LOAN AND SECURITY AGREEMENT, dated
December 15, 1997, by and between SUMMIT
BANK, having an office at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇,
hereinafter called "Bank", and
▇▇▇▇▇▇▇▇▇▇ GRAPHICS, INC., with its
principal place of business at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇,
hereinafter called "Borrower".
This Loan and Security Agreement ("Agreement") specifies the terms of a
Line of Credit in fluctuating amounts not to exceed the sum of Two Million and
00/100 ($2,000,000.00) Dollars, and a Term Loan in the amount of One Million and
00/100 ($1,000,000.00) Dollars, and further specifies the terms by which said
loans are to be secured by certain property and assets, real and personal,
tangible and intangible, of Borrower.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the parties hereto agree as follows:
I
DEFINITIONS
1.1 "ACCOUNT" or "ACCOUNTS RECEIVABLE" means, in addition to the definition
of account as contained in the Uniform Commercial Code, the right of the
Borrower to receive payment for goods sold or leased or for services rendered
which are not evidenced by an instrument or chattel paper, whether or not it has
been earned by performance.
1.2 "ADVANCE" or "ADVANCES" shall mean loans, Standby Letters of Credit and
Letters of Credit, at any time made by Bank under the Agreement.
1.3 "AFFILIATE" means any Person which, directly or indirectly, owns or
controls, on an aggregate basis, including all beneficial ownership and
ownership or control as a trustee, guardian or other fiduciary, at least ten
(10%) percent of the
outstanding capital stock, having ordinary voting power to elect a majority of
the board of directors (irrespective of whether, at the time, stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) of Borrower or any Subsidiary or is
controlled by or is under common control with Borrower, any stockholders of
Borrower or any Subsidiary. For the purpose of this definition, "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of management and policies, whether through the ownership of voting
securities, by contract or otherwise.
1.4 "BASE RATE" means the rate of interest established by Bank from time to
time as its base rate, but which may not necessarily be the rate actually
charged by Bank to its most credit worthy customers.
1.5 "BORROWER" means ▇▇▇▇▇▇▇▇▇▇ GRAPHICS, INC.
1.6 "CHATTEL PAPER" means, in addition to the definition of chattel paper
as contained in the Uniform Commercial Code, a writing or writings which
evidence both a money obligation and a security interest in, or a lease of,
specific Goods. When a transaction is evidenced both by such a security
agreement or a lease and by an Instrument or series of Instruments, the group of
writings taken together constitutes Chattel Paper.
1.7 "COLLATERAL" means all of those present or future assets, real or
personal, of Borrower in which a security interest in or lien on is granted to
Bank hereunder or contemplated hereby, or under any other present or future
agreement by Borrower in favor of Bank as more particularly set forth in Article
III hereof.
1.8 "DEBT" shall mean the indebtedness of Borrower inclusive of all items
which, in accordance with GAAP, would be included in determining total
liabilities as shown on the liability side of the balance sheet as at the date
indebtedness is determined.
1.9 "DEFAULT" means an event of the nature specified in Article VII hereof
and which upon the occurrence of same would constitute an Event of Default.
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1.10 "DOCUMENT(S)" shall have the meaning set forth in the Uniform
Commercial Code for such term.
1.11 "EQUIPMENT" means, in addition to the definition of equipment
contained in the Uniform Commercial Code, machinery and equipment of every kind,
nature and description, as well as trucks, vehicles of every nature and
description, including but not limited to trailers and the like, handling and
delivery equipment, cranes and hoisting equipment, fixtures, office machines and
furniture, whether affixed to realty or not.
1.12 "ERISA" means the Employee Retirement Income Securities Act of 1986 as
amended from time to time.
1.13 "EVENT OF DEFAULT" means an event of the nature specified in Article
VII hereof.
1.14 "GAAP" means generally accepted accounting principles, as consistently
applied.
1.15 "GENERAL INTANGIBLES" means all rights of the Borrower as defined in
the Uniform Commercial Code including but not limited to all rights to property,
choses in action and other rights of Borrower not otherwise specifically
included elsewhere in this Agreement, further including but not limited to all
present and future trademarks, trade names, service marks, copyrights and
patents, and all rights under license agreements for the use of same.
1.16 "GOODS" means, in addition to the definition of goods as contained in
the Uniform Commercial Code, all articles of tangible personal property, sold,
supplied, leased or otherwise disposed of, represented by an Account.
1.17 "INVENTORY" means, in addition to the definition of inventory as
contained in the Uniform Commercial Code, all Goods held by the Borrower for
resale or lease or furnished or to be furnished under contracts of service, and
shall include raw materials, goods and work in process and finished goods, and
all goods returned by or reclaimed from customers.
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1.18 "INSTRUMENT" means, in addition to the definition of instrument as
contained in the Uniform Commercial Code, a negotiable instrument or a security,
or any other writing which evidences a right to the payment of money and is not
itself a security agreement or lease and is of the type which is, in the
ordinary course of business, transferred by delivery with any necessary
endorsement or assignment.
1.19 "LIABILITY" or "LIABILITIES" shall mean any Advances made by Bank
prior to, on and after the date of this Agreement to, or on the account of
Borrower, and any and all interest, commissions, obligations, liabilities,
indebtedness, charges and expenses direct or indirect, primary, secondary,
contingent, joint or several which are due or to become due or that may
hereafter be contracted or acquired by the Borrower to the Bank, no matter how
or when arising and whether under any present or future agreement or instrument
between Borrower and Bank, or otherwise, and the amount due upon any notes or
other obligations given to, or received by, Bank or on account of any of the
foregoing and the performance and fulfillment by Borrower of all the terms,
conditions, promises, covenants and provisions contained in the Loan Documents,
or in any future agreement or instrument between Borrower and Bank.
1.20 "LINE OF CREDIT" shall mean the Line of Credit as more particularly
set forth in Paragraph 2.1 hereof.
1.21 "LINE OF CREDIT NOTE" shall mean the note evidencing the Line of
Credit, a copy of which is annexed hereto as Exhibit 1.21.
1.22 "LOAN DOCUMENTS" means this Agreement, all notes, mortgages or other
documents executed and delivered by Borrower or any Obligor hereunder, and any
amendments, renewals, modifications or supplements thereto, or substitutions
therefor.
1.23 "OBLIGOR" means the Borrower and Guarantor hereunder, including all
individuals executing this Agreement as parties hereto, all sureties and
guarantors and, if any debt due to Bank hereunder is evidenced by a note or
other instrument, the makers and endorser thereof.
