EXHIBIT 10.12
SECURITY AGREEMENT
(ACCOUNTS RECEIVABLE
INVENTORY AND EQUIPMENT)
BETWEEN
FINOVA CAPITAL CORPORATION
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AND
PRIVATE LABEL COSMETICS, INC.
FASHION LABORATORIES, INC.
P.L.C. SPECIALTIES, INC. and
INTERNATIONAL COSMETIC GROUP, INC.
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This Security Agreement, made and entered into in New York,
New York, this 16th day of February, 1996, by and among PRIVATE LABEL COSMETICS,
INC. ("Private Label"), P.L.C. Specialties, Inc. ("P.L.C"), International
Cosmetic Group, Inc. ("International"), each a corporation existing under and by
virtue of the laws of the State of New Jersey, and FASHION LABORATORIES, INC.
("Fashion"), a corporation existing under and by virtue of the laws of the State
of Delaware, each with their respective principal place of business located at
▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (Private Label, P.L.C., International and
Fashion, hereinafter shall individually and collectively be referred to as
"Borrower") and FINOVA CAPITAL CORPORATION, a Delaware corporation, with a place
of business located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
("FINOVA"). This Agreement sets forth the terms and conditions upon which FINOVA
may, in its sole and absolute discretion, make loans, advances and other
financial accommodations to or for the benefit of Borrower upon the security
referred to herein.
Section 1. DEFINED TERMS
1.1 All terms used herein which are defined in Article 1 or
Article 9 of the Uniform Commercial Code (the "UCC") shall have the same meaning
as given therein unless otherwise defined in this Agreement. All references to
the plural shall also mean the singular.
1.2 "Account" or "Accounts" shall mean all of Borrower's
present and hereafter created accounts receivable, contract rights, general
intangibles, security deposits, trade styles, trademarks, chattel paper, notes,
drafts, acceptances, leases, lease payments, rents, tax refunds, options to
purchase real or personal property, securities, stock options, customer lists,
insurance claims, patents, patent applications, documents, instruments,
copyrights, claims, and any other choses in action, as such terms may be defined
in the UCC, including, without limitation, all obligations for the payment of
money arising out of Borrower's sale, lease or other disposition of goods or
other property or Borrower's rendition of services, and to all of Borrower's
merchandise which is represented thereby whether delivered or undelivered, and
to all proceeds thereof including, but not limited to, the proceeds of any
insurance thereon whether or not specifically assigned to FINOVA.
1.3 "Account Debtor" shall mean each debtor or obligor in
any way obligated on or in connection with any Account.
1.4 "Collateral" shall have the meaning set forth in
Section 4.1 hereof.
1.5 "Costs and Expenses" shall include, but not be limited
to commissions, fees, appraisal fees, taxes, title insurance premiums, internal
and external audit expenses for routine and non-routine audits, field
examination expenses, filing, recording and search expenses, reasonable
attorney's fees and disbursements (as may be incurred with respect to the
effectuation of this Agreement or any claim of any nature or litigation
whatsoever arising out of or as a result of the interpretation of this
Agreement or the financing provided for hereunder, including, but not limited
to, all fees and expenses for the service and filing of papers, premiums
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on bonds and undertakings, fees of marshals, sheriffs, custodians, auctioneers
and others, travel expenses and all court costs and collection charges),
Facility Fees (as defined herein), postage, wire transfer fees, check dishonor
fees and other out of pocket expenses arising out of or relating to the
negotiations, preparation, consummation, administration and enforcement of this
Agreement or any other agreement between Borrower and FINOVA including, but not
limited to any guaranty of the Obligations (as defined herein).
1.6 "Default Rate of Interest" shall have the meaning set
forth in Section 3.2 hereof.
1.7 "Eligible Accounts" shall mean Accounts created by
Borrower in the ordinary course of its business arising out of its sale of
goods or rendition of services, which are and at all times shall continue to be
acceptable to FINOVA in its sole and absolute discretion. Standards of
eligibility may be fixed and revised from time to time solely by FINOVA in its
exclusive judgment. In determining eligibility, FINOVA may, but need not, rely
on agings, reports and schedules of Accounts furnished by Borrower but reliance
by FINOVA thereon from time to time shall not be deemed to limit its right to
revise standards of eligibility at any time without notice as to both Borrower's
present and future Accounts.
1.8 "Events of Default" shall have the meaning set forth in
Section 8.1 hereof.
1.9 "Facility Fee" shall have the meaning set forth in
Section 3.4 hereof.
1.10 "Line of Credit" as used herein is solely for the
purpose of computing the Facility Fee and does not represent any amount or
amounts available for borrowing purposes nor any limit as to the amount or
amounts available for borrowing purposes, each of which shall be determined at
FINOVA's sole and absolute discretion. Subject to the preceding sentence,
Borrower's Line of Credit is $2,000,000.
1.11 "Net Amount of Eligible Accounts" shall mean the gross
amount of Eligible Accounts less sales, excise or similar taxes, and less
returns, discounts, claims, credits, reserves (as determined by FINOVA in its
sole discretion) and allowances of any nature at any time issued, owing,
granted, outstanding, available or claimed.
1.12 "Obligations" shall mean any and all loans, advances,
accommodations, indebtedness, liabilities, Costs and Expenses and all
obligations of every kind and nature owing by Borrower to FINOVA, however
evidenced, whether as principal, guarantor or otherwise, whether arising under
this Agreement, any supplement hereto, or otherwise, whether now existing or
hereafter arising, whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured, original, renewed, modified or extended, and whether
arising directly or acquired from others (including, without limitation,
wherever applicable, FINOVA's participation or interests in Borrower's
obligations to others) and including, without limitation, FINOVA's charges, of
whatever nature, commissions, interest, expenses, costs and attorneys' fees, all
of which are chargeable to
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Borrower in connection with any of the foregoing.
1.13 "Records" shall have the meaning set forth in
Section 4.1(f) hereof.
1.14 "Renewal Date" shall have the meaning set forth in
Section 9.1 hereof.
1.15 "Service Fee" shall have the meaning set forth in
Section 3.4 hereof.
Section 2. LOANS AND ADVANCES
2.1 FINOVA shall from time to time, in its sole and absolute
discretion, make loans, advances and other financial accommodations to or for
the benefit of Borrower of up to: (a) 80% of the Net Amount of Eligible Accounts
(or such greater or lesser percentage thereof as FINOVA shall, in its sole and
absolute discretion determine); (b) 50% of eligible raw inventory up to an
amount not exceeding $214,500 (as determined by FINOVA in its sole and absolute
discretion and price at the lower of cost or market); and (c) $606,900 (the "M &
E Advance"). The M & E Advance shall be repaid to FINOVA in installments in the
amount of $10,150 per month commencing on the last day of the month in which
this Agreement is executed and delivered to FINOVA and continuing on the last
day of each month thereafter for twenty-three (23) months at which time the
entire balance of the M & E Advance shall be paid to FINOVA. Notwithstanding the
foregoing, FINOVA shall have the right at any time to demand and receive the
immediate repayment of the entire balance of the M & E Advance in the event (a)
of any default or termination under this Agreement; (b) of any reduction in the
value of the Borrower's machinery and equipment; or (c) that FINOVA, in its sole
and absolute discretion, shall consider the M & E Advance insecure.
