Exhibit 10.7
NOTE PURCHASE AGREEMENT
THIS LOAN AGREEMENT (the "Agreement") is made as of this 2 day of May, 2000
by and between CHAMPION TRAILER COMPANY, L.P., an Indiana limited partnership
("Borrower") and MARKPOINT EQUITY GROWTH FUND, J.V., a Texas joint venture
("MEGF"). In connection with the mutual covenants and agreements contained
herein, the parties hereto agrees as follows:
1. Definitions. All terms and phrases used herein which are defined in the
Uniform Commercial Code in the State of Texas, as amended from time to time
(the "Code"), shall have the meanings given them in the UCC unless
otherwise defined herein. The following definitions shall apply throughout
this Agreement:
"Affiliate" means with respect to any Person in question, any other Person
owned or controlled by, or which owns or controls or is under common
control or is otherwise affiliated with such Person in question. A Person
shall be deemed to control another Person if such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through the ownership
of voting securities, by contract or otherwise.
"Collateral" has the meaning given it in Section 4.
"Debit Account' means Account No. 1588262467, ABA No. 000000000 that
Borrower has with Bank One, Texas, N.A. over which MEGF has express written
authority to debit pursuant to this Agreement.
"Environmental Laws" means any and all federal, state and local laws,
regulations, rules, orders, licenses, agreements or other governmental
restrictions relating to the protection of human health or the environment
or to emissions, discharges or releases of pollutants or industrial, toxic
or hazardous substances into the environment, or otherwise relating to the
manufacture, processing, treatment, transport or handling of pollutants or
industrial, toxic or hazardous substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations
promulgated with respect thereto.
"ERISA Affiliate" means with respect to any Person in question, any Person
that would be treated as a single employer with Borrower.
"ERISA Plan" means any pension benefit plan subject to Title IV of ERISA
maintained by Borrower or any ERISA Affiliate of Borrower with respect to
which Borrower or any ERISA Affiliate of Borrower has a fixed or contingent
liability.
"GAAP" means those generally accepted accounting principles and practices
which are recognized as such by the Financial Accounting Standards Board
(or any generally recognized successor), consistently applied throughout
the period involved.
"General Partner" means Durham Xxxxxxxxx & Associates, an Indiana limited
liability company.
"Indemnified Claims" means any and all claims, demands, actions, causes of
action, judgments, suits, liabilities, obligations, losses, damages and
consequential damages, penalties, fines, costs, fees, expenses and
disbursements (including without limitation, fees and expenses of attorneys
and other professional consultants and experts in connection with any
investigation or defense) of every kind or nature, known or unknown,
existing or hereafter arising, foreseeable or unforeseeable, which may be
imposed upon, threatened or asserted against or incurred or paid by any
Indemnified Person at any time and from time to time, because of or
resulting from, in connection with or in any way relating to or arising out
of the Loan, the Collateral or any other transaction, act, omission, event
or circumstance in any way connected with or contemplated by this Agreement
or the other Loan Documents or any action taken or omitted by any such
Indemnified Person under or in connection with any of the foregoing
(including but not limited to any investigation, litigation, proceeding,
enforcement of MEGF's rights or defense of MEGF's actions related to or
arising out of this Agreement or the other Loan Documents), whether or not
any Indemnified Person is a party hereto.
"Indemnified Person" shall collectively mean MEGF and its joint venturers,
officers, directors, shareholders, employees, attorneys, representatives,
agents, Affiliates, successors and assigns.
"Lien" means any mortgage, lien, pledge, assignment, adverse claim, charge,
security interest or other encumbrance.
"Life Insurance" has the meaning given it in Section 8(f).
"Loan" has the meaning given it in Section 2.
"Loan Documents" means this Agreement, the Note, the Warrant and all other
documents, agreements and instruments required by MEGF to be executed and
delivered in connection herewith (including, without limitation, all
documents, agreements and instruments evidencing, securing, governing,
guaranteeing and/or pertaining to the Note and the Loan).
"Note" has the meaning given it in Section 3.
"Obligors" means Borrower and the Guarantors.
"Person" means a corporation, association, partnership, limited liability
company, organization, business, individual, governmental or political
subdivision thereof or governmental agency.
"Purchase Agreement" means (a) that certain asset purchase agreement dated
as of April 20, 2000 between Borrower and Target Companies, as may be
amended from time to time.
"Senior Lender" means Bank One, Indiana, N.A.
"Senior Lender Loan Documents" means all documents, agreements and
instruments previously executed and delivered by Borrower to Senior Lender
to evidence, secure, govern or guarantee any loans or other financial
accommodations provided by Senior Lender to Borrower.
"Target Companies" means, collectively, Champion Trailer, LLC, a Texas
limited liability company, Champion Collision, LLC, a Texas limited
liability company and Brandonson, Inc., a Texas corporation and their
successors or assignors.
"Termination Event" means (a) the occurrence with respect to any ERISA Plan
of (i) a reportable event described in Sections 4043(b)(5) of ERISA or (ii)
any other reportable event described in Section 4043 of ERISA other than a
reportable event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such
corporation under Section 4043(a) of ERISA, (b) the withdrawal of Borrower
or any Affiliate of Borrower from any ERISA Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, or (c) any event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any ERISA Plan.
" Warrant' `means the Warrant of even date herewith from Borrower to MEGF.
2. Loan. Subject to the terms and conditions set forth in this Agreement and
the other Loan Documents, MEGF hereby agrees to lend to Borrower, and
Borrower agrees to borrow from MEGF, the amount of $1,250,000 (the "Loan").
The amount advanced under the Loan shall be for $1,250,000. The purpose of
this Loan shall be to finance the acquisition of a substantial portion of
the assets of the Target Companies.
3. Promissory Note. Borrower agrees to execute, contemporaneously herewith, a
promissory note payable to the order of MEGF, in form and substance
acceptable to MEGF in MEGF's sole and absolute discretion, to evidence the
indebtedness owing by Borrower to MEGF under the Loan (together with any
renewals, extensions and increases thereof, the "Note"). Interest on the
Note shall accrue at the rate set forth therein. The principal of and
interest on the Note shall be due and payable and may be prepaid in
accordance with the terms and conditions set forth in the Note and in this
Agreement.
4. Collateral. As security for the indebtedness evidenced by the Note and any
and all other indebtedness or obligations from time to time owing by
Borrower to MEGF, MEGF shall receive a Lien in to the collateral described
in the other Loan Documents (the "Collateral").
5. Commitment Fee. Borrower shall pay to The Markpoint Company, concurrently
with the execution hereof, a commitment fee in the amount of $25,000.
Borrower hereby authorizes The Markpoint Company, in MEGF's sole
discretion, to collect any such commitment fee by deducting such fees from
the first advance under the Loan. This authorization does not affect
Borrower's obligation to pay the Loan. Borrower and The Markpoint Company
acknowledge and agree that the commitment fee is reasonable compensation to
The Markpoint Company for providing the Loan to Borrower and for no other
purpose.
6. Representations and Warranties. Borrower hereby represents and warrants to
MEGF as follows:
(a) Existence. Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation
and is duly licensed, qualified to do business and is in good standing
in all other states in which such licensing, qualification and good
standing are necessary. Borrower has all requisite power and authority
(i) to own and operate its properties, (ii) to carry on its business
as now conducted and as proposed to be conducted, and (iii) to execute
and deliver this Agreement and the other Loan Documents to which
Borrower is a party.
(b) Binding Obligations. The execution, delivery, and performance of this
Agreement and all of the other Loan Documents by Borrower have been
duly authorized by all necessary action by Borrower, have been duly
executed and delivered by Borrower and constitute legal, valid and
binding obligations of Borrower, enforceable in accordance with their
respective terms, except as limited by bankruptcy, insolvency or
similar laws of general application relating to the enforcement of
creditors' rights and except to the extent specific remedies may
generally be limited by equitable principles.
(c) No Consent. The execution, delivery and performance of this Agreement
and the other Loan Documents, and the consummation of the transactions
contemplated hereby and thereby, do not (i) conflict with, result in a
violation of, or constitute a default under (A) any provision of
Borrower's articles or certificate of incorporation or bylaws, (B) any
law, governmental regulation, court decree or order applicable to
Borrower, or (C) any other document or agreement to which Borrower is
a party, or (ii) require the consent, approval or authorization of any
Person and will not result in the creation of (or impose any
obligation on Borrower to create) any Lien upon any of the properties
of Borrower (other than Liens in favor of MEGF).
(d) Subsidiaries. Borrower neither owns nor has any other interest in,
directly or indirectly, any other corporation, partnership, joint
venture or other business organization except as set forth on Schedule
6(d) attached hereto.
(e) Financial Condition. Borrower has delivered to MEGF true, complete and
correct copies of (i) the Borrower-prepared balance sheet of Target
Companies as of December 31, 1999 and the related statements of
income, cash flows and shareholders' equity for the fiscal year then
ended, together with any footnotes thereto and the report thereon by
Xxxx Xxxxx Xxxx & Xxxxxxx, X.X. and (ii) the unaudited balance sheet
of Borrower as of December 31, 1999 and the related statements of
income, cash flows and shareholders equity for the twelve (12) months
then ended (collectively, the "Financial Statement"). The Financial
Statements have been prepared in accordance with GAAP and fairly
present Borrower's financial condition as of the date of each such
Financial Statement. There has been no material adverse change in the
financial condition or results of operations of Borrower subsequent to
the date of the most recent Financial Statements.
(f) Litigation. Except as described on Schedule 6(f) attached hereto,
there are no actions, suits or proceedings, pending or, to the
knowledge of Borrower, threatened (or any basis therefor known to
Borrower) against or affecting Borrower or the properties of Borrower,
before any court or governmental department, commission or board,
which, if determined adversely to Borrower, would have a material
adverse effect on the business, financial condition, properties,
operations or prospects of Borrower.
(g) Taxes; Governmental Charges. Borrower has filed all federal, state and
local tax reports and returns required by any law or regulation to be
filed by it and has either duly paid all taxes, duties and charges
indicated due on the basis of such returns and reports, or made
adequate provision for the payment thereof, and the assessment of any
material amount of additional taxes in excess of those paid and
reported is not reasonably expected. There is no tax Lien notice
against Borrower or its properties presently on file.
(h) ERISA Compliance. Borrower and its ERISA Affiliates, if any, are in
compliance with ERISA concerning Borrower's and any ERISA Affiliates'
ERISA Plans. Except as described on Schedule --------- 6(h ), neither
Borrower nor any ERISA Affiliate maintains, contributes to, is
required to ----- contribute to, or has been required to contribute to
at any time within the last six years, any pension plan, as defined in
Section 3(2) of ERISA. No unfunded liability exists for benefits under
any plan maintained by or contributed to by Borrower or any ERISA
Affiliate. Neither Borrower nor any ERISA Affiliate maintains any plan
which provides benefits to an employee or the employee's dependents
after the employee terminates employment other than as required by law
and no written or oral representations have been made by Borrower or
any ERISA Affiliate to any employee or former employee promising or
guaranteeing any employer payment or funding for the continuation of
medical, dental, or disability coverage beyond that legally required.
(i) Compliance with Laws. Borrower is conducting its business in
compliance with all statutes, rules, regulations and/or ordinances
imposed by any governmental unit upon Borrower or upon its businesses,
operations and property (including, without limitation, all
Environmental Laws). Borrower has all permits and licenses necessary
for the operation of its business as presently conducted and as
proposed to be conducted.
(j) Trademarks, Patents, Etc. There are no licenses, patents, trademarks,
service marks, copyrights, or applications therefor owned by Borrower
or used or required by Borrower in the operation of its business as it
is presently conducted, except for the trademark(s) set forth on
Schedule 6(j) attached hereto. To the knowledge of Borrower, there is
no infringement action, lawsuit, claim or complaint pending or
contemplated which asserts that Borrower's operations violate or
infringe the rights or the trade names, trademarks, trademark
registration, service name, service xxxx, or copyright of others, nor
is Borrower in any way making use of any confidential information or
trade secrets of any Person except with the consent of such Person.
Borrower conducts business under no trade or assumed name.
(k) Debt. Schedule 6(k) attached hereto is a complete and correct list of
all credit agreements, indentures, purchase agreements, promissory
notes and other evidences of indebtedness, guaranties, capital leases
and other instruments, agreements and arrangements presently in effect
providing for or relating to extensions of credit (including
agreements and arrangements for the issuance of letters of credit or
for acceptance financing) in respect of which Borrower, or any of the
properties thereof is in any manner directly or, to the knowledge of
Borrower, contingently obligated; and the maximum principal or face
amounts of the credit in question that are outstanding and that can be
outstanding are correctly stated, and all Liens of any nature given or
agreed to be given as security therefor are correctly described or
indicated in such Schedule.
(l) Certain Transactions. Except as set forth on Schedule 6(l) attached
hereto, Borrower is not indebted, directly or indirectly, to any of
its shareholders, officers, or directors or to their respective
spouses or children, in any amount whatsoever; none of said
shareholders, officers or directors or to the knowledge of Borrower,
any members of their immediate families, are indebted to Borrower or
have any direct or indirect ownership interest in any Person with
which Borrower has a business relationship, or any Person which
competes with Borrower. Borrower is not a party to any written
agreement or to the knowledge of Borrower, any oral agreement, in
which it is guarantor or indemnitor of any indebtedness of any other
Person.
(m) Margin Regulations. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin
stock. No proceeds received pursuant to this Agreement or the Warrant
will be used to purchase or carry any equity security of a class which
is registered pursuant to Section 12 of the Securities Exchange Act of
1934, as amended.
(n) Significant Contracts. Schedule 6(n) attached hereto is a complete and
correct list of all contracts, agreements and other documents, whether
verbal or written in nature, pursuant to which Borrower receives
revenues in the aggregate of at least $10,000 per fiscal year. Each
such contract agreement and other document is in full force and effect
as of the date hereof and Borrower knows of no reason why such
contracts, agreements and other documents would not remain in full
force and effect pursuant to the terms thereof.
(o) Title to Properties Borrower has valid leasehold interests in all of
the real properties it leases and has good title to its other assets,
free and clear of all Liens other than permitted liens set forth in
Subsection 10(e).
(p) Capitalization. The authorized equity interest ownership of Borrower
consists of (i) Xxxxxxx X. Xxxxxx owning forty-four and fifty-five one
hundredths of one percent (44.55%) of the equity limited partnership
interest; (ii) Xxxxx X. Xxxxxxxxx owning forty-four and fifty-five one
hundredths of one percent (44.55%) of the equity limited partnership
interest; (iii) Xxxxxx Xxxxxxx owning nine and nine-tenths of one
percent (9.9%) of the equity limited partnership; and (iv) General
Partner owning one percent (1%) of the equity general partnership. All
such interests of capital stock have been duly authorized, validly
issued, fully paid and are nonassessable. Except for the Warrant and
as set forth on Schedule 6(p) attached hereto, there are no
subscriptions, options, warrants, rights, convertible securities, or
other agreements or commitments of any character pursuant to which
Borrower is required to issue any shares of its equity interests.
(q) Registration Rights. Except as described in the Warrant, Borrower is
not under any contractual obligation to register under the Securities
Act of 1933, as amended, or the Trust Indenture Act of 1939, as
amended, any of its presently outstanding securities or any of its
securities that may subsequently be issued.
(r) Employees. Borrower has no current labor problems or disputes which
have resulted or Borrower reasonably believes could be expected to
have a material adverse effect on Borrower's business.
(s) List of Deposit Institutions. Schedule 6(s) attached hereto sets forth
a true and complete list of all deposit institution at which Borrower
has or maintains an account or deposits of any kind.
(t) Disclosure. Neither this Agreement, the Financial Statements nor any
other document, certificate or instrument delivered to MEGF by or on
behalf of Borrower in connection with the transactions contemplated
hereby, when all such documents, certificates and instruments are
taken as a whole, contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading. There is no
fact actually known to Borrower that materially adversely affects or
in the future may materially adversely affect the business,
operations, affairs, condition or properties of Borrower that has not
been set forth herein or in the other documents, certificates and
instruments delivered to MEGF by or on behalf of Borrower specifically
for use in connection with the transactions contemplated hereby.
(u) Solvency of Borrower. The fair saleable value of the business and
assets of Borrower, upon giving effect to the transactions
contemplated hereby, will be in excess of the amount that will be
required to pay its probable liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) on existing
debts as they may become absolute and matured. Borrower, upon giving
effect to the transactions contemplated hereby, will not be engaged in
any business or transaction, or about to engage in any business or
transaction, for which it has an unreasonably limited capital, and
Borrower has no intent (i) to hinder, delay or defraud any entity to
which it is, or will become, on or after the date hereof, indebted, or
(ii) to incur debts that would be beyond its ability to pay as they
mature.
7. Conditions Precedent MEGF's obligation to make the Loan shall be subject to
the conditions precedent that, as of the date of the Loan and after giving
effect thereto (i) all representations and warranties made to MEGF in this
Agreement and the other Loan Documents shall be true and correct as of and
as if made on such date, (ii) no material adverse change in the financial
condition of Borrower or its business since the effective date of the most
recent Financial Statements shall have occurred, (iii) no Event of Default
shall have occurred and no event has occurred and is continuing, or would
result from the Loan, which with notice or lapse of time, or both, would
constitute an Event of Default (as hereinafter defined), (iv) MEGF shall
have received all Loan Documents appropriately executed by Borrower and all
other proper parties, (v) MEEGF shall have received a legal opinion from
Borrower's counsel in form and substance and covering such matters as MEGF
and its counsel may require in MEGF's sole and absolute discretion, (vi)
MEGF's receipt of all fees and expenses owing to MEGF under this Agreement
and the other Loan Documents (vii) MEGF's receipt of a secretary's
certificate of Borrower, with the Borrower's certified articles or
certificate of limited partnership, good standing certificates, bylaws and
corporate resolutions authorizing the transactions contemplated hereby
attached thereto as given by the General Partner, (viii) MEGF's receipt of
the final and executed (A) Senior Lender Loan documents and (B) Purchase
Agreement, and (ix) evidence satisfactory to MEGF, in its sole discretion,
of the Borrower's acquisition of the Life Insurance.
8. Affirmative Covenants. Until (i) the Note and all other obligations and
liabilities of Borrower under this Agreement and the other Loan Documents
are fully paid and satisfied, and (ii) the Warrant expires or terminates or
has been exercised by the holder thereof, Borrower agrees and covenants
that it will, unless MEGF shall otherwise consent in writing:
(a) Accounts and Records. Maintain its books and records in accordance
with GAAP.
(b) Right of Inspection. Permit MEGF to visit its properties and
installations and to examine, audit and make and take away copies or
reproductions of Borrower's books and records, at all reasonable
times. For one audit trip per fiscal quarter of the Borrower and for
no more than five (5) days per audit trip, Borrower agrees to pay all
costs associated with any such audits, at a rate equal to $ 1,000.00
per day, per person, plus out-of-pocket expenses.
(c) Right to Additional Information. Furnish MEGF with such additional
information and statements, lists of assets and liabilities, tax
returns, and other reports with respect to Borrower's financial
condition and business operations as MEGF may request from time to
time.
(d) Compliance with Laws. Conduct its business in an orderly and efficient
manner consistent with good business practices, and perform and comply
with all statutes, rules, regulations and/or ordinances imposed by any
governmental unit upon Borrower, its businesses, operations and
properties (including without limitation, all Environmental Laws).
(e) Taxes. Pay and discharge when due all assessments, taxes, governmental
charges and levies, of every kind and nature, imposed upon Borrower or
its properties, income or profits, prior to the date on which
penalties would attach,. and all lawful claims that if unpaid, might
become a Lien upon any of Borrower's property, income or profits;
provided, however, Borrower will not be required to pay and discharge
any such assessment, tax, charge, levy or claim so long as (i) same
shall be contested in good faith by appropriate judicial,
administrative or other legal proceedings timely instituted, and (ii)
Borrower shall have established adequate reserves with respect to such
contested assessment, tax, charge, levy or claim in accordance with
GAAP.
(f) Insurance. Maintain, with financially sound and reputable insurers,
insurance covering the life of Xxxxxxx X. Xxxxxx in an amount not less
than $1,250,000 which is assigned to MEGIF (the "Life Insurance") and
such other insurance as deemed necessary or otherwise required by
MEGF, including but not limited to, fire insurance, comprehensive
property damage, public liability, worker's compensation and business
interruption insurance. Borrower shall provide to MEGF evidence of (i)
the Life Insurance within sixty (60) days after the date of this
Agreement and (ii) evidence of the payment of all premiums and other
fees and expenses as related to the Life Insurance annually. MEGF will
apply the proceeds of the Life Insurance, first to the unpaid balance
of principal of the Note, together with all accrued but unpaid
interest thereon, and all other indebtedness owing to MEGF by Borrower
until such indebtedness is paid in full, and second the remainder of
the proceeds of the Life Insurance to the other beneficiaries of the
Life Insurance.
(g) Notice of Material Change/Litigation. Borrower shall promptly notify
MEGF in writing (i) of any material adverse change in Borrower's
financial condition or its businesses, (ii) of any litigation or
claims against Borrower which could materially affect Borrower or its
business, operations, financial condition, properties or prospects,
and (iii) the occurrence of any event of default under the Senior
Lender Loan Documents or any event which with notice or lapse of time
or both would be an event of default under the Senior Lender Loan
Documents.
(h) Corporate Existence. Maintain its corporate existence and good
standing in the state of its incorporation and its qualification and
good standing in all other states where required by applicable law.
(i) ERISA. Borrower shall promptly notify MEGF in writing of the adoption
or amendment of any plan that results in the representations in
Subsection 7(h) no longer being true.
(j) Additional Documentation. Execute and deliver, or cause to be executed
and delivered, any and all other agreements, instruments or documents
which MEGF may reasonably request in order to give effect to the
transactions contemplated under this Agreement and the other Loan
Documents.
(k) Board Observation and Membership. The board of directors of the
General Partner shall consist of no less than four (4) or more than
five (5) members. MGEF shall be entitled to designate at least one
member of the board of members of the General Partner, the Borrower,
and each subsidiary thereof but shall not be obligated to do so.
Borrower will deliver to MEGF a copy of the minutes of and all
materials distributed at or prior to all meetings of the board of
members of the General Partner, certified as true and accurate by the
Secretary of the General Partner, promptly following each such
meeting. The Borrower will (w) permit MEGF, to designate one person to
attend all meetings of the General Partner's board of members, (x)
provide such designee not less than seven calendar days' actual notice
of all regular or special meetings of the General Partner's board of
members, (y) permit such designee to attend such meetings as an
observer, and (z) provide to such designee a copy of all materials
distributed at such meetings or otherwise to the members of the
General Partner. Such meetings shall be held in person or by telephone
or video conference at least quarterly, and the General Partner will
cause its board of members to call a meeting at any time upon the
request of any such designated observer upon the occurrence and
continuation of any Event of Default for 14 calendar days. The
Borrower shall reimburse each such observer for all reasonable
expenses incurred in traveling to and from such meetings and attending
such meetings.
(l) Licensing Agreement. Borrower will provide true, correct and complete
copies of all licensing agreements, whether verbal or written, with a
value in excess of $ 10,000.
9. Negative Covenants. Until (i) the Note and all other obligations and
liabilities of Borrower under this Agreement and the other Loan Documents
are fully paid and satisfied, and (ii) the Warrant expires or terminates or
has been exercised by the holder thereof, Borrower will not, without the
prior written consent of MEGF:
(a) Nature of Business. Make any material change in the nature of its
business as carried on as of the date hereof
(b) Liquidations; Mergers; Consolidations; Acquisitions. Liquidate, merge
or consolidate with or into any other Person, convert from any type of
legal entity to another type of legal entity or form or acquire any
new subsidiary or acquire by purchase or otherwise all or
substantially all of the assets of any other Person.
(c) Transactions with Affiliates. Enter. into any transaction, including,
without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate of Borrower, except in
the ordinary course of and pursuant to the reasonable requirements of
Borrower's business and upon fair and reasonable terms no less
favorable to Borrower than would be obtained in a comparable
arm's-length transaction with a person or entity not an Affiliate of
Borrower.
(d) Sale of Assets. Sell, lease, transfer or otherwise dispose of all or
substantially all of its assets or properties, other than inventory
sold in the ordinary course of business and as necessary to replace
obsolete equipment.
(e) Liens. Create or incur any Lien on any of its assets that the Borrower
is not contesting in good faith, other than (i) Liens securing
indebtedness owing to MEGF, (ii) pledges or deposits to secure the
payment of obligations under any worker's compensation laws or similar
laws, (iii) deposits to secure the payment of public or statutory
obligations, (iv) mechanic's, carriers', xxxxxxx'x, repairman's or
other Liens arising by operation of law in the ordinary course of
business which secure obligations that are not overdue or are being
contested in good faith and for which Borrower has established
adequate reserves in accordance with generally accepted accounting
principles, and (v) the Liens described in Schedule 9(e) attached
hereto.
(f) Indebtedness. Create, incur or assume any indebtedness for borrowed
money or issue or assume any other note, debenture, bond or other
evidences of indebtedness, or guarantee any such indebtedness or such
evidences of indebtedness of others, other than (i) borrowings from
MEGF, (ii) current accounts payable and other current obligations
(other than for borrowed money), (iii) borrowings from Senior Lender
which does not exceed $2,000,000 at any time, and (iv) the
indebtedness described on Schedule 9(f) attached hereto.