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1.24 "PERMITTED ENCUMBRANCES" shall mean (i) liens for taxes, assessments
or governmental charges or levies on property of the Borrower if the same shall
not at the time be delinquent or thereafter can be paid without penalty, or are
being diligently contested in good faith and by appropriate proceedings and
against which Borrower has established adequate reserves, (ii) liens imposed by
law, such as carriers, warehousemen and mechanics liens, liens incurred in
connection with construction or other similar liens arising in the ordinary
course of business provided same are not at the time due and payable, (iii)
liens arising out of pledge or deposits under workmen's compensation law,
unemployment insurances, old age pension or other social security or retirement
benefit or similar legislation, (iv) liens arising from judgments or awards with
respect to which the Borrower shall be diligently and in good faith prosecuting
an appeal or proceedings for review and shall have secured a stay of execution
pending such appeal or review, (v) liens in favor of Bank and (vi) purchase
money security interests in equipment.
1.25 "PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (whether national, federal, state,
county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
1.26 "PLAN" means an employee benefit plan or other plan maintained for
employees of Borrower and covered by Title IV of ERISA.
1.27 "REPORTABLE EVENT" has the meaning assigned to such term in Title IV
of ERISA, or regulations issued thereunder other than a Reportable Event not
subject to the provision for a thirty (30) day notice to the Pension Benefit
Guaranty Corporation under such regulations.
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1.28 "SENIOR DEBT" shall mean (a) the indebtedness of Borrower other than
Subordinated Debt or (b) the indebtedness of Borrower. The term indebtedness
shall mean all items, which, in accordance GAAP would be included in determining
total liabilities as shown on the liability side of the balance sheet as at the
date indebtedness is determined.
1.29 "SUBSIDIARY" means any corporation of which more than fifty (50%)
percent of the outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether,
at the time, stock of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time, directly or indirectly, owned by Borrower or one or more of its
Subsidiaries.
1.30 "TANGIBLE NET WORTH" shall mean shareholders' equity less (i)
intangible assets and (ii) indebtedness owing to the Borrower from any
shareholder, employee, Subsidiary or other Affiliate. Shareholders' equity and
intangible assets shall be determined in accordance with GAAP.
1.31 "TERM LOAN" means the term loan granted to Borrower as more
particularly described in Paragraph 2.2 hereof.
1.32 "TERM LOAN NOTE" shall mean the note evidencing the Term Loan, a copy
of which is annexed hereto as Exhibit 1.32.
1.33 "UCC" means the Uniform Commercial Code as adopted and in effect under
the laws of the State of New Jersey.
1.34 "RULES OF INTERPRETATION" (a) Any accounting term used in this
Agreement shall have, unless otherwise specifically provided herein, the meaning
customarily given such term in accordance with GAAP and all financial
computations hereunder shall be computed, unless otherwise specifically provided
herein, in accordance with GAAP consistently applied. That certain terms or
computations are explicitly modified in the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing.
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(b) All other undefined terms contained in this Agreement shall, unless the
context indicated otherwise, have the meanings provided for by the UCC to the
extent the same are used and defined herein.
(c) The words "herein", "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole, including the Exhibits and Schedules
hereto, as the same may from time to time be amended, modified or supplemented
and not to any particular section, subsection or clause contained in this
Agreement.
(d) Each reference to a Section, Schedule or Exhibit is to a Section,
Schedule or Exhibit, respectively, of or to this Agreement, unless otherwise
specified or the context otherwise requires.
(e) Wherever from the context it appears appropriate each term stated in
either the singular or plural shall include the singular or plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the masculine,
the feminine and the neuter.
II
LOANS
2.1 LINE OF CREDIT The Bank hereby grants to Borrower under this Agreement
subject to the terms and conditions hereafter set forth a Line of Credit not to
exceed the aggregate outstanding principal sum of Two Million and 00/100
($2,000,000.00) Dollars. Provided that no Default nor Event of Default exists,
the Bank will, under this Paragraph 2.1 from time to time through May 30, 1998,
or such later date as the Bank agrees to in writing, loan to Borrower no later
than two (2) business days after Borrower's request, sums not to exceed the
aggregate outstanding amount of Two Million and 00/100 ($2,000,000.00) Dollars,
which sums shall be repayable in full together with all interest due thereon on
the expiration date of this Line of Credit. The Borrower shall, beginning on the
first day of the first month hereafter and on the
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same date of each month thereafter, pay the Bank interest, computed on the basis
of a 360 day year on the unpaid daily balance of loans under this Paragraph 2.1
at the Bank's Base Rate of interest or at the Libor Rate plus two hundred
twenty-five (225) basis points as more particularly set forth in Paragraph 2.2
hereof. The loans under said Line of Credit shall be evidenced by a Master
Advance Note in substantially the form annexed hereto as Exhibit "2.1".
2.2 INTEREST For all loans set forth in Paragraphs 2.1 hereof, in the event
that Borrower chooses the Bank's Base Rate, interest shall be paid based upon
the Bank's Base Rate. In the event there should be a change in the Bank's Base
Rate which would result in a change in the rate of interest on any loan, then,
in that event, the rate of interest on any loan shall be changed accordingly as
of the date of the change in the Bank's Base Rate, without notice to the
Borrower. If the rate of interest is calculated on the basis of the Bank's Base
Rate, then Borrower shall give not less than three (3) business days prior
written notice to the Bank in order to have the rate changed for a rate based
upon the Libor Rate and shall be effective on the specific date set forth in the
notice. If the Libor Rate is utilized it must be selected for a period of thirty
(30), sixty (60) or ninety (90) days. If the Borrower elects to go back to a
rate based upon the Base Rate, the Borrower shall give not less than one (1)
business day prior written notice to the Bank before the expiration of the
selected thirty (30), sixty (60) or ninety (90) day period. If any loan is
prepaid during any period when the Libor Rate is in effect, the Borrower, at the
Bank's discretion, shall pay such additional sums as shall be necessary in order
to enable the Bank to receive a rate of interest that would equal the rate of
interest which would have been earned until termination of the declared period
of time chosen for the Libor Rate. In the event that Eurodollar loans cannot be
legally made by the Bank or cannot be obtained, then the interest rate shall be
based upon the Base Rate.