2.2 All Obligations shall be charged to an account in the
Borrower's name as maintained on FINOVA's books. FINOVA shall render to the
Borrower a monthly statement of its account which statement shall be deemed
correct, accepted by, and conclusively binding upon Borrower as an account
stated, except to the extent that Borrower shall deliver to FINOVA written
notice of any exceptions thereto within thirty (30) days after the date such
statement is rendered.
2.3 All principal, interest, fees, commissions, charges, Costs
and Expenses incurred with or in respect of this Agreement or any supplement or
amendment hereto (all of which shall be cumulative and not exclusive) and any
and all Obligations shall be charged as an advance to Borrower's account as
maintained by FINOVA.
2.4 All Obligations shall be payable at FINOVA's office
specified above or at such other place as FINOVA may hereafter designate from
time to time. If requested, Borrower shall execute and deliver to FINOVA one or
more promissory notes in form and substance satisfactory to FINOVA to further
evidence the Obligations.
Section 3. INTEREST AND FACILITY FEES
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3.1 FINOVA is authorized to charge the Borrower's loan
account as an advance on the first day of each month as follows: (a) all Costs
and Expenses; and (b) interest on Borrower's monthly average loan balance of not
less than $500,000. Interest shall be payable by Borrower to FINOVA at the per
annum Prime Rate (the "Prime Rate") plus 3% (the "Interest Rate"). As used
herein the term "Prime Rate" shall be deemed to mean the prime commercial rate
charged by Citibank, N.A., in effect on the date hereof (whether or not such
rate is the lowest rate available at such bank) and as same may be adjusted
upwards and downwards from time to time. The Interest Rate shall never be less
than six (6%) percent per annum nor greater than the highest rate permitted by
law. Any change in the Interest Rate shall become effective on the first day of
the month following the month in which the Prime Rate shall have been increased
or decreased, as the case may be. The Interest Rate shall be calculated based on
a three hundred sixty (360) day year for the actual number of days elapsed and
shall be charged to Borrower on all obligations. All interest charged or
chargeable to Borrower shall be deemed as an additional advance and shall become
part of the Obligations.
3.2 Borrower agrees that upon the occurrence of any Event of
Default (whether caused by the Borrower, an Account Debtor or others), the
Interest Rate on all Obligations shall immediately convert to the rate of 1/15th
of 1% per day (the "Default Rate of Interest") and all interest accruing
hereunder together with all Obligations shall thereafter be payable upon demand.
3.3 In no event shall the Interest Rate or the Default Rate
of Interest exceed the highest rate permitted under any applicable law or
regulation. If any part or provision of this Agreement is in contravention of
any such law or regulation such part or provision shall be deemed amended to
conform thereto and any payments of interest made in excess of such highest rate
permitted, if any, shall deemed to be payments of principal Obligations to the
extent of such excess.
3.4 Upon the execution and delivery of this Agreement,
Borrower shall pay FINOVA a Facility Fee in the amount of 1% of the Line of
Credit extended by FINOVA to Borrower and upon each annual anniversary date of
this Agreement, Borrower shall pay FINOVA a Facility Fee in the amount of .5% of
the Line of Credit extended by FINOVA to Borrower, until such time as this
Agreement has been terminated in accordance with its terms. In addition,
Borrower shall pay FINOVA a monthly Service Fee in the amount of $1,000.00.
3.5 Borrower shall pay FINOVA an Audit Fee in the amount of
$600 per day for each auditor performing an examination of the Borrower's books
and records, such Audit Fee to be in addition to all other Costs and Expenses
incurred by FINOVA with regard to each such examination, all of which shall be
deemed part of the Obligations. Audit Fees in any contract year shall not exceed
the amount of $8,000, provided there is no default hereunder.
Section 4. GRANTING PROVISIONS
4.1. As security for the prompt performance, observance and
payment in full
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of all Obligations, Borrower hereby grants to FINOVA a continuing security
interest in, lien upon and right of set off against, and Borrower hereby
assigns, transfers, pledges and sets over to FINOVA the following (which,
together with any of Borrower's other property in which FINOVA may at any time
have a security interest or lien, whether pursuant to any supplement or
amendment hereto, or otherwise, all of which are herein collectively referred to
as the "Collateral"): (a) All of Borrower's present and future Accounts; (b) all
of Borrower's monies, securities and other property and the proceeds thereof,
now or hereafter held or received by, or in transit to, FINOVA from or for
Borrower, or for the account of Borrower, whether for safekeeping, pledge,
custody, transmission, collection or otherwise, and all of Borrower's deposits
(general or special) including, but not limited to security deposits, balances,
sums and credits with FINOVA at any time existing or with a third party for the
Borrower's account; (c) all of Borrower's present and future right, title and
interest, and all of Borrower's present and future rights, remedies, security
and liens, in, to and in respect of the Accounts and other Collateral,
including, without limitation, rights of stoppage in transit, replevin,
repossession and reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, guarantees or other contracts of suretyship with
respect to the Accounts, deposits or other security for the obligation of any
Account Debtor, and credit and other insurance; (d) all of Borrower's present
and future right, title and interest in, to and in respect of all goods relating
to, or which by sale have resulted in, Accounts including, without limitation,
all goods described in invoices, documents, contracts or instruments with
respect to, or otherwise representing or evidencing, any Accounts or other
Collateral, including without limitation, all returned, reclaimed or repossessed
goods; (e) all of Borrower's present and future deposit accounts; (f) all of
Borrower's present and future books, records, ledger cards, computer programs
(including all software and data contained in or by any computer whether in the
possession of the Borrower or any other party) and other property and general
intangibles evidencing or relating to the Accounts and any other Collateral or
any Account Debtor, together with the file cabinets, containers, tapes or disks,
in which the foregoing are stored ("Records'); (g) all of Borrower's presently
owned or hereafter acquired inventory; (h) all of Borrower's machinery and
equipment, whether presently owned or hereinafter acquired; (i) all other of
Borrower's present and future general intangibles of every kind and description,
including, without limitation, customer lists, stock options, patent, trademark
and copyright applications, trade names and trademarks, and the goodwill of the
business symbolized thereby, patents, copyrights, licenses and Federal, State
and local tax refund claims, leases, rents and insurance claims of all kinds;
and (j) all proceeds of the foregoing, in any form, including, without
limitation, all claims against third parties for loss or damage to or
destruction of any or all of the foregoing. The security interests granted
herein shall remain effective whether or not the Collateral covered thereby is
acceptable to FINOVA or deemed by it to be ineligible for the purposes of any
loans or advances contemplated under this Agreement.
