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EXHIBIT 10.27
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT is entered into as of June 27, 1995
between FREMONT FINANCIAL CORPORATION, a California corporation ("Fremont"),
with a place of business located at 300 Embassy Row, Suite 650, Atlanta,
Georgia 30328 and EUROSTAR PERFUMES, INC., a Texas corporation ("Borrower"),
with its chief executive office located at One Eurostar Drive, Pleasanton,
Texas 78064.
The parties agree as follows:
1. Definitions and Construction.
1.1 Terms. As used in this Agreement, the following terms shall
have the following definitions:
Accounts means all presently existing and hereafter arising
accounts receivable, contract rights, and all other forms of obligations owing
to Borrower arising out of the sale or lease of goods or the rendition of
services by Borrower, whether or not earned by performance, all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Borrower and Borrower's Books relating to any of
the foregoing.
Agreement means collectively this Loan and Security
Agreement, any concurrent or subsequent rider to this Loan and Security
Agreement, and any extensions, supplements, amendments, addenda or
modifications to or in connection with this Loan and Security Agreement or any
such rider.
Authorized Officer means any officer of Borrower authorized
in writing to transact business with Fremont.
Borrower's Books means all of Borrower's books and records
including all of the following: ledgers; records indicating, summarizing, or
evidencing Borrower's assets or liabilities, or the Collateral; all information
relating to Borrower's business operations or financial condition; and all
computer programs, disk or tape files, printouts, runs, or other computer
prepared information, and the equipment containing such information.
Business Day means any day which is not a Saturday, Sunday,
or other day on which banks in the State of Georgia are authorized or required
to close.
Code means the Georgia Uniform Commercial Code, as amended
from time to time.
Collateral means all of the following: the Accounts; the
Equipment; the General Intangibles; the Inventory; the Negotiable Collateral;
any money, deposit accounts or assets of Borrower which hereafter come into the
possession, custody, or control of Fremont; all proceeds and products, whether
tangible or intangible, of any of the foregoing, including proceeds of
insurance covering any or all of the Collateral, and any and all Accounts,
Equipment, General Intangibles, Negotiable Collateral, money, deposit accounts,
or other tangible or intangible property resulting from the sale or other
disposition of the Collateral, or any portion thereof or interest therein, and
all proceeds thereof.
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Daily Balance means the amount of the Obligations owed at the
end of a given day.
Eligible Inventory means Inventory consisting of first
quality finished goods held for sale in the ordinary course of Borrower's
business and raw materials and work in process for such finished goods which
are located at Borrower's premises and acceptable to Fremont in all respects;
provided, however, that general criteria for Eligible Inventory may be
established and revised from time to time by Fremont in Fremont's exclusive
judgment. In determining such acceptability Fremont may, but need not, rely on
reports and schedules of Inventory furnished to Fremont by Borrower, but
reliance thereon by Fremont from time to time shall not be deemed to limit
Fremont's right to revise standards of eligibility at any time. In general,
except in Fremont's sole discretion, Eligible Inventory shall not include
components or supplies which are not being held for conversion into finished
goods, spare parts, goods returned to or repossessed by Borrower that are not
in marketable condition, ** in transit, Inventory at the premises of third
parties (other than Inventory in the United States or at Tristar Corporation's
distribution center for which Borrower has obtained a landlord's consent or
warehousemen's letter, as the case may be, in form and substance satisfactory
to Fremont; provided that in order for Inventory at any such location to
constitute Eligible Inventory, there must be no less than $100,000 of Eligible
Inventory located on such premises) or subject to a security interest or lien
in favor of any third party, bill and hold goods, Inventory which is not
subject to Fremont's perfected security interest, damaged and/or defective
goods, "seconds" and Inventory purchased on consignment. Eligible Inventory
shall be valued approximately on a FIFO basis at the lower of cost or wholesale
market value.
Equipment means all of Borrower's present and hereafter
acquired equipment, machinery, machine tools, motors, furniture, furnishings,
fixtures, motor vehicles, rolling stock, processors, tools, parts, dies, jigs,
goods (other than consumer goods or farm products), and any interest in any of
the foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing, wherever
located.
ERISA means the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
ERISA Affiliate means each trade or business (whether or not
incorporated and whether or not foreign) which is or may hereafter become a
member of a group of which Borrower is a member and which is treated as a
single employer under ERISA Section 4001(b)(1), or IRC Section 414.
Event of Default means the events specified in Section 8,
below.
Fremont Expenses means all of the following: costs and
expenses (whether taxes, assessments, insurance premiums or otherwise) required
to be paid by Borrower under any of the Loan Documents which are paid or
advanced by Fremont; filing, recording, publication, appraisal and search fees
paid or incurred by Fremont in connection with Fremont's transactions with
Borrower; costs and expenses incurred by Fremont in the disbursement or
collection of funds to or from Borrower; charges resulting from the dishonor of
checks; costs and expenses incurred by Fremont to correct any default or
enforce any provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated; and costs and expenses incurred
by Fremont in enforcing or defending the Loan Documents, including, but not
limited to, costs and expenses incurred in connection with any proceeding,
suit, enforcement of
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judgment, or appeal; and Fremont's reasonable attorneys' fees and expenses
incurred in advising, structuring, drafting, reviewing, administering,
amending, terminating, enforcing, defending, or otherwise representing Fremont
concerning the Loan Documents or Borrower's Obligations to Fremont.
General Intangibles means all of Borrower's present and
future general intangibles and other personal property (including choses or
things in action, goodwill, patents, trade names, trademarks, service marks,
blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, infringement claims, computer
programs, computer disks, computer tapes, literature, reports, catalogs,
deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims) other than goods and Accounts, and Borrower's Books relating to any of
the foregoing.
Insolvency Proceeding means any proceeding commenced by or
against any person or entity under any provision of the federal Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
compositions, or extensions generally with its creditors.
Inventory means all present and future inventory in which
Borrower has any interest, including goods held for sale or lease or to be
furnished under a contract of service, Borrower's present and future raw
materials, work in process, finished goods, tangible property, stock in trade,
wares, and materials used in or consumed in Borrower's business, goods which
have been returned to, repossessed by, or stopped in transit by Borrower,
packing and shipping materials, wherever located, any documents of title
representing any of the above, and Borrower's Books relating to any of the
foregoing.
IRC means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder.
Loan Documents means, collectively, this Agreement, any Note
or Notes executed by Borrower to the order of Fremont, any security agreements,
pledge agreements, or other encumbrances or agreements which secure Borrower's
Obligations to Fremont, and any other agreement entered into between Borrower
and Fremont relating to or in connection with this Agreement.
Multi-employer Plan means a multi-employer plan as defined in
ERISA Sections 3(37) or 4001(a)(3) or IRC Section 414(f).
Negotiable Collateral means all of Borrower's present and
future letters of credit, notes, drafts, instruments, documents, leases, and
chattel paper, and Borrower's Books relating to any of the foregoing.
Note means any promissory note made by Borrower to the order
of Fremont concurrently herewith or at any time hereafter.
Obligations means all loans, advances, debts, liabilities
(including all amounts charged to Borrower's loan account pursuant to any
agreement authorizing Fremont to charge Borrower's loan account), obligations,
lease payments, guaranties, covenants, and duties owing by Borrower to Fremont
(other than amounts owing by Tristar Corporation to Fremont pursuant to that
certain Loan and Security Agreement, dated October 3, 1993, between Tristar
Corporation and Fremont, as the same may be amended, modified or supplemented
from time to time) of any kind and description (whether pursuant to or
evidenced by the Loan Documents or by any other agreement between Fremont and
Borrower,
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and irrespective of whether for the payment of money), whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, including any debt, liability or obligation owing from
Borrower to others which Fremont may obtain by assignment or otherwise, and all
interest thereon and all Fremont Expenses which Borrower is required to pay or
reimburse by the Loan Documents, by law, or otherwise.
Plan means any plan described in ERISA Section 3(2)
maintained for employees of Borrower or any ERISA Affiliate, other than a
Multi-employer Plan.
Reference Rate means the variable rate of interest, per
annum, announced by Bank of America NT&SA, San Francisco, California or any
successor thereto, from time to time as its Reference Rate. The Reference Rate
is nothing more nor less than the rate publicly announced as such by the named
bank, and an index for determining the interest rate payable under the terms of
this Agreement. The Reference Rate is not necessarily the best rate, or any
other definition of rates, offered to its customers by the named bank or by
Fremont. In the event the Reference Rate ceases to be available, Fremont may
substitute any similar index for the Reference Rate.
Special Provisions Rider means that certain Special
Provisions Rider dated as of the date hereof between Fremont and Borrower.
Standby Letter of Credit Supplement means that certain
Standby Letter of Credit Agreement Supplement to Loan and Security Agreement
dated as of the date hereof between Fremont and Borrower.
1.2 Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, and to the
singular include the plural. The words hereof, herein, hereby, hereunder, and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Section, subsection, clause and
exhibit references are to this Agreement unless otherwise specified.
1.3 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles ("GAAP") as in effect from time to time. When used
herein, the term financial statements shall include the notes and schedules
thereto.
1.4 Exhibits. All of the exhibits, addenda or riders to this
Agreement shall be deemed incorporated herein by reference.
1.5 Code. Any terms used in this Agreement which are defined in
the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein.
2. Advances and Terms of Payment.
2.1 Revolving Advances; Advance Limit. Upon the request of
Borrower, made at any time or from time to time during the term hereof, and so
long as no Event of Default has occurred and is continuing, Fremont shall, in
its sole and absolute discretion, make advances to Borrower in an amount up to
the lesser of (1) Forty percent (40%) of the aggregate value of the Eligible
Inventory or (2) One Million Five Hundred Thousand and No/100 Dollars
($1,500,000.00) (the "Advance Limit").