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2.2 TERM LOAN The Bank will, under this Agreement and approximately
simultaneously with the execution hereof, loan to the Borrower the sum of One
Million and 00/100 ($1,000,000.00) Dollars, repayable in thirty-six (36)
consecutive monthly installments of Twenty-Seven Thousand Seven Hundred
Seventy-Seven and 77/100 ($27,777.77) Dollars each, commencing on January 1,
1999 and a final payment of Twenty-Seven Thousand Seven Hundred Seventy-Eight
and 05/100 ($27,778.05) Dollars and all interest due thereon, due and payable on
December 1, 2001. From the date hereof until January 1, 1999, the Borrower shall
pay interest only, computed on the basis of a 360 day year at the Bank's Base
Rate of interest or at the Libor Rate plus two hundred twenty-five (225) basis
points. Commencing on February 1, 1999, the Borrower shall, concurrently with
the payments of principal, pay the Bank monthly interest commencing on January
1, 1999, computed on the basis of a 360 day year, for the actual number of days
elapsed, on the unpaid balance at the time of each monthly payment, at the
Bank's Base Rate or the three year Treasury ▇▇▇▇ Index (as published in the Wall
Street Journal on the Tuesday immediately preceding the draw down on the Term
Loan) plus 225 basis points. In the event there should be a change in the Bank's
Base Rate which would result in a change in the rate of interest on this loan,
then, in that event, the rate of interest on this loan shall be changed
accordingly as of the date of the change in the Bank's Base Rate, without notice
to the Borrower. Bank shall have the right in its sole discretion to charge said
payments of principal and/or interest to any checking account of Borrower or to
apply any proceeds received by it against payment of same. Borrower authorizes
Bank to make such charge. Said loan shall be evidenced by a Term Note in
substantially the form annexed hereto as Exhibit "2.3".
2.3 EXCESS LOANS In the event the Bank shall advance an amount in excess of
the aggregate amount of all loans set forth in this Agreement or if the Borrower
should directly or indirectly become indebted to the Bank in an amount which,
together with all
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Advances made pursuant to this Agreement, is in excess of the aggregate amount
set forth in this Agreement, such Advances or such indebtedness shall
nevertheless be covered by the terms of this Agreement.
III
COLLATERAL
3.1 CROSS COLLATERAL All of the Collateral heretofore, herein or hereafter
given or assigned to Bank hereunder shall secure payment of all Liabilities, as
defined herein, of the Borrower to Bank.
3.2 ACCOUNTS RECEIVABLE Borrower hereby creates in favor of Bank and hereby
grants to Bank a security interest in all of the Borrower's Accounts, as defined
herein, presently owned by Borrower or hereafter arising.
3.3 EQUIPMENT Borrower hereby creates in favor of Bank and hereby grants to
Bank, a security interest in all of the Borrower's Equipment, as defined herein,
whether presently owned by Borrower or hereafter acquired, and wherever located.
3.4 INVENTORY Borrower hereby creates in favor of Bank and hereby grants to
Bank a security interest in all of the Borrower's Inventory, as defined herein,
whether presently owned by Borrower or hereafter acquired and wherever located.
3.5 GENERAL INTANGIBLES Borrower hereby creates in favor of Bank and hereby
grants to Bank a security interest in all of Borrower's General Intangibles, as
herein defined, whether presently owned by Borrower or hereafter acquired.
3.6 DEPOSIT ACCOUNTS Borrower hereby creates in favor of Bank, hereby
assigns to Bank and hereby grants to Bank a security interest in the balance of
every deposit account, now or hereafter existing, of the Borrower with Bank, and
all money, Instruments, securities, documents, Chattel Paper, credits, claims
and other property of Borrower now or hereafter in the possession or custody of
Bank or any of its agents.
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3.7 CHATTEL PAPER Borrower hereby creates in favor of Bank and hereby
grants to Bank a security interest in all of the Borrower's Chattel Paper, as
defined herein, whether presently owned by Borrower or hereafter left in the
possession of Bank for any purpose, further including but not limited to, for
collection.
3.8 INSTRUMENTS Borrower hereby creates in favor of Bank and hereby grants
to Bank a security interest in all of the Borrower's Instruments, as defined
herein, whether presently owned by Borrower or hereafter acquired, including but
not limited to all such Instruments now or hereafter left in the possession of
Bank for any purpose, further including but not limited to, for collection.
3.9 DOCUMENTS Borrower hereby creates in favor of Bank and hereby grants to
Bank a security interest in all of Borrower's Documents, as defined herein,
whether presently owned by Borrower or hereafter acquired, including but not
limited to all such Documents now or hereafter left in the possession of Bank
for any purpose.
3.10 PROCEEDS Borrower hereby creates in favor of Bank and hereby grants to
Bank a security interest in all of the products and proceeds of all of the
foregoing Collateral (including all proceeds of insurance policies covering the
Collateral); as well as all accessions, additions, substitutions, replacements
and increments thereto.
3.11 RECORDS Borrower hereby creates in favor of bank and hereby grants to
Bank a security interest in all books and records, including, without
limitation, customer lists, credit files, computer programs, print-outs, and
other computer materials and records of Borrower pertaining to any of the
foregoing.
3.12 CONTINUING PERFECTION Borrower will perform any and all steps
requested by Bank to create and maintain in Bank's favor the lien positions
called for hereunder and a security interest in the Collateral or pledges of
Collateral, including, without limitation, the execution, delivery, filing and
recording of financing statements and continuation statements, supplemental
security agreements, notes and any other documents necessary, in the opinion
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of Bank, to protect its interest in the Collateral. Bank and its designated
officer are hereby appointed Borrower's attorney-in-fact to do all acts and
things which Bank may deem necessary to perfect and to continue the perfected
security interests and liens provided for in this Agreement, including, but not
limited to, executing financing statements on behalf of the Borrower.
IV
CONDITIONS TO FUNDING OF THE AGREEMENT
The obligation of the Bank to make Advances provided for under this
Agreement shall be subject to the satisfaction of or waiver by Bank, prior or
concurrently therewith of each of the following conditions precedent:
4.1 EXECUTION OF LOAN DOCUMENTS All of the Loan Documents shall have been
duly authorized, executed and delivered by the parties hereto and shall be in
full force and effect on and of the date of execution of the Agreement.
4.2 REPRESENTATIONS AND WARRANTIES Each of the representations and
warranties made by or on behalf of the Borrower to the Bank in this Agreement or
in the Loan Documents shall be true and correct in all material respects on and
of the date of the execution of this Agreement.
4.3 CERTIFIED COPIES OF CHARTER DOCUMENTS The Bank shall have received from
Borrower, certified by a duly authorized officer to be true and complete on and
of the date of the execution of the Loan Documents, a copy of the certificate of
incorporation of the Borrower in effect as of the date of the closing of the
Loan Documents and a copy of the by-laws of the Borrower in effect on such date.
4.4 PROOF OF CORPORATE ACTION The Bank shall have received from the
Borrower an original Corporate Resolution and Incumbency Certificate authorizing
the officers of Borrower to enter into this Agreement.
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4.5 COLLATERAL As a result of the perfection of the Security Interest
contemplated in Article II hereof, Bank shall have obtained a first perfected
security interest in the Collateral.