(g) Transfer of Ownership. Permit the sale, pledge or other transfer of
any of the ownership interest in Borrower by Xxxxxxx X. Xxxxxx, Xxxxx
X. Xxxxxxxxx, Xxxxxx Xxxxxxx or any current or future limited partner
of the Borrower.
(h) Change in Management Permit a change in the senior management of
Borrower. Permit a change in the following personnel or a material
change in such personnel's current duties:
Name Title
Xxxxx X. Xxxxxxxxx Chairman
Xxxxxxx X. Xxxxxx Vice-Chairman
Xxxxxx Xxxxxxx President & Chief Executive Officer
(i) Loans. Make any loans to any Person other than travel advances to
employees in the ordinary course of business except for loans to
employees of the Borrower which in no event, in the aggregate, shall
exceed $5,000.
(j) Dividends. Make any distributions or declare or pay any dividends (
whether in cash or in units) on any shares of Borrower's equity
interests, or purchase, redeem, acquire or retire any units of
Borrower's equity interests.
(k) Capital Expenditures. Incur capital expenditures and capital leases or
commitments therefor in excess of $50,000 in the aggregate in any
calendar year.
(l) Senior Lender Loan Documents. Modify or amend any of the Senior Lender
Loan Documents without the prior written consent of MEGF.
10. Reporting Requirements. Until (i) the Note and all other obligations and
liabilities of Borrower under this Agreement and the other Loan Documents
are fully paid and satisfied, and (ii) the Warrant has expired or
terminates or has been exercised by the holder thereof, Borrower will,
unless MEGF shall otherwise consent in writing, furnish to MEGF:
(a) Financial Statements. The following financial statements: (i) within
90 days after the last day of each fiscal year of Borrower a
consolidated statement of income and a consolidated statement of cash
flows of Borrower for such fiscal year, and a consolidated balance
sheet of Borrower as of the last day of such fiscal year, in each case
audited by an independent certified public accounting firm acceptable
to MEGF, together with a copy of any report to management delivered to
Borrower by such accountants in connection therewith; (ii) within 45
days after the last day of each fiscal quarter of Borrower, (1) an
unaudited consolidated statement of income and statement of cash flows
of Borrower for such fiscal quarter, (2) an unaudited consolidated
balance sheet of Borrower as of the last day of such fiscal quarter,
and (3) a year-to-date unaudited statement of income of Borrower as of
the end of such fiscal quarter; and (iii) within 30 days after each
month (1) an unaudited consolidated statement of income and statement
of cash flows of Borrower for such month, (2) an unaudited
consolidated balance sheet of Borrower as of the last day of such
month, and (3) a year-to-date unaudited statement of income of
Borrower as of the end of such month. Borrower represents and warrants
that each such statement of income and statement of cash flows will
fairly present, in all material respects, the results of operations
and cash flows of Borrower for the period set forth therein, and that
each such balance sheet will fairly present, in all material respects,
the financial condition of Borrower as of the date set forth therein.
Each statement provided in accordance with subclauses (i) and (ii) of
this Subsection 10(a), shall be in accordance with GAAP (or, with
respect to unaudited financial statements, in the notes thereto and
subject to year-end review adjustments) and the statements provided in
subclause (iii) of this Subsection 10(a) will be in the form generally
kept by the Borrower that is reasonably acceptable by MEGF.
(b) Annual Pro Forma Financial Statements. A copy of Borrower's statement
of income, statement of cash flows and balance sheet on a one (1) year
pro forma basis with respect to each fiscal year of Borrower within 30
days after the commencement of each such fiscal year.
(c) Senior Lender Reports and Notices. A copy of all written reports,
certificates, lists and notices required to be given by Borrower to
Senior Lender under the Senior Lender Loan Documents as and when
required to be delivered to Senior Lender, and a copy of all written
notices received by Borrower from Senior Lender concerning the
occurrence of an event of default by Borrower under the Senior Lender
Loan Documents or concerning an event which with notice or lapse of
time, or both, would be an event of default under the Senior Lender
Loan Documents.
(d) Compliance Certificate. A certificate signed by an officer of Borrower
which states that Borrower is in full compliance and all of its
obligators; under this Agreement and all other Loan Documents and is
not in default of any term or provision hereof or thereof, and
demonstrating compliance with all financial covenants and ratios set
forth in this Agreement. Such certificate will be delivered to MEGF
contemporaneously with the delivery to MEGF of each financial
statement required hereunder.
11. Financial Covenants. Until (i) the Note and all other obligations and
liabilities of Borrower under this Agreement and the other Loan Documents
are fully paid and satisfied, and (ii) the Warrant expires or terminates or
has been exercised by the holder thereof, Borrower will maintain the
following financial covenants:
(a) Debt Service Coverage Ratio. At the end of each fiscal quarter, a
ratio of (i) earnings before interest taxes, depreciation and
amortization for the immediately preceding twelve (12) months to (ii)
all principal and interest due in such twelve (12) month period on all
amortizing loans, and all interest due in such twelve (12) month
period on all non-amortizing loans and of not less than 1.25 to 1.0.
(b) Debt/EBITDA Ratio. At the end of each fiscal quarter, a ratio of (i)
total interest-bearing liabilities as of the end of such fiscal
quarter, to (ii) earnings before interest, taxes, depreciation and
amortization at the end of such 12 month period, not greater than 4.0
to 1.0.
(c) Net Worth. At the end of each fiscal year, its Net Worth of not less
than $500,000.
Unless otherwise specified, all accounting and financial terms and
covenants set forth above are to be determined according to GAAP.
12. Events of Default. Each of the following shall constitute an "Event of
Default"' under this Agreement:
(a) Failure to Pay Indebtedness. Borrower shall fail to pay within five
(5) calendar days after receiving written notice from MEGF as and when
due any part of the principal of, or interest on, the Note or any
other indebtedness or obligations now or hereafter owing to MEGF by
Borrower,
(b) Non-Performance of Covenants. Any of the Obligors shall breach any
covenant or agreement made herein, in any of the other Loan Documents,
in the Purchase Agreement or in any other agreement now or hereafter
entered into between any of the Obligors and MEGF except for the
covenant contained in Section 8(0 hereof, where breach of said section
shall occur at the expiration of five (5) calendar days after
Borrower's receipt of notice from MEGF of such breach of this
Agreement solely due to Section 8(f) hereof.
(c) False Representation. Any warranty or representation made herein, in
any of the other Loan Documents or in the Purchase Agreement shall be
false or misleading in any material respect when made.
(d) Default Under Other Loan Documents. The occurrence of an event of
default under any of the other Loan Documents, the Purchase Agreement
or any other agreement now or hereafter entered into between any of
the Obligors and MEGF.
(e) Untrue Financial Report. Any report, certificate, schedule, financial
statement, profit and loss statement or other statement furnished by
any Obligor, or by any other person on behalf of any Obligor, to MEGF
is not true and correct in any material respect.
(f) Default to Third Party. The occurrence of any event which permits, or
with notice or lapse of time, or both, permits the acceleration of the
maturity of any indebtedness owing by any of the Obligors to any third
party under any agreement or undertaking (including, without
limitation, any indebtedness owing by Borrower to Senior Lender).
(g) Bankruptcy. The filing of a voluntary or involuntary case by or
against any of the Obligors under the United States Bankruptcy Code or
other present or future federal or state insolvency, bankruptcy or
similar laws, or the appointment of a receiver, trustee, conservator
or custodian for a substantial portion of the assets of any of the
Obligors.
(h) Insolvency. Any of the Obligors shall become insolvent, make a
transfer in fraud of creditors or make an assignment for the benefit
of creditors.
(i) Involuntary Lien. The filing or commencement of any involuntary Lien,
garnishment attachment or the like shall be issued against or with
respect to the Collateral which the Borrower is not contesting in good
faith.
(j) Material Adverse Change. A material adverse change shall have occurred
in the financial condition, business prospects or operations of any of
the Obligors.
(k) Tax Lien. Any of the Obligors shall have a federal or state tax Lien
filed against any of its properties which such Obligors are not
contesting in good faith.
(l) Execution on Collateral. The Collateral or any portion thereof is
taken on execution or other process of law.
(m) ERISA Plan. Either (i) any "accumulated funding deficiency" (as
defined in Section 412(a) of the Internal Revenue Code of 1986, as
amended) in excess of $25,000 exists with respect to any ERISA Plan of
Borrower or its ERISA Affiliate, if any, or (ii) any Termination Event
occurs with respect to any ERISA Plan of Borrower or its ERISA
Affiliate, if any, and the then current value of such ERISA Plan's
benefit liabilities exceeds the then current value of such ERISA
Plan's assets available for the payment of such benefit liabilities by
more than $25,000.
(n) Judgment. The entry against any of the Obligors of a final and
nonappealable judgment for the payment of money in excess of $50,000
(not covered by insurance satisfactory to MEGF in MEGF's sole
discretion).
(o) Termination of Purchase Agreement. The expiration or termination of
the Purchase Agreement by either party, for whatever reason.
(q) Death or Incapacity. The death or legal incapacity of Xxxxxxx X.
Xxxxxx.
Nothing contained in this Loan Agreement shall be construed to limit the events
of default enumerated in any of the other Loan Documents and all such events of
default shall be cumulative.
13. Remedies. Upon the occurrence of any one or more of the foregoing Events of
Default, (a) the entire unpaid balance of principal of the Note, together
with all accrued but unpaid interest thereon, and all other indebtedness
owing to MEGF by Borrower at such time shall, at the option of MEGF, become
immediately due and payable without farther notice, demand, presentation,
notice of dishonor, notice of intent to accelerate, notice of acceleration,
protest or notice of protest of any kind, all of which are expressly waived
by Borrower. All rights and remedies of MEGF set forth in this Agreement
and in any of the other Loan Documents are cumulative and may also be
exercised by MEGF, at its option and in its sole discretion, upon the
occurrence of an Event of Default.
14. Indemnification. Borrower hereby indemnifies and agrees to hold harmless
and defend all Indemnified Persons from and against any and all Indemnified
Claims. THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH
INDEMNIFIED CLAIMS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN
PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN
WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY INDEMNIFIED
PERSON, but shall exclude any of the foregoing resulting from such
Indemnified Person's gross negligence or willful misconduct. If Borrower or
any third party ever alleges any gross negligence or willful misconduct by
any Indemnified Person, the indemnification provided for in this Section
shall nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent jurisdiction enters
a final judgment as to the extent and effect of the alleged gross
negligence or willful misconduct. Upon notification and demand, Borrower
agrees to provide defense of any Indemnified Claim and to pay all costs and
expenses of counsel selected by any Indemnified Person in respect thereof.
Any Indemnified Person against whom any Indemnified Claim may be asserted
reserves the right to settle or compromise any such Indemnified Claim as
such Indemnified Person may determine in its sole discretion, and the
obligations of such Indemnified Person, if any, pursuant to any such
settlement or compromise shall be deemed included within the Indemnified
Claims. Except as specifically provided in this Section, Borrower waives
all notices from any Indemnified Person. The provisions of this Section
shall survive the termination of this Agreement.
15. Rights Cumulative. All rights of MEGF under the terms of this Agreement
shall be cumulative of, and in addition to, the rights of MEGF under any
and all other agreements between Borrower and MEGF (including, but not
limited to, the other Loan Documents), and not in substitution or
diminution of any rights now or hereafter held by MEGF under the terms of
any other agreement.
16. Compliance with Usury Laws. Borrower and MEGF intend to conform strictly to
the usury laws in force that apply to the transactions evidenced or
contemplated hereby. Accordingly, all agreements between Borrower and MEGF,
whether now existing or hereafter arising and whether written or oral, are
hereby limited so that in no contingency, whether by reason of acceleration
of the maturity of the Note, or otherwise, shall the interest (and all
other sums that are deemed to be interest) contracted for, charged,
received, paid or agreed to be paid exceed the Maximum Rate (as defined
below). Borrower and MEGF stipulate and represent that, as of the date
hereof (the same being the date of the granting of the Warrant to MEGF) the
value of the Wan-ant is both contingent and (in the sense that the future
realization of any value from the exercise of the Warrant is dependent upon
the occurrence of events beyond the control of the parties) and speculative
(in the sense that the amount, if any, which will be realized upon exercise
of the Warrant is uncertain). Borrower and MEGF stipulate and agree that
the terms and provisions contained in this Agreement and the other Loan
Documents are not intended to and shall never be construed to create a
contract to pay for the use, forbearance or detention of money an amount in
excess of the maximum amount permitted to be charged by applicable law, if
any.
Anything in this Agreement or the other Loan Documents to the contrary
notwithstanding, neither Borrower nor any other party now or hereafter becoming
liable for payment of the Note shall ever be required to pay interest on or with
respect to the Note or any other obligation hereunder at a rate of interest that
would otherwise be payable under this Agreement or on or with respect to the
Note would exceed the Maximum Rate, or if MEGF shall receive anything of value
that is deemed or determined to constitute interest that would increase the
effective rate of interest payable under this Agreement or on or with respect to
the Note or the other Loan Documents to a rate in excess of the Maximum Rate,
then (a) the amount of interest that would otherwise be payable under this
Agreement, the Note or the other Loan Documents shall be reduced to the amount
allowed at the Maximum Rate under applicable law, and (b) any unearned interest
paid by Borrower or any interest paid by Borrower in excess of the Maximum Rate
shall, at the option of MEGF, be either refunded to Borrower or credited on the
principal of the Note. It is further agreed that, without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged or
received by MEGF, or under this Agreement, that are made for the purpose of
determining whether such rate exceeds the Maximum Rate, shall be made, to the
extent permitted by applicable law (now or, to the extent permitted by law,
hereafter enacted) governing the Maximum Rate, by (i) characterizing any
nonprincipal payment as an expense, fee or premium rather than as interest, and
(ii) amortizing, prorating, allocating and spreading in equal parts during the
period of the full term of the Note (including the period of any renewal or
extension thereof), all interest at any time contracted for, charged or received
by such registered holder in connection therewith. As used in this Section, the
term "Maximum Rate" means the maximum nonusurious rate of interest permitted
from time to time to be contracted for, taken, charged or received with respect
to the Note by the registered holder thereof, under applicable law as in effect
with respect to this Agreement or the Note.
17. Waiver and Agreement. Neither the failure nor any delay on the part of MEGF
to exercise any right, power or privilege herein or under any of the other
Loan Documents shall operate as a waiver thereof nor shall any single or
partial exercise of such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. No waiver of any provision in this Loan Agreement or in any of
the other Loan Documents and no departure by Borrower therefrom shall be
effective unless the same shall be in writing and signed by MEGF, and then
shall be effective only in the specific instance and for the purpose for
which given and to the extent specified in such writing. No modification or
amendment to this Loan Agreement or to any of the other Loan Documents
shall be valid or effective unless the same is signed by the party against
whom it is sought to be enforced.
18. Benefits. This Agreement shall be binding upon and inure to the benefit of
MEGF and Borrower, and their respective successors and assigns; provided,
however, that Borrower may not, without the prior written consent of MEGF,
assign any rights, powers, duties or obligations under this Agreement or
any of the other Loan Documents.
19. Notices. All notices, requests, demands or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and
given by (i) personal delivery, (ii) expedited delivery service with proof
of delivery, (iii) United States mail, postage prepaid, registered or
certified mail, return receipt requested, or (iv) telecopy (with receipt
thereof confirmed by telecopier) sent to the intended addressee at the
address set forth on the signature page hereof and shall be deemed to have
been received either, in the case of personal delivery, as of the time of
personal delivery, in the case of expedited delivery service, as of the
date of first attempted delivery at the address and in the manner provided
herein, in the case of mail, upon deposit in a depository receptacle under
the care and custody of the United States Postal Service, or in the case of
telecopy, upon receipt. Either party shall have the right to change its
address for notice hereunder to any other location within the continental
United States by notice to the other party of such new address at least
thirty (30) days prior to the effective date of such new address.
20. GOVERNING LAW; VENUE; SUBMISSION TO JURISDICTION. THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAWS THEREOF, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT
OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER
OR THEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS. THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS ARE PERFORMABLE BY THE PARTIES IN DALLAS COUNTY,
TEXAS. BORROWER AND MEGF EACH AGREE THAT DALLAS COUNTY, TEXAS SHALL BE THE
EXCLUSIVE VENUE FOR LITIGATION OF ANY DISPUTE OR CLAIM ARISING UNDER OR
RELATING TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND THAT SUCH
COUNTY IS A CONVENIENT FORUM IN WHICH TO DECIDE ANY SUCH DISPUTE OR CLAIM.
BORROWER AND MEGF EACH CONSENT TO THE PERSONAL JURISDICTION OF THE STATE
AND FEDERAL COURTS LOCATED IN DALLAS COUNTY, TEXAS FOR THE LITIGATION OF
ANY SUCH DISPUTE OR CLAIM. BORROWER IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
21. WAIVER OF JURY TRIAL. BORROWER AND MEGF EACH HEREBY IRREVOCABLY WAIVES, TO
THE MAXIMUM EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH.
22. Invalid Provisions. If any provision of this Agreement or any of the other
Loan Documents is held to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable and the
remaining provisions of this Agreement or any of the other Loan Documents
shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance.
23. Expenses. Borrower shall pay all costs and expenses (including, without
limitation, reasonable attorneysfees) in connection with (i) the making of
the Loan (including without limitation, the preparation and negotiation of
this Agreement, the Note and the other Loan Documents and all filing fees
and recording taxes), (ii) any action required in the course of
administration of the indebtedness and obligations evidenced by the Loan
Documents, and (iii) any action in the enforcement of MEGF's rights upon
the occurrence of Event of Default.
24. Participation of the Loan. Borrower agrees that MEGF may, at its option,
sell interests in the Loan and its rights under this Agreement and the
other Loan Documents and, in connection with each such sale, MEGF may
disclose any financial and other information available to MEGF concerning
Borrower to each prospective purchaser and assignee.
25. Conflicts. In the event any term or provision hereof is inconsistent with
or conflicts with any provision of the other Loan Documents, the terms and
provisions contained in this Agreement shall be controlling.
26. Counterparts. This Agreement may be separately executed in any number of
counterparts, each of which shall be an original, but all of which, taken
together, shall be deemed to constitute one and the same instrument.
Delivery of an executed counterpart of this Agreement by telecopy shall be
equally as effective as delivery of a manually executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement
by telecopy also shall deliver a manually executed counterpart of this
Agreement but the failure to deliver a manually executed counterpart shall
not affect the validity, enforceability, and binding effect of this
Agreement.
27. ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO
THE TRANSACTIONS CONTEMPLATED HEREIN AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS
AGREEMENT ALSO AMENDS AND SUPERSEDES ANY OF THE TERMS OF ANY PRIOR WRITTEN
AGREEMENTS WITH RESPECT TO THE MATTERS SET FORTH IN THIS AGREEMENT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Note Purchase Agreement
129682
EXECUTED as of the date first above written.
CHAMPION TRAILER COMPANY, L.P.: MARKPOINT EQUITY GROWTH FUND, J.V.:
By: Durham Xxxxxxxxx & Associates, LLC, By: The Markpoint Company,
its general partner Venturer its Managing
By: _____________________ By: ____________________________
Name: ____________________ Name: __________________________
Title: ___________________ Title: _________________________
Borrower's Address: MEGF's Address:
000 Xxxxxxxx Xxxxxx, Xxxxx 0000 00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000 Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx Attn: Xxx Xxxxxx
Telecopy No. Telecopy No. 972-490-1980
With copy to: With a copy to:
Xxxxx Xxxxxxx & Xxxxxx, LLP . Xxxxxx Xxxxx LLP
Xxx Xxxxxxxx Xxxxxx, 00xx Xxxxx 0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000-0000 Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx, Esq. Attn: Xxxxx X. Xxxxx, Esq.
Telecopy No. 000-000-0000 Telecopy No. 000-000-0000
Index of Schedules
Schedule 6(d) Subsidiaries
Schedule 6(f) Litigation
Schedule 6(j) Trademarks, Patents, Etc.
Schedule 6(k) Debt and Liens
Schedule 6(l) Shareholder Loans
Schedule 6(n) Significant Contracts
Schedule 6 (p) Outstanding Subscriptions, Warrants, Options, Etc.
Schedule 6(s) Deposit Institutions
Schedule 9(e) Liens
Schedule 9(f) Indebtedness
THE RIGHTS AND REMEDIES OF MARKPOINT EQUITY GROWTH FUND, J.V. HEREUNDER ARE
SUBJECT TO A SUBORDINATION AGREEMENT AMONG MARKPOINT EQUITY GROWTH FUND, J.V.
AND BANK ONE INDIANA, N.A. DATED AS OF EVEN DATE HEREWITH.
PARENT PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Agreement") is made as of the 2nd day of May, 2000, by
DURHAM XXXXXXXXX & ASSOCIATES, LLC (hereinafter called "Pledgor"), in favor of
MARKPOINT EQUITY GROWTH FUND, J.V. ("Secured Party"). Pledgor hereby agrees with
Secured Party as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
meanings indicated below:
(a) "Additional Property" shall mean the following property which Pledgor
becomes entitled to receive or shall receive in connection with any
other Collateral: (i) any equity ownership unit or stock certificate,
including without limitation, any certificate representing a stock
dividend or any certificate in connection with any recapitalization,
reclassification, merger, consolidation, conversion, sale of assets,
combination of shares, stock split or spin-off, (ii) any option,
warrant~ subscription or right, whether as an addition to or in
substitution of any other Collateral; (iii) any dividends or
distributions of any kind whatsoever, whether distributable in cash,
stock or other property; (iv) any interest premium or principal
payments; and (v) any conversion or redemption proceeds
(b) "Borrower" shall mean CHAMPION TRAILER COWANY, L.P.
(c) "Code" shall mean the Uniform Commercial Code as in effect in the
State of Texas on the date of this Agreement or as it may hereafter be
amended from time to time.
(d) "Collateral" shall mean all property specifically described on
Schedule "A" attached hereto and made a part hereof The term
Collateral, as used herein, shall also include (i) all certificates,
instruments and/or other documents evidencing the foregoing, (ii) all
renewals, replacements and substitutions of all of the foregoing,
(iii) all Additional Property, and (iv) all PRODUCTS and PROCEEDS of
all of the foregoing. The designation of proceeds does not authorize
Pledgor to sell, transfer or otherwise convey any of the foregoing
property. The delivery at any time by Pledgor to Secured Party of any
property as a pledge to secure payment or performance of any
indebtedness or obligation whatsoever shall also constitute a pledge
of such property as Collateral hereunder.
(e) "Financing Documents" shall mean all instruments and documents
evidencing, securing, governing, guaranteeing and/or pertaining to the
Indebtedness, including, without limitation, the Security Agreement of
even date herewith among Borrower and Secured Party, the Note Purchase
Agreement of even date herewith among Borrower and Secured Party, the
Note and the Holder Pledge Agreement of even date herewith by and
between Secured Party and Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxxxxxx and
Xxxxxx Xxxxxxx.
(f) "Indebtedness" shall mean (i) indebtedness, obligations and
liabilities owing by Borrower to Secured Party under the Note and Note
Purchase Agreement and all other indebtedness, obligations and
liabilities of Pledgor and Borrower (or either of them) to Secured
Party of any kind or character, now existing or hereafter arising,
whether direct indirect, related, unrelated, fixed, contingent~
liquidated, unliquidated, joint, several or joint and several, and
regardless of whether such indebtedness, obligations and liabilities
may, prior to their acquisition by Secured Party, be or have been
payable to or in favor of a third party and subsequently acquired by
Secured Party (it being contemplated that Secured Party may make such
acquisitions from third parties), including without limitation all
indebtedness, obligations and liabilities of Pledgor and Borrower (or
either of them) to Secured Party now existing or hereafter arising by
note, draft, acceptance, guaranty, endorsement, letter of credit
assignment, purchase, overdraft, discount, indemnity agreement or
otherwise, (ii) all obligations of Pledgor and Borrower (or either of
them) to Secured Party under any documents evidencing, securing,
governing and/or pertaining to all or any part of the indebtedness,
obligations and liabilities described in (i) above, (iii) all costs
and expenses incurred by Secured Party in connection with the
collection and administration of all or any part of the indebtedness,
obligations and liabilities described in (i) and (ii) above or the
protection or preservation of, or realization upon, the collateral
securing all or any pan of such indebtedness, obligations and
liabilities, including without limitation all reasonable attorneys'
fees, and (iv) all renewals, extensions, modifications and
rearrangements of the indebtedness, obligations and liabilities
described in (i), (ii) and (iii) above.
(g) "Note" means that certain promissory note of even date herewith
payable by Borrower to the order of Secured Party in the stated
principal amount of $1,250,000.00, as may be renewed, extended,
amended and modified.
All words and phrases used herein which are expressly defined in
Section 1.201, Chapter 8 or Chapter 9 of the Code shall have the
meaning provided for therein. Other words and phrases defined
elsewhere in the Code shall have the meaning specified therein except
to the extent such meaning is inconsistent with a definition in
Section 1.20 1, Chapter 8 or Chapter 9 of the Code.
2. Security Interest. As security for the Indebtedness, Pledgor, for value
received, hereby grants to Secured Party a continuing security interest in
the Collateral.
