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EXHIBIT 10.14
[AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO LOGO]
LOAN AND SECURITY AGREEMENT
(ALL ASSETS WITH ADVANCE RATE)
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), made as of the
21st day of August, 1996, by and between AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO ("Bank"), a national banking association with its principal
place of business at 33 North LaSalle Street, Chicago, Illinois 60690, and
BIRMAN & ASSOCIATES, INC. ("Borrower"), a corporation with its principal place
of business at 502 Gould Drive, Cookeville, Tennessee 38501 has reference to the
following facts and circumstances:
A. Pursuant to Borrower's request, Bank heretofore, now and from time to time
hereafter, has and/or may loan or advance monies, extend credit, and/or extend
other financial accommodations to or for the benefit of Borrower.
B. To secure repayment of the same and all of "Borrower's Liabilities" (as
hereinafter defined), Borrower wishes to provide Bank with a security interest
in and/or collateral assignment of Borrower's assets.
NOW, THEREFORE, in consideration of terms and conditions set forth
herein and of any loans or extensions of credit heretofore, now or hereafter
made to or for the benefit of Borrower by Bank, the parties hereto agree as
follows:
1. DEFINITIONS AND TERMS
1.1 When used herein, the words, terms and/or phrases set forth below
shall have the following meanings:
A. "ACCOUNTS": all present and future rights of Borrower to
payment for goods sold or leased or for services rendered,
which are not evidenced by instruments or chattel paper, and
whether or not they have been earned by performance.
B. "BORROWER'S LIABILITIES": all obligations and liabilities of
Borrower to Bank (including without limitation all debts,
claims, indebtedness and attorneys' fees and expenses as
provided for in Paragraph 8.13) whether primary, secondary,
direct, contingent, fixed or otherwise, including Rate Hedging
Obligations (as defined in subparagraph L herein), heretofore,
now and/or from time to time hereafter owing, due or payable,
however evidenced, created, incurred, acquired or owing and
however arising, whether under this Agreement or the "Other
Agreements" (hereinafter defined) or by operation of law or
otherwise.
C. "CHARGES": all national, federal, state, county, city,
municipal and/or other governmental (or any instrumentality,
division, agency, body or department thereof, including
without limitation the Pension Benefit Guaranty Corporation)
taxes,
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levies, assessments, charges, liens, claims or encumbrances
upon and/or relating to the "Collateral" (as hereinafter
defined), Borrower's Liabilities, Borrower's business,
Borrower's ownership and/or use of any of its assets, and/or
Borrower's income and/or gross receipts.
D. "COLLATERAL": shall have the meaning set forth in Paragraph
3.2.
E. "INDEBTEDNESS": (i) indebtedness for borrowed money or for the
deferred purchase price of property or services; (ii)
obligations as lessee under leases which shall have been or
should be, in accordance with generally accepted accounting
principles, recorded as capital leases; (iii) obligations
under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds
referred to in clauses (i) or (ii) above; and (iv) liabilities
with respect to unfunded vested benefits under plans covered
by Title IV of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and in effect from time to time.
F. "LETTER OF CREDIT OBLIGATIONS": shall mean any and all
existing and future indebtedness, obligations and liabilities
of every kind, nature and character, direct or indirect,
absolute or contingent, of the Borrower to Bank, arising
under, pursuant to or in connection with any letter of credit
issued under the Maximum Revolving Facility.
G. "LOANS": shall mean collectively any Revolving Loans as
defined in Paragraph 2.5 and Term Loans as defined in
Paragraph 2.6.
H. "MAXIMUM REVOLVING FACILITY": shall mean the maximum amount of
the Revolving Loans as evidenced by a revolving note(s) which
amount Bank has agreed to consider as a ceiling on the
outstanding principal balance of Revolving Loans (other than
Term Loans) to be made by Bank pursuant to this Agreement.
I. "OBLIGOR": any Person who is and/or may become obligated to
Borrower under or on account of "Accounts."
J. "OTHER AGREEMENTS": all agreements, instruments and documents,
including without limitation, guaranties, mortgages, deeds of
trust, notes, pledges, powers of attorney, consents,
assignments, contracts, notices, security agreements, leases,
subordination agreements, financing statements and all other
written matter heretofore, now and/or from time to time
hereafter executed by and/or on behalf of Borrower and
delivered to Bank.
K. "PERSONS": any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization,
association, corporation, limited liability company,
institution, entity, party or government (whether national,
federal, state, county, city, municipal or otherwise,
including without limitation, any instrumentality, division,
agency, body or department thereof).
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L. "RATE HEDGING OBLIGATIONS": shall mean any and all obligations
of the Borrower, whether absolute or contingent and howsoever
and whenever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof
and substitutions therefor), under (i) any and all agreements
designed to protect the Borrower from the fluctuations of
interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions,
including, but not limited to: interest rate swap agreements,
dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest
rate cap, floor or collar agreements, forward rate currency
agreements or agreements relating to interest rate options,
puts and warrants, and (ii) any and all agreements relating to
cancellations, buy backs, reversals, terminations or
assignments of any of the foregoing.
1.2 Except as otherwise defined in this Agreement or the Other
Agreements, all words, terms and/or phrases used herein and therein shall be
defined by the applicable definition therefor (if any) in the Illinois Uniform
Commercial Code.
