DIME
THE DIME SAVINGS BANK
OF NEW YORK, FSB
0000 XXX. OF THE AMERICAS, 5TH FL
NEW YORK, N.Y 10036
BUS:(000)000-0000/6
FAX (000)000-0000
March 20, 2000
Polymer Research Corp. of America
0000 Xxxx Xxxxxx Xxxxxxxx, Xxx Xxxx 00000
Re: Line of Credit Agreement
Gentlemen:
We are pleased to advise you that we have approved a line of credit of up to a
combined aggregate amount of $750,000 outstanding at any one time, with the
sublimits described below (the "Line of Credit") for Polymer Research Corp. of
America (the "Borrower"). The Line of Credit shall include (a) Revolving Loans
on a discretionary and demand basis not to exceed $250,000 at any one time
outstanding (the "Revolving Line of Credit") and (b) a Term Loan in the original
principal amount of $500,000. The terms "we", "us", "our", "undersigned" or
"Bank" as used herein shall mean The Dime Savings Bank of New York FSB and its
successors and assigns. All capitalized terms used in this Agreement shall have
the meanings given such terms in Sections I and II hereof or as otherwise
defined herein. The following general terms and conditions will apply to the
Line of Credit:
I. TERMS AND PAYMENTS
Revolving Loans:
For the period commencing on the date all of the conditions of this Line of
Credit Agreement are complied with (the "Closing Date") and ending on June 30,
2000 (the "Termination Date"), the Bank, in its discretion may make Revolving
Loans to the
Borrower pursuant to the Revolving Line of Credit. Within the Revolving Line of
Credit and prior to the Termination Date, the Borrower may borrow, repay and
reborrow from time to time. Xxxxxxxx's Revolving Loans shall be evidenced by the
Bank's standard form of Demand Grid Note signed by Xxxxxxxx (the "Grid Note").
Term Loan:
On the date, but not later than June 30, 2000 after the Closing Date, that the
Borrower notifies the Bank in writing (the "Funding Date"), provided, there
exists no Event of Default, the Bank shall make a Term Loan to Borrower in the
principal amount of $500,000 repayable in 60 equal monthly principal payments
commencing one (1) month after the Funding Date, each in the amount of $8,333.33
(except the last payment shall be in the then unpaid principal amount of the
Term Loan), which Term Loan shall be evidenced by Borrower's Term Note in that
amount (the "Term Note").
Purpose of Loans:
The Line of Credit shall be used for working capital purposes and to repay an
existing mortgage loan from Tama Realty Co. on the Borrower's place of business
(the "Premises") . Interest Rates:
a. Revolving Loans - Reference Rate (as defined in the Grid Note) plus 1% per
annum.
b. Term Loan - a Fixed Rate of 8.5% per annum, payable in arrears.
c. Interest shall commence on the Closing Date and the Funding Date, as the
case may be, and be automatically charged monthly.
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d. Prepayment - The Term Note may be prepaid in whole or in part without any
prepayment penalty.
Expenses:
The Borrower shall pay all of the Bank's expenses, including attorney's fees,
plus out-of-pocket disbursements, incurred in connection with the preparation,
negotiation and closing of the Loan Documents.
Origination and Commitment Fees:
The Borrower shall pay the Bank prior to or at Closing an origination fee with
respect to the Term Loan in the amount of $2,500. The Borrower shall pay the
Bank prior to or at Closing a commitment fee of $500 with respect to the
Revolving Line of Credit and a fee of $500 on each anniversary of the Closing
Date thereafter. All fees shall be deemed earned as of the date hereof.
Collateral:
See attached Exhibit A. In addition, Borrower shall execute and deliver and
cause such other parties as Bank shall require, security agreements and other
documents as shall grant to the Bank a first and prior security interest in and
lien on a certificate of deposit, money market account, securities or government
securities of a type and value satisfactory to the Bank with a market/collateral
value of not less than $150,000 at the Closing Date (the "Securities
Collateral"). The Bank on each anniversary date of the Closing Date, provided,
that there exists no Event of Default, shall release to Borrower, Securities
Collateral having a market/collateral value as of such date of $30,000. The
determination of the market/collateral value and the Securities Collateral to be
released shall be determined by the Bank in its sole discretion.
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Loan Documents:
See Section VII below. The Loan Documents provide requirements for covenants,
representations and warranties and for the granting of liens and security
interests in the Collateral in our favor and for Events of Default.
II.DEFINITIONS
1. "Financial Statements" means the financial statements required to be
delivered, from time to time, by Borrower pursuant to Section V hereof.
2. "GAAP" means generally accepted accounting principles in the United
States as in effect on the date hereof, applied on a basis consistent with those
used in the preparation of the Financial Statements.
3. "Laws" shall have the meaning given such term in Section III hereof.
4. "Licenses" shall have the meaning given such term in Section III hereof.
5. "Tangible Net Worth" means, for any period, the assets of the Borrower,
all as determined by GAAP and as reported in Borrower's Financial Statements,
which assets shall exclude all goodwill, all intangible assets and all loans,
advances, exchanges and other indebtedness owing to Borrower by any shareholder,
officer, employee or a relative thereof or any affiliate of Borrower, less Total
Liabilities.
6. "Total Liabilities" means, for any period, all liabilities of the
Borrower, all as determined by GAAP and as reported in Borrower's Financial
Statements, which liabilities shall include the Revolving Loans and the Term
Loan then outstanding.
7. "Debt" means (i) indebtedness or liability for borrowed money, or for
the deferred purchase price of property or securities, (ii) trade obligations,
(iii) the principal portion of obligations as lessee under capital leases and
(iv) all guarantees
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or endorsements relating to the obligations or indebtedness of anyone other than
the Borrower.
8. "Depreciation" means, for any period, the depreciation of the Borrower's
assets, all as determined in accordance with GAAP.
9. "EBITDA" means, for any period, the Borrower's Net Income, plus Interest
Expenses, plus Taxes, plus Depreciation, plus Principal Amortization, all for
such period.
10. "Interest Expense" means, for any period, all interest paid or prepaid
by Borrower on all of its Debt, including the Revolving Loans and the Term Loan,
during such period.
11. "Net Income" means, for any period, the net income of the Borrower, all
as determined in accordance with GAAP.
12. "Principal Amortization" means, for any period, all scheduled principal
payments (whether or not actually paid) of all Debt of Borrower.
13. "Taxes" means, for any period, the income and franchise taxes of the
Borrower, all as determined in accordance with GAAP.
III. OTHER TERMS OF LINE OF CREDIT
Under the Revolving Line of Credit, borrowings may be made from time to time and
shall be repayable on demand, but may be prepaid in whole or in part with
accrued interest to the date of prepayment.
Upon the occurrence of an Event of Default under the Grid Note or the Term Note
or any of the other Loan Documents we shall have the right to demand payment of
all loans then outstanding under this Line of Credit and the other indebtedness
of the Borrower to Bank then outstanding, together with all accrued and unpaid
interest thereon (the "Obligations").
THE CONTINUING AVAILABILITY OF THE REVOLVING LINE OF CREDIT IS AT ALL TIMES
SUBJECT TO OUR CONTINUING SATISFACTION, AS
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DETERMINED BY US IN OUR SOLE AND ABSOLUTE DISCRETION, WITH THE FINANCIAL
CONDITION OF THE BORROWER AND ITS COMPLIANCE WITH THE TERMS AND PROVISIONS OF
THIS AGREEMENT AND EACH OF THE LOAN DOCUMENTS REFERRED TO HEREIN.
Xxxxxxxx hereby agrees that we each shall at any time and from time to time
during each calendar year be permitted to make one or more field examinations of
Borrower's business, the Collateral and its locations, which examinations prior
to an Event of Default shall be made upon not less than three (3) days notice
and at reasonable times and after an Event of Default at any time and from time
to time and without notice.
ANYTHING IN THIS AGREEMENT, THE GRID NOTE, THE TERM NOTE OR ANY OTHER LOAN
DOCUMENT RELATING TO THE LINE OF CREDIT TO THE CONTRARY NOTWITHSTANDING, THE
ENUMERATION IN THIS AGREEMENT, THE GRID NOTE OR THE TERM NOTE OR IN SUCH OTHER
LOAN DOCUMENT OF SPECIFIC OBLIGATIONS TO US, EVENTS OF DEFAULT AND/OR CONDITIONS
TO THE AVAILABILITY OF THIS LINE OF CREDIT AND THE REVOLVING LOANS SHALL NOT BE
CONSTRUED TO QUALIFY, DEFINE OR OTHERWISE LIMIT OUR RIGHT, POWER OR ABILITY, AT
ANY TIME, UNDER APPLICABLE LAW, TO MAKE DEMAND FOR PAYMENT OF THE ENTIRE
OUTSTANDING PRINCIPAL OF AND INTEREST DUE UNDER THE REVOLVING LINE OF CREDIT AND
THE GRID NOTE OR OUR RIGHT NOT TO MAKE ANY EXTENSION OF CREDIT UNDER THIS LINE
OF CREDIT FOR ANY REASON OR NO REASON AND BORROWER AGREES THAT ITS BREACH OF OR
DEFAULT UNDER ANY SUCH ENUMERATED OBLIGATIONS OR CONDITIONS IS NOT THE ONLY
BASIS FOR DEMAND TO BE MADE, AS XXXXXXXX'S OBLIGATION TO MAKE PAYMENT OF
REVOLVING LOANS SHALL AT ALL TIMES REMAIN A DEMAND OBLIGATION, OR FOR A REQUEST
FOR AN EXTENSION OF CREDIT TO BE DENIED.
The chief executive office of Borrower and the address at which Xxxxxxxx's
books and records with respect to its accounts receivable and the other
Collateral is located at 0000 Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000.
The Borrower is and at all times will continue to be (a) in compliance with
the requirements of all material laws, rules, regulations and orders of any
federal, state or local governmental authority relating to its business,
including, the handling and storage of hazardous materials and other
environmental laws and the regulations promulgated thereunder ("Laws") and (b)
duly licensed, to the extent required by Law by New York State and by any other
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federal or local governmental agency in any state in which Borrower does or
shall hereafter conduct business ("Licenses").
The Borrower shall promptly notify Bank in writing of any existing or
future proceeding, investigation or threatened proceeding or investigation with
respect to a violation of any material Law or the suspension, revocation or
termination of any License.
So long as any obligations under the Line of Credit shall remain
outstanding then the Borrower shall not grant, permit or cause any mortgage,
lien or encumbrance to be placed on or be recorded with respect to the Premises
or any part thereof, without the prior written consent of the Bank.
The Borrower shall maintain the Bank as its primary depositor and banking
facility.
Each borrowing by Borrower under the Line of Credit shall constitute a
representation that (a) each of the provisions of this Section III are true and
correct as of the date of such borrowing and (b) there exists no Event of
Default or default with the giving of notice and/or the lapse of time would
constitute an Event of Default.
IV. PAYMENTS
All payments of principal, interest and fees payable by the Borrower under
the Line of Credit shall be made in immediately available funds at our office at
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and may be charged at our discretion
to the account of the Borrower maintained with us.
