EXHIBIT 10.4
[LOGO OF MERRILL LYNCH APPEARS HERE] No.9502340701
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TERM WCMA(R) LOAN AND SECURITY AGREEMENT
This Term WCMA Loan and Security Agreement ("Loan Agreement") is entered into as
of February 23, 1995, between BARBEQUES GALORE, INC., a corporation organized
and existing under the laws of the State of California having its principal
office at 15041 Bake Parkway, Ste. A, Irvine, CA 92718, Attn: Sydney Selati,
Chairman. ("Customer"), and MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC., a
corporation organized and existing under the laws of the State of Delaware
having its principal office at 33 West Monroe Street, Chicago, IL 60603
("MLBFS").
In accordance with that certain Working Capital Management/(R)/ Account
Agreement No. 231-07T11 ("WCMA Agreement") between Customer and MLBFS'
affiliate, Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"),
Customer has subscribed to the WCMA Program described in the WCMA Agreement. The
WCMA Agreement is by this reference incorporated as a part hereof. In
conjunction therewith, Customer has requested that MLBFS make the Term WCMA Loan
hereinafter described (the "Loan"); and, subject to the terms and conditions
herein set forth, MLBFS has agreed to make the Loan to Customer.
The Loan combines the equivalent of 5 successive one-year term loans, each equal
to that portion of the Loan that will be fully amortized in one year, with a
line of credit under the WCMA Program ("WCMA Line of Credit") equal to that
portion of the Loan that will not be amortized in the ensuing year. Subject to
the terms hereof, each year after the initial funding there will be an
additional funding on account of the term portion of the Loan, with the proceeds
deposited into Customer's WCMA Account concurrently with a corresponding
reduction in the maximum WCMA Line of Credit.
This structure provides Customer with substantially the same funding and
amortization as a conventional term loan. However, unlike most conventional term
loans, it permits both a prepayment in whole or in part at any time without
penalty, and, subject to the terms and conditions herein set forth, a
re-borrowing on a revolving basis of any such amounts prepaid on account of the
WCMA Line of Credit portion of the Loan. The structure therefore enables
Customer at its option to use its free cash balances to reduce term loan
interest expense without impairing working capital.
Contemporaneously herewith, MLBFS is entering into a WCMA Note, Loan and
Security Agreement with Customer for a $500,000.00 line of credit for working
capital purposes. All references to the WCMA Line of Credit in this Loan
Agreement shall refer only to the WCMA Line of Credit hereunder and not to that
under the WCMA Note, Loan and Security Agreement dated as of the date hereof.
Accordingly, and in consideration of the premises and of the mutual covenants of
the parties hereto, Customer and MLBFS hereby agree as follows:
Article I. DEFINITIONS
1.1 Specific Terms. In addition to terms defined elsewhere in this Loan
Agreement, when used herein the following terms shall have the following
meanings:
(a) "Account Debtor " shall mean any party who is or may become obligated with
respect to an Account or Chattel Paper.
(b) "Additional Agreements" shall mean all agreements, instruments, documents
and opinions other than this Loan Agreement which are contemplated hereby or
otherwise reasonably required by MLBFS, and relate to this Loan agreement or
evidence the creation, guaranty or collateralization of the Obligations or the
granting
or perfection of security interests upon the Collateral or any other collateral
for the Obligations, and shall include, without limitation, the Term WCMA Note.
(c) "Business Day" shall mean any day other than a Saturday, Sunday, federal
holiday or other day on which the New York Stock Exchange is regularly closed.
(d) "Closing Date" shall mean the date upon which all conditions precedent to
MLBFS' obligation to make the Loan shall have been met to the satisfaction of
MLBFS.
(e) "Collateral" shall mean all Accounts, Chattel Paper, Contract Rights,
Inventory, Equipment, Fixtures, General Intangibles, Deposit Accounts, Documents
and Instruments of Customer, howsoever arising, whether now owned or existing or
hereafter acquired or arising, and wherever located; together with all books and
records (including computer records) in any way related thereto, all proceeds
thereof, and the additional collateral described in Section 4.6 (b) hereof.
(f) "Commitment Expiration Date" shall mean March 23, 1995.
(g) "Commitment Fee" shall mean a fee of $7,500.00 due to MLBFS in connection
with this Loan Agreement.
(h) "General Funding Conditions" shall mean each of the following conditions to
any loan or advance by MLBFS hereunder: (i) no Event of Default, or event which
with the giving of notice, passage of time, or both, would constitute an Event
of Default, shall have occurred and be continuing or would result from the
making of any WCMA Loan hereunder by MLBFS; (ii) there shall not have occurred
any material adverse change in the business or financial condition of Customer
or any Guarantor; (iii) all representations and warranties of Customer or any
Guarantor herein or in any Additional Agreements shall then be true and correct
in all material respects; (iv) no other event shall then have occurred and be
continuing which shall have reasonably caused MLBFS to in good faith believe
that the prospect of payment or performance by Customer or any Guarantor has
been materially impaired; (v) MLBFS shall have received this Loan Agreement and
all Additional Agreements, duly executed and filed or recorded where applicable,
all of which shall be in form and substance reasonably satisfactory to MLBFS;
(vi) the Commitment Fee shall have been paid in full; (vii) MLBFS shall have
received evidence reasonably satisfactory to it as to the ownership of the
Collateral and the perfection and priority of MLBFS' liens and security
interests thereon, as well as the ownership of and the perfection and priority
of MLBFS' liens and security interests on any other collateral for the
Obligations furnished pursuant to any of the Additional Agreements; (viii) MLBFS
shall have received evidence reasonably satisfactory to it of the insurance
required hereby or by any of the Additional Agreements; and (ix) any additional
conditions specified in an Approval Letter or Commitment Letter executed by
MLBFS with respect to the transactions contemplated hereby shall have been met
to the reasonable satisfaction of MLBFS.
(i) "Guarantor" shall mean a person or entity who has either guaranteed or
provided collateral for any or all of the Obligations; and "Business Guarantor"
shall mean any such Guarantor that is a corporation, partnership,
proprietorship, limited liability company or other entity regularly engaged in a
business activity.
(j) "Interest Rate" shall mean a fluctuating per annum rate equal to the sum of
(i) 2.70%, and (ii) the interest rate from time to time published in the "Money
Rates" section of The Wall Street Journal for 30-day high-grade unsecured notes
sold though dealers by major corporations (the "30-Day Commercial Paper Rate").
The Interest Rate will change as of the date of publication in The Wall Street
Journal of a 30-Day Commercial Paper Rate that is different from that published
on the preceding Business Day. In the event that The Wall Street Journal shall,
for any reason, fail or cease to publish the 30-Day Commercial Paper Rate, MLBFS
will choose a reasonably comparable index or source to use as the basis for the
Interest Rate.
(k) "Loan Amount" shall mean $1,500,000.00.
(l) "Loan Purpose" shall mean the purpose for which the proceeds of the Loan
will be used; to wit: to refinance existing debt owed to The Galore Group
Limited and to provide financing for expansion purposes,
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including, without limitation, expansion of Customer's commercial division and
for purchase of inventory, fixtures, equipment, leasehold improvements, and
lease acquisition costs for company owned and franchised stores, and as working
capital for Customer.
(m) "Location of Tangible Collateral" shall mean the address of Customer set
forth at the beginning of this Loan Agreement, together with any other address
or addresses set forth on an exhibit hereto as being a Location of Tangible
Collateral.
(n) "Maximum WCMA Line of Credit" shall mean the maximum aggregate line of
credit which MLBFS will extend to Customer subject to the terms and conditions
hereof, as the same shall be reduced from time to time in accordance with the
terms hereof.
(o) "Obligations" shall mean all liabilities, indebtedness and other
obligations of Customer to MLBFS, howsoever created, arising or evidenced,
whether now existing or hereafter arising, whether direct or indirect, absolute
or contingent, due or to become due, primary or secondary or joint or several,
and, without limiting the foregoing, include all present and future liabilities,
indebtedness and obligations of Customer under this Loan Agreement and the Term
WCMA Note.
(p) "Permitted Liens" shall mean (i) liens for current taxes not delinquent
and, if MLBFS' rights to and interest in the Collateral are not materially and
adversely affected thereby, liens for taxes being contested in good faith by
appropriate proceedings; (ii) liens arising in the ordinary course of business
for sums not due; (iii) liens in favor of MLBFS; (iv) liens which will be
discharged with the proceeds of the Loan; (v) and those liens set forth on
Schedule 1 attached hereto; and (vi) any other liens expressly permitted in
writing by MLBFS.
(q) "Term WCMA Note" shall mean and refer to the Term WCMA Note executed by
Customer and dated as of the date hereof which incorporates both a WCMA Note
evidencing amounts owing on account of the WCMA Line of Credit portion of the
Loan, and a Term Note evidencing amounts owing on account of the term portion of
the Loan.
(r) "WCMA Account" shall mean and refer to the Working Capital Management
Account of Customer with MLPF&S identified as WCMA Account No. 231-07T11.
(s) "WCMA Loan" shall mean each advance made by MLBFS pursuant to the WCMA Line
of Credit.
(t) "WCMA Loan Balance" shall mean an amount equal to the aggregate unpaid
principal balance of all WCMA Loans.
1.2 Other Terms. Except as otherwise defined herein: (i) all terms used in this
Loan Agreement which are defined in the Uniform Commercial Code of Illinois
("UCC") shall have the meanings set forth in the UCC, and (ii) capitalized terms
used herein which are defined in the WCMA Agreement shall have the meaning set
forth in the WCMA Agreement.
Article II. THE LOAN
2.1 Commitment. Subject to the terms and conditions hereof, MLBFS hereby agrees
to make the Loan to Customer, and Customer hereby agrees to borrow the Loan from
MLBFS. Unless otherwise hereafter agreed by MLBFS, the entire proceeds of the
Loan will be disbursed either directly to the applicable third party or parties
on account of the Loan Purpose or to reimburse Customer for amounts directly
expended by it; all as directed by Consumer in a Closing Certificate to be
executed and delivered to MLBFS prior to the date of funding.
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2.2 Operation of Loan.
(a) Term WCMA Note. The Loan will be evidenced by and shall be repayable in
accordance with the terms of the Term WCMA Note and this Loan Agreement. The
Term WCMA Note combines two promissory notes, one evidencing the term portion of
the Loan (the "Term Note") and the other evidencing the WCMA Line of Credit
portion of the Loan (the "WCMA Note"). The balance owing by Customer on account
of the Loan at any time shall be an amount equal to the sum of the then
outstanding balances under the WCMA Note and the Term Note included in the Term
WCMA Note. The Term WCMA Note is hereby incorporated as a part hereof.
(b) Term Note Principal. The principal balance owing under the Term Note at any
time shall be an amount equal to the difference between (i) the Loan Amount less
the aggregate principal paid by Customer on account of the Term Note; and (ii)
the WCMA Line of Credit. So long as there shall be any moneys owing by Customer
to MLBFS hereunder or there shall be a WCMA Line of Credit, no reduction in the
unpaid principal balance of the Term Note to zero shall be deemed a payment of
the Term Note in full or an extinguishment of any of the obligations of Customer
thereunder or hereunder.
(c) Term Note Funding. Subject to the terms hereof, the Term Note will be
funded by MLBFS in 5 annual installments, each equal to 1/5th of the Loan
Amount. The first 1/5th installment funded by MLBFS will be funded on the
Closing Date and applied on account of the Loan Purpose, as aforesaid.
Subsequent installments will be funded on a date chosen by MLBFS in its sole
discretion which will be on or within two weeks before or after each subsequent
anniversary of the last day of the calendar month in which the Closing Date
occurs (each, a "Subsequent Funding Date"). Each Term Note funding after the
first shall be deposited into Customers WCMA Account.
(d) Activation of WCMA Line. On the Closing Date, MLBFS will activate and make
available as an integral part of the Loan a WCMA Line of Credit equal to 4/5ths
of the Loan Amount, all of which will be immediately disbursed on account of the
Loan Purpose as part of the Loan in accordance with the directions of Customer
set forth in the Closing Certificate, as aforesaid.
(e) Subsequent Fundings. On the first Subsequent Funding Date, concurrently
with MLBFS' funding of the second installment of the debt evidenced by the Term
Note into the WCMA Account, the WCMA Line of Credit will be reduced to an amount
equal to 3/5ths of the Loan Amount. On the second Subsequent Funding Date, the
WCMA Line of Credit will be reduced to an amount equal to 2/5ths of the Loan
Amount; and on the third Subsequent Funding Date the WCMA Line of Credit will be
reduced to an amount equal to 1/5th of the Loan Amount.
(f) Final WCMA Maturity Date. On the fourth Subsequent Funding Date (the "WCMA
Maturity Date"), the WCMA Line of Credit will be terminated and the WCMA
Account, at the option of Customer, will either be converted to a WCMA Cash
Account (subject to any requirements of MLPF&S) or terminated.
2.3 Conditions of MLBFS' Obligation. The Closing Date and MLBFS' obligation to
make the Loan on the Closing Date are subject to the prior fulfillment of each
of the following conditions; (a) MLBFS shall have received a written request
from Customer that the Loan be funded in accordance with the terms hereof,
together with a written direction from Customer as to the method of payment and
payee(s) of the proceeds of the Loan, which request and direction shall have
been received by MLBFS not less than two Business Days prior to any requested
funding date; (b) MLBFS shall have received a copy of invoices, bills of sale,
payoff letters or other applicable evidence reasonably satisfactory to it that
the proceeds of the Loan will satisfy the Loan Purpose; (c) the Commitment
Expiration Date shall not then have occurred; Purpose; (c) the Commitment
Expiration Date shall not then have occurred; and (d) each of the General
Funding Conditions shall have been met or satisfied to the reasonable
satisfaction of MLBFS.
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2.4 Conditions of Subsequent Fundings; Termination.
(a) Conditions of Subsequent Fundings. The obligation of MLBFS to fund
installments of the term portion of the Loan on any Subsequent Funding Date
shall be subject to each of the conditions specified in Section 2.3 hereof being
met at such date, and the further condition that all payments due under the Term
Note on or prior to any Subsequent Funding Date shall have been paid in full;
provided, however, that notwithstanding the failure of any such conditions to
have been met, MLBFS may in its sole discretion fund such installment and/or any
other installments, and no such funding shall constitute a waiver by MLBFS of
any of its rights hereunder or under any of the Additional Agreements. Without
limiting the foregoing, it is understood that no funding by MLBFS of any sum
hereunder while an Event of Default shall have occurred and is continuing shall
under any circumstances be deemed a waiver by MLBFS of such Event of Default, or
a waiver of any of MLBFS' rights hereunder.
2.5 Commitment Fee. In consideration of the agreement by MLBFS to extend the
Loan to Customer in accordance with and subject to the terms hereof, Customer
has paid or shall, on or before the Closing Date pay, the Commitment Fee to
MLBFS. The Commitment Fee shall not be refundable under any circumstances.
2.6 Acknowledgments of Customer. Customer acknowledges, covenants and agrees
that:
(a) Payment of WCMA Interest; Additional Deposits. Under the terms of this Loan
Agreement, interest accrued on amounts outstanding on the Term WCMA Line of
Credit each month will, subject to the terms hereof, ordinarily be paid from the
proceeds of a borrowing of an additional sum under the Term WCMA Line of Credit.
Since substantially the entire Term WCMA Line of Credit may be drawn on the
Closing Date, Customer agrees that it will, without demand, invoicing or the
request of MLBFS, from time to time make sufficient deposits into the WCMA
Account in order to assure that the Maximum WCMA Line of Credit is not exceeded.
Installments of principal and interest under the Term Note shall be paid
directly to MLBFS in accordance with the terms of the Term Note.
(b) Additional Interest Charges. SUBJECT TO THE TERMS HEREOF, ON EACH
SUBSEQUENT FUNDING DATE MLBFS WILL DEPOSIT THE AMOUNT FUNDED INTO THE WCMA
ACCOUNT. DUE TO POSSIBLE DELAYS IN POSTING AS WELL AS CERTAIN DELAYS IN
RECOGNITION OF DEPOSITS INHERENT IN THE WCMA PROGRAM, CUSTOMER WILL NOT RECEIVE
CREDIT FOR THE AMOUNT DEPOSITED FOR UP TO SEVERAL DAYS THEREAFTER, RESULTING IN
AN INTEREST CHARGE FOR THAT PERIOD OF TIME ACCRUING AND CHARGED IN THE WCMA
ACCOUNT. ON THE OTHER HAND, BECAUSE MLBFS BORROWS ALL OR SUBSTANTIALLY ALL OF
THE FUNDS THAT IT LENDS ON THE DATE OF FUNDING, IT MUST CHARGE INTEREST ON THE
AMOUNT FUNDED ON EACH SUBSEQUENT FUNDING DATE FROM THE DATE OF ITS DEPOSIT INTO
THE WCMA ACCOUNT, WHETHER OR NOT SUCH DEPOSIT IS IMMEDIATELY RECOGNIZED. THE
TIMING DIFFERENCES BETWEEN THE DATE OF DEPOSIT AND DATE OF RECOGNITION OF THE
DEPOSIT IN THE WCMA ACCOUNT WILL THEREFORE RESULT IN EXTRA INTEREST CHARGES TO
CUSTOMER, WHICH CUSTOMER ACKNOWLEDGES ARE AN ADDITIONAL COST OF THE LOAN AND
HEREBY UNCONDITIONALLY AGREES TO PAY.
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Article III. THE WCMA LINE OF CREDIT
3.1 WCMA Note.
All amounts owing under the WCMA Line of Credit shall be deemed owing under and
evidenced by the WCMA Note included in the Term WCMA Note.
3.2 WCMA Loans.
(a) Loan Commitment and Requests. Subject to the terms and conditions hereof;
(i) on the Closing Date, MLBFS will make a WCMA Loan to Customer in an amount
equal to the Maximum WCMA Line of Credit, the entire proceeds of which will be
disbursed on account of the Loan Purpose, as aforesaid; and (ii) during the
period from and after the Closing Date to the WCMA Maturity Date; (x) Customer
may repay said WCMA Loan and any other WCMA Loans in whole or in part at any
time without premium or penalty, and request a re-borrowing of amounts repaid on
a revolving basis, and (y) MLBFS will make such additional WCMA Loans as
Customer may from time to time request in accordance with the terms hereof,
provided that, without limiting any of the other conditions hereof, the making
of any such WCMA Loan shall not cause the WCMA Loan Balance to exceed the
Maximum WCMA Line of Credit. Customer may request WCMA Loans by use of WCMA
Checks, FTS, Visa(R) charges, wire transfers, or such other means of access to
the WCMA Line of Credit as may be permitted by MLBFS from time to time; it being
understood that so long as the WCMA Line of Credit shall be in effect, any
charge or debit to the WCMA Account which but for the WCMA Line of Credit would
under the terms of the WCMA Agreement result in an overdraft, shall be deemed a
request by Customer for a WCMA Loan.
(b) Conditions of WCMA Loans. Notwithstanding the foregoing, MLBFS shall not be
obligated to make any WCMA Loan, and may without notice refuse to honor any such
request by Customer, if at the time of Customers request; (i) the making of such
WCMA Loan would cause the Maximum WCMA Line of Credit to be exceeded; or (ii)
the Maturity Date shall have occurred, or the WCMA Line of Credit shall have
otherwise been terminated in accordance with the terms hereof; or (iii) an event
shall have occurred and is continuing which shall have caused any of the General
Funding Conditions to not then be met or satisfied to the reasonable
satisfaction of MLBFS. The making by MLBFS of any WCMA Loan at a time when any
one or more of said conditions shall not have been met shall not in any event be
construed as a waiver of said condition or conditions or of any Event of
Default, and shall not prevent MLBFS at any time thereafter while any condition
shall not have been met from refusing to honor any request by Customer for a
WCMA Loan.
(c) Force Majeure. MLBFS shall not be responsible, and shall have no liability
to Customer or any other party, for any delay or failure of MLBFS to honor any
request of Customer for a WCMA Loan or any other act or omission of MLBFS,
MLPF&S or any of their affiliates due to or resulting from any system failure,
error or delay in posting or other clerical error, loss of power, fire, Act of
God or other cause beyond the reasonable control of MLBFS, MLPF&S or any of
their affiliates unless directly arising out of the willful wrongful act or
active gross negligence of MLBFS. In no event shall MLBFS be liable to Customer
or any other party for any incidental or consequential damages arising from any
act or omission by MLBFS, MLPF&S or any of their affiliates in connection with
the WCMA Line of Credit or this Loan Agreement.
(d) Interest. The WCMA Loan Balance shall bear interest at the Interest Rate.
Interest shall be computed for the actual number of days elapsed on the basis of
a year consisting of 360 days. Notwithstanding any other provision in this Loan
Agreement or any Additional Agreements to the contrary, in no event shall the
Interest Rate exceed the highest rate permissible under any applicable law. In
the event that any court having jurisdiction determines that MLBFS has received
excess interest hereunder, MLBFS will promptly refund such excess interest to
Customer, without charge or penalty. Except as otherwise provided herein,
accrued and unpaid interest on the WCMA Loan Balance shall be payable monthly on
the last Business Day of the calendar month in which the Closing Date shall
occur. Customer hereby irrevocably authorizes and directs MLPF&S to pay MLBFS
such accrued interest from any available free credit balances in the WCMA
Account, and if such available free credit
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balances are insufficient to satisfy any interest payment due, to liquidate any
investments in the Money Accounts (other than any investments constituting any
Minimum Money Accounts Balance) in an amount up to the balance of such accrued
interest, and pay to MLBFS the available proceeds on account thereof. If
available free credit balances in the WCMA Account and available proceeds of the
Money Accounts are insufficient to pay the entire balance of accrued interest,
and Customer otherwise fails to make such payment when due, MLBFS may, in its
sole discretion, make a WCMA Loan in an amount equal to the balance of such
accrued interest and pay the proceeds of such WCMA Loan to itself on account of
such interest. The amount of any such WCMA Loan will be added to the WCMA Loan
Balance. If MLBFS declines to extend a WCMA Loan to Customer under these
circumstances, Customer hereby authorizes and directs MLPF&S to make all such
interest payments to MLBFS from any Minimum Money Accounts Balance. If there is
no Minimum Money Accounts Balance, or it is insufficient to pay all such
interest, MLBFS will invoice Customer for payment of the balance of the accrued
interest, and Customer shall pay such interest as directed by MLBFS within 5
Business Days of receipt of such invoice.