2. LOANS
2.1 Loans made by Bank to Borrower pursuant to this Agreement shall be
evidenced by notes or other instruments issued or made by Borrower to Bank.
Except as otherwise provided in this Agreement or in any notes executed and
delivered by Borrower to Bank in connection herewith, the principal portion of
Borrower's Liabilities shall be payable by Borrower to Bank on the maturity
date(s) described in any such note(s) or other instruments evidencing Borrower's
Liabilities (as the same may be amended, renewed or replaced) and all costs,
fees and expenses payable hereunder or under the Other Agreements, shall be
payable by Borrower to the Bank on demand, in either case at Bank's principal
place of business or such other place as Bank shall specify in writing to
Borrower.
2.2 All of Borrower's Liabilities shall constitute one obligation
secured by Bank's security interest in the Collateral and by all other security
interests, liens, claims and encumbrances heretofore, now and/or from time to
time hereafter granted by Borrower to Bank.
2.3 Each loan made by Bank to Borrower pursuant to this Agreement or
the Other Agreements shall constitute an automatic warranty and representation
by Borrower to Bank that there does not then exist an "Event of Default" (as
hereinafter defined) or any event or condition, which with notice, lapse of time
and/or the making of such loan would constitute an Event of Default.
2.4 This Agreement shall be in effect until all of Borrower's
Liabilities have been paid in full and any and all commitments of Bank to make
loans have terminated.
2.5 Provided that an Event of Default does not then exist or would not
then be created or any event which with notice or lapse of time or both would
constitute an Event of Default does not then exist, Bank shall advance to
Borrower on a revolving credit basis (the "Revolving Loans") up to the lesser
of: (i) the Maximum Revolving Facility minus any Letter of Credit Obligations,
or (ii) the "Borrowing Base" minus any Letter of Credit Obligations. As used
herein, "Borrowing Base" shall mean up to 75% ("Advance Rate") of the face
amount (less maximum discounts, credits
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or allowances which may be taken by or granted to Obligors in connection
therewith) of all then existing "Eligible Accounts" (as hereinafter defined)
that are scheduled on the most recent schedule of accounts delivered to Bank. If
applicable, any amount calculated pursuant to Paragraph 2.9, shall be included
in the Borrowing Base. Notwithstanding any contrary provision contained herein,
Bank may elect at its option to at any time and upon fourteen (14) days prior
written notice to Borrower change the foregoing method of calculating the
Borrowing Base by reducing the advances against Eligible Accounts, or to deduct
reserves from the Borrowing Base.
2.6 Bank may from time to time advance to Borrower term loans ("Term
Loans") in such amounts and on such terms and conditions as the Bank and
Borrower from time to time may agree in writing.
2.7 Notwithstanding anything contained in this Agreement or the Other
Agreements to the contrary, the principal portion of Borrower's outstanding
liabilities due at any one time under the Revolving Loans shall not exceed the
lesser of: (i) the Maximum Revolving Facility minus the amount of all Letter of
Credit Obligations, or (ii) the Borrowing Base minus the amount of all Letter of
Credit Obligations.
2.8 Bank's commitment to loan shall expire on the earlier of: (i) the
date on which Borrower's Liabilities mature under the terms of any note given by
Borrower to Bank, or (ii) the occurrence of an Event of Default pursuant to
Section 7 hereof.
3. COLLATERAL: GENERAL TERMS
3.1 To secure the prompt payment to Secured party of Debtor's
Liabilities and the prompt, full and faithful performance by Debtor of all of
the provisions to be kept, observed or performed by Debtor under this Agreement
and/or the Other Agreements, Debtor grants to Secured party a security interest
in and to, and collaterally assigns to Secured party, all of Debtor's property,
wherever located, whether now or hereafter existing, owned, licensed, leased (to
the extent of Debtor's leasehold interest therein), consigned (to the extent of
Debtor's ownership therein), arising and/or acquired, including without
limitation all of Debtor's: (a) Accounts, chattel paper, tax refunds, contract
rights, leases, leasehold interests, letters of credit, instruments, documents,
documents of title, licenses, goodwill, beneficial interests and general
intangibles; (b) all goods whose sale, lease or other disposition by Debtor have
given rise to Accounts and have been returned to or repossessed or stopped in
transit by Debtor; (c) liens, guaranties and other rights and privileges
pertaining to any of the Collateral; (d) monies, reserves, deposits, deposit
accounts and interest or dividends thereon, cash or cash equivalents; (e) all
property now or at any time or times hereafter in the possession, or under the
control of Secured party or its bailee; (f) all accessions to the foregoing, all
litigation proceeds pertaining to the foregoing and all substitutions, renewals,
improvements and replacements of and additions to the foregoing; and (g) all
books, records and computer records in any way relating to the Collateral herein
described.
3.2 All of the aforesaid property and products and proceeds of the
foregoing in Paragraph 3.1 above, including without limitation, proceeds of
insurance policies insuring the foregoing are herein individually and
collectively called the "Collateral". The terms used herein to identify the
Collateral shall have the same meaning as are assigned to such terms as of the
date hereof in the Illinois Uniform Commercial Code.