3. Additional property. Collateral shall also include the Additional Property;
provided, however, that until the occurrence of an Event of Default (as
hereinafter defined), Pledgor shall be entitled to all cash dividends and
all interest paid on the Collateral (except interest paid on any
certificate of deposit pledged hereunder) free of the security interest
created under this Agreement. All Additional Property received by Pledgor
shall be received in trust for the benefit of Secured Party. All Additional
Property and all certificates or other written instruments or documents
evidencing and/or representing the Additional Property that is received by
Pledgor, together with such instruments of transfer as Secured Party may
request~ shall immediately be delivered to or deposited with Secured Party
and held by Secured Party as Collateral under the terms of this Agreement.
If the Additional Property received by Pledgor shall be shares of stock or
other securities, such shares of stock or other securities shall be duly
endorsed in blank or accompanied by proper instruments of transfer and
assignment duly executed in blank with, if requested by Secured Party,
signatures guaranteed by a member or member organization in good standing
of an authorized Securities Transfer Agents Medallion Program, all in form
and substance satisfactory to Secured Party. Secured Party shall be deemed
to have possession of any Collateral in transit to Secured Party or its
agent.
4. Voting Rights. As long as no Event of Default shall have occurred
hereunder, any voting rights incident to any stock or other securities or
interests pledged as Collateral may be exercised by Pledgor; provided,
however, that Pledgor will not exercise, or cause to be exercised, any such
voting rights, without the prior written consent of Secured Party, if the
direct or indirect effect of such vote will result in an Event of Default
hereunder.
5. Maintenance of Collateral. Other than the exercise of reasonable care to
assure the safe custody of any Collateral in Secured Party's possession
from time to time, Secured Party does not have any obligation, duty or
responsibility with respect to the Collateral. Without limiting the
generality of the foregoing, Secured Party shall not have any obligation,
duty or responsibility to do any of the following: (a) ascertain any
maturities, calls, conversions, exchanges, offers, tenders or similar
matters relating to the Collateral or informing Pledgor with respect to any
such matters; (b) fix, preserve or exercise any right, privilege or option
(whether conversion, redemption or otherwise) with respect to the
Collateral unless (i) Pledgor makes written demand to Secured Party to do
so, (ii) such written demand is received by Secured Party in sufficient
time to permit Secured Party to take the action demanded in the ordinary
course of its business, and (iii) Pledgor provides additional collateral,
acceptable to Secured Party in its sole discretion; (c) collect any amounts
payable in respect of the Collateral (Secured Party being liable to account
to Pledgor only for what Secured Party may actually receive or collect
thereon); (d) sell all or any portion of the Collateral to avoid market
loss; (e) sell all or any portion of the Collateral unless and until (i)
Pledgor makes written demand upon Secured Party to sell the Collateral, and
(ii) Pledgor provides additional collateral, acceptable to Secured Parry in
its sole discretion; or (f) hold the Collateral for or on behalf of any
party other than Pledgor.
6. Representations and Warranties. Pledgor hereby represents and wan-ants die
following to Secured Party:
(a) Due Authorization. The execution, delivery and performance of this
Agreement and all of the other Financing Documents by Pledgor have
been duly authorized by all necessary corporate action of Pledgor, to
the extent Pledgor is a corporation, or by all necessary partnership
action, to the extent Pledgor is a partnership.
(b) Enforceability. This Agreement and the other Financing Documents
constitute legal, valid and binding obligations of Pledgor,
enforceable in accordance with their respective terms, except as
limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors' rights and
except to the extent specific remedies may generally be limited by
equitable principles.
(c) Ownership and Liens. The equity interests issued by Borrower that
constitutes a portion of the Collateral represents one percent (1%) of
the issued and outstanding equity interests of Borrower. Pledgor has
good and marketable title to the Collateral free and clear of all
liens, security interests, encumbrances or adverse claims, except for
the security interest created by this Agreement. No dispute, right of
setoff, counterclaim or defense exists with respect to all or any part
of the Collateral. Pledgor has not executed any other security
agreement currently affecting the Collateral and no financing
statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office except as
may have been executed or filed in favor of Secured Party.
(d) No Conflicts or Consents. Neither the ownership, the intended use of
the Collateral by Pledgor, the grant of the security interest by
Pledgor to Secured Party herein nor the exercise by Secured Party of
its rights or remedies hereunder, will (i) conflict with any provision
of (A) any domestic or foreign law, statute, rule or regulation, (B)
the articles or certificate of incorporation or organization, charter,
operating agreement, bylaws or partnership agreement, as the case may
be, of Pledgor, or (C) any agreement, judgment, license, order or
permit applicable to or binding upon Pledgor or otherwise affecting
the Collateral, or (ii) result in or require the creation of any lien,
charge or encumbrance upon any assets or properties of Pledgor or of
any person except as may be expressly contemplated in the Financing
Documents. Except as expressly contemplated in the Financing
Documents, no consent, approval, authorization or order of, and no
notice to or filing with, any court, governmental authority or third
party is required in connection with the grant by Pledgor of the
security interest herein or the exercise by Secured Party of its
rights and remedies hereunder.
(e) Security Interest. Pledgor has and will have at all times full right,
power and authority to grant a security interest in the Collateral to
Secured Party in the manner provided herein, free and clear of any
lien, security interest or other charge or encumbrance. This Agreement
creates a legal, valid and binding security interest in favor of
Secured Party in the Collateral.
(f) Location. Pledgor's residence or chief executive office, as the case
may be, and the office where the records concerning the Collateral are
kept is located at its address set forth on the signature page hereof
(g) Solvency of Pledgor. As of the date hereof, and after giving effect to
this Agreement and the completion of all other transactions
contemplated by Pledgor at the time of the execution of this Agreement
(i) Pledgor is and will be solvent, (ii) the fair saleable value of
Pledgor's assets exceeds and will continue to exceed Pledgor's
liabilities (both fixed and contingent), (iii) Pledgor is paying and
will continue to be able to pay its debts as they mature, and (iv) if
Pledgor is not an individual, Pledgor has and will have sufficient
capital to carry on Pledgor's businesses and all businesses in which
Pledgor is about to engage.
(h) Securities. Any certificates evidencing securities pledged as
Collateral are valid and genuine and have not been altered. All
securities pledged as Collateral have been duly authorized and validly
issued, are fully paid and non-assessable, and were not issued in
violation of the preemptive rights of any party or of any agreement by
which Pledgor or the issuer thereof is bound. No restrictions or
conditions exist with respect to the transfer or voting of any
securities pledged as Collateral, except as has been disclosed to
Secured Party in writing. To the best of Pledgor's knowledge, no
issuer of such securities (other than securities of a class which are
publicly traded) has any outstanding stock rights, rights to
subscribe, options, wan-ants or convertible securities outstanding or
any other rights outstanding entitling any party to have issued to
such party capital stock of such issuer, except as has been disclosed
to Secured Party in writing.
7. Affirmative Covenants. Pledgor will comply with the covenants contained in
this Section at all times during the period of time this Agreement is
effective unless Secured Party shall otherwise consent in writing.
(a) Ownership and Liens. Pledgor will maintain good and marketable title
to all Collateral free and clear of all liens, security interests,
encumbrances or adverse claims, except for the security interest
created by this Agreement and the security interests and other
encumbrances expressly permitted by the other Financing Documents.
Pledgor will not permit any dispute, right of setoff, counterclaim or
defense to exist with respect to all or any part of the Collateral.
Pledgor will cause any financing statement or other security
instrument with respect to the Collateral to be terminated, except as
may exist or as may have been filed in favor of Secured Party. Pledgor
will defend at its expense Secured Party's right, title and security
interest in and to the Collateral against the claims of any third
party.
(b) Inspection of Books and Records. Pledgor will keep adequate records
concerning the Collateral and will permit Secured Party and all
representatives and agents appointed by Secured Party to inspect
Pledgor's books and records of or relating to the Collateral at any
time during normal business hours, to make and take away photocopies,
photographs and printouts thereof and to write down and record any
such information.
(c) Adverse Claim. Pledgor covenants and agrees to promptly notify Secured
Party of any claim, action or proceeding affecting title to the
Collateral, or any part thereof, or the security interest created
hereunder and, at Pledgor's expense, defend Secured Party's security
interest in the Collateral against the claims of any third party.
Pledgor also covenants and agrees to promptly deliver to Secured Party
a copy of all written notices received by Pledgor with respect to the
Collateral, including without limitation, notices received from the
issuer of any securities pledged hereunder as Collateral.
(d) Delivery of Instruments and/or Certificates. Contemporaneously
herewith, Pledgor covenants and agrees to deliver to Secured Party any
certificates, documents or instruments representing or evidencing the
Collateral, with Pledgor's endorsement thereon and/or accompanied by
proper instruments of transfer and assignment duly executed in blank
with, if requested by Secured Party, signatures guaranteed by a member
or member organization in good standing of an authorized Securities
Transfer Agents Medallion Program, all in form and substance
satisfactory to Secured Party.
(e) Further Assurances. Pledgor will contemporaneously with the execution
hereof and from time to time thereafter at its expense promptly
execute and deliver all further instruments and documents and take all
further action necessary or appropriate or that Secured Party may
request in order (i) to perfect and protect the security interest
created or purported to be created hereby and the first priority of
such security interest, (ii) to enable Secured Party to exercise and
enforce its rights and remedies hereunder in respect of the
Collateral, and (iii) to otherwise effect the purposes of this
Agreement, including without limitation: (A) executing and filing any
financing or continuation statements, or any amendments thereto; (B)
obtaining written confirmation from the issuer of any securities
pledged as Collateral of the pledge of such securities, in form and
substance satisfactory to Secured Party; (C) cooperating with Secured
Party in registering the pledge of any securities pledged as
Collateral with the issuer of such securities; (D) delivering notice
of Secured Party's security interest in any securities pledged as
Collateral to any securities or financial intermediary, clearing
corporation or other party required by Secured Party, in form and
substance satisfactory to Secured Party; and (E) obtaining written
confirmation of the pledge of any securities constituting Collateral
from any securities or financial intermediary, clearing corporation or
other party required by Secured Party, in form and substance
satisfactory to Secured Party. If all or any part of the Collateral is
securities issued by an agency or department of the United States,
Pledgor covenants and agrees, at Secured Party's request, to cooperate
in registering such securities in Secured Party's name or with Secured
Party's account maintained with a Federal Reserve Bank, When
applicable law provides more than one method of perfection of Secured
Party's security interest in the Collateral, Secured Party may choose
the method(s) to be used.
8. Negative Covenants. Pledgor will comply with the covenants contained in
this Section at all times during the period of time this Agreement is
effective, unless Secured Party shall otherwise consent in writing.
(a) Transfer or Encumbrance. Pledgor will not (i) sell, assign (by
operation of law or otherwise) or transfer Pledgor's rights in any of
the Collateral, (ii) xxxxx x xxxx or security interest in or execute,
file or record any financing statement or other security instrument
with respect to the Collateral to any party other than Secured Party,
or (iii) deliver actual or constructive possession of any certificate,
instrument or document evidencing and/or representing any of the
Collateral to any party other than Secured Party.
(b) Impairment of Security Interest. Pledgor will not take or fail to take
any action which would in any manner impair the value or
enforceability of Secured Party's security interest in any Collateral.
(c) Dilution of Ownership. As to any securities pledged as Collateral
(other than securities of a class which are publicly traded), Pledgor
will not consent to or approve of the issuance of (i) any additional
shares of any class of securities of such issuer (unless immediately
upon issuance additional securities are pledged and delivered to
Secured Party pursuant to the terms hereof to the extent necessary to
give Secured Party a security interest after such issuance in at least
the same percentage of such issuer's outstanding securities as Secured
Party had before such issuance), (ii) any instrument convertible
voluntarily by the holder thereof or automatically upon the occurrence
or nonoccurrence of any event or condition into, or exchangeable for,
any such securities, or (iii) any warrants, options, contracts or
other commitments entitling any third party to purchase or otherwise
acquire any such securities.
(d) Restrictions on Securities. Pledgor will not enter into any agreement
creating, or otherwise permit to exist any restriction or condition
upon the transfer, voting or control of any securities pledged as
Collateral, except as consented to in writing by Secured Party.
9. Rights of Secured Party. Secured Party shall have the rights contained in
this Section at all times during the period of time this Agreement is
effective. ,
(a) Power of Attorney. Pledgor hereby irrevocably appoints Secured Party
as Pledgor's attorney-in-fact, such power of attorney being coupled
with an interest, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, to take any action
and to execute any instrument which Secured Party may from time to
time in Secured Party's discretion deem necessary or appropriate to
accomplish the purposes of this Agreement, including without
limitation, the following action: (i) transfer any securities,
instruments, documents or certificates pledged as Collateral in the
name of Secured Party or its nominee; (ii) use any interest premium or
principal payments, conversion or redemption proceeds or other cash
proceeds received in connection with any Collateral to reduce any of
the Indebtedness; (iii) exchange any of the securities pledged as
Collateral for any other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer
thereof, and, in connection therewith, to deposit and deliver any and
all of such securities with any committee, depository, transfer agent,
registrar or other designated agent upon such terms and conditions as
Secured Party may deem necessary or appropriate; (iv) exercise or
comply with any conversion, exchange, redemption, subscription or any
other right, privilege or option pertaining to any securities pledged
as Collateral; provided, however, except as provided herein, Secured
Party shall not have a duty to exercise or comply with any such right,
privilege or option (whether conversion, redemption or otherwise) and
shall not be responsible for any delay or failure to do so; and (v)
file any claims or take any action or institute any proceedings which
Secured Party may deem necessary or appropriate for the collection
and/or preservation of the Collateral or otherwise to enforce the
rights of Secured Party with respect to the Collateral; provide ,
however, nothing herein shall allow Secured Party to confess any
judgment with respect to any action which the Company is a plaintiff
or defendant.
(b) Performance by Secured . If Pledgor fails to perform any agreement or
obligation provided herein, Secured Party may itself perform, or cause
performance of such agreement or obligation, and the expenses of
Secured Party incurred in connection therewith shall be a part of the
Indebtedness, secured by the Collateral and payable by Pledgor on
demand.
Notwithstanding any other provision herein to the contrary, Secured
Party does not have any duty to exercise or continue to exercise any
of the foregoing rights and shall not be responsible for any failure
to do so or for any delay in doing so.
10. Events of Default. Each of the following constitutes an "Event of Default"
under this Agreement:
(a) Failure to Pay Indebtedness. Borrower or Pledgor shall fail to pay
after the expiration of five (5) calendar days after Borrower has
received notice (as dictated by the Note Purchase Agreement) from
Secured Party of a failure by Borrower to pay any Indebtedness as and
when due.
(b) Non-Performance of Covenants. Borrower or Pledgor shall breach any
covenant or agreement made herein or the Note Purchase Agreement, in
any of the Financing Documents or in any other agreement now or
hereafter entered into between Borrower or Pledgor and Secured Party.
(c) False Representation. Any warranty or representation made herein or
the Note Purchase Agreement or in any of the Financing Documents shall
be false or misleading in any material respect when made.
(d) Default Under Other Financing Documents. The occurrence of an event of
default under the Note Purchase Agreement, any of the Financing
Documents or any other agreement now or hereafter entered into between
Borrower or Pledgor and Secured Party.
(e) Untrue Financial Report. Any report, certificate, schedule, financial
statement, profit and loss statement or other statement furnished by
Borrower or Pledgor, or by any other person on behalf of Borrower or
Pledgor, to Secured Party is not true and correct in any material
respect.
(f) Default to Third Party. The occurrence of any event which permits the
acceleration of the maturity of any indebtedness owing by Borrower or
Pledgor to any third party under any agreement or undertaking.
(g) Bankruptcy The filing of a voluntary or involuntary case by or against
Borrower or Pledgor under the United States Bankruptcy Code or other
present or future federal or state insolvency, bankruptcy or similar
laws (collectively, "Applicable Bankruptcy Law"), or the appointment
of a receiver, trustee, conservator or custodian for a substantial
portion of the assets of Borrower or Pledgor.
(h) Insolvency. Borrower or Pledgor shall become insolvent, make a
transfer in fraud of creditors or make an assignment for the benefit
of creditors.
(i) Involuntary Lien. The filing or commencement of any involuntary lien,
garnishment, attachment or the like shall be issued against or with
respect to the Collateral which the Borrower and/or Pledgor is not
contesting in good faith.
(j) Material Adverse Change. A material adverse change shall have occurred
in the financial condition, business prospects or operations of
Borrower or Pledgor or any of its subsidiaries.
(k) Tax Lien. Borrower or Pledgor shall have a federal or state tax lien
filed against any of its properties.
(1) Execution on Collateral. The Collateral or any portion thereof is
taken on execution or other process of law which the Borrower and/or
Pledgor is not contesting in good faith.
(m) Guarantor's Obligations. If any of the obligations of any guarantor
under the Financing Documents is limited or terminated by operation of
law or by the guarantor, or any such guarantor becomes the subject of
an insolvency proceeding.
(n) Judgment. The entry against Borrower or Pledgor of a final and
nonappealable judgment for the payment of money in excess of $50,000
(not covered by insurance satisfactory to Secured Party in its sole
discretion).
(o) Dilution of Ownership. The issuer of any securities (other than
securities of a class which are publicly traded) constituting
Collateral hereafter issues any shares of any class of capital stock
(unless immediately upon issuance, additional securities are pledged
and delivered to Secured Party pursuant to the terms hereof to the
extent necessary to give Secured Party a security interest after such
issuance in at least the same percentage of such issuer's outstanding
securities as Secured Party had before such issuance) or any options,
warrants or other rights to purchase any such capital stock.
(p) Bankruptcy of Issue . (i) The issuer of any securities constituting
Collateral files a petition for relief under any Applicable Bankruptcy
Law, (ii) an involuntary petition for relief is filed against any such
issuer under any Applicable Bankruptcy Law, or (iii) an order for
relief naming any such issuer is entered under any Applicable
Bankruptcy Law.
(q) Termination of Note Purchase Agreement. The expiration or termination
of the Note Purchase Agreement.
11. Remedies and Related Rights. If an Event of Default shall have occurred,
and without limiting any other rights and remedies provided herein, under
any of the other Financing Documents or otherwise available to Secured
Party, Secured Party may exercise one or more of the rights and remedies
provided in this Section.
(a) Remedies. Secured Party may from time to time at its discretion,
without limitation and without notice except as expressly provided in
any of the Financing Documents:
(i) exercise in respect of the Collateral all the rights and remedies
of a secured party under the Code (whether or not the Code
applies to the affected Collateral);
(ii) reduce its claim to judgment or foreclose or otherwise enforce,
in whole or in part, the security interest granted hereunder by
any available judicial procedure;
(iii)sell or otherwise dispose of, at its office, on the premises of
Pledgor or elsewhere, the Collateral, as a unit or in parcels, by
public or private proceedings, and by way of one or more
contracts (it being agreed that the sale or other disposition of
any part of the Collateral shall not exhaust Secured Party's
power of sale, but sales or other dispositions may be made from
time to time until all of the Collateral has been sold or
disposed of or until the Indebtedness has been paid and performed
in full), and at any such sale or other disposition it shall not
be necessary to exhibit any of the Collateral;
(iv) buy the Collateral, or any portion thereof, at any public sale;
(v) buy the Collateral, or any portion thereof, at any private sale
if the Collateral is of a type customarily sold in a recognized
market or is of a type which is the subject of widely distributed
standard price quotations;
(vi) apply for the appointment of a receiver for the Collateral, and
Pledgor hereby consents to any such appointment; and
(vii)at its option, retain the Collateral in satisfaction of the
Indebtedness whenever the circumstances are such that Secured
Party is entitled to do so under the Code or otherwise.
Pledgor agrees that in the event Pledgor is entitled to receive any notice under
the Uniform Commercial Code, as it exists in the state governing any such
notice, of the sale or other disposition of any Collateral, reasonable notice
shall be deemed given when such notice is deposited in a depository receptacle
under the care and custody of the United States Postal Service, postage prepaid,
at Pledgor's address set forth on the signature page hereof, five (5) days prior
to the date of any public sale, or after which a private sale, of any of such
Collateral is to be held. Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Pledgor further acknowledges
and agrees that the redemption by Secured Party of any certificate of deposit
pledged as Collateral shall be deemed to be a commercially reasonable
disposition under Section 9.504(c) of the Code.
(b) Private Sale of Securities. Pledgor recognizes that Secured Party may
be unable to effect a public sale of all or any part of the securities
pledged as Collateral because of restrictions in applicable federal
and state securities laws and that Secured Party may, therefore,
determine to make one or more private sales of any such securities to
a restricted group of purchasers who will be obligated to agree, among
other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof
Pledgor acknowledges that each any such private sale may be at prices
and other terms less favorable then what might have been obtained at a
public sale and, notwithstanding the foregoing, agrees that each such
private sale shall be deemed to have been made in a commercially
reasonable manner and that Secured Party shall have no obligation to
delay the sale of any such securities for the period of time necessary
to permit the issuer to register such securities for public sale under
any federal or state securities laws. Pledgor further acknowledges and
agrees that any offer to sell such securities which has been made
privately in the manner described above to not less than five (5) bona
fide offerees shall be deemed to involve a "public sale" for the
purposes of Section 9.504(c) of the Code, notwithstanding that such
sale may not constitute a "public offering" under any federal or state
securities laws and that Secured Party may, in such event, bid for the
purchase of such securities.
(c) Application of Proceeds. If any Event of Default shall have occurred,
Secured Party may at its discretion apply or use any cash held by
Secured Parry as Collateral, and any cash proceeds received by Secured
Party in respect of any sale or other disposition of, collection from,
or other realization upon, all or any part of the Collateral as
follows in such order and manner as Secured Party may elect:
(i) to the repayment or reimbursement of the reasonable costs and
expenses (including, without limitation,. reasonable attorneys'
fees and expenses) incurred by Secured Party in connection with
(A) the administration of the Financing Documents, (B) the
custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, the Collateral, and
(C) the exercise or enforcement of any of the rights and remedies
of Secured Party hereunder;
(ii) to the payment or other satisfaction of any liens and other
encumbrances upon the Collateral;
(iii) to the satisfaction of the Indebtedness;
(iv) by holding such cash and proceeds as Collateral;
(v) to the payment of any other amounts required by applicable law
(including without limitation, Section 9.504(a)(3) of the Code or
any other applicable statutory provision); and
(vi) by delivery to Pledgor or any other party lawfully entitled to
receive such cash or proceeds whether by direction of a court of
competent jurisdiction or otherwise.
(d) Deficiency. In the event that the proceeds of any sale of, collection
from, or other realization upon, all or any part of the Collateral by
Secured Party are insufficient to pay all amounts to which Secured
Party is legally entitled, Borrower and any party who guaranteed or is
otherwise obligated to pay all or any portion of the Indebtedness
shall be liable for the deficiency, together with interest thereon as
provided in the Financing Documents.
(e) Non-Judicial Remedies. In granting to Secured Party the power to
enforce its rights hereunder without prior judicial process or
judicial hearing, Pledgor expressly waives, renounces and knowingly
relinquishes any legal right which might otherwise require Secured
Party to enforce its rights by judicial process. Pledgor recognizes
and concedes that non-judicial remedies are consistent with the usage
of trade, are responsive to commercial necessity and are the result of
a bargain at arm's length. Nothing herein is intended to prevent
Secured Party or Pledgor from resorting to judicial process at either
party's option.
(f) Other Recourse. Pledgor waives any right to require Secured Party to
proceed against any third party, exhaust any Collateral or other
security for the Indebtedness, or to have any third party joined with
Pledgor in any suit arising out of the Indebtedness or any of the
Financing Documents, or pursue any other remedy available to Secured
Party. Pledgor further waives any and all notice of acceptance of this
Agreement and of the creation, modification, rearrangement renewal or
extension of the Indebtedness. Pledgor further waives any defense
arising by reason of any disability or other defense of any third
party or by reason of the cessation from any cause whatsoever of the
liability of any third party. Until all of the Indebtedness shall have
been paid in full, Pledgor shall have no right of subrogation and
Pledgor waives the right to enforce any remedy which Secured Party has
or may hereafter have against any third party, and waives any benefit
of and any right to participate in any other security whatsoever now
or hereafter held by Secured Party. Pledgor authorizes Secured Party,
and without notice or demand and without any reservation of rights
against Pledgor and without affecting Pledgor's liability hereunder or
on the Indebtedness, to (i) take or bold any other property of any
type from any third party as security for the Indebtedness, and
exchange, enforce, waive and release any or all of such other
property, (ii) apply such other property and direct the order or
manner of sale thereof as Secured Party may in its discretion
determine, (iii) renew, extend, accelerate, modify, compromise, settle
or release any of the Indebtedness or other security for the
Indebtedness, (iv) waive, enforce or modify any of the provisions of
any of the Financing Documents executed by any third party, and (v)
release or substitute any third party.
(g) Voting Rights. Upon the occurrence of an Event of Default, Pledgor
will not exercise any voting rights with respect to securities.
pledged as Collateral. Pledgor hereby irrevocably appoints Secured
Party as Pledgor's attorney-in-fact (such power of attorney being
coupled with an interest) and proxy to exercise any voting rights with
respect to Pledgor's securities pledged as Collateral upon the
occurrence of an Event of Default.