(e) Payments. All payments required or permitted to be made pursuant to this
Loan Agreement shall be made in lawful money of the United States. Unless
otherwise directed by MLBFS, payments on account of the WCMA Loan Balance may be
made by the delivery of checks (other than WCMA Checks), or by means of FTS or
wire transfer of funds (other than funds from the WCMA Line of Credit) to MLPF&S
for credit to Customer's WCMA Account. Notwithstanding anything in the WCMA
Agreement to the contrary, Customer hereby irrevocably authorizes and directs
MLPF&S to apply available free credit balances in the WCMA Account to the
repayment of the WCMA Loan Balance prior to application for any other purpose.
Payments to MLBFS from funds in the WCMA Account shall be deemed to be made by
Customer upon the same basis and schedule as funds are made available for
investment in the Money Accounts in accordance with the terms of the WCMA
Agreement. The acceptance by or on behalf of MLBFS of a check or other payment
for a lesser amount than shall be due from Customer, regardless of any
endorsement or statement thereon or transmitted therewith, shall not be deemed
an accord and satisfaction or anything other than a payment on account, and
MLBFS or anyone acting on behalf of MLBFS may accept such check or other payment
without prejudice to the rights of MLBFS to recover the balance actually due or
to pursue any other remedy under this Loan Agreement or applicable law for such
balance. All checks accepted by or on behalf of MLBFS in connection with the
Loan and WCMA Line of Credit are subject to final collection.
(f) Exceeding the Maximum WCMA Line of Credit. In the event that the WCMA Loan
Balance shall at any time exceed the Maximum WCMA Line of Credit, Customer shall
within 1 Business Day of the first to occur of (i) any request or demand of
MLBFS, or (ii) receipt by Customer of a statement from MLPF&S showing a WCMA
Loan Balance in excess of the WCMA Line of Credit, deposit sufficient funds into
the WCMA Account to reduce the WCMA Loan Balance below the Maximum WCMA Line of
Credit.
(g) Statements. MLPF&S will include in each monthly statement it issues under
the WCMA Program information with respect to WCMA Loans and the WCMA Loan
Balance. Any questions that Customer may have with respect to such information
should be directed to MLBFS; and any questions with respect to any other matter
in such statements or about or affecting the WCMA Program should be directed to
MLPF&S.
Article IV. GENERAL PROVISIONS
4.1 Representations and Warranties.
Customer represents and warrants to MLBFS that:
(a) Due Organization, etc. Customer is a corporation, duly organized, validly
existing and in good standing under the laws of the State of California, and if
any Guarantor is a corporation, partnership or limited liability company, such
Guarantor is, duly organized, validly existing and in good standing under the
laws of the State of its incorporation or formation.
(b) Execution, Delivery and performance. The execution, delivery and
performance by Customer of this Loan Agreement and the Term WCMA Note and by
Consumer and each Guarantor of such of the other
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Additional Agreements to which it is a party; (i) have been duly authorized by
all requisite action, (ii) do not and will not violate or conflict with any law
or other governmental requirement, or any of the agreements, instruments or
documents which formed or govern Customer or any such Guarantor, and (iii) do
not and will not breach or violate any of the provisions of, and will not result
in a default by Customer or any such Guarantor under, any other agreement,
instrument or document to which it is a party or by which it is bound.
(c) Notices and Approvals. Except as may have been given or obtained, no notice
to or consent or approval of any governmental body or authority or other third
party whatsoever (including, without limitation, any other creditor) is required
in connection with the execution, delivery or performance by Customer or any
Guarantor of such of this Loan Agreement, the Term WCMA Note and the other
Additional Agreements to which it is a party.
(d) Enforceability. This Loan Agreement, the Term WCMA Note and such of the
other Additional Agreements to which it is a party are the legal, valid and
binding obligations of Customer or the Guarantors, enforceable against it or
them, as the case may be, in accordance with their respective terms, except as
enforceability may be limited by bankruptcy and other similar laws affecting the
rights of creditors generally or by general principals of equity.
(e) Collateral. Except for Permitted Liens; (i) Customer has good and
marketable title to the Collateral, (ii) none of the Collateral is subject to
any lien, encumbrance or security interest other than the liens and security
interests of MLBFS, and (iii) upon the filing of all Uniform Commercial Code
financing statements executed by Customer with respect to the Collateral in the
appropriate jurisdiction(s) and/or the completion of any other action required
by applicable law to perfect its liens and security interests, MLBFS will have
valid and perfected first liens and security interests upon all of the
Collateral.
(f) Financial Statements. Except as expressly set forth in Customers or any
Business Guarantors financial statements, all financial statements of Customer
and each Business Guarantor furnished to MLBFS have been prepared in conformity
with generally accepted accounting principles, consistently applied, are true
and correct, and fairly present, the financial condition of it as at such dates
and the results of its operations for the periods then ended; and since the most
recent date covered by such financial statements, there has been no material
adverse change in any such financial condition or operation. All financial
statements furnished to MLBFS of any Guarantor other than a Business Guarantor
are true and correct and fairly represent such Guarantors financial condition as
of the date of such financial statements, and since the most recent date of such
financial statements, there has been no material adverse change in such
financial condition.
(g) Litigation. No litigation, arbitration, administrative or governmental
proceedings are pending or threatened against Customer or any Guarantor, which
would, if adversely determined, materially and adversely affect the financial
condition of Customer or any such Guarantor or the continued operations of
Customer or any Business Guarantor.
(h) Tax Returns. All federal, state and local tax returns, reports and
statements required to be filed by Customer and each Guarantor have been filed
with the appropriate governmental agencies and all taxes due and payable by
Customer and each Guarantor have been timely paid (except to the extent that any
such failure to file or pay will not materially and adversely affect either the
liens and security interests of MLBFS hereunder or under any of the Additional
Agreements, the financial condition of Customer or any Guarantor, or the
continued operations of Customer or any Business Guarantor).
(i) Collateral Location. All of the tangible Collateral is located at a
Location of Tangible Collateral.
Each of the foregoing representations and warranties are continuing and shall be
deemed remade by Customer on the Closing Date, on each Subsequent Funding Date
and concurrently with each request for a WCMA Loan.
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4.2 Financial and Other Information.
Customer shall furnish or cause to be furnished to MLBFS during the term of this
Loan Agreement all of the following:
(a) Annual Financial Statements. Within 120 days after the close of each fiscal
year of Customer, The Galore Group (U.S.A.), Inc. and The Galore Group Limited,
Customer shall furnish or cause to be furnished to MLBFS a copy of the annual
audited financial statements of Customer, The Galore Group (U.S.A.), Inc. and
The Galore Group Limited consisting of at least a balance sheet as at the close
of such fiscal year and related statements of income, retained earnings and cash
flows, certified by its current independent certified public accountants or
other independent certified public accountants reasonably acceptable to MLBFS
or, in the case of The Galore Group, Limited, a nationally recognized,
Australian independent certified public accounting firm.
(b) Interim Financial Statements. Within 45 days after the close of each fiscal
quarter of Customer, Customer shall furnish or cause to be furnished to MLBFS:
(i) a statement of profit and loss for the fiscal quarter then ended, and (ii) a
balance sheet as at the close of such fiscal quarter, all in reasonable detail
and certified by its chief financial officer. Within 45 days after the close of
each fiscal semi-annual period of Customer, Customer shall furnish or cause to
be furnished to MLBFS, a statement of profit and loss for the fiscal semi-annual
period then ended for each Customer-owned retail location.
(c) Aging of Accounts and Inventory Reports. Within 20 days after the close of
each fiscal month of Customer, Customer shall furnish or cause to be furnished
to MLBFS an aging of its Accounts and any Chattel Paper and an Inventory report,
certified by its chief financial officer.
(d) Other Information. Customer shall furnish or cause to be furnished to MLBFS
such other information as MLBFS may from time to time reasonably request
relating to Customer, any Guarantor or the Collateral.
Customer acknowledges that (i) timely receipt of all such information is
critical to the ability of MLBFS to prudently extend and monitor the Loan, and
(ii) the failure to provide any such information within the time required will
constitute a material breach by Customer of this Loan Agreement.
4.3 Other Covenants. Customer further covenants and agrees during the term of
this Loan Agreement that:
(a) Financial Records; Inspection. Customer and each Business Guarantor will:
(i) maintain complete and accurate books and records, and maintain all of its
financial records in a manner consistent with the financial statements
heretofore furnished to MLBFS, or prepared on such other basis as may be
approved in writing by MLBFS; and (ii) permit MLBFS, upon reasonable notice and
at reasonable times, to inspect its properties (both real or personal),
operations, books and records.
(b) Taxes. Customer and each Guarantor will pay when due all taxes, assessments
and other governmental charges, howsoever designated, and all other liabilities
and obligations, except to the extent that any such failure to pay will not
materially and adversely affect either the liens and security interests of MLBFS
hereunder or under any of the Additional Agreements, the financial condition of
Customer or any Guarantor or the continued operations of Customer or any
Business Guarantor.
(c) Compliance With Laws. Neither Customer nor any Guarantor will violate any
law, regulation or other governmental requirement, or any judgment or order of
any court or governmental agency or authority if any such violation will
materially and adversely affect either the liens and security interests of MLBFS
hereunder or under any of the Additional Agreements, the financial condition of
Customer or any Guarantor, or the continued operations of Customer or any
Business Guarantor.
(d) Use of Loan Proceeds; Securities Transactions. The proceeds of the Loan
(including the initial WCMA Loan) shall be used by Customer solely for the Loan
Purpose, or, with the prior written consent of
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MLBFS, for other lawful business purposes of Customer not prohibited hereby. The
proceeds of each WCMA Loan other than the initial WCMA Loan shall be used by
Customer solely for working capital in the ordinary course of Customers
business, or, with the prior written consent of MLBFS, for other lawful business
purposes of Customer not prohibited hereby. Customer agrees that under no
circumstances will the Loan or funds borrowed from MLBFS through WCMA Line of
Credit be used; (i) for personal, family or household purposes of any person
whatsoever, (ii) to purchase, carry or trade in securities, including shares of
the Money Accounts, or (iii) to repay debt incurred to purchase, carry or trade
in securities; nor will any such funds be remitted, directly or indirectly, to
MLPF&S or any other broker or dealer in securities, by WCMA Check, check, FTS,
wire transfer, or otherwise.
(e) Continuity. Except upon the prior written consent of MLBFS, which consent
will not be unreasonably withheld; (i) neither Customer nor any Business
Guarantor will be a party to any merger or consolidation with, or purchase or
otherwise acquire all or substantially all of the assets or stock of, or any
material partnership or joint venture interest in, any person or entity, or
sell, transfer or lease all or any substantial part of its assets if any such
action causes a material change in its control or principal business, or a
material adverse change in its financial condition or operations; (ii) Customer
and each Business Guarantor that is a corporation, partnership or limited
liability company will preserve its existence and good standing in the
jurisdictions of establishment and operation, and will not operate in any
material business other than a business substantially the same as its business
as of the date of application by Customer for credit from MLBFS; and (iii)
neither Customer nor any Business Guarantor will cause or permit any material
change in its controlling ownership, controlling senior management or, except
upon not less than 30 days prior written notice to MLBFS, its name or principal
place of business.
(f) Tangible Net Worth. Beginning March 31, 1995, the "tangible net worth" of
Customer, consisting of net worth as shown on Customers regular financial
statements prepared in a manner consistent with the terms hereof, but excluding
an amount equal to (i) any assets which are ordinarily classified as
"intangible" in accordance with generally accepted accounting principles, and
(ii) any amounts now or hereafter directly or indirectly owing to Customer by
officers, shareholders or affiliates of Customer, shall at all times exceed
$2,500,000.00.
(g) Debt to Worth. The ratio of Customers total debt to Customers tangible net
worth, determined as aforesaid, shall not at any time exceed 2 to 1.
(h) Minimum Cash Flow. The "Net Cash Flow" of Customer as of the end of each of
its fiscal years shall not be less than $400,000.00. As used herein, "Net Cash
Flow" shall mean the sum of Customers annual net after-tax income, depreciation
and any non-recurring expenses, less any non-recurring income and the current
portion of long-term debt due to parties other than MLBFS; all as shown on
Customers regular financial statements prepared in a manner consistent with the
terms hereof.
(i) Distributions and Transfers. Customer shall not without the prior written
consent of MLBFS directly or indirectly pay any cash dividends or other
distributions on account of its stock, lend any moneys to, or transfer any
assets or property, in excess of $250,000.00, to The Galore Group (U.S.A.),
Inc., Pool Patio 'N Things, Inc. or The Galore Group Limited (other than arms
length transfers for fair consideration in the ordinary course of business).
(j) Additional Debt Guaranties. Except upon the prior written consent of MLBFS,
Customer shall not directly or indirectly guaranty any additional debt of The
Galore Group (U.S.A.), Inc. or Pool Patio 'N Things, Inc., except for debt of
such entities existing as of the date of and reflected on the last financial
statements of each submitted to MLBFS. Customer shall not directly or indirectly
guaranty any additional debt of The Galore Group Limited in excess of the 29
million Australian dollars of debt currently in force for said entity.
(k) Note Receivable from The Galore Group (U.S.A.), Inc. Except upon the prior
written consent of MLBFS, Customer shall not directly or indirectly permit to
exist any debt of The Galore Group (U.S.A.), Inc. to Customer exceeding
$1,500,000.00, beginning March 31, 1995.
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4.4 Collateral
(a) Pledge of Collateral. To secure payment and performance of the Obligations,
Customer hereby pledges, assigns, transfers and sets over to MLBFS, and grants
to MLBFS first liens and security interests in and upon all of the Collateral,
subject only to Permitted Liens.
(b) Liens. Customer shall not create or permit to exist any lien, encumbrance or
security interest upon or with respect to any Collateral now owned or hereafter
acquired, except for any Permitted Liens. Customer shall further perform any and
all acts reasonably requested by MLBFS to establish, perfect, maintain and
continue MLBFS' security interests and liens upon the Collateral, including, but
not limited to: (i) executing financing statements and any and all other
instruments and documents when and as reasonably requested by MLBFS, and (ii) if
in the reasonable judgment of MLBFS it is required by local law, causing the
owners and/or mortgagees of the real property on which any Collateral may be
located to execute and deliver to MLBFS waivers or subordinations reasonably
satisfactory to MLBFS with respect to any rights in such Collateral.
(c) Performance of Obligations. Customer shall perform all of its obligations
owing on account of or with respect to the Collateral; it being understood that
nothing herein, and no action or inaction by MLBFS, under this Loan Agreement or
otherwise, shall be deemed an assumption by MLBFS of any of Customers said
obligations.
(d) Sales and Collections. So long as no Event of Default shall have occurred
and is continuing, Customer may in the ordinary course of its business: (i) sell
any Inventory normally held by Customer for sale, (ii) use or consume any
materials and supplies normally held by Customer for use or consumption. (iii)
sell or dispose of any Fixtures or Equipment so long as same is replaced by
Fixtures or Equipment of comparable value, and (iv) collect all of its Accounts.
Customer shall take such action with respect to protection of the Inventory and
the other Collateral and the collection of the Accounts as MLBFS may from time
to time reasonably request.
(e) Account Schedules. Upon the request of MLBFS, made now or at any reasonable
time or times hereafter, Customer shall deliver to MLBFS, in addition to the
other information required hereunder, a schedule identifying, for each Account
and all Chattel Paper subject to MLBFS' security interests hereunder, each
Account Debtor by name and address and amount, invoice or contract number and
date of each invoice or contract. Customer shall furnish to MLBFS such
additional information with respect to the Collateral, and amounts received by
Customer as proceeds of any of the Collateral, as MLBFS may from time to time
reasonably request.
(f) Alterations and Maintenance. Except upon the prior written consent of MLBFS,
Customer shall not make or permit any material alterations to any tangible
Collateral which might materially reduce or impair its market value or utility.
Customer shall at all times keep the tangible Collateral in good condition and
repair and shall pay or cause to be paid all obligations arising from the repair
and maintenance of such Collateral, as well as all obligations with respect to
the premises where any Collateral is or may be located, except for any such
obligations being contested by Customer in good faith by appropriate
proceedings.
(g) Location. Except for movements required in the ordinary course of Customer's
business, Customer shall give MLBFS 30 days' prior written notice of the placing
at or movement of any tangible Collateral to any location other than a Location
of Tangible Collateral. In no event shall Customer cause or permit any material
tangible Collateral to be removed from the United States without the express
prior written consent of MLBFS.
(h) Insurance. Customer shall insure all of the tangible Collateral under a
policy or policies of physical damage insurance providing that losses will be
payable to MLBFS as its interests may appear pursuant to a Lender's Loss Payable
Endorsement and containing such other provisions as may be reasonably required
by MLBFS. Customer shall further provide and maintain a policy or policies of
comprehensive public liability insurance naming MLBFS as an additional party
insured. Customer and each Business Guarantor shall
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maintain such other insurance as may be required by law or is customarily
maintained by companies in a similar business or otherwise reasonably required
by MLBFS. All such insurance shall provide that MLBFS will receive not less than
10 days prior written notice of any cancellation, and shall otherwise be in form
and amount and with an insurer or insurers reasonably acceptable to MLBFS.
Customer shall furnish MLBFS with a copy or certificate of each such policy or
policies and, prior to any expiration or cancellation, each renewal or
replacement thereof.
(i) Event of Loss. Customer shall at its expense promptly repair all repairable
damage to any tangible Collateral. In the event that any tangible Collateral is
damaged beyond repair, lost, totally destroyed or confiscated (an "Event of
Loss") and such Collateral had a value prior to such Event of Loss of $75,000.00
or more, then, on or before the first to occur of (i) 90 days after the
occurrence of such Event of Loss, or (ii) 10 Business Days after the date on
which either Customer or MLBFS shall receive any proceeds of insurance on
account of such Event of Loss, or any underwriter of insurance on such
Collateral shall advise either Customer or MLBFS that it disclaims liability in
respect of such Event of Loss, Customer shall, at Customers option, either
replace the Collateral subject to such Event of Loss with comparable Collateral
free of all liens other than Permitted Liens (in which event Customer shall be
entitled to utilize the proceeds of insurance on account of such Event of Loss
for such purpose, and may retain any excess proceeds of such insurance), or
prepay the Loan by an amount equal to the actual cash value of such Collateral
as determined by either the insurance company's payment (plus any applicable
deductible) or, in absence of insurance payment, as reasonably determined by
MLBFS. Notwithstanding the foregoing, if at the time of occurrence of such Event
of Loss or any time thereafter prior to replacement or prepayment, as aforesaid,
an Event of Default shall occur hereunder, then MLBFS may at its sole option,
exercisable at any time while such Event of Default shall be continuing, require
Customer to either replace such Collateral or prepay the Loan, as aforesaid. Any
prepayment of the Loan pursuant to this Section shall be applied first to
installments on account of the then "Term Note Balance" (as defined in the Term
WCMA Note) in inverse order of maturity; with any prepayment in excess of the
then Term Note Balance applied on account of the WCMA Note concurrently with:
(i) a like permanent reduction in the WCMA Line of Credit, and (ii) a like
reduction in the obligation of MLBFS to fund future installments on account of
the Term Note in inverse order of funding. No amount prepaid pursuant to this
Section may be re-borrowed by Customer.
(j) Notice of Certain Events. Customer shall give MLBFS immediate notice of any
attachment, lien, judicial process, encumbrance or claim affecting or involving
$75,000.00 or more of the Collateral.
(k) Indemnification. Customer shall indemnify, defend and save MLBFS harmless
from and against any and all claims, liabilities, losses, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses) of any
nature whatsoever which may be asserted against or incurred by MLBFS arising out
of or in any manner occasioned by (i) the ownership, collection, possession, use
or operation of any Collateral, or (ii) any failure by Customer to perform any
of its obligations hereunder; excluding, however, from said indemnity any such
claims, liabilities, etc. arising directly out of the willful wrongful act or
active gross negligence of MLBFS. This indemnity shall survive the expiration or
termination of this Loan Agreement as to all matters arising or accruing prior
to such expiration or termination.
4.5 Events of Default.
The occurrence of any of the following events shall constitute an "Event of
Default" under this Loan Agreement:
(a) Failure to Pay. Customer shall fail to pay to MLBFS or deposit into the WCMA
Account when due any amount owing or required to be deposited by Customer under
this Loan Agreement or the Term WCMA Note, and such failure shall continue for
more than 5 Business Days after written notice thereof shall have been given by
MLBFS to Customer.
(b) Failure to Perform. Customer or any Guarantor shall default in the
performance or observance of any covenant or agreement on its part to be
performed or observed under this Loan Agreement, the Term WCMA Note or any of
the other Additional Agreements (not constituting an Event of Default under any
other
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clause of this Paragraph) and such default shall continue unremedied for 10
Business Days after written notice thereof shall have been given by MLBFS to
Customer.
(c) Breach of Warranty. Any representation or warranty made by Customer or any
Guarantor contained in this Loan Agreement, the Term WCMA Note or any of the
other Additional Agreements shall at any time prove to have been incorrect in
any material respect when made.
(d) Default Under Other Agreement. A default or Event of Default by Customer or
any Guarantor shall occur under the terms of any other agreement, instrument or
document with or intended for the benefit of MLBFS, MLPF&S or any of their
affiliates, and any required notice shall have been given and required passage
of time shall have elapsed.
(e) Bankruptcy, Etc. A proceeding under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt or receivership law or statute
shall be filed by Customer or any Guarantor, or any such proceeding shall be
filed against Customer or any Guarantor and shall not be dismissed or withdrawn
within 60 days after filing, or Customer or any Guarantor shall make an
assignment for the benefit of creditors, or Customer or any Guarantor shall
become insolvent or generally fail to pay, or admit in writing its inability to
pay, its debts as they become due.
(f) Material Impairment. Any event shall occur which shall reasonably cause
MLBFS to in good faith believe that the prospect of payment or performance by
Customer or any Guarantor has been materially impaired.
(g) Acceleration of Debt to Other Creditors. Any event shall occur which results
in the acceleration of the maturity of any indebtedness of $1,000,000 or more of
Customer or any Guarantor to another creditor under any indenture, agreement,
undertaking, or otherwise.