4.6 PAYMENT OF FEES Borrower shall have paid to Bank all fees assessed by
Bank in the approval process and closing of this Agreement, plus all costs of
Bank for attorneys fees and/or expenses incurred by Bank in the closing of this
Agreement.
V
CONDITIONS TO MAKING EACH SUBSEQUENT EXTENSION OF CREDIT
The obligations of the Bank to make additional Advances of credit to the
Borrower subsequent to the date of the execution of the Loan Documents shall be
subject to the satisfaction or waiver by the Bank, prior thereto or concurrently
therewith, of each of the following conditions precedent:
5.1 APPLICATION AND COMPLIANCE The request for a takedown under any loan
facility provided for in this Agreement shall have been made in compliance with
the terms of this Agreement.
5.2 REPRESENTATIONS AND WARRANTIES Each of the representations and
warranties made by or on behalf of the Borrower to the Bank in the Loan
Documents shall have been true and correct in all material respects when made,
shall, for the purposes of this Agreement, be deemed to be repeated on and as of
the date of each takedown and shall be true and correct in all material respects
on and as of each such date.
5.3 PERFORMANCE The Borrower shall have duly and properly performed,
complied with and observed each of the covenants, agreements, and obligations
contained in this Agreement, and shall have duly and properly performed,
complied with and observed in all material respects its covenants, agreements,
and obligations in all other articles of this Agreement and the Loan Documents
to which it is a party or by which it is bound. No event shall have occurred
which constitutes an Event of Default or which with notice or the passage of
time, or both, would constitute an Event of Default under the Agreement or any
of the Loan Documents.
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VI
REPRESENTATIONS, COVENANTS AND WARRANTIES
To induce Bank to enter into this Agreement and to make Advances hereunder,
Borrower represents, covenants and warrants to Bank that:
6.1 GOOD STANDING Exhibit "A" sets forth:
(a) the jurisdiction of incorporation of Borrower and in which it is
in good standing;
(b) all other jurisdictions in which Borrower is authorized to
transact business;
(c) any prior changes in the structure of Borrower, such as mergers,
consolidations and the like;
(d) any prior name changes of Borrower;
(e) all trade names or trade styles under which Borrower conducts
business or issue invoices.
6.2 CORPORATE AUTHORITY Borrower has the corporate power to execute,
deliver and carry out this Agreement and all other Loan Documents and its Board
of Directors has duly authorized and approved the terms of the Agreement
described herein and the taking of any and all action contemplated herein by
Borrower, and this Agreement and all other Loan Documents executed and delivered
by Borrower to Bank constitute the valid and binding obligations of Borrower,
enforceable in accordance with their terms.
6.3 COMPLIANCE WITH LAW The execution of this Agreement, or any other Loan
Documents and the performance by Borrower of its obligations hereunder and
thereunder, does not, at the date of execution hereof, violate any existing law
or regulation or any writ or decree of any court or governmental agency or the
charter or by-laws of Borrower or any agreement or undertaking to which it is a
party or by which it is bound.
6.4 NO LITIGATION There are no judgments against Borrower as of the date of
this Agreement and no material litigation or administrative proceeding before
any governmental body is presently
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pending now, or to the knowledge of Borrower, threatened, against Borrower or
any of its property except as previously disclosed to Bank in writing.
6.5 NO FINANCIAL CHANGE There has been no substantial and material adverse
change in the condition of Borrower, financial or otherwise, since the last
financial statements and reports furnished by Borrower to Bank and the
information contained in said statements and reports is true and correctly
reflects the financial condition of Borrower as of the dates of the statements
and reports.
6.6 TAX COMPLIANCE Borrower has filed, or caused to be filed, all tax
returns required to be filed and has paid all taxes shown to be due and payable
on said return or on any assessment made against it including but not limited to
income taxes, sales taxes, payroll and withholding taxes.
6.7 GOOD TITLE On the date of the Agreement Borrower has good and
marketable title to all of its properties and assets, real, personal and mixed,
and none of said properties or assets is subject to any mortgage, pledge, lien,
security interest, encumbrance, charge or title retention or other security
agreement or arrangement of any character whatsoever except for Permitted
Encumbrances. Borrower shall notify Bank in writing of the granting of any
purchase money security interest in equipment.
6.8 PLACE OF RECORDS, CHIEF EXECUTIVE OFFICE, INVENTORY AND EQUIPMENT
(A) Borrower represents that its chief executive office, and the office
where it keeps its records concerning its Accounts, and all locations of its
Inventory and Equipment, and all other business locations of Borrower are
presently at the locations set forth on Exhibit "A". Borrower will notify Bank
in writing prior to any change in location of or addition to the places referred
to in this paragraph. (B) Except as set forth on Exhibit "A", within four (4)
months prior to the date of this Agreement, none of Borrower's assets have been
moved from any jurisdiction or other locations than the present locations of
assets set forth on Exhibit
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"A" under item 7.8 (A)(v). (C) Borrower represents and covenants that as of the
date hereof, and at all times hereafter while any of the Liabilities are
outstanding, that no Inventory is now, except as set forth on Exhibit "A", and
shall not at any time or times hereafter be stored with a bailee, warehouseman
or similar party without Bank's prior written consent and, if Bank gives such
consent, Borrower will concurrently therewith cause any such bailee,
warehouseman, or similar party to issue and deliver to Bank, in form and
substance acceptable to Bank, warehouse receipts therefor in Bank's name. (D) As
of the date of this Agreement, Borrower does not, and will not while any of the
Liabilities are outstanding, hold any Goods belonging to third parties or in
which other parties have an interest, including any Goods sold on a ▇▇▇▇ and
hold basis, except as set forth on Exhibit "A". (E) Borrower does not presently
and will not while any of the Liabilities are outstanding, purchase or otherwise
hold Goods on a consignment basis except as set forth on Exhibit "A". (F) Except
as set forth on Exhibit "A" none of Borrower's Inventory is, and while any of
the Liabilities are outstanding none of said Inventory will be, of a nature that
contains any labels, trademarks, trade names, or other identifying
characteristics which are the properties of third parties, and the use of which
by Borrower is in violation of the rights of such third parties or under
license, royalty or similar agreements with any third parties. (G) Except as set
forth on Exhibit "A" no persons hold any Inventory of the Borrower. Borrower
will not allow any Inventory to be so held in the future without the prior
written consent of Bank. (H) Except as set forth on Exhibit "A", Borrower has
not purchased any Inventory or equipment except in the ordinary course of
business for value and from persons customarily in the business of selling such
Inventory or Equipment. Except upon prior written notice to Bank, Borrower will
not in the future purchase any Inventory or Equipment except
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in the ordinary course of business from Persons customarily in the business of
selling such Inventory or Equipment. (I) Except as set forth on Exhibit "A",
Borrower does not hold any Instrument or Chattel Paper connected with any
Account.