V. FINANCIAL REPORTING
In addition, the continuing availability of the Line of Credit is subject
to the Borrower furnishing to us:
a. Within one hundred twenty (120) days after the end of each fiscal year
the Borrower's 10-K Report filed with the Securities and Exchange Commission
("SEC") presenting the annual
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financial statements of Xxxxxxxx prepared by Xxxxxxxx's current independent
certified accountants or by another regular independent certified accountant
acceptable to Bank, on an audited basis as at the end of such annual fiscal
period, including a balance sheet and related income, surplus and cash flows
statements;
b. Within ninety (90) days after the end of each quarterly period in each
fiscal year Xxxxxxxx's 10-Q Report filed with the SEC, presenting Borrower's
Financial Statements for each such period prepared by Xxxxxxxx's accountants;
c. Together with each Financial Statement referred to in clause (a) above,
a backlog report prepared by the management of the Borrower, in form
satisfactory to Bank; and
d. Such other information, as reasonably requested by the Bank, from time
to time. Borrower's Financial Statements and all other statements and reports
required by this Section V or by any Loan Document shall be prepared in
accordance with GAAP and shall be in form, scope and substance reasonably
satisfactory to the Bank.
VI. FINANCIAL COVENANTS
As a further condition to the extension of the Line of Credit and so long as any
obligation of the Borrower shall remain outstanding under the Line of Credit the
Borrower shall not:
(a) permit Tangible Net Worth as at the end of the annual fiscal period
December 31, 1999 to be less than $3,200,000 and permit Tangible Net
Worth at the end of any quarterly fiscal period thereafter to be less
than $3,250,000; and
(b) permit the ratio of EBITDA to Interest Expense plus Principal
Amortization relating to the loans then outstanding under the Line of
Credit to be less than 2.5 to 1.0, as at the end of each fiscal year,
commencing with December 31, 2000, of the Borrower; and
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(c) incur net losses (as determined in accordance with GAAP and reported
in its Financial Statements) in any two (2) consecutive quarterly
fiscal periods.
The provisions of Sections III, V and VI shall survive the execution of
this Agreement and the making of the initial Revolving Loans under the Line of
Credit and the making of the Term Loan.
VII. LOAN DOCUMENTS
The extension of the Line of Credit to the Borrower, on the terms set forth
herein, is further subject to our receipt in form, scope and substance
satisfactory to us of:
a. our standard form of banking resolutions and signature cards for the
authorized signatories of Borrower and Automatic Debit Authorization;
b. the documents set forth in Exhibit B annexed hereto;
c. evidence of the satisfaction of the existing mortgage on the Premises,
which shall be delivered on or after the Funding Date;
d. UCC-3 Termination Statements of any secured party other than the Bank
which shall be delivered after the Funding Date;
e. Letter of Instruction of Borrower as to payment on or after the
Funding Date to Tama Realty Co. to satisfy the mortgage on the
Premises;
f. Letter of Instruction of Borrower as to payments of Bank's Closing
expenses; and
g. such other documentation as we shall reasonably require.
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VIII. MODIFICATIONS
NO AMENDMENT, MODIFICATION OR WAIVER OF ANY PROVISION OF THIS AGREEMENT OR
ANY LOAN DOCUMENT, NOR CONSENT TO ANY DEPARTURE BY US THEREFROM SHALL BE
EFFECTIVE, IRRESPECTIVE OF ANY COURSE OF DEALING, UNLESS THE SAME SHALL BE IN
WRITING AND SIGNED BY US AND THEN SUCH WAIVER OR CONSENT SHALL BE EFFECTIVE ONLY
IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH GIVEN.
IX. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York. To the extent any of the terms or
provisions of this Agreement conflict with those contained in any of the Loan
Documents, the terms and provisions of such other Loan Document shall govern.
This Agreement shall remain in effect so long as any Obligations of the Borrower
are outstanding under the Line of Credit, or otherwise.
X. ARBITRATION AND JURISDICTION
XXXXXXXX AND WE AGREE THAT ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR
ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT RELATING TO THE LINE OF
CREDIT, MAY BE INITIATED AND PROSECUTED IN THE STATE OR FEDERAL COURTS, AS THE
CASE MAY BE, LOCATED IN NEW YORK COUNTY, NEW YORK.
XXXXXXXX FURTHER AGREES THAT ANY ACTION, DISPUTE, PROCEEDING, CLAIM OR
CONTROVERSY BETWEEN OR AMONG ANY OF THEM AND US WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE ("DISPUTE" OR "DISPUTES") SHALL, AT OUR ELECTION, WHICH
ELECTION MAY BE MADE AT ANY TIME PRIOR TO THE COMMENCEMENT OF A JUDICIAL
PROCEEDING BY US, OR IN THE EVENT OF A JUDICIAL PROCEEDING INSTITUTED BY ANY OF
THEM AT ANY TIME PRIOR TO THE LAST DAY TO ANSWER AND/OR RESPOND TO A SUMMONS
AND/OR COMPLAINT MADE BY ANY OF THEM, BE RESOLVED BY ARBITRATION IN NEW YORK,
NEW YORK IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION X AND SHALL, AT OUR
ELECTION, INCLUDE ALL DISPUTES-ARISING OUT OF OR IN CONNECTION WITH (A) THIS
AGREEMENT,
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OR ANY OTHER LOAN DOCUMENT OR OTHER INSTRUMENT; (B) ALL PAST, PRESENT AND FUTURE
AGREEMENTS INVOLVING THE PARTIES; (C) ANY-TRANSACTION CONTEMPLATED HEREBY AND
ALL PAST, PRESENT AND FUTURE TRANSACTIONS INVOLVING THE PARTIES AND (D) ANY
ASPECT OF THE PAST, PRESENT OR FUTURE RELATIONSHIP OF THE PARTIES. We may elect
to require arbitration of any Dispute with us without thereby being required to
arbitrate all Disputes between the parties. Any such Dispute shall be resolved
by binding arbitration in accordance with Article 75 of the New York Civil
Practice Law and Rules and the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"). In the event of any inconsistency between such
Rules and these arbitration provisions, these provisions shall supersede such
Rules. All statutes of limitations which would otherwise be applicable shall
apply to any arbitration proceeding under this Section X. In any arbitration
proceeding subject to these provisions, the arbitration panel (the "arbitrator")
is specifically empowered to decide (by documents only, or with a hearing, at
the arbitrator's sole discretion) pre-hearing motions which are substantially
similar to prehearing motions to dismiss and motions for summary adjudication.
In any such arbitration proceeding, the arbitrator shall not have the power or
authority to award punitive damages to any party. Judgment upon the award
rendered may be entered in any court having jurisdiction. Whenever an
arbitration is required, the parties shall select an arbitrator in the manner
provided in this Section X. No provision of, nor the exercise of any rights
under, this Section X shall limit the right of any party (i) to foreclose
against any real or personal property collateral through judicial foreclosure,
by the exercise of a power of sale under a deed of trust, mortgage or other
security agreement or instrument, pursuant to applicable provisions of the
Uniform Commercial Code, or otherwise pursuant to applicable law, (ii) to
exercise self help remedies including but not limited to setoff and
repossession, or (iii) to request and obtain from a court having jurisdiction
before, during or after the pendency of any arbitration, provisional or
ancillary remedies and relief including but not limited to injunctive or
mandatory relief or the appointment of a receiver. The institution and
maintenance of an action or judicial proceeding for, or pursuit of, provisional
or ancillary remedies or exercise of self help remedies shall not constitute a
waiver of our right, even if we are the plaintiff, to submit the Dispute to
arbitration it we would otherwise have such right. We may require arbitration of
any concerning the lawfulness, unconscionableness, propriety, or reasonableness
of any
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exercise by us of our right to take or dispose of any collateral or our exercise
of any other right in connection with collateral including, without limitation,
judicial foreclosures, exercising a power of sale under a deed of trust or
mortgage, obtaining or executing a writ of attachment, taking or disposing of
property with or without judicial process pursuant to Article 9 of the Uniform
Commercial Code or otherwise as permitted by applicable law, notwithstanding any
such exercise by us. Whenever an arbitration is required under this Section X,
the arbitrator shall be selected, except as otherwise herein provided, in
accordance with the Commercial Arbitration Rules of the AAA. A single arbitrator
shall decide any claim of $100,000 or less and he or she shall be an attorney
with at least five years' experience representing commercial banks. Where the
claim of any party exceeds $100,000, the Dispute shall be decided by a majority
vote of three arbitrators, at least two of whom shall be attorneys (at least one
of whom shall have not less than five years' experience representing commercial
banks). In the event of any Dispute governed by this Section X, each of the
parties shall, subject to the award of the arbitrator, pay an equal share of the
arbitrator's fees. The arbitrator shall have the power to award recovery of all
costs and fees (including attorneys' fees, administrative fees, arbitrator's
fees, and court costs) to the prevailing party. In the event of any
inconsistency between the provisions contained in this Section X and any
provision in any Loan Document the provisions of this Section X shall govern.
XI. JURY WAIVER, ETC.
XXXXXXXX AND WE HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY OR AGAINST IT ON ANY MATTERS WHATSOEVER, IN CONTRACT OR
IN TORT, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, OR ANY
OTHER LOAN DOCUMENT RELATING TO THE LINE OF CREDIT OR THE TERM LOAN. XXXXXXXX
ALSO HEREBY WAIVES THE RIGHT TO INTERPOSE ANY DEFENSE OF ANY NATURE OR
DESCRIPTION, WHETHER OR NOT BASED UPON ANY CLAIM OF XXXXXX, AND BORROWER HEREBY
WAIVES ANY SET-OFF OR COUNTERCLAIM, ANY OBJECTION BASED ON FORUM NON CONVENIENS
OR VENUE AND ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.
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If this Agreement is acceptable to the Borrower please sign and return to
us one fully executed copy of this letter.
We look forward to a pleasant relationship.
Very truly yours,
THE DIME SAVINGS BANK OF NEW YORK, FSB
By: /s/Xxxxxxxxx XxXxxxx
------------------
Title: Vice President
AGREED:
POLYMER RESEARCH CORP OF AMERICA
By: /s/Xxxx Xxxxxxxx as President
-----------------------------
President
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EXHIBIT A - Collateral Description
EXHIBIT B - Loan Documents
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EXHIBIT A
a. All accounts and accounts receivable related to or -arising from the
sale or lease of inventory or rendition of services by the Debtor in the
ordinary course of its business (collectively, the "Accounts") or however
otherwise arising and all other accounts, bank accounts, contracts, contract
rights, general intangibles related to or arising from any account, notes,
documents, chattel paper, instruments, acceptances, drafts or other forms of
obligations and receivables of the Debtor (collectively, with the Accounts, the
"Receivables") , whether or not the same are listed on any schedules,
assignments or reports furnished to the Secured Party from time to time, and
whether such Receivables are now existing or are created at any time hereafter,
together with all goods, inventory and merchandise returned by or reclaimed by
or possessed from customers wherever such goods, inventory and merchandise are
located, and all proceeds thereto, including without limitation, proceeds of
insurance thereon and all guaranties, securities, and liens which the Debtor may
hold for the payment of any such Receivables, including, without limitation, all
rights of stoppage in transit, replevin and reclamation and all other rights and
remedies of an unpaid vendor or lienor, and any liens held by the Debtor as a
mechanic, contractor, subcontractor, processor, materialman, machinist,
manufacturer, artisan, or otherwise;
b. All documents, instruments, documents of title, general intangibles,
policies and certificates of insurance, guaranties,. securities, chattel paper,
deposits, tax refunds proceeds of insurance, proceeds of an eminent domain or
condemnation award, cash, liens or other property, which are now or may
hereinafter be in the possession of the Debtor or as to which the Debtor may now
or hereafter control possession by documents of title or otherwise, including,
but not limited to, all property allocable to unshipped orders relating to
Accounts and Inventory (as defined below);
c. All books, records, customer lists, supplier lists, ledgers, evidences
of shipping, invoices, purchase orders, including without limitation, export
orders, sales orders and all other evidences of the Debtor's business records,
including all cabinets, drawers, etc. that may hold the same; computer records,
lists, software, programs, wherever located, all whether now existing or
hereafter arising acquired;
d. All of the Debtor's inventory, whether now owned or hereafter acquired,
including without limitation (collectively herein called the "Inventory"): (i)
all goods manufactured or acquired for sale or lease, and any piece goods, raw
materials, work in process and finished merchandise, findings or component
material, and all supplies, goods, incidentals, office supplies, packaging
materials, and any and all items including machinery and equipment used or
consumed in the operation of the business of the
Debtor or which contribute to the finished product or to the sale, promotion and
shipment thereof, in which the Debtor now or at any time hereafter may have an
interest, whether or not such inventory is listed in any agreement with Secured
Party or on any reports furnished to the Secured Party from time; (ii) all
inventory whether or not the same is in transit or in the constructive, actual
or exclusive occupancy or possession of the Debtor, or is held by the Debtor or
by others for the Debtor with respect to the Accounts, including without
limitation, all goods covered by purchase orders and contracts with suppliers
and, all goods billed and held by suppliers; (iii) all inventory which may be
located on premises of the Debtor or of any carrier, forwarding agents,
truckers, warehousemen, vendors, selling agents or third parties; (iv) all
general intangibles relating to or arising out of inventory; (v) all proceeds
and products of the foregoing resulting from the sale, lease or other
disposition of inventory, including cash; accounts receivable, other non-cash
proceeds and trade-ins; and (vi) with respect to after-acquired Inventory, the
security interest shall be deemed to be a purchase money security interest;
e. All general intangibles, including without limitation, tax refunds;
proceeds of insurance and eminent domain awards and condemnation proceeds, and
patents, copyrights, tradenames, trademarks, applications therefor, and licenses
to any patent, copyright, trademark, or tradename that the Debtor now owns, has
the right to use or may hereafter own or acquire the right to use;
f. All equipment, machinery, appliances, and furniture and fixtures, now
existing or hereafter arising, wherever located, and all contracts, contract
rights and chattel paper arising out of any lease of any of the foregoing;
g. All other collateral in which the Debtor may hereafter grant to the
Secured Party a security interest; and
h. All renewals, substitutions, replacements, additions, accessions,
proceeds, and products of any and all of the foregoing.