(h) Seizure or Abuse of Collateral. The Collateral. or any material part
thereof, shall be or become subject to any material abuse or misuse, or any
levy, attachment, seizure or confiscation which is not released within 10
Business Days.
4.6 Remedies.
(a) Remedies Upon Default. Upon the occurrence and during the continuance of any
Event of Default, MLBFS may at its sole option do any one or more or all of the
following, at such time and in such order as MLBFS may in its sole discretion
choose:
(i) Termination. MLBFS may without notice terminate its obligation to make the
Loan (if any portion of the Loan has not then been funded), or fund any further
amount on account of the Term WCMA Note, or make or continue to make the WCMA
Line of Credit available to Customer, or otherwise extend any credit to or for
the benefit of Customer; and upon any such termination MLBFS shall be relieved
of all such obligations.
(ii) Acceleration. MLBFS may declare the principal of and interest on the Term
Note and WCMA Note included in the Term WCMA Note, and all other Obligations to
be forthwith due and payable, whereupon all such amounts shall be immediately
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived.
(iii) Exercise Rights of Secured Party. MLBFS may exercise any or all of the
remedies of a secured party under applicable law, including, but not limited to,
the UCC, and any or all of its other rights and remedies
(iv) Possession. MLBFS may require Customer to make the Collateral and the
records pertaining to the Collateral available to MLBFS at a place designated by
MLBFS which is reasonably convenient, or may take possession of the Collateral
and the records pertaining to the Collateral without the use of any judicial
process and without any prior notice to Customer.
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(v) Sale. MLBFS may sell any or all of the Collateral at public or private
sale upon such terms and conditions as MLBFS may reasonably deem proper. MLBFS
may purchase any Collateral at any such public sale. The net proceeds of any
such public or private sale and all other amounts actually collected or received
by MLBFS pursuant hereto, after deducting all costs and expenses incurred at any
time in the collection of the Obligations and in the protection, collection and
sale of the Collateral, will be applied to the payment of the Obligations, with
any remaining proceeds paid to Customer or whoever else may be entitled thereto,
and with Customer and the Guarantors remaining jointly and severally liable for
any amount remaining unpaid after such application.
(vi) Delivery of Cash, Checks, Etc. MLBFS may require Customer to forthwith
upon receipt, transmit and deliver to MLBFS in the form received, all cash,
checks, drafts and other instruments for the payment of money (properly
endorsed, where required, so that such items may be collected by MLBFS) which
may be received by Customer at any time in full or partial payment of any
Collateral, and require that Customer not commingle any such items which may be
so received by Customer with any other of its funds or property but instead hold
them separate and apart and in trust for MLBFS until delivery is made to MLBFS.
(vii) Notification of Account Debtors. MLBFS may notify any Account Debtor that
its Account or Chattel Paper has been assigned to MLBFS and direct such Account
Debtor to make payment directly to MLBFS of all amounts due or becoming due with
respect to such Account or Chattel Paper; and MLBFS may enforce payment and
collect, by legal proceedings or otherwise, such Account or Chattel Paper.
(viii) Control of Collateral. MLBFS may otherwise take control in any lawful
manner of any cash or non-cash items of payment or proceeds of Collateral and of
any rejected, returned, stopped in transit or repossessed goods included in the
Collateral and endorse Customer's name on any item of payment on or proceeds of
the Collateral.
(b) Set-Off. MLBFS shall have the further right upon the occurrence and during
the continuance of an Event of Default to set-off, appropriate and apply toward
payment of any of the Obligations, in such order of application as MLBFS may
from time to time and at any time elect, any cash, credit, deposits, accounts,
securities and any other property of Customer which is in transit to or in the
possession, custody or control of MLBFS, MLPF&S or any agent, bailee, or
affiliate of MLBFS or MLPF&S, including, without limitation, the WCMA Account
and any Money Accounts, and all cash and securities therein or controlled
thereby, and all proceeds thereof. Customer hereby grants to MLBFS a security
interest in all such property as additional Collateral.
(c) Remedies are Severable and Cumulative. All rights and remedies of MLBFS
herein are severable and cumulative and in addition to all other rights and
remedies available in the Term WCMA Note, the other Additional Agreements, at
law or in equity, and any one or more of such rights and remedies may be
exercised simultaneously or successively.
(d) Notices. To the fullest extent permitted by applicable law, Customer hereby
irrevocably waives and releases MLBFS of and from any and all liabilities and
penalties for failure of MLBFS to comply with any statutory or other requirement
imposed upon MLBFS relating to notices of sale, holding of sale or reporting of
any sale, and Customer waives all rights of redemption from any such sale. Any
notices required under applicable law shall be reasonably and properly given to
Customer if given by any of the methods provided herein at least 5 Business Days
prior to taking action. MLBFS shall have the right to postpone or adjourn any
sale or other disposition of Collateral at any time without giving notice of any
such postponed or adjourned date. In the event MLBFS seeks to take possession of
any or all of the Collateral by court process, Customer further irrevocably
waives to the fullest extent permitted by law any bonds and any surety or
security relating thereto required by any statute, court rule or otherwise as an
incident to such possession, and any demand for possession prior to the
commencement of any suit or action.
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4.7 Miscellaneous.
(a) Non-Waiver. No failure or delay on the part of MLBFS in exercising any
right, power or remedy pursuant to this Loan Agreement, the Term WCMA Note or
any of the other Additional Agreements shall operate as a waiver thereof, and no
single or partial exercise of any such right, power or remedy shall preclude any
other or further exercise thereof, or the exercise of any other right, power or
remedy. Neither any amendment, modification, supplement, termination or waiver
of any provision of this Loan Agreement, the Term WCMA Note or any of the other
Additional Agreements, nor any consent to any departure by Customer therefrom,
shall be effective unless the same shall be in writing and signed by MLBFS. Any
waiver of any provision of this Loan Agreement, the Term WCMA Note or any of the
other Additional Agreements and any consent to any departure by Customer from
the terms thereof shall be effective only in the specific instance and for the
specific purpose for which given. Except as otherwise expressly provided herein,
no notice to or demand on Customer shall in any case entitle Customer to any
other or further notice or demand in similar or other circumstances.
(b) Disclosure. Customer and each Guarantor hereby irrevocably authorizes MLBFS
and each of its affiliates, including without limitation MLPF&S, to at any time
(whether or not an Event of Default shall have occurred) obtain from and
disclose to each other any and all financial and other information about
Customer or any Guarantor.
(c) Communications. All notices and other communications required or permitted
hereunder or in connection with any of the Additional Agreements shall be in
writing, and shall be either delivered personally, mailed by postage prepaid
certified mail or sent by express overnight courier or by facsimile. Such
notices and communications shall be deemed to be given on the date of personal
delivery, facsimile transmission or actual delivery of certified mail, or one
Business Day after delivery to an express overnight courier. Unless otherwise
specified in a notice sent or delivered in accordance with the terms hereof,
notices and other communications in writing shall be given to the parties hereto
at their respective addresses set forth at the beginning of this Loan Agreement,
or, in the case of facsimile transmission, to the parties at their respective
regular facsimile telephone number.
(d) Costs, Expenses and Taxes. Customer shall upon demand pay or reimburse MLBFS
for: (i) all Uniform Commercial Code filing and search fees and expenses
incurred by MLBFS in connection with the verification, perfection or
preservation of MLBFS' rights hereunder or in the Collateral or any other
collateral for the Obligations; (ii) any and all stamp, transfer and other taxes
and fees payable or determined to be payable in connection with the execution,
delivery and/or recording of this Loan Agreement or any of the Additional
Agreements; and (iii) all reasonable fees and out-of-pocket expenses (including,
but not limited to, reasonable fees and expenses of outside counsel) incurred by
MLBFS in connection with the enforcement of this Loan Agreement or any of the
Additional Agreements or the protection of MLBFS' rights hereunder or
thereunder, excluding, however, salaries and expenses of MLBFS' employees. The
obligations of Customer under this paragraph shall survive the expiration or
termination of this Loan Agreement and the discharge of the other Obligations.
(e) Right to Perform Obligations. If Customer shall fail to do any act or thing
which it has covenanted to do under this Loan Agreement or any representation or
warranty on the part of Customer contained in this Loan Agreement shall be
breached, MLBFS may, in its sole discretion, after 5 Business Days written
notice is sent to Customer, do the same or cause it to be done or remedy any
such breach, and may expend its funds for such purpose. Any and all reasonable
amounts so expended by MLBFS shall be repayable to MLBFS by Customer upon
demand, with interest at the Interest Rate during the period from and including
the date funds are so expended by MLBFS to the date of repayment, and all such
amounts shall be additional Obligations.
(f) Late Charges. Any payment required to be made by Customer pursuant to this
Loan Agreement or any of the Additional Agreements not paid within 5 Business
Days of the applicable due date shall be subject to a late charge in an amount
equal to the lesser of: (i) 5% of the overdue amount, or (ii) the maximum amount
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permitted by applicable law. Such late charges shall be payable on demand, or,
without demand, may in the sole discretion of MLBFS be paid by a WCMA Loan and
added to the WCMA Loan Balance in the same manner as provided herein for accrued
interest with respect to the WCMA Line of Credit.
(g) Further Assurances. Customer agrees to do such further acts and things and
to execute and deliver to MLBFS such additional agreements, instruments and
documents as MLBFS may reasonably require or deem advisable to effectuate the
purposes of this Loan Agreement, or to confirm unto MLBFS its rights, powers and
remedies under this Loan Agreement, the Term WCMA Note and the other Additional
Agreements.
(h) Binding Effect. This Loan Agreement, the Term WCMA Note and the other
Additional Agreements shall be binding upon, and shall inure to the benefit of
MLBFS, Customer and their respective successors and assigns. Customer shall not
assign any of its rights or delegate any of its obligations under this Loan
Agreement, the Term WCMA Note or any of the other Additional Agreements without
the prior written consent of MLBFS. Unless otherwise expressly agreed to in a
writing signed by MLBFS, no such consent shall in any event relieve Customer of
any of its obligations under this Loan Agreement, the Term WCMA Note or any of
the other Additional Agreements.
(i) Headings. Captions and section and paragraph headings in this Loan Agreement
and the Additional Agreements are inserted only as a matter of convenience, and
shall not affect the interpretation hereof.
(j) Governing Law. This Loan Agreement, the Term WCMA Note and, unless otherwise
expressly provided therein, each of the other Additional Agreements, shall be
governed in all respects by the laws of the State of Illinois.
(k) Severability of Provisions. Whenever possible, each provision of this Loan
Agreement, the Term WCMA Note and the other Additional Agreements shall be
interpreted in such manner as to be effective and valid under applicable law.
Any provision of this Loan Agreement, the Term WCMA Note or any of the other
Additional Agreements which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Loan Agreement, the Term WCMA Note and the other Additional Agreements or
affecting the validity or enforceability of such provision in any other
jurisdiction.
(l) Term. This Loan Agreement shall become effective on the date accepted by
MLBFS at its offices in Chicago, Illinois, and, subject to the terms hereof,
shall continue in effect so long thereafter as either MLBFS shall be obligated
to make the Loan, or, after the Closing Date, there shall be any moneys
outstanding under the Term Note or WCMA Note included in the Term WCMA Note or
under this Loan Agreement, or there shall be any other Obligations outstanding.
(m) Integration. THIS LOAN AGREEMENT, TOGETHER WITH THE TERM WCMA NOTE AND THE
OTHER ADDITIONAL AGREEMENTS, CONSTITUTES THE ENTIRE UNDERSTANDING AND REPRESENTS
THE FULL AND FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT
MATTER HEREOF, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR WRITTEN
AGREEMENTS OR PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS OF THE PARTIES. Without limiting
the foregoing, Customer acknowledges that: (i) no promise or commitment has been
made to it by MLBFS, MLPF&S or any of their respective employees, agents or
representatives to make the Loan on any terms other than as expressly set forth
herein and in the Term WCMA Note, or to make any other loan or otherwise extend
any other credit to Customer or any other party; and (ii) except as otherwise
expressly provided herein, this Loan Agreement supersedes and replaces any and
all proposals, letters of intent and approval and commitment letters from MLBFS
to Customer, non of which shall be considered an Additional Agreement.
(n) Jurisdiction; Waiver. CUSTOMER ACKNOWLEDGES THAT THIS LOAN AGREEMENT IS
BEING ACCEPTED BY MLBFS IN PARTIAL CONSIDERATION OF MLBFS' RIGHT AND OPTION, IN
ITS SOLE
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DISCRETION, TO ENFORCE THIS LOAN AGREEMENT, THE TERM WCMA NOTE AND THE
OTHER ADDITIONAL AGREEMENTS IN EITHER THE STATE OF ILLINOIS OR IN ANY OTHER
JURISDICTION WHERE CUSTOMER OR ANY COLLATERAL FOR THE OBLIGATIONS MAY BE
LOCATED. CUSTOMER CONSENTS TO JURISDICTION IN THE STATE OF ILLINOIS AND VENUE IN
ANY STATE OR FEDERAL COURT IN THE COUNTY OF COOK FOR SUCH PURPOSES, AND CUSTOMER
WAIVES ANY AND ALL RIGHTS TO CONTEST SAID JURISDICTION AND VENUE. CUSTOMER
FURTHER WAIVES ANY RIGHTS TO COMMENCE ANY ACTION AGAINST MLBFS IN ANY
JURISDICTION EXCEPT IN THE COUNTY OF COOK AND STATE OF ILLINOIS. MLBFS AND
CUSTOMER HEREBY EACH EXPRESSLY WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES AGAINST
THE OTHER PARTY WITH RESPECT TO ANY MATTER RELATING TO, ARISING OUT OF OR IN ANY
WAY CONNECTED WITH THE LOAN, THIS LOAN AGREEMENT, THE TERM WCMA NOTE, ANY OTHER
ADDITIONAL AGREEMENTS AND/OR ANY OF THE TRANSACTIONS WHICH ARE THE SUBJECT
MATTER OF THIS LOAN AGREEMENT.
IN WITNESS WHEREOF, this Loan Agreement has been executed as of the day and year
first above written.
BARBEQUES GALORE, INC.
By: /s/ Sydney Selati /s/ Kevin Ralphs
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Signature (1) Signature (2)
Sydney Selati Kevin Ralphs
-----------------------------------------------------------------------
Printed Name Printed Name
Chairman Chief Financial Officer
-----------------------------------------------------------------------
Title Title
Accepted at Chicago, Illinois:
MERRILL LYNCH BUSINESS FINANCIAL
SERVICES INC.
By: /s/ B. Jensen, AVP
-----------------------------
-17-
EXHIBIT A
ATTACHED TO AND HEREBY MADE A PART OF TERM WCMA LOAN AND SECURITY AGREEMENT NO.
9502340701 BETWEEN MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC. AND BARBEQUES
GALORE, INC.
- --------------------------------------------------------------------------------
Locations of Tangible Collateral:
15041 Bake Parkway, Ste. A, Irvine, CA 92718
2246 Sunrise Blvd., Ste. 7, Rancho Cordova, CA 95670
11073 W. Pico Blvd., Los Angeles, CA 90064
ll24 Sunset Rd., Henderson, NV 89015
6412 Tupelo Drive, Citrus Heights, CA 95621
18255 Hawthorne Blvd., Torrance, CA 90503
7450 Clairemont Mesa Blvd., San Diego, CA 92111
1286 B Auto Parkway, Escondido, CA 92025
311 E. Camelback Rd., Phoenix, AZ 85012
201 N. Central Ave., Glendale, CA 91203
9010 E. Indian Bend, Ste. 2, Scottsdale, AZ 85250
18922 Ventura Blvd., Tarzana, CA 91356
14040 E. Firestone Blvd., Santa Fe Springs, CA 90670
324 S. Mountain Ave., Upland, CA 91786
10495 Magnolia Ave., Riverside, CA 92505
2580 S. Decatur Blvd., Las Vegas, NV 89102
7307 Roseville Rd., Ste. 10, Sacramento, CA 95842
c/o Tropitone, 5 Marconi Dr., Irvine, CA 52798
SCHEDULE 1
================================================================================
C O V E R
FAX
BARBEQUES GALORE, 15041 BAKE PARKWAY, SUITE A
IRVINE CA 92718 PHONE (714) 581-1753, FAX (714) 581-4822
S H E E T
================================================================================
To: Larry Sherman
Fax #: 619-231-8770
Subject: Leased and Other Secured Assets
Date: March 9, 1995
Pages: 5, including this cover sheet.
COMMENTS:
Dear Larry,
1. Listed below are the assets that we have on lease:
Asset Lessor Termination Date
----- ------ ----------------
El Dorado Cadillac GMAC 4/96
Nissan 240SX Nissan Motor Acceptance 7/96
Canon NP2120 Copier Canon 4/96
Canon Fax L700 Canon 4/96
1994 Isuzu Rodeo GE Capital 5/98
1994 Ford Cargo Van Ford Motor Credit 7/97
1994 Ford Cargo Van Ford Motor Credit 7/97
1995 Ford Cargo Van Ford Motor Credit 10/97
1995 Ford Cargo Van Ford Motor Credit 10/97
1995 Ford Cargo Van Ford Motor Credit 3/98
None of the above leases are capitalized in our books.
2. We have purchased a Clark TM15 forklift truck through Clark Credit
Corporation. The original purchase price was $21,208.00. This loan will
be paid off by July 1995.
3. The attached Exhibit A is a listing by location of all of the computer
equipment financed by Warrior Bank and covered by a UCC filing in favor
of that bank. The invoiced value of these assets was $73,513.64. This
loan will be paid off by August 1997.
Regards,
/s/ Kevin J. Ralphs
Kevin J. Ralphs
EXHIBIT A
---------
PAGE 1 of 4
-----------
Location: 2246 Sunrise Blvd. Suite 7
- --------- Rancho Cordova, Ca. 95670
Quantity Item Serial #
- -------- ---- --------
1 IBM Value Point 386SX/20 23DC168
1 Mono Monitor VGA 9411612B
1 2400 Baud Modem 931223
1 American Power 250 UPS 931223
1 Okidata 931223
1 Star SP312 Roll Printer RKP-300 450130401236
1 Aim Cash Drawer
1 PC Anywhere Software Package
1 Remote System - Infocorp
1 SW Purchase Order Control - Infocorp
1 Cable IBM Printer
1 Hard Disk Controller W/I/O Port
- --------------------------------------------------------------------------------
Location: 1700 East Ventura Blvd, Suite D
- --------- Oxnard, California 93030
Quantity Item Serial #
- -------- ---- --------
1 IBM Value Point 386SX/20 23BV692
1 Mono Monitor VGA 12112092
1 2400 Baud Modem 301C0906904
1 American Power 250 UPS 301C0906904
1 Okidata 320 Printer 301C0906904
1 Star SP312 Roll Printer RKP-300 450130100995
1 Aim Cash Drawer
1 PC Anywhere Software Host
1 Remote System - Infocorp
1 SW Purchase Order Control - Infocorp
1 Cable IBM Printer
1 Hard Disk Controller W/I/O Port
- --------------------------------------------------------------------------------
Location: 14040 E. Firestone Blvd.
- --------- Santa Fe Springs, Ca. 90670
Quantity Item Serial #
- -------- ---- --------
1 IBM Value Point 486 23PVR43
1 Mono Monitor VGA 23112160
1 2400 Baud Modem 960551
1 American Power 250 UPS 960551
1 Okidata 320 Printer 960551
1 Star SP312 Roll Printer 450130000535
1 M-S Cash Drawer
1 PC Anywhere Software
1 Remote software/POS
1 Purchase Order Management - Infocorp
2 Cable IBM Printer
1 Hard Disk Controller
- --------------------------------------------------------------------------------
BARBEQUES GALORE INC.
BY:/s/ [SIGNATURE APPEARS HERE]
-----------------------------
ITS: C.F.O.
----------------------------
[LOGO OF MERRILL LYNCH APPEARS HERE] No. 231-07T10
- --------------------------------------------------------------------------------
WCMA(R) NOTE, LOAN AND SECURITY AGREEMENT
WCMA Note, Loan and Security Agreement ("Loan Agreement") dated as of February
23, 1995, between BARBECUES GALORE, INC., a corporation organized and existing
under the laws of the State of California having its principal office at 15041
Bake Parkway, Ste. A, Irvine, CA 92718, Attn: Sydney Selati, Chairman,
("Customer"), and MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC., a corporation
organized and existing under the laws of the State of Delaware having its
principal office at 33 West Monroe Street, Chicago, IL 60603 ("MLBFS").
In accordance with that certain Working Capital Management(R) Account Agreement
No. 231-07T10 ("WCMA Agreement") between Customer and MLBFS' affiliate, Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), Customer has subscribed
to the WCMA Program described in the WCMA Agreement. The WCMA Agreement is by
this reference incorporated as a part hereof. In conjunction therewith and as
part of the WCMA Program, Customer has requested that MLBFS provide, and subject
to the terms and conditions herein set forth MLBFS has agreed to provide, a
commercial line of credit for Customer (the "WCMA Line of Credit").
Contemporaneously herewith, MLBFS is entering into a Term WCMA Loan and Security
Agreement with Customer for an aggregate amount of $1,500,000.00. All references
to the WCMA Line of Credit in this Loan Agreement shall refer only to the WCMA
Line of Credit hereunder and not to that under the Term WCMA Loan and Security
Agreement dated as of the date hereof.
Accordingly, and in consideration of the premises and of the mutual covenants of
the parties hereto, Customer and MLBFS hereby agree as follows:
1. DEFINITIONS
(a) Specific Terms. In addition to terms defined elsewhere in this Loan
Agreement, when used herein the following terms shall have the following
meanings:
(i) "Account Debtor" shall mean any party who is or may become obligated with
respect to an Account or Chattel Paper.
(ii) "Activation Date" shall mean the date upon which MLBFS shall cause the WCMA
Line of Credit to be fully activated under MLPF&S' computer system as part of
the WCMA Program.
(iii) "Additional Agreements" shall mean all agreements, instruments, documents
and opinions other than this Loan Agreement which are contemplated hereby or
otherwise reasonably required by MLBFS, and relate to this Loan Agreement or
evidence the creation, guaranty or collateralization of the Obligations or the
granting or perfection of security interests upon the Collateral or any other
collateral for the Obligations.
(iv) "Business Day" shall mean any day other than a Saturday, Sunday, federal
holiday or other day on which the New York Stock Exchange is regularly closed.