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3.3 Borrower shall make appropriate entries upon its financial
statements and its books and records disclosing Bank's security interest in the
Collateral.
3.4 Borrower shall execute and deliver to Bank, at the request of Bank,
all agreements, instruments and documents ("Supplemental Documentation") that
Bank reasonably may request, in form and substance acceptable to Bank, to
perfect and maintain perfected Bank's security interest in the Collateral and to
consummate the transactions contemplated in or by this Agreement and the Other
Agreements. Borrower agrees that a carbon, photographic or photostatic copy, or
other reproduction of this Agreement or of any financing statement, shall be
sufficient to evidence Bank's security interest.
3.5 Bank shall have the right, at any time during Borrower's usual
business hours, to inspect the Collateral and all related records (and the
premises upon which it is located) and to verify the amount and condition of or
any other matter relating to the Collateral.
3.6 Borrower warrants and represents to and covenants with Bank that:
(a) Bank's security interest in the Collateral is now and at all times hereafter
shall be perfected and have a first priority except as expressly agreed to in
writing by the Bank; (b) the offices and/or locations where Borrower keeps the
Collateral are specified at the end of this Paragraph and Borrower shall not
remove such Collateral therefrom except as may occur in the ordinary course of
business, and shall not keep any of such Collateral at any other offices or
locations unless Borrower gives Bank written notice thereof at least thirty (30)
days prior thereto and the same is within the United States of America; and (c)
the addresses specified at the end of this Paragraph include and designate
Borrower's principal executive office, principal place of business and other
offices and places of business and are Borrower's sole offices and places of
business. Borrower, by written notice delivered to Bank at least thirty (30)
days prior thereto, shall advise Bank of Borrower's opening of any new office or
place of business or its closing of any existing office or place of business and
any new office or place of business shall be within the United States of
America. Borrower has places of business at the address shown at the beginning
of this Agreement and at the locations listed below:
1) _____________________________________________________________
2) _____________________________________________________________
3) _____________________________________________________________
All of the Collateral currently owned by Borrower and all of the
Collateral hereafter acquired is, or will be held or stored at the locations
listed below:
1) The address of the Borrower shown at the beginning of this
Agreement;
2) _____________________________________________________________
3) _____________________________________________________________
3.7 At the request of Bank, Borrower shall receive, as the sole and
exclusive property of Bank and as trustee for Bank, all monies, checks, notes,
drafts and all other payments for and/or proceeds of Collateral which come into
the possession or under the control of Borrower and immediately upon receipt
thereof, Borrower shall remit the same (or cause the same to be remitted), in
kind, to Bank or at Bank's direction.
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3.8 Upon demand or upon an Event of Default, Bank may take control of,
in any manner, and may endorse Borrower's name to any of the items of payment or
proceeds described in Paragraph 3.7 above and, pursuant to the provisions of
this Agreement, Bank shall apply the same to and on account of Borrower's
Liabilities.
3.9 Bank may, at its option, at any time or times hereafter, but shall
be under no obligation to pay, acquire and/or accept an assignment of any
security interest, lien, encumbrance or claim asserted by any Person against the
Collateral.
3.10 Immediately upon Borrower's receipt of that portion of the
Collateral evidenced by an agreement, instrument and/or document ("Special
Collateral"), Borrower shall mark the same to show that such Special Collateral
is subject to a security interest in favor of Bank and shall deliver the
original thereof to Bank, together with appropriate endorsement and/or specific
evidence of assignment (in form and substance acceptable to Bank) thereof to
Bank.
3.11 Regardless of the adequacy of any Collateral securing Borrower's
Liabilities hereunder, any deposits or other sums at any time credited by or
payable or due from Bank to Borrower, or any monies, cash, cash equivalents,
securities, instruments, documents or other assets of Borrower in possession or
control of Bank or its bailee for any purpose may, upon demand or an Event of
Default or event or condition which with notice or lapse of time would
constitute an Event of Default, be reduced to cash and applied by Bank to or
setoff by Bank against Borrower's Liabilities hereunder.
3.12 At the request of Bank, Borrower shall instruct the Obligors of
its Accounts to make payments directly to a lockbox or cash collateral account
maintained by Bank in Borrower's name. All such collections shall be Bank's
property to be applied against Borrower's Liabilities, and not Borrower's
property. Bank may endorse Borrower's name to any of the items of payment or
proceeds described herein.
