LPD") in
Delaware to execute a warehouse agreement which shall include a
provision in which LPD agrees (1) to give CIT a monthly report of
all distribution service charges and other fees which are owed by
GED (the "LPD charges") and (2) to advise CIT of any default or
amendment to its agreement between GED and LPD. GED to supply CIT
with a copy of its current agreement with LPD for storage of
inventory. CIT to reserve against GED's loan availability for all
amounts owed LPD.
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
Bodyonics, Ltd.
February 11, 1997
Page 6
11. Xxxxxx Xxxx is released from his obligations under the Guaranty dated
July 1, 1992.
12. Xxxxxx Xxxx, by his signature acknowledges the above amendments and the
release of Xxxxxx Xxxx under the Guaranty dated July 1, 1992. Xxxxxx Xxxx,
by his signature confirms and ratifies all of his obligations to The CIT
Group/Credit Finance, Inc. under the Guaranty dated July 1, 1992 (the
"Guaranty") which is a guaranty of all of the obligations of GED, Phoenix
and Bodyonics to The CIT Group/Credit Finance, Inc. Xxxxxx Xxxx further
confirms that he has pledged $200,000 to CIT as cash collateral pursuant
to a Cash Collateral Agreement dated August 31, 1993 to secure all of his
obligations under the Guaranty.
13. This will confirm that in addition to all other fees at any time payable
by Debtors to CIT, Debtors shall pay CIT on each anniversary date of the
Accounts Agreement, a Facility Fee in the amount of $35,000, which
Facility Fee that is due to be paid on each of February 17, 1997 and
February 17, 1998 (aggregating $70,000) is fully earned as of the date
hereof and shall become immediately payable upon termination of the
Financing Agreements. Facility Fees due during any renewal term shall be
earned on the first day of such renewal term. Each Facility Fee may be
charged by CIT to any account of the Debtors maintained by CIT.
All other terms and conditions of the Financing Agreements shall remain in
full force and effect.
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
Bodyonics, Ltd.
February 11, 1997
Page 7
Please evidence your agreement to the foregoing by signing in the space
provided below and returning this letter to us.
Very truly yours,
THE CIT GROUP/CREDIT FINANCE, INC.
By: /s/
------------------------------
Title: Vice President
---------------------------
Agreed to:
PHOENIX LABORATORIES, INC. GREAT EARTH DISTRIBUTION, INC.
By: /s/ By: /s/
------------------------- -------------------------
Title: Asst Secty Title: Asst Secty
------------------------- -------------------------
BODYONICS, LTD.
By: /s/
-------------------------
Title: VP
-------------------------
Confirmed:
/s/ XXXXXX XXXX
--------------------------------
XXXXXX XXXX
EVERGOOD PRODUCTS CORPORATION
By: /s/
-------------------------
Title: Asst Secty
-------------------------
SIXTH AMENDED AND RESTATED PROMISSORY NOTE
$1,150,000 New York, New York
February 12, 1997
FOR VALUE RECEIVED, PHOENIX LABORATORIES, INC., GREAT EARTH DISTRIBUTION,
INC. and BODYONICS, LTD. (individually and collectively the "Payor"), jointly
and severally hereby promise to pay to the order of THE CIT GROUP/CREDIT
FINANCE, INC., a Delaware corporation ("Payee"), at its offices located at 000
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as Payee or
any holder hereof may from time to time designate, the principal sum of ONE
MILLION ONE HUNDRED FIFTY THOUSAND DOLLARS ($1,150,000.00) in lawful money of
the United States, in twenty-three installments of FIFTEEN THOUSAND DOLLARS
($15, 000) each payable on the first (1st) day of each consecutive month,
commencing March 1, 1997 and one (1) final installment in the amount of the
entire unpaid principal balance of this Note, payable February 17, 1999. Payor
hereby further promises to pay interest to Payee in like money at said off ice
or place on the unpaid principal balance hereof, computed at the rate of two and
one-half percent (2 1/2%) per annum plus the prime rate as announced by The
Chase Manhattan Bank or its successor, in New York, New York from time to time
as its prime rate (the prime rate is not intended to be the lowest rate of
interest charged by The Chase Manhattan Bank to its borrowers) and such interest
shall be payable monthly on the first (lst) day of each month, commencing March
1, 1997. Interest shall be calculated on the basis of a 360-day year and actual
days elapsed. In no event shall the interest charged hereunder exceed the
maximum permitted under the laws of the State of New York.
This Note is secured by the collateral described in the Security Agreement
(Accounts, Contract Rights, Instruments and Goods pertaining thereto), the
Inventory Security Agreement and the Equipment Security Agreement, each executed
February 17, 1988 by and between Payor and Fidelcor Business Credit Corporation
("Fidelcor"), assignor of Payee, and all related agreements, instruments
(including but not limited to this Note) and documents granting collateral
security to Payee or evidencing or creating indebtedness of Payor to Payee, all
guaranties executed by third parties guaranteeing Payor's obligations to Payee,
including those executed by: Xxxxxx Xxxx and Evergood Products Corporation (the
"Guarantors") (the foregoing, as the same may now exist and have been and may
hereafter be amended, modified, replaced or supplemented, are hereafter
collectively referred to as the "Financing Agreements").
This Note supersedes and replaces but does not extinguish any of the
unpaid liabilities and obligations under the Fifth Amended and Restated
Promissory Note dated January 11, 1995, in the original principal amount of
$945,000 executed by Payor in favor of Payee (the "Existing Note"). The
indebtedness of Payor to Payee evidenced hereby includes (i) the unpaid balance
of the indebtedness including unpaid interest heretofore evidenced by the
Existing Note; and (ii) an indebtedness of $835,200 representing an advance made
by Payee to Payor on the date hereof, all of which shall be repayable together
with interest accrued and accruing and other sums in accordance with the terms
hereof. Payor hereby acknowledges that Payor is as of the date hereof indebted
to Payee, in the principal amount hereof, together with interest accrued and
accruing through and after the date hereof, without offset, defense or
counterclaim of any kind, nature or description whatsoever. The amendment and
restatement contained herein shall not, in any manner be construed to constitute
payment of, or impair, limit, cancel or extinguish the indebtedness evidenced by
the Existing Note and the liens and security interests securing such
indebtedness shall not in any manner be impaired, limited, terminated, waived or
released hereby.
At the time any payment is due hereunder, Payee may, at its option, charge
the amount thereof to any account of Payor maintained by Payee.
2
If an event of default shall occur for any reason under any of the
Financing Agreements, or if any of the Financing Agreements shall be terminated
or not be renewed for any reason whatsoever, then and in any such event, in
addition to all rights and remedies of Payee under the Financing Agreements,
applicable law or otherwise (all such rights and remedies being cumulative, not
exclusive and enforceable alternatively, successively and concurrently) Payee
may, at its option, declare any or all of Payor's obligations under the
Financing Agreements, including, but not limited to, all amounts owing under
this Note, to be due and payable, whereupon the then unpaid balance hereof
together with all interest accrued thereon, shall, forthwith become due and
payable, together with costs and expenses of collection, including reasonable
attorney's fees.
Payee shall not be required to resort to any of the aforementioned
collateral for payment, but may proceed against Payor and/or the Guarantors in
such order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof. Payor
hereby waives diligence, demand, presentment, protest and notice of any kind and
assents to extensions of time of payment, release, surrender or substitution of
collateral security, or forbearance or other indulgence, without notice.
In the event of any litigation with respect to any of the Financing
Agreements, Payor waives the right to a trial by jury, all rights of set-off,
and any right to interpose permissive counterclaims and cross-claims, and Payor
consents to the jurisdiction of the courts of the State of New York and of any
federal court located in either New York or Nassau County in such State. Payor
further waives personal service of any and all process upon Payor and consents
that all such service of process may be made by certified mail, return receipt
requested, directed to Payor at the address listed above or of which Payor
advises Payee, in writing, and service so made shall be deemed complete three
days after the same shall have been posted. This Note shall be governed by and
construed, and all rights and obligations hereunder determined, in accordance
with the laws of the State of New York, and shall be binding upon the successors
and assigns of Payor and inure to the benefit of Payee, its successors,
endorsees and assigns.
3
If any term or provision of this Note shall be held invalid, illegal or
unenforceable, the validity of all other terms and provisions hereof shall in no
way be affected thereby.
The execution and delivery of this Note has been authorized by the board
of directors of Payor.
PHOENIX LABORATORIES, INC. BODYONICS, LTD.
By: /s/ By: /s/
----------------------------- -----------------------------
Title: Asst Secty Title: VP
----------------------------- -----------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/
-----------------------------
Title: Asst Secty
-----------------------------
4
GREAT EARTH DISTRIBUTION, INC.
Gentlemen:
From time to time we at the Great Earth family review our various
relationships including our financing relationships. As a result of that review
we have determined it would benefit the System and the Companies to enter into a
modification of our existing relationship with the CIT Group ("CIT"). They have
advised that our files require updating and have asked us to obtain this
"no-offset" letter with regard to the security interest they are to be granted
with respect to certain of our assets.
We have assigned our accounts to CIT and CIT shall make loans to us from
time to time on the security of the accounts. CIT will rely on this letter in
making loans.
Your signature at the foot of this letter confirms that you will not
assert any offset, claim, counterclaim or deduction against any account
receivable including any claim that the payment of any invoice is contingent on
fulfillment of any contract or condition whatsoever.
Nothing contained herein shall in any way limit your right to proceed
against us by independent action for any claim of any kind that you may now or
hereafter have.
Therefore, this letter simply asks that you continue to honor all of your
G.E.D. invoices without offset or asserting any counterclaim.
It is accordingly requested by CIT that this agreement be binding upon you
and your respective successors and assigns. So, please confirm your agreement to
the foregoing by signing below.
Very truly yours,
GREAT EARTH DISTRIBUTION, INC.
By: _________________________________
Its
The foregoing is accepted and agreed to this ____ day of _______, 1997.
By: __________________________________
(GREAT EARTH DISTRIBUTION, INC. STATIONERY)
__________________, 1997
_____________________________
_____________________________
_____________________________
Gentlemen:
From time to time we at the Great Earth family review our various
relationships including our financing relationships. As a result of that review
we have determined it would benefit the System and the Companies to enter into a
modification of our existing relationship with the CIT Group ("CIT"). They have
advised that our files require updating and have asked us to obtain this letter
with regard to the security interest they are to be granted with respect to
certain of our assets.
Therefore, this letter simply asks that you continue to honor all of your
G.E.D. invoices without offset or asserting any counterclaim.
In legal vernacular, your agreement not to assert any defense or claims
which you might have or which might accrue in the future against either of the
undersigned companies is needed as well as your agreement to honor all demands
for payment of your accounts owed to the Company without offset or counterclaim.
It is accordingly requested by CIT that this agreement be binding upon you
and your respective successors and assigns. So, please confirm your agreement to
the foregoing by signing below.
Very truly yours,
GREAT EARTH DISTRIBUTION, INC.
By: _________________________________
Its
The foregoing is accepted
and agreed to this _____ day
of _______________ 1997.
By: _________________________
SIXTH AMENDED AND RESTATED PROMISSORY NOTE
$1,150,000 New York, New York
February 12, 1997
FOR VALUE RECEIVED, PHOENIX LABORATORIES, INC., GREAT EARTH DISTRIBUTION,
INC. and BODYONICS, LTD. (individually and collectively the "Payor"), jointly
and severally hereby promise to pay to the order of THE CIT GROUP/CREDIT
FINANCE, INC., a Delaware corporation ("Payee"), at its offices located at 000
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as Payee or
any holder hereof may from time to time designate, the principal sum of ONE
MILLION ONE HUNDRED FIFTY THOUSAND DOLLARS ($1,150,000.00) in lawful money of
the United States, in twenty-three installments of FIFTEEN THOUSAND DOLLARS
($15,000) each payable on the first (1st) day of each consecutive month,
commencing March 1, 1997 and one (1) final installment in the amount of the
entire unpaid principal balance of this Note, payable February 17, 1999. Payor
hereby further promises to pay interest to Payee in like money at said office or
place on the unpaid principal balance hereof, computed at the rate of two and
one-half percent (2 1/2%) per annum plus the prime rate as announced by The
Chase Manhattan Bank or its successor, in New York, New York from time to time
as its prime rate (the prime rate is not intended to be the lowest rate of
interest charged by The Chase Manhattan Bank to its borrowers) and such interest
shall be payable monthly on the first (lst) day of each month, commencing March
1, 1997. Interest shall be calculated on the basis of a 360-day year and actual
days elapsed. In no event shall the interest charged hereunder exceed the
maximum permitted under the laws of the State of New York.
This Note is secured by the collateral described in the Security Agreement
(Accounts, Contract Rights, Instruments and Goods pertaining thereto), the
Inventory Security Agreement and the Equipment Security Agreement, each executed
February 17, 1988 by and between Payor and Fidelcor Business Credit Corporation
("Fidelcor"), assignor of Payee, and all related agreements, instruments
(including but not limited to this Note) and documents granting collateral
security to Payee or evidencing or creating indebtedness of Payor to Payee, all
guaranties executed by third parties guaranteeing Payor's obligations to Payee,
including those executed by: Xxxxxx Xxxx and Evergood Products Corporation (the
"Guarantors") (the foregoing, as the same may now exist and have been and may
hereafter be amended, modified, replaced or supplemented, are hereafter
collectively referred to as the "Financing Agreements").
This Note supersedes and replaces but does not extinguish any of the
unpaid liabilities and obligations under the Fifth Amended and Restated
Promissory Note dated January 11, 1995, in the original principal amount of
$945,000 executed by Payor in favor of Payee (the "Existing Note"). The
indebtedness of Payor to Payee evidenced hereby includes (i) the unpaid balance
of the indebtedness including unpaid interest heretofore evidenced by the
Existing Note; and (ii) an indebtedness of $835,200 representing an advance made
by Payee to Payor on the date hereof, all of which shall be repayable together
with interest accrued and accruing and other sums in accordance with the terms
hereof. Payor hereby acknowledges that Payor is as of the date hereof indebted
to Payee, in the principal amount hereof, together with interest accrued and
accruing through and after the date hereof, without offset, defense or
counterclaim of any kind, nature or description whatsoever. The amendment and
restatement contained herein shall not, in any manner be construed to constitute
payment of, or impair, limit, cancel or extinguish the indebtedness evidenced by
the Existing Note and the liens and security interests securing such
indebtedness shall not in any manner be impaired, limited, terminated, waived or
released hereby.
At the time any payment is due hereunder, Payee may, at its option, charge
the amount thereof to any account of Payor maintained by Payee.
2
If an event of default shall occur for any reason under any of the
Financing Agreements, or if any of the Financing Agreements shall be terminated
or not be renewed for any reason whatsoever then and in any such event, in
addition to all rights and remedies of Payee under the Financing Agreements,
applicable law or otherwise (all such rights and remedies being cumulative, not
exclusive and enforceable alternatively, successively and concurrently) Payee
may, at its option, declare any or all of Payor's obligations under the
Financing Agreements, including, but not limited to, all amounts owing under
this Note, to be due and payable, whereupon the then unpaid balance hereof
together with all interest accrued thereon, shall forthwith become due and
payable, together with costs and expenses of collection, including reasonable
attorney's fees.
Payee shall not be required to resort to any of the aforementioned
collateral for payment, but may proceed against Payor and/or the Guarantors in
such order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof. Payor
hereby waives diligence, demand, presentment, protest and notice of any kind and
assents to extensions of time of payment, release, surrender or substitution of
collateral security, or forbearance or other indulgence, without notice.
In the event of any litigation with respect to any of the Financing
Agreements, Payor waives the right to a trial by jury, all rights of set-off,
and any right to interpose permissive counterclaims and cross-claims, and Payor
consents to the jurisdiction of the courts of the State of New York and of any
federal court located in either New York or Nassau County in such State. Payor
further waives personal service of any and all process upon Payor and consents
that all such service of process may be made by certified mail, return receipt
requested, directed to Payor at the address listed above or of which Payor
advises Payee, in writing, and service so made shall be deemed complete three
days after the same shall have been posted. This Note shall be governed by and
construed, and all rights and obligations hereunder determined, in accordance
with the laws of the State of New York, and shall be binding upon the successors
and assigns of Payor and inure to the benefit of Payee, its successors,
endorsees and assigns.