(h) Dividend Rights and interest Payments. Upon the occurrence of an Event
of Default:
(i) all rights of Pledgor to receive and retain the dividends and
interest payments which it would otherwise be authorized to
receive and retain pursuant to Section 3 shall automatically
cease, and all such rights shall thereupon become vested with
Secured Party which shall thereafter have the sole right to
receive, hold and apply as Collateral such dividends and interest
payments; and
(ii) all dividend and interest payments which are received by Pledgor
contrary to the provisions of clause (i) of this Subsection shall
be received in trust for the benefit of Secured Party, shall be
segregated from other funds of Pledgor, and shall be forthwith
paid over to Secured Party in the exact form received (properly
endorsed or assigned if requested by Secured Party), to be held
by Secured Party as Collateral.
12. Indemnity. Pledgor hereby indemnifies and agrees to hold harmless Secured
Party, and its officers, directors, shareholders, employees, attorneys,
representatives, agents and affiliates (each an "Indemnified Person") from
and against any and all liabilities, obligations, claims, demands, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature (collectively, the "Claims" which may
be imposed on, incurred by, or asserted against, any Indemnified Person
arising in connection with the Financing Documents the Indebtedness or the
Collateral (including without limitation, the enforcement of the Financing
Documents and the defense of any Indemnified Person's actions and/or
inactions in connection with the Financing Documents); provide that the
payment of such Claims shall be limited to the proceeds or products
realized from the Collateral. WITHOUT LIMITATION, THE FOREGOING INDEMNITIES
SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO ANY CLAIMS WHICH IN
WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH
ANDIOR ANY OTHER INDEMNIFIED PERSON, except to the limited extent the
Claims against an Indemnified Person are proximately caused by such
Indemnified Person's gross negligence or willful misconduct. If Pledgor or
any third parry ever alleges such gross negligence or willful misconduct by
any Indemnified Person, the indemnification provided for in this Section
shall nonetheless be paid upon demand, subject to later adjustment or
reimbursement until such time as a court of competent jurisdiction enters a
final judgment as to die extent and effect of the alleged gross negligence
or willful misconduct. The indemnification provided for in this Section
shall survive the termination of this Agreement and shall extend and
continue to benefit each individual or entity who is or has at any time
been an Indemnified Person hereunder.
13. Miscellaneous.
(a) Entire Agreement. This Agreement contains the entire agreement of
Secured Party and Pledgor with respect to the Collateral. If the
parties hereto are parties to any prior agreement, either written or
oral, relating to the Collateral, the terms of this Agreement shall
amend and supersede the terms of such prior agreements as to
transactions on or after the effective date of this Agreement, but all
security agreements, financing statements, guaranties, other contracts
and notices for the benefit of Secured Party shall continue in fill
force and effect to secure the Indebtedness unless Secured Party
specifically releases its rights thereunder by separate release.
(b) Amendment. No modification, consent or amendment of any provision of
this Agreement or any of the other Financing Documents shall be valid
or effective unless the same is in writing and signed by the party
against whom it is sought to be enforced.
(c) Actions by Secured Party. The lien, security interest and other
security rights of Secured Party hereunder shall not be impaired by
(i) any renewal, extension, increase or modification with respect to
the Indebtedness, (ii) any surrender, compromise, release, renewal,
extension, exchange or substitution which Secured Party may grant with
respect to the Collateral, or (iii) any release or indulgence granted
to any endorser, guarantor or surety of the Indebtedness. The taking
of additional security by Secured Party shall not release or impair
the lien, security interest or other security rights of Secured Party
hereunder or affect the obligations of Pledgor hereunder.
(d) Waiver by Secured Party. Secured Party may waive any Event of Default
without waiving any other prior or subsequent Event of Default.
Secured Party may remedy any default without waiving the Event of
Default remedied. Neither the failure by Secured Party to exercise,
nor the delay by Secured Party in exercising, any right or remedy upon
any Event of Default shall be construed as a waiver of such Event of
Default or as a waiver of the right to exercise any such right or
remedy at a later date. No single or partial exercise by Secured Party
of any right or remedy hereunder shall exhaust the same or shall
preclude any other or further exercise thereof, and every such right
or remedy hereunder may be exercised at any time. No waiver of any
provision hereof or consent to any departure by Pledgor therefrom
shall be effective unless the same shall be in writing and signed by
Secured Party and then such waiver or consent shall be effective only
in the specific instances, for the purpose for which given and to the
extent therein specified. No notice to or demand on Pledgor in any
case shall of itself entitle Pledgor to any other or further notice or
demand in similar or other circumstances.
(e) Costs and Expenses. After an event of default hereunder and a demand
by Secured Party to the Pledgor for the Collateral, Pledgor will upon
demand pay to Secured Party the amount of any and all costs and
expenses (including without limitation, attorneys' fees and expenses),
which Secured Party may incur in connection with (i) the exercise or
enforcement of any of the rights of Secured Party under the Financing
Documents with respect to the Collateral, or (ii) the failure by
Pledgor to perform or observe any of the provisions hereof.
(f) Governing Law; Venue; Submission to Jurisdiction. THIS AGREEMENT SHALL
HE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION
OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF TEXAS. THIS AGREEMENT IS
PERFORMABLE BY THE PARTIES IN DALLAS COUNTY, TEXAS. PLEDGOR AND
SECURED PARTY (BY ITS ACCEPTANCE HEREOF) EACH AGREE THAT DALLAS
COUNTY, TEXAS SHALL BE THE EXCLUSIVE VENUE FOR LITIGATION OF ANY
DISPUTE OR CLAIM ARISING UNDER OR RELATING TO THIS AGREEMENT, AND THAT
SUCH COUNTY IS A CONVENIENT FORUM IN WHICH TO DECIDE ANY SUCH DISPUTE
OR CLAIM. PLEDGOR AND SECURED PARTY (BY ITS ACCEPTANCE HEREOF) EACH
CONSENT TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS
LOCATED IN DALLAS COUNTY, TEXAS FOR THE LITIGATION OF ANY SUCH DISPUTE
OR CLAIM. PLEDGOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY
CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
(g) Waiver of Jury Trial. PLEDGOR AND SECURED PARTY (BY ITS ACCEPTANCE
HEREOF) EACH HEREBY IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT
PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANYTRANSACTION
CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH.
(h) Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable, shall
not impair or invalidate the remainder of this Agreement and the
effect thereof shall be confined to the provision held to be illegal,
invalid or unenforceable.
i) No Obligation. Nothing contained herein shall be construed as an
obligation on the part of Secured Party to extend or continue to
extend credit to Borrower or Pledgor.
j.) Notices. All notices, requests, demands or other communications
required or permitted to be given pursuant to this Agreement shall be
in writing and given by (i) personal delivery, (ii) expedited delivery
service with proof of delivery, (iii) United States mail, postage
prepaid, registered or certified mail, return receipt requested, or
(iv) telecopy (with receipt thereof confirmed by telecopier) sent to
the intended addressee at the address set forth on the signature page
hereof or to such different address as the addressee shall have
designated by written notice sent pursuant to the terms hereof and
shall be deemed to have been received either, in the case of personal
delivery, at the time of personal delivery, in the case of expedited
delivery service, as of the date of first attempted delivery at the
address and in the manner provided herein, in the case of mail, upon
deposit in a depository receptacle under the care and custody of the
United States Postal Service, or in the case of telecopy, upon
receipt. Either party shall have the right to change its address for
notice hereunder to any other location within the continental United
States by notice to the other party of such new address at least
thirty (30) days prior to the effective date of such new address.
(k) Binding Effect and Assignment. This Agreement (i) creates a continuing
security interest in the Collateral, (ii) shall be binding on Pledgor
and the heirs, executors, administrators, personal representatives,
successors and assigns of Pledgor, and (iii) shall inure to the
benefit of Secured Party and its successors and assigns. Without
limiting the generality of the foregoing, Secured Party may pledge,
assign or otherwise transfer the Indebtedness and its rights under
this Agreement and any of the other Financing Documents to any other
party. Pledgor's rights and obligations hereunder may not be assigned
or otherwise transferred without the prior written consent of Secured
Party.
(l) Termination. It is contemplated by the parties hereto that from time
to time there may be no outstanding Indebtedness, but notwithstanding
such occurrences, this Agreement shall remain valid and shall be in
full force and effect as to subsequent outstanding Indebtedness. Upon
(i) the satisfaction in full of the Indebtedness, (ii) the termination
or expiration of any commitment of Secured Party to extend credit to
Pledgor and/or Borrower, (iii) written request for the termination
hereof delivered by Pledgor to Secured Party, and (iv) written release
delivered by Secured Parry to Pledgor, this Agreement and the security
interests created hereby shall terminate. Upon termination of this
Agreement and Pledgor's written request Secured Party will, at
Pledgor's sole cost and expense, return to Pledgor such of the
Collateral as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof and execute and deliver to
Pledgor such documents as Pledgor shall reasonably request to evidence
such termination.
(m) Cumulative Rights. All rights and remedies of Secured Party hereunder
are cumulative of each other and of every other right or remedy which
Secured Party may otherwise have at law or in equity or under any of
the other Financing Documents, and the exercise of one or more of such
rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of any other rights or remedies.
(n) Gender and Number. Within this Agreement words of any gender shall be
held and construed to include the other gender, and words in the
singular number shall be held and construed to include the plural and
words in the plural number shall be held and construed to include the
singular, unless in each instance the context requires otherwise.
(o) Descriptive Headings. The headings in this Agreement are for
convenience only and shall in no way enlarge, limit or define the
scope or meaning of the various and several provisions hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
EXECUTED as of the date first written above.
PLEDGOR:
DURHAM XXXXXXXXX & ASSOCIATES, LLC
By:
--------------------------------------------
Name:
--------------------------------------------
Title:
--------------------------------------------
Pledgor's Address:
Telecopy No.
----------------------------------------
SECURED PARTY:
MARKPOINT EQUITY GROWTH FUND, J.V.
By: The Markpoint Company, its Managing Venturer
By:
------------------------------------
Name: Xxx Xxxxxx
Title: President
Secured Party's Address:
Markpoint Equity Growth Fund, J.V.
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
ATTN: Xxx Xxxxxx
Telecopy No. 972-490-1980
SUBORDINATION AGREEMENT
This Subordination Agreement, made effective as of the 2nd day of May, 2000
by and between MARKPOINT EQUITY GROWTH FUND, J.V., a Texas joint venture (the
"Junior Creditor") and BANK ONE, INDIANA, N.A., a national banking association
(the "Bank");
WITNESSETH:
WHEREAS, the Junior Creditor is the holder of that certain Promissory Note
dated the date hereof from Champion Trailer Company, L.P. (the "Borrower") in
the aggregate principal amount of One Million Two Hundred Fifty Thousand Dollars
($1,250,000) (the "Subordinated Note") pursuant to that certain Note Purchase
Agreement of even date herewith among Junior Creditor and Borrower (the "Note
Agreement"); and
WHEREAS, the Bank, pursuant to a certain Credit Agreement between the
Borrower and the Bank dated of even date herewith (as the same may be amended,
modified or replaced from time to time, the "Credit Agreement"), has agreed to
extend credit facilities and financial accommodations to the Borrower, subject
to the subordinations and other agreements herein; and
NOW, THEREFORE, for value received, and in consideration of the premises,
the parties agree as follows:
1. Certain Definitions. As used herein:
"Default Notice" means a notice which states that a default or an event of
default under any provision of the Junior Debt has occurred and that Junior
Creditor desires to take such action available to Junior Creditor under the Note
Agreement and the Loan Documents.
"Junior Debt" means the indebtedness evidenced by the Subordinated Note,
all loans, advances, liabilities or debit balances owed by the Borrower to the
Junior Creditor, due or to become due, secured or unsecured, now existing or
hereafter arising, together with all interest, fees, charges, expenses and
attorneys' fees which the Borrower is now or hereafter becomes liable to pay to
the Junior Creditor in connection with the foregoing and together with all
extensions, renewals, and modifications thereof or of any part thereof.
"Proceeding" has the meaning assigned to it in Section 5 hereof.
"Senior Debt" means all loans, advances, liabilities, debit balances,
covenants and duties at any time owed by the Borrower to the Bank, whether
direct or indirect, absolute or contingent, secured or unsecured, due or to
become due, now existing or hereafter arising, together with all interest, fees,
charges, expenses and attorneys' fees for which the Borrower is now or hereafter
becomes liable to pay to the Bank and with any extensions, renewals, and
modifications thereof or of any part thereof, provided that the maximum amount
of the Senior Debt (exclusive of interest thereon, collection costs and
attorneys' fees) that the Junior Creditor is subordinated to, and which is
entitled to the benefit of this Agreement, shall not exceed Two Million Dollars
($2,000,000). "Default" and "Unmatured Default" shall have the meanings ascribed
thereto in the Credit Agreement.
All other capitalized terms used herein but not defined herein shall have
the meaning ascribed to them in the Note Agreement.
2. Subordination. The Junior Creditor hereby agrees that the Junior Debt is
subordinated to the payment of all Senior Debt. The Subordinated Note and each
instrument hereafter evidencing Junior Debt shall bear a conspicuous legend that
it is subordinated to the Senior Debt. Notwithstanding the order of recording,
filing, attachment or perfection of any security interest or lien, the Junior
Creditor also hereby subordinates any lien it may have to secure the Junior Debt
on any property of the Borrower, whether real or personal, tangible or
intangible, to any lien on such property given to the Bank to secure any Senior
Debt. Except as provided for in this Section 2, the Junior Creditor hereby
agrees that any proceeds from the sale or foreclosure of Borrower's property
shall first be applied to the Senior Debt until the Senior Debt has been fully,
finally and irrevocably paid before any application to the Junior Debt.
Notwithstanding anything to the contrary within this Agreement, the Bank hereby
agrees that Junior Creditor has and shall have priority over Bank regardless of
the order of recording, filing, attachment or perfection of any security
interest or lien over the capital stock or equivalent equity units of the
Borrower.
3. No Payment or Acceleration. Except as provided in Sections 2 and 4
hereof:
(a) If (i) any default in the payment on account of any principal of or
interest on, or any other amounts owing in respect of any Senior Debt
(whether at maturity or at a date fixed for prepayment or by
declaration, acceleration or otherwise) occurs or exists, or (ii) any
event of default under Sections 7(c), (e), (f) or (g) of the Credit
Agreement occurs or exists, then the rights of Junior Creditor to
receive any payments or other distributions with respect to the Junior
Debt shall be suspended from and after the date that Junior Creditor
receives a notice to suspend payments under the Junior Debt (a "Stop
Payment Notice"), unless and until the earliest to occur of the
following: (1) written notice from the Bank that each event of default
which is the subject of such Stop Payment Notice has been waived or
cured or ceases to exist, (2) 90 days shall have elapsed since the
date upon which Junior Creditor received such Stop Payment Notice, and
(3) the Senior Debt has been paid in full and all commitments of the
Bank to Borrower under the Credit Agreement shall have expired or been
terminated; provided, however, that Bank shall not be permitted to (i)
issue a Stop Payment Notice more than twice within any 365 consecutive
days or (ii) use any event or circumstance which constitutes a default
that the Bank knows exists as of the date that such a Stop Payment
Notice is issued as a basis for the issuance of any other Stop Payment
Notice unless such event or circumstance had been waived, cured or
ceased to exist.
(b) Notwithstanding anything to the contrary contained in this Section 3
or elsewhere in this Agreement (i) Borrower may pay and Junior
Creditor may take and retain any scheduled payment on the Junior Debt
as set forth in the current terms of the Subordinated Note before
receipt by Junior Creditor of a Stop Payment Notice, (ii) Borrower
shall be entitled to resume the making of any payments otherwise
prohibited under this Section 3, including any payments previously
suspended, at the earlier of (A) such time as the Senior Debt shall
have been paid in fall and all commitments of the Bank to Borrower
under the Credit Agreement shall have expired or been terminated, or
(B) such time as the default giving rise to such prohibition shall
have been cured or waived or the applicable period following the date
upon which Junior Creditor received the relevant Stop Payment Notice
shall have elapsed.
4. Standstill. Junior Creditor agrees to promptly send to Bank a copy of
any notice of default under the Junior Debt sent to Borrower and farther agrees
that Junior Creditor shall not exercise any rights or remedies or take any
enforcement action available upon the occurrence of a default or an event of
default or otherwise under the Loan Documents evidencing, governing or securing
the Junior Debt or take any action toward the collection of any Junior Debt
until the earliest of (a "Standstill Period") (a) the expiration of 90 days
following the Banks receipt of a Default Notice unless the event of default that
is the subject of the Default Notice has been waived or cured, (b) the
expiration of 90 days following Junior Creditor's receipt of a Stop Payment
Notice, (c) the exercise by Bank of any acceleration or foreclosure available to
it upon a default or event of default with respect to the Senior Debt, (d) the
occurrence of a Proceeding, or (e) all of the Senior Debt shall have been paid
in full and all commitments of the Bank to Borrower under the Credit Agreement
shall have expired or been terminated; provided, however, that with respect to
clause (a) and (b) above, no subsequent Standstill Period shall prevent Junior
Creditor from continuing the prosecution of any remedial action or foreclosure
commenced within a reasonable time after the expiration of a previous Standstill
Period with respect to an Event of Default under the Junior Debt that began
before or during such previous Standstill Period and has continued since that
time. The failure to make a payment of principal of, interest on, or fees, costs
or expenses relative to, any of the Junior Debt by reason of any provision of
this Agreement shall not be construed as preventing the occurrence of a default
or event of default with respect to such Junior Debt. Not withstanding the
foregoing, Junior Creditor shall not be entitled to exercise any rights or
remedies or take any enforcement action upon the expiration of a Standstill
Period if no default or event of default under the Junior Debt has occurred and
is continuing at the time of such expiration.
5. Liquidation. Upon any liquidation, dissolution or other winding up of
the Borrower or its business or any sale, receivership, insolvency,
reorganization or bankruptcy proceeding, assignment for the benefit of
creditors, arrangement for the commencement of any proceeding by or against the
Borrower for any relief under any bankruptcy, reorganization or insolvency law
or laws, federal or state, or any other law, federal or state, relating to the
relief of debtors, readjustment of debt reorganization, composition or extension
(a "Proceeding"), then and in any such event, any such payment or distribution
of any kind or character, whether in cash, property or securities (except
securities which are subordinate and junior in right of payment to the payment
of Senior Debt at least to the extent provided in this Agreement) which, but for
the subordination provisions contained herein, would otherwise be payable or
deliverable to the Junior Creditor upon or in respect of any Junior Debt, shall,
instead be paid over or delivered to the Bank for application as a payment or
prepayment on account of the Senior Debt until the final satisfaction of the
Senior Debt after giving effect to any concurrent payment or distribution to the
holders of the Senior Debt. Junior Creditor shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which proceedings
are pending, or a certificate of the liquidating trustee or other person making
any distribution to Junior Creditor, for the purpose of ascertaining the persons
entitled to participate in such distribution, the Bank and the holders of other
debt of Borrower, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Agreement.
6. Turnover of Payments. Should any payment, distribution, security or
instruments or any proceeds thereof, other than regularly scheduled payments of
interest and principal in accordance with current terms of the Subordinated Note
outside of a Standstill Period, be received by the Junior Creditor upon or with
respect to the Junior Debt prior to the full, final and irrevocable payment of
the Senior Debt and termination of all financing arrangements between the
Borrower and the Bank, the Junior Creditor shall receive and hold the same in
trust, as trustee, in precisely the form received (except for the endorsement or
assignment by such Junior Creditor where necessary), for application to the
Senior Debt, whether or not due.
7. Enforcement of Junior Debt. The Junior Creditor irrevocably authorizes
and empowers the Bank, under the circumstances set forth in Section 5 hereof, to
file claims and proofs of claim in any statutory or non-statutory proceeding, in
the name of the Bank or in the name of the Junior Creditor or otherwise, if
Junior Creditor fails to do so within ten (10) days of the bar date pertaining
thereto; provided, however, that Bank shall not be permitted to vote such claim,
all rights with respect thereto being hereby retained by Junior Creditor. Junior
Creditor covenants to the Bank that it will not vote any such claim in a manner
materially detrimental to the priority of the Bank's claims as senior lender or
in contravention of U.S.C.A. ss. 1129 (b)(2). In any event, the Junior Creditor
shall not contest the validity, perfection, recording, effectiveness or priority
of any liens securing the Senior Debt. The Junior Creditor hereby agrees, under
the circumstances set forth in Section 5 hereof, duly and promptly to take such
action as may be reasonably requested at any time and from time to time by the
Bank to collect the Junior Debt for the account of the Bank and to file
appropriate proofs of claim in respect thereof. Except as set forth in Section 3
hereof, any and all monies so collected or received by the Bank shall be
retained indefeasibly by the Bank for application to the Senior Debt until the
Senior Debt is fully, finally and irrevocably paid and all financing
arrangements between the Borrower and the Bank are terminated. In no event shall
the Bank be liable to the Junior Creditor for any failure to prove any Junior
Debt, to exercise any right with respect thereto or to collect any sums payable
thereon.
8. Waivers. Without the consent of Junior Creditor and subject to the
maximum amount of Senior Debt entitled to the benefit of this Subordination
Agreement, any demand by the Bank for payment of the Senior Debt may be
rescinded by the Bank in whole or in part and any of the Senior Debt may be
continued, and the Senior Debt or the liability of the Borrower or any other
party upon or for any part thereof or any collateral security or guaranty
therefor or any right of offset with respect thereto or any obligation or
liability of the Borrower or any other party under any of the Senior Debt may,
from time to time, in whole or in part, be renewed, extended, modified,
accelerated, compromised, waived, surrendered or released by the Bank or the
amount thereof increased or decreased. The instruments evidencing the Senior
Debt or any loan agreements, collateral, security documents, guaranties or other
documents in connection therewith may be amended, modified, supplemented,
terminated or replaced, in whole or in part as the Bank may deem advisable from
time to time; provided, however, that notwithstanding the foregoing, Bank shall
not without the prior written consent of Junior Creditor amend, modify or
supplement the following terms of and provisions of such documents or
instruments if the effect is to: (a) increase the interest rate on the Senior
Debt above the rates in effect on the date of this Agreement (except for
increases due to changes in the Bank's prime rate), (b) accelerate the dates
upon which payments of principal or interest are due on the Senior Debt (other
than an acceleration on account of an event of default under the Loan Documents
evidencing, governing or securing the Senior Debt) or (c) change, amend or add
any financial covenant in a manner to be more restrictive to Borrower.
9. Representations and Warranties of the Junior Creditor. The Junior
Creditor hereby represents, warrants and covenants to the Bank that (a) he has
not heretofore assigned, transferred or created a security interest in, or
otherwise encumbered the Junior Debt (b) the Junior Debt is not represented by
any instrument or document other than the Subordinated Note and the security
agreement from the Borrower in favor of the Junior Creditor of even date
herewith, as approved by the Bank, (c) the Junior Creditor is not insolvent as
of the date hereof, (d) the documents evidencing and governing the Junior Debt
may be amended or modified without the prior written consent of the Bank;
provider, however, that notwithstanding the foregoing, Junior Creditor shall not
without the prior written consent of the Bank amend, modify or supplement the
following terms of and provisions of such documents or instruments if the effect
is to: (i) increase the interest rate on the Junior Debt above the non-default
rate in effect on the date of this Agreement, (ii) accelerate the dates upon
which payments of principal or interest are due on the Junior Debt (other than
an acceleration on account of an event of default under the Loan Documents
evidencing, governing or securing the Junior Debt) or (iii) change, amend or add
any financial covenant in a manner to be more restrictive to Borrower; (e) any
Junior Debt now or hereafter existing will not be represented by any instrument
or document other than those that have been delivered to the Bank or marked to
indicate that they are subject to this Subordination Agreement, (f) the Junior
Creditor has been made aware the Senior Debt may be, in part, of a revolving
nature and that the amount thereof which may be outstanding at any time or from
time to time may be increased or reduced and subsequently reborrowed, subject to
the maximum amount of Senior Debt entitled to the benefit of this Subordination
Agreement, and (g) the Junior Creditor will not further subordinate any of the
Junior Debt without the prior written consent of the Bank.
10. Termination. Upon (a) the full, final and irrevocable payment of all
Senior Debt and (b) the termination of all agreements under which the Bank is
obligated to extend credit, make advances, loans or other financial
accommodations to the Borrower, the Junior Creditor, by written notice to the
Bank, may terminate this Subordination Agreement. In the event of any
termination of this Subordination Agreement by operation of law, this
Subordination Agreement shall continue in full force and effect as to all Junior
Debt and all Senior Debt outstanding at the date of such termination, until such
Senior Debt has been fully, finally and irrevocably paid and discharged.
11. Payments Notwithstanding. No payment or distribution of any character,
whether in cash, securities or other property (except securities that are
subordinate and junior in right of payment to the payment of Senior Debt at
least to the extent provided in Us Agreement), to which Junior Creditor would
have been entitled except for the provisions of this Agreement and that shall
have been made to or for the account of Bank shall, as between Borrower and its
creditors (other than Bank), be deemed to be a payment or distribution by
Borrower to or for the account of Bank, and from and after the payment in full
in cash of all Senior Debt and termination of all commitments of the Borrower
under the Credit Agreement, Junior Creditor shall be subrogated to all rights of
Bank to receive any further payments or distribution applicable to the Senior
Debt until the principal of and interest on the Junior Debt shall be paid in
full and no such payment or distribution made pursuant to such rights of
subrogation to Junior Creditor that otherwise would be payable or distributable
to or for the account of Bank shall, as between Borrower and its creditors
(other than Junior Creditor), be deemed to be a payment or distribution by
Borrower to Junior Creditor or on account of the Junior Debt.