4. COLLATERAL: ACCOUNTS
4.1 An "Eligible Account" is an Account of Borrower which meets each of
the following requirements: (a) it arises from the sale or lease of goods, such
goods having been shipped or delivered to the Obligor thereof, or from services
rendered to the Obligor; (b) it is a valid, legally enforceable obligation of
the Obligor thereunder, and is not subject to any offset, counterclaim or other
defense on the part of such Obligor denying liability thereunder in whole or in
part; (c) it is subject to a perfected security interest in favor of Bank and is
not subject to any other lien or security interest whatsoever, except those of
Bank; (d) it is evidenced by an invoice (dated not later than the date of
shipment to the Obligor or performance and having a due date not more than
thirty (30) days after the date of invoice) rendered to such Obligor, and is not
evidenced by any instrument or chattel paper; (e) it is payable in United States
dollars; (f) it is not owing by any Obligor residing, located or having its
principal activities or place of business outside the United States of America
or who is not subject to service of process in the United States of America; (g)
it is not owing by any Obligor involved in any bankruptcy or insolvency
proceeding; (h) it is not owing by any affiliate of Borrower; (i) it is not
unpaid more than ninety (90) days after the date of such invoice; (j) it is not
owing by an Obligor which shall have failed to pay in full any invoice
evidencing any account within ninety (90) days after the date of such invoice,
unless the total invoice amounts of such Obligor which have not been paid within
ninety (90) days of the date
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represents less than 10% of the total invoice amounts then outstanding of such
Obligor; and (k) it is not an Account as to which Bank, at any time or times
hereafter, determines, in good faith, that the prospect of payment or
performance by the Obligor thereof is or will be impaired. Notwithstanding the
foregoing, Accounts with respect to which the Account Debtor is the United
States of America or any department, agency or instrumentality thereof, shall
not be included as an Eligible Account unless, with respect to any such Account,
Borrower has complied to Bank's satisfaction with the provisions of the Federal
Assignment of Claims Act of 1940, including, without limitation, executing and
delivering to Bank all statements of assignment and/or notification which are in
form and substance acceptable to Bank and which are deemed necessary by Bank to
effectuate the assignment to Bank of such Accounts. An Account which is at any
time an Eligible Account, but which subsequently fails to meet any of the
foregoing requirements, shall forthwith cease to be an Eligible Account. Bank
may in its sole discretion at any time reduce the percentage set forth in clause
(j) above upon seven (7) days prior notice to Borrower. Borrower, immediately
upon demand from Bank, shall pay to Bank an amount of money equal to the monies
advanced by Bank to Borrower upon an Account that is no longer an Eligible
Account. Borrower warrants and represents to and covenants with Bank that the
principal portion of Borrower's Liabilities represented by Revolving Loans made
by Bank to Borrower, pursuant to Paragraph 2.5 above, shall not exceed the total
of the then outstanding amounts (less maximum discounts, credits and allowances
which may be taken by or granted to Obligors in connection therewith) of all
then existing Eligible Accounts multiplied by the Advance Rate.
4.2 With respect to Accounts, except as otherwise disclosed by Borrower
to Bank in writing, Borrower warrants and represents to Bank that: (a) they are
genuine, are in all respects what they purport to be and are not evidenced by a
judgment; (b) they represent undisputed, bona fide transactions completed in
accordance with the terms and provisions contained in the invoices and other
documents delivered to Bank with respect thereto; (c) the amounts shown on any
Schedule of Accounts and/or all invoices and statements delivered to Bank with
respect thereto are actually and absolutely owing to Borrower and are not in any
way contingent; (d) no payments have been made or shall be made thereon except
payments immediately delivered to Bank pursuant to this Agreement; (e) there are
no setoffs, counterclaims or disputes existing or asserted with respect thereto
and Borrower has not made any agreement with any Obligor thereof for any
deduction therefrom except a regular discount allowed by Borrower in the
ordinary course of its business for prompt payment; (f) there are no facts,
events or occurrences which in any way impair the validity or enforcement
thereof or tend to reduce the amount payable thereunder, which may be shown on
any schedule of accounts and on all invoices, and statements delivered to Bank
with respect thereto; (g) to the best of Borrower's knowledge, all Obligors have
the capacity to contract and are solvent; (h) the services furnished and/or
goods sold or leased giving rise thereto are not subject to any lien, claim,
encumbrance or security interest except that of Bank; (i) Borrower has no
knowledge of any fact or circumstance which would impair the validity or
collectability thereof; (j) to the best of Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against any Obligor which
might result in any material adverse change in its financial condition; and (k)
Borrower has filed a Notice of Business Activities Report or a Certificate of
Authority or similar report with the appropriate office or department in states
where Account Obligors are located and where such reports are required as a
condition to commencing or maintaining an action in the courts of such states,
or Borrower has demonstrated to Bank's satisfaction that it is exempt from any
such requirements under such state's law.
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4.3 Any of Bank's officers, employees or agents shall have the right,
at any time or times hereafter, in Bank's name or in the name of a nominee of
Bank, to verify the validity, amount or any other matter relating to any
Accounts by mail, telephone, facsimile or otherwise and to sign Borrower's name
on any verification of Accounts and notices thereof to Obligors. All costs, fees
and expenses relating thereto incurred by Bank (or for which Bank becomes
obligated) shall be part of Borrower's Liabilities, payable by Borrower to Bank
on demand.
4.4 Unless Bank notifies Borrower in writing that Bank suspends any one
or more of the following requirements, Borrower shall: (a) promptly upon
Borrower's learning thereof, inform Bank, in writing, of any material delay in
Borrower's performance of any of its obligations to any Obligor and of any
assertion of any claims, offsets or counterclaims by any Obligor and of any
allowances, credits and/or other monies granted by Borrower to any Obligor; (b)
not permit or agree to any extension, compromise or settlement with respect to
Accounts which constitute, in the aggregate, more than 5% of all Accounts then
owing to Borrower; and (c) keep all goods returned by any Obligor and all goods
repossessed or stopped in transit by Borrower from any Obligor segregated from
other property of Borrower, immediately notify Bank of Borrower's possession of
such goods, and hold the same as trustee for Bank until otherwise directed in
writing by Bank.