3
If any term or provision of this Note shall be held invalid, illegal or
unenforceable, the validity of all other terms and provisions hereof shall in no
way be affected thereby.
The execution and delivery of this Note has been authorized by the board
of directors of Payor.
PHOENIX LABORATORIES, INC. BODYONICS, LTD.
By: /s/ By: /s/ Xxx Xxxx
----------------------------- -----------------------------
Title: Title: VP
----------------------------- -----------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/
-----------------------------
Title:
-----------------------------
THE CIT GROUP
Credit Finance
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
THE
CIT
GROUP
January 21, 1998
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
Bodyonics, Ltd.
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Re: Security Agreement (Accounts, etc.) executed February 17, 1988 (the
"Accounts Agreement), by and between Phoenix Laboratories, Inc.
("Phoenix") and Great Earth Distribution, Inc. ("GED") and The CIT
Group/Credit Finance, Inc. ("CIT") assignee of Fidelcor Business
Credit Corporation ("Fidelcor"), and the Security Agreement
(Inventory) and Security Agreement (Equipment), executed February
17, 1988 by Phoenix and GED in favor of Fidelcor, to which Security
Agreements Bodyonics, Ltd. ("Bodyonics") became a party, as Debtor,
by letter agreement dated November 18, 1996; the Sixth Amended and
Restated Promissory Note in the original principal amount of
$1,150,000, dated February 12, 1997 and made by Phoenix, GED and
Bodyonics (the "Note"), and all related agreements, amendments,
documents and instruments (collectively, the "Financing Agreements").
---------------------------------------------------------------------
Gentlemen:
The present term of your Financing Agreements with CIT expires February
17, 1999. We propose to amend the Financing Agreements and the Note as set forth
below, effective as of December 1, 1997. Capitalized terms appearing below that
are not defined herein shall have the meanings given in the Rider to the
Accounts Agreement, as amended and restated as of the date hereof.
1. Paragraph 6 of the printed portion of the Accounts Agreement
is hereby deleted in its entirety and the following is
substituted therefor:
"6. That Debtor will pay CIT for its advances made hereunder a charge of
two percent (2%) per annum plus the rate of interest publicly announced by
The Chase Manhattan Bank, New York, New York from time to time as its
prime rate (the prime rate is not intended to be the lowest rate of
interest charged by The Chase Manhattan Bank to its borrowers),
computed on a 360-day year. In the event of a change in the prime rate
charged at The Chase Manhattan Bank, adjustment hereunder shall be made on
the day of such change in the prime rate. All charges shall be computed
upon the average daily balances outstanding and charged to Debtor's
account or paid monthly."
2. The following is a restatement, in its entirety, of Paragraph
30 of the printed portion of the Accounts Agreement, as
heretofore amended:
"Debtor may, on thirty days prior written notice, prepay and terminate
this Security Agreement by paying to CIT, in cash, the entire unpaid
principal balance plus accrued charges, together with a sum equal to 25%
of the average monthly charges for the immediately preceding six months,
multiplied by the number of months of the unexpired balance of the term of
this agreement (the "early termination fee"). However, in no event shall
the early termination fee be less than $100,000. In the event of a default
or breach by Debtor hereunder, the parties agree that damages sustained by
CIT shall be computed, as provided in this paragraph. Prior to actual
receipt of moneys due under this paragraph, CIT may at its option exercise
all of its rights under the Security Agreement."
3. The last sentence of Paragraph 17 of the printed portion of
the Accounts Agreement is amended to read as follows:
"In order to avoid the necessity for separate computation of the time
of clearance of each collection item, clearance time of two business
days shall be allowed upon every check and such note or draft or
other instrument for the payment of money before the same shall be
deemed so collected."
4. The first sentence of paragraph 26 of the printed portion of
the Accounts Agreement is amended to read as follows:
"That this Agreement shall remain in effect until August 17, 2000 and
shall be deemed automatically renewed for successive terms of two
years."
5. The Debtors affirm that the unpaid principal balance of the
Note as of the date hereof is $1,000,000.
The Note shall be amended to provide that (i) the final installment
thereof in the amount of the entire unpaid principal balance shall be
payable on August 17, 2000 rather than on February 17, 1999; and (ii)
interest on the unpaid principal balance of the Note shall be payable at
the rate per annum of two (2%) percent plus the prime rate announced by
The Chase Manhattan Bank or its successor rather than two and one-half
(2.5%) percent plus such prime rate.
6. In consideration of the amendment of the Financing Agreements as provided
herein, the Debtors shall pay to CIT a Transaction Fee in the amount of
$10,000 which shall be payable on the date hereof and may be charged by
CIT on the date hereof to any account of the
Debtors maintained with CIT. In consideration of the payment of such
Transaction Fee, and notwithstanding the terms of Section F of the Rider
to the Accounts Agreement, Debtors shall not be obligated to pay the fees
of CIT's in-house or outside counsel incurred in connection with the
preparation of this Agreement, the amended and restated Rider to the
Accounts Agreement or the documents required pursuant to Paragraph 8 of
this Agreement.
7. This will confirm that in addition to all other fees at any time payable
by Debtors to CIT, Debtors shall pay a Facility Fee to CIT on each
anniversary date of the Accounts Agreement in the amounts hereinafter set
forth. The Facility Fee payable during the term of the Financing
Agreements ending on August 17, 2000 shall be fully earned on the date
hereof and the Facility Fee payable during any renewal term shall be fully
earned on the first day of such renewal term. The Facility Fee payable on
February 17, 1998 shall be $35,000, the Facility Fee payable on February
17, 1999 shall be $25,000 and the Facility Fee payable on February 17,
2000 and on each subsequent anniversary of the date of the Accounts
Agreement, commencing February 17, 2001, shall be $12,500. Upon the
occurrence of a default under the Financing Agreements or upon the
effective date of termination of the Financing Agreements for any reason
prior to the end of the then current term, all Facility Fees payable at
any time during such term shall become immediately due and payable in
full. Each Facility Fee may be charged by CIT to any account of the
Debtors maintained by CIT.
8. Debtors agree and acknowledge that it is a material condition of the
financing to be provided by CIT that CIT receive the following documents
or instruments and that accordingly, the failure to provide such documents
or instruments to CIT within 30 days of the date hereof (or, in the case
of documents that have not yet been submitted to Debtors by CIT and whose
form and content have not been approved by Debtors, as noted below, within
30 days after the date that the form and content of such document is
approved by Debtors) or the failure of Debtors and CIT to agree on the
form and content of a document within 30 days after such document has been
submitted to Debtors, shall constitute a default under the Financing
Agreements (but nothing contained herein shall limit the generality of the
terms of the Financing Agreements or constitute a waiver of any of the
terms thereof):
a. Acknowledgment by Lightning Pack, Inc., Paterson, New Jersey, of
CIT's security interest in inventory stored by Debtors with such
entity (document has been approved by Debtors but Debtors shall have
45 days from the date hereof to have such document executed by
Lightning Pack, Inc. and delivered to CIT);
b. Guaranties by Great Earth Companies, Inc. and Great Earth
International Franchising Corp. in favor of CIT of all indebtedness
due to CIT from Phoenix, GED and Bodyonics, secured by a security
interest in all assets of such entities, including a collateral
assignment of such entities, trademarks and rights under franchise
agreements (guaranties and/or security agreements identical to any
such instruments already executed by any of Debtors in favor of CIT
shall be deemed approved by Debtors; form of collateral assignment of
trademarks and rights under franchise agreements has not yet been
approved by Debtors);
c. Collateral assignment by Phoenix, securing its obligations to CIT, of
all patents, formulas and other trade secrets (document not yet
approved by Debtors); and
d. Notification (signed by GED, Bodyonics and Phoenix) to General
Nutritional Corp. ("GNC"), in the form attached, of CIT's security
interest in accounts receivable due from GNC to GED, Bodyonics and
Phoenix (document has been approved by Debtors); and
e. Evidence that Debtors have obtained a policy of credit insurance on
their accounts receivable in an amount no less than $750,000,
satisfactory to CIT as to form and issuer, with an endorsement naming
CIT as beneficiary or loss payee (approval of form and content of
documents by Debtors is not applicable to this subsection and is not
required).
9. In lieu of an agreement from the landlord of Debtors' premises at 000
Xxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxx (the "Hicksville Premises"), agreeing
that CIT may have access to such premises for the purpose of removing its
collateral in the event of a default, it is agreed that:
a. CIT may hold a reserve from amounts otherwise due to the Debtors
under the Financing Agreements, an amount equal to three (3) months
rent payable under the lease of the Premises (the "Lease'). The
monthly rent under the Lease is now $18,450; and
b. Debtors shall provide to CIT each month evidence of its payment of
the monthly rent due under the Lease and shall provide to CIT copies
of any amendments of the Lease changing the amount of such rent; and
c. Debtors' failure to pay any amount due under the Lease within 30 days
of its due date shall constitute a default under the Financing
Agreements.
By his execution below, Xxxxxx Xxxx confirms that his Guaranty (which is limited
to $450,000 in principal indebtedness and under which the estate of Xxxxxx Xxxx
shall no longer be liable) in favor of CIT, dated July 1, 1992, with respect to
the obligations of Phoenix, GED and Bodyonics, and the Cash Collateral
Agreement, dated August 31, 1993 executed by him in favor of CIT, securing such
Guaranty, remain in full force and effect.
The undersigned GED, Phoenix, Bodyonics and Evergood Products Corporation
confirm that the Guaranty, dated February 17, 1988, pursuant to which they have
each guaranteed each others obligations to CIT, remains in full force and
effect.
All other terms and conditions of the Financing Agreements shall remain in full
force and effect. The undersigned agree to execute such further documents and
instruments as shall be necessary to carry out the purposes of the amendment of
the Financing Agreements set forth above.
Please sign and return this letter to us to evidence your agreement to the
amendments of the Financing Agreements set forth above.
The offer to amend the Financing Agreements as provided in this letter shall be
deemed revoked if this letter is not signed and returned by you on or before
January 30, 1998.
Very truly yours,
THE CIT GROUP/CREDIT FINANCE, INC.
By: /s/
----------------------------------
Title: Vice President
-------------------------------
Agreed to:
PHOENIX LABORATORIES, INC.
By: /s/
----------------------------------
Title: Vice President
-------------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/
----------------------------------
Title: Vice President
-------------------------------
BODYONICS, LTD.
By: /s/
----------------------------------
Title: Vice President
-------------------------------
Confirmed:
/s/ XXXXXX XXXX
-------------------------------------
XXXXXX XXXX
EVERGOOD PRODUCTS CORPORATION
By: /s/
----------------------------------
Title: Vice President
-------------------------------
AMENDED AND RESTATED RIDER TO SECURITY AGREEMENT
(Accounts, Contract Rights, Instruments
and Goods Pertaining Thereto)
between
Debtors: PHOENIX LABORATORIES, INC. ("Phoenix")
GREAT EARTH DISTRIBUTION, INC. ("GED")
BODYONICS, LTD. ("Bodyonics")
(each hereafter refined to individually as "Debtor" and
collectively as "Debtors")
and
Secured Party: THE CIT GROUP/CREDIT FINANCE, INC.
(hereafter referred to as "CIT")
This is an Amendment and Restatement, effective as of December 1, 1997, of the
Rider to the Security Agreement (Accounts, Contract Rights, Instruments and
Goods Pertaining Thereto), dated February 17, 1988 (this "Agreement", between
Debtor and Fidelcor Business Credit Corporation ("Fidelcor"), to whose rights
CIT has succeeded, pursuant to which, in addition to and not in limitation of
any and all rights granted to CIT and obligations incurred by Debtor in the
printed portion of this Agreement, Debtor further warrants, covenants and agrees
as follows:
A. Each of the Debtors shall be jointly and severally liable for the
Obligations (as hereafter defined) of all of the Debtors.
B. The term "Financing Agreements" shall mean and include, without
limitation, this Agreement, the Security Agreement (Inventory), the Security
Agreement (Equipment), and the agreements, documents and instruments listed on
the attached Schedule A, as now existing or as hereafter renewed, extended,
amended, modified or supplemented and any agreements, documents and guaranties
that (i) are executed in the future; and (ii) are executed by any Debtors or
Affiliates of any Debtors in favor of CIT or are between CIT and any Debtors or
Affiliates of theirs or grant collateral security for or create or evidence
indebtedness of any Debtors or Affiliates of theirs to CIT; and (iii) do not by
their terms expressly recite that they shall not be deemed "Financing
Agreements" hereunder. Affiliate means any entity having common ownership with a
Debtor or controlled by or under common control with any Debtor.
C. The term "Obligations" or obligations shall mean and include,
without limitation, any and all of Debtor's indebtedness and/or liabilities to
CIT of every kind, nature and description, direct or indirect, secured or
unsecured, joint and/or several, absolute or contingent, due or to become due,
now existing or hereafter arising, related or unrelated, regardless of how they
arise or by what agreement or instrument they may be evidenced or whether
evidenced by any agreement or instrument, including, but not limited to all
amounts owing by Debtor to CIT under this Agreement, the other Financing
Agreements, or any other security agreement, guaranty or note and all
obligations to perform acts or refrain from taking any action.
D. The term Collateral or collateral shall mean and include, without
limitation, that which is set forth in Paragraph I of the printed portion of
this Agreement and any and all other items of real or personal property in which
Debtor has granted or may in the future grant a security interest to CIT under
the Financing Agreements, or any supplement or supplements thereto, and/or under
any other security agreement, or other agreement, all of Debtor's right, title
and interest in and to the goods or other property represented by or securing
any of the foregoing, all of Debtors rights as an unpaid vendor or lien or,
including stoppage in transit, replevin or reclamation, all additional amounts
due to Debtor from any account debtor irrespective of whether such additional
amounts have been specifically assigned to CIT, all other agreements on property
securing or relating, to any of the items referred to above or acquired for the
purposes of securing or enforcing any of such items, 0 present and future
chattel paper, motor vehicles, licenses, patents, trademarks, copyrights,
license agreements, tax and duty claims and refunds, computer software,
goodwill, customer lists, all documents, monies, deposits, securities,
instruments, credits, and other property now or hereafter held by CIT or any
entity which at any time participates in CIT's financing transactions with
Debtor, and all products, proceeds and accessions of all of the foregoing in
whatever form. Debtor hereby grants CIT a continuing first priority security
interest in and general lien upon all of the Collateral to secure payment and
performance of all of the Obligations, except for prior security interests set
forth on Schedule B attached hereto.
E. In addition to any other security interest granted in the
Financing Agreements and not in limitation of any of the foregoing, and to
secure the payment and performance of all of the Obligations. Debtor hereby
pledges and assigns to CIT and grants to CIT a continuing general security
interest in all of the Debtor's ledger sheets, files, records and documents
relating to the Collateral. which shall, until delivered to or removed by CIT,
be kept by Debtor in trust for CIT and without cost to CIT in appropriate
containers in safe places, bearing suitable legends disclosing CIT's security
interest. Each confirmatory assignment schedule or other form of Assignment
hereafter executed by Debtor, shall be deemed to include the foregoing, whether
or not same appears therein.
F. The Debtor will pay all costs and expenses and all taxes,
recording and filing fees (including Uniform Commercial Code Financing
Statements) in connection with the preparation. execution, delivery,
administration (including wire transfer charges in amounts that CIT may from
time to time establish if Debtor requests wire transfers) and enforcement of
this Agreement and all other documents Contemplated herein or related hereto,
including any amendments, supplements or consents which may he hereafter made or
entered into in respect thereof, including appraisal fees, and lien searches in
connection herewith and fees and disbursements of in-house and outside counsel
to CIT. Debtor will pay all out-of-pocket costs of field examinations to be
conducted by CIT as provided in Paragraph 13 of the printed portion of the AP
cement plus $650.00 per person per day. CIT is hereby authorized to charge any
amounts payable hereunder (including principal, interest, fees, charges and
expenses) directly to any account of the Debtor maintained with CIT.