12. No Prejudice or Impairment. The provisions of this Agreement are solely
for the purposes of defining the relative rights of Bank, on the one hand and
Junior Creditor, on the other hand. Bank shall not be prejudiced in the right to
enforce subordination of the Junior Debt by any act or failure to act by
Borrower or anyone in custody of its assets or property. Nothing herein shall
impair, as between Borrower and Junior Creditor, the obligation of Borrower,
which is unconditional and absolute, to pay to Junior Creditor the principal of
and interest on the Junior Debt as and when the same shall become due in
accordance with their terms, nor shall anything herein prevent Junior Creditor
from exercising all remedies otherwise permitted by applicable law upon default
under the Loan Documents evidencing, governing or securing the Junior Debt,
subject, however, to the provisions of this Agreement and the rights of Bank to
the extent provided herein. Junior Creditor shall not at any time be charged
with knowledge of the existence of any facts which would prohibit the making of
any payment to Junior Creditor or the taking of any other action under this
Agreement unless and until Junior Creditor shall have received written notice
from Bank and, prior to the receipt of any such notice, Junior Creditor shall be
entitled to assume conclusively that no such facts exist.
13. Default. In the event of a breach by the Borrower of this Subordination
Agreement, each of the Bank and Junior Creditor may declare the Senior Debt or
Junior Debt, respectively, to be immediately due and payable, however, all
provisions of this Subordination Agreement with respect to rights and remedies
shall continue to apply,
14. Notices. All notices, requests, demands or other communications
required or permitted under this Subordination Agreement or by law shall be in
writing and shall be deemed to have been duly given, made and received only when
delivered against receipt or when deposited in a receptacle of the United States
mail, certified or registered, postage prepaid, return receipt requested,
addressed, appropriately, as follows:
If to the Bank: Bank One, Indiana, N.A.
Bank Xxx Xxxxxx Xxxxx, 0xx Xxxxx
000 Xxxxxxxx Xxxxxx, XX0-0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
If to the Junior Markpoint Equity Growth Fund, J.V.
Creditor: 00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxx Xxxxxx
Facsimile: (000) 000-0000
With a copy (which shall
not constitute notice) Xxxxxx Xxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
Any party may change its address for notice by giving notice in conformity with
the requirements of this Section.
15. Non-Waiver. No delay on the part of the Bank or the Junior Creditor in
exercising any right hereunder or in failing to exercise the same shall operate
as a waiver of such right, and no notice to or demand on the Borrower or the
Junior Creditor, to the extent applicable, shall be deemed a waiver of any
obligation or duty of the Borrower or such Junior Creditor of the right of the
Bank or Junior Creditor to take further action without notice or demand. No
modification, alteration or waiver of any of the provisions of this
Subordination Agreement shall be affected unless in writing and signed by the
Bank and Junior Creditor
16. Subrogation. Once the Senior Debt has been fully, finally and
irrevocably paid and discharged, the Junior Creditor shall be subrogated to all
rights of the Bank to receive payments or distributions of cash, property or
securities payable or distributable on account of the Senior Debt and no such
payment or distribution made pursuant to such rights of subordination to Junior
Creditor that otherwise would be payable or distributable to or for the account
of the Bank shall, as between Borrower and its creditors (other than Junior
Creditor) be deemed to be a payment or distribution by Borrower to Junior
Creditor or on account of Junior Debt.
17. Assignment. If the Junior Creditor desires to assign or transfer any
document or instrument evidencing or securing Junior Debt or any benefits
thereof to any other person, the Junior Creditor shall notify the Bank thereof
and shall advise such person of this Subordination Agreement. On or prior to the
date of such assignment, and as a condition thereof, the Junior Creditor shall
obtain an undertaking from such person to be bound hereby in form and substance
satisfactory to the Bank. If Borrower is in the process of refinancing a portion
of the Senior Debt or Junior Debt with a new lender (such refinancing to be in
accordance with the provisions of the Loan Documents evidencing, governing or
securing the Senior Debt), and if the party who wishes to be refinanced makes a
request of the other parties hereto, Junior Creditor or Bank, as the case may
be, may agree to enter into a new, substitute agreement with the new lender;
provided, however, that any such new, substitute agreement shall be in a form,
and contain such terms and conditions, as may be acceptable to the party whose
financial accommodations to Borrower are not being refinanced; and provided
further, however, that in no circumstances shall the party hereto whose
financial accommodations to Borrower are not being refinanced be obligated to
enter into such an agreement if the substitute agreement deprives it of any
material right, privilege or benefit accorded to it hereunder.
18. Application of Proceeds. Except as set forth in Section 2 hereof, Bank
and Junior Creditor agree to apply the proceeds of the Collateral in the
following order irrespective of the application of any rule of law or the defect
or impairment of any Loan Document evidencing, governing or securing the Senior
Debt, any Loan Document evidencing, governing or securing the Junior Debt or
security interest, lien or assignment thereunder:
first, to the payment of all costs and expenses of Bank (including, without
limitation, the reasonable fees and expenses of legal counsel and
other agents) incurred in connection with the collection of such
Proceeds or the protection of the rights and interests of Bank
therein;
second, to the payment in full of all Senior Debt, in such order as the
Bank shall determine in it sole discretion;
third, to the payment of all costs and expenses of Junior Creditor
(including, without limitation, the reasonable fees and expenses of
legal counsel and other agents) incurred in connection with the
collection of such Proceeds or the protection of the rights and
interests of Junior Creditor therein;
fourth, to the payment in full of all Junior Debt in such order as Junior
Creditor shall determine
in its sole discretion; and
finally, to pay any surplus then remaining to the owner of such Collateral
or its successors or assigns or as a court of competent jurisdiction
may direct.
19. Governing Law. The validity, construction and enforcement of this
Subordination Agreement shall be governed by the internal laws of the State of
Indiana, notwithstanding the fact that Indiana conflict of law rules might
otherwise require the substantive rules of law of another jurisdiction to apply.
The Junior Creditor consents to the jurisdiction of any state or federal court
located within Xxxxxx County, Indiana. All service of process may be made by
messenger, certified mail, return receipt requested or by registered mail
directed to the Junior Creditor at the address indicated in Section 14 hereof,
and the Junior Creditor otherwise waives personal service of any and all process
made upon the Junior Creditor. The Junior Creditor waives any objection which
the Junior Creditor may have to any proceeding commenced in a federal or state
court located within Xxxxxx County, Indiana, based upon improper venue or forum
non conveniens. Nothing contained in this Section shall affect the right of the
Bank to serve legal process in any other manner permitted by law or to bring any
action or proceeding against the Junior Creditor or its property in the courts
of any other jurisdiction.
20. Successors and Assigns. This Subordination Agreement shall inure to the
benefit of the Bank, its successors and assigns, and shall be binding upon the
Junior Creditor and its successors and assigns. Any reference to the Borrower
herein shall be deemed to refer to Champion Trailer Company, L.P., its
successors and assigns, including any receiver, trustee or debtor-in-possession
of or for the Borrower.
21. Severability. The provisions of this Subordination Agreement are
independent and separable from one another. If any provision hereof shall for
any reason be held invalid or unenforceable, it is the intent of the parties
that such invalidity or unenforceability shall not affect the validity or
enforceability of other provisions hereof and that this Subordination Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein.
22. Additional Documentation. The Junior Creditor agrees to execute and
deliver to the Bank such further instruments and take such further action as the
Bank may at any time, and from time to time, reasonably request in order to
carry out the provisions and intent of this Subordination Agreement.
23. Limited Duty. The rights granted to each of the Bank and Junior
Creditor in this Subordination Agreement are solely for its protection and
nothing herein contained imposes on each of the Bank or Junior Creditor any
duties with respect to any property either of the Borrower or of the Junior
Creditor, as applicable, received by the Bank beyond the duty to exercise
reasonable care in the custody and preservation of such property while in the
its possession. Neither the Bank nor the Junior Creditor has any duty to
preserve rights against prior parties on any instrument or chattel paper
received from the Borrower or the Junior Creditor, as applicable, as collateral
security for the Senior Debt, the Junior Debt or any portion thereof.
24. Counterparts. This Subordination Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts each of which, when so executed and delivered by the parties,
constituting an original but all such counterparts together constituting but one
and the same instrument.
25. Entire Agreement. This Subordination Agreement constitutes the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, whether express or implied, oral or
written.
26. Reinstatement of Obligations and Security. To the extent that the
Borrower or any obligor makes a payment to the Bank or the Bank receives any
payment(s) or proceeds of the collateral securing the Senior Debt for the
Borrower's benefit, which payment(s) or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable doctrine, then, to
the extent of such payment(s) or proceeds received and not retained by the Bank,
the Junior Creditor's obligations intended to be satisfied thereby and this
Subordination Agreement shall be reinstated and continue in full force and
effect until full and final payment shall have been made to the Bank. The Junior
Creditor agrees to hold in trust for the Bank and promptly remit to the Bank any
payments received by the Junior Creditor after such invalidated, rescinded or
returned payment(s) were originally made until the Senior Debt is satisfied in
full.
27. No Marshalling. The Junior Creditor, on its own behalf and on behalf of
its successors and assigns hereby expressly waives all rights, if any, to
require a marshalling of the assets of the Borrower or any obligor by the Bank
or to require that the Bank first resort to some or any portion of the
collateral before foreclosing upon, selling or otherwise realizing on any other
portion thereof.
28. Waiver of Jury Trial. THE BANK AND THE JUNIOR CREDITOR, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY
JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS SUBORDINATION AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS SUBORDINATION AGREEMENT OR ANY
COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF
ANY OF TEEM. NEITHER THE BANK NOR THE JUNIOR CREDITOR SHALL SEEK TO CONSOLIDATE,
BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
THIS WAIVER SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR
RELINQUISHED BY OF THE BANK NOR THE JUNIOR CREDITOR EXCEPT BY A WRITTEN
INSTRUMENT EXECUTED BY BOTH OF THEM.
[THIS SPACE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have executed or caused to be executed
this Subordination Agreement as of the date first above written.
"JUNIOR CREDITOR"
MARKPOINT EQUITY GROWTH FUND, J.V.
By: The Markpoint Company,
its Managing Venturer
By:_________________________________
Xxx Xxxxxx
President
ACCEPTED:
"BANK"
BANK ONE, INDIANA, N.A.
By:_______________________________________
Xxxxx X. Xxxx
Vice-President
THE RIGHTS AND REMEDIES OF MARKPOINT EQUITY GROWTH FUND, J.V. HEREUNDER ARE
SUBJECT TO A SUBORDINATION AGREEMENT AMONG MARKPOINT EQUITY GROWTH FUND, J.V.AND
BANK ONE INDIANA, N.A. DATED AS OF EVEN DATE HEREWITH.
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is made as of the 2 day of May, 2000, by
CHAMPION TRAILER COMPANY, L.P. (hereinafter called "Debtor", whether one or
more), in favor of MARKPOINT EQUITY GROWTH FUND, J.V., a Texas joint venture
authorized to do business in Texas ("Secured Party"). Debtor hereby agrees with
Secured Party as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
meanings indicated below:
(a) "Code" shall mean the Uniform Commercial Code as in effect in the
State of Texas, as it may hereafter be amended from time to time.
(b) "Collateral" shall mean all of the property set forth below:
Accounts. All present and future accounts, contract rights, chattel
paper, documents, instruments, deposit accounts and general
intangibles now or hereafter owned by Debtor, all money and other
funds of Debtor which may now or hereafter come into the possession,
custody or control of Secured Party, all books of account and customer
lists, and in any case where an account arises from the sale of goods,
the interest of Debtor in such goods.
Inventory. All present and hereafter acquired inventory (including
without limitation, all raw materials, work in process and finished
goods) owned by Debtor wherever located.
Equipment. All equipment of whatsoever kind and character now or
hereafter owned by Borrower (including, without limitation, the
equipment described on Exhibit "A" attached hereto), together with all
replacements, accessories, additions, substitutions and accessions to
all of the foregoing.
Other. All goods and investment property now or hereafter owned by
Borrower, including all proceeds therefrom.
The term Collateral, as used herein, shall also include (i) all
records relating in any way to the foregoing (including, without
limitation, any computer software, whether on tape, disk, card, strip,
cartridge or any other form), and (ii) all PRODUCTS and PROCEEDS of
all of the foregoing (including without limitation, insurance payable
by reason of loss or damage to the foregoing property). The
designation of proceeds does not authorize Debtor to sell, transfer or
otherwise convey any of the foregoing property except finished goods
intended for sale in the ordinary course of Debtor's business or as
otherwise provided herein.
(c) "Financing Documents" shall mean all instruments and documents
evidencing, securing, governing, guaranteeing and/or pertaining to the
Indebtedness, including, without limitation, the Parent Pledge
Agreement of even date herewith among Secured Party and Durham
Xxxxxxxxx & Associates, the Note, the Note Purchase Agreement of even
date herewith among Borrower and Secured Party and the Holder Pledge
Agreement of even date herewith among the Secured Party, Xxxxxxx X.
Xxxxxx, Xxxxxx Xxxxxxx and Xxxxx X. Xxxxxxxxx.
(d) "Indebtedness" shall mean (i) indebtedness, obligations and
liabilities owing by Debtor to Secured Party under the Note and all
other indebtedness, obligations and liabilities of Debtor to Secured
Party of any kind or character, now existing or hereafter arising,
whether direct, indirect, related, unrelated, fixed, contingent,
liquidated, unliquidated, joint, several or joint and several, and
regardless of whether such indebtedness, obligations and liabilities
may, prior to their acquisition by Secured Party, be or have been
payable to or in favor of a third party and subsequently acquired by
Secured Party (it being contemplated that Secured Party may make such
acquisitions from third parties), including without limitation all
indebtedness, obligations and liabilities of Debtor to Secured Party
now existing or hereafter arising by note, draft, acceptance,
guaranty, endorsement, letter of credit, assignment, purchase,
overdraft, discount, indemnity agreement or otherwise, (ii) all
obligations of Debtor to Secured Party under any documents evidencing.
securing, governing and/or pertaining to all or any part of the
indebtedness, obligations and liabilities described in (i) above,
(iii) all costs and expenses incurred by Secured Party in connection
with the collection and administration of all or any part of the
indebtedness, obligations and liabilities described in (i) and (ii)
above or the protection or preservation of. or realization upon, the
collateral securing all or any part of such indebtedness, obligations
and liabilities, including without limitation all reasonable
attorneys' fees, and (iv) all renewals, extensions, modifications and
rearrangements of the indebtedness, obligations and liabilities
described in (i), (ii) and (iii) above.
(e) "Note" means that certain promissory note of even date herewith
payable by Debtor to the order of Secured Party in the stated
principal amount of $1,250,000, as may be renewed, extended, amended
and modified.
All words and phrases used herein which are expressly defined in Section 1.201
or Chapter 9 of the Code shall have the meaning provided for therein. Other
words and phrases defined elsewhere in the Code shall have the meaning specified
therein except to the extent such meaning is inconsistent with a definition in
Section 1.201 or Chapter 9 of the Code.
2. Security Interest. As security for the Indebtedness, Debtor, for value
received, hereby grants to Secured Party a continuing security interest in
the Collateral.
3. Representations and Warranties. Debtor hereby represents and warrants the
following to Secured Party:
(a) Due Authorization . The execution, delivery and performance of this
Agreement and all of the other Financing Documents executed by Debtor
have been duly authorized by all necessary partnership action.
(b) Enforceability . This Agreement and the other Financing Documents
executed by Debtor constitute legal, valid and binding obligations of
Debtor, enforceable in accordance with their respective terms, except
as limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors' rights and
except to the extent specific remedies may generally be limited by
equitable principles.
(c) Ownership and Liens. Debtor has good and marketable title to the
Collateral free and clear of all liens, security interests,
encumbrances or adverse claims, (other than those in favor of Secured
Party or otherwise expressly permitted in the other Financing
Documents or the Senior Subordination Agreement). No dispute, right of
setoff, counterclaim or defense exists with respect to all or any part
of the Collateral. Debtor has not executed any other security
agreement currently affecting the Collateral and no effective
financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any recording office
except as may have been executed or filed in favor of Secured Party or
as expressly permitted in the other Financing Documents.
(d) No Conflicts or Consents. Neither the ownership, the intended use of
the Collateral by Debtor, the grant of the security interest by Debtor
to Secured Party herein nor the exercise by Secured Party of its
rights or remedies hereunder, will (i) conflict with any provision of
(A) any domestic or foreign law, statute, rule or regulation, (B) the
articles or certificate of incorporation, charter, bylaws or
partnership agreement, as the case may be, of Debtor, or (C) any
agreement, judgment, license, order or permit applicable to or binding
upon Debtor, or (ii) result in or require the creation of any lien,
charge or encumbrance upon any assets or properties of Debtor or of
any person except as may be expressly contemplated in the Financing
Documents. Except as expressly contemplated in the Financing
Documents, no consent, approval, authorization or order of, and no
notice to or filing with, any court governmental authority or third
party is required in connection with the grant by Debtor of the
security interest herein or the exercise by Secured Party of its
rights and remedies hereunder.
(e) Security Interest. Debtor has and will have at all times full right,
power and authority to grant a security interest in the Collateral to
Secured Party in the manner provided herein, free and clear of any
lien, security interest or other charge or encumbrance (other than
those in favor of Secured Party or otherwise disclosed to and
consented by Secured Party in writing). This Agreement creates a
legal, valid and binding security interest in favor of Secured Party
in the Collateral securing the Indebtedness. Possession by Secured
Party of all instruments, chattel paper and cash constituting
Collateral from time to time and/or the filing of the financing
statements delivered prior hereto and/or concurrently herewith by
Debtor to Secured Party will perfect and establish the first priority
of Secured Party's security interest hereunder in the Collateral.
(f) Location. Debtor's residence or chief executive office, as the case
may be, and the office where the records concerning the Collateral are
kept is located at its address set forth on the signature page hereof.
Except as specified elsewhere herein, all Collateral shall be kept at
such address and such other addresses as may be listed in Schedule "A"
attached hereto and made a part hereof
(g) Solvency of Debtor. As of the date hereof. and after giving effect to
this Agreement and the completion of all other transactions
contemplated by Debtor at the time of the execution of this Agreement,
(i) Debtor is and will be solvent, (ii) the fair saleable value of
Debtor's assets exceeds and will continue to exceed Debtor's
liabilities (both fixed and contingent), (iii) Debtor is paying and
will continue to be able to pay its debts as they mature. and (iv) if
Debtor is not an individual, Debtor has and will have sufficient
capital to carry on Debtor's businesses and all businesses in which
Debtor is about to engage.
(h) Compliance with Environmental Laws. Except as disclosed in writing to
Secured Party, Debtor is conducting Debtor's businesses in material
compliance with all applicable federal, state and local laws,
statutes, ordinances, rules, regulations, orders, determinations and
court decisions, including without limitation, those pertaining to
health or environmental matters.
(i) Inventory. The security interest in the inventory granted hereunder
shall continue through all stages of manufacture and shall, without
further action, attach to the accounts or other proceeds resulting
from the sales lease or other disposition thereof and to all such
inventory as may be returned to Debtor by its account debtors.
(h) Accounts. Each account pledged hereunder represents the valid and
legally binding indebtedness of a bona fide account debtor arising
from the sale or lease by Debtor of goods or the rendition by Debtor
of services and is not subject to contra accounts, setoffs, defenses
or counterclaims by or available to account debtors obligated on the
accounts except as disclosed by Debtor to Secured Party from time to
time in writing. The amount shown as to each account on Debtor's books
is the true and undisputed amount owing and unpaid thereon, subject
only to discounts, allowances, rebates, credits and adjustments to
which the account debtor has a right and which have been disclosed to
Secured Party in writing.
(k) Chattel Paper, Documents and Instruments. The chattel paper, documents
and instruments of Debtor pledged hereunder have only one original
counterpart and no party other than Debtor or Secured Party is in
actual or constructive possession of any such chattel paper, documents
or instruments.
4. Affirmative Covenants. Debtor will comply with the covenants contained in
this Section at all times during the period of time this Agreement is
effective unless Secured Party shall otherwise consent in writing.
(a) Ownership and Liens. Debtor will maintain good and marketable title to
all Collateral free and clear of all liens, security interests,
encumbrances or adverse claims, except those in favor of Secured Party
and the security interests and other encumbrances expressly permitted
by the other Financing Documents or the Senior Subordination Agreement
of even date herewith between Secured Party and Bank One, Indiana.
N.A. Debtor will not permit any dispute, right of setoff, counterclaim
or defense to exist with respect to all or any part of the Collateral.
Debtor will cause any financing statement or other security instrument
with respect to the Collateral to be terminated, except those liens
expressly permitted in the other Financing Documents or as may have
been filed in favor of Secured Party. Debtor will defend at its
expense Secured Party's right, title and security interest in and to
the Collateral against the claims of any third party.
(b) Further Assurances. Debtor will from time to time at its expense
promptly execute and deliver all further instruments and documents and
take all further action necessary or appropriate or that Secured Party
may request in order (i) to perfect and protect the security interest
created or purported to be created hereby and the first priority of
such security interest, (ii) to enable Secured Party to exercise and
enforce its rights and remedies hereunder in respect of the
Collateral, and (iii) to otherwise effect the purposes of this
Agreement, including without limitation: (A) executing and filing such
financing or continuation statements, or amendments thereto; and (B)
furnishing to Secured Party from time to time statements and schedules
further identifying and describing the Collateral and such other
reports in connection with the Collateral, all in reasonable detail
satisfactory to Secured Party.
(c) Inspection of Collateral. Debtor will keep adequate records concerning
the Collateral and will permit Secured Party and all representatives
and agents appointed by Secured Party to inspect any of the Collateral
and the books and records of or relating to the Collateral at any time
during normal business hours, to make and take away photocopies,
photographs and printouts thereof and to write down and record any
such information.
(d) Payment of Taxes. Debtor (i) will timely pay all property and other
taxes, assessments and governmental charges or levies imposed upon the
Collateral or any part thereof, (ii) will timely pay all lawful claims
which, if unpaid, might become a lien or charge upon the Collateral or
any part thereof, and (iii) will maintain appropriate accruals and
reserves for all such liabilities in a timely fashion in accordance
with generally accepted accounting principles. Debtor may, however,
delay paying or discharging any such taxes, assessments, charges,
claims or liabilities so long as the validity thereof is contested in
good faith by proper proceedings and provided Debtor has set aside on
Debtor's books adequate reserves therefor; provided, however, Debtor
understands and agrees that in the event of any such delay in payment
or discharge and upon Secured Party's written request, Debtor will
establish with Secured Party an escrow acceptable to Secured Party
adequate to cover the payment of such taxes, assessments and
governmental charges with interest, costs and penalties and a
reasonable additional sum to cover possible costs, interest and
penalties (which escrow shall be returned to Debtor upon payment of
such taxes, assessments, governmental charges, interests, costs and
penalties or disbursed in accordance with the resolution of the
contest to the claimant) or furnish Secured Party with an indemnity
bond secured by a deposit in cash or other security acceptable to
Secured Party. Notwithstanding any other provision contained in this
Subsection, Secured Party may at its discretion exercise its rights
under Subsection 6(c) at any time to pay such taxes, assessments,
governmental charges, interest, costs and penalties.
(e) Mortgagee's and Landlord's Waivers. Debtor shall cause each mortgagee
of real property owned by Debtor and each landlord of real property
leased by Debtor to execute and deliver agreements satisfactory in
form and substance to Secured Party by which such mortgagee or
landlord waives or subordinates any rights it may have in the
Collateral.
(f) Accounts and General Intangible. Debtor will duly perform and cause to
be performed all of its obligations with respect to the goods or
services, the sale or lease or rendition of which gave rise or will
give rise to each account pledged hereunder and all of its obligations
to be performed under or with respect to the general intangibles
pledged hereunder. Debtor also covenants and agrees to take any action
and/or execute any documents that Secured Party may request in order
to comply with the Federal Assignment of Claims Act, as amended.
(g) Chattel Paper. Documents and Instruments .Debtor will take such action
as may be requested by Secured Party in order to cause any Collateral
which constitute chattel paper, documents or instruments to be valid
and enforceable and will cause all chattel paper to have only one
original counterpart. Upon request by Secured Party, Debtor will
deliver to Secured Party all originals of chattel paper, documents or
instruments or will xxxx all originals of chattel paper with a legend
indicating that such chattel paper is subject to the security interest
granted hereunder.
(h) Condition of Goods. Debtor will maintain, preserve, protect and keep
all Collateral which constitutes goods in good condition, repair and
working order and will cause such Collateral to be used and operated
in good and workmanlike manner, in accordance with applicable laws and
in a manner which will not make void or cancelable any insurance with
respect to such Collateral. Debtor will promptly make or cause to be
made all repairs, replacements and other improvements to or in
connection with the Collateral which Secured Party may request from
time to time.