4.5 Bank shall have the right, now and at any time or times hereafter,
at its option, without notice thereof to Borrower: (a) to notify any or all
Obligors that the Accounts and Special Collateral have been assigned to Bank and
the Bank has a security interest therein; (b) to direct such Obligors to make
all payments due from them to Borrower upon the Accounts and Special Collateral
directly to Bank; and (c) to enforce payment of and collect, by legal
proceedings or otherwise, the Accounts and Special Collateral in the name of
Bank and Borrower.
4.6 Borrower, irrevocably, hereby designates, makes, constitutes and
appoints Bank (and all Persons designated by Bank) as Borrower's true and lawful
attorney (and agent-in-fact), with power, upon an Event of Default, or an event
or condition which with notice or lapse of time would constitute an Event of
Default, without notice to Borrower and in Borrower's or Bank's name: (a) to
demand payment of Accounts; (b) to enforce payment of the Accounts by legal
proceedings or otherwise; (c) to exercise all of Borrower's rights and remedies
with respect to the collection of the Accounts; (d) to settle, adjust,
compromise, discharge, release, extend or renew the Accounts; (e) to settle,
adjust or compromise any legal proceedings brought to collect the Accounts; (f)
to sell or assign the Accounts upon such terms, for such amounts and at such
time or times as Bank deems advisable; (g) to prepare, file and sign Borrower's
name on any Notice of Lien, Assignment or Satisfaction of Lien or similar
document in connection with the Accounts and Special Collateral; or (h) to
prepare, file and sign Borrower's name on any Proof of Claim in Bankruptcy or
similar document against any Obligor.
5. WARRANTIES, REPRESENTATIONS AND COVENANTS:
INSURANCE AND TAXES
5.1 Borrower, at its sole cost and expense, shall keep and maintain:
(a) the Collateral insured for the full insurable value against all hazards and
risks ordinarily insured against by other owners or users of such properties in
similar businesses; and (b) business interruption insurance and public liability
and property damage insurance relating to Borrower's ownership and use of its
assets. All such policies of insurance shall be in a form with insurers and in
such amounts as may be satisfactory to Bank. Borrower shall deliver to Bank the
original (or certified) copy of each
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policy of insurance, or a certificate of insurance, and evidence of payment of
all premiums for each such policy. Such policies of insurance (except those of
public liability) shall contain a standard form lender's loss payable clause, in
form and substance acceptable to Bank, showing loss payable to Bank, and shall
provide that: (i) the insurance companies will give Bank at least thirty (30)
days written notice before any such policy or policies of insurance shall be
altered or canceled; and (ii) no act or default of Borrower or any other Person
shall effect the right of Bank to recover under such policy or policies of
insurance in case of loss or damage. Borrower hereby directs all insurers under
such policies of insurance (except those of public liability) to pay all
proceeds payable thereunder directly to Bank and hereby authorizes Bank to make,
settle, and adjust claims under such policies of insurance and endorse the name
of Borrower on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance.
5.2 Borrower shall pay promptly, when due, all Charges, and shall not
permit any Charges to arise, or to remain and will promptly discharge the same.
6. WARRANTIES, REPRESENTATIONS AND COVENANTS:
GENERAL
6.1 Borrower warrants and represents to and covenants with Bank that:
(a) Borrower has the right, power and capacity and is duly authorized and
empowered to enter into, execute, deliver and perform this Agreement and Other
Agreements; (b) the execution, delivery and/or performance by Borrower of this
Agreement and Other Agreements shall not, by the lapse of time, the giving of
notice or otherwise, constitute a violation of any applicable law or a breach of
any provision contained in Borrower's Articles of Incorporation, By-Laws,
Articles of Partnership, Articles of Organization, Operating Agreement or
similar document, or contained in any agreement, instrument or document to which
Borrower is now or hereafter a party or by which it is or may be bound; (c)
Borrower has and at all times hereafter shall have good, indefeasible and
merchantable title to and ownership of the Collateral, free and clear of all
liens, claims, security interests and encumbrances except those of Bank; (d)
Borrower is now and at all times hereafter, shall be solvent and generally
paying its debts as they mature and Borrower now owns and shall at all times
hereafter own property which, at a fair valuation, is greater than the sum of
its debts; (e) Borrower is not and will not be during the term hereof in
violation of any applicable federal, state or local statute, regulation or
ordinance that, in any respect materially and adversely affects its business,
property, assets, operations or condition, financial or otherwise; and (f)
Borrower is not in default with respect to any indenture, loan agreement,
mortgage, deed or other similar agreement relating to the borrowing of monies to
which it is a party or by which it is bound.