2.2 Initial Advance. Fremont agrees that, upon satisfaction on
or before July 14, 1995 of each of the conditions precedent set forth in the
Conditions Precedent Rider
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between Borrower and Fremont dated the date hereof and elsewhere in this
Agreement, Fremont shall advance to Borrower, on Borrower's request therefor,
an aggregate amount not less than Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00) as Fremont's Initial Advance under this Agreement, and all future
advances under this Agreement shall be deemed to be and constitute, together
with the Initial Advance, one general obligation of Borrower's and a single
loan from Fremont to Borrower, and shall be secured by Fremont's security
interest in and lien upon all of the Collateral, and by all other security
interests and liens heretofore, now or at any time or times hereafter granted
by Borrower to Fremont.
2.3 Overadvances. All advances and Term Loans (as defined in the
Special Provisions Rider) made hereunder shall be added to and deemed part of
the Obligations when made. If, at any time and for any reason, the aggregate
amount of the outstanding advances made pursuant to Section 2.1 exceeds the
dollar or percentage limitations contained in Section 2.1 (an "Overadvance"),
then Borrower shall, upon demand by Fremont, immediately pay to Fremont, in
cash, the amount of such excess.
2.4 Overadvance Fee. Without affecting Borrower's obligation to
immediately repay to Fremont the amount of each Overadvance in accordance with
the provisions of Section 2.3 of this Agreement, Borrower agrees to pay Fremont
a fee (the "Overadvance Fee") in an amount equal to twenty-five percent (25%)
per annum on the amount Overadvanced for each day any Overadvance exists. All
such fees shall be computed on the basis of a three hundred and sixty (360) day
year for the actual number of days elapsed.
2.5 Authorization to Make Advances. Fremont is hereby authorized
to make the advances provided for in this Agreement based upon telephonic or
other instructions received from anyone purporting to be an Authorized Officer,
or, at the discretion of Fremont, if such advances are necessary to satisfy any
Obligations. All requests for advances hereunder shall specify the date on
which the requested advance is to be made (which day shall be a Business Day)
and the amount of the requested advance. Requests received after 11:00 a.m.
Eastern time on any day shall be deemed to have been made as of the opening of
business on the immediately following Business Day. All advances made under
this Agreement shall be conclusively presumed to have been made to, at the
request of, and for the benefit of Borrower when deposited to the credit of
Borrower or otherwise disbursed in accordance with the instructions of Borrower
or in accordance with the terms and conditions of this Agreement.
2.6 Interest.
A. Except where specified to the contrary in any Loan
Document, the aggregate outstanding balances of all of Borrower's Obligations
to Fremont shall accrue interest at the lesser of (i) interest at the Maximum
Rate, or (ii) the rate of one and three quarters percent (1.75%) per annum
above the Reference Rate. The aggregate outstanding balances of all
Obligations shall bear interest from and after written notice by Fremont to
Borrower of the occurrence of an Event of Default, and without constituting a
waiver of any such Event of Default, at the lesser of (i) interest at the
Maximum Rate, or (ii) the rate of four and three quarters of one percent
(4.75%) per annum above the Reference Rate. All interest payable under the
Loan Documents shall be computed on the basis of a three hundred sixty (360)
day year for the actual number of days elapsed, on the aggregate outstanding
balances of the Obligations on each day. Interest shall continue to accrue
until all of the Obligations are paid in full.
B. The Reference Rate as of the date of the execution of
this Agreement is nine percent (9%) per annum. The interest rate payable by
Borrower under the terms of this Agreement shall be adjusted in accordance with
any change in the Reference Rate
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from time to time on the date of any such change. All interest payable by
Borrower shall be due and payable on the first day of each calendar month
during the term of this Agreement. Fremont may, at its option, add such
interest and all Fremont Expenses to Borrower's loan account with Fremont,
which amounts shall thereafter accrue interest at the rate then applicable
under this Agreement. Notwithstanding anything to the contrary contained in
the Loan Documents, the minimum interest payable by Borrower on its Obligations
to Fremont shall be Ten Thousand and No/100 Dollars ($10,000.00) per month.
2.7 Collection of Accounts. Upon the occurrence and during the
continuance of an Event of Default, Fremont or Fremont's designee may, at any
time, with or without notice to Borrower, notify customers or account debtors
of Borrower that the Accounts have been assigned to Fremont, and that Fremont
has a security interest in them; collect the Accounts directly, and add the
collection costs and expenses to Borrower's loan account, but, unless and until
Fremont does so or gives Borrower other written instructions, Borrower shall
collect all Accounts for Fremont, receive in trust all payments thereon as
Fremont's trustee and immediately deliver said payments to Fremont in their
original form as received from the account debtor.
2.8 Crediting Payments. The receipt of any item of payment by
Fremont shall be applied to reduce Obligations, but the receipt of such an item
of payment shall be deemed to have been paid to Fremont (i) one (1) Business
Day after the date Fremont actually receives receipt of such item of payment,
if such item of payment is received from a Person (as defined in the Special
Provisions Rider) other than an Affiliate (as defined in the Special Provisions
Rider), and (ii) zero (0) Business Days after the date Fremont actually
receives receipt of such item of payment if such item of payment is received
from an Affiliate of Borrower. Notwithstanding anything to the contrary
contained herein, payments received by Fremont after 11:00 a.m. Eastern time
shall be deemed to have been received by Fremont as of the opening of business
on the immediately following Business Day.
2.9 Deleted.
2.10 Loan Fee. In consideration of Fremont's agreement to extend
financial accommodations (including, without limitation, the Term Loans, as
defined in the Special Provisions Rider) to Borrower hereunder, Borrower agrees
to pay Fremont a fee ("Loan Fee") in the amount of Twenty-Six Thousand and
No/100 Dollars ($26,000.00), which shall be fully earned, due and payable upon
the execution and delivery of this Agreement.
2.11 Deleted.
2.12 Deleted.
2.13 Audit Fee. Borrower agrees to pay Fremont a fee ("Audit
Fee") in an amount equal to Five Hundred and No/100 Dollars ($500.00) per day
per auditor, plus out-of-pocket expenses for each audit or examination of
Borrower performed by Fremont.
2.14 Late Reporting Fee. Borrower agrees to pay Fremont a fee
("Late Reporting Fee") in an amount equal to Fifty Dollars ($50.00) per
document per day for each Business Day any report, financial statement or
schedule required by this Agreement to be delivered to Fremont is more than two
(2) days past due.
2.15 Maximum Charges. In no event shall interest on the
Obligations exceed the highest lawful rate in effect from time to time. It is
not the intention of the parties hereto to make an agreement which violates any
applicable state or federal usury laws. In no event
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shall Borrower pay to Fremont accept or charge any interest which, together
with any other charges upon the principal or any portion thereof, exceeds the
maximum lawful rate of interest allowable under any applicable state or federal
usury laws. Should any provision of this Agreement or any existing or future
Notes or Loan Documents between the parties be construed to require the payment
of interest which, together with any other charges upon the principal or any
portion thereof, exceeds the maximum lawful rate of interest, then any such
excess shall be applied to the remaining principal balance, if any, and the
remainder refunded to Borrower.
2.16 Monthly Statements. Fremont shall render monthly statements
to Borrower, including statements of all principal, interest and Fremont
Expenses charged, and Borrower shall have fully and irrevocably waived all
objections to such statements and the contents thereof unless within thirty
(30) days after receipt thereof by Borrower, Borrower shall deliver to Fremont,
by registered, certified or overnight mail, at Fremont's address indicated in
Section 12 hereof, written objection to Fremont's statement specifying the
error or errors, if any, contained in such statement.
3. Term.
3.1 Renewal Date. This Agreement shall become effective upon
acceptance by Fremont and shall continue in full force and effect for a term
ending two (2) years from the date hereof (the "Renewal Date") and from year to
year thereafter, unless sooner terminated pursuant to the terms hereof. Either
party may terminate this Agreement on the Renewal Date or on the anniversary of
the Renewal Date in any year by giving the other party at least sixty (60)
days' prior written notice by registered or certified mail, return receipt
requested and, in addition, Fremont shall have the right to terminate this
Agreement immediately at any time upon the occurrence of an Event of Default.
No termination of this Agreement, however, shall relieve or discharge Borrower
of Borrower's duties, Obligations and covenants hereunder until all Obligations
have been paid in full, and fremont's continuing security interest in the
Collateral shall remain in effect until all of Borrower's Obligations to
Fremont have been fully paid and satisfied. Upon termination of this
Agreement, all of the Obligations shall be immediately due and payable in full.
3.2 Early Termination Fee. If this Agreement is terminated by
Fremont upon the occurrence of an Event of Default, or is terminated at
Borrower's request other than pursuant to Section 3.1, in view of the
impracticability and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Fremont's
lost profits as a result thereof, Borrower shall pay to Fremont upon the
effective date of such termination a fee ("Early Termination Fee") in an amount
equal to: (a) two percent (2%) of the Advance Limit if such termination occurs
on or prior to the first (1st) anniversary of this Agreement; or (b) one
percent (1%) of the Advance Limit if such termination occurs after the first
(1st) anniversary of this Agreement; provided, however, that no Early
Termination Fee shall be payable if (x) termination occurs on the Renewal Date
or subsequent anniversary of the Renewal Date, (y) Borrower has provided
Fremont at least sixty (60) days' prior written notice of termination in
accordance with the terms and conditions of Section 3.1 and (z) the Obligations
are indefeasibly paid in full on or before the termination date specified in
such notice of termination. The Early Termination Fee shall be presumed to be
the amount of damages sustained by Fremont as the result of the early
termination and Borrower agrees that it is reasonable under the circumstances
currently existing. The Early Termination Fee provided for in this Section 3.2
shall be deemed included in the Obligations. Notwithstanding anything
contained herein to the contrary, if and to the extent the Early Termination
Fee constitutes interest under applicable law, the Early Termination Fee, when
added to all other interest contracted for, charged or received under this
Agreement or any
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other Loan Documents, shall not exceed, and shall be limited to an amount which
constitutes, interest at the Maximum Rate.