G. CIT agrees that in addition to the advances made with reference to
the formula set forth in Paragraph 2 of the printed portion of this agreement
("Accounts Advances"),
CIT shall make additional advances to Debtor, in its sole discretion, of thirty
percent (30%) of the value of Phoenix's acceptable and eligible raw material
inventory and of thirty-five (35%) percent of the value of GED's and Bodyonics'
acceptable and eligible finished goods inventory (collectively the "Inventory
Advances"). As used herein, "value" shall mean the lower of cost or market
price, as determined by CIT. Except in CIT's sole discretion, (1) the aggregate
principal amount of Accounts Advances to GED shall not exceed, at any time
outstanding, the lesser of (a) $1,750,000 (the "GED Accounts Sublimit") or (b)
an amount equal to one hundred and twenty-five (125%) percent of the Phoenix
Accounts Advances and (2) the aggregate principal amount of the Inventory
Advances to Debtors shall not exceed $2,000,000 at any time outstanding. Except
in CIT's sole discretion, the aggregate principal amount of Accounts Advances to
Bodyonics shall not exceed an amount equal to the sum of one hundred (100%)
percent of the Phoenix Accounts Advances and one hundred (I 00%) percent of the
GED Accounts Advances.
H. Except in CIT's sole discretion the aggregate principal amount of
the advances made by CIT to Debtors under the Financing Agreements, including
the Accounts Advances and the Inventory Advances, shall not exceed the principal
amount of $6,500,000 at any time outstanding.
I. [Intentionally omitted]
J. In consideration of CIT entering into this Agreement and incurring
accounting, operating and Management expenses, Debtors shall pay to CIT each
calendar month a minimum charge equal to the amount of interest Debtors would
pay CIT if they at all times had an aggregate average daily loan balance
outstanding of S2,500,000 bearing interest at the rate provided for in Paragraph
6 of the printed portion of this Agreement. CIT shall reduce such minimum charge
by the amounts actually paid by Debtors to CIT as interest pursuant to said
Paragraph 6, so that for each calendar month Debtors shall pay CIT interest as
provided for in said Paragraph 6, plus the amount, if any, by which the minimum
charge provided for in this paragraph exceeds the amount of interest payable
pursuant to said Paragraph 6 for such month. If this Amendment shall be
terminated. such minimum charge shall continue and be paid by the Debtor for any
unexpired term of this Agreement, except if such termination is made pursuant to
Paragraph 26 or 30 of the printed portion of this Agreement or by mutual
agreement of CIT and the Debtor.
K. All advances by CIT pursuant to this Agreement shall bear interest
at the variable rate provided for in Paragraph 6 of the printed portion of this
Agreement and shall be calculated on the basis of a 360-day year for actual days
elapsed.
L. Should CIT commence a proceeding to take possession of any of the
Collateral under this Agreement or any of the Financing Agreements, Debtor
waives the requirement, if any, that CIT post a bond or any other type of
security.
M. In addition to all of the covenants set forth in the
Financing Agreements and without limiting any of the terms or
provisions thereof, Debtor hereby covenants and agrees as follows:
1. Debtor will pay all obligations when due and will perform all of the
terms, conditions, covenants and agreements of Debtor to be performed
under the Financing Agreements, and will make punctual payment of all
monies and will perform all of the terms, conditions, covenants and
agreements on its part to be paid, kept or performed under the terms of
any lease or mortgage of the premises where any of the Collateral is now
or hereafter located, wherein Debtor is lessee or mortgagor, and will
promptly notify CIT in the event of any default by Debtor or receipt by
Debtor of any notice or alleged default under any such lease or mortgage.
2. Debtor will pay and discharge at or before maturity, all taxes,
assessments, rents, claims, debts and charges except where the same are
being contested in good faith and Debtor is maintaining, in accordance
with generally accepted accounting principles and practice, appropriate
reserves for accrual thereof
3. Debtor will promptly give notice in writing to CIT of the occurrence of
any event which constitutes or which with notice or lapse of time, or
both, would constitute a default under any of the Financing Agreements. As
used in the Paragraph (3), the word "promptly" shall be determined in
relation to the point in time at which Debtor, exercising sound management
practices, has actual knowledge or should have discovered the occurrence
of such event.
4. Debtor will provide CIT with such other information concerning the
financial or business affairs of Debtor as CIT, in its sole discretion,
requests from time to time.
5. Debtor will not, without the prior written consent of CIT, declare or pay
any dividend, return any capital to any of its stockholders, loan any sum
to any of its stockholders, employees, officers or directors, or redeem,
repurchase or otherwise acquire any of its outstanding capital stock
except that Debtor may continue to repay an indebtedness due to its
shareholder, Xxxxxxxxx Xxxx, in the outstanding principal amount of
$378,623.08, provided that the amount of such repayment does not exceed
$140,000 per year, inclusive of both principal and interest.
6. Notwithstanding Paragraph 3 of the printed portion of this Agreement,
Debtor shall direct that all proceeds of accounts receivable, letters of
credit, banker's acceptances and other proceeds of Collateral shall be
payable to a post office box or a lock box designated by and in control of
CIT and in connection therewith shall execute such agreements as CIT in
its sole discretion shall specify. So long as no default has occurred
under the Financing Agreements, Debtor's deposit of all proceeds of
Collateral
to an account at Chase Manhattan Bank which is blocked to CIT shall
constitute compliance with this subsection.
7. Debtor will duly execute and deliver, or will cause to be executed and
delivered, such further instruments and documents, including, without
limitation, additional security agreements, collateral assignments,
Uniform Commercial Code financing statements or amendments, or
continuations thereof, landlord's or mortgagee's waivers of liens, and
consents to the exercise by CIT of 0 of its rights and remedies under the
Financing Agreements with respect to the Collateral and will do such
further acts as may be necessary or proper in CIT's opinion to effectuate
the provisions or purposes of the Financing Agreements.
8. Debtor will not, without the prior written consent of CIT, directly or
indirectly sell, lease, abandon or otherwise dispose of all or any
substantial portion of its property or assets or consolidate with or merge
with or into any other entity, or permit any other entity to consolidate
with or merge with or into it.
9. Debtor will at all times preserve and keep in full force and effect its
corporate existence, licenses, permits, rights and franchises.
10. Debtor will comply with the requirements of all applicable laws, rules,
regulations, orders of any governmental authority, and all agreements to
which Debtor is a party. the noncompliance with which laws, rules,
regulations, orders and agreements would materially adversely affect its
business, properties or credit.
N. Any default by Debtor under the Financing Agreements or any
default under any material obligation for the payment of money to any person,
firm or corporation shall constitute and be deemed a default by the Debtor and
shall be a default under all such other agreements and instruments.
O. Debtor hereby further represents and warrants to CIT
the following:
1. Debtor has the corporate power to borrow and to execute, deliver and carry
out the terms and provisions of the financing Agreements, and a other
instruments and documents delivered by it pursuant hereto and thereto, and
Debtor has taken or caused to be taken all necessary corporate action to
authorize the execution, delivery and performance of the Financing
Agreements. and such other agreements, the borrowings hereunder and the
execution, delivery and performance of the instruments and documents
delivered and to be delivered by it pursuant hereto and thereto, and the
Financing Agreements constitute and will constitute legal, valid and
binding obligations of Debtor, enforceable in accordance with their
respective terms.
2. Debtor is not aware of, has knowledge of, or has received notice of, a
default in any material respect under any indenture, mortgage, deed of
trust, lease agreement, or other instrument to which it is a party or by
which it or its properties may be bound. Neither the execution nor
delivery of the Financing Agreements, nor any of the instruments
or documents to be delivered pursuant hereto or thereto, nor the
consummation of the transactions herein or therein contemplated nor
compliance with the provisions hereof or thereof, will violate any law or
regulation or any order or decree of any court or governmental
instrumentality in any respect, or will conflict with, or result in the
breach of, or constitute a default in any material respect under, any
mortgage, deed of trust, agreement or other instrument to which Debtor is
party or by which it or its properties may be bound, or result in the
creation or imposition of any lien, charge or encumbrance upon any of the
property of Debtor (except as contemplated hereunder or under any of the
other Financing Agreements) or violate any provision of Certificate of
Incorporation or By-Laws of Debtor.
3. No action of, or filing with, any governmental or public body or
authority (other than the filing or recording of Uniform Commercial Code
financing statements) is required in connection with the execution,
delivery and performance of the Financing Agreements or any of the
instruments or documents to be delivered pursuant hereto or thereto.
4. Debtor has obtained all necessary licenses and approvals and is in
compliance in all material respects with all applicable state and Federal
laws and regulations relating to the conduct of its business as presently
conducted or contemplated.
5. There are no strikes or other labor disputes against Debtor, pending, or
to Debtor's knowledge, threatened.
6. None of the information contained in the representations and warranties
made by Debtor in the Financing Agreements, or contained in any
certificate, statement, schedule or exhibit to or under any of the
Financing Agreements, contains or will contain any untrue statement of a
material fact or omit or will omit to state a fact necessary in order to
make the statements contained herein or therein not misleading.
PHOENIX LABORATORIES, INC.
By: /s/
-----------------------------
Title: VP
--------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/
-----------------------------
Title: VP
--------------------------
BODYONICS, LTD.
By: /s/
-----------------------------
Title: VP
--------------------------
THE CIT GROUP/CREDIT FINANCE, INC.
By: /s/
-----------------------------
Title: VP
--------------------------
Schedule A
1. Security Agreement (Accounts, etc.) between Phoenix Laboratories, Inc.
("Phoenix"), Great Earth Distribution, Inc. ("GED"), and Fidelcor Business
Credit Corporation ("Fidelcor") dated February 17, 1988.
2. Rider to Security Agreement (Accounts, etc.) between Phoenix, GED and
Fidelcor.
3. Amendments to Security Agreement
a. Amendment dated June 29. 1988 among GED, Phoenix and
Fidelcor;
b. Amendment dated October 4, 1989 among GED, Phoenix and
Fidelcor;
c. Amendment dated August 13, 1991 among GED, Phoenix and
The CIT Group/Credit Finance, Inc. ("CIT");
d. Amendment dated August 13, 1991 among Great Earth
International, Inc., Great Earth International Licensing
Corp., Great Earth Stores, Inc., Great Earth
International Franchising Corp., Great Earth Vitamins
Ltd. and CIT;
e. Amendment dated December 16, 1991 among Phoenix, GED,
Evergood Products Corporation ("Evergood") and CIT;
f. Amendment dated June 19, 1992 among Phoenix, GED, Evergood and CIT;
g. Amendment dated August 27, 1993 among Phoenix, GED,
Evergood and CIT;
h. Amendment dated December 23, 1994 among Phoenix, GED and CIT;
i. Amendment dated January 4, 1995 among Phoenix, GED and
CIT;
j. Amendment dated January 6,1995 among Phoenix, GED and CIT;
k. Amendment dated June 21, 19,96 among Phoenix. GED.
Evergood and CIT;
l. Amendment dated November 18,1996 among Phoenix,
Bodyonics, Ltd. ("Bodyonics') and CIT;
m. Amendment dated November 18, 1996 among Phoenix,
Bodyonics and CIT;
n. Amendment dated February II, 1997 among Phoenix, GED,
Bodyonics, Evergood and CIT.
4. Security Agreement (Inventory) among Phoenix, GED and Fidelcor
dated February 17,1988
5. Security Agreement (Equipment) among Phoenix, GED and Fidelcor
dated February 17,1988
6. Sixth Amended and Restated Promissory Note in the original principal
amount of $1,150,000.00 made by Phoenix, GED and Bodyonics and payable to
CIT dated February12,1997.
7. Secretary's Certificates
a. Secretary's Certificate of Evergood dated February 9,
1988;
b. Secretary's Certificate of Phoenix dated February 9, 1988;
c. Secretary's Certificate of GED dated February 9, 1988.
8. Replacement Guaranty by Xxxxxx Xxxx in favor of CIT with
respect to Phoenix and GED dated July 1, 1992
9. Cash Collateral Agreement executed by Xxxxxx Xxxx, dated
August 31, 1993.
10. Guaranty by Evergood, Phoenix and GED in favor of Fidelcor
with respect to Evergood Products Corporation, Phoenix
Laboratories, Inc. and Great Earth Distribution, Inc., dated
February 17, 1988
11. Intercreditor Agreement between Fidelcor and Xxxxxxxx - Xx
Xxxxx Inc. dated February16, 1988
12. Guaranty in favor of Fidelcor by Great Earth International,
Inc. ("GED), dated April 26, 1988, with respect to Phoenix and
GED.
13. Trademark Collateral Assignment and Security Agreement, dated
April 26, 1988,executed by GEI in favor of Fidelcor.
Schedule B
Page 1 of 2
Unterminated Security Interests
-------------------------------------------------------------------------------------------------------
Amendments
Juris- Filing (Releases,
Debtor Secured Party diction UCC # Date Collateral Assignments, etc.)
-------------------------------------------------------------------------------------------------------
Phoenix Xxxxxxx-La N.Y. 390298 12/24/88 All Equipment
Laboratories, Inc. Roche, Inc. S/S (now owned,
X.X. Xxx 000 000 Xxxxxxxxx hereafter
000 Xxxxx Xxxxxx Xxxxxx xxxxxxxx)
Xxxxxxxx, Xxx Xxxx Nutley, N.J.
11598 07110
-------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxx Xxxxxx X.X. 000000 11/10/86 2 Machines
Laboratories, Inc. Trust Co. S/S
000 Xxxxxx Xxxx Xxxxxxxxxx Xxxxxx has no
Hicksville, New York Finance Dept. power to sell
11801 00 Xxxxxxxx xx xxxxxxx xx
Xxxxxxxxxx, xxxxxxxxxx
XX 00000
-------------------------------------------------------------------------------------------------------
Phoenix Xxxxxxx-La Nassau 87-001408 1/16/87 All equipment
Laboratories, Inc. Roche, Inc. County (now owned &
X.X. Xxx 000 000 Xxxxxxxxx Clerk hereafter
000 Xxxxx Xxxxxx Xxxxxx xxxxxxxx.)
Xxxxxxxx, Xxx Xxxx Nutley, N.J.
11598 07110
-------------------------------------------------------------------------------------------------------
Phoenix Xxxxxxx-La Nassau 87-027548 11/25/87 All equipment
Laboratories, Inc. Roche, Inc. County (now owned &
X.X. Xxx 000 000 Xxxxxxxxx Clerk hereafter
000 Xxxxx Xxxxxx Xxxxxx xxxxxxxx.)
Xxxxxxxx, Xxx Xxxx Nutley, N.J.
11598 07110
-------------------------------------------------------------------------------------------------------
Phoenix Equilease Nassau 86-03044 12/19/86 Feild for Info. ASSIGNED TO:
Laboratories, Inc. Corporation County Only. Textron Capital
000 Xxxxxx Xxxx 750 Third Clerk Property (not Corporation
Hicksville, New York Avenue described) 0000 Xxxxxxxx Xxxxx Xxxxx
00000 Xxx Xxxx, XX Subject to Xxxxxxxxxx, Xxxxx Xxxxxx
00000 LEASE
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Schedule B
Page 2 of 2
(Cont'd)
-------------------------------------------------------------------------------------------------------
Amendments
Juris- Filing (Releases,
Debtor Secured Party diction UCC # Date Collateral Assignments, etc.)
-------------------------------------------------------------------------------------------------------
Phoenix WASCO Funding Nassau 86-021181 8/25/86 MACHINE (3) ASSIGNED TO:
Laboratories, Inc. Corporation County leased to Xxxxxx
000 Xxxxxx Xxxx 150 East 58th Clerk debtor who has Financial Corporation
Hicksville, New Street no right to 0 Xxxxxxx Xxxxxx
Xxxx 00000 Xxx Xxxx, New sell or Xxxxxx Xxxxxxx, XX 00000
York 10155 dispose.
--------------------------------------------------------------------------------------------------------
Phoenix L.I. Trust Co., Nassau 86-027280 11/18/86 2 MACHINE
Laboratories, Inc. N.A. County
000 Xxxxxx Xxxx Industrial Clerk
Hicksville, Xxx Xxxxxxx Xxxx.
Xxxx 00000 00 Xxxxxxxx
Xxxxxxxxxx, XX
00000
--------------------------------------------------------------------------------------------------------
Great Earth The Lease Factor, S/S 87-128909 5/28/87 Equipment Lease
Distribution, Inc. Inc. Calif.