6.2 Borrower warrants and represents to and covenants with Bank that
Borrower shall not, without Bank's prior written consent thereto: (a) grant a
security interest in or assign any of the Collateral to any Person or permit,
grant, or suffer a lien, claim or encumbrance upon any of the Collateral; (b)
sell or transfer any of the Collateral not in the ordinary course of business;
(c) enter into any transaction not in the ordinary course of business which
materially and adversely affects the Collateral or Borrower's ability to repay
Borrower's Liabilities or Indebtedness; (d) other than as specifically permitted
in or contemplated by this Agreement, encumber, pledge, mortgage, sell, lease or
otherwise dispose of or transfer, whether by sale, merger, consolidation or
otherwise, any of Borrower's assets; and (e) incur Indebtedness except: (i)
unsecured trade debt in the ordinary course of business; (ii) renewals or
extensions of existing Indebtedness and interest thereon; and (iii) Indebtedness
that is unsecured and is to Persons who execute and deliver to Bank in form and
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substance acceptable to Bank and its counsel subordination agreements
subordinating their claims against Borrower therefor to the payment of
Borrower's Liabilities.
6.3 Borrower warrants and represents to and covenants with Bank that
Borrower shall furnish to Bank: (a) as soon as available but not later than
ninety (90) days after the close of each fiscal year of Borrower, financial
statements, which shall include, but not be limited to, balance sheets, income
statements and statements of cash flow of Borrower prepared in accordance with
generally accepted accounting principles, consistently applied, audited by a
firm of independent certified public accountants selected by Borrower and
acceptable to Bank; (b) as soon as available but not later than thirty (30) days
after the end of each month hereafter, financial statements of Borrower
certified by Borrower to be prepared in accordance with generally accepted
accounting principles fairly present the financial position and results of
operations of Borrower for such period; (c) schedule of accounts payable and
accounts receivable by the 15th of every month or otherwise as Bank may direct;
and (d) such other data and information (financial and otherwise) as Bank, from
time to time, may request.
6.4 Borrower warrants and represents to and covenants with Bank that
Borrower shall not permit its "Tangible Net Worth" (as hereinafter defined) to
be at any time less than $1,000,000.00. Tangible Net Worth shall mean the value
of the tangible assets of Borrower as determined in accordance with the
generally accepted accounting principles after subtracting therefrom the
aggregate amount of any intangible assets of Borrower as determined in
accordance with generally accepted accounting principles, including without
limitation, prepaid expenses, other accounts receivable, goodwill, franchises,
licenses, patents, trademarks, tradenames, copyrights and brand names, minus the
aggregate of all contingent and non-contingent liabilities of Borrower.
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7. DEFAULT
7.1 The occurrence of any one of the following events shall constitute
a default by the Borrower ("Event of Default") under this Agreement: (a) if
Borrower fails to pay any of Borrower's Liabilities when due and payable or
declared due and payable (whether by scheduled maturity, required payment,
acceleration, demand or otherwise); (b) if Borrower fails or neglects to
perform, keep or observe any term, provision, condition, covenant, warranty or
representation contained in this Agreement or any of the Other Agreements; (c)
occurrence of a default or Event of Default under any of the Other Agreements
heretofore, now or at any time hereafter delivered by or on behalf of Borrower
to Bank; (d) occurrence of a default or an Event of Default under any agreement,
instrument or document heretofore, now or at any time hereafter delivered to
Bank by any guarantor of Borrower's Liabilities or by any Person which has
granted to Bank a security interest or lien in such Person's real or personal
property to secure the payment of Borrower's Liabilities; (e) if the Collateral
or any other of Borrower's assets are attached, seized, subjected to a writ, or
are levied upon or become subject to any lien or come within the possession of
any receiver, trustee, custodian or assignee for the benefit of creditors; (f)
if a notice of lien, levy or assessment is filed of record or given to Borrower
with respect to all or any of Borrower's assets by any federal, state, local
department or agency; (g) if Borrower or any guarantor of Borrower's Liabilities
becomes insolvent or generally fails to pay or admits in writing its inability
to pay debts as they become due, if a petition under Title 11 of the United
States Code or any similar law or regulation is filed by or against Borrower or
any such guarantor, if Borrower or any such guarantor shall make an assignment
for the benefit of creditors, if any case or proceeding is filed by or against
Borrower or any such guarantor for its dissolution or liquidation, if Borrower
or any such guarantor is enjoined, restrained or in any way prevented by court
order from conducting all or any material part of its business affairs; (h) the
death or incompetency of Borrower or any guarantor of Borrower's Liabilities, or
the appointment of a conservator for all or any portion of Borrower's assets or
the Collateral; (i) the revocation, termination, or cancellation of any guaranty
of Borrower's Liabilities without written consent of Bank; (j) if a contribution
failure occurs with respect to any pension plan maintained by Borrower or any
corporation, trade or business that is, along with Borrower, a member of a
controlled group of corporations or controlled group of trades or businesses (as
described in Sections 414(b) and (c) of the Internal Revenue Code of 1986 or
Section 4001 of ERISA) sufficient to give rise to a lien under Section 302(f) of
ERISA; (k) if Borrower or any guarantor of Borrower's Liabilities is in default
in the payment of any obligations, indebtedness or other liabilities to any
third party and such default is declared and is not cured within the time, if
any, specified therefor in any agreement governing the same; (l) if any material
statement, report or certificate made or delivered by Borrower, any of
Borrower's partners, officers, employees or agents or any guarantor of
Borrower's Liabilities is not true and correct; or (m) if Bank is reasonably
insecure.
7.2 All of Bank's rights and remedies under this Agreement and the
Other Agreements are cumulative and non-exclusive.