4.2 Borrower shall deliver to FINOVA a duplicate and/or
original invoice, and all original documents evidencing the delivery of goods or
the performance of services with regard to each Account, including but not
limited to all original contracts, orders, invoices, bills of lading, warehouse
receipts, delivery tickets and shipping receipts, together with schedules
describing the Accounts and/or written confirmatory assignments to FINOVA of
each Account,
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in form and substance satisfactory to FINOVA and duly executed by Borrower,
together with such other information as FINOVA may request. In no event shall
the making (or the failure to make) of any schedule or assignment or the content
of any schedule or assignment or Borrower's failure to comply with the
provisions hereof be deemed or construed as a waiver, limitation or modification
of FINOVA's security interest in, lien upon and assignment of the Collateral or
Borrower's representations, warranties or covenants under this Agreement or any
supplement or amendment hereto.
Section 5. ENFORCEMENT OF RIGHTS IN AND TO COLLATERAL
5.1 Until Borrower's authority to do so is curtailed or
terminated at any time by FINOVA in its sole and absolute discretion, Borrower
shall (at Borrower's expense) collect on FINOVA's behalf as FINOVA's property
and in trust for FINOVA, and deliver to FINOVA in their original form on the
same date as the date of the actual receipt thereof, all checks, drafts, notes,
acceptances, cash, wire transfers and any other evidences of payment, applicable
to any assigned Account. Five (5) working days shall be allowed subsequent to
receipt by FINOVA of all Account Debtor or third party checks and two (2)
working days shall be allowed subsequent to receipt by FINOVA of wire transfer
by Account Debtors or third parties to permit bank clearance and collection.
5.2 FINOVA or FINOVA's representatives shall at all times
(upon reasonable notice unless FINOVA alleges a default hereunder) have free
access to and right of inspection of the Collateral and have full access to and
the right to examine and make copies of Borrower's Records, to confirm and
verify all Accounts, to perform general audits and to do whatever else FINOVA
deems necessary to protect FINOVA's interests. FINOVA may at any time remove
from Borrower's premises or require Borrower or its accountants or auditors to
deliver any Records to FINOVA. FINOVA may, at Borrower's cost and expense, use
any of Borrower's personnel, supplies, computer equipment (including all
computer programs, software and data) and space at Borrower's places of business
or at any other place as FINOVA may designate, as may be reasonably necessary
for the handling of collections.
5.3 Merchandise received in settlement of any assigned Account
shall be received in trust for, segregated and delivered to or for the account
of FINOVA. All returns of merchandise, credits, issued by Borrower, claims or
disputes of Account Debtors whether or not accepted by Borrower or given an
allowance of any nature shall be reported by Borrower to FINOVA at least weekly.
Each such report shall be accompanied by copies of all documentation provided to
Borrower in support of all merchandise returns, credits, claims and disputes.
Borrower shall immediately upon obtaining knowledge thereof report to FINOVA all
reclaimed, repossessed and returned goods, Account Debtor claims and any other
matter affecting the value, enforceability or collectability of Accounts. At
FINOVA's request, any goods reclaimed or repossessed by or returned to Borrower
will be set aside, marked with FINOVA's name and held by Borrower (at Borrower's
place of business or at such other place as FINOVA may designate) for FINOVA's
account and subject to FINOVA's security interest.
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5.4 All claims and disputes relating to Accounts shall be
adjusted within a reasonable time at Borrower's own cost and expense.
5.5 FINOVA is authorized and empowered upon alleging an Event
of Default, to compromise or extend the time for payment of any Account, for
such amounts and upon such terms as FINOVA may in its sole discretion determine,
and to accept the return of the merchandise represented by any Account, all
without notice to or consent by Borrower, and without discharging or affecting
Borrower's obligations hereunder to any extent and Borrower's will, upon demand,
pay to FINOVA the amount of any allowance given or authorized by FINOVA
hereunder. FINOVA shall have the right (in addition to its other rights
hereunder or otherwise), with or without the occurrence of an Event of Default
and without notice to Borrower, to appropriate, set off and apply to the payment
of any or all of the Obligations, any portion or all of the Collateral, in such
manner as FINOVA shall in FINOVA's sole discretion determine, to enforce payment
of any Collateral, to settle, compromise or release in whole or in part, any
amounts owing on any Collateral, to prosecute any action, suit or proceeding
with respect to the Collateral, to extend the time of payment of any and all
Collateral, to make allowances and adjustments with respect thereto, to issue
credits in FINOVA's or Borrower's name, to sell, assign and deliver the
Collateral (or any part thereof) at public or private sale, for cash, upon
credit or otherwise at FINOVA's sole option and discretion, and FINOVA may bid
or become purchaser at any such sale, free from any right of redemption which is
hereby expressly waived. Any public or private sale of the Collateral shall be
deemed reasonable to the extent Borrower shall have received written notice of
such sale at least five (5) days prior to its occurrence and shall not have
delivered written objection to FINOVA.
Section 6. REPRESENTATIONS AND WARRANTIES
Borrower hereby epresents, warrants and covenants to FINOVA
the following (which shall survive the execution and delivery of this
Agreement), the truth and accuracy of which, and continuing compliance with,
being a continuing condition of the making of all loans an advances hereunder by
FINOVA or under any supplement or amendment hereto:
6.1 Borrower is and shall be the owner of the Collateral free
and clear of all liens, security interests, claims and encumbrances of every
kind and nature, except in FINOVA's favor or as otherwise consented to in
writing by FINOVA, and Borrower shall indemnify and defend FINOVA from and
against all cost, loss and expense with regard to the same. None of Borrower's
Accounts nor any of its inventory has been previously sold or assigned to any
person, firm or corporation and will not be sold or assigned, other than to
FINOVA, at any time during the term of this Agreement without first obtaining
FINOVA's consent in writing. Borrower shall not execute any security agreement
or UCC financing statements in favor of any other party or borrow against the
security of any corporate asset, including but not limited to the Collateral,
without first obtaining FINOVA's consent in writing.
6.2 (a) Without first obtaining FINOVA's consent in
writing Borrower will not directly or indirectly sell, lease, transfer,
abandon or otherwise dispose of all or any portion
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of Borrower's property or assets except in the ordinary course of
business) or consolidate or merge with or into any other entity or permit any
other entity to consolidate or merge with or into Borrower.
(b) Borrower will preserve, renew and keep in full force and
effect Borrower's existence and good standing as a corporation and its rights
and franchises with respect thereto;
(c) Borrower will continue to engage in business of the same
type as Borrower is engaged as of the date hereof; and
(d) Borrower will give FINOVA thirty (30) days prior written
notice of any proposed change in Borrower's corporate name which notice shall
set forth the new name.