6.9 COLLATERAL REQUIREMENTS The Borrower will (A) not, without prior
written consent of Bank, give a security interest in Accounts or Inventory or
Equipment or General Intangibles or Chattel Paper or Instruments or any other
assets to anyone other than Bank except for Permitted Encumbrances; (B) keep its
Inventory, Accounts, Chattel Paper, Instruments, General Intangibles and
Equipment and other assets free from all security interests, liens, encumbrances
and taxes, except those provided for herein and except for Permitted
Encumbrances; (C) collect its Accounts and sell its Inventory, only in the
ordinary course of business for value to buyers in the ordinary course of
business; (D) following a Default, and subsequent to receipt of written notice
by Bank, Borrower will not sell or transfer any of its Inventory; (E) keep
accurate and complete records of its Accounts and Inventory; (F) pay and
discharge when due all taxes, levies and other charges on its property; (G) not,
without prior written consent of Bank, remove the Collateral from its present
location, except for the removal of Inventory in the ordinary course of
business; (H) not sell or transfer any Inventory to any Affiliate or Subsidiary;
(I) not sell or transfer any of its Equipment without the prior written consent
of Bank.
6.10 REPORTING REQUIREMENTS Borrower agrees to deliver financial
information and documents as follows:
(a) within ninety (90) days of the close of each fiscal year it will
furnish Bank with annual audited financial statements prepared by an
independent certified public accountant satisfactory to Bank.
- 17 -
(b) within ninety (90) days of the close of each fiscal quarter it
will furnish Bank with internally prepared quarterly financial statements
prepared on a review basis by an independent certified public accountant
satisfactory to Bank. Borrower shall cause its President to execute and
deliver to Bank a Statement Attestation Form verifying the accuracy of the
financial statements.
(c) within fifteen (15) days of the close of each calendar quarter,
Borrower shall supply Bank with Accounts Receivable agings and listings as
of the last business day of the previous quarter.
(d) within fifteen (15) days of the close of each calendar quarter,
Borrower shall supply Bank with an inventory report covering all locations,
as of the last business day of the previous quarter.
(e) within fifteen (15) days of the close of each calendar quarter,
Borrower shall supply Bank with an accounts payable aging, as of the last
business day of the previous quarter.
(f) Borrower shall permit Bank to conduct audits of the books and
records of the Borrower at Bank's discretion during normal business hours.
6.11 INSURANCE Borrower agrees to keep all of the tangible Collateral
assigned hereunder insured, at its own cost and expense, for the benefit of
Bank, and in such amounts, in such companies, and against such risks as may be
acceptable to the Bank, and deliver the policies evidencing such insurance to
the Bank. All policies of insurance on the Collateral shall be in form and with
insurers recognized as adequate by prudent business persons and all such
policies shall be in such amounts as may be satisfactory to Bank prior to
closing. Borrower shall deliver to Bank the original (or certified copy) of each
policy of insurance and evidence of payment of all premiums therefor. Such
policies of insurance shall contain an endorsement, in form and substance
satisfactory to Bank, showing loss payee/ additional insured to Bank. Such
endorsement or an independent instrument furnished to Bank, shall provide that
the insurance companies will give Bank at least thirty (30) days
- 18 -
prior written notice before any such policy or policies of insurance shall be
altered or canceled and that no act or default of Borrower or any other person
shall affect the right of Bank to recover under such policy or policies of
insurance in case of loss or damage. Borrower hereby directs all insurers under
such policies of insurance to pay all proceeds payable thereunder directly to
Bank. Borrower irrevocably makes, constitutes and appoints Bank (and all
officers, employees or agents designated by Bank) as Borrower's true and lawful
attorney (and agent-in-fact) for the purpose of making, settling and adjusting
claims under such policies of insurance (provided that until an Event of Default
exists, Bank shall consult with Borrower prior to finally making, settling or
adjusting claims under such policies of insurance), endorsing the name of
Borrower on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance and for making all determinations and
decisions with respect to such policies of insurance. In the event Borrower, at
any time or times hereafter, shall fail to obtain or maintain any of the
policies of insurance required above or to pay any premium in whole or in part
relating thereto, then Bank, without waiving or releasing any obligation or
default by Borrower hereunder, may (but shall be under no obligation to do so)
at any time or times thereafter obtain and maintain such policies of insurance
and pay such premium and take any other action with respect thereto which Bank
deems advisable. All sums so disbursed by Bank, including reasonable attorneys'
fees, court costs, expenses and other charges related thereto, shall by payable,
on demand, by Borrower to Bank and shall be additional Liabilities hereunder
secured by the Collateral.
6.12 PAYMENT OF EXPENSES Borrower shall pay any and all expenses, including
reasonable counsel fees and disbursements, filing and recording fees, and all
other charges and expenses which may be required in connection with the loans
and advances made under this Agreement.
- 19 -
6.13 LIFE INSURANCE Borrower agrees to maintain a life insurance policy on
the life of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ in the amount of Five Hundred Thousand and
00/100 ($500,000.00) Dollars. Borrower is to keep said policy in full force and
effect, and pay all premiums as they fall due.
6.14 LIMITATION ON INDEBTEDNESS Borrower will not, without the prior
written consent of Bank, borrow from anyone other than Bank, or assume,
guarantee or endorse any debt or obligation of any person, firm or corporation,
except for the endorsement of instruments for deposit.
6.15 DISCHARGE OF TAXES AND LIENS Bank may, at its option, discharge any
taxes, liens, security interests or other encumbrances at any time levied or
placed on the Collateral and may pay for the maintenance of the Collateral and
Borrower will reimburse Bank on demand for any payment made or any expense
incurred by Bank pursuant to the foregoing authority, with interest at the
highest rate provided for in this Agreement.
6.17 GOOD WORKING CONDITION Borrower shall maintain all of its property in
good working condition.
6.18 MAINTAIN CORPORATE EXISTENCE (A) Borrower shall maintain in good
standing its corporate existence and will not, without the prior written consent
of Bank, dissolve nor liquidate, nor merge nor consolidate with nor acquire nor
affiliate itself with any other business entity nor form any subsidiary.
(B) Borrower will not change its name without furnishing to Bank at least
ten (10) days prior written notice thereof.
(C) Borrower will notify Bank in writing prior to utilizing any trade name
not set forth on Exhibit "A".
6.19 DIVIDENDS Borrower shall not, without the prior written consent of
Bank, pay or declare any cash or property dividends, nor otherwise make a
distribution of capital, nor redeem, retire or repurchase any stock of Borrower
except for dividends to pay taxes on Borrower's income under an S corporation
status.