7.3 Upon an Event of Default or the occurrence of any one of the events
described in Paragraph 7.1, without notice by Bank to or demand by Bank of
Borrower, Bank shall have no further obligation to and may then forthwith cease
advancing monies or extending credit to or for the benefit of Borrower under
this Agreement and the Other Agreements. Upon an Event of Default, without
notice by Bank to or demand by Bank of Borrower, Borrower's Liabilities shall be
immediately due and payable.
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7.4 Upon an Event of Default, Bank, in its sole and absolute
discretion, may exercise any one or more of the rights and remedies accruing to
a secured party under the Uniform Commercial Code of the relevant state and any
other applicable law upon default by a debtor.
7.5 Upon an Event of Default, Borrower, immediately upon demand by
Bank, shall assemble the Collateral and make it available to Bank at a place or
places to be designated by Bank which is reasonably convenient to Bank and
Borrower. Borrower recognizes that in the event Borrower fails to perform,
observe or discharge any of its obligations or liabilities under this Agreement
or the Other Agreements, no remedy of law will provide adequate relief to Bank,
and agrees that Bank shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
7.6 Upon an Event of Default, without notice, demand or legal process
of any kind, Bank may take possession of any or all of the Collateral (in
addition to Collateral of which it already has possession), wherever it may be
found, and for that purpose may pursue the same wherever it may be found, and
may enter into any of Borrower's premises where any of the Collateral may be or
is supposed to be, and search for, take possession of, remove, keep and store
any of the Collateral until the same shall be sold or otherwise disposed of, and
Bank shall have the right to store the same in any of Borrower's premises
without cost to Bank.
7.7 Any notice required to be given by Bank of a sale, lease, or other
disposition of the Collateral or any other intended action by Bank, (i)
deposited in the United States mail, postage prepaid and duly addressed to
Borrower at the address specified at the beginning of this Agreement, or (ii)
sent via certified mail, return receipt requested, or (iii) sent via facsimile,
or (iv) delivered personally, not less than ten (10) days prior to such proposed
action, shall constitute commercially reasonable and fair notice to Borrower.
7.8 Upon an Event of Default, Borrower agrees that Bank may, if Bank
deems it reasonable, postpone or adjourn any such sale of the Collateral from
time to time by an announcement at the time and place of sale or by announcement
at the time and place of such postponed or adjourned sale, without being
required to give a new notice of sale. Borrower agrees that Bank has no
obligation to preserve rights against prior parties to the Collateral. Further,
to the extent permitted by law, Borrower waives and releases any cause of action
and claim against Bank as a result of Bank's possession, collection or sale of
the Collateral, any liability or penalty for failure of Bank to comply with any
requirement imposed on Bank relating to notice of sale, holding of sale or
reporting of sale of the Collateral, and any right of redemption from such sale.
8. GENERAL
8.1 Borrower waives the right to direct the application of any and all
payments at any time or times hereafter received by Bank on account of
Borrower's Liabilities and Borrower agrees that Bank shall have the continuing
exclusive right to apply and re-apply any and all such payments in such manner
as Bank may deem advisable, notwithstanding any entry by Bank upon any of its
books and records.
8.2 Borrower covenants, warrants and represents to Bank that all
representations and warranties of Borrower contained in this Agreement and the
Other Agreements shall be true from
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the time of Borrower's execution of this Agreement to the end of the original
term and each renewal term hereof. All of Borrower's warranties,
representations, undertakings, and covenants contained in this Agreement or the
Other Agreements shall survive the termination or cancellation of the same.
8.3 The terms and provisions of this Agreement and the Other Agreements
shall supersede any prior agreement or understanding of the parties hereto, and
contain the entire agreement of the parties hereto with respect to the matters
covered herein. This Agreement and the Other Agreements may not be modified,
altered or amended except by an agreement in writing signed by Borrower and
Bank. Except for the provisions of Section 2 hereof which shall terminate as
provided in paragraph 2.8, this Agreement shall continue in full force and
effect so long as any portion or component of Borrower's Liabilities shall be
outstanding. Should a claim ("Recovery Claim") be made upon the Bank at any time
for recovery of any amount received by the Bank in payment of Borrower's
Liabilities (whether received from Borrower or otherwise) and should the Bank
repay all or part of said amount by reason of (1) any judgment, decree or order
of any court or administrative body having jurisdiction over Bank or any of its
property; or (2) any settlement or compromise of any such Recovery Claim
effected by the Bank with the claimant (including Borrower), this Agreement and
the security interests granted Bank hereunder shall continue in effect with
respect to the amount so repaid to the same extent as if such amount had never
originally been received by the Bank, notwithstanding any prior termination of
this Agreement, the return of this Agreement to Borrower, or the cancellation of
any note or other instrument evidencing Borrower's Liabilities. Borrower may not
sell, assign or transfer this Agreement, or the Other Agreements or any portion
thereof.