(v) "Collateral" shall mean all Accounts, Chattel Paper, Contract Rights,
Inventory, Equipment, Fixtures, General Intangibles, Deposit Accounts, Documents
and Instruments of Customer, howsoever arising, whether now owned or existing or
hereafter acquired or arising, and wherever located; together with all books and
records (including computer records) in any way related thereto, all proceeds
thereof, and the additional collateral described in Section 9 (b) hereof.
(vi) "Commitment Expiration Date" shall mean March 23,1995.
(vii) "General Funding Conditions" shall mean each of the following conditions
to any WCMA Loan by MLBFS hereunder; (A) no Event of Default, or event which
with the giving of notice, passage of time, or both, would constitute an Event
of Default, shall have occurred and be continuing or would result from the
making of any WCMA Loan hereunder by MLBFS; (B) there shall not have occurred
any material adverse change in the business or financial condition of Customer
or any Guarantor; (C) all representations and warranties of Customer or any
Guarantor herein or in any Additional Agreements shall then be true and correct
in all material respects; (D) no other event shall then have occurred and be
continuing which shall have reasonably caused MLBFS to in good faith believe
that the prospect of payment or performance by Customer or any Guarantor has
been materially impaired; (E) MLBFS shall have received this Loan Agreement and
all Additional Agreements, duly executed and filed or recorded where applicable,
all of which shall be in form and substance reasonably satisfactory to MLBFS;
(F) MLBFS shall have received evidence reasonably satisfactory to it as to the
ownership of the Collateral and the perfection and priority of MLBFS' liens and
security interests thereon, as well as the ownership of and the perfection and
priority of MLBFS' liens and security interests on any other collateral for the
Obligations furnished pursuant to any of the Additional Agreements; (G) MLBFS
shall have received evidence reasonably satisfactory to it of the insurance
required hereby or by any of the Additional Agreements; and (H) any additional
conditions specified in an Approval Letter or Commitment Letter executed by
MLBFS with respect to the transactions contemplated hereby shall have been met
to the reasonable satisfaction of MLBFS.
(viii) "Guarantor' shall mean a person or entity who has either guaranteed or
provided collateral for any or all of the Obligations; and "Business Guarantor"
shall mean any such Guarantor that is a corporation, partnership,
proprietorship, limited liability company or other entity regularly engaged in a
business activity.
(ix) "Interest Rate" shall mean a fluctuating per annum rate of interest equal
to the sum of 2.65% and the 30-Day Commercial Paper Rate. The "30-Day Commercial
Paper Rate" shall mean, as of the date of any determination, the interest rate
from time to time published in the "Money Rates" section of The Wall Street
Journal for 30-Day high-grade unsecured notes sold though dealers by major
corporations. The Interest Rate will change as of the date of publication in The
Wall Street Journal of a 30-Day Commercial Paper Rate that is different from
that published on the preceding Business Day. In the event that The Wall Street
Journal shall, for any reason, fail or cease to publish the 30-Day Commercial
Paper Rate, MLBFS will choose a reasonably comparable index or source to use as
the basis for the Interest Rate.
(x) "Line Fee" shall mean a fee of $2,500.00 due to MLBFS in connection with the
WCMA Line of Credit for the period prior to the current Maturity Date.
(xi) "Location of Tangible Collateral" shall mean the address of Customer set
forth at the beginning of this Loan Agreement, together with any other address
or addresses set forth on an exhibit hereto as being a Location of Tangible
Collateral.
(xii) "Maturity Date" shall mean March 31,1996, or such later date as may be
consented to in writing by MLBFS.
(xiii) "Maximum WCMA Line of Credit" shall mean an amount equal to the lesser of
(A) the sum of (i) 70% of Customer's Non-Government Accounts and Chattel Paper
(excluding Accounts over 90 days old, Chattel Paper with installments or other
sums more than 90 days past due, and Accounts and Chattel Paper directly or
indirectly due from any shareholder, officer or employee of Customer or any
affiliated entity) and (ii) 50% of Customer's Inventory, all as shown on
Customers regular books and records, less the aggregate of (x) then outstanding
balance of principal and interest under the Term WCMA Note made by Customer and
payable to MLBFS and (y) the remaining availability under the WCMA Line of
Credit portion of the Term WCMA facility, or (B) $500,000.00.
(xiv) "Obligations" shall mean all liabilities, indebtedness and other
obligations of Customer to MLBFS, howsoever created, arising or evidenced,
whether now existing or hereafter arising, whether direct or indirect, absolute
or contingent, due or to become due, primary or secondary or joint or several,
and, without
-2-
limiting the foregoing, include all present and future liabilities, indebtedness
and obligations of Customer under this Loan Agreement.
(xv) "Permitted Liens" shall mean (A) liens for current taxes not delinquent
and, if MLBFS' rights to and interest in the Collateral are not materially and
adversely affected thereby, liens for taxes being contested in good faith by
appropriate proceedings; (B) liens arising in the ordinary course of business
for sums not due; (C) liens in favor of MLBFS; (D) liens which will be
discharged with the proceeds of the initial WCMA Loan; (E) those liens set forth
on Schedule 1, attached hereto; and (F) any other liens expressly permitted in
writing by MLBFS.
(xvi) "WCMA Account" shall mean and refer to the Working Capital Management
Account of Customer with MLPF&S identified as Account No. 231-07T10.
(xvii) "WCMA Loan" shall mean each advance made by MLBFS pursuant to this Loan
Agreement.
(b) Other Terms. Except as otherwise defined herein: (i) all terms used in this
Loan Agreement which are defined in the Uniform Commercial Code of Illinois
("UCC") shall have the meanings set forth in the UCC, and (ii) capitalized terms
used herein which are defined in the WCMA Agreement shall have the meaning set
forth in the WCMA Agreement.
2. WCMA PROMISSORY NOTE
FOR VALUE RECEIVED, Customer hereby promises to pay to the order of MLBFS, at
the times and in the manner set forth in this Loan Agreement, or in such other
manner and at such place as MLBFS may hereafter designate in writing, the
following: (a) on the Maturity Date, the aggregate unpaid principal amount of
all WCMA Loans (the "WCMA Loan Balance"); (b) interest at the Interest Rate on
the outstanding WCMA Loan Balance, from and including the date on which the
initial WCMA Loan is made until the date of payment of all WCMA Loans in full;
and (c) on demand, all other sums payable pursuant to this Loan Agreement,
including, but not limited to, the Line Fee and any late charges. Except as
otherwise expressly set forth herein, Customer hereby waives presentment, demand
for payment, protest and notice of protest, notice of dishonor, notice of
acceleration, notice of intent to accelerate and all other notices and
formalities in connection with this WCMA Promissory Note and this Loan
Agreement.
3. WCMA LOANS
(a) Activation Date. Provided that: (i) the Commitment Expiration Date shall not
then have occurred, and (ii) Customer shall have subscribed to the WCMA Program
and its subscription to the WCMA Program shall then be in effect, the Activation
Date shall occur on or promptly after the date, following the acceptance of this
Loan Agreement by MLBFS at its office in Chicago, Illinois, upon which each of
the General Funding Conditions shall have been met or satisfied to the
reasonable satisfaction of MLBFS. No activation by MLBFS of the WCMA Line of
Credit for a nominal amount shall be deemed evidence of the satisfaction of any
of the conditions herein set forth, or a waiver of any of the terms or
conditions hereof.
(b) WCMA Loans. Subject to the terms and conditions hereof, during the period
from and after the Activation Date to the Maturity Date: (i) MLBFS will make
WCMA Loans to Customer in such amounts as Customer may from time to time request
in accordance with the terms hereof, up to an aggregate outstanding amount not
to exceed the Maximum WCMA Line of Credit, and (ii) Customer may repay any WCMA
Loans in whole or in part at any time without premium or penalty, and request a
re-borrowing of amounts repaid on a revolving basis, provided that the aggregate
amount outstanding at any time shall not exceed the Maximum WCMA Line of Credit.
Customer may request WCMA Loans by use of WCMA Checks, FTS, Visa(R) charges,
wire transfers, or such other means of access to the WCMA Line of Credit as may
be permitted by MLBFS from time to time; it being understood that so long as the
WCMA Line of Credit shall be in effect, any charge or debit to the WCMA Account
which but for the WCMA Line of Credit would under the terms of the WCMA
Agreement result in an overdraft, shall be deemed a request by Customer for a
WCMA Loan.
-3-
(c) Conditions of WCMA Loans. Notwithstanding the foregoing, MLBFS shall not be
obligated to make any WCMA Loan, and may without notice refuse to honor any such
request by Customer, if at the time of Customer's request: (i) the making of
such WCMA Loan would cause the Maximum WCMA Line of Credit to be exceeded; or
(ii) the Maturity Date shall have occurred, or the WCMA Line of Credit shall
have otherwise been terminated in accordance with the terms hereof; or (iii) an
event shall have occurred and is continuing which shall have caused any of the
General Funding Conditions to not then be met or satisfied to the reasonable
satisfaction of MLBFS. The making by MLBFS of any WCMA Loan at a time when any
one or more of said conditions shall not have been met shall not in any event be
construed as a waiver of said condition or conditions or of any Event of
Default, and shall not prevent MLBFS at any time thereafter while any condition
shall not have been met from refusing to honor any request by Customer for a
WCMA Loan.
(d) Force Majeure. MLBFS shall not be responsible, and shall have no liability
to Customer or any other party, for any delay or failure of MLBFS to honor any
request of Customer for a WCMA Loan or any other act or omission of MLBFS,
MLPF&S or any of their affiliates due to or resulting from any system failure,
error or delay in posting or other clerical error, loss of power, fire, Act of
God or other cause beyond the reasonable control of MLBFS, MLPF&S or any of
their affiliates unless directly arising out of the willful wrongful act or
active gross negligence of MLBFS. In no event shall MLBFS be liable to Customer
or any other party for any incidental or consequential damages arising from any
act or omission by MLBFS, MLPF&S or any of their affiliates in connection with
the WCMA Line of Credit or this Loan Agreement.
(e) Interest. The WCMA Loan Balance shall bear interest at the Interest Rate.
Interest shall be computed for the actual number of days elapsed on the basis of
a year consisting of 360 days. Notwithstanding any other provision in this Loan
Agreement or any Additional Agreements to the contrary, in no event shall the
Interest Rate exceed the highest rate permissible under any applicable law. In
the event that any court having jurisdiction determines that MLBFS has received
excess interest hereunder, MLBFS will promptly refund such excess interest to
Customer, without charge or penalty. Except as otherwise provided herein,
accrued and unpaid interest on the WCMA Loan Balance shall be payable monthly on
the last Business Day of each calendar month, commencing with the last Business
Day of the calendar month in which the Activation Date shall occur. Customer
hereby irrevocably authorizes and directs MLPF&S to pay MLBFS such accrued
interest from any available free credit balances in the WCMA Account, and if
such available free credit balances are insufficient to satisfy any interest
payment due, to liquidate any investments in the Money Accounts (other than any
investments constituting any Minimum Money Accounts Balance) in an amount up to
the balance of such accrued interest, and pay to MLBFS the available proceeds on
account thereof. If available free credit balances in the WCMA Account and
available proceeds of the Money Accounts are insufficient to pay the entire
balance of accrued interest, and Customer otherwise fails to make such payment
when due, MLBFS may, in its sole discretion, make a WCMA Loan in an amount equal
to the balance of such accrued interest and pay the proceeds of such WCMA Loan
to itself on account of such interest. The amount of any such WCMA Loan will be
added to the WCMA Loan Balance. If MLBFS declines to extend a WCMA Loan to
Customer under these circumstances, Customer hereby authorizes and directs
MLPF&S to make all such interest payments to MLBFS from any Minimum Money
Accounts Balance. If there is no Minimum Money Accounts Balance, or it is
insufficient to pay all such interest, MLBFS will invoice Customer for payment
of the balance of the accrued interest, and Customer shall pay such interest as
directed by MLBFS within 5 Business Days of receipt of such invoice.
(f) Payments. All payments required or permitted to be made pursuant to this
Loan Agreement shall be made in lawful money of the United States. Unless
otherwise directed by MLBFS, payments on account of the WCMA Loan Balance may be
made by the delivery of checks (other than WCMA Checks), or by means of FTS or
wire transfer of funds (other than funds from the WCMA Line of Credit) to MLPF&S
for credit to Customer's WCMA Account. Notwithstanding anything in the WCMA
Agreement to the contrary, Customer hereby irrevocably authorizes and directs
MLPF&S to apply available free credit balances in the WCMA Account to the
repayment of the WCMA Loan Balance prior to application for any other purpose.
Payments to MLBFS from funds in the WCMA Account shall be deemed to be made by
Customer upon the same basis and schedule as funds are made available for
investment in the Money Accounts in accordance with the terms of the WCMA
Agreement. All funds received by MLBFS from MLPF&S pursuant to the aforesaid
authorization shall be applied by MLBFS to repayment of the WCMA Loan Balance.
The acceptance by or
-4-
on behalf of MLBFS of a check or other payment for a lesser amount than shall be
due from Customer, regardless of any endorsement or statement thereon or
transmitted therewith, shall not be deemed an accord and satisfaction or
anything other than a payment on account, and MLBFS or anyone acting on behalf
of MLBFS may accept such check or other payment without prejudice to the rights
of MLBFS to recover the balance actually due or to pursue any other remedy under
this Loan Agreement or applicable law for such balance. All checks accepted by
or on behalf of MLBFS in connection with the WCMA Line of Credit are subject to
final collection.
(g) Exceeding the Maximum WCMA Line of Credit. In the event that the WCMA Loan
Balance shall at any time exceed the Maximum WCMA Line of Credit, Customer shall
within 1 Business Day of the first to occur of (i) any request or demand of
MLBFS, or (ii) receipt by Customer of a statement from MLPF&S showing a WCMA
Loan Balance in excess of the Maximum WCMA Line of Credit, deposit sufficient
funds into the WCMA Account to reduce the WCMA Loan Balance below the Maximum
WCMA Line of Credit.
(h) Line Fee; Extensions. In consideration of the extension of the WCMA Line of
Credit by MLBFS to Customer during the period prior to the current Maturity
Date, Customer has paid or shall pay the Line Fee to MLBFS. If such fee has not
heretofore been paid by Customer, Customer hereby authorizes MLBFS, at its
option, to either cause said fee (and any renewal Line Fee) to be paid with a
WCMA Loan which is added to the WCMA Loan Balance, or invoice Customer for said
fee (in which event Customer shall pay said fee within 5 Business Days after
receipt of such invoice). No delay in the Activation Date, howsoever caused,
shall entitle Customer to any rebate or reduction in the Line Fee or extension
of the Maturity Date. In the event MLBFS and Customer, in their respective sole
discretion, agree to renew the WCMA Line of Credit beyond the current Maturity
Date, Customer agrees to pay a renewal Line Fee in the amount then set forth in
the writing signed by MLBFS which extends the Maturity Date; it being understood
that any request by Customer for a WCMA Loan or failure of Customer to pay any
WCMA Loan Balance outstanding on the immediately prior Maturity Date, after the
receipt by Customer of a writing signed by MLBFS extending the Maturity Date,
shall be deemed a consent by Customer to both the renewal Line Fee and the new
Maturity Date. If no renewal Line Fee is set forth in the writing signed by
MLBFS extending the Maturity Date, the renewal Line Fee shall be deemed to be
the same as the immediately preceding Line Fee.
(i) Statements. MLPF&S will include in each monthly statement it issues under
the WCMA Program information with respect to WCMA Loans and the WCMA Loan
Balance. Any questions that Customer may have with respect to such information
should be directed to MLBFS; and any questions with respect to any other matter
in such statements or about or affecting the WCMA Program should be directed to
MLPF&S.
(j) Use of Loan Proceeds; Securities Transactions. The proceeds of each WCMA
Loan shall be used by Customer solely for working capital in the ordinary course
of its business, or, with the prior written consent of MLBFS, for other lawful
business purposes of Customer not prohibited hereby. Customer agrees that under
no circumstances will funds borrowed from MLBFS through the WCMA Line of Credit
be used: (i) for personal, family or household purposes of any person
whatsoever, (ii) to purchase, carry or trade in securities, including shares of
the Money Accounts, or (iii) to repay debt incurred to purchase, carry or trade
in securities; nor will any such funds be remitted, directly or indirectly, to
MLPF&S or any other broker or dealer in securities, by WCMA Check, check, FTS,
wire transfer, or otherwise.
4. REPRESENTATIONS AND WARRANTIES
Customer represents and warrants to MLBFS that:
(a) Due Organization, etc. Customer is a corporation, duly organized, validly
existing and in good standing under the laws of the State of California, and if
any Guarantor is a corporation, partnership or limited liability company, such
Guarantor is, duly organized, validly existing and in good standing under the
laws of the State of its incorporation or formation.
-5-
(b) Execution, Delivery and Performance. The execution, delivery and performance
by Customer of this Loan Agreement and by Customer and each Guarantor of such of
the Additional Agreements to which it is a party: (i) have been duly authorized
by all requisite action, (ii) do not and will not violate or conflict with any
law or other governmental requirement, or any of the agreements, instruments or
documents which formed or govern Customer or any such Guarantor, and (iii) do
not and will not breach or violate any of the provisions of, and will not result
in a default by Customer or any such Guarantor under, any other agreement,
instrument or document to which it is a party or by which it is bound.
(c) Notices and Approvals. Except as may have been given or obtained, no notice
to or consent or approval of any governmental body or authority or other third
party whatsoever (including, without limitation, any other creditor) is required
in connection with the execution, delivery or performance by Customer or any
Guarantor of such of this Loan Agreement and the Additional Agreements to which
it is a party.
(d) Enforceability. this Loan Agreement and such of the Additional Agreements to
which it is a party are the legal, valid and binding obligations of Customer or
the Guarantors, enforceable against it or them, as the case may be, in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy and other similar laws affecting the rights of creditors generally
or by general principals of equity.
(e) Collateral. Except for Permitted Liens: (i) Customer has good and marketable
title to the Collateral, (ii) none of the Collateral is subject to any lien,
encumbrance or security interest other than the liens and security interests of
MLBFS, and (iii) upon the filing of all Uniform Commercial Code financing
statements executed by Customer with respect to the Collateral in the
appropriate jurisdiction(s) and/or the completion of any other action required
by applicable law to perfect its liens and security interests, MLBFS will have
valid and perfected first liens and security interests upon all of the
Collateral.
(f) Financial Statements. Except as expressly set forth in Customer's or any
Business Guarantor's financial statements, all financial statements of Customer
and each Business Guarantor furnished to MLBFS have been prepared in conformity
with generally accepted accounting principles, consistently applied, are true
and correct, and fairly present the financial condition of it as at such dates
and the results of its operations for the periods then ended; and since the most
recent date covered by such financial statements, there has been no material
adverse change in any such financial condition or operation. All financial
statements furnished to MLBFS of any Guarantor other than a Business Guarantor
are true and correct and fairly represent such Guarantor's financial condition
as of the date of such financial statements, and since the most recent date of
such financial statements, there has been no material adverse change in such
financial condition.
(g) Litigation. No litigation, arbitration, administrative or governmental
proceedings are pending or threatened against Customer or any Guarantor, which
would, if adversely determined, materially and adversely affect the financial
condition of Customer or any such Guarantor or the continued operations of
Customer or any Business Guarantor.
(h) Tax Returns. All federal, state and local tax returns, reports and
statements required to be filed by Customer and each Guarantor have been filed
with the appropriate governmental agencies and all taxes due and payable by
Customer and each Guarantor have been timely paid (except to the extent that any
such failure to file or pay will not materially and adversely affect either the
liens and security interests of MLBFS hereunder or under any of the Additional
Agreements, the financial condition of Customer or any Guarantor, or the
continued operations of Customer or any Business Guarantor).
(i) Collateral Location. All of the tangible Collateral is located at a Location
of Tangible Collateral.
Each of the foregoing representations and warranties are continuing and shall be
deemed remade by Customer concurrently with each request for a WCMA Loan.
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5. FINANCIAL AND OTHER INFORMATION
Customer shall furnish or cause to be furnished to MLBFS during the term of this
Loan Agreement all of the following:
(a) Annual Financial Statements. Within 120 days after the close of each fiscal
year of Customer, The Galore Group (U.S.A.), Inc. and The Galore Group Limited,
Customer shall furnish or cause to be furnished to MLBFS a copy of the annual
audited financial statements of Customer, The Galore Group (U.S.A.), Inc. and
The Galore Group Limited consisting of at least a balance sheet as at the close
of such fiscal year and related statements of income, retained earnings and cash
flows, certified by its current independent certified public accountants or
other independent certified public accountants reasonably acceptable to MLBFS,
or in the case of The Galore Group Limited, a nationally recognized, Australian
independent certified public accounting firm.
(b) Interim Financial Statements. Within 45 days after the close of each fiscal
quarter of Customer, Customer shall furnish or cause to be furnished to MLBFS;
(i) a statement of profit and loss for the fiscal quarter then ended, and (ii) a
balance sheet as at the close of such fiscal quarter; all in reasonable detail
and certified by its chief financial officer. Within 45 days after the close of
each fiscal semi-annual period of Customer, Customer shall furnish or cause to
be furnished to MLBFS, a statement of profit and toss for the fiscal semi-annual
period then ended for each Customer-owned retail location.
(c) Aging of Accounts and Inventory Reports. Within 20 days after the close of
each fiscal month of Customer, Customer shall furnish or cause to be furnished
to MLBFS an aging of its Accounts and any Chattel Paper and an Inventory report,
certified by its chief financial officer
(d) Other Information. Customer shall furnish or cause to be furnished to MLBFS
such other information as MLBFS may from time to time reasonably request
relating to Customer, any Guarantor or the Collateral.
Customer acknowledges that timely receipt of all such information is critical to
the ability of MLBFS to prudently offer the WCMA Line of Credit, and that the
failure to provide any such information within the time required will constitute
a material breach by Customer of this Loan Agreement.
6. OTHER COVENANTS
Customer further agrees during the term of this Loan Agreement that;
(a) Financial Records; Inspection. Customer and each Business Guarantor will;
(i) maintain complete and accurate books and records, and maintain all of its
financial records in a manner consistent with the financial statements
heretofore furnished to MLBFS, or prepared on such other basis as may be
approved in writing by MLBFS; and (ii) permit MLBFS, upon reasonable notice and
at reasonable times, to inspect its properties (both real or personal),
operations, books and records.