00000 Xxxxxxx Xxxxxx Xxx Xxxxxxxx
Xx Xxxxxx, XX 00000 Building
X.X. Xxx 00
Xxxxx Xxxxxxx
Xxxxxxxxxxx,
Xxxx. 00000
--------------------------------------------------------------------------------------------------------
Great Earth Pitney Xxxxx S/S 86-146811 6/11/86 Lease - re:
Distribution, Inc. Credit Calif. Postal
00000 Xxxxxxx Xxxxxx Xxxxxxxxxxx Xxxxxxxxx
Xx Xxxxxx, XX 00000 00000 Xxxxxxxxx
Xxxx.
Xxxxx 000
Xxxxxxxx, XX
00000
--------------------------------------------------------------------------------------------------------
Great Earth Pitney Xxxxx S/S 86146812 6/11/86 Lease - re:
Distribution, Inc. Credit Calif. Postal
00000 Xxxxxxx Xxxxxx Xxxxxxxxxxx Xxxxxxxxx
Xx Xxxxxx, XX 00000 00000 Xxxxxxxxx
Xxxx.
Xxxxx 000
Xxxxxxxx, XX
00000
--------------------------------------------------------------------------------------------------------
P. CIT shall have the right, in its discretion, to withhold and
reserve from the amount of its advances under this Agreement such amount as CIT
shall establish as a reasonable reserve upon the occurrence of any breach of any
warranty, covenant, or agreement under the Financing Agreements or for any
default under the Financing Agreements. Without in any way limiting CIT's rights
to withhold and set up reserves, in its sole discretion, CIT shall have the
right to establish a reserve from Debtor's availability for amounts due from GED
to Xxxxxxxxxx Healthcare Services, Inc.
Q. CIT agrees that in addition to the Accounts Advances
and Inventory Advances, CIT shall make additional advances to
Debtor of up to
(i) whichever is less,
(x) $200,000; or
(y) 100% of the amount of any cash collateral pledged by
any guarantor of the Obligations to secure his or her
guaranty; and
(ii) whichever is less,
(x) S250,000; or
(y) five (5%) of the sum of
(a) the combined Accounts and Inventory Availability
of the Debtors, as hereinafter defined. and
(b) the unpaid principal balance from time to time of the Sixth
Amended and Restated Promissory Note, in the original principal
amount of $1,150,000, dated February 12, 1997, made by Phoenix,
GED and Bodyonics.
Accounts Availability means for each Debtor, the advance percentage
applicable to accounts receivable of such Debtor as specified in Paragraph
2 of the printed portion of this Agreement, multiplied by the amount of
eligible and acceptable accounts receivable of such Debtor, but not
exceeding any limitation on the amount of Accounts Advances to such Debtor
specified in such Paragraph 2 or in Section G of this Rider.
Inventory Availability means for each Debtor, the advance percentages
applicable to raw material and finished goods inventory of such Debtor as
specified in Section G of this Rider, multiplied by the lower of cost or
market value of eligible and acceptable raw material and finished goods
inventory of such Debtor, but not exceeding in the aggregate for all
Debtors the limitation on the amount of Inventory Advances to all Debtors
as specified in Section G of this Rider.
THE CIT GROUP
Credit Finance
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
THE
CIT
GROUP
August 27, 1998
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
Bodyonics, Ltd.
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Re: Security Agreement (Accounts, etc.) executed February 17, 1988 (the
"Accounts Agreement'), by and between Phoenix Laboratories, Inc.
("Phoenix") and Great Earth Distribution, Inc. ("GED") and The CIT
Group/Credit Finance, Inc. ("CIT"), assignee of Fidelcor Business
Credit Corporation (`Fidelcor'), and the Security Agreement
(Inventory) and Security Agreement (Equipment), executed February17,
1988 by Phoenix and GED in favor of Fidelcor, to which Security
Agreements Bodyonics, Ltd. ("Bodyonics') became a party, as Debtor,
by letter agreement dated November 18, 1996; the Sixth Amended and
Restated Promissory Note in the original principal amount of
$1,150,000, dated February 12, 1997 and made by Phoenix, GED and
Bodyonics, as amended by letter agreement dated January21, 1998 (the
"Note"), and all related agreements, amendments, documents and
instruments (collectively, the "Financing Agreements"). GED, Phoenix
and Bodyonics may be hereinafter referred to individually as "Debtor'
and collectively as "Debtors".
---------------------------------------------------------------------
Gentlemen:
The present term of your Financing Agreements with CIT expires August 17,
2000. We propose to amend the Financing Agreements as set forth below, effective
as of the date hereof. Capitalized terms appearing below that are not defined
herein shall have the meanings given in the Rider to the Accounts Agreement, as
amended and restated as of the date hereof.
1. The first sentence of paragraph 26 of the printed portion of the
Accounts Agreement is amended to read as follows:
"That this Agreement shall remain in effect until August 17, 2001
and shall be deemed automatically renewed for successive terms of
two years."
2. The Debtors affirm that the unpaid principal balance of the Note as of the
date hereof is
$880,000 (the "Existing Term Debt") and that the unpaid balance of the
loans made to the Debtors pursuant to paragraph 9 of the February 11, 1997
amendment of the Financing Agreements for the purpose of allowing the
Debtors to purchase new equipment, is $95,000 (the "Capital Expenditure
Loans").
Concurrently herewith, CIT is making an advance to the Debtors in the
amount of$245,000, which together with the Existing Term Debt and the
Capital Expenditure Loans shall be repayable in accordance with the terms
of the Seventh Amended and Restated Promissory Note, in the original
principal amount of $1,220,000, executed on the date hereof, which shall
replace the Note but not extinguish the indebtedness evidenced by the Note
or the indebtedness represented, by the Capital Expenditure Loans.
3. This will confirm that in addition to all other fees at any time payable
by Debtors to CIT, Debtors shall pay a Facility Fee to CIT on each
anniversary date of the Accounts Agreement in the amounts hereinafter set
forth. The Facility Fee payable during the term of the Financing
Agreements ending on August 17, 2001 shall be fully earned on the date
hereof and the Facility Fee payable during any renewal term shall be fully
earned on the first day of such renewal term. The Facility Fee payable on
February 17, 1999 shall be$25,000 and the Facility Fee payable on February
17, 2000 and on each subsequent anniversary of the date of the Accounts
Agreement, commencing February 17, 2001,shall be $17,500. Upon the
occurrence of a default under the Financing Agreements or upon the
effective date of termination of the Financing Agreements for any reason
prior to the end of the then current term, all Facility Fees payable at
any time during such term shall become immediately due and payable in
full. Each Facility Fee may be charged by CIT to any account of the
Debtors maintained by CIT. This paragraph supersedes the provisions of
paragraph 7 of the amendment of the Financing Agreements dated January21,
1998 except with respect to any Facility Fee already paid by Debtors
pursuant to the terms of such paragraph.
All other terms and conditions of the Financing Agreements (including the Rider
to the Security Agreement (Accounts, etc.), as amended and restated effective as
of the date hereof) shall remain in full force and effect and nothing contained
herein is intended to modify or impair CIT's entitlement to the documentation
described in paragraph 8 of the January 21, 1998 amendment of the Financing
Agreements. The undersigned agree to execute such further documents and
instruments as shall be necessary to carry out the purposes of the amendment of
the Financing Agreements set forth above.
Please sign and return this letter to us to evidence your agreement to the
amendments of the Financing Agreements set forth above.
The offer to amend the Financing Agreements as provided in this letter shall be
deemed revoked if this letter is not signed and returned by you on or before
August 31, 1998.
Very truly yours,
THE CIT GROUP/CREDIT FINANCE, INC.
By: /s/
-----------------------------
Title: VICE PRESIDENT
--------------------------
PHOENIX LABORATORIES, INC.
By: /s/
-----------------------------
Title: ExVP
--------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/
-----------------------------
Title: EVP
--------------------------
BODYONICS, LTD.
By: /s/
-----------------------------
Title: ExVP
--------------------------
Confirmed:
/s/ XXXXXX XXXX
--------------------------------
XXXXXX XXXX, individually as guarantor
EVERGOOD PRODUCTS CORPORATION
By: /s/
-----------------------------
Title: ExVP
--------------------------
AMENDED AND RESTATED RIDER TO SECURITY AGREEMENT
(Accounts, Contract Rights, Instruments
and Goods Pertaining Thereto)
between
Debtors: PHOENIX LABORATORIES, INC. ("Phoenix")
GREAT EARTH DISTRIBUTION, INC. ("GED")
BODYONICS, LTD. ("Bodyonics")
(each hereafter referred to individually as "Debtor" and
collectively as "Debtors")
and
Secured Party: THE CIT GROUP/CREDIT FINANCE, INC.
(hereafter referred to as "CIT")
This is an Amendment and Restatement, effective as of August 27, 1998 of the
Rider to the Security Agreement (Accounts, Contract Rights, Instruments and
Goods Pertaining Thereto), dated February 17, 1988 (this "Agreement"), between
Debtor and Fidelcor Business Credit Corporation (`Fidelcor'), to whose rights
CIT has succeeded, pursuant to which, in addition to and not in limitation of
any and all rights granted to CIT and obligations incurred by Debtor in
the printed portion of this Agreement, Debtor further warrants, covenants and
agrees as follows:
A. Each of the Debtors shall be jointly and severally liable for the
Obligations (as hereafter defined) of all of the Debtors.
B. The term "Financing Agreements" shall mean and include, without
limitation, this Agreement, the Security Agreement (Inventory), the Security
Agreement (Equipment), and the agreements, documents and instruments listed on
the attached Schedule A, as now existing or as hereafter renewed, extended,
amended, modified or supplemented and any agreements, documents and guaranties
that (i) are executed in the future; and (ii) are executed by any Debtors or
Affiliates of any Debtors in favor of CIT or are between CIT and any Debtors or
Affiliates of theirs or grant collateral security for or create or evidence
indebtedness of any Debtors or Affiliates of theirs to CIT; and (iii) do not by
their terms expressly recite that they shall not be deemed "Financing
Agreements" hereunder. Affiliate means any entity having common ownership with a
Debtor or controlled by or under common control with any Debtor.
C. The term "Obligations" or obligations shall mean and include,
without limitation, any and all of Debtor's indebtedness and/or liabilities to
CIT of every kind, nature and description, direct or indirect, secured or
unsecured, joint and/or several, absolute or contingent, due or to become due,
now existing or hereafter arising, related or unrelated, regardless of how they
arise or by what agreement or instrument they may be evidenced or whether
evidenced by any agreement or instrument, including, but not limited to all
amounts owing by Debtor to CIT under this Agreement, the other Financing
Agreements, or any other security agreement, guaranty or note and all
obligations to perform acts or refrain from taking any action.
D. The term Collateral or collateral shall mean and include, without
limitation, that which is set forth in Paragraph I of the printed portion of
this Agreement and any and all other items of real or personal property in which
Debtor has granted or may in the future grant a security interest to CIT under
the Financing Agreements, or any supplement or supplements thereto, and/or under
any other security agreement, or other agreement, all of Debtor's right, title
and interest in and to the goods or other property represented by or securing
any of the foregoing, all of Debtors rights as an unpaid vendor or lien or,
including stoppage in transit, replevin or reclamation, 0 additional amounts due
to Debtor from any account debtor irrespective of whether such additional
amounts have been specifically assigned to CIT, all other agreements on property
securing or relating to any of the items referred to above or acquired for the
purposes of securing or enforcing any of such items, all present and future
chattel paper, motor vehicles, licenses, patents, trademarks, copyrights,
license agreements, tax and duty claims and refunds, computer software,
goodwill, customer lists, all documents, monies, deposits, securities,
instruments, credits, and other property now or hereafter held by CIT or any
entity which at any time participates in CIT's financing transactions with
Debtor, and all products, proceeds and accessions of all of the foregoing in
whatever form. Debtor hereby grants CIT a continuing first priority security
interest in and general lien upon all of the Collateral to secure payment and
performance of 0 of the Obligations, except for prior security interests set
forth on Schedule E attached hereto.
E. In addition to any other security interest granted in the
Financing Agreements and not in limitation of any of the foregoing, and to
secure the payment and performance of all of the Obligations, Debtor hereby
pledges and assigns to CIT and grants to CIT a continuing general security
interest in 0 of the Debtor's ledger sheets, files, records and documents
relating to the Collateral, which shall, until delivered to or removed by CIT,
be kept by Debtor in trust for CIT and without cost to CIT in appropriate
containers in safe places, bearing suitable legends disclosing CIT's security
interest. Each confirmatory assignment schedule or other form of Assignment
hereafter executed by Debtor, shall be deemed to include the foregoing, whether
or not same appears therein.
F. The Debtor will pay all costs and expenses and all taxes,
recording and filing fees (including Uniform Commercial Code Financing
Statements) in connection with the preparation, execution, delivery,
administration (including wire transfer charges in amounts that CIT may from
time to time establish if Debtor requests wire transfers) and enforcement of
this Agreement and all other documents contemplated herein or related hereto,
including any amendments, supplements or consents which may he hereafter made or
entered into in respect thereof, including appraisal fees, and lien searches in
connection herewith and fees and disbursements of in-house and outside counsel
to CIT. Debtor will pay all out-of-pocket costs of field examinations to be
conducted by CIT as provided in Paragraph 13 of the printed portion of the
Agreement plus $650.00 per person per day. CIT is hereby authorized to charge
any amounts payable hereunder (including principal, interest, fees, charges and
expenses) directly to any account of the Debtor maintained with CIT.
G. CIT agrees that in addition to the advances made with reference
to the formula set forth in Paragraph 2 of the printed portion of this Agreement
("Accounts Advances"),
CIT shall make additional advances to Debtor, in its sole discretion, of thirty
percent (30%) of the value of Phoenix's acceptable and eligible raw material
inventory, forty percent (40%) of the value of GED's and Bodyonics' acceptable
and eligible furnished goods inventory located at the warehouses of Xxxxxxxxxx
Healthcare Services, Inc. in Newark, Delaware and Rancho Cucamonga, California
(such percentage being hereinafter referred to as the `Xxxxxxxxxx Inventory
Advance Rate') and thirty-five (35%) percent of the value of all other
acceptable and eligible finished goods inventory of GED and Bodyonics
(collectively the "Inventory Advances"). As used herein, "value" shall mean the
lower of cost or market price, as determined by CIT. Except in CIT's sole
discretion, (1) the aggregate principal amount of Accounts Advances to GED shall
not exceed, at any time outstanding, the lesser of (a) $1,750,000 (the "GED
Accounts Sublimit") or (b) an amount equal to one hundred and twenty-five
(125%)percent of the Phoenix Accounts Advances and (2) the aggregate principal
amount of the Inventory Advances to Debtors shall not exceed $2,500,000 at any
time outstanding. In the event that Debtor at any time has negative Cash Flow
(defined below) to be calculated commencing with the nine month period ending
September 3O, l998 and quarterly thereafter, then the Xxxxxxxxxx Inventory
Advance Rate shall be reduced from 40% to 35%. Cash Flow is defined as: Net
income plus depreciation and amortization less capital expenditures and
principal repayments of term debt on a consolidated basis. Except in CIT's sole
discretion, the aggregate principal amount of Accounts Advances to Bodyonics
shall not exceed an amount equal to the sum of one hundred (I 000/o) percent of
the Phoenix Accounts Advances and one hundred (I 00%)percent of the GED Accounts
Advances.
H. Except in CIT's sole discretion the aggregate principal amount of
the advances. made by CIT to Debtors under the Financing Agreements, including
the Accounts Advances and the Inventory Advances, shall not exceed the principal
amount of $7,500,000 at any time outstanding.
I. [Intentionally omitted]
J. In consideration of CIT entering into this Agreement and
incurring accounting, operating and management expenses, Debtors shall pay to
CIT each calendar month a minimum charge equal to the amount of interest Debtors
would pay CIT if they at all times had an aggregate average daily loan balance
outstanding of $2,500,000 bearing interest at the rate provided for in Paragraph
6 of the printed portion of this Agreement. CIT shall reduce such minimum charge
by the amounts actually paid by Debtors to CIT as interest pursuant to said
Paragraph 6, so that for each calendar month Debtors shall pay CIT interest as
provided for in said Paragraph 6, plus the amount, if any, by which the minimum
charge provided for in this paragraph exceeds the amount of interest payable
pursuant to said Paragraph 6 for such month. If this Agreement shall be
terminated, such minimum charge shall continue and be paid by the Debtor for any
unexpired term of this Agreement, except if such termination is made pursuant to
Paragraph 26 or 30 of the printed portion of this Agreement or by mutual
agreement of CIT and the Debtor.