- 20 -
6.20 LOANS AND ADVANCES Borrower shall not, without prior written consent
of Bank, make any loans or advances to any third parties in excess of
Seventy-Five Thousand and 00/100 ($75,000.00) Dollars.
6.21 PROTECTION OF COLLATERAL Borrower shall comply with any and all laws,
legislation, rules and regulations in effect as of the date hereof and
subsequent hereto, including but not limited to all state and federal laws,
legislation, rules and regulations relating to the environment, employee pension
and benefit funds, the payment of taxes, assessments, and other governmental
charges, zoning, and the use, occupancy, transfer or encumbrancing of the
Collateral. Borrower agrees to comply with all reasonable conditions required by
Bank designed to protect Bank and the Collateral from the effect of the Spill
Compensation and Control Act (N.J.S.A. 58:10-23.11 et seq.), the Environmental
Cleanup Responsibility Act as amended by the Industrial Site Recovery Act
(N.J.S.A. 13:IK-6 et seq.), the Employee Retirement Income Security Act (Public
Law 94-306, as amended), and such other laws, legislation, rules and regulations
as are in, or may come into, effect and apply to the Borrower, the Bank, the
transactions contemplated hereby or the Collateral or any occupants or users
thereof, whether as lessees, tenants, licensees or otherwise. Borrower agrees to
pay any costs required with any of the above conditions.
6.22 INSPECTION Bank (by any of its officers, employees and agents) shall
have the right, at any time or times during Borrower's usual business hours, to
inspect the Collateral, all records related thereto (and to make extracts from
such records) and the premises upon which any of the Collateral is located, to
discuss Borrower's affairs and finances with any person and to verify in any
manner the Bank deems advisable, the amount, quality, quantity, value and
condition of, or any other matter relating to, the Collateral.
- 21 -
6.33 ERISA (A) Borrower represents that no Reportable Event or failure of
compliance with the Internal Revenue Code of 1986, as amended, has occurred and
is continuing with respect to any Plan; (B) Borrower will comply with the
provisions of ERISA and the Internal Revenue Code of 1986, as amended, with
respect to each Plan.
6.34 MAINTENANCE OF ACCOUNTS During the length of this Agreement, Borrower
shall maintain all of its business and operating accounts at Bank.
6.35 TANGIBLE NET WORTH Borrower shall, as of December 31, 1997, have
attained a Tangible Net Worth of at least Two Million Three Hundred Thousand and
00/100 ($2,300,000.00) Dollars.
6.36 DEBT TO WORTH RATIOS Borrower shall during the length of this
Agreement maintain a ratio of Senior Debt to Tangible Net Worth not to exceed
3.25 to 1.0.
VII
EVENTS OF DEFAULT
The occurrence of any of the following shall constitute an Event of
Default:
7.1 NON-PERFORMANCE Failure on the part of any Obligor to perform any term,
covenant or condition contained in any Loan Document or any other agreement now
existing or hereafter entered into with Bank, or in any document executed in
connection with any agreements, including, but not limited to, the payment of
any Liability when due.
7.2 MISREPRESENTATION Any representation, covenant or warranty made by any
Obligor in this Agreement, or any Loan Document, or in connection with any
instrument of guaranty or security furnished to Bank shall have proved to have
been inaccurate in any substantial or material respect as of the date or dates
with respect to which it is deemed to have been made.
- 22 -
7.3 OTHER SECURITY INTEREST Borrower shall have caused or permitted a
security interest, perfected or otherwise, other than the security interest
specifically provided for or permitted hereunder, to be created in any
Collateral provided for hereby, or shall have failed to take any action
requested by Bank to perfect or protect the security interest provided for
herein or Borrower shall not have notified Bank of any changes to applicable law
affecting either the Bank's security interest in the Collateral or its priority
to same.
7.4 INSOLVENCY Any Obligor shall have applied for or consented to the
appointment of a custodian, receiver, trustee or liquidator of all or a
substantial part of its assets; a custodian shall have been appointed with or
without consent of any Obligor; any Obligor is generally not paying its debts as
they become due; has made a general assignment for the benefit of creditors; has
been adjudicated insolvent; or has filed a voluntary petition in bankruptcy, or
a petition or an answer seeking reorganization or an arrangement with creditors
or to take advantage of any insolvency law, or an answer admitting the material
allegations of a petition in any bankruptcy, reorganization or insolvency
proceeding; or taken corporate action for the purpose of effecting any of the
foregoing; or an order, judgement or decree shall have been entered, without the
application, approval or consent of any Obligor by any court of competent
jurisdiction approving a petition seeking reorganization of any Obligor, or
appointing a receiver, trustee, custodian or liquidator of any Obligor, or a
substantial part of its assets and such order, judgment or degree shall have
continued unstayed and in effect for any period of forty-five (45) consecutive
days; or a petition in bankruptcy shall have been filed against any Obligor and
shall not have been dismissed for a period of thirty (30) consecutive days, or
if an Order for Relief has been entered under the Bankruptcy Code, or if any
Obligor shall have suspended the transaction of its usual business.
7.5 DEATH The death of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
- 23 -
7.6 CHANGE IN MANAGEMENT A substantial change in the present management of
Borrower which shall mean the departure of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ from control
over the day to day operations of Borrower.
7.7 JUDGMENT OR LIEN Entry of a judgment, issuance of any garnishment,
attachment or distraint, the filing of any lien or of any governmental
attachment against any property of the Borrower which entry, issuance,
attachment or filing shall have continued unstayed and in effect for a period of
thirty (30) consecutive days.
7.8 NONCOMPLIANCE WITH LEASES OR LAWS Failure of Borrower to comply with
the terms and conditions of any lease covering the premises where the Collateral
is located and any orders, ordinances, laws or statutes of any city, state or
other governmental department having jurisdiction with respect to such premises
or the conduct of business thereon.
7.9 IMPAIRMENT OF RESPONSIBILITY Occurrence of any event which, in the
opinion of Bank, impairs the business condition, financial or otherwise, of any
Obligor.
7.10 ADVERSE CHANGE The determination by Bank that a material adverse
change has occurred in the financial condition of any Obligor.
7.11 MISREPRESENTATION OF FACT The determination by Bank that a material
misrepresentation of fact has been made by any Obligor in any writing
supplementary or ancillary hereto.
7.12 TRANSFER OF OWNERSHIP The sale or transfer, without the prior written
consent of Bank, of any of the capital stock of Borrower or without the prior
written consent of Bank, the issuance of any additional capital stock of
Borrower.