6.3 Borrower's Records and principal executive office are
maintained at the address referred to herein. Borrower shall not change such
location without FINOVA's prior written consent and prior to making any such
change, Borrower agrees to execute any additional financing statements or other
documents or notices which FINOVA may require.
6.4 Borrower shall maintain its shipping forms, invoices and
other related documents in a form satisfactory to FINOVA and shall maintain its
books, records and accounts in accordance with general accepted accounting
principles consistently applied. Borrower agrees to furnish FINOVA monthly with
accounts receivable agings, inventory reports (if requested by FINOVA), and
interim financial statements (including balance sheet, statement of income and
surplus account, and cash flow statement) hereafter collectively referred to as
("Interim Financial Statements"), and to furnish FINOVA at any time or from time
to time with such other information regarding Borrower's business affairs and
financial condition as FINOVA may reasonably request, including, without
limitation, cash flow and other projections, earnings forecasts, schedules,
agings, and reports. Borrower hereby irrevocably authorizes and directs all
accountants, auditors and any other third parties to deliver to FINOVA, at
Borrower's expense, copies of Borrower's financial statements, papers related
thereto, and other accounting records of any kind or nature in their possession
and to disclose to FINOVA any information they may have regarding Borrower's
business affairs and financial condition. Borrower shall furnish FINOVA with
audited financial statements within ninety (90) days of the end of its fiscal
year end certified by independent public accountants selected by Borrower and as
to whom FINOVA has no objection. All financial statements and information shall
fairly present Borrower's financial condition and the results of Borrower's
operations for the periods in which the financial statements are furnished.
6.5 Each Account represents a valid and legally enforceable
indebtedness based upon a bona fide sale and delivery of goods or rendition of
services usually dealt in by Borrower in the ordinary course of its business
which has been finally accepted by the Account Debtor. Each Account is and will
be for a liquidated amount maturing as stated in the invoice rendered
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to the Account Debtor who is unconditionally liable to make payment at maturity
of the amount stated in each invoice, document or instrument evidencing the
Account in accordance with the terms thereof, without offset, defense,
deduction, counterclaim, discount or condition. Every assigned Account, and any
evidence of indebtedness with respect thereto shall be paid in full at maturity.
If any account is not paid in full at maturity, the amount of such unpaid
Account (whether in whole or in part) may be charged against and deducted from
any advance then or thereafter made by FINOVA to Borrower or, in the event
Borrower then has no borrowing availability, Borrower shall pay FINOVA, upon
demand, the full amount remaining unpaid thereon. Such payment or deduction
shall not constitute a reassignment, and FINOVA may retain the Account as
collateral for all Obligations of Borrower to FINOVA until the same have been
fully satisfied.
6.6 All statements made and all unpaid balances appearing in
the invoices, documents and instruments evidencing each Account are true and
correct and are in all respects what they purport to be and all signatures and
endorsements that appear thereon are genuine and all signatories and endorsers
have full capacity to contract. Each Account Debtor is solvent and financially
able to pay in full each Account when it matures. None of the transactions
underlying or giving rise to any Account shall violate any state or federal laws
or regulations, and all documents relating to the Accounts shall be legally
sufficient under such laws or regulations and shall be legally enforceable in
accordance with their terms and all recording, filing and other requirements of
giving public notice under any applicable law have been and shall be duly
complied with.
6.7 Borrower is solvent and will so remain. Borrower's
federal, state and local taxes of every kind and nature, including, but not
limited to employment taxes, are current, and there are no pending tax audits or
examinations with respect to Borrower's federal, state or local tax returns.
6.8 Borrower shall duly pay and discharge all taxes,
assessments, contributions and governmental charges upon or against it or its
properties or assets prior to the date on which penalties attach thereto.
Borrower shall be liable for all taxes and penalties imposed upon any
transaction under this Agreement or any supplemental or amendment hereto or
giving rise to the Accounts or any other Collateral or which FINOVA may be
required to withhold or pay for any reason. Borrower agrees to indemnify and
hold FINOVA harmless with respect thereto, and to repay to FINOVA on demand the
amount thereof, and until paid by Borrower such amounts shall be added to and
included in Borrower's Obligations.
6.9 There is no investigation by any state, federal or local
agency pending or threatened against Borrower and there is no action, suit,
proceeding or claim pending or threatened against Borrower or Borrower's assets
or goodwill or affecting any transactions contemplated by this Agreement, or any
supplement or amendment hereto, or any agreements, instruments or documents
delivered in connection herewith or therewith before any court, arbitrator, or
governmental or administrative body or agency which if adversely determined with
respect to Borrower would result in any material adverse change in Borrower's
business,
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properties, assets, goodwill or condition, financial or otherwise.
6.10 The execution, delivery and performance of this
Agreement, any supplement or amendment hereto, or any agreements, instruments
and documents executed and delivered in connection herewith, are within
Borrower's corporate powers, have been duly authorized, are not in contravention
of law or the terms of Borrower's charter, by-laws or other incorporation
papers, or of any indenture, agreement or undertaking to which Borrower is party
or by which Borrower is bound.
6.11 Borrower shall keep and maintain, at its sole cost and
expense, satisfactory and complete Records including records of all Accounts,
all payments received and credits granted thereon, and all other dealings
therewith. Upon the sale of goods or the rendering of services, Borrower shall
make appropriate entries in its books and records disclosing such assignments of
Accounts to FINOVA, and shall execute and deliver all papers and instrument, and
do all things necessary to effectuate this Agreement and facilitate the
collection of the Accounts. FINOVA is hereby vested with all of Borrower's
rights, securities and guarantees with respect to each Account, including the
right of stoppage in transit. Notwithstanding the failure of Borrower to execute
and deliver such written assignment as aforesaid, each Account created by
Borrower shall be deemed assigned to FINOVA and shall become its property.
6.12 If any Account Debtor of Borrower shall reject or return
any of the goods which created an assigned Account, Borrower shall promptly
deliver the same to FINOVA, or notify FINOVA and hold the same, separate and
apart from Borrower's stock, in trust for and subject to the order of FINOVA,
and FINOVA may take and sell the same, without notice, for such price and upon
such terms as it may, in its sole and absolute discretion, determine. Borrower
shall remain liable for any difference between the original invoice price and
the net proceeds of resale, after deducting any expenses incurred by FINOVA in
connection with such resale. Notwithstanding the foregoing, FINOVA may require
Borrower to pay to it the original invoice price of such rejected or returned
goods. In case any such goods shall be resold, the Account thereby created shall
be FINOVA's property and shall be deemed assigned hereunder.
6.13 All monies, Accounts and other property of Borrower which
may come into FINOVA's possession in any manner, and all sums to the credit of
Borrower may be retained by FINOVA and applied to Obligations or any of the
Borrower's obligations owing to FINOVA's parent, any of its subsidiaries or any
of its affiliates. Borrower's obligations as set forth in the preceding sentence
shall remain applicable and enforceable as against Borrower should FINOVA be
merged into or with any of the entity, including, but not limited to, its parent
corporation. Borrower absolutely and unconditionally guarantees and grants a
security interest to FINOVA in and to all of its Collateral to secure any and
all Obligations (including, but not limited to all obligations of any entity
which is a parent, subsidiary or affiliate of Borrower, whether arising under
this Agreement or otherwise, and whether or not then due and however created)
which Borrower may at any time owe to FINOVA or its parent, any of its
subsidiaries or any of its affiliates.