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EXHIBIT B
CLOSING LIST
OF LOAN DOCUMENTS
Borrower: Polymer Research Corp. of America
Mortgagee: Tama Realty Company
Bank: The Dime Savings Bank of New York, FSB
1. Line of Credit Agreement between Borrower and Bank.
2. $250,000 Demand Grid Note of Borrower.
3. $500,000 Term Note of Borrower.
4. General Security Agreement executed by the Borrower covering the
Collateral, together with signed copies of UCC-1 Financing Statements of
the Borrower for filing with (a) NYDOS and (b) Kings County.
(a) Certified copies of resolutions or other authorization of the Borrower
authorizing (i) signatories of Xxxxxxxx and (ii) the execution,
delivery, and performance of all of the Loan Documents and other
related documentation and the transactions contemplated herein.
5. Pledge and Security Agreement of Borrower.*
(a) Control Agreement among Borrower, Bank and
6. Evidence of satisfaction of mortgage held by Mortgagee.*
7. Letter of Direction of Borrower to Bank to make payment (a) to Mortgagee*
and (b) of closing expenses of Bank, including the Bank's legal fees.
8. UCC and Judgment searches as to Borrower.
9. Evidence of the good standing of the Borrower.
10. UCC-3 Termination Statements executed by Xxxxxxxxx* and any other secured
party.
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11. Banking Resolutions and Automatic Debit Authorization of Borrower.
12. Signature cards of Borrower.
13. Certificate of Insurance naming Bank as loss payee.*
14. Waiver of Counsel by Xxxxxxxx.
15. Post-closing letter as to items indicated by "*."
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DEMAND GRID NOTE
New York, New York
$250,000.00
Date: March 20, 2000
ON DEMAND, the undersigned ("Maker") promises to pay to the order of THE
DIME SAVINGS BANK OF NEW YORK, FSB ("Bank") at its corporate headquarters
located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at any of its banking
offices in New York as Bank may designate by written notice to Maker, the
principal sum of TWO HUNDRED AND FIFTY THOUSAND ($250,000.00) DOLLARS or so much
thereof, as shall be advanced by Bank to Maker, in Bank's sole discretion and
not repaid, together with interest on the unpaid principal amount hereof from
time to time outstanding from the date hereof until the date on which this Note
is paid in full at the rate set forth below.
Interest on the unpaid principal of this Note will be due and payable when
demand is made for payment of the principal of this Note and (indicate whichever
is applicable):
[ ] on the last day of each month.
[X] on the 15th day of each month
Prior to the date that demand is made for payment of the principal hereof,
this Note shall bear interest at a rate (the "Contract Rate") equal to (indicate
whichever is applicable):
[ ] a fixed rate of -% per annum
[X] a fluctuating rate of one percent (1%) per annum above the
Reference Rate (as defined below), such rate to change without
notice from time to time with each change in the Reference Rate.
After demand is made for payment of the principal of this Note, interest under
this Note shall be payable on demand and shall accrue at a fluctuating rate per
annum equal to 2% per annum above (i) if the Contract Rate is a fixed rate, the
Contract Rate, or (ii) if the Contract Rate is a fluctuating rate, the greater
from time to time of (x) the Contract Rate in effect on the date that the
principal became due and (y) the Contract Rate that would have been in effect
from time to time if the principal had not become due. Interest shall be
calculated on the basis of a 360-day year for actual days elapsed. In no event
shall the interest rate applicable at any time to this Note exceed the maximum
rate permitted by law. As used herein, "Reference Rate" means the rate
established by Bank from time to time at its principal domestic office as its
reference lending rate for domestic commercial loans. Bank may make loans to
customers above, at or below the Reference Rate.
This Note evidences loans made by Bank to Maker in Bank's sole discretion,
from time to time, pursuant to the terms of a Line of Credit Agreement of even
date herewith. The unpaid principal balance of this Note at any time shall be
the total amount advanced by Bank to Maker in Bank's sole discretion, less the
total amount of principal payments made hereon by Maker. The date and amount of
each such loan and each payment on account of principal thereof may be endorsed
by Bank on the grid attached to and made a part of this Note, and when so
endorsed shall represent evidence thereof binding upon Maker in the absence of
manifest error. Any failure by Bank to so endorse shall in no way mitigate or
discharge the obligation of Maker to repay any loans actually made. Maker may
prepay this Note in whole at any time with all accrued interest to the date of
repayment. So long as Maker is not in default under this Note, Maker may prepay
this Note in part at any time with accrued interest to the date of prepayment on
the principal amount prepaid.
This note shall be payable in lawful money of the United States of America
in immediately available funds. Except as otherwise provided herein with respect
to prepayments, all payments on this Note shall be applied to the payment of
accrued interest before being applied to the payment of the principal;. Any
payment which is required to be made on a day which is not a banking
business day in the City of New York shall be payable on the next succeeding
banking business day and such additional time shall be included in the
computation of interest. In the event that any other Obligations are due at any
time that Bank receives a payment from Maker on account of this Note or any such
other Obligations, Bank may apply such payments to amounts due under this Note
or any such other Obligations in such manner as Bank, in its discretion, elects,
regardless of any instructions from Maker to the contrary.
Maker acknowledges that this Note is an obligation which is payable on
demand and that notwithstanding anything to the contrary in any other
instrument, agreement or other document to which Maker and/or Bank is a party,
the enumeration in any such document of specific events of default, conditions
and/or covenants relating to the loan evidenced by this Note or to any other
Obligation, shall not be construed to qualify, define or otherwise limit in any
way Bank's right, power or ability, at any time, to make demand for payment of
the principal of and interest on this Note, and Maker agrees that the occurrence
of any event of default or breach of any condition or covenant in any such
document is not the only basis for demand to be made on this Note.
To induce Bank, in its sole discretion, to make loans to Maker, Maker
represents, warrants and covenants to Bank that (i) Maker is duly organized and
validly existing in good standing under the laws of its jurisdiction, with full
power and authority to make, deliver and perform this Note; (ii) the execution,
delivery and performance by Maker of this Note have been duly authorized by all
necessary legal action and do not and will not violate or conflict with its
organizational documents or any law, rule, regulation or order binding on Maker
or any agreement or instrument to which Maker is a party or which may be binding
on Maker; (iii) this Note has been fully executed by an authorized
representative of Maker and constitutes a legal, valid, binding and enforceable
obligation of Maker; (iv) no authorization, consent, approval, license,
exemption of or filing or registration with, any court or government or
governmental agency is or will be necessary to the valid execution, delivery or
performance by Maker of this Note; (v) the loans evidenced by this Note will be
used solely for the purposes set forth in the Line of Credit Agreement; (vi)
there are no pending or threatened actions, suits or proceedings against or
affecting Maker by or before any court, commission, bureau or other governmental
agency or instrumentality, which individually or in the aggregate, if determined
adversely to Maker, would have a material adverse effect on the business,
properties, operations, or condition, financial or otherwise, of Maker; and
(vii) the most recent financial statements of Maker heretofore delivered to Bank
are complete and correct and since the date thereof there has not occurred any
material adverse change in the financial condition or operations of Maker from
that shown on said financial statements.
Upon the occurrence of any of the following (each, an "Event of Default")
with respect to any Maker, indorser or guarantor of the indebtedness evidenced
by this Note: (i) default in payment of any amount due under this Note or in the
payment or performance of any other Obligation or the Line of Credit Agreement
or any other agreement of any nature or description to or with Bank; (ii) any of
them shall commence any case, proceeding or other action under any law relating
to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have
an order for relief entered with respect to any of them, or seeking to
adjudicate any of them a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to any of them or any of their debts, or seeking
appointment of a receiver, trustee, custodian or other similar official for any
of them or for all or any substantial part of the assets of any of them, or any
of them shall make a general assignment for the benefit of its creditors, or
there shall be commenced against any of them any case, proceeding or other
action of a nature referred to in this clause (ii), or there shall be commenced
against any of them any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all or
any substantial part of the assets of any of them which results in the entry of
an order for any such relief, or any of them shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in this clause (ii), or any of them shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; (iii) entry of a judgment against any of them; (iv)
failure to pay or remit any tax when assessed or due; (v) death or dissolution;
(vi) making a bulk transfer or sending notice of intent to do so; (vii) granting
any security interest (other than to Bank); (viii) suspension or liquidation of
the usual business; (ix) failing to furnish Bank with any requested financial
information or failing to permit inspection of books or records by Bank or any
of its agents, attorneys or accountants; (x) making any misrepresentation to
Bank in obtaining credit for any of them; (xi) impairment of financial
responsibility of any of them in Bank's good faith opinion; (xii) Bank shall in
good xxxxx xxxx itself insecure at any time; or (xiii) the occurrence of a
default or event of default under the Line of Credit Agreement or any guarantee
or security agreement guaranteeing, or securing any Obligations of Maker; then,
in the case of any Event of Default other than those referred to in clause (ii)
of this sentence, Bank may declare by notice to Maker any and all Obligations of
Maker to be immediately due and payable, and in case of any Event of Default
referred to in clause (ii) of this sentence all of the Obligations of Maker
shall automatically become due and payable immediately without notice or demand.
Bank shall have a continuing lien and/or right of set-off on, and is hereby
granted a security interest in, all deposits (general and special) and credits
with Bank or any Bank Affiliate of any Maker and indorser, and may apply all or
part of the same to any Obligations; at any time or times, without notice. Bank
shall have a continuing lien on, and is hereby granted a security interest in,
all property of every Maker and indorser and the proceeds thereof held or
received by or for Bank or any Bank Affiliate for any purpose, whether or not
for the express purpose of serving as collateral security for the Obligations.