(i) Insurance. Debtor will, at its own expense, maintain insurance with
respect to all Collateral which constitutes goods in such amounts,
against such risks, in such form and with such insurers, as shall be
satisfactory to Secured Party from time to time. If requested by
Secured Party, each policy for property damage insurance shall provide
for all losses to be paid directly to Secured Party. If requested by
Secured Party, each policy of insurance maintained by Debtor shall (i)
name Debtor and Secured Party as insured parties thereunder (without
any representation or warranty by or obligation upon Secured Party) as
their interests may appear, (ii) contain the agreement by the insurer
that any loss thereunder shall be payable to Secured Party
notwithstanding any action, inaction or breach of representation or
warranty by Debtor, (iii) provide that there shall be no recourse
against Secured Party for payment of premiums or other amounts with
respect thereto, and (iv) provide that at least ten (10) days prior
written notice of cancellation or of lapse shall be given to Secured
Party by the insurer. Debtor will, if requested by Secured Party,
deliver to Secured Party original or duplicate policies of such
insurance and, as often as Secured Party may reasonably request a
report of a reputable insurance broker with respect to such insurance.
Debtor will also, at the request of Secured Party, duly execute and
deliver instruments of assignment of such insurance policies and cause
the respective insurers to acknowledge notice of such assignment. All
insurance payments in respect of loss of or damage to any Collateral
shall be paid to Secured Party and applied as Secured Party in its
sole discretion deems appropriate.
5. Negative Covenants. Debtor will comply with the covenants contained in this
Section at all times during the period of time this Agreement is effective,
unless Secured Party shall otherwise consent in writing.
(a) Transfer or Encumbrance. Debtor will not (i) sell, assign (by
operation of law or otherwise), transfer, exchange, lease or otherwise
dispose of any of the Collateral, (ii) xxxxx x xxxx or security
interest in or execute, file or record any financing statement or
other security instrument with respect to the Collateral to any party
other than Secured Party except as permitted in the other Financing
Documents, or (iii) deliver actual or constructive possession of any
of the Collateral to any party other than Secured Party, except for
(A) sales and leases of inventory in the ordinary course of business,
and (B) the sale or other disposal of any item of equipment which is
worn out or obsolete and which has been replaced by an item of equal
suitability and value, owned by Debtor and made subject to the
security interest under this Agreement, but which is otherwise free
and clear of any lien, security interest, encumbrance or adverse
claim; provided, however, the exceptions permitted in clauses (A) and
(B) above shall automatically terminate upon the occurrence of an
Event of Default.
(b) Impairment of Security Interest. Debtor will not take or fail to take
any action which would in any manner impair the value or
enforceability of Secured Party's security interest in any Collateral.
(c) Possession of Collateral. Debtor will not cause or permit the removal
of any Collateral from its possession, control and risk of loss, nor
will Debtor cause or permit the removal of any Collateral from the
address on the signature page hereof and the addresses specified on
Schedule "A" to this Agreement other than (i) as permitted by
Subsection 5(a), or (ii) in connection with the possession of any
Collateral by Secured Party or by its bailee.
(d) Goods. Debtor will not permit any Collateral which constitutes goods
to at any time (i) be covered by any document except documents in the
possession of the Secured Party, (ii) become so related to, attached
to or used in connection with any particular real property so as to
become a fixture upon such real property, or (iii) be installed in or
affixed to other goods so as to become an accession to such other
goods unless such other goods are subject to a perfected first
priority security interest under this Agreement.
(e) Compromise of Collateral. Debtor will not adjust, settle, compromise,
amend or modify any Collateral, except an adjustment, settlement,
compromise, amendment or modification in good faith and in the
ordinary course of business: provided. however, this exception shall
automatically terminate upon the occurrence of an Event of Default or
upon Secured Party's written request. Debtor shall provide to Secured
Party such information concerning (i) any adjustment, settlement,
compromise, amendment or modification of any Collateral, and (ii) any
claim asserted by any account debtor for credit, allowance,
adjustment. dispute, setoff or counterclaim, as Secured Party may
request from time to time.
(f) Financing Statement Filings. Debtor recognizes that financing
statements pertaining to the Collateral have been or may be filed
where Debtor maintains any Collateral, has its records concerning any
Collateral or has its residence or chief executive office, as the case
may be. Without limitation of any other covenant herein, Debtor will
not cause or permit any change in the location of (i) any Collateral,
(ii) any records concerning any Collateral or (iii) Debtor's residence
or chief executive office, as the case may be, to a jurisdiction other
than as represented in Subsection 3(f) unless Debtor shall have
notified Secured Party in writing of such change at least thirty (30)
days prior to the effective date of such change, and shall have first
taken all action required by Secured Party for the purpose of further
perfecting or protecting the security interest in favor of Secured
Party in the Collateral. In any written notice furnished pursuant to
this Subsection, Debtor will expressly state that the notice is
required by this Agreement and contains facts that may require
additional filings of financing statements or other notices for the
purpose of continuing perfection of Secured Party's security interest
in the Collateral.
(g) Liquidations, Mergers . Debtor shall not merge or consolidate with or
into any other entity or liquidate, dissolve or otherwise cease
conducting business.
6. Rights of Secured Party. Secured Party shall have the rights contained in
this Section at all times during the period of time this Agreement is
effective.
(a) Additional Financing Statements Filing. Debtor hereby authorizes
Secured Party to file, without the signature of Debtor, one or more
financing or continuation statements, and amendments thereto, relating
to the Collateral. Debtor further agrees that a carbon, photographic
or other reproduction of this Security Agreement or any financing
statement describing any Collateral is sufficient as a financing
statement and may be filed in any jurisdiction Secured Party may deem
appropriate.
(b) Power of Attorney. Debtor hereby irrevocably appoints Secured Party as
Debtor's attorney-in-fact, such power of attorney being coupled with
an interest, with full authority in the place and stead of Debtor and
in the name of Debtor or otherwise, from time to time in Secured
Party's discretion, to take any action and to execute any instrument
which Secured Party may deem necessary or appropriate to accomplish
the purposes of this Agreement, including without limitation, (i) to
obtain and adjust any insurance required by Secured Party hereunder;
(ii) to demand, collect, xxx for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in
respect of the Collateral: (iii) to receive, endorse and collect any
drafts or other instruments, documents and chattel paper in connection
with clause (i) or (ii) above: and (iv) to file any claims or take any
action or institute any proceedings which Secured Party may deem
necessary or appropriate for the collection and/or preservation of the
Collateral or otherwise to enforce the rights of Secured Party with
respect to the Collateral; provided, however, that nothing herein
shall permit Secured Party to confess any judgment with respect to any
action which the Company is a plaintiff or defendant.
(c) Performance by Secured Party. If Debtor fails to perform any agreement
or obligation provided herein, Secured Party may itself perform, or
cause performance of, such agreement or obligation, and the expenses
of Secured Party incurred in connection therewith shall be a part of
the Indebtedness, secured by the Collateral and payable by Debtor on
demand.
(d) Debtor's Receipt of Proceeds. All amounts and proceeds (including
instruments and writings) received by Debtor in respect of accounts,
general intangibles or chattel paper shall be received in trust for
the benefit of Secured Party hereunder and, upon request of Secured
Party, shall be segregated from other property of Debtor and shall be
forthwith delivered to Secured Party in the same form as so received
(with any necessary endorsement) and applied to the Indebtedness in
such manner as Secured Party deems appropriate in its sole discretion.
(c) Notification of Account Debtors. Secured Party may at its discretion
from time to time notify any or all obligors under any accounts,
general intangibles or chattel paper (i) of Secured Party's security
interest in such accounts or general intangibles and direct such
obligors to make payment of all amounts due or to become due to Debtor
thereunder directly to Secured Party, and (ii) to verify the accounts,
general intangibles or chattel paper with such obligors. Secured Party
shall have the right, at the expense of Debtor. to enforce collection
of any such accounts, general intangibles or chattel paper and to
adjust, settle or compromise the amount or payment thereof, in the
same manner and to the same extent as Debtor.
7. Events of Default. Each of the following constitutes an "Event of Default"
under this Agreement:
(a) Failure to Pay Indebtedness. Debtor shall fail to pay after the
expiration of five (5) calendar days after Borrower has received
notice (as dictated by the Note Purchase Agreement) from Secured Party
of a failure by Borrower to pay any Indebtedness as and when due.
(b) Non-Performance of Covenants. Debtor shall breach any covenant or
agreement made herein, in any of the Financing Documents or in any
other agreement now or hereafter entered into between Debtor and
Secured Party.
(c) False Representation. Any warranty or representation made herein or in
any of the Financing Documents shall be false or misleading in any
material respect when made.
(d) Default Under Other Financing Documents. The occurrence of an event of
default under any of the Financing Documents or any other agreement
now or hereafter entered into between Debtor and Secured Party.
(e) Untrue Financial Report. Any report, certificate, schedule, financial
statement, profit and loss statement or other statement furnished by
Debtor, or by any other person on behalf of Debtor, to Secured Party
is not true and correct in any material respect.
(f) Default to Third Party. The occurrence of any event which permits the
acceleration of the maturity of any indebtedness owing by Debtor to
any third party under any agreement or undertaking.
(g) Bankruptcy. The filing of a voluntary or involuntary case by or
against Debtor under the United States Bankruptcy Code or other
present or future federal or state insolvency, bankruptcy or similar
laws, or the appointment of a receiver, trustee, conservator or
custodian for a substantial portion of Debtor's assets.
(h) Insolvency. Debtor shall become insolvent, make a transfer in fraud of
creditors or make an assignment for the benefit of creditors.
(i) Involuntary Lien. The filing or commencement of any involuntary lien,
garnishment, attachment or the like shall be issued against or with
respect to the Collateral which the Debtor is not contesting in good
faith.
(j) Material Adverse Change. A material adverse change shall have occurred
in the financial condition, business prospects or operations of Debtor
or any of its subsidiaries.
(k) Tax Lien. Debtor shall have a federal or state tax lien filed against
any of its properties which the Debtor is not contesting in good
faith.
(l) Execution on Collateral. The Collateral or any portion thereof is
taken on execution or other process of law.
(m) Guarantor's Obligations. If any of the obligations of any guarantor
under the Financing Documents or other third-party agreement related
to the transactions contemplated hereby is limited or terminated by
operation of law or by the guarantor, or any such guarantor becomes
the subject of an insolvency proceeding.
(n) Judgment. The entry against Debtor of a final and nonappealable
judgment for the payment of money in excess of $50,000 (not covered by
insurance satisfactory to Secured Party in its sole discretion).
8. Remedies and Related Rights. If an Event of Default shall have occurred,
and without limiting any other rights and remedies provided herein, under
any of the other Financing Documents or otherwise available to Secured
Party, Secured Party may exercise one or more of the rights and remedies
provided in this Section.
(a) Remedies. Secured Party may from time to time at its discretion,
without limitation and without notice except as expressly provided in
any of the Financing Documents:
(i) exercise in respect of the Collateral all the rights and remedies
of a Secured Party under the Code (whether or not the Code
applies to the affected Collateral);
(ii) require Debtor to, and Debtor hereby agrees that it will at its
expense and upon request of the Secured Party, assemble the
Collateral as directed by Secured Party and make it available to
Secured Party at a place to be designated by Secured Party which
is reasonably convenient to both parties:
(iii)reduce its claim to judgment or foreclose or otherwise enforce,
in whole or in part, the security interest granted hereunder by
any available judicial procedure;
(iv) sell or otherwise dispose of, at its office, on the premises of
Debtor or elsewhere, the Collateral, as a unit or in parcels, by
public or private proceeding , and by way of one or more
contracts (it being agreed that the sale or other disposition of
any part of the Collateral shall not exhaust Secured Party's
power of sale, but sales or other dispositions may be made from
time to time until all of the Collateral has been sold or
disposed of or until the Indebtedness has been paid and performed
in full), and at any such sale or other disposition it shall not
be necessary to exhibit any of the Collateral:
(v) buy the Collateral, or any portion thereof, at any public sale;
(vi) buy the Collateral, or any portion thereof at any private sale if
the Collateral is of a type customarily sold in a recognized
market or is of a type which is the subject of widely distributed
standard price quotations:
(vii)apply for the appointment of a receiver for the Collateral, and
Debtor hereby consents to any such appointment; and
(viii) at its option, retain the Collateral in satisfaction of the
Indebtedness whenever the circumstances are such that Secured
Party is entitled to do so under the Code or otherwise.
Debtor agrees that in the event Debtor is entitled to receive any notice under
the Uniform Commercial Code, as it exists in the state governing any such
notice, of the sale or other disposition of any Collateral, reasonable notice
shall be deemed given when such notice is deposited in a depository receptacle
under the care and custody of the United States Postal Service, postage prepaid,
at Debtor's address set forth on the signature page hereof, five (5) days prior
to the date of any public sale, or after which a private sale, of any of such
Collateral is to be held. Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) Application of Proceeds. If any Event of Default shall have occurred,
Secured Party may at its discretion and without notice to Debtor (any
requirement of notice being expressly waived) apply or use any cash
held by Secured Party as Collateral. and any cash proceeds received by
Secured Party in respect of any sale or other disposition of,
collection from, or other realization upon, all or any part of the
Collateral as follows in such order and manner as Secured Party may
elect:
(i) to the repayment or reimbursement of the reasonable costs and
expenses (including, without limitation, reasonable attorneys'
fees and expenses) incurred by Secured Party in connection with
(A) the administration of the Financing Documents, (B) the
custody, preservation, use or operation of, or the sale of
collection from, or other realization upon, the Collateral, and
(C) the exercise or enforcement or any of the rights and remedies
of Secured Party hereunder;
(ii) to the payment or other satisfaction of any liens and other
encumbrances upon the Collateral;
(iii)to the satisfaction of the Indebtedness (without constituting a
retention of collateral in satisfaction of an obligation within
the meaning of Section 9.505 of the Code);
(iv) by holding such cash and proceeds as Collateral;
(v) to the payment of any other amounts required by applicable law
(including without limitation, Section 9.504(a)(3) of the Code or
any other applicable statutory provision); and
(vi) by delivery to Debtor or any other party lawfully entitled to
receive such cash or proceeds whether by direction of a Court of
competent jurisdiction or otherwise.
(c) Deficiency. In the event that the proceeds of any sale of, collection
from, or other realization upon, all or any part of the Collateral by
Secured Party are insufficient to pay all amounts to which Secured
Party is legally entitled. Debtor and any party who guaranteed or is
otherwise obligated to pay all or any portion of the Indebtedness
shall be liable for the deficiency, together with interest thereon as
provided in the Financing Documents.
(d) Non-Judicial Remedies. In granting to Secured Party the power to
enforce its rights hereunder without prior judicial process or
judicial hearing, Debtor expressly waives, renounces and knowingly
relinquishes any legal right which might otherwise require Secured
Party to enforce its rights by judicial process. Debtor recognizes and
concedes that non-judicial remedies are consistent with the usage of
trade, are responsive to commercial necessity and are the result of a
bargain at arm's length. Nothing herein is intended to prevent Secured
Party or Debtor from resorting to judicial process at either party's
option.
(e) Other Recourse. Debtor waives any right to require Secured Party to
proceed against any third party, exhaust any Collateral or other
security for the Indebtedness, or to have any third party joined with
Debtor in any suit arising out of the Indebtedness or any of the
Financing Documents, or pursue any other remedy available to Secured
Party. Debtor further waives any and all notice of acceptance of this
Agreement and of the creation, modification, rearrangement renewal or
extension of the Indebtedness. Debtor further waives any defense
arising by reason of any disability or other defense of any third
party or by reason of the cessation from any cause whatsoever of the
liability of any third party. Until all of the Indebtedness shall have
been paid in full, Debtor shall have no right of subrogation and
Debtor waives the right to enforce any remedy which Secured Party has
or may hereafter have against any third party, and waives any benefit
of and any right to participate in any other security whatsoever now
or hereafter held by Secured Party. Debtor authorizes Secured Party,
and without notice or demand and without any reservation of rights
against Debtor and without affecting Debtor's liability hereunder or
on the Indebtedness to (i) take or hold any other property of any type
from any third party as security for the Indebtedness, and exchange,
enforce, waive and release any or all of such other property, (ii)
apply such other property and direct the order or manner of sale
thereof as Secured Party may in its discretion determine, (iii) renew,
extend, accelerate, modify, compromise, settle or release any of the
Indebtedness or other security for the Indebtedness, (iv) waive,
enforce or modify any of the provisions of any of the Financing
Documents executed by any third party, and (v) release or substitute
any third party.
9. Indemnity. Debtor hereby indemnifies and agrees to hold harmless Secured
Party, and its officers, directors, shareholders, employees, attorneys,
representatives, agents and affiliates (each an "Indemnified Person" from
and against any and all liabilities, obligations, claims, demands, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature (collectively, the "Claims") which may
be imposed on, incurred by, or asserted against, any Indemnified Person
arising in connection with the Financing Documents, the Indebtedness or the
Collateral (including without limitation, the enforcement of the Financing
Documents and the defense of any Indemnified Person's actions and/or
inactions in connection with the Financing Documents). WITHOUT LIMITATION.
THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO ANY CLAIMS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT
OF THE NEGLIGENCE OF SUCH AND/OR ANY OTHER INDEMNIFIED PERSON, except to
the limited extent the Claims against an Indemnified Person are proximately
caused by such Indemnified Person's gross negligence or willful misconduct.
If Debtor or any third party ever alleges such gross negligence or willful
misconduct by any Indemnified Person, the indemnification provided for in
this Section shall nonetheless be paid upon demand, subject to later
adjustment or reimbursement, until such time as a court of competent
jurisdiction enters a final judgment as to the extent and effect of the
alleged gross negligence or willful misconduct. The indemnification
provided for in this Section shall survive the termination of this
Agreement and shall extend and continue to benefit each individual or
entity who is or has at any time been an Indemnified Person hereunder.
10. Miscellaneous.
(a) Entire Agreement. This Agreement contains the entire agreement of
Secured Party and Debtor with respect to the Collateral. If the
parties hereto are parties to any prior agreement, either written or
oral, relating to the Collateral, the terms of this Agreement shall
amend and supersede the terms of such prior agreements as to
transactions on or after the effective date of this Agreement, but all
security agreements, financing statements, guaranties, other contracts
and notices for the benefit of Secured Party shall continue in full
force and effect to secure the Indebtedness unless Secured Party
specifically releases its rights thereunder by separate release.
(b) Amendment. No modification, consent or amendment of any provision of
this Agreement or any of the other Financing Documents shall be valid
or effective unless the same is in writing and signed by the party
against whom it is sought to be enforced.
(c) Actions by Secured Party. The lien, security interest and other
security rights of Secured Party hereunder shall not be impaired by
(i) any renewal, extension, increase or modification with respect to
the Indebtedness, (ii) any surrender, compromise, release, renewal,
extension, exchange or substitution which Secured Party may grant with
respect to the Collateral, or (iii) any release or indulgence granted
to any endorser, guarantor or surety of the Indebtedness. The taking
of additional security by Secured Party shall not release or impair
the lien, security interest or other security rights of Secured Party
hereunder or affect the obligations of Debtor hereunder.
(d) Waiver by Secured Party. Secured Party may waive any Event of Default
without waiving any other prior or subsequent Event of Default.
Secured Party may remedy any default without waiving the Event of
Default remedied. Neither the failure by Secured Party to exercise,
nor the delay by Secured Party in exercising, any right or remedy upon
any Event of Default shall be construed as a waiver of such Event of
Default or as a waiver of the right to exercise any such right or
remedy at a later date. No single or partial exercise by Secured Party
of any right or remedy hereunder shall exhaust the same or shall
preclude any other or further exercise thereof, and every such right
or remedy hereunder may be exercised at any time. No waiver of any
provision hereof or consent to any departure by Debtor therefrom shall
be effective unless the same shall be in writing and signed by Secured
Party and then such waiver or consent shall be effective only in the
specific instances, for the purpose for which given and to the extent
therein specified. No notice to or demand on Debtor in any case shall
of itself entitle Debtor to any other or further notice or demand in
similar or other circumstances.
(e) Costs and Expense. Debtor will upon demand pay to Secured Party the
amount of any and all costs and expenses (including without
limitation, attorneys' fees and expenses), which Secured Party may
incur in connection with (i) the transactions which give rise to the
Financing Documents, (ii) the preparation of this Agreement and the
perfection and preservation of the security interests granted under
the Financing Documents, (iii) the administration of the Financing
Documents, (iv) the custody, preservation, use or operation of, or the
sale of collection from, or other realization upon, the Collateral,
(v) the exercise or enforcement of any of the rights of Secured Party
under the Financing Documents, or (vi) the failure by Debtor to
perform or observe any of the provisions hereof
(f) Governing Law; Venue; Submission to Jurisdiction. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION
OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF TEXAS. THIS AGREEMENT IS
PERFORMABLE BY THE PARTIES IN DALLAS COUNTY, TEXAS. DEBTOR AND SECURED
PARTY (BY ITS ACCEPTANCE HEREOF) EACH AGREE THAT DALLAS COUNTY, TEXAS
SHALL BE THE EXCLUSIVE VENUE FOR LITIGATION OF ANY DISPUTE OR CLAIM
ARISING UNDER OR RELATING TO THIS AGREEMENT, AND THAT SUCH COUNTY IS A
CONVENIENT FORUM IN WHICH TO DECIDE ANY SUCH DISPUTE OR CLAIM. DEBTOR
AND SECURED PARTY (BY ITS ACCEPTANCE HEREOF) EACH CONSENT TO THE
PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
DALLAS COUNTY, TEXAS FOR THE LITIGATION OF ANY SUCH DISPUTE OR CLAIM.
DEBTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
(g) Waiver of Jury Trial. DEBTOR AND SECURED PARTY (BY ITS ACCEPTANCE
HEREOF) EACH HEREBY IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT
PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH.
(h) Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable, shall
not impair or invalidate the remainder of this Agreement and the
effect thereof shall be confined to the provision held to be illegal,
invalid or unenforceable.
(i) No Obligation. Nothing contained herein shall be construed as an
obligation on the part of Secured Party to extend or continue to
extend credit to Debtor.
(j) Notices. All notices, requests, demands or other communications
required or permitted to be given pursuant to this Agreement shall be
in writing and give by (i) personal delivery, (ii) expedited delivery
service with proof of delivery, (iii) United States mail, postage
prepaid, registered or certified mail, return receipt requested, or
(iv) telecopy (with receipt thereof confirmed by telecopier) sent to
the intended addressee at the address set forth on the signature page
hereof or to such different address as the addressee shall have
designated by written notice sent pursuant to the terms hereof and
shall be deemed to have been received either, in the case of personal
delivery, at the time of personal delivery, in the case of expedited
delivery service, as of the date of first attempted delivery at the
address and in the mariner provided herein, in the case of mail, upon
deposit in a depository receptacle under the care and custody of the
United States Postal Service, or in the case of telecopy, upon
receipt. Either parry shall have the right to change its address for
notice hereunder to any other location within the continental United
States by notice to the other party of such new address at least
thirty (30) days prior to the effective date of such new address.
(k) Binding Effect and Assignment. This Agreement (i) creates a continuing
security interest in the Collateral, (ii) shall be binding on Debtor
and the heirs, executors, administrators, personal representatives,
successors and assigns of Debtor, and (iii) shall inure to the benefit
of Secured Party and its successors and assigns. Without limiting the
generality of the foregoing, Secured Party may pledge, assign or
otherwise transfer the Indebtedness and its rights under this
Agreement and any of the other Financing Documents to any other party.
Debtor's rights and obligations hereunder may not be assigned or
otherwise transferred without the prior written consent of Secured
Party.
(l) Termination. It is contemplated by the parties hereto that from time
to time there may be no outstanding Indebtedness, but notwithstanding
such occurrences, this Agreement shall remain valid and shall be in
full force and effect as to subsequent outstanding Indebtedness. Upon
(i) the satisfaction in full of the Indebtedness, (ii) the termination
or expiration of any commitment of Secured Party to extend credit to
Debtor, (iii) written request for the termination hereof delivered by
Debtor to Secured Party, and (iv) written release or termination
delivered by Secured Party to Debtor, this Agreement and the security
interests created hereby shall terminate. Upon termination of this
Agreement and Debtor's written request, Secured Party will, at
Debtor's sole cost and expense, return to Debtor such of the
Collateral as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof and execute and deliver to Debtor
such documents as Debtor shall reasonably request to evidence such
termination.
(m) Cumulative Rights. All rights and remedies of Secured Party hereunder
are cumulative of each other and of every other right or remedy which
Secured Party may otherwise have at law or in equity or under any of
the other Financing Documents, and the exercise of one or more of such
rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of any other rights or remedies.
(n) Gender and Number. Within this Agreement, words of any gender shall be
held and construed to include the other gender, and words in the
singular number shall be held and construed to include the plural and
words in the plural number shall be held and construed to include the
singular, unless in each instance the context requires otherwise.
(o) Descriptive Heading . The headings in this Agreement are for
convenience only and shall in no way enlarge, limit or define the
scope or meaning of the various and several provisions hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
EXECUTED as of the date first written above.
DEBTOR:
CHAMPION TRAILER COMPANY, L.P.
By: Durham Xxxxxxxxx & Associates,
its general partner
By: __________________________
Name: ________________________
Title: _________________________
Debtor's Address:
Champion Trailer Company, L.P.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
ATTN: Xxxxxxx X. Xxxxxx
Telecopy No. 000-000-0000
SECURED PARTY:
MARKPOINT EQUITY GROWTH FUND, J.V.