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6.14 FINOVA's agents and examiners shall have the right at any
time during business hours to review, inspect, examine, check and make copies of
extracts from Borrower's Records.
6.15 Borrower shall, at Borrower's expense, duly execute and
deliver, or shall cause to be duly executed and delivered, such further
agreements, instruments and documents, including, without limitation, additional
security agreements, mortgages, deeds of trust, deeds to secure debt, collateral
assignments, UCC financing statements or amendments and continuations thereof,
landlord's or mortgagee's waivers of liens and consents to the exercise by
FINOVA of all of its rights and remedies hereunder, under any supplement or
amendment hereto, or applicable law with respect to the Collateral. In addition,
Borrower shall do or cause to be done such further acts as may be necessary or
proper, in FINOVA's opinion, to evidence, perfect, maintain and enforce its
security interest and the priority thereof in and to the Collateral and to
otherwise effect the provisions and purposes of this Agreement or any supplement
or amendment hereto. Where permitted by law, Borrower hereby authorizes FINOVA
to execute and file one or more UCC financing statements covering the Collateral
signed only by FINOVA.
6.16 Borrower shall, at Borrower's expense, maintain insurance
covering the Collateral in such amounts and with such insurance companies as may
be acceptable to FINOVA in its sole and absolute discretion. Borrower shall have
FINOVA named a loss payee on all such insurance policies.
Section 7. ADDITIONAL POWERS
7.1 FINOVA shall have the right at any time in its sole and
absolute discretion: (a) to notify Account Debtors that Borrower's Accounts have
been assigned to and are payable to FINOVA; and (b) to collect any and all
Accounts directly in its own name and charge all of its collection costs and
expenses including, but not limited to, its legal expenses to the Borrower's
account as part of the Obligations.
7.2 Borrower hereby appoints FINOVA or FINOVA's designee as
Borrower's attorney-in-fact, at Borrower's own cost and expense, to exercise at
any time all or any of the following powers which, being coupled with an
interest, shall be irrevocable until all Obligations have been paid in full: (a)
upon FINOVA alleging an Event of Default hereunder to redirect, receive, open
and dispose of all mail addressed to Borrower and to notify postal authorities
to change the address for delivery thereof to such address as FINOVA may
designate; (b) to execute and file in Borrower's name financing statements and
amendments under the UCC; (c) to receive, take, endorse, assign, deliver, accept
and deposit, in FINOVA's or Borrower's name, any and all checks, notes, drafts,
acceptances, money orders, remittances or other evidences of payment of money or
Collateral which may come into FINOVA's possession; (d) to sign Borrower's name
on any drafts against Account Debtors, assignments and verifications of
Accounts; (e) to transmit to Account Debtors notice of FINOVA's interest therein
and to request from such Account Debtors at any time, in FINOVA's or Borrower's
name or that of FINOVA's designee, information concerning the Accounts and the
amounts owing thereon; (f) upon
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FINOVA alleging an Event of Default hereunder to notify Account Debtors to make
payment directly to FINOVA; (g) to take or bring, in FINOVA's or Borrower's
name, and in FINOVA's sole and absolute discretion all steps, actions, suits or
proceedings deemed necessary or desirable by FINOVA to effect collection of the
Collateral; and (h) to do all other acts and things necessary to carry out this
Agreement. Borrower hereby releases FINOVA and FINOVA's officers, employees and
designees, from all liability arising from any act or acts under this Agreement
or in furtherance thereof, whether by omission or commission, and whether based
upon any error of judgment or mistake of law or fact.
Section 8. EVENTS OF DEFAULT
8.1 All Obligations shall be, at FINOVA's option, immediately
8.2 In the event FINOVA seeks to take possession of all or any
portion of the Collateral by judicial process (including, but not limited to,
FINOVA obtaining an order of attachment, a temporary restraining order, a
preliminary or permanent injunction or otherwise) against the Borrower or with
regard to the Collateral, Borrower irrevocably waives: (a) the
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posting of any bond, surety or security with respect thereto which might
otherwise be required, (b) any demand for possession prior to the commencement
of any suit or action to recover the Collateral, and (c) any requirement that
FINOVA retain possession and not dispose of any Collateral until after trial or
final judgment.
8.3 Borrower agrees that the giving of five (5) days' notice
by FINOVA, sent by ordinary mail, postage prepaid, to Borrower's address set
forth herein, designating the place and time of any public sale or of the time
after which any private sale or other intended disposition of the Collateral is
to be made, shall be deemed to be reasonable notice thereof and Borrower waives
any other notice with respect thereto.
8.4 The net cash proceeds resulting from the exercise of any
of FINOVA's rights or remedies under this Agreement, under the UCC or otherwise,
shall be applied by FINOVA to the payment of the Obligations in such order as
FINOVA may elect, and Borrower shall remain liable to FINOVA for any deficiency.
Without limiting the generality of the foregoing, if FINOVA enters into any
credit transaction, directly or indirectly, in connection with the disposition
of any Collateral, FINOVA shall have the option, at any time, in FINOVA's sole
and absolute discretion, to reduce the Obligations by the amount of such credit
transaction or any part thereof or to defer the reduction thereof until actual
receipt by FINOVA of cash in connection therewith.
8.5 The enumeration of the foregoing rights and remedies is
not intended to be exclusive, and such rights and remedies are in addition to
and not by way of limitation of any other rights or remedies FINOVA may have
under the UCC or other applicable law. FINOVA shall have the right, in FINOVA's
sole and absolute discretion, to determine which rights and remedies, and in
which order any of the same, are to be exercised, and to determine which
Collateral is to be proceeded against and in which order, and the exercise of
any right or remedy shall not preclude the exercise of any others, all of which
shall be cumulative.
8.6 No act, failure or delay by FINOVA shall constitute a
waiver of any of its rights or remedies. No single or partial waiver by FINOVA
of any provision of this Agreement or any supplement or amendment hereto, or
breach or default thereunder, or of any right or remedy which FINOVA may have
shall operate as a waiver of any other provision, breach, default, right or
remedy or of the same provision, breach, default, right or remedy on a future
occasion.
8.7 Borrower waives presentment, notice of dishonor, protest
and notice of protest of all instruments included in or evidencing any of the
Obligations or the Collateral and any and all notices or demands whatsoever
(except as expressly provided herein). FINOVA may, at all times, proceed
directly against Borrower or any guarantor or endorser to enforce payment of the
Obligations and shall not be required to take any action of any kind to
preserve, collect or protect FINOVA's or Borrower's rights in the Collateral.