As used in this Note, the term "Obligations" means all amounts payable under
-2-
this Note and any and all other indebtedness, obligations and liabilities of
Maker to Bank, and all claims of Bank against Maker, now existing or hereafter
arising, direct or indirect (including participations or any interest of Bank in
indebtedness of Maker to others), acquired outright, conditionally, or as
collateral security from another, absolute or contingent, joint or several,
secured or unsecured, matured or unmatured, monetary or non-monetary, arising
out of contract or tort, liquidated or unliquidated, arising by operation of law
or otherwise, and all extensions, renewals, refundings, replacements and
modifications of any of the foregoing.
In case of the occurrence of an Event of Default, each Maker and indorser shall
be jointly and severally liable for all costs of enforcement and collection of
the Note incurred by Bank or any other holder of this Note, including but not
limited to reasonable attorney's fees, disbursements and court costs.
Maker and each indorser hereby separately waive presentment, notice of dishonor,
protest and notice of protest, and any or all other notices or demands (other
than demand for payments) in connection with the delivery, acceptance,
performance, default, endorsement or guarantee of this Note. The liability of
any Maker or indorser hereunder shall be unconditional and shall not be in any
manner affected by any indulgence whatsoever granted or consented to by the
holder hereof, including but not limited to any extension of time, renewal,
waiver or other modification. Any failure of the holder to exercise any right
hereunder shall not be construed as a waiver of the right to exercise the same
or any other right at any time and from time to time thereafter. Bank or any
holder may accept late payments, or partial payments, even though marked
"payment in full" or containing words of similar import or other conditions,
without waiving any of its rights. No amendment, modification or waiver of any
provision of this Note nor consent to any departure by Maker therefrom shall be
effective, irrespective of any course of dealing, unless the same shall be in
writing and signed by Bank, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. This
Note cannot be changed or terminated orally or by estoppel or waiver or by any
alleged oral modification regardless of any claimed partial performance
referable thereto.
Any notice from Bank to Maker or any indorser shall be deemed given when
delivered to Maker or such indorser by hand or when deposited in the United
States mail and addressed to Maker or such indorser at the last address of Maker
or such indorser appearing on Bank's records.
This Note shall be governed by and construed in accordance with the laws of the
State of New York applicable to instruments made and to be performed wholly
within that state. If any provision of this Note is held to be illegal or
unenforceable for any reason whatsoever, such illegality or unenforceability
shall not affect the validity of any other provision hereof.
MAKER AND EACH INDORSER AGREE THAT ANY ACTION, DISPUTE, PROCEEDING, CLAIM OR
CONTROVERSY BETWEEN MAKER OR SUCH INDORSER AND BANK, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE ("DISPUTE" OR "DISPUTES") SHALL, AT BANK'S ELECTION,
WHICH ELECTION MAY BE MADE AT ANY TIME PRIOR TO THE COMMENCEMENT OF A JUDICIAL
PROCEEDING BY BANK, OR IN THE EVENT OF A JUDICIAL PROCEEDING INSTITUTED BY MAKER
OR SUCH INDORSER AT ANYTIME PRIOR TO THE LAST DAY TO ANSWER AND/OR RESPOND TO A
SUMMONS AND/OR COMPLAINT MADE BY MAKER OR SUCH INDORSER, BE RESOLVED BY
ARBITRATION IN ACCORDANCE WITH THE PROVISIONS OF THIS PARAGRAPH AND SHALL, AT
THE ELECTION OF BANK, INCLUDE ALL DISPUTES ARISING OUT OF OR IN CONNECTION WITH
(1) THIS NOTE OR ANY RELATED AGREEMENTS OR INSTRUMENTS, (2) ALL PAST, PRESENT
AND FUTURE AGREEMENTS INVOLVING MAKER OR SUCH INDORSER AND BANK, (3) ANY
TRANSACTION RELATED TO THIS NOTE AND ALL PAST, PRESENT AND FUTURE TRANSACTIONS
INVOLVING MAKER OR SUCH INDORSER AND BANK, AND (4) ANY ASPECT OF THE PAST,
PRESENT OR FUTURE RELATIONSHIP OF MAKER OR SUCH INDORSER AND BANK. Bank may
elect to require arbitration of any Dispute with Maker or any indorser without
thereby being required to arbitrate all Disputes between Bank and Maker or such
indorser. Any such Dispute shall be resolved by binding arbitration in
accordance with Article 75 of the New York Civil Practice Law and Rules and the
Commercial Arbitration Rules of the American Arbitration Association ("AAA"). In
the event of any inconsistency between such Rules and these arbitration
provisions, these provisions shall supersede such Rules. All statutes of
limitations which would otherwise be applicable shall apply to any arbitration
proceeding under this paragraph. In any arbitration proceeding subject to this
paragraph, the arbitration panel (the "arbitrator") is specifically empowered to
decide (by documents only, or with a hearing, at the arbitrator's sole
discretion) pre-hearing motions which are substantially similar to pre-hearing
motions to dismiss and motions for summary adjudication. In any such arbitration
proceeding, the arbitrator shall not have the power or authority to award
punitive damages to any party. Judgment upon the award rendered may be entered
in any court having jurisdiction. Whenever an arbitration is required, the
parties shall select an arbitrator in the manner provided in this paragraph. No
provision of, nor the exercise of any rights under, this paragraph shall limit
the right of Bank (1) to foreclose against any real or personal property
collateral through judicial foreclosure, by the exercise of the power of sale
under a deed of trust, mortgage or other security agreement or instrument,
pursuant to applicable provisions of the Uniform Commercial Code, or otherwise
herein pursuant to applicable law, (2) to exercise self-help remedies including
but not limited to set-off and repossession, or (3) to request and obtain from a
court having jurisdiction before, during or after the pendency of any
arbitration, provisional or ancillary remedies and relief including but not
limited to injunctive or mandatory relief or the appointment of a receiver. The
institution and maintenance of an action or judicial proceeding for, or pursuit
of, provisional or ancillary remedies or exercise of self-help remedies shall
not constitute a waiver of the right of Bank, even if Bank is the plaintiff, to
submit the Dispute to arbitration if Bank would otherwise have such right.
Whenever an arbitration is required under this paragraph, the arbitrator shall
be selected, except as otherwise herein provided, -in accordance with the
Commercial Arbitration Rules of the AAA. A single arbitrator shall decide any
claim of $100,000 or less and he or she shall be an attorney with at least five
years' experience. Where the claim of any party exceeds $100,000, the Dispute
shall be decided
-3-
by a majority of three arbitrators, at least two of whom shall be attorneys (at
least one of whom shall have not less than five years' experience representing
commercial banks). The arbitrator shall have the power to award recovery of all
costs and fees (including attorneys' fees, administrative fees, arbitrator's
fees, and court costs) to the prevailing party. In the event of any Dispute
governed by this paragraph, each of the parties shall, subject to the award of
the arbitrator, pay an equal share of the arbitrator's fees.
MAKER AND EACH INDORSER AGREE THAT ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF
OR ARISING OUT OF THIS NOTE MAY BE INITIATED AND PROSECUTED IN THE STATE OR
FEDERAL COURTS, AS THE CASE MAY BE, LOCATED IN NEW YORK COUNTY, NEW YORK AND ANY
ARBITRATION PROCEEDING PURSUANT HERETO SHALL BE CONDUCTED IN NEW YORK, NEW YORK.
MAKER AND EACH INDORSER CONSENT TO AND SUBMIT TO THE EXERCISE OF JURISDICTION
OVER ITS PERSON BY ANY SUCH COURT HAVING JURISDICTION OVER THE SUBJECT MATTER,
WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENT THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO MAKER OR SUCH INDORSER
AT ITS ADDRESS SET FORTH BELOW OR TO ANY OTHER ADDRESS AS MAY APPEAR IN BANK'S
RECORDS AS THE ADDRESS OF MAKER OR SUCH INDORSER.
IN ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE,
BANK, MAKER AND EACH INDORSER WAIVE TRIAL BY JURY, AND MAKER AND EACH INDORSER
ALSO WAIVE (I) THE RIGHT TO INTERPOSE ANY DEFENSE BASED UPON ANY CLAIMS OR
LACHES OR SET-OFF OR COUNTERCLAIM' OF ANY NATURE OR DESCRIPTION, (II) ANY
OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE, AND (III) ANY CLAIM FOR
CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.
Bank is authorized to fill in any blank spaces and to otherwise complete this
Note and correct any patent errors herein.
POLYMER RESEARCH CORP. OF AMERICA
By: /s/ Xxxx Xxxxxxxx
------------------
Signature of Authorized Signatory
Xxxx Xxxxxxxx President
-------------
Print Name and Title
'
Address for Notices:
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
The Maker signing above is a:
[ ] partnership organized under the laws of
[ ] limited partnership organized under the laws of
[ ] not-for-profit corporation organized under the laws of_____
[ ] limited liability company organized under the laws of
[X] corporation organized under the laws of New York
-4-
LOANS AND PAYMENTS OF PRINCIPAL
Amount of Unpaid
Loan Amount of Principal Principal Notation
Date No. Loan Paid Balance Made By
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-5-
CONTINUING GENERAL SECURITY AGREEMENT
Dated: March 20, 2000
As used in this Agreement:
"Collateral" means all right, title and interest of the Obligor in and to any
and all of the following property, whether now or hereafter existing or acquired
and wherever located, all products and Proceeds (including but not limited to
insurance proceeds) of such property, wherever located and in whatever form, and
all books and records pertaining to such property and all other property of the
Obligor in which Bank now or hereafter is granted a security interest pursuant
to this Agreement or otherwise:
[mark or initial the applicable boxes]
Accounts, General Intangibles, Chattel Paper and Instruments
[ ] All Accounts (including, without limitation, all accounts receivable),
General Intangibles (including, without limitation, contract rights and tax
refunds) and all returned or repossessed Goods, all Chattel Paper (including,
without limitation, leases) and Instruments, and all interests of the Obligor in
all guarantees, security agreements and other property securing the payment or
performance of obligations under any of the foregoing.
Imported Inventory and Documents
[ ] All Imported Inventory, and all Documents (including, without limitation,
all documents of title, transport or otherwise) relating to such Inventory.
Inventory and Documents
[ ] All Inventory of every description (including, without limitation, Imported
Inventory, raw materials, work in process and finished Goods), and all Documents
(including, without limitation, all documents of title, transport or otherwise)
relating to such Inventory.
Equipment
[ ] All Equipment of every description and all Accessions thereto.
Fixtures
[ ] All Fixtures of every description and all Accessions thereto located at the
Collateral Location or at _________________________.
Specific Property
[ ] All of the following property:
All Property
[X] All property of every description (including, without limitation, all
Accounts, General Intangibles, Chattel Paper, Instruments, Inventory, Documents,
Equipment, Fixtures, Goods and all Accessions to any of the foregoing).
* If no box is marked, Collateral shall mean All Property.
"Collateral Location" means the following address(es) where all Collateral
consisting of Inventory, Equipment, Fixtures or other tangible property is
located: 0000 Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000.
"Obligor" means Polymer Research Corp. of America, and its successors and
assigns, and if more than one Person is named as Obligor, "Obligor" shall mean
each, any or all of them, and their liabilities and obligations hereunder shall
be joint and several. Obligor is/are:
[ ] individual(s).