K. All advances by CIT pursuant to this Agreement shall bear
interest at the variable rate provided for in Paragraph 6 of the printed portion
of this Agreement and shall be
calculated on the basis of a 360-day year for actual days elapsed.
L. Should CIT commence a proceeding to take possession of any of the
Collateral under this Agreement or any of the Financing Agreements, Debtor
waives the requirement, if any, that CIT post a bond or any other type of
security.
M. In addition to all of the covenants set forth in the Financing
Agreements and without limiting any of the terms or provisions thereof, Debtor
hereby covenants and agrees as follows:
1. Debtor will pay all obligations when due and will perform all
of the terms, conditions, covenants and agreements of Debtor
to be performed under the Financing Agreements, and will make
punctual payment of all monies and will perform all of the
terms, conditions, covenants and agreements on its part to be
paid, kept or performed under the terms of any lease or
mortgage of the premises where any of the Collateral is now or
hereafter located, wherein Debtor is lessee or mortgagor, and
will promptly notify CIT in the event of any default by Debtor
or receipt by Debtor of any notice or alleged default under
any such lease or mortgage.
2. Debtor will pay and discharge at or before maturity, all
taxes, assessments, rents, claims, debts and charges except
where the same are being contested in good faith and Debtor is
maintaining, in accordance with generally accepted accounting
principles and practice, appropriate reserves for accrual
thereof.
3. Debtor will promptly give notice in writing to CIT of the
occurrence of any event which constitutes or which with notice
or lapse of time, or both, would constitute a default under
any of the Financing Agreements. As used in the Paragraph (3),
the word "promptly' shall be determined in relation to the
point in time at which Debtor, exercising sound management
practices, has actual knowledge or should have discovered the
occurrence of such event.
4. Debtor will provide CIT with such other information concerning
the financial or business affairs of Debtor as CIT, in its
sole discretion, requests from time to time.
5. Debtor will not, without the prior written consent of CIT,
declare or pay any dividend, return any capital to any of its
stockholders, loan any sum to any of its stockholders,
employees, officers or directors, or redeem, repurchase or
otherwise acquire any of its outstanding capital stock except
that Debtor may continue to repay an indebtedness due to its
shareholder, Xxxxxxxxx Xxxx, in the outstanding principal
amount of $378,623.08,provided that the amount of such
repayment does not exceed $140,000 per
year, inclusive of both principal and interest.
6. Notwithstanding Paragraph 3 of the printed portion of this
Agreement, Debtor shall direct that all proceeds of accounts
receivable, letters of credit, banker s acceptances and other
proceeds of Collateral shall be payable to a post office box
or a lock box designated by and in control of CIT and in
connection therewith shall execute such agreements as CIT in
its sole discretion shall specify. So long as no default has
occurred under the Financing Agreements, Debtor's deposit of
all proceeds of Collateral to an account at Chase Manhattan
Bank which is blocked to CIT shall constitute compliance with
this subsection.
7. Debtor will duly execute and deliver, or will cause to be
executed and delivered, such further instruments and
documents, including, without limitation, additional security
agreements, collateral assignments, Uniform Commercial Code
financing statements or amendments, or continuations thereof,
landlords or mortgagee's waivers of liens, and consents to the
exercise by CIT of all of its rights and remedies under the
Financing Agreements with respect to the Collateral and will
do such further acts as may be necessary or proper in CIT's
opinion to effectuate the provisions or purposes of the
Financing Agreements.
8. Debtor will not, without the prior written consent of CIT,
directly or indirectly sell, lease, abandon or otherwise
dispose of all or any substantial portion of its property or
assets or consolidate with or merge with or into any other
entity, or permit any other entity to consolidate with or
merge with or into it.
9. Debtor will at all times preserve and keep in full force and
effect its corporate existence, licenses, permits, rights and
franchises.
10. Debtor will comply with the requirements of all applicable
laws, rules, regulations, orders of any governmental
authority, and all agreements to which Debtor is a party, the
noncompliance with which laws'. rules, regulations, orders and
agreements would materially adversely affect its business,
properties or credit.
N. Any default by Debtor under the Financing Agreements or any
default under any material obligation for the payment of money to any person,
firm or corporation shall constitute and be deemed a default by the Debtor and
shall be a default under all such other agreements and instruments.
O. Debtor hereby further represents and warrants to CIT the
following:
1. Debtor has the corporate power to borrow and to execute,
deliver and carryout the terms and provisions of the Financing
Agreements, and all other
instruments and documents delivered by it pursuant hereto and
thereto, and Debtor has taken or caused to be taken 0
necessary corporate action to authorize the execution,
delivery and performance of the Financing Agreements, and such
other agreements, the borrowings hereunder and the execution,
delivery and performance of the instruments and documents
delivered and to be delivered by it pursuant hereto and
thereto, and the Financing Agreements constitute and will
constitute legal, valid and binding obligations of Debtor,
enforceable in accordance with the irrespective terms.
2. Debtor is not aware of, has knowledge of, or has received
notice of, a default in any material respect under any
indenture, mortgage, deed of trust, lease agreement, or other
instrument to which it is a party or by which it or its
properties may be bound. Neither the execution nor delivery of
the Financing Agreements, nor any of the instruments or
documents to be delivered pursuant hereto or thereto, nor the
consummation of the transactions herein or therein
contemplated nor compliance with the provisions hereof or
thereof, will violate any law or regulation, or any order or
decree of any court or governmental instrumentality in any
respect, or will conflict with, or result in the breach of, or
constitute a default in any material respect under, any
mortgage, deed of trust, agreement or other instrument to
which Debtor is party or by which it or its properties may be
bound, or result in the creation or imposition of any lien,
charge or encumbrance upon any of the property of Debtor
(except as contemplated hereunder or under any of the other
Financing Agreements) or violate any provision of Certificate
of Incorporation or By-Laws. of Debtor.
3. No action of, or filing with, any governmental or public body
or authority(other than the filing or recording of Uniform
Commercial Code financing statements) is required in
connection with the execution, delivery and performance of the
Financing Agreements or any of the instruments or documents to
be delivered pursuant hereto or thereto.
4. Debtor has obtained all necessary licenses and approvals and
is in compliance in all material respects with all applicable
state and Federal laws and regulations relating to the conduct
of its business as presently conducted or contemplated.
5. There are no strikes or other labor disputes against Debtor,
pending, or to Debtor's knowledge, threatened.
6. None of the information contained in the representations and
warranties made by Debtor in the Financing Agreements, or
contained in any certificate, statement, schedule or exhibit
to or under any of the Financing
Agreements, contains or will contain any untrue statement of a
material fact or omit or will omit to state a fact necessary
in order to make the statements contained herein or therein
not misleading.
P. CIT shall have the right, in its discretion, to withhold and
reserve from the amount of its advances under this Agreement such amount as CIT
shall establish as a reasonable reserve upon the occurrence of any breach of any
warranty, covenant, or agreement under the Financing Agreements or for any
default under the Financing Agreements. Without in any way limiting CIT's rights
to withhold and set up reserves, in its sole discretion, CIT shall have the
right to establish a reserve from Debtor's availability for amounts due from GED
to Xxxxxxxxxx Healthcare Services, Inc.
Q. CIT agrees that in addition to the Accounts Advances and
Inventory Advances, CIT shall make additional advances to Debtor of up to
(i) whichever is less,
(x) $200,000; or
(y) I 00% of the amount of any cash collateral pledged by any
guarantor of the Obligations to secure his or her guaranty; and
(ii) whichever is less,
(x) $250,000; or
(y) five (5%) of the sum of
(a) the combined Accounts and Inventory Availability of the
Debtors, as hereinafter defined; and
(b) the unpaid principal balance from time to time of the
Seventh Amended and Restated Promissory Note, in the original
principal amount of $1,220,000, dated August 27, 1998, made by
Phoenix, GED and Bodyonics.
Accounts Availability means for each Debtor, the advance percentage
applicable to accounts receivable of such Debtor as specified in Paragraph
2 of the printed portion of this Agreement, multiplied by the amount of
eligible and acceptable accounts receivable of such Debtor, but not
exceeding any limitation on the amount of Accounts Advances to such Debtor
specified in such Paragraph 2 or in Section G of this Rider.
Inventory Availability means for each Debtor, the advance percentages
applicable to raw material and finished goods inventory of such Debtor as
specified in Section G of this Rider, multiplied by the lower of cost or
market value of eligible and acceptable raw
material and finished goods inventory of such Debtor, but not exceeding in
the aggregate for all Debtors the limitation on the amount of Inventory
Advances to all Debtors as specified in Section G of this Rider.
PHOENIX LABORATORIES, INC.
By: /s/
------------------------------
Title: ExVP
---------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/
------------------------------
Title: ExVP
---------------------------
BODYONICS, LTD.
By: /s/
------------------------------
Title: ExVP
---------------------------
THE CIT GROUP/CREDIT FINANCE, INC.
By: /s/
------------------------------
Title: VICE PRESIDENT
---------------------------
Schedule A
1. Security Agreement (Accounts, etc.) between Phoenix Laboratories, Inc.
("Phoenix"), Great Earth Distribution, Inc. ("GED"), and Fidelcor Business
Credit Corporation ("Fidelcor") dated February 17, 1988.
2. Rider to Security Agreement (Accounts, etc.) between Phoenix, GED and
Fidelcor.
3. Amendments to Security Agreement
a. Amendment dated June 29, 1988 among GED, Phoenix and Fidelcor;
b. Amendment dated October 4, 1989 among GED, Phoenix and Fidelcor;
c. Amendment dated August 13, 1991 among GED, Phoenix and The CIT
Group/ Credit Finance, Inc. ("CIT");
d. Amendment dated August 13, 1991 among Great Earth International,
Inc., Great Earth International Licensing Corp., Great Earth Stores,
Inc., Great Earth International Franchising Corp., Great Earth
Vitamins Ltd. and CIT;
e. Amendment dated December 16, 1991 among Phoenix, GED, Evergood
Products Corporation ("Evergood") and CIT;
f. Amendment dated June 19, 1992 among Phoenix, GED, Evergood and CIT;
g. Amendment dated August 27, 1993 among Phoenix, GED, Evergood and
CIT.
h. Amendment dated December 23, 1994 among Phoenix, GED and CIT;
i. Amendment dated January 4, 1995 among Phoenix, GED and CIT;
j. Amendment dated January 6, 1995 among Phoenix, GED and CIT;
k. Amendment dated June 21, 1996 among Phoenix, GED, Evergood and CIT;
l. Amendment dated November 18, 1996 among Phoenix, Bodyonics, Ltd.
("Bodyonics") and CIT;
m. Amendment dated November 18, 1996 among Phoenix, Bodyonics and CIT;
n. Amendment dated February 11, 1997 among Phoenix, GED, Bodyonics,
Evergood and CIT.
o. Amendment dated January 21, 1998 among Phoenix, Bodyonics, GED,
Xxxxxx Xxxx and Evergood
4. Security Agreement (Inventory) among Phoenix, GED and Fidelcor dated
February 17,1988
5. Security Agreement (Equipment) among Phoenix, GED and Fidelcor dated
February 17,1988
6. Seventh Amended and Restated Promissory Note in the original principal
amount of$1,220,000 made by Phoenix, GED and Bodyonics and payable to CIT
dated August 27,1998
7. Secretary's Certificates
a. Secretary's Certificate of Evergood dated February 9, 1988;
b. Secretary's Certificate of Phoenix dated February 9, 1988;
c. Secretary's Certificate of GED dated February 9, 1988.
8. Replacement Guaranty by Xxxxxx Xxxx in favor of CIT with respect to
Phoenix and GED dated July 1, 1992
9. Cash Collateral Agreement executed by Xxxxxx Xxxx, dated August 31, 1993.
10. Guaranty by Evergood, Phoenix and GED in favor of Fidelcor with respect to
Evergood Products Corporation, Phoenix Laboratories, Inc. and Great Earth
Distribution, Inc., dated February 17, 1988
11. Intercreditor Agreement between Fidelcor and Xxxxxxxx - Xx Xxxxx Inc.
dated February16, 1988
12. Guaranty in favor of Fidelcor by Great Earth International, Inc. ("GED),
dated April 26, 1988, with respect to Phoenix and GED.
13. Trademark Collateral Assignment and Security Agreement, dated April 26,
1988, executed by GED in favor of Fidelcor.
Schedule B
Page 1 of 2
Unterminated Security Interests
------------------------------------------------------------------------------------------------------------------------------------
Juris- Filing Amendments
Debtor Secured Party diction UCC # Date Collateral (Releases, Assignments, etc.)
------------------------------------------------------------------------------------------------------------------------------------
Phoenix Laboratories, Inc. Xxxxxxx-Xx Xxxxx, N.Y. S/S 390298 12/24/88 All Equipment (now
X.X. Xxx 000 Inc. owned, hereafter
000 Xxxxx Xxxxxx 000 Xxxxxxxxx Xxxxxx xxxxxxxx)
Xxxxxxxx, Xxx Xxxx 00000 Nutley, N.J. 07110
------------------------------------------------------------------------------------------------------------------------------------
Phoenix Laboratories, Inc. Long Island Trust Co. N.Y. S/S 348550 11/10/86 2 Machines
000 Xxxxxx Xxxx Xxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000 Dept. Debtor has no power
11 Broadway to sell or dispose
Xxxxxxxxxx, XX 00000 of collateral
------------------------------------------------------------------------------------------------------------------------------------
Phoenix Laboratories, Inc. Xxxxxxx-Xx Xxxxx, Nassau 87-001408 1/16/87 All equipment (now
X.X. Xxx 000 Inc. County owned & hereafter
000 Xxxxx Xxxxxx 340 Kingsland Street Clerk acquired.)
Xxxxxxxx, Xxx Xxxx 00000 Nutley, N.J. 07110
------------------------------------------------------------------------------------------------------------------------------------
Phoenix Laboratories, Inc. Xxxxxxx-Xx Xxxxx, Nassau 87-027548 11/25/87 All equipment (now
X.X. Xxx 000 Inc. County owned & hereafter
000 Xxxxx Xxxxxx 340 Kingsland Street Clerk acquired.)
Xxxxxxxx, Xxx Xxxx 00000 Nutley, N.J. 07110
------------------------------------------------------------------------------------------------------------------------------------
Phoenix Laboratories, Inc. Equilease Corporation Nassau 86-030440 12/19/86 Feild for Info. Assigned to:
000 Xxxxxx Xxxx 000 Xxxxx Xxxxxx Xxxxxx Only. Property Textron Capital
Xxxxxxxxxx, Xxx Xxxx 00000 Xxx Xxxx, XX 00000 Clerk (not described) Corporation
Subject to Lease 1410 Hospital Trust Tower
Providence, Rhode Island
------------------------------------------------------------------------------------------------------------------------------------
Schedule B
Page 2 of 2
(Cont'd)
------------------------------------------------------------------------------------------------------------------------------------
Juris- Filing Amendments
Debtor Secured Party diction UCC # Date Collateral (Releases, Assignments, etc.)
------------------------------------------------------------------------------------------------------------------------------------
Phoenix Laboratories, Inc. WASCO Funding Corporation Nassau 86-021181 8/25/86 Machine (3) leased Assigned To:
000 Xxxxxx Xxxx 000 Xxxx 00xx Xxxxxx Xxxxxx to debtor who has Xxxxxx Financial
Xxxxxxxxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000 Clerk no right to sell or Corporation
dispose. 0 Xxxxxxx Xxxxxx
Xxxxxx Xxxxxxx, XX 00000
------------------------------------------------------------------------------------------------------------------------------------
Phoenix Laboratories, Inc. L.I. Trust Co., N.A. Nassau 86-027280 11/18/86 2 Machines
000 Xxxxxx Xxxx Industrial Finance Dept. County
Xxxxxxxxxx, Xxx Xxxx 00000 00 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
------------------------------------------------------------------------------------------------------------------------------------
Great Earth Distribution, The Lease Factor, Inc. S/S 87-128909 5/28/87 Equipment Lease
Inc. The Beaumont Building Calif.