7.13 ERISA If (A) any Reportable Event occurs and shall be continuing for
thirty (30) days, or (B) any Plan shall be terminated, or (C) the Plan
administrator of any Plan shall file with the Pension Benefit Guaranty
Corporation ("PBG C") a notice of intention to terminate such Plan, or (D) the
PBG C shall institute proceedings to terminate any Plan or appoint a trustee to
administer any Plan, and, if in any of the cases set forth in (A)
- 24 -
through (D) above, the Bank reasonably determines in good faith that any Plan
will be terminated and that the amount of the unfunded guaranteed benefits
(within the meaning of Title IV of ERISA) resulting upon termination of such
Plan would have a material adverse effect on the financial condition and
properties or operation of Borrower if a lien against the assets of Borrower
were to result under ERISA.
VIII
CONSEQUENCE OF EVENT OF DEFAULT
In case any Event of Default shall have occurred, then and in every such
Event of Default, Bank may take any or all of the following actions, at the same
time or at different times:
8.1 ACCELERATION Declare all Advances, sums and Liabilities owing Bank from
Borrower under this Agreement or any other agreement or loan between Bank and
Borrower to be forthwith due and payable, whereupon all such sums shall
forthwith become due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by Borrower.
8.2 POSSESSION Proceed with or without judicial process to take possession
of all or any part of the Collateral provided for herein not already in the
possession of Bank and the Borrower agrees that upon receipt of notice of Bank's
intention to take possession of all or any part of said Collateral, the Borrower
will do everything reasonably necessary to assemble the Collateral and make same
available to Bank at a place to be designated by Bank. Borrower hereby waives
any and all rights it may have, by statute, constitution or otherwise to notice
or a hearing to determine the probable cause of Bank to obtain possession, by
Court proceedings or otherwise, of the Collateral provided for in this or in any
other agreement with Bank.
- 25 -
8.3 METHODS OF SALE So long as Bank acts in a commercially reasonable
manner, the Bank may assign, transfer and deliver at any time or from time to
time the whole or any portion of the Collateral or any rights or interest
therein in accordance with the Uniform Commercial Code, and without limiting the
scope of Bank's rights thereunder, Bank may sell the Collateral at public or
private sale, or in any other manner, at such price or prices as Bank may deem
best, and either for cash or credit, or for future delivery, at the option of
Bank, in bulk or in parcels and with or without having the Collateral at the
sale or other disposition. Bank shall have the right to be the purchaser at any
public sale. Bank shall have the right to conduct such sales on Borrower's
premises or elsewhere and shall have the right to use Borrower's premises
without charge for such sales for such time or times as the Bank may see fit.
Bank is hereby granted license or other right to use, without charge, Borrower's
labels, patents, copyrights, rights of use of any name, trade secrets, trade
names, trademarks and advertising matter, or any property of a similar nature,
as it pertains to the Collateral, in advertising for sale and selling any
Collateral and Borrower's rights under all licenses and franchise agreements
shall inure to Bank's benefit. Borrower agrees that a reasonable means of
disposition of Accounts shall be for Bank to hold and liquidate any and all
Accounts. In the event of a sale of the Collateral, or any other disposition
thereof, Bank shall apply all proceeds first to all costs and expenses of
disposition, including attorneys' fees, and then to the Liabilities of Borrower
to Bank.
8.4 RETENTION OF COLLATERAL Elect to retain the Collateral or any part
thereof in satisfaction of any or all Liabilities due from Borrower to Bank upon
notice of such proposed election to Borrower and any other party as may be
required by the Uniform Commercial Code.
- 26 -
8.5 SET-OFF Bank or its affiliates immediately, and without notice or other
action to set-off against any of the Obligor's Liabilities to Bank any sum owed
by Bank in any capacity to any Obligor whether due or not, and Bank shall be
deemed to have exercised such right of set-off and to have made a charge against
any such sum immediately upon the occurrence of such Event of Default, even
though the actual book entries may be made at some time subsequent thereto.
8.6 ATTORNEYS' FEES AND EXPENSES Add to the Liabilities of Borrower, Bank's
reasonable expenses to obtain or enforce payment of any Liabilities hereunder
and the enforcement or liquidation of any debt hereunder shall include
reasonable attorneys' fees plus other legal expenses incurred by Bank.
8.7 INCREASE IN INTEREST Increase the rate of interest under any
Liabilities to a rate of three (3%) percent in excess of the interest rates
otherwise provided for in this Agreement. Unless otherwise agreed by Bank, this
increase in interest rates shall be retroactive to the date of the first
occurrence of an Event of Default.
8.8 OTHER REMEDIES Exercise any other remedies under the Uniform Commercial
Code or other applicable law, or any other Loan Document.
IX
MISCELLANEOUS
9.1 NO WAIVER Borrower agrees that no delay on the part of Bank in
exercising any power or right hereunder or any other Loan Document shall operate
as a waiver of any such power or right, preclude other or further exercise
thereof, or the exercise of any other power or right. No waiver whatsoever shall
be valid unless in writing signed by Bank and then only to the extent set forth
therein.
- 27 -
9.2 WAIVER OF NOTICE Borrower waives presentment, dishonor and notice of
dishonor, protest and notice of protest of all commercial papers at any time
held by Bank on which the Borrower is any way liable.
9.3 ONE INSTRUMENT The provisions of this Agreement shall be in addition to
those of any notes or other evidence of Liability held by Bank relating to this
particular transaction, all of which shall be construed as one instrument.
9.4 LAW OF NEW JERSEY This Agreement and the rights of the parties hereto
shall be governed by the laws of the State of New Jersey.
9.5 JURISDICTION Borrower hereby irrevocably consents to the nonexclusive
jurisdiction of the Courts of the State of New Jersey or any Federal Court in
such State in connection with any action or proceeding arising out of or related
to this Agreement or any other Loan Document. In any such litigation, Borrower
waives personal service of any summons, complaint or other process and agrees
that service of any summons, complaint or other process may be made by certified
or registered mail to it, at the address provided herein. BORROWER WAIVES TRIAL
BY JURY IN ANY LITIGATION ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT.
9.6 SUCCESSORS OR ASSIGNS This Agreement and all other Loan Documents shall
be binding upon and shall inure to the benefit of the parties hereto, their
respective successors and assigns.
9.7 RIGHTS CUMULATIVE The rights and remedies herein expressed or in any
other Loan Document to be vested in or conferred upon Bank shall be cumulative
and shall be in addition to and not in substitution for or in derogation of the
rights and remedies conferred upon secured creditors by the Uniform Commercial
Code or any other applicable law.