[X] a corporation organized under the laws of New York
[ ] a partnership organized under the laws of______
[ ] a limited partnership organized under the laws of____
[ ] a limited liability company organized under the laws of_____
[ ] other (specify)___________
In consideration of any extension of credit or other financial
accommodation heretofore, now or hereafter made by Bank to or for the account of
the Obligor, or to or for the account of any other Person made by Bank at the
request of the Obligor or with respect to which the Obligor's agreements
hereunder have been required by Bank, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by the Obligor, the
Obligor agrees as follows:
1. Security Interest: Right of Set-Off. As security for the prompt and
unconditional payment of any and all Obligations, the Obligor does hereby
grant to Bank a continuing lien upon and security interest in, and does
hereby pledge, assign and transfer to Bank, all of the Collateral, together
with the cash and non-cash Proceeds thereof. In order to secure further the
payment of the Obligations, Bank is hereby given a continuing lien upon and
is granted a security interest in any and all monies, securities and any
and all other property of the Obligor and the proceeds thereof, now or
hereafter actually or constructively held or received by or in transit in
any manner to or from Bank, its correspondents or agents from or for the
Obligor, whether for safekeeping, custody, pledge, transmission, collection
or for any other
purpose (whether or not for the express purpose of being used by Bank as
collateral security), or coming into the possession of Bank or its
correspondents or agents in any way, or placed in any safe deposit box
leased by Bank to the Obligor, and all such monies, securities and other
property shall also constitute "Collateral" and shall be held subject to
all the terms of this Agreement as collateral security for the prompt and
unconditional payment of any and all Obligations. Obligor hereby assigns
and grants Bank a security interest in, and Bank is also given a continuing
lien on and/or right of set-off for the amount of the Obligations with
respect to, any and all deposits (general or special) and credits of the
Obligor with, any and all claims of the Obligor against, Bank at any time
existing, and Bank is hereby authorized at any time or times, without prior
notice, to apply such deposit or credits, or any part thereof, to the
Obligations in such amounts as Bank may elect, although the Obligations may
be contingent or unmatured, and whether the collateral security therefor is
deemed adequate or not.
2. Representations of Obligor. The Obligor represents and warrants to Bank
that (a) no financing statement or other filing listing any of the
Collateral as collateral is on file in any jurisdiction other than any
financing statement filed on behalf of Bank, as secured party and as set
forth in Schedule A annexed hereto ("Permitted Liens"); (b) the chief
executive office of the Obligor, if any, is located at the address set
forth in the space provided therefor in this Agreement; (c) all Collateral,
other than intangible property and property which is in the possession of
Bank or its agents, is located at the Collateral Location(s) and the
Obligor has no place of business other than the chief executive office
specified herein, if any, and the Collateral Location(s); (d) the Obligor
has not created and is not aware of any Lien on or affecting any Collateral
other than the Lien created by this Agreement in favor of Bank and the
Permitted Liens; (e) if the Obligor is not a natural person, the execution,
delivery and performance of this Agreement have been duly authorized by all
required corporate, partnership or other applicable actions of the Obligor;
(f) this Agreement and the Line Letter each constitutes a valid, binding
and enforceable obligation of the Obligor; (g) the execution, delivery and
performance of this Agreement and the Line Letter each do not violate any
law or any agreement or undertaking to which the Obligor is a party or by
which the Obligor may be bound and do not result in the imposition of any
Lien upon any Collateral other than the Lien in favor of Bank created by
this Agreement; (h) all consents, approvals, authorizations, permits and
licenses necessary for the Obligor to enter and perform its obligations
under this Agreement, the Line Letter, and the Obligations and/or to
conduct its business have been obtained; (i) the Obligor did not have or
conduct business under any name or trade name in any jurisdiction during
the past six years other than its name and trade names, if any, set forth
on the signature page of this Agreement, and the Obligor is entitled to use
such name and trade names; and (j) the Obligor is the legal and beneficial
owner of all Collateral specifically identified on page 1 of this Agreement
(alongside the box designated "Specific Property") and any Collateral
specifically identified in any rider, schedule or exhibit to this
Agreement.
3. Covenants. Unless and until all of the Obligations have been indefeasibly
paid in full and all commitments of Bank to extend credit which, once
extended, would give rise to Obligations, have expired or been terminated,
the Obligor shall: (a) keep the Collateral free and clear of any Lien of
any kind other than the lien created by this Agreement and the Permitted
Liens; (b) promptly pay, when due, all taxes and transportation, storage,
warehousing and other charges and fees affecting or arising out of the
Collateral and defend the Collateral against all claims and demands of all
Persons at any time claiming any interest therein adverse to or the same as
that of Bank; (c) at all times keep all insurable Collateral insured at the
expense of the Obligor to Bank's satisfaction against loss by fire, theft
and any other risks to which the Collateral may be subject, and cause all
such policies to be endorsed in favor of Bank and to name Bank as loss
payee and as an additional insured, and, if Bank so requests, deposit the
same with Bank, and cause all such policies to provide that each insurer
will give Bank not less than 30 days notice in writing prior to the
exercise of any right of cancellation; (d) keep the Collateral in good
condition at all times (normal wear and tear excepted) and provide Bank
with such information as Bank may from time to time request with respect to
the location of the Collateral and the Obligor's places of business; (e)
give Bank at least 30 days' prior written notice before changing the
Obligor's name or chief executive office or changing the location or
disposing of any Collateral (other than in connection with the sale of any
Inventory in the ordinary course of business); (f) not sell or otherwise
dispose of any Collateral except on commercially reasonable terms and in
the ordinary course of business; (g) permit Bank, by its officers and
agents to have access to, examine and copy at all reasonable times the
Collateral, properties, minute books and other corporate or partnership
records, books of accounts, and financial and other business records of the
Obligor (including, without limitation, all books, records, ledger cards,
computer programs, tapes and computer disks and diskettes and other
property recording, evidencing or relating to any Collateral); (h) promptly
notify Bank upon the occurrence of any Event of Default of which the
Obligor has knowledge; (i) maintain, with financially sound and reputable
insurers, with companies and in form satisfactory to the Bank, fire,
hazard, vandalism, malicious mischief, business interruption, public
liability, flood and other insurance, all in coverage and amounts and upon
other terms customary for companies engaged in the same or similar business
and similarly situated to the Borrower as the Bank may from time to time
require, and deliver to the Bank certificates of all such insurance in
effect, provided, that the amount of such insurance in effect from time to
time shall in no event be less than One Million ($1,000,000) Dollars, in
the aggregate or such other amount as the Bank shall from time to time
approve. Each such insurance policy shall (aa) name the Bank and its
successors and assigns as their interests may appear, as additional insured
and as sole loss payee, as the case may be, (bb) insure the interests of
the Bank and its successors and assigns regardless of any breach of or
violation by the Borrower of any representations, warranties or conditions
contained therein, and (cc) provide that no cancellation, reduction in
amount or change in coverage thereof shall be effective until at least
thirty (30) days after receipt by the Bank of written notice thereof. The
Borrower shall deliver to the Bank copies of renewals of each insurance
policy maintained by the Borrower not later than thirty (30) days prior to
the expiration date of such insurance policy. Regarding proceeds of
insurance, the Bank may at its options apply such proceeds to the repayment
of any of the Obligor's outstanding obligations to the Bank; (j) deliver to
the Bank financial statements and reports required by the Line Letter.
4. Events of Default. The occurrence of any of the following events shall
constitute an Event of Default: (a) the failure of the Obligor to pay when
due any of the Obligations; (b) any representation or warranty of the
Obligor to Bank in
-2-
this Agreement, the Line Letter or any other instrument or agreement with
or in favor of Bank shall prove to be inaccurate or untrue; (c) the breach
by the Obligor of any covenant in this Agreement, or the Line Letter, or in
any other instrument or agreement with or in favor of Bank; (d) Bank shall
in good xxxxx xxxx itself insecure at any time with respect to the
Obligor's financial condition or ability to pay the Obligations; or (e)
Bank shall have determined in good faith that the value of the Collateral
has materially decreased after the date of this Agreement. The occurrence
of any of the following events with respect to any Obligor, maker,
endorser, acceptor, surety or guarantor of, or any other party to, the
Obligations or the Collateral shall also constitute an Event of Default:
(aa) a default in respect of any liabilities, obligations or agreements,
present or future, absolute or contingent, secured or unsecured, matured or
unmatured, several or joint, original or acquired, of any of the
Responsible Parties to or with Bank; (bb) death (in the case of any of the
Responsible Parties who is an individual) or dissolution (in the case of
any of the Responsible Parties which is not a natural person); (cc) any
default (after the lapse of any cure period ) which constitutes an Event of
Default under any Loan document (as defined in the Line Letter); (dd)
making, or sending a notice of, an intended bulk transfer; (ee) granting a
security interest (other than the Permitted Liens) to anyone other than
Bank in the Collateral; (ff) suspension of payment; (gg) the whole or
partial suspension or liquidation of its usual business; (hh) failing,
after demand, to furnish to Bank any financial information or to permit
inspection of books and records of account; (ii) making any
misrepresentation to Bank for the purpose of obtaining credit or an
extension of credit; (jj) failing to pay any tax, or failing to withhold,
collect or remit any tax or tax deficiency when assessed or due; (kk)
failing to pay when due any obligations, whether or not in writing; (ll)
making of any tax assessment by the United States or any state or foreign
country; (mm) entry of a judgment or issuance of an order of attachment or
an injunction against, or against any of the property of, any of the
Responsible Parties; (nn) commencement against any of the Responsible
Parties of any proceeding for enforcement of a money judgment under Article
52 of the New York Civil Practice Law and Rules or amendments thereto; (oo)
if any of the Responsible Parties or if any of the Obligations or
Collateral at any time fails to comply with Regulation U of the Federal
Reserve Board or any amendments thereto; (pp) the issuance of any warrant,
process or order of attachment, garnishment or lien, and/or the filing of a
Lien as a result thereof against any of the property of the Obligor whether
or not Collateral; (qq) any of the Responsible Parties challenges or
institutes any proceeding, or any proceedings are instituted, which
challenge the validity, binding effect or enforceability of this Agreement;
(rr) any of the Responsible Parties makes, receives or retains any payment
on account of indebtedness subordinated to the Obligations in violation of
the terms of such subordination; (ss) any of the Responsible Parties or any
partnership of which any of the Responsible Parties is a member is expelled
from or suspended by any stock or securities exchange or other exchange;
(tt) any of the Responsible Parties shall make an assignment for the
benefit of creditors or a composition with creditors, shall be unable or
admit in writing an inability to pay its respective debts as they mature,
shall file a petition in bankruptcy, shall become insolvent (however such
insolvency may be evidenced), shall be adjudicated insolvent or bankrupt,
shall petition or apply to any tribunal for the appointment of any
receiver, liquidator or trustee of or for any of the Responsible Parties or
any substantial part of the property of assets of any of the Responsible
Parties, shall commence any proceedings relating to it under any
bankruptcy, reorganization, arrangement, readjustment of debt,
receivership, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, or there shall be
commenced against any of the Responsible Parties any such proceeding, or
any order, judgment or decree approving the petition in any such proceeding
shall be entered, or any of the Responsible Parties shall by any act or
failure to act indicate its consent to,, approval of or acquiescence in any
such proceeding or in the appointment of any receiver, liquidator or
trustee of or for any of the Responsible Parties or any substantial part of
the property or assets of any of the Responsible Parties, or shall suffer
any such appointment, or any of the Responsible Parties shall take any
action for the purpose of effecting any of the foregoing, or any court of
competent jurisdiction shall assume jurisdiction with respect to any such
proceeding or a receiver or trustee or other officer or representative of
the court or of creditors, or any court, governmental officer or agency,
shall under color of legal authority, take and hold possession of any
substantial part of the Collateral or the property or assets of any of the
Responsible Parties; or (uu) Bank shall in good xxxxx xxxx itself insecure
with respect to the financial condition of any of the Responsible Parties.