(b) Taxes. Customer and each Guarantor will pay when due all taxes, assessments
and other governmental charges, howsoever designated, and all other liabilities
and obligations, except to the extent that any such failure to pay will not
materially and adversely affect either the liens and security interests of MLBFS
hereunder or under any of the Additional Agreements, the financial condition of
Customer or any Guarantor or the continued operations of Customer or any
Business Guarantor.
(c) Compliance With Laws. Neither Customer nor any Guarantor will violate any
law, regulation or other governmental requirement, or any judgment or order of
any court or governmental agency or authority if any such violation will
materially and adversely affect either the liens and security interests of MLBFS
hereunder or under any of the Additional Agreements, the financial condition of
Customer or any Guarantor, or the continued operations of Customer or any
Business Guarantor.
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(d) Continuity. Except upon the prior written consent of MLBFS, which consent
will not be unreasonably withheld: (i) neither Customer nor any Business
Guarantor will be a party to any merger or consolidation with, or purchase or
otherwise acquire all or substantially all of the assets or stock of, or any
material partnership or joint venture interest in, any person or entity, or
sell, transfer or lease all or any substantial part of its assets if any such
action causes a material change in its control or principal business, or a
material adverse change in its financial condition or operations; (ii) Customer
and each Business Guarantor that is a corporation, partnership or limited
liability company wilt preserve its existence and good standing in the
jurisdictions of establishment and operation, and will not operate in any
material business other than a business substantially the same as its business
as of the date of application by Customer for credit from MLBFS; and (iii)
neither Customer nor any Business Guarantor will cause or permit any material
change in its controlling ownership, controlling senior management or, except
upon not less than 30 days prior written notice to MLBFS, its name or principal
place of business.
(e) Tangible Net Worth. Beginning March 31, 1995, the "tangible net worth" of
Customer, consisting of net worth as shown on Customer's regular financial
statements prepared in a manner consistent with the terms hereof, but excluding
an amount equal to (i) any assets which are ordinarily classified as
"intangible" in accordance with generally accepted accounting principles, and
(ii) any amounts now or hereafter directly or indirectly owing to Customer by
officers, shareholders or affiliates of Customer, shall at all times exceed
$2,500,000.00.
(f) Debt to Worth. The ratio of Customer's total debt to Customer's tangible net
worth, determined as aforesaid, shall not at any time exceed 2 to 1.
(g) Minimum Cash Flow. The "Net Cash Flow" of Customer as of the end of each of
its fiscal years shall not be less than $400,000.00. As used herein, "Net Cash
Flow" shall mean the sum of Customer's annual net after-tax income, depreciation
and any non-recurring expenses, less any non-recurring income and the current
portion of long-term debt due to parties other than MLBFS; all as shown on
Customer's regular financial statements prepared in a manner consistent with the
terms hereof.
(h) Annual Clean-Up. Prior to each Maturity Date, Customer shall cause the WCMA
Loan Balance to be fully paid off and remain at zero for at least one
consecutive 60-day period.
(i) Distributions and Transfers. Customer shall not without the prior written
consent of MLBFS directly or indirectly pay any cash dividends or other
distributions on account of its stock, lend any moneys to, or transfer any
assets or property, in excess of $250,000.00, to The Galore Group (U.S.A.),
Inc., Pool Patio 'N Things, Inc. or The Galore Group Limited (other than arms
length transfers for fair consideration in the ordinary course of business).
(j) Additional Debt Guaranties. Except upon the prior written consent of MLBFS,
Customer shall not directly or indirectly guaranty any additional debt of The
Galore Group (U.S.A.), Inc. or Pool Patio 'N Things, Inc., except for debt of
such entities existing as of the date of and reflected on the last financial
statements of each submitted to MLBFS. Customer shall not directly or indirectly
guaranty any additional debt of The Galore Group Limited in excess of the 29
million Australian dollars of debt currently in force for said entity.
(k) Note Receivable from The Galore Group (U.S.A.), Inc. Except upon the prior
written consent of MLBFS, Customer shall not directly or indirectly permit to
exist any debt of The Galore Group (U.S.A.), Inc. to Customer exceeding
$1,500,000.00, beginning March 31, 1995.
7. COLLATERAL
(a) Pledge of Collateral. To secure payment and performance of the Obligations,
Customer hereby pledges, assigns, transfers and sets over to MLBFS, and grants
to MLBFS first liens and security interests in and upon all of the Collateral,
subject only to Permitted Liens.
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(b) Liens. Customer shall not create or permit to exist any lien, encumbrance or
security interest upon or with respect to any Collateral now owned or hereafter
acquired, except for any Permitted Liens. Customer shall further perform any and
all acts reasonably requested by MLBFS to establish, perfect, maintain and
continue MLBFS' security interests and liens upon the Collateral, including, but
not limited to; (i) executing financing statements and any and all other
instruments and documents when and as reasonably requested by MLBFS, and (ii) if
in the reasonable judgment of MLBFS it is required by local law, causing the
owners and/or mortgagees of the real property on which any Collateral may be
located to execute and deliver to MLBFS waivers or subordinations reasonably
satisfactory to MLBFS with respect to any rights in such Collateral.
(c) Performance of Obligations. Customer shall perform all of its obligations
owing on account of or with respect to the Collateral; it being understood that
nothing herein, and no action or inaction by MLBFS, under this Loan Agreement or
otherwise, shall be deemed an assumption by MLBFS of any of Customer's said
obligations.
(d) Sales and Collections. So long as no Event of Default shall have occurred
and is continuing, Customer may in the ordinary course of its business; (i) sell
any Inventory normally held by Customer for sale, (ii) use or consume any
materials and supplies normally held by Customer for use or consumption, (iii)
sell or dispose of any Fixtures or Equipment so long as same is replaced by
Fixtures or Equipment of comparable value, and (iv) collect all of its Accounts.
Customer shall take such action with respect to protection of the Inventory and
the other Collateral and the collection of the Accounts as MLBFS may from time
to time reasonably request.
(e) Account Schedules. Upon the request of MLBFS, made now or at any reasonable
time or times hereafter, Customer shall deliver to MLBFS, in addition to the
other information required hereunder, a schedule identifying, for each Account
and all Chattel Paper subject to MLBFS' security interests hereunder, each
Account Debtor by name and address and amount, invoice or contract number and
date of each invoice or contract. Customer shall furnish to MLBFS such
additional information with respect to the Collateral, and amounts received by
Customer as proceeds of any of the Collateral, as MLBFS may from time to time
reasonably request.
(f) Alterations and Maintenance. Except upon the prior written consent of MLBFS,
Customer shall not make or permit any material alterations to any tangible
Collateral which might materially reduce or impair its market value or utility.
Customer shall at all times keep the tangible Collateral in good condition and
repair and shall pay or cause to be paid all obligations arising from the repair
and maintenance of such Collateral, as well as all obligations with respect to
the premises where any Collateral is or may be located, except for any such
obligations being contested by Customer in good faith by appropriate
proceedings.
(g) Location. Except for movements required in the ordinary course of Customer's
business, Customer shall give MLBFS 30 days' prior written notice of the placing
at or movement of any tangible Collateral to any location other than a Location
of Tangible Collateral. In no event shall Customer cause or permit any material
tangible Collateral to be removed from the United States without the express
prior written consent of MLBFS.
(h) Insurance. Customer shall insure all of the tangible Collateral under a
policy or policies of physical damage insurance providing that losses will be
payable to MLBFS as its interests may appear pursuant to a Lender's Loss Payable
Endorsement and containing such other provisions as may be reasonably required
by MLBFS. Customer shall further provide and maintain a policy or policies of
comprehensive public liability insurance naming MLBFS as an additional party
insured. Customer and each Business Guarantor shall maintain such other
insurance as may be required by law or is customarily maintained by companies in
a similar business or otherwise reasonably required by MLBFS. All such insurance
shall provide that MLBFS will receive not less than 10 days prior written notice
of any cancellation, and shall otherwise be in form and amount and with an
insurer or insurers reasonably acceptable to MLBFS. Customer shall furnish MLBFS
with a copy or certificate of each such policy or policies and, prior to any
expiration or cancellation, each renewal or replacement thereof.
-9-
(i) Event of Loss. Customer shall at its expense promptly repair all repairable
damage to any tangible Collateral. In the event that any tangible Collateral is
damaged beyond repair, lost, totally destroyed or confiscated (an "Event of
Loss") and such Collateral had a value prior to such Event of Loss of $75,000.00
or more, then, on or before the first to occur of (i) 90 days after the
occurrence of such Event of Loss, or (ii) 10 Business Days after the date on
which either Customer or MLBFS shall receive any proceeds of insurance on
account of such Event of Loss, or any underwriter of insurance on such
Collateral shall advise either Customer or MLBFS that it disclaims liability in
respect of such Event of Loss, Customer shall, at Customer's option, either
replace the Collateral subject to such Event of Loss with comparable Collateral
free of all liens other than Permitted Liens (in which event Customer shall be
entitled to utilize the proceeds of insurance on account of such Event of Loss
for such purpose, and may retain any excess proceeds of such insurance), or
consent to a reduction in the WCMA Line of Credit in an amount equal to the
actual cash value of such Collateral as determined by either the applicable
insurance company's payment (plus any applicable deductible) or, in absence of
insurance payment, as reasonably determined by MLBFS. Notwithstanding the
foregoing, if at the time of occurrence of such Event of Loss or any time
thereafter prior to replacement or line reduction, as aforesaid, an Event of
Default shall occur hereunder, then MLBFS may at its sole option, exercisable at
any time while such Event of Default shall be continuing, require Customer to
either replace such Collateral or, on its own volition and without the consent
of Customer, reduce the WCMA Line of Credit, as aforesaid.
(j) Notice of Certain Events. Customer shall give MLBFS immediate notice of any
attachment, lien, judicial process, encumbrance or claim affecting or involving
$75,000.00 or more of the Collateral.
(k) Indemnification. Customer shall indemnify, defend and save MLBFS harmless
from and against any and all claims, liabilities, losses, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses) of any
nature whatsoever which may be asserted against or incurred by MLBFS arising out
of or in any manner occasioned by (i) the ownership, collection, possession, use
or operation of any Collateral, or (ii) any failure by Customer to perform any
of its obligations hereunder; excluding, however, from said indemnity any such
claims, liabilities, etc. arising directly out of the willful wrongful act or
active gross negligence of MLBFS. This indemnity shall survive the expiration or
termination of this Loan Agreement as to all matters arising or accruing prior
to such expiration or termination.
8. Events of Default.
The occurrence of any of the following events shall constitute an "Event of
Default" under this Loan Agreement:
(a) Failure to Pay. Customer shall fail to pay to MLBFS or deposit into the WCMA
Account when due any amount owing or required to be deposited by Customer under
this Loan Agreement, and such failure shall continue for more than 5 Business
Days after written notice thereof shall have been given by MLBFS to Customer.
(b) Failure to Perform. Customer or any Guarantor shall default in the
performance or observance of any covenant or agreement on its part to be
performed or observed under this Loan Agreement or any of the Additional
Agreements (not constituting an Event of Default under any other clause of this
Paragraph), and such default shall continue unremedied for 10 Business Days
after written notice thereof shall have been given by MLBFS to Customer.
(c) Breach of Warranty. Any representation or warranty made by Customer or any
Guarantor contained in this Loan Agreement or any of the Additional Agreements
shall at any time prove to have been incorrect in any material respect when
made.
(d) Default Under Other Agreement. A default or Event of Default by Customer or
any Guarantor shall occur under the terms of any other agreement, instrument or
document with or intended for the benefit of
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MLBFS, MLPF&S or any of their affiliates, and any required notice shall have
been given and required passage of time shall have elapsed.
(e) Bankruptcy, Etc. A proceeding under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt or receivership law or statute
shall be filed by Customer or any Guarantor, or any such proceeding shall be
filed against Customer or any Guarantor and shall not be dismissed or withdrawn
within 60 days after filing, or Customer or any Guarantor shall make an
assignment for the benefit of creditors, or Customer or any Guarantor shall
become insolvent or generally fail to pay, or admit in writing its inability to
pay, its debts as they become due.
(f) Material Impairment. Any event shall occur which shall reasonably cause
MLBFS to in good faith believe that the prospect of payment or performance by
Customer or any Guarantor has been materially impaired.
(g) Acceleration of Debt to Other Creditors. Any event shall occur which results
in the acceleration of the maturity of any indebtedness of $100,000.00 or more
of Customer or any Guarantor to another creditor under any indenture, agreement,
undertaking, or otherwise.
(h) Seizure or Abuse of Collateral. The Collateral, or any material part
thereof, shall be or become subject to any material abuse or misuse, or any
levy, attachment, seizure or confiscation which is not released within 10
Business Days.
9. Remedies.
(a) Remedies Upon Default. Upon the occurrence and during the continuance of
any Event of Default, MLBFS may at its sole option do any one or more or all of
the following, at such time and in such order as MLBFS may in its sole
discretion choose:
(i) Termination. MLBFS may without notice terminate the WCMA Line of Credit and
all obligations to provide the WCMA Line of Credit or otherwise extend any
credit to or for the benefit of Customer; and upon any such termination MLBFS
shall be relieved of all such obligations.
(ii) Acceleration. MLBFS may declare the principal of and interest on the WCMA
Loan Balance, and all other Obligations to be forthwith due and payable,
whereupon all such amounts shall be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived.
(iii) Exercise Rights of Secured Party. MLBFS may exercise any or all of the
remedies of a secured party under applicable law, including, but not limited to,
the UCC, and any or all of its other rights and remedies under this Loan
Agreement and the Additional Agreements.
(iv) Possession. MLBFS may require Customer to make the Collateral and the
records pertaining to the Collateral available to MLBFS at a place designated by
MLBFS which is reasonably convenient, or may take possession of the Collateral
and the records pertaining to the Collateral without the use of any judicial
process and without any prior notice to Customer.
(v) Sale. MLBFS may sell any or all of the Collateral at public or private sale
upon such terms and conditions as MLBFS may reasonably deem proper. MLBFS may
purchase any Collateral at any such public sale. The net proceeds of any such
public or private sale and all other amounts actually collected or received by
MLBFS pursuant hereto, after deducting all costs and expenses incurred at any
time in the collection of the Obligations and in the protection, collection and
sale of the Collateral, will be applied to the payment of the obligations, with
any remaining proceeds paid to Customer or whoever else may be entitled thereto,
and with Customer and the Guarantors remaining jointly and severally liable for
any amount remaining unpaid after such application.
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(vi) Delivery of Cash, Checks, Etc. MLBFS may require Customer to forthwith upon
receipt, transmit and deliver to MLBFS in the form received, all cash, checks,
drafts and other instruments for the payment of money (properly endorsed, where
required, so that such items may be collected by MLBFS) which may be received by
Customer at any time in full or partial payment of any Collateral, and require
that Customer not commingle any such items which may be so received by Customer
with any other of its funds or property but instead hold them separate and apart
and in trust for MLBFS until delivery is made to MLBFS.
(vii) Notification of Account Debtors. MLBFS may notify any Account Debtor that
its Account or Chattel Paper has been assigned to MLBFS and direct such Account
Debtor to make payment directly to MLBFS of all amounts due or becoming due with
respect to such Account or Chattel Paper; and MLBFS may enforce payment and
collect, by legal proceedings or otherwise, such Account or Chattel Paper.
(viii) Control of Collateral. MLBFS may otherwise take control in any lawful
manner of any cash or non-cash items of payment or proceeds of Collateral and of
any rejected, returned, stopped in transit or repossessed goods included in the
Collateral and endorse Customers name on any item of payment on or proceeds of
the Collateral.
(b) Set-Off. MLBFS shall have the further right upon the occurrence and during
the continuance of an Event of Default to set-off, appropriate and apply toward
payment of any of the Obligations, in such order of application as MLBFS may
from time to time and at any time elect, any cash, credit, deposits, accounts,
securities and any other property of Customer which is in transit to or in the
possession, custody or control of MLBFS, MLPF&S or any agent, bailee, or
affiliate of MLBFS or MLPF&S, including, without limitation, the WCMA Account
and any Money Accounts, and all cash and securities therein or controlled
thereby, and all proceeds thereof. Customer hereby grants to MLBFS a security
interest in all such property as additional Collateral.
(c) Remedies are Severable and Cumulative. All rights and remedies of MLBFS
herein are severable and cumulative and in addition to all other rights and
remedies available in the Additional Agreements, at law or in equity, and any
one or more of such rights and remedies may be exercised simultaneously or
successively.
(d) Notices. To the fullest extent permitted by applicable law, Customer hereby
irrevocably waives and releases MLBFS of and from any and all liabilities and
penalties for failure of MLBFS to comply with any statutory or other requirement
imposed upon MLBFS relating to notices of sale, holding of sale or reporting of
any sale, and Customer waives all rights of redemption from any such sale. Any
notices required under applicable law shall be reasonably and properly given to
Customer if given by any of the methods provided herein at least 5 Business Days
prior to taking action. MLBFS shall have the right to postpone or adjourn any
sale or other disposition of Collateral at any time without giving notice of any
such postponed or adjourned date. In the event MLBFS seeks to take possession of
any or all of the Collateral by court process, Customer further irrevocably
waives to the fullest extent permitted by law any bonds and any surety or
security relating thereto required by any statute, court rule or otherwise as an
incident to such possession. and any demand for possession prior to the
commencement of any suit or action.
10. Miscellaneous.
(a) Non-Waiver. No failure or delay on the part of MLBFS in exercising any
right, power or remedy pursuant to this Loan Agreement or any of the Additional
Agreements shall operate as a waiver thereof, and no single or partial exercise
of any such right, power or remedy shall preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy. Neither any
amendment, modification, supplement, termination or waiver of any provision of
this Loan Agreement or any of the Additional Agreements, nor any consent to any
departure by Customer therefrom, shall be effective unless the same shall be in
writing and signed by MLBFS. Any waiver of any provision of this Loan Agreement
or any of the Additional Agreements and any consent to any departure by Customer
from the terms of this Loan Agreement or any of the Additional Agreements shall
be effective only in the specific instance and for the specific purpose for
which
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given. Except as otherwise expressly provided herein, no notice to or demand on
Customer shall in any case entitle Customer to any other or further notice or
demand in similar or other circumstances.
(b) Disclosure. Customer and each Guarantor hereby irrevocably authorizes MLBFS
and each of its affiliates, including without limitation MLPF&S, to at any time
(whether or not an Event of Default shall have occurred) obtain from and
disclose to each other any and all financial and other information about
Customer or any Guarantor.
(c) Communications. All notices and other communications required or permitted
hereunder shall be in writing, and shall be either delivered personally, mailed
by postage prepaid certified mail or sent by express overnight courier or by
facsimile. Such notices and communications shall be deemed to be given on the
date of personal delivery, facsimile transmission or actual delivery of
certified mail, or one Business Day after delivery to an express overnight
courier. Unless otherwise specified in a notice sent or delivered in accordance
with the terms hereof, notices and other communications in writing shall be
given to the parties hereto at their respective addresses set forth at the
beginning of this Loan Agreement, or, in the case of facsimile transmission, to
the parties at their respective regular facsimile telephone number.
(d) Costs, Expenses and Taxes. Customer shall upon demand pay or reimburse MLBFS
for: (i) all Uniform Commercial Code filing and search fees and expenses
incurred by MLBFS in connection with the verification, perfection or
preservation of MLBFS' rights hereunder or in the Collateral or any other
collateral for the Obligations; (ii) any and all stamp, transfer and other taxes
and fees payable or determined to be payable in connection with the execution,
delivery and/or recording of this Loan Agreement or any of the Additional
Agreements; and (iii) all reasonable fees and out-of-pocket expenses (including,
but not limited to, reasonable fees and expenses of outside counsel) incurred by
MLBFS in connection with the enforcement of this Loan Agreement or any of the
Additional Agreements or the protection of MLBFS' rights hereunder or
thereunder, excluding, however, salaries and expenses of MLBFS' employees. The
obligations of Customer under this paragraph shall survive the expiration or
termination of this Loan Agreement and the discharge of the other Obligations.
(e) Right to Perform Obligations. If Customer shall fail to do any act or thing
which it has covenanted to do under this Loan Agreement or any representation or
warranty on the part of Customer contained in this Loan Agreement shall be
breached, MLBFS may, in its sole discretion, after 5 days written notice is sent
to Customer, do the same or cause it to be done or remedy any such breach, and
may expend its funds for such purpose. Any and all reasonable amounts so
expended by MLBFS shall be repayable to MLBFS by Customer upon demand, with
interest at the Interest Rate during the period from and including the date
funds are so expended by MLBFS to the date of repayment, and all such amounts
shall be additional Obligations.
(f) Late Charges. Any payment required to be made by Customer pursuant to this
Loan Agreement not paid within 5 Business Days of the applicable due date shall
be subject to a late charge in an amount equal to the lesser of: (i) 5% of the
overdue amount, or (ii) the maximum amount permitted by applicable law. Such
late charges shall be payable on demand, or, without demand, may in the sole
discretion of MLBFS be paid by a WCMA Loan and added to the WCMA Loan Balance in
the same manner as provided herein for accrued interest.
(g) Further Assurances. Customer shall do such further acts and things and
execute and deliver to MLBFS such additional agreements, instruments and
documents as MLBFS may reasonably require or deem advisable to effectuate the
purposes of this Loan Agreement, or to confirm unto MLBFS its rights, powers and
remedies under this Loan Agreement and the Additional Agreements.
(h) Binding Effect; Assignment. This Loan Agreement and the Additional
Agreements shall be binding upon, and shall inure to the benefit of MLBFS,
Customer and their respective successors and assigns. Customer shall not assign
any of its rights or delegate any of its obligations under this Loan Agreement
or any of the Additional Agreements without the prior written consent of MLBFS.
Unless otherwise expressly
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agreed to in a writing signed by MLBFS no such consent shall in any event
relieve Customer of any of its obligations under this Loan Agreement or the
Additional Agreements.
(i) Headings. Captions and section and paragraph headings in this Loan Agreement
and the Additional Agreements are inserted only as a matter of convenience, and
shall not affect the interpretation hereof.
(j) Governing Law. This Loan Agreement, and, unless otherwise expressly provided
therein, each of the Additional Agreements, shall be governed in all respects by
the laws of the State of Illinois.