4. Creation of Security Interest.
4.1 Grant of Security Interest. Borrower hereby grants to
Fremont a continuing security interest in all presently existing and hereafter
acquired or arising Collateral in order to secure prompt repayment of any and
all Obligations and in order to secure prompt performance by Borrower of each
and all of its covenants and Obligations under the Loan Documents and
otherwise. Fremont's security interest in the Collateral shall attach to all
Collateral without further act on the part of Fremont or Borrower.
4.2 Negotiable Collateral. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral,
Borrower shall, upon the request of Fremont, immediately endorse and assign
such Negotiable Collateral to Fremont and deliver physical possession of such
Negotiable Collateral to Fremont.
4.3 Delivery of Additional Documentation Required. Borrower
shall execute and deliver to Fremont, concurrently with Borrower's execution
and delivery of this Agreement and at any time thereafter at the request of
Fremont, all financing statements, continuation financing statements, fixture
filings, security agreements, chattel mortgages, pledges, assignments,
endorsements of certificates of title, applications for title, affidavits,
reports, notices, schedules of accounts, letters of authority, and all other
documents that Fremont may reasonably request, in form satisfactory to Fremont,
to perfect and maintain perfected Fremont's security interest in the Collateral
and in order to fully consummate all of the transactions contemplated under the
Loan Documents.
4.4 Power of Attorney. Borrower hereby irrevocably makes,
constitutes and appoints Fremont (and any of Fremont's officers, employees or
agents designated by Fremont) as Borrower's true and lawful attorney-in-fact
with power to sign the name of Borrower on any of the above described documents
or on any other similar documents to be executed, recorded or filed in order to
perfect or continue perfected Fremont's security interest in the Collateral.
In addition, Borrower hereby appoints Fremont (and any of Fremont's officers,
employees or agents designated by Fremont) as Borrower's attorney-in-fact with
power to: (a) sign Borrower's name on verifications of Accounts, and on notices
to account debtors; (b) send requests for verification of Accounts; (c) endorse
Borrower's name on any checks, notes, acceptances, money orders, drafts or
other forms of payment or security that may come into Fremont's possession; (d)
after an Event of Default, notify the post office authorities to change the
address for delivery of Borrower's mail to an address designated by Fremont, to
receive and open all mail addressed to Borrower, and to retain all mail
relating to the Collateral and forward all other mail to Borrower; (e) after an
Event of Default, make, settle and adjust all claims under Borrower's policies
of insurance, endorse the name of Borrower on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance; and (f)
after an Event of Default, make all determinations and decisions with respect
to such policies of insurance. The appointment of Fremont as Borrower's
attorney-in-fact and each and every one of Fremont's rights and powers, being
coupled with an interest, is irrevocable so long as any Accounts in which
Fremont has a security interest remain unpaid and until all of the Obligations
have been fully repaid and performed.
4.5 Right To Inspect. Fremont shall have the right at any time
or times hereafter during Borrower's usual business hours, or during the usual
business hours of any third party having control over the records of Borrower,
to inspect Borrower's Books in order to verify the amount or condition of, or
any other matter relating to, the Collateral or
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Borrower's financial condition. Fremont also shall have the right at any time
or times hereafter during Borrower's usual business hours to inspect and
examine the Inventory and the Equipment and to check and test the same as to
quality, quantity, value and condition. Fremont shall have reasonable notice
to Borrower of Fremont's intent to perform such inspections, unless Fremont in
its sole discretion, deems such notice is inappropriate.
5. Representations and Warranties.
Borrower represents, warrants and agrees as follows:
5.1 No Prior Encumbrances; Security Interests. Borrower has good
and marketable title to the Collateral, free and clear of liens, claims,
security interests or encumbrances, except for the security interests granted
to Fremont by Borrower, those disclosed in the UCC searches obtained by Fremont
and any security interest which Borrower has disclosed in writing to Fremont
and to which Fremont has given its prior written consent. Other than those
expressly permitted by this Agreement, Borrower will not create or permit to be
created any security interest, lien, pledge, mortgage or encumbrance on any
Collateral.
5.2 Bona Fide Accounts. All Accounts represent bona fide sales
of goods and/or services for which Borrower has an unconditional right to
payment. None of the accounts are subject to any rights of offset,
counterclaim, cancellation or contractual rights of return.
5.3 Merchantable Inventory. All Inventory is now and at all
times hereafter shall be of good and merchantable quality, free from defects.
5.4 Location of Inventory and Equipment. The Inventory and
Equipment is not now and shall not at any time or times hereafter be stored
with a bailee, warehouseman, processor, or similar party without Fremont's
prior written consent. Borrower shall keep the Inventory and Equipment only at
the following locations: One Eurostar Drive, Pleasanton, Texas 78064 and all
other locations listed on Exhibit A attached hereto.
5.5 Inventory Records. Borrower now keeps and hereafter at all
times shall keep correct and accurate records itemizing and describing the
kind, type, quality and quantity of the Inventory and Borrower's cost therefor.
5.6 Retail Merchant Inventory. Borrower's retail sales of goods
for personal, family or household purposes, for the twelve (12) months
preceding the date of filing of the financing statement perfecting the security
interest granted hereunder, did not exceed twenty-five percent (25.0%) in
dollar volume of Borrower's total sales of all gods during that period. At all
times during each month of the term of this Agreement, Borrower's retail sales
of goods for personal, family or household purposes shall not exceed
twenty-five percent (25.0%) in dollar volume of Borrower's total sales of all
goods in each such month.
5.7 Relocation of Chief Executive Office. The chief executive
office of Borrower is at the address indicated in the first paragraph of this
Agreement and Borrower covenants and agrees that it will not, without thirty
(30) days' prior written notice to Fremont, relocate such chief executive
office.
5.8 Due Incorporation and Qualification. Borrower is and shall
at all times hereafter be a corporation duly organized and existing under the
laws of the state of its incorporation and is qualified and licensed to do
business and is in good standing in any state
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in which the conduct of its business or its ownership of property requires that
it be so qualified.
5.9 Fictitious Name(s). Borrower is conducting its business
under the following trade or fictitious name(s): See attached Exhibit B.
5.10 Permits and Licenses. Borrower holds all licenses, permits,
franchises, approvals and consents as are required in the conduct of its
business and the ownership and operation of its properties.
5.11 Due Authorization. Borrower has the right and power and is
duly authorized to enter into each of the Loan Documents to which it is a
party.
5.12 Compliance with Articles; Bylaws. The execution by Borrower
of each of the Loan Documents to which it is a party does not constitute a
breach of any provision contained in Borrower's Certificate or Articles of
Incorporation or its Corporate Bylaws, nor does it constitute an event of
default under any material agreement to which Borrower is now or may hereafter
become a party.
5.13 Litigation. Except as previously disclosed by Borrower to
Fremont in writing, there are no actions or proceedings pending by or against
Borrower before any court or administrative agency and Borrower has no
knowledge or notice of any pending, threatened or imminent litigation,
governmental investigations, or claims, complaints, actions, or prosecutions
involving Borrower, except for ongoing collection matters in which Borrower is
the plaintiff. If any of the foregoing arise during the term of this
Agreement, Borrower shall promptly notify Fremont in writing.
5.14 No Material Adverse Change in Financial Statements. All
financial statements relating to Borrower which have been or may hereafter be
delivered by Borrower to Fremont have been prepared in accordance with GAAP and
fairly present Borrower's financial condition as of the date thereof and
Borrower's results of operations for the period then ended. There has been no
material adverse change in the financial condition of Borrower since the date
of the most recent such financial statement submitted to Fremont.
5.15 Accounting System. Borrower at all times hereafter shall
maintain a standard and modern system of accounting in accordance with GAAP
with ledger and account cards or computer tapes, disks, printouts and records
pertaining to the Collateral which contain information as may from time to time
be requested by Fremont.
5.16 Solvency. Borrower is now and shall be at all times
hereafter solvent and able to pay its debts (including trade debts) as they
mature.
5.17 ERISA. Neither Borrower or any ERISA Affiliate, nor any Plan
is or has been in violation of any of the provisions of ERISA, any of the
qualification requirements of IRC Section 401(a), or any of the published
interpretations thereof. No lien upon the assets of Borrower has arisen with
respect to any Plan. No prohibited transaction within the meaning of ERISA
Section 406 or IRC Section 4975(c) has occurred with respect to any Plan.
Neither Borrower nor any ERISA Affiliate has incurred any withdrawal liability
with respect to any Multi-employer Plan. Borrower and each ERISA Affiliate
have made all contributions required to be made by them to any Plan or
Multi-employer Plan when due. There is no accumulated funding deficiency in
any Plan, whether or not waived.
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5.18 Environmental Laws and Hazardous Materials. Borrower has
complied, and at all times will comply, with all Environmental Laws. Borrower
has not and will not cause or permit any Hazardous Materials to be located,
incorporated, generated, stored, manufactured, transported to or from,
released, disposed of, or used at, upon, under, or within any premises at which
Borrower conducts its business, or in connection with Borrower's business,
except as previously disclosed to Fremont in writing. To the best of
Borrower's knowledge, no prior owner or operator of any premises at which
Borrower conducts its business has caused or permitted any of the above to
occur at, upon, under, or within any of the premises. Borrower will not permit
any lien to be filed against the Collateral or any part thereof under any
Environmental Law, and will promptly notify Fremont of any proceeding, inquiry
or claim relating to any alleged violation of any Environmental Law, or any
alleged loss, damage or injury resulting from any Hazardous Material. Borrower
shall defend, indemnify and hold Fremont, its directors, officers, agents,
employees, participants and assigns, harmless against any and all claims,
suits, actions, causes of action, debts, liabilities, damages, losses,
obligations, charges, judgments and expenses, including attorneys' fees and
costs, of any nature whatsoever, in any way relating to or arising from the
breach of any warranty or covenant contained herein, any alleged or actual
violation of any Environmental Law, or any loss, damage, or injury resulting
from any Hazardous Material. Fremont shall have the right to join and
participate in, as a party if it so elects, any legal or administrative
proceeding initiated with respect to any Hazardous Material or in connection
with any Environmental Law. "Hazardous Material" includes without limitation
any substance, material, emission, or waste which is or hereafter becomes
regulated or classified as a hazardous substance, hazardous material, toxic
substance or solid waste under any Environmental Law, asbestos, petroleum
products, urea formaldehyde, polychlorinated biphenyls (PCBs), radon, and any
other hazardous or toxic substance, material, emission or waste.