00000 Xxxxxxx Xxxxxx X.X. Xxx 00
Xx Xxxxxx, XX 00000 South Station
Framingman, Mass. 01701
------------------------------------------------------------------------------------------------------------------------------------
Great Earth Distribution, Pitney Xxxxx Credit S/S 86-146811 6/11/86 Lease - re: Postal
14211 Gannett Corporation Corporation Calif. Equipment
Xx Xxxxxx, XX 00000 00000 Xxxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
------------------------------------------------------------------------------------------------------------------------------------
Great Earth Distribution, Pitney Xxxxx Credit S/S 86146812 6/11/86 Lease - re: Postal
Inc. Corporation Calif. Equipment
00000 Xxxxxxx Xxxxxx 00000 Xxxxxxxxx Xxxx.
Xx Xxxxxx, XX 00000 Xxxxx 000
Xxxxxxxx, XX 00000
------------------------------------------------------------------------------------------------------------------------------------
SEVENTH AMENDED AND RESTATED PROMISSORY NOTE
$1,220,000
New York, New York
August 27, 1998
FOR VALUE, RECEIVED, PHOENIX LABORATORIES, INC., GREAT EARTH DISTRIBUTION,
INC. and BODYONICS, LTD. (individually and collectively the "Payor"), jointly
and severally hereby promise to pay to the order of THE CIT GROUP/CREDIT
FINANCE, INC., a Delaware corporation ("Payee"), at its offices located at 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as
Payee or any holder hereof may from time to time designate, the principal sum of
ONE NHLL16N TWO HUNDRED TWENTY THOUSAND DOLLARS ($1,220,000) in lawful money of
the United States, in thirty-five installments of TWENTY THOUSAND DOLLARS
($20,000) each payable on the first (1st) day of each consecutive month,
commencing October 1, 1998 and one (1) final installment in the amount of the
entire unpaid principal balance of this Note, payable August 17, 2001. Payor
hereby further promises to pay interest to Payee in like money at said office or
place on the unpaid principal balance hereof, computed at the rate of two
percent (2%) per annum plus the prime rate as announced by The Chase Manhattan
Bank or its successor, in New York, New York from time to time as its prime rate
(the prime rate is not intended to be the lowest rate of interest charged by The
Chase Manhattan Bank to its borrowers) and such interest shall be payable
monthly on the first (1st) day of each month, commencing September 1, 1998.
Interest shall be calculated on the basis of a 360-day year and actual days
elapsed. In no event shall the interest charged hereunder exceed the maximum
permitted under the laws of the State of New York.
This Note is secured by the collateral described in the Security Agreement
(Accounts, Contract Rights, Instruments and Goods pertaining thereto), the
Inventory Security Agreement and the Equipment Security Agreement, each executed
February 17, 1988 by and between Payor and Fidelcor Business Credit Corporation
("Fidelcor"), assignor of Payee, and all related agreements, instruments
(including but not limited to this Note) and documents granting collateral
security to Payee or evidencing or creating indebtedness of Payor to Payee, all
guaranties executed by third parties guaranteeing Payor's obligations to Payee,
including those executed by: Xxxxxx Xxxx and Evergood Products Corporation (the
"Guarantors") (the foregoing, as the same may now exist and have been and may
hereafter be amended, modified, replaced or supplemented, are hereafter
collectively referred to as the "Financing Agreements").
This Note supersedes and replaces but does not extinguish any of the unpaid
liabilities and obligations under the Sixth Amended and Restated Promissory Note
dated February 12, 1997, in the original principal amount of $1,150,000 executed
by Payor in favor of Payee (the "`Existing Note"). The indebtedness of Payor to
Payee evidenced hereby includes (i) an indebtedness of$880,000 representing the
unpaid principal balance of the Existing Note; (ii) an indebtedness of$95,000
representing advances made by Payee to Payor for the purchase of new equipment;
and (iii) an indebtedness of $245,000 representing an advance made by Payee to
Payor on the date hereof, all of which shall be repayable together with interest
accrued and accruing and other sums in accordance with the terms hereof. Payor
hereby acknowledges that Payor is as of the
date hereof indebted to Payee, in the principal amount hereof, together with
interest accrued and accruing through and after the date hereof, without offset,
defense or counterclaim of any kind, nature or description whatsoever. The
amendment and restatement contained herein shall not, in any manner be construed
to constitute payment of, or impair, limit, cancel or extinguish the
indebtedness evidenced by the Existing Note and the liens and security interests
securing such indebtedness shall not in any manner be impaired, limited,
terminated, waived or released hereby.
At the time any payment is due hereunder, Payee may, at its option, charge the
amount thereof to any account of Payor maintained by Payee.
If an event of default shall occur for any reason under any of the Financing
Agreements, or if any of the Financing Agreements shall be terminated or not be
renewed for any reason whatsoever, then and in any such event, in addition to
all rights and remedies of Payee under the Financing Agreements, applicable law
or otherwise (all such rights and remedies being cumulative, not exclusive and
enforceable alternatively, successively and concurrently) Payee may, at its
option, declare any or all of Payor's obligations under the Financing
Agreements, including, but not limited to, all amounts owing under this Note, to
be due and payable, whereupon the then unpaid balance hereof together with all
interest accrued thereon, shall forthwith become due and payable, together with
costs and expenses of collection, including reasonable attorney's fees.
Payee shall not be required to resort to any of the aforementioned collateral
for payment, but may proceed against Payor and/or the Guarantors in such order
and manner as Payee may choose.
None of the rights of Payee shall be waived or diminished by any failure or
delay in the exercise thereof. Payor hereby waives diligence, demand,
presentment, protest and notice of any kind and assents to extensions of time of
payment, release, surrender or substitution of collateral security, or
forbearance or other indulgence, without notice.
In the event of any litigation with respect to any of the Financing Agreements,
Payor waives the right to a trial by jury, 0 rights of set-off, and any right to
interpose permissive counterclaims and cross-claims, and Payor consents to the
jurisdiction of the courts of the State of New York and of any federal court
located in either New York or Nassau County in such State. Payor further waives
personal service of any and all process upon Payor and consents that all such
service of process may be made by certified mail, return receipt requested,
directed to Payor at the address listed above or of which Payor advises Payee,
in writing, and service so made shall be deemed complete three days after the
same shall have been posted. This Note shall be governed by and construed, and
all rights and obligations hereunder determined, in accordance with the laws of
the State of New York, and shall be binding upon the successors and assigns of
Payor and inure to the benefit of Payee, its successors, endorsees and assigns.
If any term or provision of this Note shall be held invalid, illegal or
unenforceable, the validity of all other terms and provisions hereof shall in no
way be affected thereby.
The execution and delivery of this Note has been authorized by the board of
directors of Payor.
PHOENIX LABORATORIES, INC.
By: /s/
------------------------------
Title: ExVP
---------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/
------------------------------
Title: ExVP
---------------------------
BODYONICS, LTD.
By: /s/
------------------------------
Title: ExVP
---------------------------
August 30, 2000
Phoenix Laboratories, Inc.
Great Earth Distribution, Inc.
Bodyonics, Ltd.
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Re: Security Agreement (Accounts, etc.) executed February 17, 1988 (the
"Accounts Agreement"), by and between Phoenix Laboratories, Inc.
("Phoenix") and Great Earth Distribution, Inc. ("GED") and The CIT
Group/Business Credit, Inc. ("CIT"), successor by merger to The CIT
Group/Credit Finance, Inc., assignee of Fidelcor Business Credit
Corporation ("Fidelcor"), and the Security Agreement (Inventory) and
Security Agreement (Equipment), executed February 17, 1988 by Phoenix
and GED in favor of Fidelcor, to which Security Agreements Bodyonics,
Ltd. ("Bodyonics") became a party, as Debtor, by letter agreement
dated November 18, 1996; the Seventh Amended and Restated Promissory
Note in the original principal amount of $1,220,000 dated August 27,
1998 and made by Phoenix, GED and Bodyonics, (the "Note"), and all
related agreements, amendments, documents and instruments
(collectively, the "Financing Agreements"). GED, Phoenix and Bodyonics
may be hereinafter referred to individually as "Debtor" and
collectively as "Debtors".
Gentlemen:
The present term of your Financing Agreements with CIT expires August 17,
2001. We propose to amend the Financing Agreements as set forth below, effective
as of the date hereof. Capitalized terms appearing below that are not defined
herein shall have the meanings given in the Rider to the Accounts Agreement, as
amended and restated as of the date hereof.
1. The first sentence of paragraph 26 of the printed portion of the Accounts
Agreement is amended to read as follows:
"That this Agreement shall remain in effect until August 17, 2004 and
shall be deemed automatically renewed for successive terms of two
years."
2. The Debtors affirm that the unpaid principal balance of the Note as of the
date hereof is
$780,000 (the "Existing Term Debt").
Concurrently herewith, CIT is making an advance to the Debtors in the
amount of $775,500, which together with the Existing Term Debt shall be
repayable in accordance with the terms of the Eighth Amended and Restated
Promissory Note, in the original principal amount of $1,555,500, executed
on the date hereof, which shall replace the Note but not extinguish the
indebtedness evidenced by the Note.
3. This will confirm that in addition to all other fees at any time payable by
Debtors to CIT, Debtors shall pay a Facility Fee to CIT on each anniversary
date of the Accounts Agreement in the amounts hereinafter set forth. The
Facility Fee payable during the term of the Financing Agreements ending on
August 17, 2004 shall be fully earned on the date hereof but shall be
payable in three equal installments, each in the amount of $31,667 and
payable on August 17, 2001, August 17, 2002 and August 17, 2003. The
Facility Fee payable during any renewal term shall be $31,667 for each year
of such renewal term, payable on at the end of each such year but fully
earned on the first day of the renewal term. Upon the occurrence of a
default under the Financing Agreements or upon the effective date of
termination of the Financing Agreements for any reason prior to the end of
the then current term, all Facility Fees payable at any time during such
term shall become immediately due and payable in full. Each Facility Fee
may be charged by CIT to any account of the Debtors maintained by CIT. This
paragraph supersedes the provisions of paragraph 3 of the amendment of the
Financing Agreements dated August 27, 1998 except with respect to any
Facility Fee already paid by Debtors pursuant to the terms of such
paragraph.
4. Paragraph 6 of the printed portion of the Accounts Agreement is hereby
deleted in its entirety and the following is substituted therefor:
"6. That Debtor will pay CIT for its advances made hereunder a charge of
one percent (1%) per annum plus the rate of interest publicly
announced by The Chase Manhattan Bank, New York, New York from time to
time as its prime rate (hereinafter, the "Chase Prime," which prime
rate is not intended to be the lowest rate of interest charged by The
Chase Manhattan Bank to its borrowers), computed on a 360-day year. In
the event of a change in the prime rate charged at The Chase Manhattan
Bank, adjustment hereunder shall be made on the day of such change in
the prime rate. All charges shall be computed upon the average daily
balances outstanding and charged to Debtor's account or paid monthly.
If Debtor's net income exclusive of any extraordinary items, as
calculated using generally accepted accounting principles, for any
fiscal year, commencing with Debtor's fiscal year ending on December
31, 2001, is at least $850,000 (hereinafter, a "Qualifying Fiscal
Year,") then, effective as of the date that Debtor delivers to CIT its
certified fiscal year-end financial statement for such period, the
rate of interest payable by Debtor pursuant to the first sentence of
this section shall be reduced by one-quarter percent (.25%) per annum
if on such date no event of default under the financing agreements
between Debtor and CIT has occurred
2
and is continuing but in no event shall such interest rate be reduced
to a rate per annum which is less than one-half of one percent (.5%)
in excess of the Chase Prime. If Debtor has a net loss in any fiscal
year following a Qualifying Fiscal Year, then, effective as of the
date that Debtor delivers to CIT its certified fiscal year-end
financial statement for such period, the interest rate payable by
Debtor pursuant to this section shall be increased by one-quarter of
one per cent (.25%) per annum."
5. Paragraph 2 of the printed portion of the Accounts Agreement is amended to
read in its entirety as follows:
"2. That it will advance to Phoenix Laboratories, Inc. up to 85%, to
Bodyonics, Ltd. up to 80%. and to Great Earth Distribution, Inc. up to
67.50% of the net amounts of acceptable Accounts Collateral, as CIT in
its sole discretion may determine, and will pay the remainder (less
the compensation specified in paragraph 6, plus any overpayments by
account debtors, and less deductions by account debtors and any unpaid
compensation, charges or expenses), after actual receipt of payment
upon such Collateral and at such times as CIT may determine; however,
no payment of such remainder need be made by CIT if Debtor shall have
breached any provision hereof or shall be otherwise indebted to CIT,
in either of which events CIT may retain and apply such remainder upon
any indebtedness then or thereafter due from Debtor.
6. Paragraph 20 of the printed portion of the Accounts Agreement shall be
amended so as to read in its entirety as follows:
"Debtor will provide CIT with quarterly compiled financial statements
no later than 45 days after the end of each fiscal quarter and, no
later than 90 days after the end of each fiscal year, certified annual
financial statements certified by certified public accountants
acceptable to CIT."
All other terms and conditions of the Financing Agreements (including the Rider
to the Security Agreement (Accounts, etc.), as amended and restated effective as
of the date hereof) shall remain in full force and effect and nothing contained
herein is intended to modify or impair CIT's entitlement to the documentation
described in paragraph 8 of the January 21, 1998 amendment of the Financing
Agreements. The undersigned agree to execute such further documents and
instruments as shall be necessary to carry out the purposes of the amendment of
the Financing Agreements set forth above.
Please sign and return this letter to us to evidence your agreement to the
amendments of the Financing Agreements set forth above.
The offer to amend the Financing Agreements as provided in this letter shall be
deemed revoked if this letter is not signed and returned by you on or before
September 8, 2000.
3
Very truly yours,
THE CIT GROUP/BUSINESS CREDIT, INC.
By: Xxxx Xxxxxx
--------------------------------
Title: Vice President
-----------------------------
Agreed to:
PHOENIX LABORATORIES INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Title: Executive Vice President
-----------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Title: Executive Vice President
-----------------------------
BODYONICS, LTD.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Title: Executive Vice President
-----------------------------
Confirmed: /s/ Xxx Xxxx
------------------------
XXXXXX XXXX, individually as a limited guarantor
EVERGOOD PRODUCTS CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Title: Executive Vice President
-----------------------------
4
AMENDED AND RESTATED RIDER TO SECURITY AGREEMENT
(Accounts, Contract Rights, Instruments
and Goods Pertaining Thereto)
between
Debtors: PHOENIX LABORATORIES, INC. ("Phoenix")
GREAT EARTH DISTRIBUTION, INC. ("GED")
BODYONICS, LTD. ("Bodyonics")
(each hereafter referred to individually as "Debtor" and
collectively as "Debtors")
and
Secured Party: THE CIT GROUP/BUSINESS CREDIT, INC., successor by merger to The
CIT Group/Credit Finance, Inc.
(hereafter referred to as "CIT")
This is an Amendment and Restatement, effective as of August 30, 2000 of the
Rider to the Security Agreement (Accounts, Contract Rights, Instruments and
Goods Pertaining Thereto), dated February 17, 1988 (this "Agreement"), between
Debtor and Fidelcor Business Credit Corporation ("Fidelcor"), to whose rights
CIT has succeeded, pursuant to which, in addition to and not in limitation of
any and all rights granted to CIT and obligations incurred by Debtor in the
printed portion of this Agreement, Debtor further warrants, covenants and agrees
as follows:
A. Each of the Debtors shall be jointly and severally liable for the
Obligations (as hereafter defined) of all of the Debtors.
B. The term "Financing Agreements" shall mean and include, without
limitation, this Agreement, the Security Agreement (Inventory), the Security
Agreement (Equipment), and the agreements, documents and instruments listed on
the attached Schedule A, as now existing or as hereafter renewed, extended,
amended, modified or supplemented and any agreements, documents and guaranties
that (i) are executed in the future; and (ii) are executed by any Debtors or
Affiliates of any Debtors in favor of CIT or are between CIT and any Debtors or
Affiliates of theirs or grant collateral security for or create or evidence
indebtedness of any Debtors or Affiliates of theirs to CIT; and (iii) do not by
their terms expressly recite that they shall not be deemed "Financing
Agreements" hereunder. Affiliate means any entity having common ownership with a
Debtor or controlled by or under common control with any Debtor.