Section 9. MISCELLANEOUS
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9.1 This Agreement shall become effective upon acceptance by
FINOVA and shall continue in full force and effect for a term ending two (2)
years from the date hereof (the "Renewal Date") and from year to year
thereafter, unless and until terminated pursuant to the terms hereof. In
addition to FINOVA's right to declare this Agreement immediately terminated at
any time upon the occurrence of an Event of Default, either party may terminate
this Agreement on the Renewal date or on the anniversary of the Renewal Date in
any year by giving the other party at least sixty (60) days prior written notice
by registered or certified mail, return receipt requested. No termination of
this Agreement, however, shall relieve or discharge Borrower of Borrower's
duties, obligations and covenants hereunder until all Obligations have been paid
in full and FINOVA's continuing security interest in and to the Collateral shall
remain in effect until all such Obligations have been fully discharged.
9.2 If FINOVA terminates this Agreement upon the occurrence of
an Event of Default or if Borrower terminates this Agreement as to future
transactions other than on the Renewal Date or any anniversary of the Renewal
Date, in view of the impracticality and extreme difficulty in ascertaining
FINOVA's actual damages and by mutual agreement of the parties as to a
reasonable calculation of FINOVA's lost profits as a result thereof, Borrower
hereby agrees that it shall immediately pay to FINOVA by wire transfer,
certified check or bank cashier's check, Borrower's entire Obligations owing
thereunder, plus liquidated damages of an amount equal to 75% of FINOVA's
average monthly charges (inclusive of interest, Facility Fee, LC Fees, if any,
and all other Costs and Expenses, hereafter, the "Monthly Charges") for the six
month period preceding the date of FINOVA's receipt of Borrower's notice of
termination or from the date of this Agreement, whichever is less, multiplied by
the number of months remaining under this Agreement, but in no event less than
$500 per month of the then unexpired term thereof. Prior to its actual receipt
of payment as aforesaid, FINOVA shall be free to exercise, without limitation,
all of its rights under this Agreement or under any other agreement it may then
have with Borrower. Borrower's default of any provision under this Agreement may
be considered and construed at the sole option of FINOVA, as a termination of
this Agreement by Borrower. The liquidated damages provided for in this
paragraph 9.2 shall be deemed included in the Obligations and shall be presumed
to be the amount of damages sustained by FINOVA due to the Borrower's early
termination and Borrower agrees that such damages are reasonable and appropriate
under the circumstances currently existing. Notwithstanding anything to the
contrary contained herein, Borrower shall not be obligated to pay the liquidated
damages set forth in this paragraph 9.2 if after the first anniversary of this
Agreement Borrower transfers the financing set forth hereunder to another
division of FINOVA.
9.3 This Agreement, and any supplement or amendment hereto and
any agreements, instruments or documents delivered or to be delivered in
connection herewith, constitute the entire agreement and understanding between
FINOVA and Borrower concerning the subject matter hereof and thereof and as such
supersedes all other prior or contemporaneous agreements, understandings,
negotiations and discussions, representations, warranties, commitments, offers,
contracts, whether written or oral, all of which are merged into this Agreement.
FINOVA and the Borrower agree that neither party shall be bound by anything not
expressed herein, nor shall this Agreement be modified orally.
15
9.4 All amendments to and modifications of this Agreement
shall be in writing and signed by Borrower and FINOVA, which requirement shall
not be modified by oral agreement or by course of conduct.
9.5 All notices, requests and demands to or upon the respect
parties hereto shall be deemed to have been duly given or made; (a) by hand or
by telecopier, immediately upon sending: (b) one day after posting if by Federal
Express, Express Mail or any other overnight delivery service; or (c) five days
after posting if by certified mail, return receipt requested. All notices,
requests and demands are to be given or made to the respective parties at the
addresses set forth herein or at such other addresses as either party may
designate in writing by notice in accordance with the provisions of this
paragraph.
9.6 Borrower and FINOVA each hereby waive all rights to a
trial by jury in any action or proceeding of any kind arising out of or relating
to this Agreement, any supplement or amendment hereto, the Obligations, the
Collateral or any such other transaction. Borrower hereby waives all of its
rights of set off and rights to interpose any defense and/or counterclaims in
the event of any litigation with respect to any matter connected with this
Agreement, any supplement or amendment hereto, the Obligations, the Collateral
or any other transaction between the parties. Borrower hereby irrevocably
consents and submits to the jurisdiction and venue of the Supreme Court of the
State of New York or the United States District Court for the Southern District
of New York in connection with any action or proceeding of any kind arising out
of or relating to this Agreement, any supplement hereto, the Obligations, the
Collateral or any such other transaction. Borrower agrees that any action
brought by it against FINOVA whether with regard to this Agreement or otherwise
shall be subject to the exclusive jurisdiction and venue of the Supreme Court of
the State of New York, County of New York or the United States District Court
for the Southern District of New York.
9.7 In any litigation brought by FINOVA, Borrower waives
personal service of any summons, complaint or other process and agrees that
service thereof may be made by certified or registered mail directed to Borrower
at Borrower's address set forth below and service so made shall be complete two
(2) days after the same shall have been posted. Within thirty (30) days after
such mailing, Borrower shall appear and answer such summons, complaint or other
process, failing which Borrower shall be deemed in default and judgement may be
entered by FINOVA against Borrower for the amount of the claim and for any other
relief requested therein.
9.8 This Agreement and all transactions hereunder are deemed
to be consummated in the State of New York and shall be governed by and
interpreted in accordance with the substantive and procedural laws of the State
of New York. If any part or provision of this Agreement shall be determined to
be invalid or in contravention of any applicable law or regulation of the
controlling jurisdiction, such part or provision shall be severed without
affecting the validity of any other part or provision of this Agreement.
9.9 Borrower hereby consents to and authorizes FINOVA to
issue appropriate
16
press release and to cause a tombstone to be published announcing the
consummation of this transaction and the aggregate amount thereof.
9.10 This Agreement shall inure to and be binding upon the
parties hereto and their successors and assigns.
WITNESS: PRIVATE LABEL COSMETICS, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
WITNESS: FASHION LABORATORIES, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
WITNESS: P.L.C. SPECIALTIES, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
WITNESS: INTERNATIONAL COSMETICS GROUP, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
ACCEPTED:
FINOVA CAPITAL CORPORATION
---------------------------------
17
GUARANTY
1. In consideration of and in order to induce FINOVA Capital
Corporation ("FINOVA"), its successors, endorsees or assigns to grant and
continue to grant such advances, loans or extensions of credit directly or
indirectly to PRIVATE LABEL COSMETICS, INC., FASHION LABORATORIES, INC., P.L.C.