"Environmental Law" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, the Resource Conservation
and Recovery Act of 1976, the Hazardous Materials Transportation Act, the Toxic
Substances Control Act, the regulations pertaining to such statutes, and any
other safety, health or environmental statutes, laws, regulations or ordinances
of the United States or of any state, county or municipality in which Borrower
conducts its business or the Collateral is located.
5.19 Reliance by Fremont: Cumulative. Each warranty,
representation and agreement contained in this Agreement shall be automatically
deemed repeated with each advance and shall be conclusively presumed to have
been relied on by Fremont regardless of any investigation made or information
possessed by Fremont. The warranties, representations and agreements set forth
herein shall be cumulative and in addition to any and all other warranties,
representations and agreements which Borrower shall now or hereafter give, or
cause to be given, to Fremont.
6. Affirmative Covenants.
Borrower covenants and agrees that during the term of this
Agreement and until payment in full of the Obligations, and unless Fremont
shall otherwise consent in writing, Borrower shall do all of the following:
6.1 Collateral Reports. Borrower shall, from time to time
hereafter, but not less often than monthly, execute and deliver to Fremont, no
later than the fifteenth (15th) day of each month during the term of this
Agreement, a listing of the Accounts, a reconciliation statement and a summary
aging, by vendor, of all accounts payable and any cash account book overdraft.
Borrower shall deliver to Fremont, as Fremont may from time to time require,
collection reports, sales journals, invoices, original delivery receipts,
customers' purchase orders, shipping instructions, bills of lading and other
documentation respecting shipment
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arrangements. Absent such a request by Fremont, copies of all such
documentation shall be held by Borrower as custodian for Fremont.
6.2 Returns. Returns and allowances, if any, as between Borrower
and its account debtors, shall be permitted by Borrower on the same basis and
in accordance with the usual customary practices of Borrower as they exist at
the time of the execution and delivery of this Agreement.
6.3 Designation of Inventory. Borrower shall now and from time
to time hereafter, but not less frequently than weekly, execute and deliver to
Fremont a designation of Inventory specifying Borrower's cost and the wholesale
market value of Borrower's raw materials, work in process and finished goods,
and further specifying such other information as Fremont may reasonably
request.
6.4 Financial Statements, Reports, Certificates. Borrower agrees
to deliver to Fremont: (a) as soon as available, but in any event within
thirty (30) days after the end of each month during each of Borrower's fiscal
years, a company prepared balance sheet and profit and loss statement covering
Borrower's operations during such period; and (b) as soon as available, but in
any event within ninety (90) days after the end of each of Borrower's fiscal
years, financial statements of Borrower for each such fiscal period, audited by
independent certified public accountants acceptable to Fremont. Such financial
statements shall include a balance sheet and profit and loss statement, and the
accountants' letter to management. Together with the above, Borrower shall
also deliver Borrower's Form 10-Qs, 10-Ks or 8-Ks, if any, as soon as the same
become available, and any other report reasonably requested by Fremont relating
to the Collateral and the financial condition of Borrower and a certificate
signed by the chief financial officer of Borrower to the effect that all
reports, statements or computer prepared information of any kind or nature
delivered or caused to be delivered to Fremont under this Section 6.4 fairly
present the financial condition of Borrower and that there exists on the date
of delivery of such certificate to Fremont no condition or event which
constitutes an Event of Default.
6.5 Tax Returns, Receipts. Borrower agrees to deliver to Fremont
copies of each of Borrower's future federal income tax returns, and any
amendments thereto, within thirty (30) days of the filing thereof with the
Internal Revenue Service. Borrower further agrees to promptly deliver to
Fremont, upon request, satisfactory evidence of Borrower's payment of all
federal withholding taxes required to be paid by Borrower.
6.6 Guarantor Reports. Borrower agrees to cause any guarantor of
any of the Obligations to deliver it annual financial statements and copies of
all federal income tax returns as soon as the same are available and in any
event no later than thirty (30) days after the same are required to be filed by
law.
6.7 Title to Equipment. Upon Fremont's request, Borrower shall
immediately deliver to Fremont, properly endorsed, any and all evidences of
ownership of, certificates of title, or applications for title to any items of
Equipment.
6.8 Maintenance of Equipment. Borrower shall keep and maintain
the Equipment in good operating condition and repair, and shall make all
necessary replacements thereto so that the value and operating efficiency
thereof shall at all times be maintained and preserved. Borrower shall not
permit any item of Equipment to become a fixture to real estate or an accession
to other property, and the Equipment is now and shall at all times remain
personal property.
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6.9 Taxes. All assessments and taxes, whether real, personal or
otherwise, due or payable by, or imposed, levied or assessed against Borrower
or any of its property or in connection with Borrower's business have been
paid, and shall hereafter be paid in full, before delinquency or before the
expiration of any extension period. Borrower shall make due and timely payment
or deposit of all federal, state and local taxes, assessments or contributions
required of it by law, and will execute and deliver to Fremont, on demand,
appropriate certificates attesting to the payment or deposit thereof. Borrower
will make timely payment or deposit of all F.I.C.A. payments and withholding
taxes required of it by applicable laws and will, upon request, furnish Fremont
with proof satisfactory to Fremont indicating that Borrower has made such
payments or deposits.
6.10 Insurance. Borrower, at its expense, shall keep and maintain
the Collateral insured against all risk of loss or damage from fire, theft,
vandalism, malicious mischief, explosion, sprinklers, and all other hazards and
risks of physical damage included within the meaning of the term "extended
coverage" in such amounts as are ordinarily insured against by other owners in
similar businesses. Borrower shall also keep and maintain comprehensive
general public liability insurance and property damage insurance, and insurance
against loss from business interruption, insuring against all risks relating to
or arising from Borrower's ownership and use of the Collateral and Borrower's
other assets and the operation of Borrower's business. All such policies of
insurance shall be in such form, with such companies and in such amounts as may
be satisfactory to Fremont. Borrower shall deliver to Fremont certified copies
of such policies of insurance and evidence of the payments of all premium
therefor. All such policies of insurance (except those of public liability and
property damage) shall contain a Lender's Loss Payable indorsement in a form
satisfactory to Fremont, naming Fremont as sole loss payee thereof, and
containing a waiver of warranties, and all proceeds payable thereunder shall be
payable to Fremont to be applied to the Obligations.
6.11 No Offsets or Counterclaims. All payments hereunder and
under the other Loan Documents made by or on behalf of Borrower shall be made
without offset or counterclaim, and Borrower hereby waives any right to offset
against the repayment of the Obligations, any claims it may have against
Fremont.
6.12 Fremont Expenses. Borrower shall immediately and without
demand reimburse Fremont for all sums expended by Fremont which constitute
Fremont Expenses and Borrower hereby authorizes and approves all advances and
payments by Fremont for items constituting Fremont Expenses.
6.13 Compliance with Law. Borrower shall comply, in all material
respects, with the requirements of all applicable laws, rules, regulations and
orders of governmental authorities relating to Borrower and the conduct of the
Borrower's business.
7. Negative Covenants.
Borrower covenants and agrees that during the term of this
Agreement and until payment in full of the Obligations, Borrower will not do
any of the following without Fremont's prior written consent:
7.1 Extraordinary Transactions and Disposal of Assets. Enter
into any transaction not in the ordinary and usual course of Borrower's
business, including but not limited to, sell, lease or otherwise dispose of,
move, relocate or transfer, whether by sale or otherwise, any of Borrower's
assets other than sales of Inventory in the ordinary and usual course of
Borrower's business as presently conducted; incur any debts outside the
ordinary and
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usual course of Borrower's business except for renewals or extension of
existing debts; or make any advance or loan except in the ordinary course of
business as presently conducted.
7.2 Change Name. Change Borrower's name, business structure or
identity, or add any new fictitious name.
7.3 Merge, Acquire. Merge, acquire, or consolidate with or into
any other business organization.
7.4 Guaranty. Guaranty or otherwise become in any way liable
with respect to the obligations of any third party except by endorsement of
instruments or items of payment for deposit to the account of Borrower for
negotiation and delivery to Fremont; provided, however, Fremont agrees that
Borrower shall have the right to guarantee a loan to be made to Tristar
Corporation by a third party lender for the purchase of personal computers for
the sales staff of Tristar Corporation, provided that Borrower's total
liability under such guaranty shall not exceed an amount equal to $175,000.00.
7.5 Restructure. Make any change in Borrower's financial
structure or in any of its business operations.
7.6 Prepayments. Prepay any existing indebtedness owing to any
third party.
7.7 Change of Ownership. Cause, permit or suffer any change,
direct or indirect, in Borrower's capital ownership in excess of ten percent
(10%).
7.8 Compensation. Pay total compensation, including salaries,
withdrawals, fees, bonuses, commissions, drawing accounts, management fees or
other payments, whether directly or indirectly, in money or otherwise, during
any fiscal year to all of Borrower's executives, officers, shareholders,
affiliates, and directors (or any relatives thereof) in an aggregate amount in
excess of One Hundred Twenty percent (120%) of those paid in the prior fiscal
year.
7.9 Loans and Advances. Make any loans, advances or extensions
of credit to any officer, director, executive, employee or shareholder of
Borrower, or any relative of any of the foregoing, or to any entity which is a
subsidiary of, related to, affiliated with or has common shareholders, officers
or directors with Borrower, which when aggregated with all other loans,
advances or extensions of credit to any or all of the above persons or entities
during the term of this Agreement, exceeds FOUR HUNDRED THOUSAND AND NO/100
Dollars ($400,000.00); provided, however, Borrower may make such loans,
advances and extensions of credit to the extent permitted under paragraph 12 of
the Special Provisions Rider.