C. The term "Obligations" or obligations shall mean and include, without
limitation, any and all of Debtor's indebtedness and/or liabilities to CIT of
every kind, nature and description, direct or indirect, secured or unsecured,
joint and/or several, absolute or contingent, due or to become due, now existing
or hereafter arising, related or unrelated, regardless of how they arise or by
what agreement or instrument they may be evidenced or whether evidenced by any
agreement or instrument, including, but not limited to all amounts owing by
Debtor to CIT
under this Agreement, the other Financing Agreements, or any other security
agreement, guaranty or note and all obligations to perform acts or refrain from
taking any action.
D. The term Collateral or collateral shall mean and include, without
limitation, that which is set forth in Paragraph 1 of the printed portion of
this Agreement and any and all other items of real or personal property in which
Debtor has granted or may in the future grant a security interest to CIT under
the Financing Agreements, or any supplement or supplements thereto, and/or under
any other security agreement, or other agreement, all of Debtor's right, title
and interest in and to the goods or other property represented by or securing
any of the foregoing, all of Debtors rights as an unpaid vendor or lienor,
including stoppage in transit, replevin or reclamation, all additional amounts
due to Debtor from any account debtor irrespective of whether such additional
amounts have been specifically assigned to CIT, all other agreements on property
securing or relating to any of the items referred to above or acquired for the
purposes of securing or enforcing any of such items, all present and future
chattel paper, motor vehicles, licenses, patents, trademarks, copyrights,
license agreements, tax and duty claims and refunds, computer software,
goodwill, customer lists, all documents, monies, deposits, securities,
instruments, credits, and other property now or hereafter held by CIT or any
entity which at any time participates in CIT's financing transactions with
Debtor, and all products, proceeds and accessions of all of the foregoing in
whatever form. Debtor hereby grants CIT a continuing first priority security
interest in and general lien upon all of the Collateral to secure payment and
performance of all of the Obligations, except for prior security interests set
forth on Schedule B attached hereto.
E. In addition to any other security interest granted in the Financing
Agreements and not in limitation of any of the foregoing, and to secure the
payment and performance of all of the Obligations, Debtor hereby pledges and
assigns to CIT and grants to CIT a continuing general security interest in all
of the Debtor's ledger sheets, files, records and documents relating to the
Collateral, which shall, until delivered to or removed by CIT, be kept by Debtor
in trust for CIT and without cost to CIT in appropriate containers in safe
places, bearing suitable legends disclosing CIT's security interest. Each
confirmatory assignment schedule or other form of Assignment hereafter executed
by Debtor, shall be deemed to include the foregoing, whether or not same appears
therein.
F. The Debtor will pay all costs and expenses and all taxes, recording and
filing fees (including Uniform Commercial Code Financing Statements) in
connection with the preparation, execution, delivery, administration (including
wire transfer charges in amounts that CIT may from time to time establish if
Debtor requests wire transfers) and enforcement of this Agreement and all other
documents contemplated herein or related hereto, including any amendments,
supplements or consents which may he hereafter made or entered into in respect
hereof, including appraisal fees, and lien searches in connection herewith and
fees and disbursements of in-house and outside counsel to CIT. Debtor will pay
all out-of-pocket costs of field examinations to be conducted by CIT as provided
in Paragraph 13 of the printed portion of the Agreement plus a per them charge
of $650.00 per person per day but the aggregate per diem charges in any contract
year (August 17 to August 16 of each year) shall be limited to $25,000
2
unless an event of default under the Financing Agreements has occurred and is
continuing. CIT is hereby authorized to charge any amounts payable hereunder
(including principal, interest, fees, charges and expenses) directly to any
account of the Debtor maintained with CIT.
G. CIT agrees that in addition to the advances made with reference to the
formula set forth in Paragraph 2 of the printed portion of this agreement
("Accounts Advances"), CIT shall make additional advances to Debtor, in its sole
discretion, of thirty percent (30%) of the value of Phoenix's acceptable and
eligible raw material inventory, forty percent (40%) of the value of GED's and
Bodyonics' acceptable and eligible finished goods inventory located at the
warehouses of Xxxxxxxxxx Healthcare Services, Inc. in Newark, Delaware and
Rancho Cucamonga, California (such percentage being hereinafter referred to as
the "Xxxxxxxxxx Inventory Advance Rate") and thirty-five (35%) percent of the
value of all other acceptable and eligible finished goods inventory of GED and
Bodyonics (collectively the "Inventory Advances"). As used herein, "value" shall
mean the lower of cost or market price, as determined by CIT. Except in CIT's
sole discretion, (1) the aggregate principal amount of Accounts Advances to GED
shall not exceed, at any time outstanding, the lesser of (a) $1,750,000 (the
"GED Accounts Sublimit") or (b) an amount equal to one hundred and twenty-five
(125%) percent of the Phoenix Accounts Advances and (2) the aggregate principal
amount of the Inventory Advances to Debtors shall not exceed $2,500,000 at any
time outstanding. In the event that Debtor at any time has negative Cash Flow
(defined below) to be calculated commencing with the nine month period ending
September 30, 1998 and quarterly thereafter, then the Xxxxxxxxxx Inventory
Advance Rate shall be reduced from 40% to 35%. Cash Flow is defined as: Net
income plus depreciation and amortization less capital expenditures and
principal repayments of term debt on a consolidated basis. Except in CIT's sole
discretion, the aggregate principal amount of Accounts Advances to Bodyonics
shall not exceed an amount equal to the sum of one hundred (100%) percent of the
Phoenix Accounts Advances and one hundred (100%) percent of the GED Accounts
Advances.
H. Except in CIT's sole discretion the aggregate principal amount of the
advances made by CIT to Debtors under the Financing Agreements, including the
Accounts Advances, the Inventory Advances, the unpaid balance of the Eighth
Amended and Restated Promissory Note, the Supplemental Advance and the CAPEX
Advances, shall not exceed the principal amount of $9,500,000 at any time
outstanding. Without limiting the generality of any other provisions of the
Financing Agreements, any overadvance, as hereinafter defined, shall be due and
payable on demand. Overadvance means the amount, if any, by which the
outstanding indebtedness due to CIT from the Debtors other than the Supplemental
Advance, the unpaid principal balance of the Eighth Amended and Restated
Promissory Note and the unpaid balance of the CAPEX Advances exceeds the
Accounts Availability and the Inventory Availability, as such terms are defined
herein; and the amount, if any, by which the unpaid principal balance of the
Eighth Amended and Restated Promissory Note and the CAPEX Advances exceeds 85%
of the auction sale value (as determined by appraisals conducted by CIT from
time to time at the Debtors' expense) of all of the equipment of the Debtors on
which CIT has a first priority perfected security interest and which are subject
to no other liens or encumbrances.
3
I. [Intentionally omitted]
J. In consideration of CIT entering into this Agreement and incurring
accounting, operating and management expenses, Debtors shall pay to CIT each
calendar month a minimum charge equal to the amount of interest Debtors would
pay CIT if they at all times had an aggregate average daily loan balance
outstanding of $4,000,000 bearing interest at the rate provided for in Paragraph
6 of the printed portion of this Agreement. CIT shall reduce such minimum charge
by the amounts actually paid by Debtors to CIT as interest pursuant to said
Paragraph 6, so that for each calendar month Debtors shall pay CIT interest as
provided for in said Paragraph 6, plus the amount, if any, by which the minimum
charge provided for in this paragraph exceeds the amount of interest payable
pursuant to said Paragraph 6 for such month. If this Agreement shall be
terminated, such minimum charge shall continue and be paid by the Debtor for any
unexpired term of this Agreement, except if such termination is made pursuant to
Paragraph 26 or 30 of the printed portion of this Agreement or by mutual
agreement of CIT and the Debtor.
K. All advances by CIT pursuant to this Agreement shall bear interest at
the variable rate provided for in Paragraph 6 of the printed portion of this
Agreement and shall be calculated on the basis of a 360-day year for actual days
elapsed.
L. Should CIT commence a proceeding to take possession of any of the
Collateral under this Agreement or any of the Financing Agreements, Debtor
waives the requirement, if any, that CIT post a bond or any other type of
security.
M. In addition to all of the covenants set forth in the Financing
Agreements and without limiting any of the terms or provisions thereof, Debtor
hereby covenants and agrees as follows:
1. Debtor will pay all obligations when due and will perform all of the
terms, conditions, covenants and agreements of Debtor to be performed
under the Financing Agreements, and will make punctual payment of all
monies and will perform all of the terms, conditions, covenants and
agreements on its part to be paid, kept or performed under the terms
of any lease or mortgage of the premises where any of the Collateral
is now or hereafter located, wherein Debtor is lessee or mortgagor,
and will promptly notify CIT in the event of any default by Debtor or
receipt by Debtor of any notice or alleged default under any such
lease or mortgage.
2. Debtor will pay and discharge at or before maturity, all taxes,
assessments, rents, claims, debts and charges except where the same
are being contested in good faith and Debtor is maintaining, in
accordance with generally accepted accounting principles and practice,
appropriate reserves for accrual thereof.
4
3. Debtor will promptly give notice in writing to CIT of the occurrence
of any event which constitutes or which with notice or lapse of time,
or both, would constitute a default under any of the Financing
Agreements. As used in the Paragraph (3), the word "promptly" shall be
determined in relation to the point in time at which Debtor,
exercising sound management practices, has actual knowledge or should
have discovered the occurrence of such event.
4. Debtor will provide CIT with such other information concerning the
financial or business affairs of Debtor as CIT, in its sole
discretion, requests from time to time.
5. Debtor will not, without the prior written consent of CIT, declare or
pay any dividend, return any capital to any of its stockholders, loan
any sum to any of its stockholders, employees, officers or directors,
or redeem, repurchase or otherwise acquire any of its outstanding
capital stock except that Debtor may continue to repay an indebtedness
due to its shareholder, Xxxxxxxxx Xxxx, in the outstanding principal
amount of $94,453.
6. Notwithstanding Paragraph 3 of the printed portion of this Agreement,
Debtor shall direct that all proceeds of accounts receivable, letters
of credit, banker's acceptances and other proceeds of Collateral shall
be payable to a post office box or a lock box designated by and in
control of CIT and in connection therewith shall execute such
agreements as CIT in its sole discretion shall specify. So long as no
default has occurred under the Financing Agreements, Debtor's deposit
of all proceeds of Collateral to an account at Chase Manhattan Bank
which is blocked to CIT shall constitute compliance with this
subsection.
7. Debtor will duly execute and deliver, or will cause to be executed and
delivered, such further instruments and documents, including, without
limitation, additional security agreements, collateral assignments,
Uniform Commercial Code financing statements or amendments, or
continuations thereof, landlord's or mortgagee's waivers of liens, and
consents to the exercise by CIT of all of its rights and remedies
under the Financing Agreements with respect to the Collateral and will
do such further acts as may be necessary or proper in CIT's opinion to
effectuate the provisions or purposes of the Financing Agreements.
8. Debtor will not, without the prior written consent of CIT, directly or
indirectly sell, lease, abandon or otherwise dispose of all or any
substantial portion of its property or assets or consolidate with or
merge with or into any other entity, or permit any other entity to
consolidate with or merge with or into it.
5
9. Debtor will at all times preserve and keep in full force and effect
its corporate existence, licenses, permits, rights and franchises.
10. Debtor will comply with the requirements of all applicable laws,
rules, regulations, orders of any governmental authority, and all
agreements to which Debtor is a party, the noncompliance with which
laws, rules, regulations, orders and agreements would materially
adversely affect its business, properties or credit.
N. Any default by Debtor under the Financing Agreements or any default
under any material obligation for the payment of money to any person, firm or
corporation shall constitute and be deemed a default by the Debtor and shall be
a default under all such other agreements and instruments.
0. Debtor hereby further represents and warrants to CIT the following:
1. Debtor has the corporate power to borrow and to execute, deliver and
carry out the terms and provisions of the Financing Agreements, and
all other instruments and documents delivered by it pursuant hereto
and thereto, and Debtor has taken or caused to be taken all necessary
corporate action to authorize the execution, delivery and performance
of the Financing Agreements, and such other agreements, the borrowings
hereunder and the execution, delivery and performance of the
instruments and documents delivered and to be delivered by it pursuant
hereto and thereto, and the Financing Agreements constitute and will
constitute legal, valid and binding obligations of Debtor, enforceable
in accordance with their respective terms.
2. Debtor is not aware of, has knowledge of, or has received notice of, a
default in any material respect under any indenture, mortgage, deed of
trust, lease agreement, or other instrument to which it is a party or
by which it or its properties may be bound. Neither the execution nor
delivery of the Financing Agreements, nor any of the instruments or
documents to be delivered pursuant hereto or thereto, nor the
consummation of the transactions herein or therein contemplated nor
compliance with the provisions hereof or thereof, will violate any law
or regulation, or any order or decree of any court or governmental
instrumentality in any respect, or will conflict with, or result in
the breach of, or constitute a default in any material respect under,
any mortgage, deed of trust, agreement or other instrument to which
Debtor is party or by which it or its properties may be bound, or
result in the creation or imposition of any lien, charge or
encumbrance upon any of the property of Debtor (except as contemplated
hereunder or under any of the other Financing Agreements) or violate
any provision of Certificate of
6
Incorporation or By-Laws of Debtor.
3. No action of, or filing with, any governmental or public body or
authority (other than the filing or recording of Uniform Commercial
Code financing statements) is required in connection with the
execution, delivery and performance of the Financing Agreements or any
of the instruments or documents to be delivered pursuant hereto or
thereto.
4. Debtor has obtained all necessary licenses and approvals and is in
compliance in all material respects with all applicable state and
Federal laws and regulations relating to the conduct of its business
as presently conducted or contemplated.
5. There are no strikes or other labor disputes against Debtor, pending,
or to Debtor's knowledge, threatened.
6. None of the information contained in the representations and
warranties made by Debtor in the Financing Agreements, or contained in
any certificate, statement, schedule or exhibit to or under any of the
Financing Agreements, contains or will contain any untrue statement of
a material fact or omit or will omit to state a fact necessary in
order to make the statements contained herein or therein not
misleading.
P. CIT shall have the right, in its discretion, to withhold and reserve
from the amount of its advances under this Agreement such amount as CIT shall
establish as a reasonable reserve upon the occurrence of any breach of any
warranty, covenant, or agreement under the Financing Agreements or for any
default under the Financing Agreements. Without in any way limiting CIT's rights
to withhold and set up reserves, in its sole discretion, CIT shall have the
right to establish a reserve from Debtor's availability for amounts due from GED
to Xxxxxxxxxx Healthcare Services, Inc.
Q. CIT agrees that in addition to the Accounts Advances and Inventory
Advances, and the advances which are repayable in accordance with the terms of
the Eighth Amended and Restated Promissory Note, CIT shall make available to
Debtor a Supplemental Advance and CAPEX Advances, as hereinafter defined, The
CAPEX Advances shall replace the accommodations (the "Prior CAPEX
Accommodations") that were provided by CIT to the Debtors pursuant to Section 9
of the Letter Agreement amending the Financing Agreements, dated February 11,
1997
(i) the Supplemental Advance means, whichever is less,
(x) $250,000; or
7
(y) five (5%) of the sum of
(a) the combined Accounts and Inventory Availability of the Debtors,
as hereinafter defined; and
(b) the unpaid principal balance from time to time of the Eighth
Amended and Restated Promissory Note, in the original principal amount
of $1,555,500, dated August 2000, made by Phoenix, GED and Bodyonics.
