EXHIBIT 10.08
COMMERCIAL SECURITY AGREEMENT
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Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
$1,000,000.00 11-17-1999 11-17-2000 4000013363 ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
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References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item
Any item above containing "***"has been omitted due to text length
limitations.
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BORROWER: Avid Sportswear and Golf Corp. LENDER: First State Bank
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GRANTOR: Avid Sportswear and Golf Corp.
Avid Sportswear, Inc.
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THIS COMMERCIAL SECURITY AGREEMENT DATED NOVEMBER 17, 1999, IS MADE AND EXECUTED
AMONG AVID SPORTSWEAR AND GOLF CORP.; AND AVID SPORTSWEAR, INC. ("GRANTOR");
AVID SPORTSWEAR AND GOLF CORP. ("BORROWER"); AND FIRST STATE BANK ("LENDER").
GRANT OF SECURITY INTEREST. FOR VALUABLE CONSIDERATION, GRANTOR GRANTS TO LENDER
A SECURITY INTEREST IN THE COLLATERAL TO SECURE THE INDEBTEDNESS AND AGREES THAT
LENDER SHALL HAVE THE RIGHTS STATED IN THIS AGREEMENT WITH RESPECT TO THE
COLLATERAL, IN ADDITION TO ALL OTHER RIGHTS WHICH LENDER MAY HAVE BY LAW.
COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means
the following described property, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever located, in which
Grantor is giving to Lender a security interest for the payment of the
Indebtedness and performance of all other obligations under the Note and this
Agreement:
ALL INVENTORY, CHATTEL PAPER, ACCOUNTS, EQUIPMENT AND GENERAL INTANGIBLES;
WHETHER ANY OF THE FOREGOING IS OWNED NOW OR ACQUIRED LATER; ALL
ACCESSIONS, ADDITIONS, REPLACEMENTS, AND SUBSTITUTIONS RELATING TO ANY OF
THE FOREGOING; ALL RECORDS OF ANY KIND RELATING TO ANY OF THE FOREGOING;
ALL PROCEEDS RELATING TO ANY OF THE FOREGOING (INCLUDING INSURANCE,
GENERAL INTANGIBLES AND OTHER ACCOUNTS PROCEEDS AND PURCHASE MONEY ON ALL
DOCKER INVENTORY PURCHASED FROM LEVI ▇▇▇▇▇▇▇ AND COMPANY
In addition, the word "Collateral" also includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
(A) All accessions, attachments, accessories, tools, parts, supplies,
replacements and additions to any of the collateral described herein,
whether added now or later.
(B) All products and produce of any of the property described in this
Collateral section.
(C) All accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, or other
disposition of any of the property described in this Collateral section.
(D) All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property described
in this Collateral section, and sums due from a third party who has
damaged or destroyed the Collateral or from that party's insurer, whether
due to judgment, settlement or other process.
(E) All records and data relating to any of the property described in this
Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of Grantor's
right, title, and interest in and to all computer software required to
utilize, create, maintain, and process any such records or data on
electronic media.
Despite any other provision of this Agreement, Lender is not granted, and will
not have, a nonpurchase money security interest in household goods, to the
extent such a security interest would be prohibited by applicable law. In
addition, if because of the type of any Property, Lender is required to give a
notice of the right to cancel under Truth in Lending for the Indebtedness, then
Lender will not have a security interest in such Property unless and until such
a notice is given.
CROSS-COLLATERALIZATION. In addition to the Note, this Agreement secures all
obligations, debts and liabilities, plus interest thereon, of Borrower to
Lender, or any one or more of them, as well as all claims by Lender against
Borrower or any one or more of them, whether now existing or hereafter arising,
whether related or unrelated to the purpose of the Note, whether voluntary or
otherwise, whether due or not due, direct or indirect, absolute or contingent,
liquidated or unliquidated and whether Borrower may be liable individually or
jointly with others, whether obligated as guarantor, surety, accommodation party
or otherwise, and whether recovery upon such amounts may be or hereafter may
become barred by: any statute of limitations, and whether the obligation to
repay such amounts may be or hereafter may become otherwise unenforceable.