(k) Severability of Provisions. Whenever possible, each provision of this Loan
Agreement and the Additional Agreements shall be interpreted in such manner as
to be effective and valid under applicable law. Any provision of this Loan
Agreement or any of the Additional Agreements which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
the remaining provisions of this Loan Agreement and the Additional Agreements or
affecting the validity or enforceability of such provision in any other
jurisdiction.
(I) Term. This Loan Agreement shall become effective on the date accepted by
MLBFS at its offices in Chicago, Illinois, and, subject to the terms hereof,
shall continue in effect so long thereafter as the WCMA Line of Credit shall be
in effect or there shall be any other Obligations outstanding.
(m) Integration. THIS LOAN AGREEMENT, TOGETHER WITH THE ADDITIONAL AGREEMENTS,
CONSTITUTES THE ENTIRE UNDERSTANDING AND REPRESENTS THE FULL AND FINAL AGREEMENT
BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF, AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR WRITTEN AGREEMENTS OR PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS OF THE PARTIES. Without limiting the foregoing, Customer acknowledges
that: (i) no promise or commitment has been made to it by MLBFS, MLPF&S or any
of their respective employees, agents or representatives to extend the
availability of the WCMA Line of Credit or the due date of the WCMA Loan Balance
beyond the current Maturity Date, or to increase the Maximum WCMA Line of
Credit, or otherwise extend any other credit to Customer or any other party;
(ii) no purported extension of the Maturity Date, increase in the Maximum WCMA
Line of Credit or other extension or agreement to extend credit shall be valid
or binding unless expressly set forth in a written instrument signed by MLBFS;
and (iii) except as otherwise expressly provided herein, this Loan Agreement
supersedes and replaces any and all proposals, letters of intent and approval
and commitment letters from MLBFS to Customer, none of which shall be considered
an Additional Agreement.
(n) Jurisdiction; Waiver. CUSTOMER ACKNOWLEDGES THAT THIS LOAN AGREEMENT IS
BEING ACCEPTED BY MLBFS IN PARTIAL CONSIDERATION OF MLBFS' RIGHT AND OPTION, IN
ITS SOLE DISCRETION, TO ENFORCE THIS LOAN AGREEMENT AND THE ADDITIONAL
AGREEMENTS IN EITHER THE STATE OF ILLINOIS OR IN ANY OTHER JURISDICTION WHERE
CUSTOMER OR ANY COLLATERAL FOR THE OBLIGATIONS MAY BE LOCATED. CUSTOMER CONSENTS
TO JURISDICTION IN THE STATE OF ILLINOIS AND VENUE IN ANY STATE OR FEDERAL COURT
IN THE COUNTY OF COOK FOR SUCH PURPOSES, AND CUSTOMER WAIVES ANY AND ALL RIGHTS
TO CONTEST SAID JURISDICTION AND VENUE. CUSTOMER FURTHER WAIVES ANY RIGHTS TO
COMMENCE ANY ACTION AGAINST MLBFS IN ANY JURISDICTION EXCEPT IN THE COUNTY OF
COOK AND STATE OF ILLINOIS. MLBFS AND CUSTOMER HEREBY EACH EXPRESSLY WAIVE ANY
AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES AGAINST THE OTHER PARTY WITH RESPECT TO ANY
MATTER RELATING TO, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE WCMA LINE OF
CREDIT, THIS LOAN AGREEMENT, ANY ADDITIONAL AGREEMENTS AND/OR ANY OF THE
TRANSACTIONS WHICH ARE THE SUBJECT MATTER OF THIS LOAN AGREEMENT.
-14-
IN WITNESS WHEREOF, this Loan Agreement has been executed as of the day and year
first above written.
BARBEQUES GALORE, INC.
By: /s/ Sydney Selati /s/ Kevin Ralphs
----------------------------------------------------------------
Signature (1) Signature (2)
Sydney Selati Kevin Ralphs
- -------------------------------------------------------------------
Printed Name Printed Name
Chairman Chief Financial Officer
- -------------------------------------------------------------------
Title Title
Accepted at Chicago, Illinois:
MERRILL LYNCH BUSINESS FINANCIAL
SERVICES INC.
By /s/ [SIGNATURE APPEARS HERE]
------------------------------------
-15-
EXHIBIT A
ATTACHED TO AND HEREBY MADE A PART OF WCMA NOTE, LOAN AND SECURITY AGREEMENT NO.
231-07T10 BETWEEN MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC. AND BARBEQUES
GALORE, INC.
- --------------------------------------------------------------------------------
Locations of Tangible Collateral:
15041 Bake Parkway, Ste. A, Irvine, CA 92718
2246 Sunrise Blvd., Ste. 7, Rancho Cordova, CA 95670
11073 W. Pico Blvd., Los Angeles, CA 90064
1124 Sunset Rd., Henderson, NV 89015
6412 Tupelo Drive, Citrus Heights, CA 95621
18255 Hawthorne Blvd., Torrance, CA 90503
7450 Clairemont Mesa Blvd., San Diego, CA 92111
1286 B Auto Parkway, Escondido, CA 92025
311 E. Camelback Rd., Phoenix, AZ 85012
201 N. Central Ave., Glendale, CA 91203
9010 E. Indian Bend, Ste. 2, Scottsdale, AZ 85250
18922 Ventura Blvd., Tarzana, CA 91356
14040 E. Firestone Blvd., Santa Fe Springs, CA 90670
324 S. Mountain Ave., Upland, CA 91786
10495 Magnolia Ave., Riverside, CA 92505
2580 S. Decatur Blvd., Las Vegas, NV 89102
7307 Roseville Rd., Ste. 10, Sacramento, CA 95842
c/o Tropitone, 5 Marconi Dr., Irvine, CA 52798
SCHEDULE 1
================================================================================
[LETTERHEAD OF FAX COVERSHEET APPEARS HERE]
================================================================================
To: Larry Sherman
Fax#: 619-231-8770
Subject: Leased and Other Secured Assets
Date: March 9, 1995
Pages 5, including this cover sheet.
COMMENTS:
Dear Larry,
1. Listed below are the assets that we have on lease:
Asset Lessor Termination Date
- ----- ------ ----------------
El Dorado Cadillac GMAC 4/96
Nissan 240SX Nissan Motor Acceptance 7/96
Canon NP2120 Copier Canon 4/96
Canon Fax L700 Canon 4/96
1994 Isuzu Rodeo GE Capital 5/98
1994 Ford Cargo Van Ford Motor Credit 7/97
1994 Ford Cargo Van Ford Motor Credit 7/97
1995 Ford Cargo Van Ford Motor Credit 10/97
1995 Ford Cargo Van Ford Motor Credit 10/97
1995 Ford Cargo Van Ford Motor Credit 3/98
None of the above leases are capitalized in our books.
2. We have purchased a Clark TM15 forklift truck through Clark Credit
Corporation. The original purchase price was $21,208.00. This loan will be
paid off by July 1995.
3. The attached Exhibit A is a listing by location of all of the computer
equipment financed by Warrior Bank and covered by a UCC filing in favor of
that bank. The invoiced value of these assets was $73,513.64. This loan will
be paid off by August 1997.
Regards,
/s/ Kevin J. Ralphs
Kevin J. Ralphs
EXHIBIT A
---------
PAGE 1 of 4
-----------
Location: 2246 Sunrise Blvd. Suite 7
- --------- Rancho Cordova, Ca 95670
Quantity Item Serial #
- -------- ---- --------
1 IBM Value Point 386SX/20 23DC168
1 Mono VGA 94116128
1 2400 Baud Modem 931223
1 American Power 250 UPS 931223
1 Okidata 931223
1 Star SP312 Roll Printer RKP-300 450130401236
1 Aim Cash Drawer
1 PC Anywhere Software Package
1 Remote System - Infocorp
1 SW Purchase Order Control - Infocorp
1 Cable IBM Printer
1 Hard Disk Controller W/I/O Port
- --------------------------------------------------------------------------------
Location: 1700 East Ventura Blvd, Suite D
- -------- Oxnard, California 93030
Quantity Item Serial #
- --------- ---- --------
1 IBM Value Point 386SX/20 23BV692
1 Mono Monitor VGA 12112092
1 2400 Baud Modem 301C0906904
1 American Power 250 UPS 301C0906904
1 Okidata 320 Printer 301C0906904
1 Star SP312 Roll Printer RKP-300 450130100995
1 Aim Cash Drawer
1 PC Anywhere Software Host
1 Remote System - Infocorp
1 SW Purchase Order Control - Infocorp
1 Cable IBM Printer
1 Hard Disk Controller W/I/O Port
- --------------------------------------------------------------------------------
Location: 14040 E. Firestone Blvd.
- --------- Santa Fe Springs, Ca 90670
Quantity Item Serial #
- -------- ---- --------
1 IBM PS/Value Point 486 23PVR43
1 Mono Monitor VGA 23112160
1 2400 Baud Modem 960551
1 American Power 250 UPS 960551
1 Okidata 320 Printer 960551
1 Star SP312 Roll Printer 450130600535
1 M-S Cash Drawer
1 PC Anywhere Software
1 Remote software/POS [xx] Sign Here 4 pages
1 Purchase Order Management - Infocorp [ ] Initial Here
2 Cable IBM Printer [ ] Notarize Here
1 Hard Disk Controller [ ] Return
- ------------------------------------------------- [xx] Sign 4 pages (to be
-------------------
recorded in Alabama)
BARBEQUES GALORE, INC.
BY: /s/ [SIGNATURE APPEARS HERE]
----------------------------
ITS: CFO
----------------------------
EXHIBIT A
---------
PAGE 2 of 4
-----------
Location: 10495 Magnolia Ave., Suite A
- --------- Riverside, Ca. 92505
Quantity Item Serial #
- --------- ---- --------
1 IBM PS/Value Point 486 23FWL24
1 Mono Monitor VGA 64130104
1 2400 Baud Modem 931095
1 American Power 250 UPS 931095
1 Okidata 320 Printer 931095
1 Star SP312 Roll Printer 450130600560
1 M-S Cash Drawer
1 PC Anywhere Software
1 Remote software/POS
1 SW Purchase order management - Infocorp
2 Cable IBM Printer
1 Hard Disk Controller
- --------------------------------------------------------------------------------
Location: 1286 B. Auto Parkway
- -------- Escondido, Ca. 92025
Quantity Item Serial #
- --------- ---- --------
1 IBM Value Point 486 23FWH18
1 Mono Monitor VGA 64130067
1 2400 Baud Modem
1 American Power 250 UPS
1 Okidata 320 Printer
1 Star SP312 Roll Printer 450130600559
1 M-S Cash Drawer
1 PC Anywhere software
1 Remote System - Infocorp
1 SW Purchase Order - Infocorp
1 Cable IBM Printer
1 Hard Disk Controller
- --------------------------------------------------------------------------------
Location: 18225 Hawthorne Blvd.
- --------- Torrance, Ca. 90504
Quantity Item Serial #
- -------- ---- --------
1 IBM 486 PS/Value Point 23GAC54
1 Mono Monitor VGA 23112400
1 2400 Baud Modem 307C1030366
1 American Power 450 UPS 307C1030366
1 Okidata 320 Printer 307C1030366
1 Star SP312 Roll Printer 450130600166
1 Cash Drawer
1 PC Anywhere software
1 Remote software/POS - Infocorp
1 Purchase Order Management - Infocorp
1 Cable IBM Printer
1 Hard disk controller W/I/O Port
- --------------------------------------------------------------------------------
BARBEQUES GALORE, INC. WARRIOR SAVINGS BANK
BY:[SIGNATURE APPEARS HERE] BY:
------------------------- --------------------------
ITS: CFO ITS:
------------------------ --------------------------
EXHIBIT A
---------
PAGE 3 0F 4
-----------
Location: 11073 W. Pico Blvd.
- --------- Los Angeles, Ca. 90064
Quantity Item Serial #
- --------- ---- --------
1 IBM 486 PS/Value Point 23FZY64
1 Mono Monitor VGA 64135441
1 2400 Baud Modem G.V.C. 307C1030903
1 American Power 450 UPS 307C1030903
1 Star SP312 Roll Printer 307C1030903
1 M-S Cash Drawer
1 PC Anywhere Software
1 Software POS, Remote (Store System)
1 Purchase order management
2 Cable IBM Printer
1 Hard Disk Controller
- --------------------------------------------------------------------------------
Location: 18922 Venture Blvd.
- --------- Tarzana, Ca. 91356
Quantity Item Serial #
- -------- ---- --------
1 IBM 486 PS/Value Point 23GAB06
1 Mono Monitor VGA 23112348
1 2400 Baud Modem G.V.C. 307C1030304
1 American Power 450 UPS 307C1030304
1 Okidata 320 Printer 307C1030304
1 Star SP312 Roll Printer 450130600529
1 M-S Cash Drawer
1 PC Anywheres oftware
1 Purchase order management
2 Cable IBM Printer
1 Hard Disk ControllerW/I/O Port
- --------------------------------------------------------------------------------
Location: 311 East Camelback Road
- --------- Camelback Terrace
Phoenix, Arizona 85012
Quantity Item Serial #
- -------- ---- --------
1 IBM Value Point 386SX/120 2BM729
1 Mono Monitor VGA 12112004
1 2400 Baud Modem 301C0906909
1 American Power 250 UPS 301C0906909
1 Okidata 320 Printer 301C0906909
1 Star SP312 Roll Printer RKF-300 450121100037
1 Aim Cash Drawer
1 PC Anywhere Softward Host
1 Remote System - Infocorp.
1 SW Purchase Order Control - Infocorp.
1 Cable IBM Printer
- --------------------------------------------------------------------------------
BARBEQUES GALORE INC. WARRIOR SAVINGS BANK
BY:/s/ SIGNATURE APPEARS HERE] BY:
----------------------------- ---------------------------
ITS: CFO. ITS:
---------------------------- --------------------------
EXHIBIT A
---------
PAGE 4 OF 4
-----------
Location:
- --------- 2580 South Decatur Avenue
Las Vegas, Nevada 89102
and
1124 Sunset Road
Henderson, Nevada 89015
Quantity Item Serial #
- -------- ---- --------
1 IBM Value Point 386SX/20 23BP598
1 Mono Monitor VGA 94116303
1 2400 Baud Modem 112C0636794
1 American Power 250 UPS 112C0636794
1 Okedata 320 Printer 112CO636794
1 Star SP312 Roll Printer
RKP-300 112C0636794
1 Aim Cash Drawer 450130101229
1 PC Anywhere Software Package
1 Remote System - Infocorp
1 SW Purchase Order Control - Infocorp
1 Cable IBM Printer
1 Hard Disk Controller W/I/O Port
- --------------------------------------------------------------------------------
BARBEQUES GALORE, INC. WARRIOR SAVINGS BANK
BY:[SIGNATURE APPEARS HERE] BY:
----------------------------- ------------------------------
ITS: CFO ITS:
---------------------------- -----------------------------
[LOGO OF MERRILL LYNCH APPEARS HERE]
No. 9502340701
================================================================================
UNCONDITIONAL GUARANTY
FOR VALUE RECEIVED, and in order to induce MERRILL LYNCH BUSINESS FINANCIAL
SERVICES INC. ("MLBFS") to advance moneys or extend or continue to extend credit
to or for the benefit of BARBEQUES GALORE, INC., a corporation organized and
existing under the laws of the State of California (with any successor-in
interest, including, without limitation, any successor by merger or by operation
of law, herein collectively referred to as "Customer") under (a) that certain
TERM WCMA LOAN AND SECURITY AGREEMENT No. 9502340701 between MLBFS and Customer
(the "Loan Agreement"), (b) any "Additional Agreements", as that term is defined
in the Loan Agreement (including, without limitation, the TERM WCMA NOTE
incorporated by reference into the Loan Agreement), and (c) all present and
future amendments and other evidences of any extensions, increases, renewals and
other changes of or to the Loan Agreement or Additional Agreements
(collectively, the "Guaranteed Documents"), the undersigned, THE GALORE GROUP
(U.S.A.), INC., a corporation duly organized and validly existing under the laws
of the State of Delaware ("Guarantor"), hereby unconditionally guarantees to
MLBFS:(i) the prompt and full payment when due, by acceleration or otherwise, of
all sums now or any time hereafter due from Customer to MLBFS under the
Guaranteed Documents; (ii) the prompt, full and faithful performance and
discharge by Customer of each and every other covenant and warranty of Customer
set forth in the Guaranteed Documents, and (iii) the prompt and full payment and
performance of all other indebtedness, liabilities and obligations of Customer
to MLBFS howsoever, created or evidenced, and whether now existing or hereafter
arising (collectively, the "Obligations"). Guarantor further agrees to pay all
reasonable costs and expenses (including, but not limited to, court costs and
reasonable attorneys' fees) paid or incurred by MLBFS in endeavoring to collect
or enforce performance of any of the Obligations, or in enforcing this Guaranty.
This Guaranty is absolute, unconditional and continuing and shall remain in
effect until all of the Obligations shall have been fully paid, performed and
discharged. Upon the occurrence and during the continuance of any Event of
Default under the Guaranteed Documents, any or all of the indebtedness hereby
guaranteed then existing shall, at the option of MLBFS, become immediately due
and payable from Guarantor. Notwithstanding the occurrence of any such event,
this Guaranty shall continue and remain in full force and effect.
The liability of Guarantor hereunder shall in no event be affected or impaired
by any of the following, any of which may be done or omitted by MLBFS from time
to time, without notice to or the consent of Guarantor: (a) any renewals,
amendments, modifications or supplements of or to any of the Guaranteed
Documents, or any renewals, extensions, forbearances, compromises or releases of
any of the Obligations or any of MLBFS, rights under any of the Guaranteed
Documents; (b) any acceptance by MLBFS of any collateral or security for, or
other guarantors of any of the Obligations; (c) any failure, neglect or omission
on the part of MLBFS to realize upon or protect any of the Obligations, or any
collateral or security therefor, or to exercise any lien upon or right of
appropriation of any moneys, credits or property of Customer or any other
guarantor, possessed by or under the control of MLBFS or any of its affiliates,
toward the liquidation or reduction of the Obligations; (d) any application of
payments or credits by MLBFS; (e) the granting of credit from time to time by
MLBFS to Customer in excess of the amount set forth in the Guaranteed Documents;
or (f) any other act of commission or omission of any kind or at any time upon
the part of MLBFS or any of its affiliates or any of their respective employees
or agents with respect to any matter whatsoever. MLBFS shall not be required at
any time, as a condition of Guarantor's obligations hereunder, to resort to
payment from Customer or other persons or entities whatsoever, or any of their
properties or estates, or resort to any collateral or pursue or exhaust any
other rights or remedies whatsoever.
No release or discharge in whole or in part of any other guarantor of the
Obligations shall release or discharge Guarantor unless and until all of the
Obligations shall have been fully paid and discharged. Guarantor expressly
waives presentment, protest, demand, notice of dishonor or default, notice of
acceptance of this Guaranty, notice of advancement of funds under the Guaranteed
Documents and all other notices and formalities to which Customer or Guarantor
might be entitled, by statute or otherwise, and, so long as there are any
Obligations or MLBFS is committed to extend credit to Customer, waives any right
to revoke or terminate this Guaranty without the express written consent of
MLBFS.
So long as there are any Obligations, Guarantor shall not have any claim, remedy
or right of subrogation, reimbursement, exoneration, contribution,
indemnification, or participation in any claim, right, or remedy of MLBFS
against Customer or any security which MLBFS now has or hereafter acquires,
whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law, or otherwise.
MLBFS is hereby irrevocably authorized by Guarantor at any time during the
continuance of an Event of Default under the Loan Agreement or other Guaranteed
Documents or in respect of any of the Obligations, in its sole discretion and
without demand or notice of any kind, to appropriate, hold, set off and apply
toward the payment of any amount due hereunder, in such order of application as
MLBFS may elect, all moneys, credits and other property belonging to or in the
name of Guarantor at any time held or controlled by MLBFS or Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("MLPF&S"), or any of their respective
affiliates, whether now being held or controlled or held or controlled in the
future, on deposit or otherwise, and MLBFS is hereby granted a lien and security
interest upon all such moneys, credits and other property. Guarantor further
hereby irrevocably authorizes MLBFS and each of its affiliates, including
without limitation MLPF&S, to at any time (whether or not an Event of Default
shall have occurred) obtain from and disclose to each other any and all
financial and other information about Guarantor.
Guarantor agrees to furnish to MLBFS such financial information concerning
Guarantor as may be required by any of the Guaranteed Documents or as MLBFS may
otherwise from time to time reasonably request.
No delay on the part of MLBFS in the exercise of any right or remedy under any
agreement (including, but not limited to, this Guaranty) shall operate as a
waiver thereof, and, without limiting the foregoing, no delay in the enforcement
of any security interest, and no single or partial exercise by MLBFS of any
right or remedy shall preclude any other or further exercise thereof or the
exercise of any other right or remedy. This Guaranty may be executed in any
number of counterparts, each of which counterparts, once they are executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Guaranty. This Guaranty
shall be binding upon Guarantor and its successors and assigns, and shall inure
to the benefit of MLBFS and its successors and assigns. If there is more than
one guarantor of the Obligations, all of the obligations and agreements of
Guarantor are joint and several with such other guarantors.
This Guaranty shall be governed by the laws of the State of Illinois. Guarantor
agrees that this Guaranty may be enforced by MLBFS in any jurisdiction and venue
in which the Loan Agreement may be enforced. Guarantor and MLBFS hereby each
expressly waive any and all rights to a trial by jury in any action, proceeding
or counterclaim brought by either of the parties against the other party in any
way related to or arising out of this Guaranty or the Obligations. Wherever
possible each provision of this Guaranty shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Guaranty shall be prohibited by or invalid under such law, such provision shall
be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Guaranty. No modification or waiver of any of the provisions of this Guaranty
shall be effective unless in writing and signed by both Guarantor and an officer
of MLBFS.
-2-
Each signatory on behalf of Guarantor warrants that he has authority to sign on
behalf of Guarantor, and by so signing, to bind Guarantor hereunder.
Dated as of February 28, 1995.
THE GALORE GROUP (U.S.A.), INC.