(ii) CAPEX Advances means advances equal to 75% of the hard cost (as hereinafter
defined) of equipment purchased by any of the Debtors after March 31, 2000,
which advances shall not exceed, in the aggregate, $1,500,000 and which
advances, together with the sum of $170,000.36 representing the unpaid balance
of the advances made as part of the Prior CAPEX Accommodations, shall be
repayable in monthly installments of principal, payable on the first day of each
month commencing September 1, 2000, together with interest at the rate provided
in the Financing Agreements. Each monthly installment of principal shall be
equal to an amount calculated by dividing the then unpaid principal balance of
the CAPEX Advances (including the unpaid balance of the Prior CAPEX
Accommodations) by a number which shall be (i) 60 in the case of the principal
installment due on September 1, 2000 and (ii) in the case of all subsequent
monthly principal installments, 60 reduced by one for each principal installment
that was payable prior to the date such principal installment is being made. The
"hard cost" of an item of equipment means the gross amount paid by Debtor, less
shipping and installation charges and all taxes. Such advances shall only be
made if the equipment to be purchased meets CIT's eligibility standards then in
effect and only upon CIT receiving evidence, satisfactory to it, that (i) CIT
has or will obtain a first priority security interest in the equipment being
purchased, subject to no other liens or encumbrances; (ii) the Debtor has
received possession of the equipment; (iii) the entire purchase price of the
equipment has or will be paid to the vendor; and (iv) the Debtor has title to
the equipment. The CAPEX Advances are not intended to be a revolving facility
and accordingly no additional CAPEX Advances shall become available by reason of
repayment of the outstanding principal amount of such advances. The unpaid
balance of the CAPEX Advances shall be due and payable in full upon termination
of the Financing Agreements for any reason.
Accounts Availability means for each Debtor, the advance percentage applicable
to accounts receivable of such Debtor as specified in Paragraph 2 of the printed
portion of this Agreement, multiplied by the amount of eligible and acceptable
accounts receivable of such Debtor, but not exceeding any limitation on the
amount of Accounts Advances to such Debtor specified in such Paragraph 2 or in
Section G of this Rider.
Inventory Availability means for each Debtor, the advance percentages applicable
to raw material and finished goods inventory of such Debtor as specified in
Section G of this
8
Rider, multiplied by the lower of cost or market value of eligible and
acceptable raw material and finished goods inventory of such Debtor, but
not exceeding in the aggregate for all Debtors the limitation on the amount
of Inventory Advances to all Debtors as specified in Section G of this
Rider.
PHOENIX LABORATORIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Title: Executive VP
---------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Title: Executive VP
---------------------------
BODYONICS, LTD.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Title: Executive VP
---------------------------
THE CIT GROUP/BUSINESS CREDIT, INC.
By: Xxxx Xxxxxx
------------------------------
Title: Vice President
---------------------------
9
Schedule A
1. Security Agreement (Accounts, etc.) between Phoenix Laboratories, Inc.
("Phoenix"), Great Earth Distribution, Inc. ("GED"), and Fidelcor
Business Credit Corporation ("Fidelcor") dated February 17, 1988.
2. Rider to Security Agreement (Accounts, etc.) between Phoenix, GED and
Fidelcor.
3. Amendments to Security Agreement
a. Amendment dated June 29. 1988 among GED, Phoenix and Fidelcor;
b. Amendment dated October 4, 1989 among GED, Phoenix and Fidelcor;
c. Amendment dated August 13, 1991 among GED, Phoenix and The CIT
Group/Credit Finance, Inc. ("CIT");
d. Amendment dated August 13, 1991 among Great Earth International,
Inc., Great Earth International Licensing Corp., Great Earth
Stores, Inc., Great Earth International Franchising Corp., Great
Earth Vitamins Ltd. and CIT;
e. Amendment dated December 16, 1991 among Phoenix, GED, Evergood
Products Corporation ("Evergood") and CIT;
f. Amendment dated June 19, 1992 among Phoenix, GED, Evergood and
CIT;
g. Amendment dated August 27, 1993 among Phoenix, GED, Evergood and
CIT;
h. Amendment dated December 23, 1994 among Phoenix, GED and CIT;
i. Amendment dated January 4, 1995 among Phoenix, GED and CIT;
j. Amendment dated January 6, 1995 among Phoenix, GED and CIT;
k. Amendment dated June 21, 1996 among Phoenix, GED, Evergood and
CIT;
1. Amendment dated November 18, 1996 among Phoenix, Bodyonics, Ltd
("Bodyonics") and CIT;
m. Amendment dated November 18, 1996 among Phoenix, Bodyonics and
CIT;
n. Amendment dated February 11, 1997 among Phoenix, GED, Bodyonics,
Evergood and CIT.
o. Amendment dated January 21, 1998 among Phoenix, Bodyonics, GED,
Xxxxxx Xxxx and Evergood
p. Amendment dated August 27, 1998 among Phoenix, Bodyonics, GED,
Xxxxxx Xxxx and Evergood
4. Security Agreement (Inventory) among Phoenix, GED and Fidelcor dated
February 17, 1988
5. Security Agreement (Equipment) among Phoenix, GED and Fidelcor dated
February 17, 1988
6. Eighth Amended and Restated Promissory Note in the original principal
amount of $1,555,500 made by Phoenix, GED and Bodyonics and payable to CIT
dated August ______, 2000
7. Secretary's Certificates
a. Secretary's Certificate of Evergood dated February 9, 1988;
b. Secretary's Certificate of Phoenix dated February 9, 1988;
c. Secretary's Certificate of GED dated February 9, 1988.
8. Replacement Guaranty by Xxxxxx Xxxx in favor of CIT with respect to Phoenix
and GED dated July 1, 1992
9. Guaranty by Evergood, Phoenix, GED and Bodyonics in favor of Fidelcor with
respect to the obligations of each guarantor to Fidelcor, dated February
17, 1988
10. Intercreditor Agreement between Fidelcor and Xxxxxxxx-Xx Xxxxx Inc. dated
February 16, 1988
11. Guaranty in favor of Fidelcor by Great Earth International, Inc. ("GEI"),
dated April 26, 1988, with respect to Phoenix and GED.
12. Trademark Collateral Assignment and Security Agreement, dated April 26,
1988, executed by GEI in favor of Fidelcor.
SCHEDULE B
Page 1 of 2
Unterminated Security Interests
Juris- Filing Amendments
Debtor Secured Party diction UCC # Date Collateral (Releases, Assignments, etc.)
Phoenix Laboratories, Inc. Xxxxxxxx-Xx Xxxxx, Inc. N.Y. S/S 390298 12/24/88 All Equipment (now
X.X. Xxx 000 000 Xxxxxxxxx Xxxxxx owned, hereafter
000 Xxxxx Xxxxxx Xxxxxx, X.X. 00000 acquired)
Xxxxxxxx, Xxx Xxxx 00000
Phoenix Laboratories, Inc. Long Island Trust Co. N.Y. S/S 348550 11/10/86 2 Machines
000 Xxxxxx Xxxx Industrial Finance Dept.
000 Xxxxx Xxxxxx 11 Broadway Debtor has no power to
Xxxxxxxxxx, Xxx Xxxx 00000 Xxxxxxxxxx, XX 00000 sell or dispose of
collateral
Phoenix Laboratories, Inc. Xxxxxxxx-Xx Xxxxx, Inc. Nassau 87-001408 1/16/87 All equipment (now
X.X. Xxx 000 000 Xxxxxxxxx Xxxxxx Xxxxxx ---------
000 Xxxxx Xxxxxx Xxxxxx, X.X. 00000 Clerk owned & hereafter
Xxxxxxxx, Xxx Xxxx 00000 acquired.)
Phoenix Laboratories, Inc. Xxxxxxxx-Xx Xxxxx, Inc. Nassau 87-027548 11/25/87 All equipment (now
X.X. Xxx 000 000 Xxxxxxxxx Xxxxxx Xxxxxx ---------
000 Xxxxx Xxxxxx Xxxxxx, X.X. 00000 Clerk owned & hereafter
Xxxxxxxx, Xxx Xxxx 00000 acquired.)
Phoenix Laboratories, Inc. Equilease Corporation Nassau 86-030440 12/19/86 Filed for Info. Only. Assigned to:
000 Xxxxxx Xxxx 000 Xxxxx Xxxxxx Xxxxxx Property (not describ- -----------
Xxxxxxxxxx, Xxx Xxxx 00000 Xxx Xxxx, XX 00000 Clerk ed) subject to Lease Textron Capitol Corp.
----- 1410 Hospital Trust
Tower Providence, Rhode
Island
SCHEDULE B Page 2 of 2
(Cont'd)
----------------------------------------------------------------------------------------------------------------------------------
Juris- Filing Amendments
Debtor Secured Party diction UCC # Date Collateral (Releases, Assignments, etc.)
----------------------- ------------------- -------- ------ ------- ------------ -----------------------------
Assigned to:
Phoenix Laboratories, Inc. WASCO Funding Corp. Nassau 86-021181 8/25/86 Machines (3) leased -----------
000 Xxxxxx Xxxx - 000 X. 00xx Xxxxxx Xxxxxx -------- Xxxxxx Financial Corp.
Xxxxxxxxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000 Clerk to debtor who has no 0 Xxxxxxx Xxxxxx -
right to sell or Xxxxxx Xxxxxxx, XX 00000
dispose.
---------------------------------------------------------------------------------------------------------------------------------
Phoenix laboratories, Inc. L.I. Trust Co., N.A. Nassau 86-027280 11/18/86 2 Machines
000 Xxxxxx Xxxx Industrial Finance Dept. County --------
Xxxxxxxxxx, Xxx Xxxx 00000 11 Broadway Clerk debtor has no power to
Hicksville, N.Y. 11801 sell or dispose.
----------------------------------------------------------------------------------------------------------------------------------
Great Earth Distribution, The Lease Factor, Inc. S/S 87-128909 5/28/87 Equipment Lease
Inc. The Beaumont Building Calif. Lease # 73351
00000 Xxxxxxx Xxxxxx X.X. Xxx 00
Xx Xxxxxx, XX 00000 Xxxxx Xxxxxxx
Xxxxxxxxxx, Xxxx. 00000
----------------------------------------------------------------------------------------------------------------------------------
Great Earth Distributions, Pitney Xxxxx Credit S/S 86-146811 6/11/86 Lease - re: Postal
Corporation Corporation Calif. Equipment
00000 Xxxxxxx Xxxxxx 00000 Xxxxxxxxx Xxxx.
Xx Xxxxxx, XX 00000 Xxxxx 000
Xxxxxxxx, XX 00000
-----------------------------------------------------------------------------------------------------------------------------------
Great Earth Distribution, Pitney Xxxxx Credit S/S 86146812 6/11/86 Lease - re: Postal
Inc. Corporation Calif. Equipment
00000 Xxxxxxx Xxxxxx 00000 Xxxxxxxxx Xxxx.
Xx Xxxxxx, XX 00000 Xxxxx 000
Xxxxxxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
EIGHTH AMENDED AND RESTATED PROMISSORY NOTE
$1,555,500 New York, New York
August 30, 2000
FOR VALUE RECEIVED, PHOENIX LABORATORIES, INC., GREAT EARTH DISTRIBUTION,
INC. and BODYONICS, LTD. (individually and collectively the "Payor"), jointly
and severally hereby promise to pay to the order of THE CIT GROUP/BUSINESS
CREDIT, INC., a New York corporation, successor by merger to The CIT
Group/Credit Finance, Inc. ("Payee"), at its offices located at 0000 Xxxxxx xx
xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as Payee or any
holder hereof may from time to time designate, the principal sum of ONE MILLION
FIVE HUNDRED FIFTY FIVE THOUSAND FIVE HUNDRED DOLLARS ($1,555,500) in lawful
money of the United States, in forty-seven installments of TWENTY THOUSAND
DOLLARS ($20,000) each payable on the first (1st) day of each consecutive month,
commencing October 1, 2000 and one (1) final installment in the amount of the
entire unpaid principal balance of this Note, payable August 17, 2004. Payor
hereby further promises to pay interest to Payee in like money at said office or
place on the unpaid principal balance hereof, computed at the rate of one
percent (1%) per annum plus the prime rate as announced by The Chase Manhattan
Bank or its successor, in New York, New York from time to time as its prime rate
(the prime rate is not intended to be the lowest rate of interest charged by The
Chase Manhattan Bank to its borrowers) and such interest shall be payable
monthly on the first (1st) day of each month, commencing September 1, 2000.
Interest shall be calculated on the basis of a 360-day year and actual days
elapsed. In no event shall the interest charged hereunder exceed the maximum
permitted under the laws of the State of New York.
This Note is secured by the collateral described in the Security Agreement
(Accounts, Contract Rights, Instruments and Goods pertaining thereto), the
Inventory Security Agreement and the Equipment Security Agreement, each executed
February 17, 1988 by and between Payor and Fidelcor Business Credit Corporation
("Fidelcor"), assignor of Payee, and all related agreements, instruments
(including but not limited to this Note) and documents granting collateral
security to Payee or evidencing or creating indebtedness of Payor to Payee, all
guaranties executed by third parties guaranteeing Payor's obligations to Payee,
including those executed by: Xxxxxx Xxxx and Evergood Products Corporation (the
"Guarantors") (the foregoing, as the same may now exist and have been and may
hereafter be amended, modified, replaced or supplemented, are hereafter
collectively referred to as the "Financing Agreements").
This Note supersedes and replaces but does not extinguish any of the unpaid
liabilities and obligations under the Seventh Amended and Restated Promissory
Note dated August 27,1998, in the original principal amount of $1,220,000
executed by Payor in favor of Payee (the "Existing Note"). The indebtedness of
Payor to Payee evidenced hereby includes (i) an indebtedness of $780,000
representing the unpaid principal balance of the Existing Note; and (ii) an
indebtedness of $775,500 representing an advance made by Payee to Payor on the
date hereof, all of which shall be repayable together with interest accrued and
accruing and other sums in accordance with the terms hereof. Payor hereby
acknowledges that Payor is as of the date hereof indebted to
Payee, in the principal amount hereof, together with interest accrued and
accruing through and after the date hereof, without offset defense or
counterclaim of any kind, nature or description whatsoever. The amendment and
restatement contained herein shall not, in any manner be construed to constitute
payment of, or impair, limit, cancel or extinguish the indebtedness evidenced by
the Existing Note and the liens and security interests securing such
indebtedness shall not in any manner be impaired, limited, terminated, waived or
released hereby.
At the time any payment is due hereunder, Payee may, at its option, charge the
amount thereof to any account of Payor maintained by Payee.
If an event of default shall occur for any reason under any of the Financing
Agreements, or if any of the Financing Agreements shall be terminated or not be
renewed for any reason whatsoever, then and in any such event, in addition to
all rights and remedies of Payee under the Financing Agreements, applicable law
or otherwise (all such rights and remedies being cumulative, not exclusive and
enforceable alternatively, successively and concurrently) Payee may, at its
option, declare any or all of Payor's obligations under the Financing
Agreements, including, but not limited to, all amounts owing under this Note, to
be due and payable, whereupon the then unpaid balance hereof together with all
interest accrued thereon, shall forthwith become due and payable, together with
costs and expenses of collection, including reasonable attorney's fees.
Payee shall not be required to resort to any of the aforementioned collateral
for payment, but may proceed against Payor and/or the Guarantors in such order
and manner as Payee may choose. None of the rights of Payee shall be waived or
diminished by any failure or delay in the exercise thereof. Payor hereby waives
diligence, demand, presentment, protest and notice of any kind and assents to
extensions of time of payment, release, surrender or substitution of collateral
security, or forbearance or other indulgence, without notice.
In the event of any litigation with respect to any of the Financing Agreements,
Payor waives the right to a trial by jury, all rights of set-off, and any right
to interpose permissive counterclaims and cross-claims, and Payor consents to
the jurisdiction of the courts of the State of New York and of any federal court
located in either New York or Nassau County in such State. Payor further waives
personal service of any and all process upon Payor and consents that all such
service of process may be made by certified mail, return receipt requested,
directed to Payor at the address listed above or of which Payor advises Payee,
in writing, and service so made shall be deemed complete three days after the
same shall have been posted. This Note shall be governed by and construed, and
all rights and obligations hereunder determined, in accordance with the laws of
the State of New York, and shall be binding upon the successors and assigns of
Payor and inure to the benefit of Payee, its successors, endorsees and assigns.
If any term or provision of this Note shall be held invalid, illegal or
unenforceable, the validity of all other terms and provisions hereof shall in no
way be affected thereby.
The execution and delivery of this Note has been authorized by the board of
directors of Payor.
PHOENIX LABORATORIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Title: Executive Vice President
----------------------------
GREAT EARTH DISTRIBUTION, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Title: Executive Vice President
----------------------------
BODYONICS, LTD.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Title: Executive Vice President
----------------------------