7.10 Capital Expenditures. Make any plant or fixed capital
expenditure, or any commitment therefor, or purchase or lease any real or
personal property or replacement equipment in excess of (x) TWO HUNDRED FIFTY
THOUSAND AN NO/100 Dollars ($250,000.00) in the calendar year ending December
31, 1995 and (y) in any period thereafter, ONE HUNDRED THOUSAND AND NO/100
Dollars ($100,000.00) for any individual transaction or where the aggregate
amount of such transaction (i) in the fiscal year ending September 30, 1995, is
in excess of ONE MILLION SEVEN HUNDRED FIFTY THOUSAND AND NO/100 Dollars
($1,750,000.00) and (ii) in any fiscal year thereafter is in excess of SIX
HUNDRED THOUSAND AND NO/100 Dollars ($600,000.00).
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7.11 Consignments Without Prior Written Notice to Fremont.
Consign any Inventory, provided that notwithstanding any such notice to
Fremont, such consigned Inventory shall at no time exceed an aggregate amount
equal to $250,000.
7.12 Distributions. Make any distribution or declare or pay any
dividends (in cash or in stock) on, or purchase, acquire, redeem or retire any
of Borrower's capital stock, of any class, whether now or hereafter
outstanding.
7.13 Accounting Methods. Modify or change its method of
accounting or enter into, modify or terminate any agreement presently existing
or at any time hereafter entered into with any third party accounting firm or
service bureau for the preparation or storage of Borrower's accounting records
without said accounting firm or service bureau agreeing to provide Fremont
information regarding the Collateral or Borrower's financial condition.
Borrower waives the right to assert a confidential relationship, if any, it may
have with any accounting firm or service bureau in connection with any
information requested by Fremont pursuant to or in accordance with this
Agreement, and agrees that Fremont may contact directly any such accounting
firm or service bureau in order to obtain such information.
7.14 Suspension. Suspend or go out of business.
8. Events of Default.
The occurrence of any one or more of the following events shall
constitute an Event of Default by Borrower under this Agreement:
8.1 Failure to Pay. Borrower fails to pay when due and payable,
or when declared due and payable, any portion of the Obligations (whether
principal, interest, taxes, reimbursement of Fremont Expenses, or otherwise);
8.2 Failure to Perform. Borrower fails or neglects to perform,
keep or observe any term, provision, condition, representation, warranty,
covenant or agreement contained in this Agreement, in any of the Loan Documents
or in any other present or future agreement between Borrower and Fremont;
8.3 Misrepresentation. Any misstatement or misrepresentation now
or hereafter exists in any warranty, representation, statement or report made
to Fremont by Borrower or any officer, employee, agent or director of Borrower,
or if any such warranty or representation is withdrawn by any of them;
8.4 Misrepresentation of Collateral. Any writing, document,
aging, certificate or other evidence of the Eligible Inventory shall be
incomplete, incorrect or misleading at the time the same is furnished to
Fremont, Borrower shall fail to comply with the terms of Section 6.2 of this
Agreement, or Borrower shall fail to immediately remit each payment on any
Account, pursuant to terms of Section 2.7 of this Agreement;
8.5 Material Adverse Change. There is a material adverse change
in Borrower's business or financial condition;
8.6 Material Impairment. There is a material impairment of the
prospect of repayment of any portion of the Obligations owing to Fremont or a
material impairment of the value or priority of Fremont's security interests in
the Collateral;
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8.7 Levy or Attachment. Any material portion of Borrower's
assets is attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes into the possession of any judicial officer or assignee;
8.8 Insolvency by Borrower. An Insolvency Proceeding is
commenced by Borrower;
8.9 Insolvency Against Borrower. an Insolvency Proceeding is
commenced against Borrower;
8.10 Injunction Against Borrower. Borrower is enjoined,
restrained or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
8.11 Government Lien. A notice of lien, levy or assessment is
filed of record with respect to any of Borrower's assets by the United States
Government, or any department, agency or instrumentality thereof, or by any
state, county, municipal or other governmental agency, or any taxes or debts
owing at any time hereafter to any one or more of such entities be comes a
lien, whether choate or otherwise, upon any of Borrower's assets and the same
is not paid on the payment date there;
8.12 Judgment. A judgment is entered against Borrower in excess
of an aggregate amount equal to $100,000.
8.13 Default to Third Party. There is a default in any material
agreement to which Borrower is a party or by which Borrower or Borrower's
property or assets are bound where the occurrence or existence of such default
would have a material adverse effect on the business or operations of the
Borrower.
8.14 Subordinated Debt Payments. Borrower makes any payment on
account of indebtedness which has been subordinated to the Obligations except
to the extent such payment is allowed under any Subordination Agreement entered
into with Fremont;
8.15 Loss of Guarantor. Any guarantor of the obligations dies,
terminates its guaranty or becomes the subject of an Insolvency Proceeding; or
8.16 ERISA Violation. A ("prohibited transaction") within the
meaning of ERISA Section 406 or IRC Section 4975(c) shall occur with respect to
a Plan which could have a material adverse effect on the financial condition of
Borrower; any lien upon the assets of Borrower in connection with any Plan
shall arise; Borrower or any ERISA Affiliate shall completely or partially
withdraw from a Multi-employer Plan and such withdrawal could, in the opinion
of Fremont, have a material adverse effect on the financial condition of
Borrower; Borrower or any of its ERISA Affiliates shall fail to make full
payment when due of all amounts which Borrower or any of its ERISA Affiliates
may be required to pay to any Plan or any Multi-employer Plan as one or more
contributions thereto; Borrower or any of its ERISA Affiliates creates or
permits the creation of any accumulated funding deficiency, whether or not
waived; the voluntary or involuntary termination of any Plan which termination
could, in the opinion of Fremont, have a material adverse effect on the
financial condition of Borrower; or Borrower shall fail to notify Fremont
promptly and in any event within ten (10) days of the occurrence of any event
which constitutes an Event of Default under this clause or would constitute
such an Event of Default upon the exercise of Fremont's judgment;
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Notwithstanding anything contained in this Section 8 to the
contrary, Fremont shall refrain from exercising its rights and remedies and an
Event of Default shall not be deemed to have occurred by reason of the
occurrence of any of the events set forth in Sections 8.7, 8.9, 8.11 or 8.12 of
this Agreement if, within ten (10) days from the date thereof, the same is
released, discharged, dismissed, bonded against or satisfied; provided,
however, Fremont shall not be obligated to make advances to Borrower during
such period.
9. Fremont's Rights and Remedies.
9.1 Rights and Remedies. Upon the occurrence of an Event of
Default Fremont may, at its election, without notice of its election and
without demand, do any one or more of the following, all of which are
authorized by Borrower:
(a) Declare all Obligations, whether evidenced by the Loan
Documents or otherwise, immediately due and payable in full;
(b) Cease advancing money or extending credit to or for the
benefit of Borrower under the Loan Documents or under any other
agreement between Borrower and Fremont;
(c) Terminate this Agreement as to any future liability or
obligations of Fremont, but without affecting Fremont's rights and
security interest in the Collateral and without affecting the
Obligations;
(d) Settle or adjust disputes and claims directly with
account debtors for amounts and upon terms which Fremont considers
advisable and, in such cases, Fremont will credit Borrower's loan
account with only the net amounts received by Fremont in payment of
such disputed Accounts, after deducting all Fremont Expenses
incurred or expended in connection therewith;
(e) Cause Borrower to hold all returned Inventory in trust
for Fremont, segregate all returned Inventory from all other
property of Borrower or in Borrower's possession and conspicuously
label said returned Inventory as the property of Fremont;
(f) Without notice to or demand upon Borrower or any
guarantor, make such payments and do such acts as Fremont considers
necessary or reasonable to protect its security interest in the
Collateral. Borrower agrees to assemble the Collateral if Fremont
so requires and to deliver or make the Collateral available to
Fremont at a place designated by Fremont. Borrower authorizes
Fremont to enter any premises where the Collateral is located, to
take and maintain possession of the Collateral, or any part of it,
and to pay, purchase, contest or compromise any encumbrance, charge
or lien which in Fremont's determination appears to be prior or
superior to its security interest and to pay all expenses incurred
in connection therewith;
(g) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale and sell (in the
manner provided for herein) the Collateral. Fremont is hereby
granted a license or other right to use, without charge, Borrower's
labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising
matter, or any property of a similar nature, as it pertains to the
Collateral, in completing
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production of, advertising for sale and selling any Collateral.
Borrower's rights under all licenses and all franchise agreements
shall inure to Fremont's benefit;
(h) Sell the Collateral at either a public or private sale,
or both, by why of one or more contracts or transactions, for cash
or on terms, in such manner and at such places (including
Borrower's premises) as Fremont determines is commercially
reasonable. It is not necessary that the Collateral be present at
any such sale;
(i) Fremont shall give notice of the disposition of the
Collateral as follows:
(1) Fremont shall give the Borrower and each holder
of a security interest in the Collateral who has filed with
Fremont a written request for notice, a notice in writing of
the time and place of public sale or, if the sale is a
private sale or some other disposition other than a public
sale is to be made, then the time on or after which the
private sale or other disposition is to be made;
(2) The notice shall be personally delivered or
mailed, postage prepaid, to Borrower as provided in Section
12 of this Agreement, at least five (5) calendar days before
the date fixed for the sale, or at least five (5) calendar
days before the date on or after which the private sale or
other disposition is to be made, unless the Collateral is
perishable or threatens to decline speedily in value.
Notice to persons other than Borrower claiming an interest in
the Collateral shall be sent to such addresses as they have
furnished to Fremont;
(j) Fremont may credit bid and purchase at any public sale;
(k) Any deficiency which exists after disposition of the
Collateral as provided above shall be paid immediately by Borrower.