(INITIAL HERE /S/ [ILLEGIBLE])
BORROWER'S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under this
Agreement or by applicable law, (A) Borrower agrees that Lender need not tell
Borrower about any action or inaction Lender takes in connection with this
Agreement; (B) Borrower assumes the responsibility for being and keeping
informed about the Collateral; and (C) Borrower waives any defenses that may
arise because of any action or inaction of Lender, including without limitation
any failure of Lender to realize upon she Collateral or any delay by Lender in
realizing upon she Collateral; and Borrower agrees to remain liable under the
Note no matter what action Lender takes or fails to take under this Agreement.
GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (A) this
Agreement is executed at Borrower's request and not at the request of Lender;
(B) Grantor has the full right, power and authority to enter into this Agreement
and to pledge the Collateral to Lender; (C) Grantor has established adequate
means of obtaining from Borrower on a continuing basis information about
Borrower's financial condition; and (D) Lender has made no representation to
Grantor about Borrower or Borrower's creditworthiness.
GRANTOR'S WAIVERS. Grantor waives all requirements of presentment, protest,
demand, and notice of dishonor or non-payment to Grantor, Borrower, or any other
party to the Indebtedness or the Collateral. Lender may do any of the following
with respect to any obligation of any Borrower, without first obtaining the
consent of Grantor: (A) grant any extension of time for any payment, (B) grant
any renewal, (C) permit any modification of payment terms or other terms, or (D)
exchange or release any Collateral or other security. No such act or failure to
act shall affect Lender's rights against Grantor or the Collateral.
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RIGHT OF SETOFF. Grantor grants to Lender a contractual security interest in all
Grantor's accounts with Lender (whether checking, savings, or some other
account). This includes all accounts Grantor holds jointly with someone else and
all accounts Grantor may open in the future. However, this does not include any
▇▇▇ or ▇▇▇▇▇ accounts, or any trust accounts for which the grant of a security
interest would be prohibited by law. Grantor authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With
respect to the Collateral, Grantor represents and warrants to Lender that:
PERFECTION OF SECURITY INTEREST. Grantor agrees to execute financing
statements and to take whatever other actions are requested by Lender to
perfect and continue Lender's security interest in the Collateral. Upon
request of Lender, Grantor will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Grantor will note
Lender's interest upon any and all chattel paper if not delivered to
Lender for possession by Lender. This Is a continuing Security Agreement
and will continue In effect even though all or any part of the
Indebtedness is paid In full and even though for a period of time Borrower
may not be indebted to Lender.
NOTICES TO LENDER. Grantor will notify Lender in writing at Lender's
address shown above (or such other addresses as Lender may designate from
time to time) prior to any (1) change in Grantor's name, (2) change in
Grantor's assumed business name(s), (3) change in the management of
Grantor, (4) change in the authorized signer(s), (5) change in Grantor's
principal office address, (6) conversion of Grantor to a new or different
type of business entity, or (7) change in any other aspect of Grantor that
directly or indirectly relates to any agreements between Grantor and
Lender. No change in Grantor's name will take effect until after Lender
has been notified.
NO VIOLATION. The execution and delivery of this Agreement will not
violate any law or agreement governing Grantor or to which Grantor is a
party, and its certificate or articles of incorporation and bylaws do not
prohibit any term or condition of this Agreement.
ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, as defined by the Uniform
Commercial Code, the Collateral is enforceable in accordance with its
terms, is genuine, and fully complies with all applicable laws and
regulations concerning form, content and manner of preparation and
execution, and all persons appearing to be obligated on the Collateral
have authority and capacity to contract and are in fact obligated as they
appear to be on the Collateral. At the time any Account becomes subject to
a security interest in favor of Lender, the Account shall be a good and
valid account representing an undisputed, bona fide indebtedness incurred
by she account debtor, for merchandise held subject to delivery
instructions or previously shipped or delivered pursuant to a contract of
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sale, or for services previously performed by Grantor with or for the
account debtor. So long as this Agreement remains in effect, Grantor shall
not, without Lender's prior written consent, compromise, settle, adjust,
or extend payment under or with regard to any such Accounts. There shall
be no setoffs or counterclaims against any of the Collateral, and no
agreement shall have been made under which any deductions or discounts may
be claimed concerning the Collateral except those disclosed to Lender in
writing.