5. Remedies of Bank.
(a) After the occurrence of an Event of Default, Bank shall have no
obligation to make further loans, extensions of credit or other
financial accommodations to or on behalf of the Obligor, anything in
any other agreement to the contrary notwithstanding.
(b) After the occurrence of an Event of Default, other than an Event of
Default referred to in clause (it) of the second sentence of Section
4, Bank may declare by notice to the Obligor, any and all Obligations
to be immediately due and payable and in the case of any Event of
Default referred to in clause (tt) of the second sentence of Section 4
all of the Obligations shall automatically be and become due and
payable in either case without presentment, demand, protest or notice
of any kind, all of which are hereby waived by the Obligor, anything
in any other agreement to the contrary notwithstanding.
(c) After the occurrence of an Event of Default, Bank may, without notice
to or demand (other than any notice required by law, the giving of
which is not waivable), upon the Obligor (all of which are hereby
waived by the Obligor), without releasing the Obligor from any
obligation under this Agreement or any other instruments or agreements
with Bank and without waiving any rights Bank may have or impairing
any declaration of default or election to cause the Collateral to be
sold or any sale proceeding predicated on they same; (i) demand,
collect or receive upon all or any part of the Collateral and assemble
or require the Obligor, at the Obligor's expense, to assemble all or
any part of the Collateral and, if Bank so requests, the Obligor shall
assemble the Collateral and make it available to Bank at a place to be
designated by Bank; (ii) without notice, demand or other process and
without charge enter any of the Obligor's premises and without breach
of peace until Bank completes the enforcement of its rights in the
Collateral, take possession of such premises or place custodians in
exclusive control thereof, remain on such premises and use the same
and any
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of the Obligor's equipment for the purpose of completing any
work-in-process, preparing any Collateral for disposition and
disposing of or collecting any Collateral, and in exercise of its
rights under this Agreement, without payment of compensation of any
kind, use any and all trademarks, trade styles, trade names, patents,
patent applications, licenses, franchises and the like to the extent
of the Obligor's rights therein and the Obligor hereby grants a
license and the right to grant sublicenses for that purpose; (iii) in
such manner and to such extent as Bank may deem necessary to protect
the Collateral or the interests, rights, powers or duties of Bank,
enter into and upon any premises of the Obligor and take and hold
possession of all or any part of the Collateral (the Obligor hereby
waiving and releasing any claim for damages in respect of such taking)
and exclude the Obligor and all other Persons from the Collateral,
operate and manage the Collateral and rent and lease the same, perform
such reasonable acts of repair or protection as may be reasonably
necessary or proper to conserve the value of the Collateral, collect
any and all income, rents, issues, profits and proceeds from the
Collateral, the same being hereby assigned and transferred to Bank,
and from time to time apply or accumulate such income, rents, issues,
profits and proceeds in such order and manner as Bank, in its sole
discretion, shall instruct, it being understood that the collection or
receipt of income, rents, issues, profits or proceeds from the
Collateral after declaration of default and election to cause the
Collateral to be sold under and pursuant to the terms of this
Agreement shall not affect or impair any event of default or
declaration of default under any agreement or instrument between the
Obligor and Bank or election to cause any Collateral to be sold or any
sale proceedings predicated on the same, but such proceedings may be
conducted and sale effected notwithstanding the collection or receipt
of any such income, rents, issues, profits and proceeds; (iv) take
control of any and all of the Accounts, contractual or other rights
that are included in the Collateral and Proceeds arising from any such
Accounts or contractual or other rights, enforce collection, either in
the name of Bank or in the name of the Obligor, of any or all of the
Accounts, release or exchange all or any part of such Collateral or
compromise, settle, extend or renew (whether or not longer than the
original period) any indebtedness under such Collateral; (v) sell all
or any part of the Collateral at public or private sale at such place
or places and at such time or times and in such manner and upon such
terms, whether for cash or credit, a Bank in its sole discretion may
determine; (vi) endorse in the name of Obligor any Instrument, however
received by Bank, representing Collateral or Proceeds of any of the
Collateral; (vii) require the Obligor to turn over, or instruct the
financial institutions holding the same to turn over, all monies and
investments in any of Obligor's accounts to Bank; and (viii) exercise
all the rights and remedies granted to a secured party under the New
York Uniform Commercial Code and all other rights and remedies given
to Bank under this Agreement or any other instrument or agreement or
otherwise available at law or in equity. Bank shall be under no
obligation to make any of the payments or do any of the acts referred
to in this Section 5 or elsewhere in this Agreement and any of the
actions referred to in this Section 5 or elsewhere in this Agreement
may be taken regardless of whether any notice of default or election
to sell has been given under this Agreement (provided, however, that
all notices required by law, the giving of which may not be waived,
shall be given in accordance with such law) without regard to the
adequacy of the security for the Obligations.
(d) The Obligor hereby waives notice of the sale of any Collateral by Bank
pursuant to any provision of this Agreement or any applicable
provisions of the Uniform Commercial Code or other applicable law. In
the event that notice of the sale of Collateral cannot be waived or
Bank gives notice of such sale to the Obligor, Bank will give the
Obligor notice of the time and place of any public sale of the
Collateral or of the time after which any private sale or any other
intended disposition thereto is to be made by sending notice, as
provided below, at least five days before the time of the sale or
disposition, which provisions for notice the Obligor and Bank agree
are reasonable. No such notice need be given by Bank with respect to
Collateral which is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market.
(e) Bank may apply the net proceeds of any sale, lease or other
disposition of Collateral, after deducting all costs and expenses of
every kind incurred thereon or incidental to the retaking, holding,
preparing for sale, selling, leasing, or the like of the Collateral or
in any way relating to the rights of Bank thereunder, including
attorneys' fees and expenses hereinafter provided for, to the payment,
in whole or in part, in such order as Bank may elect, of one or more
of the Obligations, whether due or not due, absolute or contingent,
making proper rebate for interest or discount on items not then due,
and only after so applying such net proceeds and after the payment by
Bank of any other amounts required by any existing or future provision
of law (including Section 9-504(1)(c) of the Uniform Commercial Code
of any jurisdiction in which any of the Collateral may at the time be
located) need Bank account for the surplus, if any. The Obligor shall
remain liable to Bank for the payment of any deficiency, with interest
at the default rate provided for in the instruments, if any,
evidencing the Obligations, but if there is no such instrument with
respect to any Obligation or no default rate is specified therein, at
a variable rate equal to 4% above the Bank's reference lending rate
applicable to domestic commercial loans as established by Bank from
time to time, but in no event shall such rate exceed the maximum rate
allowed by law. Bank may make loans to its customers above, at or
below its reference rate.
(f) Whether or not an Event of Default shall have occurred, Bank may sell
all or any part of the Collateral, although the Obligations may be
contingent or unmatured, whenever in its discretion Bank considers
such sale necessary for its protection. Any such sale may be made
without prior demand for payment on account, margin or additional
margin or any other demands whatsoever, the making of any such demands
shall not establish a course of conduct nor constitute a waiver of the
right of Bank to sell the Collateral as herein provided or of the
right of Bank to accelerate the maturity of the Obligations as herein
provided.
6. Additional Rights of Bank and Duties of Obligor Regarding Obligations and
Collateral.
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(a) If the Obligor, as registered holder of any Collateral, shall become
entitled to receive or does receive any stock certificate, option or
right, whether as an addition to, in substitution of, or in exchange
for, such Collateral, or otherwise, the Obligor agrees to accept same
as Bank's agent and to hold same in trust for Bank, and to forthwith
deliver the same to Bank in the exact form received, with the
Obligor's endorsement when necessary or requested by Bank, to be held
by Bank as Collateral.
(b) The Obligor waives protest, demand for payment, notice of default or
nonpayment to the Obligor or any other party liable for or upon any of
said Obligations or Collateral.
(c) The Obligor consents that the obligation of any party upon or of any
guarantor, surety or indemnitor for any Obligations or any Collateral
may, from time to time, in whole or in part, be renewed, extended,
modified, accelerated, compromised, settled or released and that any
Collateral or Liens for any Obligations may, from time to time, in
whole or in part, be exchanged, sold, released or surrendered, by
Bank, all without any notice to, or further assent by, or any
reservation of rights against, the Obligor, and all without in any way
affecting or releasing the liability of the Obligor with respect to
such Obligations or any security interest hereby created.
(d) Bank shall not be liable for failure to collect or realize upon the
Obligations or upon the Collateral, or any part thereof, or for any
delay in so doing, nor shall Bank be under any obligation to take any
action whatsoever with regard thereto. Bank shall use reasonable care
in the custody and preservation of the Collateral in its possession
but need not take any steps to preserve rights against prior parties
or to keep the Collateral identifiable. Bank shall have no obligation
to comply with any recording, re-recording, filing, refiling or other
legal requirements necessary to establish or maintain the validity,
priority or enforceability of, or Bank's right in and to the
Collateral or any part thereof. Bank may exercise any right of the
Obligor with respect to any Collateral. Bank shall have no duty to
exercise any of the aforesaid rights, privileges or options with
respect to any Collateral and shall not be responsible for any failure
to do so or delay in so doing.
(e) In any statutory or non-statutory proceeding affecting the Obligor or
any Collateral, Bank or its nominee may, whether or not an Event of
Default shall have occurred and regardless of the amount of the
Obligations, file a proof of claim for the full amount of any
Collateral and vote such Claim for the full amount thereof (i) for or
against any proposal or resolution; (ii) for a trustee or trustees or
for a committee of creditors; and/or (iii) for the acceptance or
rejection of any proposed arrangement, plan of reorganization, wage
earners' plan, composition or extension; and Bank or its nominee may
receive any payment or distribution and give acquittance therefor and
may exchange or release any Collateral.
(f) Whether or not an Event of Default shall have occurred, Bank may,
without notice to or demand upon the Obligor, (i) commence, appear in
or defend any action or proceeding purporting to affect all or any
part of the Collateral or the interests, rights, powers or duties of
Bank, whether brought by or against the Obligor or Bank; and/or (ii)
pay, purchase, contest or compromise any claim, debt, lien, charge or
encumbrance which in the judgement of Bank may affect or appear to
affect the Collateral or the interests, rights, powers or duties of
Bank.
(g) Any and all stocks, bonds or other securities held by Bank as
Collateral hereunder may, without notice (and whether or not a default
exists), be registered in the name of Bank or its nominee without
disclosing that Bank is a pledgee. Bank (whether or not a default
exists and regardless of the amount of the Obligations) or its nominee
may, without notice, exercise all voting and corporate rights at any
meeting of any corporation issuing such stocks, bonds or other
securities, and exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to
such stocks, bonds or other securities as if the absolute owner
thereof, including, without limitation, the right to exchange, at its
discretion, any and all of such stocks, bonds or other securities for
other stocks, bonds, securities or any other property upon the merger,
consolidation, reorganization, recapitalization or other readjustment
of any corporation issuing the same or upon the exercise by the
issuing corporation or Bank of any right, privilege or option
pertaining to such stocks, bonds or other securities, and in
connection therewith, to deposit and deliver any and all of such
stocks, bonds or other securities with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to
account for property actually received by it. Bank shall have no duty
to exercise any of the aforesaid rights, privileges or options and
shall not be responsible for any failure to do so or for any delay in
so doing.