Any excess will be remitted without interest by Fremont to the
party or parties legally entitled to such excess; and
(l) In addition to the foregoing, Fremont shall have all
rights and remedies provided by law and any rights and remedies
contained in any other Loan Documents. All such rights and
remedies shall be cumulative.
9.2 No Waiver. No delay on the part of Fremont in exercising nay
right, power or privilege under this Agreement shall operate as a waiver, nor
shall any single or partial exercise of any right, power or privilege under
this Agreement or otherwise, preclude other or further exercise of the right,
power or privilege or the exercise of any other rights, power or privilege.
10. Taxes and Expenses Regarding the Collateral.
If the Borrower fails to pay any monies (whether taxes, assessments,
insurance premises or otherwise) due to third persons or entities, or fails to
make any deposits or furnish any required proof of payment or deposit, or fails
to perform any of Borrower's other covenants under the terms of this Agreement,
then in its discretion and without prior notice to Borrower, Fremont may do any
or all of the following: (a) make any payment which Borrower has failed to pay
or any part thereof; (b) set up such reserves in Borrower's loan account as
Fremont
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deems necessary to protect Fremont from the exposure created by such failure;
(c) obtain and maintain insurance policies of the type described in Section
6.10 of this Agreement and take any action with respect to such policies as
Fremont deems prudent; or (d) take any other action deemed necessary by Fremont
to preserve and protect its interests and rights under this Agreement. Any
payments made by Fremont shall not constitute: (1) an agreement by Fremont to
make similar payments in the future or (2) a waiver by Fremont of any Event of
Default under this Agreement. Fremont need not inquire as to, or contest the
validity of, any such expense, tax, security interest, encumbrance or lien and
the receipt of notice for the payment thereof shall be conclusive evidence that
the same was validly due and owing.
11. Waivers.
11.1 Demand; Protest. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, and notice of nonpayment at maturity, and agrees that
Fremont may compromise, settle or release without notice to Borrower any
accounts, documents, instruments, chattel paper and/or guaranties at any time
held by Fremont on which Borrower may in any way be liable. Borrower agrees to
any extension of time of payment or partial payment at, before or after
termination of this Agreement. Borrower waives notice of intention to
accelerate and notice of acceleration, such that Fremont may exercise any and
all rights and remedies under this Agreement or any Loan Documents or as
otherwise provided in law or in equity, immediately upon the occurrence of any
Event of Default without any further notice, grace or opportunity to cure
whatsoever.
11.2 No Marshaling. Borrower, on its own behalf and on behalf of
its successors and assigns hereby expressly waives all rights, if any, to
require a marshaling of assets by Fremont or to require that Fremont first
resort to some or any portion of the Collateral before foreclosing upon,
selling or otherwise realizing on any other portion thereof.
11.3 Fremont's Liability for Inventory or Equipment. So long as
Fremont complies with its obligations, if any, under Section 9207 of the Code,
Fremont shall not in any way or manner be liable or responsible for: (a) the
safekeeping of the Inventory or Equipment; (b) any loss or damage thereto
occurring or arising in any manner or fashion from any cause; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency or other person whomsoever. All risk
of loss, damage or destruction of the Inventory or Equipment shall be borne by
Borrower.
12. Notices.
Unless otherwise provided in this Agreement, all notices or demands
by any party relating to this Agreement, the Loan Documents or any other
agreement entered into in connection herewith shall be in writing and (except
for financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail, postage prepaid, return receipt requested, or by
receipted overnight delivery service to Borrower or to Fremont, as the case may
be, at their addresses set forth below:
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If to Borrower: EUROSTAR PERFUMES, INC.
One Eurostar Drive
Pleasanton, Texas 78064
Attn: Chief Financial Officer
If to Fremont: FREMONT FINANCIAL CORPORATION
300 Embassy Row, Suite 650
Atlanta, Georgia 30328
Attn: Credit Manager
The parties hereto may change the address at which they are to
receive notices hereunder by notice in writing in the foregoing manner given to
the other. All notices or demands sent in accordance with this Section 12
shall be deemed received on the earlier of the date of actual receipt or five
(5) calendar days after the deposit thereof in the mail.
13. Choice of Law, Venue and Jury Trial Waiver.
THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER,
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
GEORGIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW; PROVIDED, HOWEVER,
THAT THE LAWS OF THE STATE IN WHICH THE COLLATERAL IS LOCATED SHALL GOVERN WITH
RESPECT TO (A) THE CREATION OF LIENS ON COLLATERAL LOCATED IN SUCH STATE AND
(B) THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF FREMONT'S LIEN UPON ANY
PORTION OF THE COLLATERAL LOCATED IN SUCH STATE AND THE ENFORCEMENT IN SUCH
STATE OF FREMONT'S OTHER REMEDIES WITH RESPECT TO THE COLLATERAL LOCATED IN
SUCH STATE. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE
COURTS LOCATED IN THE COUNTY OF FULTON, STATE OF GEORGIA, THE FEDERAL COURTS
WHOSE VENUE INCLUDES THE COUNTY OF FULTON, STATE OF GEORGIA, OR, AT THE SOLE
OPTION OF FREMONT, IN ANY OTHER COURT IN WHICH THE FREMONT SHALL INITIATE LEGAL
OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE
MATTER IN CONTROVERSY, BORROWER AND FREMONT EACH WAIVES, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, THE RIGHT TO A TRIAL BY JURY AND ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF "FORUM NON CONVENIENS" OR TO OBJECT TO VENUE
TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13.
14. Destruction of Borrower's Documents.
All documents, schedules, invoices, agings or other papers delivered to
Fremont may be destroyed or otherwise disposed of by Fremont four (4) months
after they are delivered to or received by Fremont unless Borrower requests, in
writing, the return of the said documents, schedules, invoices or other papers
and makes arrangements, at Borrower's expense, for their return.
15. General Provisions.
15.1 Effectiveness. This Agreement shall be binding and deemed
effective when executed by Borrower and accepted and executed by Fremont.
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15.2 Successors and Assigns. This Agreement shall bind and inure
to the benefit of the respective successors and assigns of each of the parties;
provided, however, that Borrower may not assign this Agreement or any rights
hereunder without Fremont's prior written consent and any prohibited assignment
shall be absolutely void. No consent to an assignment by Fremont shall release
Borrower from its Obligations. Fremont may assign this Agreement and its
rights and duties hereunder. Fremont reserves the right to sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in Fremont's rights and benefits hereunder. In connection therewith,
Fremont may disclose all documents and information which Fremont now or
hereafter may have relating to Borrower or Borrower's business.
15.3 Section Headings. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each paragraph applies equally to this entire
Agreement.
15.4 Interpretation. Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against Fremont or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.
15.5 Severability of Provisions. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
15.6 Amendments in Writing. This Agreement cannot be changed or
terminated orally. This Agreement is the entire agreement between the parties
with respect to the matters contained herein. This Agreement supersedes all
prior agreements, understandings and negotiations, if any, which are merged
into this Agreement.
15.7 Counterparts. This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts each of
which, when executed and delivered, shall be deemed to be an original and all
of which, when taken together, shall constitute but one and the same Agreement.
15.8 CMF License. Fremont is licensed as a commercial finance
lender by the California Department of Corporations, license number 943 1051.
15.9 Incorporation of Riders. The Conditions Precedent Rider, the
Special Provisions Rider and the Standby Letter of Credit Supplement are by
this reference incorporated herein and made a part hereof.
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Borrower and Fremont have executed this Agreement at Fremont's
place of business in Atlanta, Georgia.
ATTEST: BORROWER:
EUROSTAR PERFUMES, INC.
- -----------------------------------
Secretary a Texas corporation
[Corporate Seal] Signed By:
---------------------------
Print Name:
Title/Capacity:
----------------------
FREMONT FINANCIAL CORPORATION,
a California corporation
Signed By:
---------------------------
Print Name:
Title/Capacity:
----------------------
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SPECIAL PROVISIONS RIDER
THIS SPECIAL PROVISIONS RIDER (hereinafter referred to as this
"Rider") dated June 27, 1995, is hereby made a part of and incorporated into
that certain Loan and Security Agreement dated the date hereof between FREMONT
FINANCIAL CORPORATION (hereinafter referred to as "Fremont"), a California
corporation, and EUROSTAR PERFUMES, INC. (hereinafter referred to as
"Borrower"), a Texas corporation (hereinafter referred to, together with all
other supplements and riders thereto and amendments thereof, as the "Loan
Agreement")
l. All capitalized terms contained in this Rider, unless
otherwise defined herein, shall have the meanings ascribed to such terms in the
Loan Agreement. All references herein to any instrument, agreement or other
document shall include all amendments thereto and modifications, extensions and
renewals thereof, whether heretofore or hereafter entered into by the parties
to such documents. When used herein the following terms shall have the
following meanings:
"Affiliate" means any Person controlling, controlled by or
under common control with Borrower. For purposes of this definition,
"control" means the possession, directly or indirectly, of the power
to direct or cause direction of the management and policies of any
Person, whether through ownership of common or preferred stock or
other equity interests, by contract or otherwise.
"Applicable Law" shall mean all laws, rules and regulations
applicable to the person, conduct, transaction, covenant or Loan
Documents in question, including, but not limited to, all applicable
common law and equitable principles; all provisions of all applicable
state and federal constitutions, statutes, rules, regulations and
orders of governmental bodies; and orders, judgments and decrees of
all courts and arbitrators.
"Conditions Precedent Rider" shall mean the Conditions
Precedent Rider of even date herewith between Borrower and Fremont.
"Deed of Trust " shall mean that certain Deed of Trust with
Security Agreement, Financing Statement for Fixture Filing and
Assignment of Rents dated the date hereof from Borrower to Fremont,
pursuant to which Borrower shall grant and convey to Fremont, as
security for the Obligations, a mortgage lien upon the real property
of Borrower located in Atascosa County, Texas, and all improvements
thereto.