LOCATION OF THE COLLATERAL. Except in the ordinary course of Grantor's
business, Grantor agrees to keep the Collateral (or to the extent the
Collateral consists of intangible property such as accounts or general
intangibles, the records concerning the Collateral) at Grantor's address
shown above or at such other locations as are acceptable to Lender. Upon
Lender's request, Grantor will deliver to Lender in form satisfactory to
Lender a schedule of real properties and Collateral locations relating to
Grantor's operations, including without limitation the following: (1) all
real property Grantor owns or is purchasing; (2) all real property Grantor
is renting or leasing; (3) all storage facilities Grantor owns, rents,
leases, or uses; and (4) all other properties where Collateral is or may
be located.
REMOVAL OF THE COLLATERAL. Except in the ordinary course of Grantor's
business, including the sales of inventory, Grantor shall not remove the
Collateral from its existing location without Lender's prior written
consent. Grantor shall, whenever requested, advise Lender of the exact
location of the Collateral.
TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, Grantor shall not
sell, offer to sell, or otherwise transfer or dispose of the Collateral.
While Grantor is not in default under this Agreement, Grantor may sell
inventory, but only in the ordinary course of its business and only to
buyers who qualify as a buyer in the ordinary course of business. A sale
in the ordinary course of Grantor's business does not include a transfer
in partial or total satisfaction of a debt or any bulk sale. Grantor shall
not pledge, mortgage, encumber or otherwise permit the Collateral to be
subject to any lien, security interest, encumbrance, or charge, other than
the security interest provided for in this Agreement, without the prior
written consent of Lender. This includes security interests even if junior
in right to the security interests granted under this Agreement. Unless
waived by Lender, all proceeds from any disposition of the Collateral (for
whatever reason) shall be held in trust for Lender and shall not be
commingled with any other funds; provided however, this requirement shall
not constitute consent by Lender to any sale or other disposition. Upon
receipt, Grantor shall immediately deliver any such proceeds to Lender.
TITLE. Grantor represents and warrants to Lender that Grantor holds good
and marketable title to the Collateral, free and clear of all liens and
encumbrances except for the lien of this Agreement. No financing statement
covering any of the Collateral is on file in any public office other than
those which reflect the security interest created by this Agreement or to
which Lender has specifically consented. Grantor shall defend Lender's
rights in the Collateral against the claims and demands of all other
persons.
REPAIRS AND MAINTENANCE. Grantor agrees to keep and maintain, and to cause
others to keep and maintain, the Collateral in good order, repair and
condition at all times while this Agreement remains in effect. Grantor
further agrees to pay when due all claims or work done on, or services
rendered or material furnished in connection with the Collateral so that
no lien or encumbrance may ever attach to or be filed against the
Collateral.
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INSPECTION OF COLLATERAL. Lender and Lender's designated representatives
and agents shall have the right at all reasonable times to examine and
inspect the Collateral wherever located.
TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes,
assessments and liens upon the Collateral, its use or operation, upon this
Agreement, upon any promissory note or notes evidencing the Indebtedness,
or upon any of the other Related Documents. Grantor may withhold any such
payment or may elect to contest any lien if Grantor is in good faith
conducting an appropriate proceeding to contest the obligation to pay and
so long as Lender's interest in the Collateral is not jeopardized in
Lender's sole opinion. If the Collateral is subjected to a lien which is
not discharged within fifteen (15) days, Grantor shall deposit with Lender
cash, a sufficient corporate surety bond or other security satisfactory to
Lender in an amount adequate to provide for the discharge of the lien plus
any interest, costs, reasonable attorneys' fees or other charges that
could accrue as a result of foreclosure or sale of the Collateral. In any
contest Grantor shall defend itself and Lender and shall satisfy any final
adverse judgment before enforcement against the Collateral. Grantor shall
name Lender as an additional obliges under any surety bond furnished in
the contest proceedings. Grantor further agrees to furnish Lender with
evidence that such taxes, assessments, and governmental and other charges
have been paid in full and in a timely manner. Grantor may withhold any
such payment or may elect to contest any lien if Grantor is in good faith
conducting an appropriate proceeding to contest the obligation to pay and
so long as Lender's interest in the Collateral is not jeopardized.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly
with all laws, ordinances, rules and regulations of all governmental
authorities, now or hereafter in effect, applicable to the ownership,
production, disposition, or use of the Collateral. Grantor may contest in
good faith any such law, ordinance or regulation and withhold compliance
during any proceeding, including appropriate appeals, so long as Lender's
interest in the Collateral, in Lender's opinion, is not jeopardized.