By: The Markpoint Company, its Managing Venturer
By: ____________________________________
Name: Xxx Xxxxxx
Title: President
Secured Party's Address:
Markpoint Equity Growth Fund, J.V.
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
ATTN: Xxx Xxxxxx
Telecopy No. 972-490-1980
THE RIGHTS AND REMEDIES OF MARKPOINT EQUITY GROWTH FUND, J.V. HEREUNDER ARE
SUBJECT TO A SUBORDINATION AGREEMENT AMONG MARKPOINT EQUITY GROWTH FUND, J.V.
AND BANK ONE INDIANA, N.A. DATED AS OF EVEN DATE HEREWITH.
HOLDER PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Agreement") is made as of the 2nd day of May, 2000, by
XXXXXXX X. XXXXXX, XXXXX X. XXXXXXXXX and XXXXXX XXXXXXX (hereinafter
individually and collectively referred to as "Pledgor"), in favor of MARKPOINT
EQUITY GROWTH FUND, J.V. ("Secured Party"). Pledgor hereby agrees with Secured
Party as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
meanings indicated below:
(a) "Additional Property" shall mean the following property which Pledgor
becomes entitled to receive or shall receive in connection with any
other Collateral: (i) any stock certificate, including without
limitation, any certificate representing a stock dividend or any
certificate in connection with any recapitalization, reclassification,
merger, consolidation, conversion, sale of assets, combination of
shares, stock split or spin-off; (ii) any option, warrant~
subscription or right, whether as an addition to or in substitution of
any other Collateral; (iii) any dividends or distributions of any kind
whatsoever, whether distributable in cash, stock or other property;
(iv) any interest premium or principal payments; and (v) any
conversion or redemption proceeds.
(b) "Borrower" shall mean Champion Trailer Company, L.P.
(c) "Code' shall mean the Uniform Commercial Code as in effect in the
State of Texas on the date of this Agreement or as it may
hereafter be amended from time to time.
(d) "Collateral, shall mean all property specifically described on
Schedule "A" attached hereto and made a part hereof The term
Collateral, as used herein, shall also include (i) all certificates,
instruments and/or other documents evidencing the foregoing, (ii) all
renewals, replacements and substitutions of all of the foregoing,
(iii) all Additional Property, and (iv) all PRODUCTS and PROCEEDS of
all of the foregoing. The designation of proceeds does not authorize
Pledgor to sell, transfer or otherwise convey any of the foregoing
property.
(e) "Financing Documents" shall mean all instruments and documents
evidencing, securing, governing, guaranteeing and/or pertaining to the
Indebtedness, including, without limitation, the Security Agreement
dated as of the date hereof among the Secured Party and the Borrower,
the Note Purchase Agreement of even date herewith among Borrower and
Secured Party, the Note and the Parent Pledge Agreement dated as of
even date herewith by and between Secured Party and Parent.
(f) "Indebtedness" shall mean (i) indebtedness, obligations and
liabilities owing by Borrower to Secured Party under the Note and all
other indebtedness, obligations and liabilities of Pledgor and
Borrower (or either of them) to Secured Party of any kind or
character, now existing or hereafter arising, whether direct~ indirec4
related, unrelated, fixed, xxxxxxxx0 liquidated, unliquidated, joint
several or joint and several, and regardless of whether such
indebtedness, obligations and liabilities may, prior to their
acquisition by Secured Party, be or have been payable to or in favor
of a third party and subsequently acquired by Secured Party (it being
contemplated that Secured Party may make such acquisitions from third
parties), including without limitation all indebtedness, obligations
and liabilities of Pledgor and Borrower (or either of them) to Secured
Party now existing or hereafter arising by note, draft, acceptance,
guaranty, endorsement letter of credit, assignment purchase, overdraft
discount~ indemnity agreement or otherwise, (ii) all obligations of
Pledgor and Borrower (or either of them) to Secured Party under any
documents evidencing, securing, governing and/or pertaining to all or
any part of the indebtedness, obligations and liabilities described in
(i) above, (iii) all costs and expenses incurred by Secured Party in
connection with the collection and administration of all or any part
of the indebtedness, obligations and liabilities described in (i) and
(ii) above or the protection or preservation of, or realization upon,
the collateral securing all or any part of such indebtedness,
obligations and liabilities, including without limitation all
reasonable attorneys, fees, and (iv) all renewals, extensions,
modifications and rearrangements of the indebtedness, obligations and
liabilities described in (i), (ii) and (iii) above.
(g) "Note" means that certain promissory note of even date herewith
payable by Borrower to the order of Secured Party In the stated
principal amount of $1.250,000.00. as such promissory note may be
renewed, extended, amended and modified.
(h) "Parent" means Durham Xxxxxxxxx & Associates, LLC. an Indiana limited
liability company.
All words and phrases used herein which are expressly defined in Section U01,
Chapter 8 or Chapter 9 of the Code shall have the meaning provided for therein.
Other words and phrases defined elsewhere in the Code shall have the meaning
specified therein except to the extent such meaning is inconsistent with a
definition in Section 1.20 1, Chapter 8 or Chapter 9 of the Code.
2. Security Interest. As security for the Indebtedness, Pledgor, for value
received, hereby grants to Secured Party a continuing security interest in
the Collateral.
3. Additional Property. Collateral shall also include the Additional Property;
provided, however, that until the occurrence of an Event of Default (as
hereinafter defined), Pledgor shall be entitled to all cash dividends and
all interest paid on the Collateral (except interest paid on any
certificate of deposit pledged hereunder) free of the security interest
created under this Agreement. All Additional Property received by Pledgor
shall be received in trust for the benefit of Secured Party. All Additional
Property and all certificates or other written instruments or documents
evidencing and/or representing the Additional Property that is received by
Pledgor, together with such instruments of transfer as Secured Party may
request, shall immediately be delivered to or deposited with Secured Party
and held by Secured Party as Collateral under the terms of this Agreement.
If the Additional Property received by Pledgor shall be shares of stock or
other securities, such shares of stock or other securities shall be duly
endorsed in blank or accompanied by proper instruments of transfer and
assignment duly executed in blank with, if requested by Secured Party,
signatures guaranteed by a member or member organization in good standing
of an authorized Securities Transfer Agents Medallion Program, all in form
and substance satisfactory to Secured Party. Secured Party shall be deemed
to have possession of any Collateral in transit to Secured Party or its
agent.
4. Voting Rights. As long as no Event of Default shall have occurred
hereunder, any voting rights incident to any stock or other securities
pledged as Collateral may be exercised by Pledgor; provided, however, that
Pledgor will not exercise, or cause to be exercised, any such voting
rights, without the prior written consent of Secured Party, if the direct
or indirect effect of such vote will result in an Event of Default
hereunder.
5. Maintenance of Collateral. Other than the exercise of reasonable care to
assure the safe custody of any Collateral in Secured Party's possession
from time to time, Secured Party does not have any obligation, duty or
responsibility with respect to the Collateral. Without limiting the
generality of the foregoing, Secured Party shall not have any obligation,
duty or responsibility to do any of the following: (a) ascertain any
maturities, calls, conversions, exchanges, offers, tenders or similar
matters relating to the Collateral or informing Pledgor with respect to any
such matters; (b) fix, preserve or exercise any right, privilege or option
(whether conversion, redemption or otherwise) with respect to the
Collateral unless (i) Pledgor makes written demand to Secured Party to do
so, (ii) such written demand is received by Secured Party in sufficient
time to permit Secured Party to take the action demanded in the ordinary
course of its business, and (iii) Pledgor provides additional collateral,
acceptable to Secured Party in its sole discretion; (c) collect any amounts
payable in respect of the Collateral (Secured Party being liable to account
to Pledgor only for what Secured Party may actually receive or collect
thereon); (d) sell all or any portion of the Collateral to avoid market
loss; (e) sell all or any portion of the Collateral unless and until W
Pledgor makes written demand upon Secured Party to sell the Collateral, and
(ii) Pledgor provides additional collateral, acceptable to Secured Party in
its sole discretion; or (f) hold the Collateral for or on behalf of any
party other than Pledgor.
6. Representations and Warranties. Pledgor hereby represents and wan-ants the
following to Secured Party:
(a) Due Authorization. The execution, delivery and performance of this
Agreement and all of the other Financing Documents by Pledgor have
been duly authorized by all necessary corporate action of Pledgor, to
the extent Pledgor is a corporation, or by all necessary partnership
action, to the extent Pledgor is a partnership.
(b) Enforceability. This Agreement and the other Financing Documents to
which each of Pledgor is a party constitute legal, valid and binding
obligations of Pledgor, enforceable in accordance with their
respective terms, except as limited by bankruptcy, insolvency or
similar laws of general application relating to the enforcement of
creditors' rights and except to the extent specific remedies may
generally be limited by equitable principles.
(c) Ownership and Liens. The equity interests issued by Parent that
constitutes a portion of the Collateral represents one hundred percent
(100%) of the issued and outstanding equity interests of Parent.
Pledgor has good and marketable title to the Collateral free and clear
of all liens, security interests, encumbrances or adverse claims,
except for the security interest created by this Agreement. No
dispute, right of setoff, counterclaim or defense exists with respect
to all or any part of the Collateral. Pledgor has not executed any
other security agreement currently affecting the Collateral and no
financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any recording office
except as may have been executed or filed in favor of Secured Party.
(d) No Conflicts or Consents. Neither the ownership, the intended use of
the Collateral by Pledgor, the grant of the security interest by
Pledgor to Secured Party herein nor the exercise by Secured Party of
its rights or remedies hereunder, will (i) conflict with any provision
of (A) any domestic or foreign law, statute, rule or regulation, and
(B) any agreement, judgment, license. order or permit applicable to or
binding upon Pledgor or otherwise affecting the Collateral, or (ii)
result in or require the creation of any lien, charge or encumbrance
upon any assets or properties of Pledgor or of any person except as
may be expressly contemplated in the Financing Documents. Except as
expressly contemplated in the Financing Documents, no consent,
approval, authorization or order of and no notice to or filing with,
any court, governmental authority or third party is required in
connection with the grant by Pledgor of the security interest herein
or the exercise by Secured Parry of its rights and remedies hereunder.
(e) Security Interest. Pledgor has arid will have at all times full right~
power and authority to grant a security interest in the Collateral to
Secured Party in the manner provided herein, free and clear of any
lien, security interest or other charge or encumbrance. This Agreement
creates a legal, valid and binding security interest in favor of
Secured Party in the Collateral.
(f) Location. Pledgor's residence or chief executive office, as the case
may be, and the office where the records concerning the Collateral are
kept is located at its address set forth on the signature page hereof.
(g) Solvency of Pledgor. As of the date hereof, and after giving effect to
this Agreement and the completion of all other transactions
contemplated by Pledgor at the time of the execution of this
Agreement, (i) Pledgor is and will be solvent, (ii) the fair saleable
value of Pledgor's assets exceeds and will continue to exceed
Pledgor's liabilities (both fixed and contingent), (iii) Pledgor is
paying and will continue to be able to pay its debts as they mature,
and (iv) if Pledgor is not an individual, Pledgor has and will have
sufficient capital to carry on Pledgor's businesses and all businesses
in which Pledgor is about to engage.
(h) Securities. Any certificates evidencing securities pledged as
Collateral are valid and genuine and have not been altered. All
securities pledged as Collateral have been duly authorized and validly
issued, are fully paid and non-assessable, and were not issued in
violation of the preemptive rights of any party or of any agreement by
which Pledgor or the issuer thereof is bound. No restrictions or
conditions exist with respect to the transfer or voting of any
securities pledged as Collateral, except as has been disclosed to
Secured Party in writing. To the best of Pledgor's knowledge, no
issuer of such securities (other than securities of a class which are
publicly traded) has any outstanding stock rights, rights to
subscribe, options, warrants or convertible securities outstanding or
any other rights outstanding entitling any party to have issued to
such party capital stock of such issuer, except as has been disclosed
to Secured Party in writing.
7. Affirmative Covenants. Pledgor will comply with the covenants contained in
this Section at all times during the period of time this Agreement is
effective unless Secured Party shall otherwise consent in writing.
(a) Ownership and Liens. Pledgor will maintain good and marketable tide to
all Collateral free and clear of all liens, security interests,
encumbrances or adverse claims, except for the security interest
created by this Agreement and the security interests and other
encumbrances expressly permitted by the other Financing Documents.
Pledgor will not permit any dispute, right of setoff, counterclaim or
defense to exist with respect to all or any part of the Collateral.
Pledgor will cause any financing statement or other security
instrument with respect to the Collateral to be terminated, except as
may exist or as may have been filed in favor of Secured Party. Pledgor
will defend at its expense Secured Party's right, title and security
interest in and to the Collateral against the claims of any third
party.
(b) Inspection of Books and Records. Pledgor will keep adequate records
concerning the Collateral and will permit Secured Party and all
representatives and agents appointed by Secured Party to inspect
Pledgor's books and records of or relating to the Collateral at any
time during normal business hours, to make and take away photocopies,
photographs and printouts thereof and to write down and record any
such information.
(c) Adverse Claim. Pledgor covenants and agrees to promptly notify Secured
Party of any claim, action or proceeding affecting title to the
Collateral, or any part thereof, or the security interest created
hereunder and, at Pledgor's expense, defend Secured Party's security
interest in the Collateral against the claims of any third party.
Pledgor also covenants and agrees to promptly deliver to Secured Party
a copy of all written notices received by Pledgor with respect to the
Collateral, including without limitation, notices received from the
issuer of any securities pledged hereunder as Collateral.
(d) Delivery of Instruments and/or Certificates. Contemporaneously
herewith, Pledgor covenants and agrees to deliver to Secured Party any
certificates, documents or instruments representing or evidencing the
Collateral, with Pledgor's endorsement thereon and/or accompanied by
proper instruments of transfer and assignment duly executed in blank
with, if requested by Secured Party, signatures guaranteed by a member
or member organization in good standing of an authorized Securities
Transfer Agents Medallion Program, all in form and substance
satisfactory to Secured Party.
(e) Further Assurance . Pledgor will contemporaneously with the execution
hereof and from time to time thereafter at its expense promptly
execute and deliver all further instruments and documents and take all
further action necessary or appropriate or that Secured Party may
request in order (i) to perfect and protect the security interest
created or purported to be created hereby and the first priority of
such security interest (h) to enable Secured Party to exercise and
enforce its rights and remedies hereunder in respect of the
Collateral, and (iii) to otherwise effect the purposes of this
Agreement, including without limitation: (A) executing and filing any
financing or continuation statements, or any amendments thereto; (B)
obtaining written confirmation from the issuer of any securities
pledged as Collateral of the pledge of such securities, in form and
substance satisfactory to Secured Party; (C) cooperating with Secured
Party in registering the pledge of any securities pledged as
Collateral with the issuer of such securities; (D) delivering notice
of Secured Party's security interest in any securities pledged as
Collateral to any securities or financial intermediary, clearing
corporation or other party required by Secured Party, in form and
substance satisfactory to Secured Party; and (E) obtaining written
confirmation of the pledge of any securities constituting Collateral
from any securities or financial intermediary, clearing corporation or
other party required by Secured Party. in form and substance
satisfactory to Secured Party. If all or any part of the Collateral is
securities issued by an agency or department of the United States,
Pledgor covenants and agrees, at Secured Party's request, to cooperate
in registering such securities in Secured Party's name or with Secured
Party's account maintained with a Federal Reserve Bank. When
applicable law provides more than one method of perfection of Secured
Party's security interest in the Collateral, Secured Parry may choose
the method(s) to be used.
8. Negative Covenants. Pledgor will comply with the covenants contained in
this Section at all times during the period of time this Agreement is
effective, unless Secured Party shall otherwise consent in writing.
(a) Transfer or Encumbrance. Pledgor will not (i) sell, assign (by
operation of law or otherwise) or transfer Pledgor's rights in any of
the Collateral, (ii) xxxxx x xxxx or security interest in or execute,
file or record any financing statement or other security instrument
with respect to the Collateral to any party other than Secured Party,
or (iii) deliver actual or constructive possession of any certificate,
instrument or document evidencing and/or representing any of the
Collateral to any party other than Secured Party.
(b) Impairment of Security Interest. Pledgor will not take or fail to take
any action which would in any manner impair the value or
enforceability of Secured Party's security interest in any Collateral.
(c) Dilution of Ownership. As to any securities pledged as Collateral
(other than securities of a class which are publicly traded), Pledgor
will not consent to or approve of the issuance of (i) any additional
shares of any class of securities of such issuer (unless immediately
upon issuance additional securities are pledged and delivered to
Secured Party pursuant to the terms hereof to the extent necessary to
give Secured Parry a security interest after such issuance in at least
the same percentage of such issuer's outstanding securities as Secured
Party had before such issuance), (ii) any instrument convertible
voluntarily by the holder thereof or automatically upon the occurrence
or non-occurrence of any event or condition into, or exchangeable for,
any such securities, or (iii) any warrants, options, contracts or
other commitments entitling any third party to purchase or otherwise
acquire any such securities.
(d) Restrictions on Securities. Pledgor will not enter into any agreement
creating, or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any securities pledged as
Collateral, except as consented to in writing by Secured Party.
9. Rights of Secured Party. Secured Party shall have the rights contained in
this Section at all times during the period of time this Agreement is
effective.
(a) Power of Attorney. Pledgor hereby irrevocably appoints Secured Party
as Pledgor's attorney-in-fact, such power of attorney being coupled
with an interest, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, to take any action
and to execute any instrument which Secured Party may from time to
time in Secured Party's discretion deem necessary or appropriate to
accomplish the purposes of this Agreement, including without
limitation, the following action: (i) transfer any securities,
instruments, documents or certificates pledged as Collateral in the
name of Secured Party or its nominee; (ii) use any interest, premium
or principal payments, conversion or redemption proceeds or other cash
proceeds received in connection with any Collateral to reduce any of
the Indebtedness; (iii) exchange any of the securities pledged as
Collateral for any other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer
thereof, and, in connection therewith, to deposit and deliver any and
all of such securities with any committee, depository, transfer agent,
registrar or other designated agent upon such terms and conditions as
Secured Party may deem necessary or appropriate; (iv) exercise or
comply with any conversion, exchange, redemption, subscription or any
other right privilege or option pertaining to any securities pledged
as Collateral; provided, however, except as provided herein, Secured
Party shall not have a duty to exercise or comply with any such right,
privilege or option (whether conversion, redemption or otherwise) and
shall not be responsible for any delay or failure to do so; and (v)
file any claims or take any action or institute any proceedings which
Secured Party may deem necessary or appropriate for the collection
and/or preservation of the Collateral or otherwise to enforce the
rights of Secured Party with respect to the Collateral; provided,
however, that nothing herein shall permit Secured Xxx to confess any
judgment with respect to any action which the Company is a plaintiff
or defendant.
(b) Performance by Secured. If Pledgor fails to perform any agreement or
obligation provided herein, Secured Party may itself perform, or cause
performance of, such agreement or obligation, and the expenses of
Secured Party incurred in connection therewith shall be a part of the
Indebtedness, secured by the Collateral and payable by Pledgor on
demand.
Notwithstanding any other provision herein to the contrary, Secured Party does
not have any duty to exercise or continue to exercise any of the foregoing
rights and shall not be responsible for any failure to do so or for any delay in
doing so.
10. Events of Default. Each of the following constitutes an "Event of Default"
under this Agreement:
(a) Failure to Pay Indebtedness. Borrower or Pledgor shall fail to pay
after the expiration of five (5) calendar days after Borrower has
received notice (as dictated by die Note Purchase Agreement) from
Secured Party of a failure by Borrower to pay any Indebtedness as and
when due.
(b) Non-Performance of Covenants. Borrower or Pledgor shall breach any
covenant or agreement made herein, in any of the Financing Documents
or in any other agreement now or hereafter entered into between
Borrower or Pledgor and Secured Party.
(c) False Representation. Any warranty or representation made herein or in
any of the Financing Documents shall be false or misleading in any
material respect when made.
(d) Default Under Other Financing Documents. The occurrence of an event of
default under any of the -- Financing Documents or any other agreement
now or hereafter entered into between Borrower or Pledgor and Secured
Party.
(e) Untrue Financial Report. Any report, certificate, schedule, financial
statement, profit and loss statement or other statement furnished by
Borrower or Pledgor, or by any other person on behalf of Borrower or
Pledgor, to Secured Party is not true and correct in any material
respect.
(f) Default to Third Party. The occurrence of any event which permits the
acceleration of the maturity of any indebtedness owing by Borrower or
Pledgor to any third party under any agreement or undertaking.
(g) Bankruptcy. The filing of a voluntary or involuntary case by or
against Borrower or Pledgor under the United States Bankruptcy Code or
other present or future federal or state insolvency, bankruptcy or
similar laws (collectively, "Applicable Bankruptcy Law") or the
appointment of a receiver, trustee, conservator or custodian for a
substantial portion of the assets of Borrower or Pledgor.
(h) Insolvency. Borrower or Pledgor shall become insolvent, make a
transfer in fraud of creditors or make an assignment for the benefit
of creditors.
(i) Involuntary Lien. The filing or commencement of any involuntary lien,
garnishment, attachment or the like shall be issued against or with
respect to the Collateral which the Borrower and/or Pledgor is not
contesting in good faith.
(j) Material Adverse Change. A material adverse change shall have occurred
in the financial condition, business prospects or operations of
Borrower or Pledgor or any of its subsidiaries.
(k) Tax Lien. Borrower or Pledgor shall have a federal or state tax lien
filed against any of its properties which the Borrower and/or Pledgor
is not contesting in good faith
(l) Execution on Collateral. The Collateral or any portion thereof is
taken on execution or other process of law.
(m) Guarantor's Obligations. If any of the obligations of any guarantor
under the Financing Documents is limited or terminated by operation of
law or by the guarantor, or any such guarantor becomes the subject of
an insolvency proceeding.
(n) Judgment. The entry against Borrower or Pledgor of a final and
nonappealable judgment for the payment of money in excess of $50,000
(not covered by insurance satisfactory to Secured Party in its sole
discretion).
(o) Dilution of Ownership. The issuer of any securities (other than
securities of a class which are publicly traded) constituting
Collateral hereafter issues any shares of any class of capital stock
(unless immediately upon issuance, additional securities are pledged
and delivered to Secured Party pursuant to the terms hereof to the
extent necessary to give Secured Party a security interest after such
issuance in at least the same percentage of such issuer's outstanding
securities as Secured Parry had before such issuance) or any options,
warrants or other rights to purchase any such capital stock.
(p) Bankruptcy of Issuer. (i) The issuer of any securities constituting
Collateral files a petition for relief under any Applicable Bankruptcy
Law, (ii) an involuntary petition for relief is filed against any such
issuer under any Applicable Bankruptcy Law, or (iii) an order for
relief naming any such issuer is entered under any Applicable
Bankruptcy Law.
11. Remedies and Related Rights. If an Event of Default shall have occurred,
and without limiting any other rights and remedies provided herein, under
any of the other Financing Documents or otherwise available to Secured
Party, Secured Party may exercise one or more of the rights and remedies
provided in this Section.
(a) Remedies. Secured Party may from time to time at its discretion,
without limitation and without notice except as expressly provided in
any of the Financing Documents:
(i) exercise in respect of the Collateral all the rights and remedies
of a secured party under the Code (whether or not the Code
applies to the affected Collateral);
(ii) reduce its claim to judgment or foreclose or otherwise enforce,
in whole or in part, the security interest granted hereunder by
any available judicial procedure;
(iii)sell or otherwise dispose of, at its office, on the premises of
Pledgor or elsewhere, the Collateral, as a unit or in parcels, by
public or private proceedings, and by way of one or more
contracts (it being agreed that the sale or other disposition of
any part of the Collateral shall not exhaust Secured Party's
power of sale, but sales or other dispositions may be made from
time to time until all of the Collateral has been sold or
disposed of or until the indebtedness has been paid and performed
in full), and at any such sale or other disposition it shall not
be necessary to exhibit any of the Collateral;
(iv) buy the Collateral, or any portion thereof, at any public sale;
(v) buy the Collateral, or any portion thereof, at any private sale
if the Collateral is of a type customarily sold in a recognized
market or is of a type which is the subject of widely distributed
standard price quotations;
(vi) apply for the appointment of a receiver for the Collateral, and
Pledgor hereby consents to any such appointment; and
(vii)at its option, retain the Collateral in satisfaction of the
Indebtedness whenever the circumstances are such that Secured
Party is entitled to do so under the Code or otherwise.
Pledgor agrees that in the event Pledgor is entitled to receive any notice under
the Uniform Commercial Code, as it exists in the state governing any such
notice, of the sale or other disposition of any Collateral, reasonable notice
shall be deemed given when such notice is deposited in a depository receptacle
under the care and custody of the United States Postal Service, postage prepaid,
at Pledgor's address set forth on the signature page hereof, five (5) days prior
to the date of any public sale, or after which a private sale, of any of such
Collateral is to be held. Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Pledgor further acknowledges
and agrees that the redemption by Secured Party of any certificate of deposit
pledged as Collateral shall be deemed to be a commercially reasonable
disposition under Section 9.504(c) of the Code.