9.8 NOTIFICATION OF DISPOSITION OF COLLATERAL Any notification of a sale or
other disposition of the Collateral or of any other action by Bank required to
be given by Bank to the Borrower will be sufficient if given personally or
mailed to Borrower, by certified mail, at its chief executive office set
- 28 -
forth on Exhibit "A" not less than five (5) days prior to the day on which such
sales or other disposition will be made, and such notification shall be deemed
reasonable notice.
9.9 ADDRESS OF NOTICE Any written notice required to be given hereunder
shall be sufficient if mailed to Borrower at the addresses set forth on the face
page of this Agreement and to the Bank c/o ▇▇▇▇ ▇▇▇▇▇- V.P. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
9.10 TITLES The titles and headings indicated herein are inserted for
convenience only and shall not be considered a part of this Agreement or in any
way limit the construction or interpretation of this Agreement.
9.11 DISCLOSURE Bank is hereby authorized to disclose any financial or
other information it may have about Borrower to any present or future
participant, any regulatory body or agency having jurisdiction over Bank, or to
any Person.
9.12 CAPITAL ADEQUACY If after the date of this Agreement, Bank shall
determine that the adoption of any applicable law, rule or regulation regarding
capital requirements for banks, or bank holding companies, or any change
therein, or any change in the interpretation or administration thereof by
governmental authority, central bank or comparable agency charged with the
interpretation, or administration thereof, or compliance by the Bank with any
request or directive of such entity regarding capital adequacy (whether or not
having the force of law), has the effect of reducing the return on the Bank's
capital to a level below that which Bank could have achieved (taking into
consideration Bank's policies with respect to capital adequacy immediately
before such adoption, change or compliance and assuming that each Bank's capital
was fully utilized prior to such adoption, change or compliance) but for such
adoption, change or compliance as a consequence of its commitment to make or the
making or maintenance of the Advances referenced herein, by an amount deemed by
the Bank to be material, Borrower shall pay to the Bank as an additional fee
from time to time, on demand, such amount as the bank shall have reasonably
determined to be necessary to compensate it for such
- 29 -
reduction, with interest on each such amount from the date demanded until paid
in full at the highest rate provided for with respect to the Advances referenced
herein. Any amount not paid upon demand shall be added to and become part of the
Liabilities. The determination by the Bank of such amount, if done on the basis
of any reasonable averaging and attribution methods, shall, in the absence of
manifest error be conclusive. At the Borrower's request, the Bank shall
demonstrate the basis of any such determination. Failure on the part of the Bank
to demand compensation for such increased costs or reduction in amounts received
or receivable or reduction in return on capital with respect to any period shall
not constitute a waiver of the Bank's right to demand compensation with respect
to such period or any other period.
9.13 INDEMNIFICATION Each of the Obligors agree to pay, reimburse,
indemnify and hold harmless, the Bank, its directors, officers, employees,
agents and representatives from and against any and all actions, costs, damages,
disbursements, expenses (including attorneys fees) judgments, liabilities,
losses, obligations, penalties and suits of any kind or nature whatsoever with
respect to:
(a) the development, negotiation, preparation, execution, enforcement,
amendment or modification of any of the Loan Documents;
(b) the exercise of any right or remedy granted in any of the Loan
Documents, the collection or enforcement of any of the Liabilities and the
proof or allowability of any claim arising out of any of the Loan
Documents, whether in any bankruptcy or receivership proceeding or
otherwise;
(c) any claim of third parties and the prosecution or defense thereof,
arising out of or in any way connected with any of the Loan Documents; and
(d) any and all recording fees and taxes, and any and all liabilities
with respect thereto or resulting from any delay in paying stamp and other
taxes, if any, which may be payable or determined to be payable in
connection with the Loan Documents.
- 30 -
Notwithstanding the foregoing, Bank shall not be entitled to any
indemnification with respect to either its own gross negligence or willful
misconduct.
9.14 NO THIRD PARTY BENEFICIARY Nothing contained in this Agreement or in
the conduct of any party hereto shall be deemed to vest in any third party any
rights or privileges pertaining to or under this Agreement.
9.15 COUNTERPARTS This Agreement or any of the Loan Documents associated
herewith may be signed in counterparts and shall constitute an original copy
thereof.
9.16 TERM This Agreement shall with respect to Paragraph 2.2 hereof have a
term through May 30, 1998. Notwithstanding the foregoing, and in absence of an
Event of Default, Bank may at any time terminate this Agreement upon ninety (90)
days prior written notice at any time. The Advances provided for in Paragraph
2.1 hereof shall be due and payable in full upon expiration of the term as set
forth herein. Notwithstanding the giving of any notice of termination, the
rights of Bank hereunder and the obligations of Borrower hereunder, including
but not limited to the grant of security interests in the Collateral as set
forth in Article III hereof, shall remain in full force and effect until all of
the Liabilities of Borrower to Bank are paid in full.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
SUMMIT BANK
BY:
-------------------------------
▇▇▇▇ ▇▇▇▇▇-V.P.
- 31 -
▇▇▇▇▇▇▇▇▇▇ GRAPHICS, INC.
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇-PRES.
ATTEST: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇-Secretary
EXHIBIT "A"
REPRESENTATIONS OF BORROWER
7.1 (A) Jurisdiction of incorporation of Borrower and in which it is in good
standing:
New Jersey
(B) Jurisdiction(s) Borrower is authorized to transact business:
New Jersey
(C) Prior changes in structure (mergers, consolidations, etc.):
(D) Prior changes in name of Borrower:
- 32 -
(E) Trade names used by Borrower or under which it issues invoices:
7.8 (A) (i) Borrower's chief executive office:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
(ii) Change in location of foregoing within past four (4) months:
(iii) Location of Books and Records:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
(iv) Change in location of foregoing within past four (4) months:
(v) Present location(s) of Inventory and Equipment:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
(B) Location from which assets have been moved or other location of assets
within past four (4) months:
(C) (i) Name and address of warehouses, bailees or similar parties where
any Inventory of Borrower is located:
- 33 -
Exhibit "A" continued:
(ii) if any: warehouse receipts are/are not issued:
(iii) If warehouse receipts issued: they are negotiable/non-negotiable:
(D) Goods held by Borrower in which other parties have any interests,
including Goods sold on a ▇▇▇▇ and hold basis:
(E) Goods held by Borrower on a consignment basis:
(F) Inventory with trademarks, trade names, and the like which are the
property of others.
(G) Names and addresses of persons holding Goods belonging to Borrower and
location of Goods:
(H) Purchases of Inventory or Equipment not in the ordinary course of
business or from persons not customarily in the business of selling
such Goods:
- 34 -
Exhibit "A" continued:
(I) Instruments or Chattel Paper held by Borrower relating to Accounts:
- 35 -