HAZARDOUS SUBSTANCES. Grantor represents and warrants that the Collateral
never has been, and never will be so long as this Agreement remains a lien
on the Collateral, used in violation of any Environmental Laws or for the
generation, manufacture, storage, transportation, treatment, disposal,
release or threatened release of any Hazardous Substance. The
representations and warranties contained herein are based on Grantor's due
diligence in investigating the Collateral for Hazardous Substances.
Grantor hereby (1) releases and waives any future claims against Lender
for indemnity or contribution in the event Grantor becomes liable for
cleanup or other costs under any Environmental Laws, and (2) agrees to
indemnify and hold harmless Lender against any and all claims and losses
resulting from a breach of this provision of this Agreement. This
obligation to indemnify shall survive the payment of the Indebtedness and
the satisfaction of this Agreement.
MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all
risks insurance, including without limitation fire, theft and liability
coverage together with such other insurance as Lender may require with
respect to the Collateral, in form, amounts, coverages and basis
reasonably acceptable to Lender and issued by a company or companies
reasonably acceptable to Lender. Grantor, upon request of Lender, will
deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that
coverages will not be cancelled or diminished without at least thirty (30)
days' prior written notice to Lender and not including any disclaimer of
the insurer's liability for failure to give such a notice. Each insurance
policy also shall include an endorsement providing that coverage in favor
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of Lender will not be impaired in any way by any act, omission or default
of Grantor or any other person. In connection with all policies covering
assets in which Lender holds or is offered a security interest, Grantor
will provide Lender with such loss payable or other endorsements as Lender
may require. If Grantor at any time fails to obtain or maintain any
insurance as required under this Agreement, Lender may (but shall not be
obligated to) obtain such insurance as Lender deems appropriate, including
if Lender so chooses "single interest insurance," which will cover only
Lender's interest in the Collateral.
APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender of
any loss or damage to the Collateral. Lender may make proof of loss if
Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof of expenditure, pay or reimburse
Grantor from the proceeds for the reasonable cost of repair or
restoration. If Lender does not consent to repair or replacement of the
Collateral, Lender shall retain a sufficient amount of the proceeds to pay
all of the Indebtedness, and shall pay the balance to Grantor. Any
proceeds which have not been disbursed within six (6) months after their
receipt and which Grantor has not committed to the repair or restoration
of the Collateral shall be used to prepay the Indebtedness.
INSURANCE RESERVES. Lender may require Grantor to maintain with Lender
reserves for payment of insurance premiums, which resumes shall be created
by monthly payments from Grantor of a sum estimated by Lender to be
sufficient to produce, at least fifteen (15) days before the premium due
date, amounts at least equal to the insurance premiums to be paid. If
fifteen (15) days before payment is due, the reserve funds are
insufficient, Grantor shall upon demand pay any deficiency to Lender. The
reserve funds shall be held by Lender as a general deposit and shall
constitute a non-interest-bearing account which Lender may satisfy by
payment of the insurance premiums required to be paid by Grantor as they
become due. Lender does not hold the reserve funds in trust for Grantor,
and Lender is not the agent of Grantor for payment of the insurance
premiums required to be paid by Grantor. The responsibility for the
payment of premiums shall remain Grantor's sole responsibility.
INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to
Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request including the following: (1)
the name of the insurer; (2) the risks insured; (3) the amount of the
policy; (4) the property insured; (5) the then current value on the basis
of which insurance has been obtained and the manner of determining that
value; and (6) the expiration date of the policy. In addition, Grantor
shall upon request by Lender (however not more open than annually) have an
independent appraiser satisfactory to Lender determine, as applicable, the
cash value or replacement cost of the Collateral.
GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral. Until otherwise notified by Lender, Grantor may collect any of
the Collateral consisting of accounts. At any time and even though no Event of
Default exists, Lender may exercise its rights to collect the accounts and to
notify account debtors to make payments directly to Lender for application to
the Indebtedness. If Lender at any time has possession of any Collateral,
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whether before or aver an Event of Default, Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral if
Lender takes such action for that purpose as Grantor shall request or as Lender,
in Lender's sole discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be deemed to be a
failure to exercise reasonable care. Lender shall not be required to take any
steps necessary to preserve any rights in the Collateral against prior parties,
nor to protect, preserve or maintain any security interest given to secure the
indebtedness.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Grantor fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Grantor's failure to discharge or pay when due any amounts
Grantor is required to discharge or pay under this Agreement or any Related
Documents, Lender on Grantor's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on the Collateral and paying all
costs for insuring, maintaining and preserving the Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Grantor. All such expenses will become a part
of the Indebtedness and, at Lender's option, will (A) be payable on demand;
(B)be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity. The Collateral also will secure payment of these amounts. Such right
shall be in addition to all other rights and remedies to which Lender may be
entitled upon Default.
DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:
PAYMENT DEFAULT. Borrower fails to make any payment when due under the
Indebtedness.
OTHER DEFAULTS. Borrower or Grantor fails to comply with or to perform any
other term, obligation, covenant or condition contained in this Agreement
or in any of the Related Documents or to comply with or to perform any
term, obligation, covenant or condition contained in any other agreement
between Lender and Borrower or Grantor.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by Borrower or Grantor or on Borrower's or Grantor's
behalf under this Agreement, the Note, or the Related Documents is false
or misleading in any material respect, either now or at the time made or
furnished or becomes false or misleading at any time thereafter.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
collateral document to create a valid and perfected security interest or
lien) at any time and for any reason.
INSOLVENCY. The dissolution or termination of Borrower's or Grantor's
existence as a going business, the insolvency of Borrower or Grantor, the
appointment of a receiver for any part of Borrower's or Grantor's
property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower or Grantor.
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CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or Grantor
or by any governmental agency against any collateral securing the
Indebtedness. This includes a garnishment of any of Borrower's or
Grantor's accounts, including deposit accounts, with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by
Borrower or Grantor as to the validity or reasonableness of the claim
which is the basis of the creditor or forfeiture proceeding and if
Borrower or Grantor gives Lender written notice of the creditor or
forfeiture proceeding and deposits with Lender monies or a surety bond for
the creditor or forfeiture proceeding, in an amount determined by Lender,
in its sole discretion, as being an adequate reserve or bond for the
dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to Guarantor of any of the Indebtedness or Guarantor dies or
becomes incompetent.
ADVERSE CHANGE. A material adverse change occurs in Borrower's or
Grantor's financial condition, or Lender believes the prospect of payment
or performance of the Indebtedness is impaired.
INSECURITY. Lender in good faith believes itself insecure.
CURE PROVISIONS. If any default, other than a default in payment, is
curable and if Grantor has not been given a notice of a breach of the same
provision of this Agreement within the preceding twelve (12) months, it
may be cured (and no event of default will have occurred) if Grantor,
after receiving written notice from Lender demanding cure of such default:
(1) cures the default within ten (10) days; or (2) if the cure requires
more than ten (10) days, immediately initiates steps which Lender deems in
Lender's sole discretion to be sufficient to cure the default and
thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Florida Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:
ACCELERATE INDEBTEDNESS. With respect to each obligation constituting the
Indebtedness as to which an Event of Default has occurred, Lender may
declare the entire unpaid principal balance on and all accrued unpaid
interest on such obligation or obligations (including, without limitation,
the Note) immediately due and payable unless notice and an opportunity to
cure is required by Section 425.105, Wis. Stats., and in that event, all
amounts due under this Agreement shall become payable if such default is
not cured, as provided by that statute, within fifteen (15) calendar days
after Lender has mailed such notice.
ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all
or any portion of the Collateral and any and all certificates of title and
other documents relating to the Collateral. Lender may require Grantor to
assemble the Collateral and make it available to Lender at a place to be
designated by Lender. Lender also shall have full power to enter upon the
property of Grantor to take possession of and remove the Collateral. If
the Collateral contains other goods not covered by this Agreement at the
time of repossession, Grantor agrees Lender may take such other goods,
provided that Lender makes reasonable efforts to return them to Grantor
after repossession.
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SELL THE COLLATERAL. Lender shall have full power to sell, lease,
transfer, or otherwise deal with the Collateral or proceeds thereof in
Lender's own name or that of Grantor. Lender may sell the Collateral at
public auction or private sale. Unless the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Lender will give Grantor reasonable notice of the time after which any
private sale or any other intended disposition of the Collateral is to be
made. The requirements of reasonable notice shall be met if such notice is
given at least fifteen (15) days before the time of the sale or
disposition. All expenses relating to the disposition of the Collateral,
including without limitation the expenses of retaking, holding, insuring,
preparing for sale and selling the Collateral, shall become a part of the
Indebtedness secured by this Agreement and shall be payable on demand,
with interest at the Note rate from date of expenditure until repaid.
APPOINT RECEIVER. In the event of a suit being instituted to foreclose
this Agreement, Lender shall be entitled to apply at any time pending such
foreclosure suit to the court having jurisdiction thereof for the
appointment of a receiver of any or all of the Collateral, and of all
rents, incomes, profits, issues and revenues thereof, from whatsoever
source. The parties agree that the court shall forthwith appoint such
receiver with the usual powers and duties of receivers in like cases. Such
appointment shall be made by the court as a matter of strict right to
Lender and without notice to Grantor, and without reference to the
adequacy or inadequacy of the value of the Collateral, or to Grantor's
solvency or any other party defendant to such suit. Grantor hereby
specifically waives the right to object to the appointment of a receiver
and agrees that such appointment shall be made as an admitted equity and
as a matter of absolute right to Lender, and consents to the appointment
of any officer or employee of Lender as receiver. Lender shall have the
right to have a receiver appointed to take possession of all or any part
of the Collateral, with the power to protect and preserve the Collateral,
to operate the Collateral preceding foreclosure or sale, and to collect
the Rents from the Collateral and apply the proceeds, over and above the
cost of the receivership, against the Indebtedness. The receiver may serve
without bond if permitted by law. Lender's right to the appointment of a
receiver shall exist whether or not the apparent value of the Collateral
exceeds the Indebtedness by a substantial amount. Employment by Lender
shall not disqualify a person from serving as a receiver.
COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a
receiver, may collect the payments, rents, income, and revenues from the
Collateral. Lender may at any time in Lender's discretion transfer any
Collateral into Lender's own name or that of Lender's nominee and receive
the payments, rents, income, and revenues therefrom and hold the same as
security for the Indebtedness or apply it to payment of the Indebtedness
in such order of preference as Lender may determine. Insofar as the
Collateral consists of accounts, general intangibles, insurance policies,
instruments, chattel paper, chases in action, or similar property, Lender
may demand, collect, receipt for, settle, compromise, adjust, ▇▇▇ for,
foreclose, or realize on the Collateral as Lender may determine, whether
or not Indebtedness or Collateral is then due. For these purposes, Lender
may, on behalf of and in the name of Grantor, receive, open and dispose of
mail addressed to Grantor; change any address to which mail and payments
are to be sent; and endorse notes, checks, drafts, money orders, documents
of title, instruments and items pertaining to payment, shipment, or
storage of any Collateral. To facilitate collection, Lender may notify
account debtors and obligors on any Collateral to make payments directly
to Lender.
OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Borrower for any deficiency remaining
on the Indebtedness due to Lender after application of all amounts
9
received from the exercise of the rights provided in this Agreement.
Borrower shall be liable for a deficiency even if the transaction
described in this subsection is a sale of accounts or chattel paper.
OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and remedies
of a secured creditor under the provisions of the Uniform Commercial Code,
as may be amended from time to time. In addition, Lender shall have and
may exercise any or all other rights and remedies it may have available at
law, in equity, or otherwise.