By: /s/ Sydney Selati /s/ Kevin Ralphs
----------------------------------------------------------
Signature (1) Signature (2)
Sydney Selati Kevin Ralphs
----------------------------------------------------------
Printed Name Printed Name
President Chief Financial Officer
----------------------------------------------------------
Title Title
Address of Guarantor:
15041 Bake Parkway, Suite A
Irvine, CA 92718
-3-
[LOGO OF MERRILL LYNCH APPEARS HERE] Ref. No. 231-07T10
================================================================================
UNCONDITIONAL GUARANTY
FOR VALUE RECEIVED, and in order to induce MERRILL LYNCH BUSINESS FINANCIAL
SERVICES INC. ("MLBFS") to advance moneys or extend or continue to extend credit
to or for the benefit of BARBEQUES GALORE, INC., a corporation organized and
existing under the laws of the State of California (with any successor-in
interest, including, without limitation, any successor by merger or by operation
of law, herein collectively referred to as "Customer") under (a) that certain
WCMA NOTE, LOAN AND SECURITY AGREEMENT No. 231-07T10 between MLBFS and Customer
(the "Loan Agreement"), (b) any "Additional Agreements", as that term is defined
in the Loan Agreement, and (c) all present and future amendments and other
evidences of any extensions, increases, renewals and other changes of or to the
Loan Agreement or Additional Agreements (collectively, the "Guaranteed
Documents"), the undersigned, THE GALORE GROUP (U.S.A.), INC., a corporation
duly organized and validly existing under the laws of the State of Delaware
("Guarantor"), hereby unconditionally guarantees to MLBFS: (i) the prompt and
full payment when due, by acceleration or otherwise, of all sums now or any time
hereafter due from Customer to MLBFS under the Guaranteed Documents: (ii) the
prompt, full and faithful performance and discharge by Customer of each and
every other covenant and warranty of Customer set forth in the Guaranteed
Documents, and (iii) the prompt and full payment and performance of all other
indebtedness, liabilities and obligations of Customer to MLBFS, howsoever
created or evidenced, and whether now existing or hereafter arising
(collectively, the "Obligations"). Guarantor further agrees to pay all
reasonable costs and expenses (including, but not limited to, court costs and
reasonable attorneys' fees) paid or incurred by MLBFS in endeavoring to collect
or enforce performance of any of the Obligations, or in enforcing this Guaranty.
This Guaranty is absolute, unconditional and continuing and shall remain in
effect until all of the Obligations shall have been fully paid, performed and
discharged. Upon the occurrence and during the continuance of any Event of
Default under the Guaranteed Documents, any or all of the indebtedness hereby
guaranteed then existing shall, at the option of MLBFS, become immediately due
and payable from Guarantor. Notwithstanding the occurrence of any such event,
this Guaranty shall continue and remain in full force and effect.
The liability of Guarantor hereunder shall in no event be affected or impaired
by any of the following, any of which may be done or omitted by MLBFS from time
to time, without notice to or the consent of Guarantor: (a) any renewals,
amendments, modifications or supplements of or to any of the Guaranteed
Documents, or any renewals, extensions, forbearances, compromises or releases of
any of the Obligations or any of MLBFS' rights under any of the Guaranteed
Documents; (b) any acceptance by MLBFS of any collateral or security for, or
other guarantors of, any of the Obligations; (c) any failure, neglect or
omission on the part of MLBFS to realize upon or protect any of the Obligations,
or any collateral or security therefor, or to exercise any lien upon or right of
appropriation of any moneys, credits or property of Customer or any other
guarantor, possessed by or under the control of MLBFS or any of its affiliates,
toward the liquidation or reduction of the Obligations; (d) any application of
payments or credits by MLBFS; (e) the granting of credit from time to time by
MLBFS to Customer in excess of the amount set forth in the Guaranteed Documents;
or (f) any other act of commission or omission of any kind or at any time upon
the part of MLBFS or any of its affiliates or any of their respective employees
or agents with respect to any matter whatsoever. MLBFS shall not be required at
any time, as a condition of Guarantor's obligations hereunder, to resort to
payment from Customer or other persons or entities whatsoever, or any of their
properties or estates, or resort to any collateral or pursue or exhaust any
other rights or remedies whatsoever.
No release or discharge in whole or in part of any other guarantor of the
Obligations shall release or discharge Guarantor unless and until all of the
Obligations shall have been fully paid and discharged. Guarantor expressly
waives presentment, protest, demand, notice of dishonor or default, notice of
acceptance of this Guaranty, notice of advancement of funds under the Guaranteed
Documents and all other notices and formalities to which Customer or Guarantor
might be entitled, by statute or otherwise, and, so long as there are any
Obligations or MLBFS is committed to extend credit to Customer, waives any right
to revoke or terminate this Guaranty without the express written consent of
MLBFS.
So long as there are any Obligations, Guarantor shall not have any claim, remedy
or right of subrogation, reimbursement, exoneration, contribution,
indemnification, or participation in any claim, right, or remedy of MLBFS
against Customer or any security which MLBFS now has or hereafter acquires,
whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law, or otherwise.
MLBFS is hereby irrevocably authorized by Guarantor at any time during the
continuance of an Event of Default under the Loan Agreement or other Guaranteed
Documents or in respect of any of the Obligations, in its sole discretion and
without demand or notice of any kind, to appropriate, hold, set off and apply
toward the payment of any amount due hereunder, in such order of application as
MLBFS may elect, all moneys, credits and other property belonging to or in the
name of Guarantor at any time held or controlled by MLBFS or Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("MLPF&S"), or any of their respective
affiliates, whether now being held or controlled or held or controlled in the
future, on deposit or otherwise, and MLBFS is hereby granted a lien and security
interest upon all such moneys, credits and other property. Guarantor further
hereby irrevocably authorizes MLBFS and each of its affiliates, including
without limitation MLPF&S, to at any time (whether or not an Event of Default
shall have occurred) obtain from and disclose to each other any and all
financial and other information about Guarantor.
Guarantor agrees to furnish to MLBFS such financial information concerning
Guarantor as may be required by any of the Guaranteed Documents or as MLBFS may
otherwise from time to time reasonably request.
No delay on the part of MLBFS in the exercise of any right or remedy under any
agreement (including, but not limited to, this Guaranty) shall operate as a
waiver thereof, and, without limiting the foregoing, no delay in the enforcement
of any security interest, and no single or partial exercise by MLBFS of any
right or remedy shall preclude any other or further exercise thereof or the
exercise of any other right or remedy. This Guaranty may be executed in any
number of counterparts, each of which counterparts, once they are executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Guaranty. This Guaranty
shall be binding upon Guarantor and its successors and assigns, and shall inure
to the benefit of MLBFS and its successors and assigns. If there is more than
one guarantor of the Obligations, all of the obligations and agreements of
Guarantor are joint and several with such other guarantors.
This Guaranty shall be governed by the laws of the State of Illinois. Guarantor
agrees that this Guaranty may be enforced by MLBFS in any jurisdiction and venue
in which the Loan Agreement may be enforced. Guarantor and MLBFS hereby each
expressly waive any and all rights to a trial by jury in any action, proceeding
or counterclaim brought by either of the parties against the other party in any
way related to or arising out of this Guaranty or the Obligations. Wherever
possible each provision of this Guaranty shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Guaranty shall be prohibited by or invalid under such law, such provision shall
be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Guaranty. No modification or waiver of any of the provisions of this Guaranty
shall be effective unless in writing and signed by both Guarantor and an officer
of MLBFS.
-2-
Each signatory on behalf of Guarantor warrants that he has authority to sign on
behalf of Guarantor, and by so signing, to bind Guarantor hereunder.
Dated as of February 23, 1995.
THE GALORE GROUP (U.S.A), INC.
By: /s/ Sydney Selati /s/ Kevin Ralphs
-----------------------------------------------------
Signature (1) Signature (2)
Sydney Selati Kevin Ralphs
- --------------------------------------------------------
Printed Name Printed Name
President Chief Financial Officer
- --------------------------------------------------------
Title Title
Address of Guarantor:
15041 Bake Parkway, Suite A
Irvine, CA 92718
-3-
[LOGO OF MERRILL LYNCH APPEARS HERE]
No. 9502340701
================================================================================
$1,500,000,00 February 23, 1995
TERM WCMA(R) NOTE
FOR VALUE RECEIVED, BARBEQUES GALORE, INC., a corporation organized and existing
under the laws of the State of California ("Customer"), hereby promises to pay
to the order of MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC., a corporation
organized and existing under the laws of the State of Delaware ("MLBFS"), in
lawful money of the United States, the principal sum of $1,500,000.00, or, if
less, an amount equal to the sum of the balances from time to time outstanding
under the "Term Note" and "WCMA Note" included herein.
TERM NOTE
FOR VALUE RECEIVED, Customer hereby promises to pay to the order of MLBFS, in
lawful money of the United States, an amount equal to the difference between (i)
the principal sum of $1,500,000.00 or, if less, the aggregate amount advanced by
MLBFS to Customer pursuant to the "Loan Agreement," as herein defined (the "Loan
Amount"), and (ii) the sum of (x) the aggregate amount paid by Customer on
account of the principal hereof, and (y) the WCMA Line of Credit (said
difference being herein called the "Term Note Balance"); together with interest
on the Term Note Balance, from the date of advancement of funds hereunder until
payment, at the Interest Rate.
Said indebtedness shall be payable in 61 consecutive monthly installments
commencing on the first day of the calendar month following the calendar month
in which funds are advanced hereunder, and continuing on the first day of each
calendar month thereafter until this Note shall be paid in full. The first such
installment shall be in an amount equal to accrued interest at the Interest Rate
and installments 2 through 61, both inclusive, shall be in an amount equal to
the sum of (i) accrued interest at the Interest Rate and (ii) 1/60th of the Loan
Amount. Each payment received hereunder shall be applied first to interest at
the Interest Rate, with the balance applied on account of the Term Note Balance.
All sums payable hereunder shall be payable at the office of MLBFS at 33 West
Monroe Street, Chicago, Illinois 60603, or at such other place or places as the
holder hereof may from time to time appoint in writing.
Customer may prepay this Term Note at any time in whole or in part without
premium or penalty. Any partial prepayment shall be applied to installments of
the Loan Amount in inverse order of maturity. Customer shall not have the right
to re-borrow amounts prepaid on account of this Term Note.
WCMA NOTE
FOR VALUE RECEIVED, Customer hereby promises to pay to the order of MLBFS, at
the times and in the manner set forth in the Loan Agreement, or in such other
manner and at such place as MLBFS may hereafter designate in writing, the
following: (a) on the WCMA Maturity Date, the then WCMA Loan Balance; and (b)
interest at the Interest Rate on the outstanding WCMA Loan Balance, from and
including the date on which the initial WCMA Loan is made until the date of
payment of all WCMA Loans in full. Interest shall be payable in the manner and
on the dates specified in, or determined in accordance with, the Loan Agreement.
PROVISIONS APPLICABLE TO BOTH TERM NOTE AND WCMA NOTE
As used herein, the term "Interest Rate" shall mean a fluctuating per annum rate
equal to the sum of (i) 2.70%, and (ii) 30-Day Commercial Paper Rate. The "30-
Day Commercial Paper Rate" shall mean, as of the date of any determination, the
interest rate from time to time published in the "Money Rates" section of
The Wall Street Journal for 30-day high-grade unsecured notes sold through
dealers by major corporations. The Interest Rate will change as of the date of
publication in The Wall Street Journal of a 30-Day Commercial Paper Rate that is
different from that published on the preceding Business Day. In the event that
The Wall Street Journal shall, for any reason, fail or cease to publish the 30-
Day Commercial Paper Rate, MLBFS will choose a reasonably comparable index or
source to use as the basis for the Interest Rate. Any part of the principal
hereof or interest hereon not paid within S Business Days of the applicable due
date shall be subject to a late charge equal to the lesser of (i) 5% of the
overdue amount, or (ii) the maximum amount permitted by law. All interest shall
be computed on the basis of actual days elapsed over a 360-day year.
This Term WCMA Note constitutes and includes both the "Term Note" and the "WCMA
Note" referred to in, and is entitled to all of the benefits of that certain
TERM WCMA LOAN AND SECURITY AGREEMENT No. 9502340701 between Customer and MLBFS
(the "Loan Agreement"). Capitalized terms used herein and not defined herein
shall have the meaning set forth in the Loan Agreement. The Loan Agreement is by
this reference hereby incorporated as a part hereof.
If Customer shall fail to pay when due any installment or other sum due
hereunder, and any such failure shall continue for more than 5 Business Days
after written notice thereof from the holder hereof to Customer, or if any other
"Event of Default", as that term is defined in the Loan Agreement, shall occur,
then at the option of the holder hereof, and in addition to all other rights and
remedies available to such holder under the Loan Agreement and otherwise, an
amount equal to the sum of the WCMA Loan Balance and the Term Note Balance at
such time remaining unpaid, together with accrued interest thereon, and all
other sums then owing by Customer under the Loan Agreement, may be declared to
be and thereby become immediately due and payable.
It is expressly understood, however, that nothing contained in the Loan
Agreement, any other agreement, instrument or document executed by Customer, or
otherwise, shall affect or impair the right, which is unconditional and
absolute, of the holder hereof to enforce payment of all sums due under this
Term WCMA Note at or after maturity, whether by acceleration or otherwise, or
shall affect the obligation of Customer, which is also unconditional and
absolute, to pay the sums payable under this Term WCMA Note in accordance with
its terms.
Except as otherwise expressly set forth herein or in the Loan Agreement,
Customer hereby waives presentment, demand for payment, protest and notice of
protest, notice of dishonor, notice of acceleration, notice of intent to
accelerate and all other notices and formalities in connection with this Term
WCMA Note. Wherever possible each provision of this Term WCMA Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Term WCMA Note shall be prohibited by or invalid
under such law, such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or the remaining provisions of this Term WCMA Note. Notwithstanding anything
herein to the contrary, in no event shall any interest charged hereunder exceed
the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the
event that such a court determines that MLBFS has received interest hereunder in
excess of the highest rate applicable hereto, MLBFS shall promptly refund such
excess interest to Customer without charge or penalty. This Term WCMA Note shall
be construed in accordance with the laws of the State of Illinois and may be
enforced by the holder hereof in any jurisdiction in which the Loan Agreement
may be enforced.
-2-
IN WITNESS WHEREOF, this Term WCMA Note has been executed by Customer as of the
day and year first above written.
BARBEQUES GALORE, INC.
By: /s/ Sydney Selati /s/ Kevin Ralphs
------------------------------------------------------------
Signature (1) Signature (2)
Sydney Selati Kevin Ralphs
------------------------------------------------------------
Printed Name Printed Name
Chairman Chief Financial Officer
------------------------------------------------------------
Title Title
-3-
Private Client Group
Merrill Lynch Business
Financial Services Inc.
33 West Monroe Street
22nd Floor
Chicago, Illinois 60603
312/845-1020
[LOGO OF MERRILL LYNCH APPEARS HERE] FAX 312/845-9093
November 27, 1996
Mr. Sydney Selati
Barbeques Galore, Inc.
15041 Bake Parkway
Irvine, CA 92718
Re: WCMA Line of Credit Increase
Dear Mr. Selati,
I am pleased to advise you that the request of Barbeques Galore, Inc. for an
increase of its WCMA Line of Credit has been approved upon the terms set forth
in the enclosed Letter Agreement.
Note that, among other conditions in said Letter Agreement, in order for this
increase to become effective, one copy of the enclosed Letter Agreement and the
other documents enclosed herewith must be fully executed and returned to me
within 14 days from the date hereof. Please note further that because of
inherent system and administrative delays that it may take several days after
such execution and return before the increased line of credit is actually
available. Accordingly, I recommend that you call me if you have need to
immediately use the increased portion of the line.
If you have such an immediate need or have any questions, please call me at
(312) 269-5426.
Very truly yours,
Merrill Lynch Business Financial Services Inc.
By: /s/ Heather J. Wise
----------------------------------
Heather J. Wise
Credit Services Account Manager
cc: David Polster
Private Client Group
Merrill Lynch Business
Financial Services Inc.
33 West Monroe Street
22nd Floor
Chicago, Illinois 60603
312/269-5426
[LOGO OF MERRILL LYNCH APPEARS HERE] FAX 312/201-0210
November 27,1996
Barbeques Galore, Inc.
15041 Bake Parkway
Irvine, CA 92718
Re: WCMA Line of Credit Increase
Ladies And Gentlemen:
This Letter Agreement will serve to confirm certain agreements of Merrill Lynch
Business Financial Services Inc. ("MLBFS") and Barbeques Galore, Inc.
("Customer") with respect to: (i) that certain WCMA NOTE, LOAN AND SECURITY
AGREEMENT NO. 231-07T10 between MLBFS and Customer (including any previous
amendments and extensions thereof), and (ii) all other agreements between MLBFS
and Customer or any party who has guaranteed or provided collateral for
Customer's obligations to MLBFS (a "Guarantor") in connection therewith
(collectively, the "Loan Documents"). Capitalized terms used herein and not
defined herein shall have the meaning set forth in the Loan Documents.
Subject to the terms hereof, effective as of the "Effective Date" the Loan
Documents are hereby amended as follows:
1. The term "Maximum WCMA Line of Credit" shall mean: (A) during the period
between the Effective Date and June 30, 1997, an amount equal to the lesser of:
(i) the sum of (x) 70% of Customer's Non-Government Accounts and Chattel Paper
(excluding Accounts over 90 days old, Chattel Paper with installments or other
sums more than 90 days past due, and Accounts and Chattel Paper directly or
indirectly due from any shareholder, officer or employee of Customer or any
affiliated entity) and (y) 50% of Customer's Inventory, all shown on Customer's
regular books and records, less the aggregate of (a) the outstanding balance of
principal and interest under the Term WCMA Note made by Customer and payable to
MLBFS and (b) the availability under the WCMA Line of Credit portion of the Term
WCMA facility, or (ii) $1,250,000.00; and (B) from and after July 1,1997 to the
Maturity Date, $650,000.00.
2. The "Line Fee" for the period ending September 30,1997, is hereby increased
to $6,250.00, of which $3,750.00 (the "Additional Fee") is now due and owing.
Customer hereby authorizes and directs MLBFS to charge the Additional Fee to
WCMA Account No. 231-07T10 on or at any time after the Effective Date.
3. Within 15 days after the close of each fiscal month of Customer, Customer
shall furnish or cause to be furnished to MLBFS: (i) a statement of profit or
loss for the fiscal month then ended, and (ii) a balance sheet as at the close
of such fiscal month; all in reasonable detail and certified by its chief
financial officer. In addition, within 15 days after the close of each fiscal
month of Customer, Customer shall furnish or cause to be furnished to MLBFS, a
statement of profit and loss for the fiscal month then ended for each Customer-
owned retail location.
Barbeques Galore, Inc.
November 27, 1996
Page No. 2
4. The following are now additional "Locations of Tangible Collateral":
Cooper Street Plaza, 4605 S. Cooper St., Arlington, TX 76017
9010 E. Indian Bend, Suite 2, Scottsdale, AZ 85012
7635 W. Bell Road, Suite #101, Peoria, AZ 85382
390 McKinley #108, Corona, CA 91719
2080 El Camino Real, Palo Alto, CA 94306
Camelback Terrace, 311 E. Camelback Road, Phoenix, AZ 85012
1801 Preston Road, Suite A, Plano TX 75093
1875 S. Bascorn Avenue, Campbell, CA 95008
4360 Lovers Lane, Dallas, TX 75205
1539 Botelho Drive, Walnut Creek, CA 94596
Mariner Village / Miracle Mile 6429 Westheimer, Houston, TX 77057
1419 State Highway, 114 West, Suite 412, Grapevine, TX 76051
5. The ratio of Customer's total debt to Customer's tangible net worth,
determined as aforesaid, shall not at any time exceed 1.75:1.
6. The "Net Cash Flow" of Customer as of the end of each of its fiscal years
shall not be less than $750,000.00. As used herein, "Net Cash Flow" shall mean
the sum of Customer's annual net after-tax income, depreciation and any non-
recurring expenses, less any non-recurring income and the current portion of
long-term debt due to parties other than MLBFS; all as shown on Customer's
regular financial statements prepared in a manner consistent with the term
hereof.
7. Customer shall no longer be required to reduce the WCMA Loan Balance to zero
at any time.
8. The "tangible net worth" of Customer, consisting of net worth as shown on
Customer's regular financial statements prepared in a manner consistent with the
term hereof, but excluding an amount equal to (i) any assets which are
ordinarily classified as "intangible" in accordance with generally accepted
accounting principles, and (ii) any amounts now or hereafter directly or
indirectly owing to Customers by officers, shareholders or affiliates of
Customer, shall on and at all times after June 30, 1997 exceed $5,000,000.00.
Except as expressly modified hereby, the Loan Documents shall continue in full
force and effect upon all of their terms and conditions. Nothing herein shall be
deemed to extend the Maturity Date of the WCMA Line of Credit.
By their execution of this Letter Agreement, the below-named Guarantors hereby
consent to the foregoing modifications to the Loan Documents, and hereby agree
that the "Obligations" under their Unconditional Guaranty shall extend to and
include the Obligations of Customer under the Loan Documents, as amended hereby.
Customer and said Guarantors acknowledge, warrant and agree, as a primary
inducement to MLBFS to enter into this Agreement, that: (i) no default or Event
of Default has occurred and is continuing under the Loan Documents; (ii) each of
the warranties of Customer in the Loan Documents are true and correct as of the
date hereof and shall be deemed remade as of the date hereof; (iii) neither
Customer nor any of said Guarantors have any claim against MLBFS or any of its
affiliates arising out of or in connection with the Loan Documents or any other
matter its affiliates arising out of or in connection with the Loan Documents or
any other matter whatsoever; and (iv) neither Customer nor any of said
Guarantors have any defense to payment of any amounts owing, or any right of
counterclaim for any reason under, the Loan Documents.
Barbeques Galore, Inc.
November 27,1996
Page No. 3
The amendments and agreements in this Letter Agreement will become effective on
the date (the "Effective Date") upon which: (i) Customer and the Guarantors
shall have executed and returned the duplicate copy of this Letter Agreement and
the other documents enclosed herewith; (ii) an officer of MLBFS shall have
reviewed and approved this Letter Agreement and such other documents as being
consistent in all respects with the original internal authorization hereof; and
(iii) to the extent applicable, MLBFS shall have entered such amendments and
agreements in its computer system (which MLBFS agrees to do promptly after the
receipt of such executed duplicate copy and other documents). Notwithstanding
the foregoing, if for any reason other than the sole fault of MLBFS the
Effective Date shall not occur within 14 days from the date of this Letter
Agreement, then all of said amendments and agreements herein will, at the sole
option of MLBFS, be void.