SPECIALTIES, INC. and INTERNATIONAL COSMETIC GROUP, INC. (hereinafter, whether
one or more, called "Borrower") and to grant to Borrower such renewals,
extensions, forbearances, releases of collateral or other relinquishment of
legal rights as FINOVA may deem advisable, and for other good and valuable
consideration, receipt of which is hereby duly acknowledged, the undersigned
Guarantor(s) (hereinafter, whether one or more, call "Guarantor", who, if two or
more in number, shall be jointly and severally bound) for the undersigned
Guarantor and for their heirs and personal representatives, or successors, and
assigns of the undersigned Guarantor, hereby absolutely and unconditionally
guarantees to FINOVA, its successors, endorsees and assigns, the prompt and
unconditional payment when due (whether at maturity, by acceleration or
otherwise) and at all times thereafter of any and all obligations or liabilities
of every kind, nature and character (including all renewals, extensions and
modifications thereof) of Borrower to FINOVA, its successors, endorsees, or
assigns howsoever created or arising, whether or not represented by negotiable
instruments or other writings, whether now existing or hereafter incurred,
whether originally contracted with FINOVA or with another and assigned or
transferred to FINOVA or otherwise acquired by FINOVA, whether contracted by
Borrower alone or jointly with others, and whether absolute or contingent,
secured or unsecured, matured or unmatured, including but not limited to any and
all sums, late charges, disbursements, expenses, legal fees and any deficiency
upon enforcement of collateral, agreements and contracts in connection with all
of such obligations.
2. Undersigned Guarantor consents that without notice to or
further assent by undersigned Guarantor, the obligation of Borrower or of any
other party for the liability hereby guaranteed may be renewed, extended,
modified, prematured or released by FINOVA as it may deem advisable in its sole
and absolute discretion, and that any security or securities which FINOVA holds
may be exchanged, sold, released, or surrendered by it, as it may deem advisable
in its sole and absolute discretion, without impairing or affecting the
obligation of undersigned Guarantor hereunder.
3. Undersigned Guarantor waives any and all notice of the
acceptance of this guaranty, or of the creation, renewal or accrual of any
obligations or liability of Borrower to FINOVA, present or future, or of the
reliance of FINOVA upon this guaranty. Any and every obligation or liability of
Borrower to FINOVA herein described shall conclusively be presumed to have been
created, contracted or incurred in reliance upon this guaranty, and all dealings
between Borrower and FINOVA shall likewise be presumed to be in reliance upon
this guaranty. Undersigned Guarantor waives protest, presentment, demand for
payment, notice or default or non-payment and notice of dishonor to or upon
undersigned Guarantor, Borrower or any other
18
party liable for any Borrower's obligations hereby granted.
4. This guaranty shall be construed as an absolute and
unconditional guaranty of payment without regard to the validity, regularity or
enforceability of any obligation or purported obligation of Borrower. FINOVA
shall have all of its remedies under this guaranty without being obliged to
resort first to any security or to any other remedy or remedies to enforce
payment or collection of the obligations hereby guaranteed and may pursue all or
any of its remedies at one or at different times. FINOVA is hereby given a
continuing lien for the purposes and security of this guaranty as well as for
any other obligation or liability (present or future, absolute or contingent,
due or not due) of undersigned Guarantor to FINOVA upon all property and
securities now or hereafter given unto or left in the possession or custody of
FINOVA for any purpose (including property left in safekeeping or custody), by
or for the account of any undersigned Guarantor, and also upon any deposits with
or any credit or claim of any undersigned Guarantor against FINOVA existing from
time to time. FINOVA is hereby authorized and empowered, upon the occurrence of
any of the events set forth in the next succeeding paragraph, to appropriate and
apply to the payment and extinguishment of the liability of undersigned
Guarantor any and all such monies, property, securities, deposits or credit
balances without demand, advertisement or notice, all of which are hereby
expressly waived.
5. Upon the default of Borrower or any undersigned Guarantor
with respect to any obligations or liabilities of either of them to FINOVA or in
the event Borrower or any undersigned Guarantor shall die or become insolvent or
make an assignment for the benefit of creditors, or if a petition in bankruptcy
be filed by or against Borrower or any undersigned Guarantor, or in the event of
the appointment of a receiver (either at law or in equity) of Borrower or of any
undersigned Guarantor, or in the event that a judgment is obtained or warrant of
attachment issued against Borrower or of any undersigned Guarantor, or in the
event that the financial or business condition of any of them shall so change as
in the opinion of FINOVA will materially impair its security or increase its
risk, all or any part of the obligations and liabilities of Borrower and/or of
undersigned Guarantor to FINOVA, whether direct or contingent, and of every kind
and description, shall, without notice or demand, become immediately due and
payable insofar as this guaranty is concerned, and shall be taken up forthwith
by undersigned Guarantor, and in any of such events, and whether or not the said
liabilities and obligations are due and payable, FINOVA may (in addition to, and
subject to its rights and remedies under the terms of any special contract with
Borrower), without demand of performance or advertisement or notice of intention
to sell or of time or place of sale, or to redeem, or other notice whatsoever to
undersigned Guarantor or to Borrower (all and each of which demands,
advertisements and notices being hereby expressly waived), sell any and all
collateral which it may hold for said obligations, or under this guaranty, in
one or more parcels, at public or private sale, at FINOVA's office or elsewhere,
at such prices as FINOVA may deem best, either for cash or credit, with the
right of FINOVA at any such sale, public or private, to purchase the whole or
any part of said collateral free from any right or equity of redemption, which
right or equity is hereby expressly waived. FINOVA may, in its uncontrolled
discretion, apply the net proceeds of such sale or sales to payment on account
of
19
the obligations or liabilities of Borrower and undersigned Guarantor in such
manner and order of priority as FINOVA may, in its absolute and uncontrolled
discretion, elect. If, in the opinion of FINOVA, any collateral deposited
hereunder cannot be freely sold or disposed of at public or private sale
(because of any relationship between the owner and issuer thereof or otherwise),
FINOVA shall have the unqualified right (in addition to all other rights
hereunder) to sell the same, or any part thereof, to a purchaser or purchasers,
under investment letters, for a negotiated price or prices which, under such
circumstances, shall be deemed to be fair and equitable.
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6. Any stocks, bonds or other securities held by FINOVA hereunder may,
whether or not Borrower or undersigned Guarantor is in default, be registered
and held in the name of FINOVA or its nominee, and FINOVA or said nominee may
exercise all voting and corporate rights relating thereto as if the absolute
owner thereof.
7. The term "Borrower" as used herein shall include the individual or
individuals, association, partnership or corporation named herein as Borrower,
and (a) any successor individual or individuals, association, partnership or
corporation to which all or substantially all of the business or assets of said
Borrower shall have been transferred, (b) in the case of a partnership Borrower,
any new partnership which shall have been created by reason of the admission of
any new partner or partners therein and/or the dissolution of the existing
partnership by the death, resignation, or other withdrawal of any partner, and
(c) in the case of a corporate Borrower, any other corporation into or with
which said Borrower shall have been merged, consolidated, reorganized, purchased
or absorbed. The right of FINOVA to hold, deal with and dispose of the property
deposited by undersigned Guarantor hereunder, as herein provided, shall continue
unimpaired notwithstanding any invalidity or unenforceability of this guaranty
as against undersigned Guarantor personally.