8.4 Bank's failure to require strict performance by Borrower of any
provision of this Agreement shall not waive, affect or diminish any right of
Bank thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by Bank of an Event of Default by Borrower under this
Agreement or the Other Agreements shall not suspend, waive or affect any other
Event of Default by Borrower under this Agreement or the Other Agreements,
whether the same is prior or subsequent thereto and whether of the same or of a
different type. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement or the Other Agreements
and no Event of Default by Borrower under this Agreement or the Other Agreements
shall be deemed to have been suspended or waived by Bank unless such suspension
or waiver is by an instrument in writing signed by an officer of Bank and
directed to Borrower specifying such suspension or waiver.
8.5 If any provision of this Agreement or the Other Agreements or the
application thereof to any Person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the Other Agreements and the
application of such provision to other Persons or circumstances will not be
affected thereby and the provisions of this Agreement and the Other Agreements
shall be severable in any such instance.
8.6 This Agreement and the Other Agreements shall be binding upon and
inure to the benefit of the successors and assigns of Borrower and Bank. This
provision, however, shall not be deemed to modify Paragraph 8.3 hereof.
8.7 Borrower hereby appoints Bank as Borrower's agent and
attorney-in-fact for the purpose of carrying out the provisions of this
Agreement and taking any action and executing any
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agreement, instrument or document which Bank may reasonably deem necessary or
advisable to accomplish the purposes hereof which appointment is irrevocable and
coupled with an interest. All monies paid for the purposes herein, and all
costs, fees and expenses paid or incurred in connection therewith, shall be part
of Borrower's Liabilities, payable by Borrower to Bank on demand.
8.8 This Agreement, or a carbon, photographic or other reproduction of
this Agreement or of any Uniform Commercial Code financing statement covering
the Collateral or any portion thereof, shall be sufficient as a Uniform
Commercial Code financing statement and may be filed as such.
8.9 Except as otherwise provided in the Other Agreements, if any
provision contained in this Agreement is in conflict with, or inconsistent with,
any provision in the Other Agreements, the provision contained in this Agreement
shall govern and control.
8.10 Except as otherwise specifically provided in this Agreement,
Borrower waives any and all notice or demand which Borrower might be entitled to
receive by virtue of any applicable statute or law, and waives presentment,
demand and protest and notice of presentment, protest, default, dishonor,
non-payment, maturity, release, compromise, settlement, extension or renewal of
any and all agreements, instruments or documents at any time held by Bank on
which Borrower may in any way be liable.
8.11 Until Bank is notified by Borrower to the contrary in writing by
registered or certified mail directed to Bank's principal place of business, the
signature upon this Agreement or upon any of the Other Agreements of any
partner, manager, employee or agent of the Borrower, or of any other Person
designated in writing to Bank by any of the foregoing, shall bind Borrower and
be deemed to be the duly authorized act of Borrower.
8.12 This Agreement and the Other Agreements shall be governed and
controlled by the internal laws of the State of Illinois; and not the law of
conflicts.
8.13 If at anytime or times hereafter, whether or not Borrower's
Liabilities are outstanding at such time, Bank: (a) employs counsel for advice
or other representation, (i) with respect to the Collateral, this Agreement, the
Other Agreements or the administration of Borrower's Liabilities, (ii) to
represent Bank in any litigation, arbitration, contest, dispute, suit or
proceeding or to commence, defend or intervene or to take any other action in or
with respect to any litigation, arbitration, contest, dispute, suit or
proceeding (whether instituted by Bank, Borrower or any other Person) in any way
or respect relating to the Collateral, this Agreement, the Other Agreements, or
Borrower's affairs, or (iii) to enforce any rights of Bank against Borrower or
any other Person which may be obligated to Bank by virtue of this Agreement or
the Other Agreements, including, without limitation, any Obligor; (b) takes any
action with respect to administration of Borrower's Liabilities or to protect,
collect, sell, liquidate or otherwise dispose of the Collateral; and/or (c)
attempts to or enforces any of Bank's rights or remedies under this Agreement or
the Other Agreements, including, without limitation, Bank's rights or remedies
with respect to the Collateral, the reasonable costs and expenses incurred by
Bank in any manner or way with respect to the foregoing, shall be part of
Borrower's Liabilities, payable by Borrower to Bank on demand.
8.14 BORROWER IRREVOCABLY AGREES THAT, SUBJECT TO BANK'S SOLE AND
ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER
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OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE OTHER
AGREEMENTS OR THE COLLATERAL SHALL BE LITIGATED ONLY IN COURTS HAVING SITUS
WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. BORROWER HEREBY CONSENTS AND
SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN
SAID CITY AND STATE. BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR
CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER BY BANK IN
ACCORDANCE WITH THIS PARAGRAPH.
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8.15 BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN
ANY ACTION, SUIT, COUNTERCLAIM OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY RIGHTS
UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE OTHER AGREEMENTS, OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR (II) ARISING FROM
ANY DISPUTE OR CONTROVERSY ARISING IN CONNECTION WITH OR RELATED TO THIS
AGREEMENT, THE OTHER AGREEMENTS, OR ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT, AND AGREES THAT ANY SUCH ACTION, SUIT, COUNTERCLAIM OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year specified at the beginning hereof.
BIRMAN & ASSOCIATES, INC.,
a Tennessee corporation
By: ______________________________
Its: ______________________________
Accepted this 21st day of August, 1996, at Bank's principal place of
business in the City of Chicago, State of Illinois.
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By: ___________________________
Its: __________________________
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