"Maximum Rate" shall mean the maximum non-usurious rate of
interest permitted by Applicable Law that at any time, or from time to
time, may be contracted for, taken, reserved, charged or received on
the Obligations in question or, to the extent permitted by Applicable
Law, under such Applicable Laws that may hereafter be in effect and
which allow a higher maximum non-usurious interest rate than
Applicable Laws now allow. Notwithstanding any other provision in this
Rider or the Loan Agreement, the Maximum Rate shall be calculated on a
daily basis (computed on the actual number of days elapsed over a year
of 365 or 366 days, as the case may be).
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"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, government, or any agency or political
division thereof, or any other entity.
"Standby Letter of Credit Supplement" shall mean the Standby
Letter of Credit Agreement Supplement to Loan and Security Agreement
dated of even date herewith by and between Borrower and Fremont.
"Subordinated Debt" shall mean all indebtedness at any time or
times owing by Borrower to any person that is expressly subordinated
to the payment of any of the Obligations.
"Term Loan A" shall mean the term loan to be made by Fremont
to Borrower pursuant to Paragraph 4 of this Rider.
"Term Loan B" shall mean the term loan to be made by Fremont
to Borrower pursuant to Paragraph 5 of this Rider.
"Term Loans" shall mean the Term Loan A and the Term Loan B.
"Term Note A" shall mean that certain Secured Promissory Note
dated as of the date hereof, executed by Borrower and payable to
Fremont in the original principal amount of $3,500,000, as it may be
amended or modified from time to time, together with any renewals or
extensions thereof, in whole or in part.
"Term Note B" shall mean that certain Secured Promissory Note
dated as of the date hereof, executed by Borrower and payable to
Fremont in the original principal amount of $200,000, as it may be
amended or modified from time to time, together with any renewals or
extensions thereof, in whole or in part.
2. In no event shall Borrower be obligated to pay the fees
payable under Sections 2.4, 2.10, 2.13 and 3.2 of the Loan Agreement to the
extent that the amount of such fees otherwise payable under such sections of
the Loan Agreement, when added to the amount of interest charged under Sections
2.6(A) and 2.6(B) of the Loan Agreement or otherwise, would result in the
assessment or collection of interest in excess of the Maximum Rate (provided
that it is the express intent and understanding of the parties hereto that such
fees not constitute interest or a charge for the use or detention of money).
3. All of the Obligations consisting of advances made by Lender
to Borrower pursuant to Section 2.1 of the Loan Agreement and accrued interest
thereon (except as otherwise provided in Section 2.3 of the Loan Agreement)
shall be payable by Borrower to Fremont upon the earliest of (i) the receipt by
Fremont or Borrower of any collections of proceeds of any of the Collateral, to
the extent of said collections or proceeds, (ii) in the case of interest,
monthly, in arrears, on the first day of each month as provided in Section
2.6(B) of the Loan Agreement, (iii) the occurrence of an Event of Default in
consequence of which Fremont elects to accelerate the maturity and payment of
the Obligations, or (iv) termination of the Loan Agreement pursuant to Section
3.1 thereof. Notwithstanding the foregoing, each advance made by Fremont to
Borrower pursuant
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to Section 2.1 of the Loan Agreement shall be due and payable no later than the
last day of the thirty-fifth month following the month in which such advance
was made. The Term Note A and the Term Note B shall be due and payable upon
termination of the Loan Agreement.
4. Subject to the conditions set forth in the Conditions
Precedent Rider, Fremont shall make a single term loan advance to Borrower in
the original principal amount of THREE MILLION FIVE HUNDRED THOUSAND DOLLARS,
($3,500,000) which shall be repayable in accordance with the terms of the Term
Note A and shall be secured by the Collateral. The amount of the Term Loan A
outstanding at any time shall not exceed the sum of (i) 80% of the liquidation
value of the Equipment of Borrower, as said liquidation value has been
determined by an appraisal performed by M.E.L. Valuations, Inc., dated March
17, 1995 (the "Appraised Equipment") plus (ii) 30% of the appraised value of
the real property of Borrower, as said value has been determined by an
appraisal performed by The Glen Company. The Term Loan A shall be funded
concurrently with Fremont's initial advance under the Loan Agreement
5. Subject to the conditions set forth in the Conditions
Precedent Rider, Fremont shall make a single term loan advance to Borrower in
the original principal amount of TWO HUNDRED THOUSAND DOLLARS, ($200,000) which
shall be repayable in accordance with the terms of the Term Note B and shall be
secured by the Collateral. The amount of the Term Loan B outstanding at any
time shall not exceed 80% of the actual cost of the Equipment being purchased
by Borrower with the proceeds of such Term Loan B (exclusive of taxes,
transportation and shipping charges and installation or make- ready fees or
expenses). The Term Loan B shall be funded upon satisfaction of all terms and
conditions in Section 3 of the Conditions Precedent Rider
6. The proceeds of the Term Loans shall be used by Borrower
solely for the purposes for which the proceeds of the advances made by Fremont
to Borrower under Section 2.1 of the Loan Agreement are authorized to be used.
If Borrower sells any of the Equipment or real property covered by the Deed of
Trust (and nothing herein shall be construed to authorize Borrower's sale of
any Equipment or real property covered by the Deed of Trust) or if any of the
Collateral is taken by condemnation, Borrower shall pay to Fremont, unless
otherwise agreed by Fremont or provided herein, as and when received by
Borrower and as a mandatory prepayment of the Term Loans (or at Fremont's
option, such of the other Obligations as Fremont may elect), a sum equal to the
proceeds received by Borrower from such sale or condemnation
7. The due and punctual payment and performance of the
Obligations shall also be secured by a lien upon all real property of Borrower
described in the Deed of Trust. The Deed of Trust shall be duly recorded in the
office where such recording is required to constitute a valid, perfected lien
upon and security title to the real property covered by such Deed of Trust.
8. At the request of and as an administrative convenience to
Borrower to ensure the timely payment of interest owing by Borrower each month,
and Fremont Expenses and other fees owing by Borrower from time to time under
the Loan Agreement, Borrower has requested Fremont to advance for the account
of Borrower an amount each month sufficient to pay interest accrued on the
Obligations during the immediately preceding month and amounts from time to
time sufficient to pay all fees owing by Borrower under the Loan Agreement.
Unless and
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until Borrower in writing notifies Fremont to the contrary, Borrower authorizes
Fremont, in Fremont's sole discretion, to make an advance under the Loan
Agreement for Borrower's account of a sum sufficient each month to pay, on the
due date thereof, all interest accrued on the Obligations during the
immediately preceding month and sums from time to time sufficient to pay, on
the due date thereof, all Fremont Expenses and other fees owing by Borrower
under the Loan Agreement, and Fremont may apply the proceeds of each such
advance to the payment of such interest, Fremont Expenses and other fees.
Fremont, however, shall not be obligated to make any such advance and Borrower
acknowledges that Fremont will be particularly disinclined to do so if an Event
of Default or an Overadvance exists at the time of, or would result from the
making of, such advance.
9. In addition to the indemnification by Borrower of Fremont
under Section 5.18 of the Loan Agreement, Borrower hereby agrees to indemnify
Fremont and hold Fremont harmless from and against any liability, loss, damage,
suit, action or proceeding ever suffered or incurred by Fremont as the result
of Borrower's failure to observe, perform or discharge Borrower's duties
hereunder. Additionally, if by reason of any existing or hereafter enacted
federal, state, foreign or local statute, rule or regulation, any taxes
(excluding taxes imposed upon or measured by the net income of Fremont, but
including, without limitation, any intangibles tax, stamp tax, recording tax or
franchise tax) shall be payable by Fremont or Borrower on account of the
execution or delivery of the Loan Agreement or any of the other Loan Documents,
or the creation of any of the Obligations, Borrower shall pay (or shall
promptly repay Fremont for the payment of) all such taxes, including, but not
limited to, any interest and penalties thereon, and will indemnify and hold
Fremont harmless from and against liability in connection therewith.
Notwithstanding any provision of the Loan Agreement to the contrary, the
indemnity obligation of Borrower under Section 5.18 of the Loan Agreement, this
Paragraph 9 and any other provision of the Loan Documents shall survive the
payment in full of the Obligations. THIS PARAGRAPH AND SECTION 5.18 OF THE LOAN
AGREEMENT INCLUDE INDEMNIFICATION AGAINST LIABILITIES, LOSSES, DAMAGES, SUITS,
ACTIONS OR PROCEEDINGS CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OF FREMONT
OR ITS DIRECTORS, OFFICERS, AGENTS, EMPLOYEES, PARTICIPANTS AND/OR ASSIGNS.