8. FINOVA's books and records showing the account between
FINOVA and Borrower shall be admissible as evidence in any action or proceeding,
shall be binding upon the undersigned Guarantor for the purpose of establishing
the items therein set forth and shall constitute prima facie proof hereof.
FINOVA's monthly statements rendered to Borrower shall, to the extent to which
no written objection is made within thirty (30) days after the date thereof,
constitute an account stated between FINOVA and Borrower and be binding upon the
undersigned Guarantor.
9. The undersigned Guarantor waives any and all rights of
subrogation, reimbursement, indemnity, exoneration, contribution or any other
claim which the undersigned Guarantor may now or hereafter have against
Borrower, or any person other than a coguarantor directly or contingently liable
for the obligations guaranteed hereunder, or against or with respect to the
Borrower's property (including without limitation, property collateralizing the
undersigned Guarantor's obligations to FINOVA) arising from the existence or
performance o this guaranty. In furtherance and not in limitation of the
preceding waiver, the undersigned Guarantor agrees that any payment to FINOVA by
the undersigned Guarantor pursuant to this guaranty shall be deemed a
contribution to the capital of the Borrower or other obligated party, and any
such payment shall not constitute the undersigned Guarantor a creditor of any
such party.
10. The undersigned Guarantor represents and warrants that
there is no existing indemnification agreement, whether qualified or
unqualified, between the undersigned and Borrower. The undersigned waives any
right he may otherwise have to seek a stay from any United States Bankruptcy
Court, in which Borrower may become a debtor, of any claim or cause of action
hereinafter asserted against the undersigned Guarantor on his guaranty, whether
in an action commenced against the undersigned as a guarantor prior to or
instituted following the
21
filing a Chapter 11 petition by or against Borrower. The undersigned Guarantor
further acknowledges that this waiver hereinabove, is specifically provided to
FINOVA as an inducement to it to effect the financial accommodations provided by
FINOVA to Borrower.
11. This guaranty shall, without further reference, pass to,
and may be relied upon and enforced by, any successor or assignee of FINOVA and
any transferee or subsequent holder of any of said liabilities or obligations of
Borrower. This guaranty may be terminated (but only insofar as it may relate to
obligations of Borrower arising subsequent to such termination) upon written
notice to that effect delivered by undersigned Guarantor to an officer of
FINOVA, such termination to be effective only upon the execution by such officer
of a written receipt therefor, and in the event of such termination, undersigned
Guarantor and his or their respective executors, administrators or successors
and assigns shall nevertheless remain liable with respect to obligations
incurred or arising theretofore, and with respect to such obligations and any
renewals, extensions or other liabilities arising out of same, this guaranty
shall continue in full force and effect, and FINOVA shall have all the rights
herein provided for as if no such termination had occurred.
12. The undersigned Guarantor does hereby waive any an all
right to a trial by jury in any action or proceeding based hereon. This guaranty
and the rights and obligations of FINOVA and of the undersigned Guarantor shall
be governed and construed in accordance with the laws of the State of New York.
The undersigned Guarantor hereby consents to the jurisdiction of the Supreme
Court of the State of New York for a determination of any dispute connected with
this guaranty and authorizes the service of process on the undersigned Guarantor
by registered or certified mail sent to the undersigned Guarantor at the address
or addresses of the undersigned Guarantor, as the case may be as herein set
forth or as set forth on any record maintained by FINOVA. This guaranty cannot
be changed or terminated orally, shall be interpreted according to the laws of
the State of New York, shall be binding upon the heirs, executors,
administrators, successors and assigns of the undersigned Guarantor and shall
inure to the benefit of FINOVA's successors and assigns.
13. Guarantor agrees that, whenever an attorney is used to
obtain payment under or otherwise enforce this guaranty or to enforce, declare
or adjudicate any rights or obligations under this guaranty or with respect to
collateral, whether by legal proceeding or by any other means whatsoever,
FINOVA's reasonable attorney's fee plus costs and expenses shall be payable by
each Guarantor against whom this guaranty or any obligation or right hereunder
is sought to be enforced, declared or adjudicated. Guarantor, if more than one,
shall be jointly and severally bound and liable hereunder and if any of the
undersigned is a partnership, also the members thereof individually. FINOVA and
Guarantor, in any litigation (whether or not arising out of or relating to
obligations, liabilities or collateral security or any of the matters contained
in this guaranty) in which FINOVA and any of them shall be adverse parties,
waive trial by jury. In addition, Guarantor waives the performance of each and
every condition precedent to which Guarantor might otherwise be entitled by law.
FINOVA shall have the right to fill in any blank spaces left in this guaranty
(including the name of "Borrower"), to date this guaranty and to correct patent
errors therein.
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14. The Guarantor acknowledges that this guaranty and the
Guarantor's obligations under this guaranty are and shall at all times continue
to be absolute and unconditional in all respects and shall at all items be valid
and enforceable irrespective of any other agreements or circumstances of any
kind or nature whatsoever which might otherwise constitute a defense to this
guaranty and the obligations of the Guarantor under this guaranty or the
obligations of any other person or party (including, without limitation, the
Borrower) relating to this guaranty or the obligations of the Guarantor
hereunder or otherwise with respect to any transactions involving the Borrower
and FINOVA. This guaranty sets forth the entire agreement and understanding of
FINOVA and Guarantor and Guarantor absolutely, unconditionally and irrevocably
waives any and all right to assert any defense, set-off, counterclaim or
cross-claim of any nature whatsoever (including, but not limited to, fraud in
the inducement and commercial disposition of collateral of the Guarantor or
Borrower) with respect to this Guaranty or the obligations of the Guarantor
under this guaranty or the obligations of any other person or party (including,
without limitation, Borrower) relating to this guaranty or the obligations of
the Guarantor under this guaranty or otherwise with respect to any transactions
involving the Borrower and FINOVA in any action or proceeding brought by its
successors and assigns, to collect the Debt or any portion thereof, or to
enforce, the obligations of the Guarantor under this guaranty. The Guarantor
acknowledges that no oral or other agreement, understandings, representations or
warranties exists with respect to this guaranty or with respect to the
obligations of the Guarantor under this guaranty, except as specifically set
forth in this guaranty.
15. No executory agreement and no course of dealing between
undersigned Guarantor and FINOVA shall be effective to change or modify this
guaranty in whole or in part; nor shall any change, modification or waiver of
any rights or powers of FINOVA be valid or effective unless in writing or signed
by an authorized officer of FINOVA.
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IN WITNESS WHEREOF, the undersigned Guarantor has hereunto set
his hand and seal the day and year first above written.
WITNESS
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
24