7. Sale of Collateral Consisting of Securities. The Obligor recognizes that
Bank may be unable to effect a public sale of any securities which may
constitute a portion of the Collateral by reason of certain prohibitions
contained in the Securities Act of 1933 and applicable state securities
laws and instead may resort to one or more private sales of such Collateral
to a restricted group of purchasers who would be obliged to agree, among
other things, to. acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Obligor recognizes and agrees that, because of this restriction, sales of
securities may result in prices and other terms less favorable to the
seller than if the disposition were made pursuant to a public sale and,
notwithstanding such circumstances, agrees that any such private or limited
sale or sales shall be deemed to have been made in a commercially
reasonable manner. Bank shall be under no obligation to delay a sale of any
of any of the securities constituting part of the Collateral for the period
of time necessary to permit the issuer of such securities to register them
for public sale under the Securities Act of 1933 or under applicable state
securities law.
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8. Collection Rights of Bank. The Obligor agrees that at any time, whether or
not an Event of Default shall have occurred, Bank shall have the right to
notify an account debtor (with respect to any Collateral consisting of
Accounts), or the obligor on any Instrument or other right or claim of the
Obligor to any payment which is Collateral, to make payment directly to
Bank, whether or not Event of Default shall have occurred and whether or
not the Obligor was theretofore making collections on such Collateral, and
also to take control of any Proceeds Bank is entitled to under Section
9-306 of the New York Uniform Commercial Code. If any Collateral consists
of Accounts, Instruments or other rights or claims of the Obligor to any
payment, then at Bank's request, the Obligor shall promptly notify, (in
manner, form and substance satisfactory to Bank) all Persons obligated to
the Obligor under any such Accounts, Instruments or other rights or claims
of the Obligor to any payment that Bank possesses a security interest in
such Accounts, Instruments or other rights or claims of the Obligor to any
payment and that all payments in respect of such Accounts, Instruments, or
other rights or claims of the Obligor to any payment are to be made
directly to Bank. The Obligor shall not settle, compromise or adjust any
disputed amount, or allow any credit, rebate or discount with respect to
any Account, Instrument or other right or claim of the Obligor to any
payment which constitutes Collateral. After Bank shall have given any
notice of the type specified in the first sentence of this Section 8, any
and all amounts received by the Obligor from the account debtor or other
obligor so notified shall be promptly remitted to Bank, and until so
remitted shall be segregated by the Obligor and held in trust for Bank.
9. Additional Security. If Bank shall at any time hold security for any
Obligations in addition to the Collateral, Bank may enforce the terms of
this Agreement or otherwise realize upon the Collateral, at its option,
either before or concurrently with the exercise of remedies as to such
other security or, after a sale is made of such other security, it may
apply the proceeds upon the Obligations without affecting the status of or
waiving any right to exhaust all or any other security, including the
Collateral, and without waiving any breach or default or any right or power
whether exercised under this Agreement, contained in this Agreement, or
provided for in respect of any such security.
10. Preservation and Protection of Security Interest: Power of Attorney. The
Obligor will faithfully preserve and protect the Lien in the Collateral
created by this Agreement and will, at its own cost and expense, cause such
Lien to be perfected and continue to be perfected and to be and remain
prior to all other Liens, so long as all or any part of the Obligations are
outstanding and unpaid, and for such purpose the Obligor will from time to
time at the request of Bank (i) make notations of the security interest in
certificates of title of Collateral, a security interest in which is
perfected by such notation, and deliver the same to Bank, (ii) deliver
possession of Collateral (concurrent with the acquisition of such
Collateral) to Bank, a security interest in which is perfected by the
taking of possession, and (iii) file or record, or cause to be filed or
recorded, such instruments, documents and notices, including financing
statements and continuation statements, as Bank may reasonably deem
necessary or advisable from time to time in order to perfect and continue
to perfect such Liens and to maintain their priority over all other Liens.
The Obligor will do all such other acts and things and will execute and
deliver all such other instruments and documents, including further
security agreements, pledges, endorsements, assignments and notices as Bank
may reasonably deem necessary or advisable from time to time in order to
perfect and preserve the priority of the Liens in the Collateral as
contemplated by this Agreement. Bank, acting through its officers,
employees and authorized agents, is hereby irrevocably appointed the
attorney-in-fact of the Obligor to do, at the Obligor's expense, all acts
and things which Bank may reasonably deem necessary or advisable to
preserve, perfect, continue to perfect and/or maintain the priority of such
Liens in the Collateral, including the signing of financing, continuation
or other similar statements and notices on behalf of the Obligor, and which
the Obligor is required to do by the terms of the Agreement. The Obligor
hereby authorizes Bank to sign and file financing statements with respect
to the Collateral without the signature of the Obligor. The Obligor shall
pay all filing fees for financing statements with respect to the
Collateral.
11. Risk of Loss: Insurance. Risk of loss, damage to or destruction of the
Collateral is and shall remain upon the Obligor. If the Obligor fails to
obtain and keep in force insurance covering the Collateral as required by
Section 3 of this Agreement, or fails to pay the premiums on such insurance
when due, Bank may, but is not obligated to do so for the account of the
Obligor and the cost of so doing shall thereupon become an Obligation. Such
amounts shall be payable by the Obligor upon demand by the Bank and
following demand shall bear interest at a variable rate equal to 4% above
the Bank's reference lending rate applicable to domestic commercial loans
as established by Bank from time to time, but in no event shall such rate
exceed the maximum rate allowed by law. Bank, acting through its officers,
employees and authorized agents, is hereby irrevocably appointed the
attorney-in-fact of the Obligor to endorse any draft or check that may be
payable to the Obligor in order to collect the proceeds of such insurance
or any return or unearned premiums.
12. Change of Law. In the event of the passage, after the date of this
Agreement, of any law which has the effect of changing in any way the laws
now in force for the taxation of security documents such as this Agreement
or debts secured by such security documents or the manner of the collection
of any such taxes so as in any case to affect this Agreement or to impose
payment of the whole or any portion of any taxes, assessments or other
similar charges against the Collateral upon Bank, the Obligations shall
immediately become due and payable at the option of Bank and upon 30 days'
notice to the Obligor.
13. Expenses. The Obligor hereby agrees to pay any and all expenses incurred by
Bank in enforcing any rights under this Agreement or in defending any of
its rights to any amounts received hereunder. Without limiting the
foregoing, the Obligor agrees that whenever any attorney is used by Bank to
obtain payment hereunder, to advise it as to its rights, to adjudicate the
rights of the parties hereunder or for the defense of any of its rights to
amounts secured, received or to be received hereunder, Bank shall be
entitled to recover all reasonable attorneys' fees and distributions, court
costs and all other expenses attributable thereto.
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14. Notices. Each notice or other communication hereunder shall be in writing,
shall be sent by messenger, by registered or certified mail or by facsimile
transmitter or tested telex, and shall be effective when sent, and shall be
sent as follows:
If to the Obligor, to the address set forth below its signature or such
other address as it may designate, by written notice to Bank as herein
provided or to any other address as may appear in the records of Bank as
Obligor's address.
If to Bank, The Dime Savings Bank of New York, FSB, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxx, or such other address as it
may designate, by written notice to the Obligor as herein provided.
15. Additional Definitions. The following terms have the following meaning
unless otherwise specified herein:
"Accessions," "Account," "Chattel Paper," "Document," "Equipment,"
"Fixtures," "General Intangibles," "Goods," "Instrument" and "Inventory"
have the meanings assigned to those terms by the New York Uniform
Commercial Code, as amended.
"Agreement" means this Continuing General Security Agreement.
"Bank" means The Dime Savings Bank of New York, FSB, a federally chartered
savings bank, its successors and assigns, and any Person acting as agent or
nominee for The Dime Savings Bank of New York, FSB and any corporation the
stock of which is owned or controlled directly or indirectly by, or is
under common control with, The Dime Savings Bank of New York, FSB.
"Claims" means each "claim" as that term is defined under Section 101(4) of
the United States Bankruptcy Code, and any amendments thereto (Title 11,
United States Code).
"Event of Default" means any of the events described in Section 4 of this
Agreement.
"Imported Inventory" means all Inventory of the Obligor of every
description (including, without limitation, raw materials, work in process
and finished Goods) imported from outside of the United States, including
but not limited to Inventory consisting of parts or components produced in
whole or in part in the United States and sent outside of the United States
for assembly, completion or packaging.
"Lien" means any lien, security interest, pledge, hypothecation,
encumbrance or other claim in or with respect to any property.
"Line Letter" means the Line of Credit Agreement of even date herewith
among the Bank, the Obligor and others, as amended from time to time.
"Term Note" means the term note of Maker in the principal amount of
$500,000 and any renewal or replacements thereof.
"Demand Grid Note" means the demand grid note of Maker in the principal
amount of $250,000 of even date herewith and any renewal or replacements
thereof.
"Obligations" means the Term Note, Demand Grid Note, and any and all
indebtedness, obligations and liabilities of the Obligor to Bank, including
but not limited to (i) those arising from the payment of checks or other
orders for the payment of monies drawn on accounts maintained by the
Obligor with the Bank in excess of the collected funds on deposit in such
accounts, (ii) those arising from or related to letters of credit issued on
behalf of the Obligor through the Bank, and (iii) all Claims of Bank
against the Obligor, now existing or hereafter arising, direct or indirect
(including participations or any interest of Bank in indebtedness of the
Obligor to others), acquired outright, conditionally, or as collateral
security from another, absolute or contingent, joint or several, secured or
unsecured, matured or unmatured, monetary or non-monetary, arising out of
contract or tort, liquidated or unliquidated, arising by operation of law
or otherwise, and all extensions, renewals, refundings, replacements and
modifications of any of the foregoing.
"Person" means any natural person, corporation, partnership, trust,
government or other association or legal entity.
"Proceeds" has the meaning assigned to the term by the New York Uniform
Commercial Code, as amended, and also means all "proceeds," "products,"
"offspring," "rents" or "profits" of any property, as such quoted terms are
used in the United States Bankruptcy Code, and any amendments thereto
(Title 11, United States Code).
"Responsible Parties" includes all Obligors and all makers, endorsors,
acceptors, sureties and guarantors of, and all other parties, to the
Obligations or the Collateral.