MLBFS requests that as soon as feasible Customer furnish to MLBFS the following
items (however, the Effective Date of this Letter Agreement is not conditioned
upon the receipt of such items):
(1) The finalized 6/30/96 year end statements from The Galore Group
(2) The Landlord Subordinations from each store location in Arizona and
Texas
Very truly yours,
Merrill Lynch Business Financial Services Inc.
By: /s/ Heather J. Wise
-------------------------------------
Heather J. Wise
Credit Services Account Manager
Accepted:
Barbeques Galore, Inc.
By: /s/ Sydney Selati
-------------------------------------
Printed Name: SYDNEY SELATI
--------------------------
Title: PRESIDENT
----------------------------------
(Additional Acceptance and Approval Signatures on Page 4)
Barbeques Galore, Inc.
November 27,1996
Page No. 4
Approved:
The Galore Group (USA), Inc.
By: /s/ Sydney Selati
-------------------------------------
Printed Name: SYDNEY SELATI
--------------------------
Title: PRESIDENT
----------------------------------
Pool Patio'n Things, Inc.
By: /s/ Sydney Selati
-------------------------------------
Printed Name: SYDNEY SELATI
--------------------------
Title: PRESIDENT
----------------------------------
[LETTERHEAD OF MERRILL LYNCH APPEARS HERE]
August 21, 1997
Mr. Kevin Ralphs
Controller
Barbeques Galore, Inc.
15041 Bake Parkway, Suite A
Irvine, CA 92718
Re: WCMA Line of Credit Increase and Extension
Dear Mr. Ralphs,
I am pleased to advise you that the request of Barbeques Galore, Inc. for an
increase and extension of its WCMA Line of Credit has been approved upon the
terms set forth in the enclosed Letter Agreement.
Among other conditions in said Letter Agreement, in order for this increase and
extension to become effective, one copy of the enclosed Letter Agreement must be
fully executed and returned to me within 14 days from the date hereof. Due to
internal processing requirements it may take a few days after such execution and
return before the increased line of credit is actually available. Accordingly, I
recommend that you call me if you have need to immediately use the increased
portion of the line.
If you have such an immediate need or have any questions, please call me at
(312) 269-5426.
Very truly yours,
Merrill Lynch Business Financial Services Inc.
By: /s/ Heather Wise
------------------------------------------
Heather Wise
Credit Services Account Manager
cc: David Polster
[LETTERHEAD OF MERRILL LYNCH APPEARS HERE]
Barbeques Galore, Inc.
15041 Bake Parkway, Suite A
Irvine, CA 92718
Re: WCMA Line of Credit Increase and Extension
Ladies and Gentlemen:
This Letter Agreement will serve to confirm certain agreements of Merrill Lynch
Business Financial Services Inc. ("MLBFS") and Barbeques Galore, Inc.
("Customer") with respect to: (i) that certain WCMA NOTE, LOAN AND SECURITY
AGREEMENT NO. 231-07T10 between MLBFS and Customer (including any previous
amendments and extensions thereof), and (ii) all other agreements between MLBFS
and Customer or any party who has guaranteed or provided collateral for
Customer's obligations to MLBFS ("Guarantor") in connection therewith
(collectively, the "Loan Documents"). Capitalized terms used herein and not
defined herein shall have the meaning set forth in the Loan Documents.
Subject to the terms hereof, effective as of the "Effective Date" the Loan
Documents are hereby amended as follows:
1. The term "Maturity Date" shall mean October 31, 1997.
2. The "Line Fee" for the period ending October 31, 1997 shall be $770.83.
Customer hereby authorizes and directs MLBFS to charge said amount to WCMA
Account No. 231-07T10 on or at any time after the Effective Date.
3. The term "Maximum WCMA Line of Credit" shall mean an amount equal to the
lesser of: (A) the sum of (x) 70% of Customer's Non-Government Accounts and
Chattel Paper, as shown on its regular books and records (excluding Accounts
over 90 days old, Chattel Paper with installments or other sums more than 90
days past due, and Accounts and Chattel Paper directly or indirectly due from
any person or entity not domiciled in the United States or from any shareholder,
officer or employee of Customer or any affiliated entity) and (y) 50% of
Customer's Inventory, as shown on its regular books and records, (Provided,
however, unless and until MLBFS shall receive and accept Landlord's
Subordination Agreements for each of Customer's locations in Texas and Arizona,
the inventory at such locations shall not be considered in determining the
Maximum WCMA Line of Credit.) less the aggregate of (a) the outstanding balance
of principal and interest under the Term WCMA Note made by the customer and
payable to MLBFS and (b) the availability under the WCMA Line of Credit portion
of the Term WCMA facility or (B) $1,250,000.00.
Barbeques Galore, Inc.
August 21, 1997
Page No. 2
4. The following are now additional "Locations of Tangible Collateral":
9333 Research Blvd., Building C, Suite 200, Austin, TX 78759
Box 133, Outdoor Living BR A51, Pearl Harbor, HI 96860
10991 San Jose Blvd., Jacksonville, FL 32223
30 S. Rosemead Blvd, Pasadena, CA 91107
11355 Fountain Lakes Drive, Stafford, TX 77477
327 NW Loop 410, Suite #101, San Antonio, TX 78216
Except as expressly modified hereby, the Loan Documents shall continue in full
force and effect upon all of their terms and conditions.
By their execution of this Letter Agreement, the below-named Guarantors hereby
consent to the foregoing modifications to the Loan Documents, and hereby agree
that the "Obligations" under their respective Unconditional Guaranty and/or
agreement providing collateral shall extend to and include the Obligations of
Customer under the Loan Documents, as amended hereby.
Customer and said Guarantors acknowledge, warrant and agree, as a primary
inducement to MLBFS to enter into this Agreement, that: (i) no default or Event
of Default has occurred and is continuing under the Loan Documents; (ii) each of
the warranties of Customer in the Loan Documents are true and correct as of the
date hereof and shall be deemed remade as of the date hereof; (iii) neither
Customer nor any of said Guarantors has any claim against MLBFS or any of its
affiliates arising out of or in connection with the Loan Documents or any other
matter whatsoever; and (iv) neither Customer nor any of said Guarantors has any
defense to payment of any amounts owing, or any right of counterclaim for any
reason under, the Loan Documents.
Provided that no Event of Default, or event which with the giving of notice,
passage of time, or both, would constitute an Event of Default, shall then have
occurred and be continuing under the terms of the Loan Documents, the amendments
and agreements in this Letter Agreement will become effective on the date (the
"Effective Date") upon which: (i) Customer and the Guarantors shall have
executed and returned the duplicate copy of this Letter Agreement enclosed
herewith; (ii) Receipt and satisfaction with the Customer's 6/30/97 store by
store income statements; (iii) receipt and satisfaction with the Landlord Waiver
that have been sent on the Customer's locations in Texas and Arizona; (iv) an
officer of MLBFS shall have reviewed and approved this Letter Agreement as being
consistent in all respects with the original internal authorization hereof; and
(v) to the extent applicable, MLBFS shall have entered such amendments and
agreements in its computer system (which MLBFS agrees to do promptly after the
receipt of such executed duplicate copy). Notwithstanding the foregoing, if for
any reason other than the sole fault of MLBFS the Effective Date shall not occur
within 14 days from the date of this Letter Agreement, then all of said
amendments and agreements herein will, at the sole option of MLBFS, be void.
Barbeques Galore, Inc.
August 21, 1997
Page No. 3
MLBFS requests that as soon as feasible Customer furnish to MLBFS the following
items (however, the Effective Date of this Letter Agreement is not conditioned
upon the receipt of the such items):
(1) Receipt and satisfaction with The Galore Group Limited Financial
Statement for FYE 1/31/97; and,
(2) Receipt of the proposal for the Customer's IPO in September of
1997.
Very truly yours,
Merrill Lynch Business Financial Services Inc.
By: /s/ Heather Wise
-----------------------------------------
Heather Wise
Credit Services Account Manager
Accepted:
Barbeques Galore, Inc.
By: /s/ Kevin Ralphs
-----------------------------------------
Printed Name: Kevin Ralphs
-------------------------------
Title: C.F.O.
-------------------------------------
Approved:
Pool Patio'n Things, Inc.
By: /s/ Kevin Ralphs
-----------------------------------------
Printed Name: Kevin Ralphs
-------------------------------
Title: C.F.O.
-------------------------------------
The Galore Group (USA), Inc.
By: /s/ Kevin Ralphs
-----------------------------------------
Printed Name: Kevin Ralphs
-------------------------------
Title: C.F.O.
-------------------------------------
Type complete address below.
- --------------------------------------------------------------------------------
Return by Mail ( ) To: Pickup or will pickup ( )
CSC NETWORKS/PHL&FS
1013 Centre Rd., Wilmington, DE 18905-1297
- --------------------------------------------------------------------------------
2. Debtor (Last Name First) and Address Assignee and Address
Barbeques Galore, Inc.
15041 Bake Parkway, Suite A
Irvine, CA 92718
- ----------------------------------------------------
3. Secured Party: Name and Address
Merrill Lynch Business Financial Services, Inc.
33 West Monroe, 22nd Floor
Chicago, IL 60603
- ----------------------------------------------------
This Financing Statement covers the following types or items of property:
All Accounts, Chattel Paper, Contract Rights, Inventory, Equipment, Fixtures,
General Intangibles, Deposit Accounts, Documents and Instruments of Debtor,
howsoever arising, whether now owned or existing or hereafter acquired or
arising, and wherever located; together with all parts thereof (including spare
parts), all accessories and accessions thereto, all books and records (including
computer records) directly related thereto, and all proceeds thereof (including,
without limitation, proceeds in the form of Accounts and insurance proceeds).
In accordance with the terms of a certain Loan Agreement between Debtor and
Secured Party, Debtor has agreed that except for certain "Permitted Liens" (as
defined in said Loan Agreement), Debtor will not further encumber any of the
above property without the prior written consent of Secured Party.
CSC#/M000023/97-002159/1/1 III Hawaii Bureau of Con
- --------------------------------------------------------------------------------
6. Check (x) if applicable: ( ) (if collateral is crops) The above described
crops are growing or are to be grown on:
( ) (If collateral is goods which are or are to become fixtures) The above
described goods are affixed or to be affixed to:
Record Owner:
-------------------------------------------------------------------
Record Lessee:
------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. Check (x) if applicable: ( ) Proceeds ( ) Products of collateral are also
covered
- --------------------------------------------------------------------------------
8. This statement is filed without the debtor's signature to perfect a security
interest in collateral:
( ) which is already subject to a security interest in another jurisdiction
when it was brought to this state, or;
( ) which is proceeds of the original collateral described above in which a
security interest was perfected.
Barbeques Galore, Inc. Merrill Lynch Business Financial Services, Inc.
By /s/ [SIGNATURE APPEARS HERE] By
--------------------------------------------------- ------------------------------------------------
Signature(s) of Debtor(s) (only on amendment) Signature(s) of Secured Party(ies)
STATE OF HAWAII
Private Client Group
MERRILL LYNCH BUSINESS
FINANCIAL SERVICES INC.
33 West Monroe Street
22nd Floor
[LOGO OF MERRILL LYNCH APPEARS HERE] Chicago, Illinois 60603
312/845-1020
FAX 312/845-9093
January 20, 1998
Barbeques Galore, Inc.
15041bake Parkway, Suite A
Irvine, CA 92618
RE: AMENDMENT TO LOAN DOCUMENTS
Ladies And Gentlemen:
This Letter Agreement will serve to confirm certain agreements of Merrill Lynch
Business Financial Services Inc. ("MLBFS") and Barbeques Galore, Inc.
("Customer") with respect to: (i) that certain WCMA NOTE, LOAN AND SECURITY
AGREEMENT NO. 231-07T10 between MLBFS and Customer (including any previous
amendments and extensions thereof), and (ii) all other agreements between MLBFS
and Customer or any party who has guaranteed or provided collateral for
Customer's obligations to MLBFS ("Guarantor") in connection therewith
(collectively, the "Loan Documents"). Capitalized terms used herein and not
defined herein shall have the meaning set forth in the Loan Documents.
Subject to the terms hereof, effective as of the "Effective Date", the Loan
Documents are hereby amended as follows:
1. The term "Maturity Date" shall mean February 28, 1998.
2. The "Line Fee" for the period ending shall be $2,083.33. Customer hereby
authorizes and directs MLBFS to charge said amount to the WCMA Account No.
231-07T10 on or at any time after the Effective Date.
3. The following locations are now additional "Locations of Tangible
Collateral":
1076 N. El Camino Real, Encinitas, CA 92024-1320
620 W. Francisco Blvd. San Rafael, CA 94901
4765 FM 1960 West, Suite H, Houston, TX 77069
25550 North The Old Road, Valencia, Ca 91381
2267 S. Stemmons Fwy, #604, Lewisville, TX 75067
Except as expressly amended hereby, the Loan Documents shall continue in full
force and effect upon all of their terms and conditions.
By their execution of this Letter Agreement, the below-named Guarantors hereby
consent to the foregoing modifications to the Loan Documents, and hereby agree
that the "Obligations" under their respective Unconditional Guaranty and/or
agreement providing collateral shall extend to and include the Obligations of
Customer under the Loan Documents, as amended hereby.
Barbeques Galore, Inc.
January 20, 1998
Page No. 2
Customer and said Guarantors acknowledge, warrant and agree, as a primary
inducement to MLBFS to enter into this Agreement, that: (i) no default or
Event of Default has occurred and is continuing under the Loan Documents; (ii)
each of the warranties of Customer in the Loan Documents are true and correct
as of the date hereof and shall be deemed remade as of the date hereof; (iii)
neither Customer nor any of said Guarantors has any claim against MLBFS or any
of its affiliates arising out of or in connection with the Loan Documents or
any other matter whatsoever; and (iv) neither Customer nor any of said
Guarantors has any defense to payment of any amounts owing, or any right of
counterclaim for any reason under, the Loan Documents.
Provided that no Event of Default, or event which with the giving of notice,
passage of time, or both, would constitute an Event of Default, shall then
have occurred and be continuing under the terms of the Loan Documents, the
amendments and agreements in this Letter Agreement will become effective on
the date (the "Effective Date") upon which: Customer and the Guarantors shall
have executed and returned the duplicate copy of this Letter Agreement
enclosed herewith; (ii) an officer of MLBFS shall have reviewed and approved
this Letter Agreement as being consistent in all respects with the original
internal authorization hereof; (iii) 11/30/97 store-by-store income
statements; (iv) updated UCC-1 filings on new stores; and (v) to the extent
applicable, MLBFS shall have entered such amendments and agreements in its
computer system (which MLBFS agrees to do promptly after the receipt of such
executed duplicate copy). Notwithstanding the foregoing, if for any reason
other than the sole fault of MLBFS the Effective Date shall not occur within
14 days from the date of this Letter Agreement, then all of said amendments
and agreements herein will, at the sole option of MLBFS, be void.
MLBFS requests that as soon as feasible Customer furnish to MLBFS the
following item (however, the Effective Date of this Letter Agreement is not
conditioned upon the receipt of the such item):
Final Copy of The Galore Group (U.S.A.), Inc.'s Audited Financial
Statements for FYE 1/31/97.
Very truly yours,
MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC.
By: /s/ Heather Wise
-----------------------------------------
Heather Wise
Credit Services Account Manager
Barbeques Galore, Inc.
January 20, 1998
Page No. 3
Accepted:
BARBEQUES GALORE, INC.
By: Kevin Ralphs
-----------------------------------
Printed Name: Kevin Ralphs
-------------------------
Title: C.F.O.
--------------------------------
Approved:
THE GALORE GROUP (U.S.A.), INC.
By: Kevin Ralphs
-----------------------------------
Printed Name: Kevin Ralphs
-------------------------
Title: C.F.O.
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POOL PATIO'N THINGS, INC.
By: Kevin Ralphs
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Printed Name: Kevin Ralphs
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Title: C.F.O.
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THIS STATEMENT IS PRESENTED TO A FILING
OFFICER FOR FILING PURSUANT TO THE
UNIFORM COMMERCIAL CODE.
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11. [_] CHECK TO REQUEST SAME DEBTOR
SEARCH CERTIFICATE (INSTRUCTION B.11)
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1. DEBTOR (IF PERSONAL) LAST NAME FIRST NAME M.I 1A. PREFIX 1B. SUFFIX
Barbeques Galore, Inc.
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1C. MAILING ADDRESS 1D. CITY, STATE 1E. ZIP CODE
5041 Bake Parkway, Suite A Irvine, CA 92718
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2. ADDITIONAL DEBTOR (IF PERSONAL) LAST NAME FIRST NAME M.I. 2A. PREFIX 2B. SUFFIX
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2C. MAILING ADDRESS 2D. CITY, STATE 2E. ZIP CODE
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3. SECURED PARTY (IF PERSONAL) LAST NAME FIRST NAME M.I.
Merrill Lynch Business Financial Services Inc.
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3A. MAILING ADDRESS 3B. CITY, STATE 3C. ZIP CODE
33 West Monroe, 22nd Floor Chicago, IL 60603
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4. ADDITIONAL SECURED PARTY (IF ANY)
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4A. MAILING ADDRESS 4B. CITY, STATE 4C. ZIP CODE
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5. ORIGINAL FINANCING STATEMENT NUMBER 5A. ORIGINAL DATE FILED 6. CHECK THIS FINANCING STATEMENT CHANGE
104243 5/29/97 IF IS TO BE FILED IN THE REAL ESTATE
APPLICABLE [ ] RECORDS. NO. OF ADDITIONAL SHEETS
PRESENTED 1
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7. A. [ X ] AMENDMENT - THE FINANCING STATEMENT IS AMENDED AS SET FORTH IN ITEM 8 BELOW. (INSTRUCTION 8.7(A))
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B. TOTAL ASSIGNMENT - ALL OF SECURED PARTY'S RIGHTS UNDER THE FINANCING STATEMENT HAVE BEEN ASSIGNED TO THE
[ ] ASSIGNEE WHOSE NAME AND ADDRESS ARE SET FORTH IN ITEM 8 BELOW. (INSTRUCTION 8.7(B))
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C. PARTIAL ASSIGNMENT - SOME OF SECURED PARTY'S RIGHTS HAVE BEEN ASSIGNED TO THE ASSIGNEE SHOWN IN ITEM 8 BELOW.
[ ] (INSTRUCTION 8.7(C))
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D. [ ] CONTINUATION - THE ORIGINAL STATEMENT IS STILL EFFECTIVE. (INSTRUCTION 8.7(D))
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E. [ ] TOTAL RELEASE - THE SECURED PARTY RELEASES ALL OF THEIR INTEREST IN THE COLLATERAL (INSTRUCTION 8.7(E))
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F. [ ] PARTIAL RELEASE - THE SECURED PARTY RELEASES THE FOLLOWING COLLATERAL DESCRIBED IN ITEM 8 BELOW.
(INSTRUCTION 8.7(F))
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G. [ ] TERMINATION - THE SECURED PARTY(IES) OR RECORD NO LONGER CLAIMS A SECURITY INTEREST AND THE FINANCING STATEMENT IS
TERMINATED. (INSTRUCTION 8.7(G))
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8. The collateral is hereby amended to include Exhibit A:
CSC#/M000023/98-000185/1/1 TX: Texas SOS
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9. SIGNATURE(S) Barbeques Galore, Inc. THIS SPACE FOR USE OF FILING OFFICER
OF By: /s/ K. Ralphs C.F.O. (DATE, TIME, NUMBER, FILING OFFICER)
DEBTOR(S)
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SIGNATURE(S) Merrill Lynch Business Financial Services Inc.
OF
SECURED PARTY(IES)
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10. Return copy to:
NAME CSC NETWORKS/PHL&FS
ADDRESS 1013 Centre Rd.
CITY Wilmington, DE 18905-1297
STATE
ZIP
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STANDARD FORM - FORM UCC-3 (REV. 9/1/92) COPYRIGHT 1992 OFFICE OF THE SECRETARY OF STATE OF TEXAS
REORDER FROM: CSC Networks, 500 Central Avenue, Albany, NY 12206
(1) Filing Officer Copy-Numerical
EXHIBIT A
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Locations of tangible collateral shall now mean:
Arlington Plano
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Coopers Street Plaza 1801 Preston Road, Suite A
4605 S. Cooper Street Plano, TX 75093
Arlington, TX 76017 (972) 735-8185
(817) 467-4900
University Park Westheimer
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4360 Lovers Lane Mariner Village/Miracle Mile
Dallas, TX 75205 6429 Westheimer
(214) 696-0030 Houston, TX 77057
(713) 953-7030
Grapevine Fountains
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1419 State Hwy. 114 West 11355 Fountain Lakes Drive
Suite 412 Stafford, TX 77477
Grapevine, TX 76051 (281) 494-9800
(817) 421-9052
Austin University Park
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9333 Rescarch Blvd. 4360 Lovers Lane
Bldg. C, Suite 200 Dallas, TX 75225
Austin, TX 78759 (214) 696-0030
(512) 345-1146
San Antonio Champions
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327 NW Loop 410, Suite 101 4765 FM 1960 West, Suite H
San Antonio, TX 78216 Houston, TX 77069
(210) 375-2070 (281) 880-9291
Lewisville
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2267 S. Stemmons Fwy, #604
Lewisville, TX 75067
(972) 315-3364
All Accounts, Chattel Paper, Contract Rights, Inventory, Equipment, Fixtures,
General Intangibles, Deposit Accounts, Documents and Instruments of Debtor,
howsoever arising, whether now owned or existing or hereafter acquired or
arising, and wherever located; together with all parts thereof (including
spare parts), all accessories and accessions thereto, all books and records
(including computer records) directly related thereto, and all proceeds
thereof (including, without limitation, proceeds in the form of Accounts and
insurance proceeds).
In accordance with the terms of a certain Loan Agreement between Debtor and
Secured Party, Debtor has agreed that except for certain "Permitted Liens" (as
defined in said Loan Agreement), Debtor will not further encumber any of the
above property without the prior written consent of Secured Party.