10. Regardless of any provision contained in this Rider or any of
the other Loan Documents, in no contingency or event whatsoever shall the
aggregate of all amounts that are contracted for, charged or collected pursuant
to the terms of this Rider, any of the Notes or any of the other Loan Documents
and that are deemed interest under Applicable Law exceed the highest rate
permissible under any Applicable Law. No agreements, conditions, provisions or
stipulations contained in this Rider or any of the other Loan Documents or the
exercise by Fremont of the right to accelerate the payment or the maturity of
all or any portion of the Obligations, or the exercise of any option whatsoever
contained in any of the Loan Documents, or the prepayment by Borrower of any of
the Obligations, or the occurrence of any contingency whatsoever, shall entitle
Fremont to charge or receive in any event, interest or any charges, amounts,
premiums or fees deemed interest by Applicable Law (such interest, charges,
amounts, premiums and fees referred to herein collectively as "Interest") in
excess of the Maximum Rate and in no event shall Borrower be obligated to pay
Interest exceeding such Maximum Rate, and all agreements, conditions or
stipulations, if any, which may in any event or contingency whatsoever operate
to bind, obligate or compel Borrower to pay Interest exceeding the Maximum Rate
shall be without binding force or effect, at law or in equity, to the extent
only
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of the excess of Interest over such Maximum Rate. If any Interest is charged or
received in excess of the Maximum Rate ("Excess"), Borrower acknowledges and
stipulates that any such charge or receipt shall be the result of an accident
and bona fide error, and such Excess, to the extent received, shall be applied
first to reduce the principal Obligations and the balance, if any, returned to
Borrower, it being the intent of the parties hereto not to enter at and time
into a usurious or otherwise illegal relationship. The right to accelerate the
maturity of any of the Obligations does not include the right to accelerate any
interest that has not otherwise accrued on the date of such acceleration, and
Fremont does not intend to collect any unearned interest in the event of any
such acceleration. Borrower recognizes that, with fluctuations in the rates of
interest set forth in Section 2.6(A) of the Loan Agreement and the Maximum
Rate, such an unintentional result could inadvertently occur but for the
agreements of the parties to limit interest to the Maximum Rate and to apply,
credit or return any Excess as provided herein. All monies paid to Fremont
hereunder or under any of the other Loan Documents, whether at maturity or by
prepayment, shall be subject to any rebate of unearned interest as and to the
extent required by Applicable Law. By the execution of this Rider, Borrower
covenants that (i) the credit or return of any Excess shall constitute the
acceptance by Borrower of such Excess, and (ii) Borrower shall not seek or
pursue any other remedy, legal or equitable, against Fremont, based in whole or
in part upon contracting for, charging or receiving any Interest in excess of
the Maximum Rate. For the purpose of determining whether or not any Excess has
been contracted for, charged or received by Fremont, all interest at any time
contracted for, charged or received from Borrower in connection with this Rider
shall, to the extent permitted by Applicable Law, be amortized, prorated,
allocated and spread in equal parts throughout the full term of the
Obligations. Borrower and Fremont shall, to the maximum extent permitted under
Applicable Law, (i) characterize any non-principal payment as an expense, fee
or premium rather than as Interest and (ii) exclude voluntary prepayments and
the effects thereof. The provisions of this Section shall be deemed to be
incorporated into every Loan Document (whether or not any provision of this
Section is referred to therein) . All such Loan Documents and communications
relating to any Interest owed by Borrower and all figures set forth therein
shall, for the sole purpose of computing the extent of Obligations, be
automatically recomputed by Borrower, and by any court considering the same, to
give effect to the adjustments or credits required by this Section.
Notwithstanding any provisions contained in this Agreement or any of the other
Loan Documents providing that interest is to be computed on the basis of a 360
day year, interest shall never exceed the Maximum Rate computed on the basis of
a 365 or 366 day year, as the case may be.
11. Notwithstanding Section 5.4 of the Loan Agreement, Borrower
shall be permitted to relocate the Appraised Equipment from time to time at
locations other than the Borrower's facilities at (i) One Eurostar Drive,
Pleasanton, Texas 78064 and (ii) 12001 Network Blvd., Suites 100 and 110, San
Antonio, Texas 78249; provided, however, that the aggregate value of all such
relocated Equipment shall not, without the prior written consent of Fremont, at
any time exceed an appraised value equal to $200,000.
12. Borrower shall not enter into, or be a party to any
transaction with any Affiliate of Borrower except in the ordinary course of and
pursuant to the reasonable requirements of Borrower's business and upon fair
and reasonable terms which are fully disclosed to Fremont and are no less
favorable to Borrower than
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would obtain in a comparable arm's length transaction with a Person not an
Affiliate of Borrower.
13. In addition to and without limiting the powers of Fremont
granted by Borrower pursuant to Section 4.4 of the Loan Agreement, Borrower
hereby irrevocably designates, makes, constitutes and appoints Fremont (and any
of Fremont's officers, employees or agents designated by Fremont) as Borrower's
true and lawful attorney (and agent-in- fact) and Fremont, or Fremont's agent,
may, without notice to Borrower and in either Borrower's or Fremont's name, but
at the cost and expense of Borrower, at such time or times as Fremont or its
agent in its sole discretion may determine: (i) at any time upon or after the
occurrence of an Event of Default, demand payment of the Accounts from the
account debtors of Borrower, enforce payment of the Accounts by legal
proceedings or otherwise, and generally exercise all of Borrower's rights and
remedies with respect to the collection of the Accounts; (ii) at any time upon
or after the occurrence of an Event of Default, settle, adjust, compromise or
discharge any of the Accounts or other Collateral or any legal proceedings
brought to collect any of the Accounts or other Collateral and give releases
and acquittances in the name of Borrower in connection therewith; (iii) sell or
assign any of the Accounts and other Collateral upon such terms, for such
amounts and at such time or times as Fremont deems advisable; (iv) take
control, in any manner, of any item of payment or proceeds relating to any
Collateral; (v) prepare, file and sign Borrower's name to a proof of claim in
bankruptcy or similar document against any account debtor of Borrower or to any
notice of lien, assignment or satisfaction of lien or similar document in
connection with any of the Collateral; (vi) at any time upon or after the
occurrence of an Event of Default, receive, open and dispose of all mail
addressed to Borrower and notify postal authorities to change the address for
delivery thereof to such address as Fremont may designate; (vii) endorse the
name of Borrower upon any of the items of payment or proceeds relating to any
Collateral and deposit the same to the account of Fremont for application to
the Obligations; (viii) endorse the name of Borrower upon any chattel paper,
document, instrument, invoice, freight bill, bill of lading or similar document
or agreement relating to the Accounts, Inventory and any other Collateral; (ix)
use Borrower's stationery and sign the name of Borrower to verifications of the
Accounts and notices thereof to account debtors of Borrower; (x) use the
information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory, Equipment
and any other Collateral and which Borrower has access; (xi) at any time upon
or after the occurrence of an Event of Default, make and adjust claims under
policies of insurance; and (xii) do all other acts and things necessary, in
Fremont's determination, to fulfill Borrower's obligations under the Loan
Agreement or any of the other Loan Documents.
14. Notwithstanding the terms of Sections 7.2, 7.5 and 7.7 of the
Loan Agreement, (i) Borrower shall be permitted to merge with and into Tristar
Corporation with Tristar Corporation as the surviving corporation (the
"Surviving Borrower") and (ii) Surviving Borrower shall be permitted to
restructure as a limited partnership, provided that Fremont consents to all
documents, instruments and other legal matters incident to such merger and
restructure, which consent will not be unreasonably withheld.
15. In addition to the waivers set forth in Section 11.1 of the
Loan Agreement, Borrower hereby waives notice of intention to accelerate and
notice of acceleration, so that Fremont may exercise any and all rights and
remedies under
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the Loan Agreement or any other Loan Documents, or as otherwise provided by law
or in equity, immediately upon the occurrence of any Event of Default, without
any further notice, grace or opportunity to cure whatsoever.
16. In addition to the Events of Default set forth in Section 8 of
the Loan Agreement, the occurrence of any one or more of the following events
or conditions shall constitute an Event of Default:
(a) Borrower shall pay any of the Subordinated Debt to
any holder or holders thereof after the occurrence of an Event of
Default;
(b) Borrower shall default in the observance or
performance of any covenant on Borrower's part to be performed
hereunder; and
(c) An Event of Default (as defined in the Deed of Trust)
shall occur under the Deed of Trust
17. This Rider may be executed in multiple counterparts, each of
which shall be deemed an original document and all of which taken together
shall constitute one and the same instrument.
18. The Loan Agreement (including this Rider) has been executed
and delivered by Borrower and Fremont in Atlanta, Georgia, and shall be deemed
to be a contract made in Georgia. This Rider shall be governed in all respects
by and construed in accordance with the internal laws of the State of Georgia.
This Rider shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Borrower hereby waives notice of
Fremont's acceptance hereof.
19. Nonapplicability of Article 5069-15.01 et seq. Borrower and
Fremont hereby agree that, except for Section 15.10(b) thereof, the provisions
of Tex. Rev. Civ. Stat. An. art. 5069-15.01 et seq. (Vernon 1987) (regulating
certain revolving credit loans and revolving tri-party accounts) shall not
apply to this Rider, the Loan Agreement or any of the other Loan Documents.
20. DTPA WAIVER. BORROWER HEREBY WAIVES ALL PROVISIONS OF THE
DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT (TEX. BUS. & COM. CODE ANN.
Section 17.01 ET SEQ. (VERNON SUPP. 1987)), OTHER THAN SECTION 17.555 THEREOF
PERTAINING TO CONTRIBUTION AND INDEMNITY, AND EXPRESSLY WARRANTS AND REPRESENTS
THAT BORROWER (A) HAS ASSETS OF $5,000,000 OR MORE, (B) HAS KNOWLEDGE AND
EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE BORROWER TO EVALUATE
THE MERITS AND RISKS OF THIS TRANSACTION, (C) IS NOT IN A SIGNIFICANTLY
DISPARATE BARGAINING POSITION RELATIVE TO LENDER, AND (D) HAS BEEN REPRESENTED
BY LEGAL COUNSEL IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.
21. ORAL AGREEMENTS INEFFECTIVE. THIS RIDER, THE LOAN AGREEMENT,
THE CONDITIONS PRECEDENT RIDER, THE STANDBY LETTER OF CREDIT SUPPLEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND THE
SAME MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
SIGNED, SEALED AND DELIVERED in Atlanta, Georgia, on the day and year
first above written.
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ATTEST: EUROSTAR PERFUMES, INC.
("Borrower")
By:
- ----------------------------------- -----------------------------------
Secretary Viren S. Sheth
[CORPORATE SEAL] President and Chief
Executive Officer
Accepted and agreed to in Atlanta, Georgia, this 27th day of June, 1995.
FREMONT FINANCIAL CORPORATION
("Fremont")
By:
-----------------------------------
Title:
--------------------------------
The undersigned, legal counsel to Borrower, executes this Rider solely to
acknowledge the waiver of the Texas Deceptive Trade Practices - Consumer
Protection Act contained in Paragraph 19 of the foregoing Rider.
Borrower's Counsel:
Akin, Gump, Straus, Hauer & Feld, L.L.P.
By:
-----------------------------------
Name:
---------------------------------
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