16. Miscellaneous. This Agreement shall remain in full force and effect and
shall be binding upon the Obligor, its successors and assigns, in
accordance with its terms, notwithstanding any increase, decrease or change
in the partners of the Obligor, if it should be a partnership, or the
merger, consolidation, or reorganization of the Obligor, if it be a
corporation, or any other change concerning the form, structure or
substance of any such entity or any other legal entity. If there is more
than one Person named as an Obligor in this Agreement, this Agreement shall
be binding upon each of the Obligors who execute and deliver this Agreement
to Bank even if this Agreement is not executed by any other Person or
Persons also named as an Obligor herein. Bank may assign all or a portion
of its rights under this
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Agreement and may deliver the Collateral, or any part thereof, to any
assignee and such assignee shall thereupon become vested with all the
powers and rights given to Bank in respect thereof; and Bank shall
thereafter be forever relieved and discharged from any liability or
responsibility in the matter but with respect to any Collateral not so
delivered or assigned, Bank shall retain all powers and rights given to it
hereby. The execution and delivery hereafter to Bank by the Obligor of a
new security agreement shall not terminate, supersede or cancel this
Agreement, unless expressly provided therein, and this Agreement shall not
terminate, supersede or cancel any security agreement previously delivered
to Bank by the Obligor, and all rights and remedies of Bank hereunder or
under any security agreement hereafter or heretofore executed and delivered
to Bank by the Obligor shall be cumulative and may be exercised singly or
concurrently. This Agreement may not be changed or terminated orally, but
only by a writing executed by the Obligor and a duly authorized officer of
Bank. Unless Bank, in its discretion, otherwise agrees, the security
interests granted in this Agreement shall not terminate until all of the
Obligations have been indefeasibly paid in full and all commitments of Bank
to extend credit which, once extended, would give right to Obligations have
expired or been terminated. No delay on the part of Bank in exercising any
of its options, powers or rights, or partial or single exercise thereof,
shall constitute a waiver thereof. No modification or waiver of this
Agreement or any provision hereof or of any other agreement or instrument
made or issued in connection herewith or contemplated hereby, nor consent
to any departure by the Obligor therefrom, shall in any event be effective,
irrespective of any course of dealing between the parties, unless the same
shall be in a writing executed by a duly authorized officer of Bank, and
then such waiver or consent shall be effective only in the specific
instance and for the specific purpose of which given. No notice to or
demand on the Obligor in any case shall thereby entitle the Obligor to any
other or further notice or demand in the same, similar or other
circumstances. The remedies herein provided are cumulative and not
exclusive of any other remedies provided at equity or by law and all such
remedies may be exercised singly or concurrently. If any one or more of the
provisions contained in this Agreement or any document executed in
connection herewith shall be invalid, illegal or unenforceable in any
respect under any applicable law, the validity, legality and enforceability
of the remaining provisions contained herein shall not (to the full extent
permitted by law) in any way be affected or impaired. The descriptive
headings used in this Agreement are for convenience only and shall not be
deemed to affect the meaning or construction of any provision hereof. The
word "including" shall be deemed to be followed by the words "without
limitation." The Obligor waives any and all notice of the acceptance of
this Agreement by Bank, or of the creation, accrual or maturity (whether by
declaration or otherwise) of any and all Obligations, or of any renewals or
extensions thereof from time to time, or of Bank's reliance on this
Agreement.
17. Governing Law: Consent to Jurisdiction' Service of Process. This Agreement
shall be governed by and construed in accordance with the laws of the State
of New York applicable to contracts made and to be performed wholly within
that state. The Obligor hereby consents to the jurisdiction of the courts
of the State of New York and the courts of the United States of America for
the Southern District of New York and consents that any action or
proceeding hereunder may be brought in such courts, and waives any
objection that it may now or hereafter have to the venue of any such action
or proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the same;
and authorizes the service of process on the Obligor by registered or
certified mail sent to any address authorized in Section 14 as an address
for the sending of notices.
18. RIGHT OF BANK TO ARBITRATE DISPUTES.
(a) THE OBLIGOR AGREES THAT ANY ACTION, DISPUTE, PROCEEDING, CLAIM OR
CONTROVERSY BETWEEN OR AMONG THE PARTIES WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE ("DISPUTE" OR "DISPUTES") SHALL, AT BANK'S ELECTION,
WHICH ELECTION MAY BE MADE AT ANY TIME PRIOR TO THE COMMENCEMENT OF A
JUDICIAL PROCEEDING BY BANK, OR IN THE EVENT OF A JUDICIAL PROCEEDING
INSTITUTED BY THE OBLIGOR AT ANY TIME PRIOR TO THE LAST DAY TO ANSWER
AND/OR RESPOND TO A SUMMONS AND/OR COMPLAINT MADE BY THE OBLIGOR, BE
RESOLVED BY ARBITRATION IN NEW YORK, NEW YORK IN ACCORDANCE WITH THE
PROVISIONS OF THIS SECTION 18 AND SHALL, AT THE ELECTION OF BANK,
INCLUDE ALL DISPUTES ARISING OUT OF OR IN CONNECTION WITH (I) THIS
AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, (II) ALL PAST,
PRESENT AND FUTURE AGREEMENTS INVOLVING THE PARTIES, (III) ANY
TRANSACTION CONTEMPLATED HEREBY AND ALL PAST, PRESENT AND FUTURE
TRANSACTIONS INVOLVING THE PARTIES AND (IV) ANY ASPECT OF THE PAST,
PRESENT OR FUTURE RELATIONSHIP OF THE PARTIES. Bank may elect to
require arbitration of any Dispute with the Obligor without thereby
being required to arbitrate all Disputes between Bank and the Obligor.
Any such Dispute shall be resolved by binding arbitration in
accordance with Article 75 of the New York Civil Practice Law and
Rules and the Commercial Arbitration Rules of the American Arbitration
Association ("AAA"). In the event of any inconsistency between such
Rules and these arbitration provisions, these provisions shall
supersede such Rules. All statutes of limitations which would
otherwise be applicable shall apply to any arbitration proceeding
under this subsection 18(a). In any arbitration proceeding subject to
these provisions, the arbitration panel (the "arbitrator") is
specifically empowered to decide (by documents only, or with a
hearing, at the arbitrator's sole discretion) pre-hearing motions
which are substantially similar to pre-hearing motions to dismiss and
motions for summary adjudication. In any such arbitration proceeding,
the arbitrator shall not have the power or authority to award punitive
damages to any party. Judgment upon the award rendered may be entered
in any court having jurisdiction. Whenever an arbitration is required,
the parties shall select an arbitrator in the manner provided in
subsection 18(d).
(b) No provision of, nor the exercise of any rights under, subsection
18(a) shall limit the right of any party (i) to foreclose against any
real or personal property collateral through judicial foreclosure, by
the exercise of a power of sale under a deed of trust, mortgage or
other security agreement or instrument, pursuant to applicable
provisions of the Uniform Commercial Code, or otherwise pursuant to
applicable law, (ii) to
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exercise self help remedies including but not limited to setoff and
repossession, or (iii) to request and obtain from a court having
jurisdiction before, during or after the pendency of any arbitration,
provisional or ancillary remedies and relief including but not limited
to injunctive or mandatory relief or the appointment of a receiver.
The institution and maintenance of an action or judicial proceeding
for, or pursuit of, provisional or ancillary remedies or exercise of
self help remedies shall not constitute a waiver of the right of Bank,
even if Bank is the plaintiff, to submit the Dispute to arbitration if
Bank would otherwise have such right.
(c) Bank may require arbitration of any Dispute(s) concerning the
lawfulness, unconscionableness, propriety, or reasonableness of any
exercise of Bank of its right to take or dispose of any Collateral or
its exercise of any other right in connection with Collateral
including, without limitation, judicial foreclosure, exercising a
power of sale under a deed of trust or mortgage, obtaining or
executing a writ of attachment, taking or disposing of property with
or without judicial process pursuant to Article 9 of the Uniform
Commercial Code or otherwise as permitted by applicable law,
notwithstanding any such exercise by Bank.
(d) Whenever an arbitration is required under subsection 18(a), the
arbitrator shall be selected, except as otherwise herein provided, in
accordance with the Commercial Arbitration Rules of the AAA. A single
arbitrator shall decide any claim of $100,000 or less and he or she
shall be an attorney with at lease five years' experience. Where the
claim of any party exceeds $100,000, the Dispute shall be decided by a
majority vote of three arbitrators, at least two of whom shall be
attorneys (at least one of whom shall have not less than five years'
experience representing commercial banks).
(e) In the event of any Dispute governed by this Section 18, each of the
parties shall, subject to the award of the arbitrator, pay an equal
share of the arbitrator's fees. The arbitrator shall have the power to
award recovery of all costs and fees (including attorneys' fees,
administrative fees, arbitrator's fees, and court costs) to the
prevailing party.
19. WAIVER OF TRIAL BY JURY. EACH OF BANK AND THE OBLIGOR HEREBY WAIVES TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR AGAINST IT
ON ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR IN ANY
WAY CONNECTED WITH THIS AGREEMENT OR THE OBLIGATIONS.
20. WAIVER OF CERTAIN OTHER RIGHTS. THE OBLIGOR HEREBY WAIVES THE RIGHT TO
INTERPOSE ANY DEFENSE BASED UPON ANY CLAIMS OR LACHES OR SET-OFF OR
COUNTERCLAIM OF ANY NATURE OR DESCRIPTION, ANY OBJECTION BASED ON FORUM NON
CONVENIENS OR VENUE, AND ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL
DAMAGES. IN WITNESS WHEREOF, the Obligor(s) has/have executed this
Continuing General Security Agreement.
Chief Executive Office: POLYMER RESEARCH CO P. OF AMERICA
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx, 00000 By.
By: /s/Xxxx Xxxxxxxx
--------------------
Xxxx Xxxxxxxx
Title: President
[CORPORATE SEAL]
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STATE OF NEW YORK )
ss:
COUNTY OF KINGS )
On this 20th day of March 2000, before me personally came Xxxx Xxxxxxxx to
me known who, being duly sworn, deposed and said that he is the President of
POLYMER RESEARCH CORP. OF AMERICA, the corporation described in and which
executed the above instrument; that he knows the seal of the corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation and he signed his
name by like order.
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CERTIFICATE
I, Xxxx Xxxxxxx do hereby certify as follows:
1. I am the duly elected, qualified and acting Secretary of POLYMER RESEARCH
CORP. OF AMERICA, a New York corporation (the "Company"), and as such, have
the care and custody of the books and records of the Company, have personal
knowledge of the matters set forth herein, and have authority to make this
Certificate for and on behalf of the Company.
2. At a special meeting of the Board of Directors of the Company, called in
accordance with the provisions of the organizational documents of the
Company and held on ___________, ____, or pursuant to the unanimous written
consent of the Directors of the Company dated March 17, 2000, as authorized
by the organizational documents of the Company, the following resolutions
were adopted by unanimous vote or consent:
WHEREAS, the Company desires The Dime Savings Bank of New York, FSB
(hereinafter referred to as the "Bank") hereafter to extend credit or
other financial accommodations to the Company upon such terms and
conditions as may be required by the Bank.
IT IS, THEREFORE, RESOLVED, that pursuant to a demand grid note in the
amount of $250,000 and a term note in the amount of $500,000, the
Company borrow from the Bank and shall grant to the Bank a security
interest in property of the Company designated by any duly authorized
representative of the Company to secure any and all obligations of the
Company to the Bank, whether now existing or hereafter incurred; and
FURTHER RESOLVED, that any duly authorized representative of the
Company be, and each of them hereby is, authorized and directed to
execute, and the President or Secretary of the Company is hereby
authorized and directed to attest to and to affix the seal of the
Company to, any security agreements and other instruments or documents
related thereto, in the form required by the Bank; and
FURTHER RESOLVED, that the Company shall agree to submit to
arbitration and to waive the right of trial by jury with respect to
any dispute arising under such security agreement or any related
document.
3. I further certify that the foregoing resolutions remain in full force and
effect and have not been rescinded or modified in any manner whatsoever and
neither their adoption nor their implementation violates the Company's
organizational documents or constitutes a default under any agreement or
indenture to which the Company is a party or by which it is bound.
IN WITNESS WHEREOF, I have set my hand and the seal of the Company this 2oth day
of March 2000.
[SEAL] POLYMER RESEARCH CORP. OF AMERICA
By: /s/ Xxxx Xxxxxxx
-----------------
Title: Secretary
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Schedule A
Permitted Liens
Name of Secured Party Description of Collateral
--------------------- -------------------------
(a) Clarklift of New York, Inc. Xxxxx Forklift Truck, Forks, Battery & Charger
(b) Liens in favor of Tama Realty Co. or its successor or assigns, which are to
(Name of Mortgagor)
be terminated after payment from the proceeds of the, Term Loan to be made
pursuant to the Line Letter.
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