(b) Private Sale of Securities. Pledgor recognizes that Secured Party may
be unable to effect a public sale of all or any part of the securities
pledged as Collateral because of restrictions in applicable federal
and state securities laws and that Secured Party may, therefore,
determine to make one or more private sales of any such securities to
a restricted group of purchasers who will be obligated to agree, among
other things, to acquire such securities for their own account, for
investment and not with a view to the distribution or resale thereof
Pled.-or acknowledges that each any such private sale may be at prices
and other terms less favorable than what might have been obtained at a
public sale and, notwithstanding the foregoing, agrees that each such
private sale shall be deemed to have been made in a commercially
reasonable manner and that Secured Party shall have no obligation to
delay the sale of any such securities for the period of time necessary
to permit the issuer to register such securities for public sale under
any federal or state securities laws. Pledgor further acknowledges and
agrees that any offer to sell such securities which has been made
privately in the manner described above to not less than five (5) bona
fide offerees shall be deemed to involve a "public sale" for the
purposes of Section 9.504(c) of the Code, notwithstanding that such
sale may not constitute a "public offering" under any federal or state
securities laws and that Secured Party may, in such event, bid for the
purchase of such securities.
(c) Application of Proceeds. If any Event of Default shall have occurred,
Secured Party may at its discretion apply or use any cash held by
Secured Party as Collateral, and any cash proceeds received by Secured
Party in respect of any sale or other disposition of, collection from,
or other realization upon, all or any part of the Collateral as
follows in such order and manner as Secured Party may elect:
(i) to the repayment or reimbursement of the reasonable costs and
expenses (including, without limitation, reasonable attorney's
fees and expenses) incurred by Secured Party in connection with
(A) the administration of the Financing Documents, (B) the
custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, the Collateral, and
(C) the exercise or enforcement of any of the rights and remedies
of Secured Party hereunder;
(ii) to the payment or other satisfaction of any liens and other
encumbrances upon the Collateral;
(iii) to the satisfaction of the Indebtedness;
(iv) by holding such cash and proceeds as Collateral;
(v) to the payment of any other amounts required by applicable law
(including without limitation, Section 9.504(a)(3) of the Code or
any other applicable statutory provision); and
(vi) by delivery to Pledgor or any other party lawfully entitled to
receive such cash or proceeds whether by direction of a court of
competent jurisdiction or otherwise.
(d) Deficiency. In the event that the proceeds of any sale of, collection
from, or other realization upon, all or any part of the Collateral by
Secured Party are insufficient to pay all amounts to which Secured
Party is legally entitled, Borrower and any party who guaranteed or is
otherwise obligated to pay all or any portion of the Indebtedness
shall be liable for the deficiency, together with interest thereon as
provided in the Financing Documents.
(e) Non-Judicial Remedies . In granting to Secured Party the power to
enforce its rights hereunder without prior judicial process or
judicial hearing, Pledgor expressly waives, renounces and knowingly
relinquishes any legal right which might otherwise require Secured
Party to enforce its rights by judicial process. Pledgor recognizes
and concedes that non-judicial remedies are consistent with the usage
of trade, are responsive to commercial necessity and are the result of
a bargain at arm's length. Nothing herein is intended to prevent
Secured Party or Pledgor from resorting to judicial process at either
party's option.
(f) Other Recourse. Pledgor waives any right to require Secured Party to
proceed against any third party, exhaust any Collateral or other
security for the Indebtedness, or to have any third party joined with
Pledgor in any suit arising out of the Indebtedness or any of the
Financing Documents, or pursue any other remedy available to Secured
Party. Pledgor further waives any and all notice of acceptance of this
Agreement and of the creation, modification, rearrangement, renewal or
extension of the Indebtedness. Pledgor further waives any defense
arising by reason of any disability or other defense of any third
party or by reason of the cessation from any cause whatsoever of the
liability of any third party. Until all of the Indebtedness shall have
been paid in full, Pledgor shall have no right of subrogation and
Pledgor waives the right to enforce any remedy which Secured Party has
or may hereafter have against any third party, and waives any benefit
of and any right to participate in any other security whatsoever now
or hereafter held by Secured Party. Pledgor authorizes Secured Party,
and without notice or demand and without any reservation of rights
against Pledgor and without affecting Pledgor's liability hereunder or
on the Indebtedness, to (I) take or hold any other property of any
type from any third party as security for the Indebtedness, and
exchange, enforce, waive and release any or all of such other
property, (ii) apply such other property and direct the order or
manner of sale thereof as Secured Party may in its discretion
determine, (iii) renew, extend, accelerate, modify, compromise, settle
or release any of the Indebtedness or other security for the
Indebtedness, (iv) waive, enforce or modify any of the provisions of
any of the Financing Documents executed by any third party, and (v)
release or substitute any third party.
(g) Voting Rights. Upon the occurrence of an Event of Default, Pledgor
will not exercise any voting rights with respect to securities pledged
as Collateral. Pledgor hereby irrevocably appoints Secured Party as
Pledgor's attorney-in-fact (such power of attorney being coupled with
an interest) and proxy to exercise any voting rights with respect to
Pledgor's securities pledged as Collateral upon the occurrence of an
Event of Default.
(h) Dividend Rights and Interest Payments. Upon the occurrence of an Event
of Default:
(ii) all rights of Pledgor to receive and retain the dividends and
interest payments which it would otherwise be authorized to
receive and retain pursuant to Section 3 shall automatically
cease, and all such rights shall thereupon become vested with
Secured Party which shall thereafter have the sole right to
receive, hold and apply as Collateral such dividends and interest
payments; and
(ii) all dividend and interest payments which are received
by Pledgor contrary to the provisions of clause (i)
of this Subsection shall be received in trust for the
benefit of Secured Party, shall be segregated from
other funds of Pledgor, and shall be forthwith paid
over to Secured Party in the exact form received
(properly endorsed or assigned if requested by
Secured Party), to be held by Secured Party as
Collateral.
12. Indemnity. Pledgor hereby indemnifies and agrees to hold harmless Secured
Party, and its officers, directors, shareholders, employees, attorneys,
representatives, agents and affiliates (each an "Indemnified Person") from
and against any and all liabilities, obligations, claims, demands, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature (collectively, the "Claims") which way
be imposed on, incurred by, or asserted against~ any Indemnified Person
arising in connection with the Financing Documents the Indebtedness or the
Collateral (including without limitation, the enforcement of the Financing
Documents and the defense of any Indemnified Person's actions and/or
inactions in connection with the Financing Documents); provided that the
payment of such Claims shall be restricted to the proceeds or products
realized from the Collateral. WITHOUT LIMITATION, THE FOREGOING INDEMNITIES
SHALL APPLY TO EACH INDEMNIFIED PERSON WIT14 RESPECT TO ANY CLAIMS WHICH IN
WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH
ANDIOR ANY OTHER INDEMNIFIED PERSON, except to the limited extent the
Claims against an Indemnified Person are proximately caused by any
Indemnified Person's gross negligence or willful misconduct. If Pledgor or
any third party ever alleges such gross negligence or willful misconduct by
any Indemnified Person, the indemnification provided for in this Section
shall nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent jurisdiction enters
a final judgment as to the extent and effect of the alleged gross
negligence or willful misconduct. The indemnification provided for in this
Section shall survive the termination of this Agreement and shall extend
and continue to benefit each individual or entity who is or has at any time
been an Indemnified Person hereunder.
13. Miscellaneous.
(a) Entire Agreement. This Agreement contains the entire agreement of
Secured Party and Pledgor with respect to the Collateral. If the
parties hereto are parties to any prior agreement, either written or
oral, relating to the Collateral, the terms of this Agreement shall
amend and supersede the terms of such prior agreements as to
transactions on or after the effective date of this Agreement, but all
security agreements, financing statements, guaranties, other contracts
and notices for the benefit of Secured Party shall continue in full
force and effect to secure the Indebtedness unless Secured Party
specifically releases its rights thereunder by separate release.
(b) Amendment. No modification, consent or amendment of any provision of
this Agreement or any of the other Financing Documents shall be valid
or effective unless the same is in writing and signed by the party
against whom it is sought to be enforced.
(c) Actions by Secured Party. The lien, security interest and other
security rights of Secured Party hereunder shall not be impaired by
(i) any renewal. extension, increase or modification with respect to
the Indebtedness, (ii) any surrender, compromise, release, renewal,
extension, exchange or substitution which Secured Party may grant with
respect to the Collateral, or (iii) any release or indulgence granted
to any endorser, guarantor or surety of the Indebtedness. 'Me taking
of additional security by Secured Party shall not release or impair
the lien, security interest or other security rights of Secured Party
hereunder or affect the obligations of Pledgor hereunder.
(d) Waiver by Secured Party. Secured Party may waive any Event of Default
without waiving any other prior or subsequent Event of Default.
Secured Party may remedy any default without waiving the Event of
Default remedied. Neither the failure by Secured Party to exercise,
nor the delay by Secured Party in exercising, any right or remedy upon
any Event of Default shall be construed as a waiver of such Event of
Default or as a waiver of the right to exercise any such right or
remedy at a later date. No single or partial exercise by Secured Party
of any right or remedy hereunder shall exhaust the same or shall
preclude any other or further exercise thereof, and every such right
or remedy hereunder may be exercised at any time. No waiver of any
provision hereof or consent to any departure by Pledgor therefrom
shall be effective unless the same shall be in writing and signed by
Secured Party and then such waiver or consent shall be effective only
in the specific instances, for the purpose for which given and to the
extent therein specified. No notice to or demand on Pledgor in any
case shall of itself entitle Pledgor to any other or further notice or
demand in similar or other circumstances.
(e) Costs and Expenses. After an event of default hereunder and a demand
by the Secured Party to the Pledgor for the Collateral, Pledgor will
upon demand pay to Secured Party the amount of any and all costs and
expenses (including without limitation, attorneys' fees and expenses),
which Secured Party may incur in connection with (i) the exercise or
enforcement of any of the rights of Secured Party under the Financing
Documents with respect to the Collateral, or (ii) the failure by
Pledgor to perform or observe any of the provisions hereof.
(f) Governing Law; Venue; Submission to Jurisdiction. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS WITHOUT GIVING EFTECI` TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION
OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF TEXAS. THIS AGREEMENT IS
PERFORMABLE BY THE PARTIES IN DALLAS COUNTY, TEXAS, PLEDGOR AND
SECURED PARTY (BY ITS ACCEPTANCE HEREOF) EACH AGREE THAT DALLAS
COUNTY, TEXAS SHALL BE THE EXCLUSIVE VENUE FOR LITIGATION OF ANY
DISPUTE OR CLAIM ARISING UNDER OR RELATING TO THIS AGREEMENT, AND THAT
SUCH COUNTY IS A CONVENIENT FORUM IN WHICH TO DECIDE ANY SUCH DISPUTE
OR CLAINL PLEDGOR AND SECURED PARTY (BY ITS ACCEPTANCE HEREOF) EACH
CONSENT TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS
LOCATED IN DALLAS COUNTY, TEXAS FOR THE LITIGATION OF ANY SUCH DISPUTE
OR CLAIM. PLEDGOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFFER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY
CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM
(g) Waiver of Jury Trial. PLEDGOR AND SECURED PARTY (BY ITS ACCEPTANCE
HEREOF) EACH HEREBY IRREVOCABLY WAIVES, TO THE MAXIM[UM EXTENT
PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH.
(h) Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable, shall
not impair or invalidate the remainder of this Agreement and the
effect thereof shall be confined to the provision held to be illegal,
invalid or unenforceable.
(i) No Obligation. Nothing contained herein shall be construed as an
obligation on the part of Secured Party to extend or continue to
extend credit to Borrower or Pledgor.
(j) Notice. All notices, requests, demands or other communications
required or permitted to be given pursuant to this Agreement shall be
in writing and given by (i) personal delivery, (ii) expedited delivery
service with proof of delivery, (iii) United States mail, postage
prepaid, registered or certified mail, return receipt requested, or
(iv) telecopy (with receipt thereof confirmed by telecopier) sent to
the intended addressee at the address set forth on die signature page
hereof or to such different address as die addressee shall have
designated by written notice sent pursuant to the terms hereof and
shall be deemed to have been received either, in the case of personal
delivery, at the time of personal delivery, in the case of expedited
delivery service, as of the date of first attempted delivery at the
address and in the manner provided herein, in the case of mail, upon
deposit in a depository receptacle under the care and custody of the
United States Postal Service, or in the case of telecopy, upon
receipt. Either party shall have the right to change its address for
notice hereunder to any other location within the continental United
States by notice to the other party of such new address at least
thirty (30) days prior to the effective date of such new address.
(k) Binding Effect and Assignment. This Agreement (i) creates a continuing
security interest in die Collateral, (ii) shall be binding on Pledgor
and the heirs, executors, administrators, personal representatives,
successors and assigns of Pledgor, and (iii) shall inure to the
benefit of Secured Party and its successors and assigns. Without
limiting the generality of the foregoing, Secured Party may pledge,
assign or otherwise transfer the Indebtedness and its rights under
this Agreement and any of the other Financing Documents to any other
party. Pledgor's rights and obligations hereunder may not be assigned
or otherwise transferred without the prior written consent of Secured
Party.
(1) Termination. It is contemplated by the parties hereto that from time
to time there may be no outstanding Indebtedness, but notwithstanding
such occurrences, this Agreement shall remain valid and shall be in
full force and effect as to subsequent outstanding Indebtedness. Upon
(i) the satisfaction in full of the Indebtedness, (ii) the termination
or expiration of any commitment of Secured Party to extend credit to
Pledgor and/or Borrower, (iii) written request for the termination
hereof delivered by Pledgor to Secured Party, and (iv) written release
delivered by Secured Party to Pledgor, this Agreement and the security
interests created hereby shall terminate. Upon termination of this
Agreement and Pledgor's written request, Secured Party will, at
Pledgor's sole cost and expense, return to Pledgor such of the
Collateral as shall not have been sold or otherwise disposed of or
applied pursuant to the terms. hereof and execute and deliver to
Pledgor such documents as Pledgor shall reasonably request to evidence
such termination.
(m) Cumulative Rights. All rights and remedies of Secured Party hereunder
are cumulative of each other and of every other right or remedy which
Secured Party may otherwise have at law or in equity or under any of
the other Financing Documents, and the exercise of one or more of such
rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of any other rights or remedies.
(n) Gender and Number. Within this Agreement words of any gender shall be
held and construed to include the other gender, and words in the
singular number shall be held and construed to include the plural and
words in the plural number shall be held and construed to include the
singular, unless in each instance the context requires otherwise.
(o) Descriptive Heading . The headings in this Agreement are for
convenience only and shall in no way enlarge, limit or define the
scope or meaning of the various and several provisions hereof
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
EXECUTED as of the date first written above.
PLEDGOR:
Xxxxxxx X. Xxxxxx
Telecopy No.:
Xxxxx X. Xxxxxxxxx
Telecopy No.:
Xxxxxx Xxxxxxx
Telecopy No.:
SECURED PARTY:
MARKPOINT EQUITY GROWTH FUND, J.V.
By: The Markpoint Company, its Managing Venturer
By:
Name: Xxx Xxxxxx
Title: President
Secured Party's Address:
Markpoint Equity Growth Fund, J.V.
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
ATTN: Xxx Xxxxxx
Telecopy No. 972-490-1980
THE RIGHTS AND REMEDIES OF MARKPOINT EQUITY GROWTH FUND, J.V. HEREUNDER ARE
SUBJECT TO A SUBORDINATION AGREEMENT AMONG MARKPOINT EQUITY GROWTH FUND, J.V.
AND BANK ONE INDIANA, NA. DATED AS OF EVEN DATE HEREWITH.
REPLACEMENT PROMISSORY NOTE
$1,250,000 May 2, 2000
FOR VALUE RECEIVED, on or before May 2, 2005 ("Maturity Date") the
undersigned (hereinafter referred to as "Borrower"), promises to pay to the
order of MARKPOINT EQUITY GROWTH FUND, J.V. ("MEGF") at its offices in Dallas
County, Texas, at 00000 Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, the
principal amount of ONE MILLION TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($1,250,000) ("Total Principal Amount"), or such amount less than the Total
Principal Amount which is outstanding from time to time if the total amount
outstanding under this Promissory Note ("Note") is less than the Total Principal
Amount, together with interest at the rate set forth below on such portion of
the Total Principal Amount which has been advanced to Borrower from the date
advanced until paid. All defined terms used herein but not defined herein shall
have the meanings ascribed to them in that certain Note Purchase Agreement
between Borrower and MEGF dated as of the date hereof.
Interest Rate. The unpaid principal amount of this Note shall bear interest
at a fixed rate per annum equal to thirteen and one half percent (13.5%),
calculated on the basis of actual days elapsed but computed as if each year
consisted of 360 days.
Repayment Terms. The principal of and all accrued but unpaid interest on
this Note shall be due and payable as follows:
(a) interest shall be due and payable monthly as it accrues, commencing on
the 1st day of June, 2000 and continuing on the 1st day of each successive
month thereafter during the term of this Note; and
(b) the outstanding principal balance of this Note, together with all
accrued but unpaid interest, shall be due and payable on the Maturity Date.
Borrower authorizes MEGF to effect all payments due under this Note and to
collect all sums due hereunder (whether by acceleration or otherwise) by
debiting Borrower's account number 1588262467, ABA No. 000000000 at Bank One,
Texas, N.A. (the "Debit Account") through the Automated Clearing House system
("ACH"). Such authorization shall not affect the obligations of Borrower to make
all payments when due hereunder. Borrower represents and agrees that the Debt
Account shall only be used for the payment of this Note. If on my payment date
there are insufficient funds in the Debit Account to make such payments in full,
Borrower agrees to pay TMC on demand a $100.00 manual processing fee. All
payments of principal of or interest on this Note shall be made in lawful money
of the United States of America in immediately available funds, and, if such
payments are not made via ACH, shall be made at MEGF's address indicated above,
or such other place as the holder of this Note shall designate in writing to
Borrower. If any payment of principal or interest on this Note shall become due
on a day which is not a Business Day (as hereinafter defined), such payment
shall be made on the next succeeding Business Day and any such extension of time
shall be included in computing interest in connection with such payment. As used
herein, the term "Business Day" shall mean my day other than a Saturday, Sunday
or any other day on which MEGF's office in Dallas Texas is closed. All regularly
scheduled payments of the indebtedness evidenced by this Note shall be applied
first to any accrued but unpaid interest then due and payable hereunder and then
to the principal mount then due and payable. The books and records of MEGF shall
be prima facie evidence of all outstanding principal of and accrued and unpaid
interest on this Note. To the extent that any interest is not paid on or before
the fifth day after it becomes due and payable, MEGF may, at its option, add
such accrued interest to the principal of this Note. Notwithstanding anything
herein to the contrary, upon an Event of Default (as hereinafter defined) or at
maturity, whether by acceleration or otherwise, all principal of this Note
shall, at the option of MEGF, bear interest at the higher of 18% or the Maximum
Rate (as defined hereinbelow) any further action or notice to the Borrower.
Prepayment without Penalty. Borrower may from time to time prepay all or any
portion of the outstanding principal balance of this Note without premium or
penalty. Any partial prepayment shall be applied toward the payment of the
principal last maturing on this Note in the inverse order of maturity, without
reducing the amount or altering the due date of the remaining payments due
hereunder.
Loan Documents. This Note is subject to the terms and conditions set forth in
that certain Note Purchase Agreement of even date herewith by and between
Borrower and MEOF (the "Note Purchase Agreement"). This Note, the Note Purchase
Agreement and all other documents evidencing, securing, governing, guaranteeing
and/or pertaining to this Note are hereinafter collectively referred to as the
"Loan Document". The holder of this Note is entitled to the benefits and
security provided in the Loan Documents.
Purpose. Borrower agrees that no proceeds of this Note shall be used for
personal, family or household purposes, and that all of such proceeds shall be
used solely for the investment purpose of the acquisition of a substantial
portion of the assets of the Target Companies.
Event of Default. Borrower agrees that upon the occurrence of any event of
default specified in the Note Purchase Agreement or any of the other Loan
Documents, the holder of this Note may, at its option, pursue any and all other
rights, remedies and recourses available to the holder hereof, including but not
limited to any such rights, remedies or recourses under the other Loan
Documents, at law or in equity. The failure to exercise the option to accelerate
the maturity of this Note or any other right remedy or recourse available to the
holder hereof upon the occurrence of an Event of Default hereunder shall not
constitute a waiver of the right of the holder of this Note to exercise the same
at that time or at any subsequent time with respect to such Event of Default or
any other Event of Default. The rights, remedies and recourses of the holder
hereof, as provided in this Note and in any of the other Loan Documents, shall
be cumulative and concurrent and may be pursued separately, successively or
together as often as occasion therefore shall arise, at the sole discretion of
the holder hereof. The acceptance by the holder hereof of any payment under this
Note which is less than the payment in full of all amounts due and payable at
the time of such payment shall not (i) constitute a waiver of or impair, reduce,
release or extinguish any right, remedy or recourse of the holder hereof, or
nullify any prior exercise of any such right, remedy or recourse, or (ii)
impair, reduce, release or extinguish the obligations of any party liable under
any of the other Loan Documents as originally provided herein or therein.
Compliance with Usury Laws. Notwithstanding any provision to the contrary
contained in this Note, the Borrower shall not be required to pay, and Purchaser
shall not be permitted to contract for, take, reserve, charge or receive, any
compensation which constitutes interest under applicable law in excess of the
maximum amount of interest permitted by law ("Excess Interest"). If any Excess
Interest is provided for or determined by a court of competent jurisdiction to
have been provided for in this Note or otherwise contracted for, taken,
reserved, charged or received, then in such event: (a) the provisions of this
Note shall govern and control; (b) the Borrower shall not be obligated to pay
any Excess Interest; (c) any Excess Interest that MEGF may have contracted for,
taken, reserved, charged or received hereunder shall be, at MEGF's option, (i)
applied as a credit against the outstanding principal balance of the Loan or
accrued and unpaid interest (not to exceed the maximum amount permitted by law),
(ii) refunded to the payor thereof, or (iii) any combination of the foregoing;
(d) the interest provided for shall be automatically reduced to the maximum
lawful rate allowed from time to time under applicable law (the "Maximum Rate"),
and this Note shall be deemed to have been, and shall be, reformed and modified
to reflect such reduction; and (e) the Borrower shall have no action against
MEGF for any damages arising due to any Excess Interest. Notwithstanding the
foregoing, if for any period of time interest on any part of the Loan is
calculated at the Maximum Rate rather than the applicable rate under this Note,
and thereafter such applicable rate becomes less than the Maximum Rate, the rate
of interest payable on such part of the Loan shall remain at the Maximum Rate
until MEGF shall have received the amount of interest which MEGF would have
received during such period on such part of the Loan had the rate of interest
not been limited to the Maximum Rate during such period. All sums paid or agreed
to be paid hereunder or under the Loan Documents for the use, forbearance or
detention of sums due shall, to the extent permitted by applicable law, be
amortized, pro-rated, allocated and spread throughout the full term of the Loan
until payment in full so that the rate or amounts of interest on account of the
Loan does not exceed the Maximum Rate. The terms of this Section shall be deemed
incorporated into each of the Loan Documents and any other document or
instrument between the Borrower and MEGF or directed to the Borrower by MEGF,
whether or not specific reference to this Section is made.
Costs of Collection; Waivers. If this Note is placed in the hands of an attorney
for collection, or is collected in whole or in part by suit or through probate,
bankruptcy or other legal proceedings of any kind, Borrower agrees to pay, in
addition to all other sums payable hereunder, all costs and expenses of
collection, including but not limited to reasonable attorneys' fees. Borrower
and any and all endorsers and guarantors of this Note severally waive
presentment for payment, notice of nonpayment, protest, demand, notice of
protest, notice of intent to accelerate, notice of acceleration and dishonor,
diligence in enforcement and indulgences of every kind and without further
notice hereby agree to renewals, extensions, exchanges or releases of
collateral, taking of additional collateral indulgences or partial payments,
either before or after maturity.
GOVERNING LAW; VENUE; SUBMISSION TO JURISDICTION. THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF. THIS NOTE IS PERFORMABLE
IN DALLAS COUNTY, TEXAS. BORROWER AGREES THAT DALLAS COUNTY, TEXAS SHALL BE THE
EXCLUSIVE VENUE FOR LITIGATION OF ANY DISPUTE OR CLAIM ARISING UNDER OR RELATING
TO THIS NOTE, AND THAT SUCH COUNTY IS A CONVENIENT FORUM IN WHICH TO DECIDE ANY
SUCH DISPUTE OR CLAIM. BORROWER CONSENTS TO THE PERSONAL JURISDICTION OF THE
STATE AND FEDERAL COURTS LOCATED IN DALLAS COUNTY, TEXAS FOR THE LITIGATION OF
ANY SUCH DISPUTE OR CLAIM. BORROWER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
WAIVER OF JURY TRIAL. BORROWER HEREBY IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT
PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY OR ASSOCIATED
HEREWITH.
FINAL AGREEMENT. THIS NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN MEGF AND BORROWER WITH RESPECT TO THE TRANSACTIONS
CONTEMPLATED HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
BORROWER:
CHAMPION TRAILER COMPANY, L.P.
By: Durham Xxxxxxxxx & Associates, LLC,
its general partner
By: ______________________
Name: Xxxxxxx X. Xxxxxx
Title: Managing Member