ELECTION OF REMEDIES. Except as may be prohibited by applicable law, all of
Lender's rights and remedies, whether evidenced by this Agreement, the Related
Documents, or by any other writing, shall be cumulative and may be exercised
singularly or concurrently. Election by Lender to pursue any remedy will not bar
any other remedy,. and an election to make expenditures or to take action to
perform an obligation of Grantor under this Agreement, after failure to perform,
shall not affect Lender's right to declare a default and exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
ATTORNEYS' FEES; EXPENSES. Grantor agrees to pay upon demand all of
Lender's costs and expenses, including Lender's reasonable attorneys' fees
and Lender's legal expenses, incurred in connection with the enforcement
of this Agreement. Lender may hire or pay someone else to help enforce
this Agreement, and Grantor shall pay the costs and expenses of such
enforcement. Costs and expenses include Lender's reasonable attorneys'
fees and legal expenses whether or not there is a lawsuit, including
reasonable attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Grantor
also shall pay all court costs and such additional fees as may be directed
by the court.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
GOVERNING LAW. This Agreement will be governed by, construed and enforced
in accordance with federal law and the laws of the State of Florida. This
Agreement has been accepted by Lender in the State of Florida.
CHOICE OF VENUE. If there is a lawsuit, Grantor agrees upon Lender's
request to submit to the jurisdiction of the courts of Sarasota County,
State of Florida.
JOINT AND SEVERAL LIABILITY. All obligations of Borrower and Grantor under
this Agreement shall be joint and several, and all references to Grantor
shall mean each and every Grantor, and all references to Borrower shall
mean each and every Borrower. This means that each Borrower and Grantor
signing below is responsible for all obligations in this Agreement. Where
any one or more of the parties is a corporation, partnership, limited
10
liability company or similar entity, it is not necessary for Lender to
inquire into the powers of any of the officers, directors, partners,
members, or other agents acting or purporting to act on the entity's
behalf, and any obligations made or created in reliance upon the professed
exercise of such powers shall be guaranteed under this Agreement.
NO WAIVER BY LENDER. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed
Lender. No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Agreement shall not prejudice or constitute
a waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Grantor, shall
constitute a waiver of any of Lender's rights or of any of Grantor's
obligations as to any future transactions. Whenever the consent of Lender
is required under this Agreement, the granting of such consent by Lender
in any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent may
be granted or withheld in the sole discretion of Lender.
NOTICES. Any notice required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered, when
actually received by telefacsimile (unless otherwise required by law),
when deposited with a nationally recognized overnight courier, or, if
mailed, when deposited in the United States mail, as first class,
certified or registered mail postage prepaid, directed to the addresses
shown near the beginning of this Agreement. Any party may change its
address for notices under this Agreement by giving written notice to the
other parties, specifying that the purpose of the notice is to change the
party's address. For notice purposes, Grantor agrees to keep Lender
informed at all times of Grantor's current address. Unless otherwise
provided or required by law, if there is more than one Grantor, any notice
given by Lender to any Grantor is deemed to be notice given to all
Grantors.
POWER OF ATTORNEY. Grantor hereby appoints Lender as Grantor's irrevocable
attorney-in-fact for the purpose of executing any documents necessary to
perfect or to continue the security interest granted in this Agreement.
Lender may at any time, and without further authorization from Grantor,
file a carbon, photographic or other reproduction of any financing
statement or of this Agreement for use as a financing statement. Grantor
will reimburse Lender for all expenses for the perfection and the
continuation of the perfection of Lender's security interest in the
Collateral.
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be illegal, invalid, or unenforceable as to any person
or circumstance, that finding shall not make the offending provision
illegal, invalid, or unenforceable as to any other person or circumstance.
If feasible, the offending provision shall be considered modified so that
it becomes legal, valid and enforceable. If the offending provision cannot
be so modified, it shall be considered deleted from this Agreement. Unless
otherwise required by law, the illegality, invalidity, or unenforceability
of any provision of this Agreement shall not affect the legality, validity
or enforceability of any other provision of this Agreement.
SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this
Agreement on transfer of Grantor's interest, this Agreement shall be
binding upon and inure to the benefit of the parties' their successors and
assigns. If ownership of the Collateral becomes vested in a person other
11
than Grantor, Lender, without notice to Grantor, may deal with Grantor's
successors with reference to this Agreement and the Indebtedness by way of
forbearance or extension without releasing Grantor from the obligations of
this Agreement or liability under the Indebtedness.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, and agreements made by Grantor in this Agreement shall survive
the execution and delivery of this Agreement, shall be continuing in
nature, and shall remain in full force and effect until such time as
Borrower's Indebtedness shall be paid in full.
TIME IS OF THE ESSENCE. Time Is of the essence in the performance of this
Agreement.
WAIVE JURY. All parties to this Agreement hereby waive the right to any
jury trial in any action, proceeding, or counterclaim brought by any party
against any other party.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code:
ACCOUNT. The word "Account" means a trade account, account receivable, other
receivable, or other right to payment for goods sold or services rendered owing
to Grantor (or to a third party grantor acceptable to Lender).
AGREEMENT. The word "Agreement" means this Commercial Security Agreement, as
this Commercial Security Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Commercial Security
Agreement from time to time.
BORROWER. The word "Borrower" means Avid sportswear and Golf Corp., and all
other persons and entities signing the Note in whatever capacity.
COLLATERAL. The word "Collateral" means all of Grantor's right, title and
interest in and to all the Collateral as described in the Collateral Description
section of this Agreement.
DEFAULT. The word "Default" means the Default set forth in this Agreement in the
section titled "Default".
ENVIRONMENTAL LAWS. The words "Environmental Laws". mean any and all state,
federal and local statutes, regulations and ordinances relating to the
protection of human health or the environment, including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments
and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARAN), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other
applicable state or federal laws, rules, or regulations adopted pursuant
thereto.
EVENT OF DEFAULT. The words "Event of Default" mean any of the Events of Default
set forth in this Agreement in the Default section of this Agreement.
GRANTOR. The word "Grantor" means Avid Sportswear and Golf Corp.; and Avid
Sportswear, Inc.
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GUARANTOR. The word "Guarantor" means any guarantor, surety, or accommodation
party of any or all of the Indebtedness.
HAZARDOUS SUBSTANCES. The words "Hazardous Substances". mean materials that,
because of their quantity, concentration or physical, chemical or infectious
characteristics, may cause or pose a present or potential hazard to human health
or the environment when improperly used, treated, stored, disposed of,
generated, manufactured, transposed or otherwise handled. The words "Hazardous
Substances". are used in their very broadest sense and include without
limitation any and all hazardous or toxic substances, materials or waste as
defined by or listed under the Environmental Laws. The term "Hazardous
Substances" also includes, without limitation, petroleum and petroleum
by-products or any fraction thereof and asbestos.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by the
Note or Related Documents, including all principal and interest together with
all other indebtedness and costs and expenses for which Borrower is responsible
under this Agreement or under any of the Related Documents. In addition, and
without limitation, the term "Indebtedness" includes all amounts Identified in
the Documents.
LENDER. The word "Lender" means First State Bank, its successors and assigns.
NOTE. The word "Note". means the Note executed by Borrower in the principal
amount of $1,000,000.00 dated November 17, 1999, together with all renewals of,
extensions of, modifications of, refinancings of, consolidations of, and
substitutions for the note or credit agreement.
RELATED DOCUMENTS. The words "Related Documents" mean all promissory notes,
credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.
BORROWER AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
COMMERCIAL SECURITY AGREEMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED
NOVEMBER 17, 1999. THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT
THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED
INSTRUMENT ACCORDING TO LAW.
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GRANTOR:
AVID SPORTSWEAR AND GOLF CORP.
BY: (SEAL)
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President of Avid Sportswear and
Golf Corp.
AVID SPORTSWEAR, INC.
BY: (SEAL)
--------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President of Avid Sportswear
Inc.
BORROWER:
AVID SPORTSWEAR AND GOLF CORP.
BY: (SEAL)
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President of Avid Sportswear and
Golf Corp.
