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FINOVA Capital Corporation
Rediscount Finance
FIRST AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Borrower: AutoInfo Finance of Virginia, Inc.
Address: 536 West 21st Street
Norfolk, Virginia 23517
Date: December 19, 1995
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THIS FIRST AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is entered into on
the above date between FINOVA CAPITAL CORPORATION, a Delaware corporation
("Lender"), whose corporate address is Dial Tower, Dial Corporate Center,
Phoenix, Arizona 85077 and whose Rediscount Finance Office address is 13355 Noel
Road, Suite 800, Dallas, Texas 75240 and the borrower named above (the
"Borrower"), whose chief executive office is located at the above address
("Borrower's Address"). Borrower has purchased certain assets and certain
assumed the obligations of Falk Finance Company, Inc.'s, including the
indebtedness to Lender pursuant to that certain Loan and Security Agreement,
dated September 30, 1994, ("Prior Agreement"). This First Amemded and Restated
Loan and Security Agreement is an amendment and restatement of the Prior
Agreement.
1. DEFINITIONS
1.1. ACCOUNT DEBTOR. The term "Account Debtor" shall mean any person or
persons that are an obligor in any contractual arrangement with Borrower or any
co-signor in respect of any Receivable.
1.2. AGREEMENT. The term "Agreement" shall mean this Loan and Security
Agreement and any amendment, modifications or extension hereof.
1.3. BUSINESS DAY. The term "Business Day" shall mean a day, other than a
Saturday or Sunday, on which commercial banks are open for business to the
public in Phoenix, Arizona and New York, New York.
1.4. CHARGE OFFS. The term "Charge Offs" shall mean the amount due (including
the principal balance plus all earned fees and charges) pursuant to a Receivable
on the date that Borrower charges off such Receivable as uncollectible, pursuant
to Borrower's policies and/or procedures.
1.5. CODE. The term "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
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1.6. COLLATERAL. The term "Collateral" shall have the meaning set forth in
Section 3.1. hereof.
1.7. COLLATERAL RECOVERY RATE. The term "Collateral Recovery Rate" shall mean,
for any period of determination, (i) the total cash collected from all
Receivables (including but not limited to all cash proceeds from charge off
recoveries, but excluding recoveries from Charlie Falk Auto Wholesale, Inc., or
its affiliates, (collectively referred to herein as "CFAW") pursuant to any
recourse agreement or agreements between Borrower and CFAW ["Recourse
Agreement"]), divided by (ii) the sum of (a) the Rebates plus (b) the total cash
collected from all Receivables (excluding all cash proceeds from charge off
recoveries) plus (c) the aggregate of all Charge Offs for that period.
1.8. COMMONLY CONTROLLED ENTITY. The term "Commonly Controlled Entity" shall
mean an entity, whether or not incorporated, which is under common control with
Borrower within the meaning of Section 414(b) or (c) of the Code.
1.9. DEFAULT. The term "Default" shall mean an event which with the passage of
time or notice or both would constitute an Event of Default (as defined in
Section 7.1).
1.10. DISTRIBUTIONS. The term "Distributions" shall mean any dividends or
other distribution of earnings to Borrower's shareholders, loans to officers,
directors, affiliates or shareholders (excluding salaries).
1.11. ELIGIBLE RECEIVABLES. The term "Eligible Receivables" shall mean those
Receivables of Borrower that are acceptable to Lender, in its reasonable
discretion, and, in each case, that meet, at a minimum, all of the following
requirements: (i) arise from the extension of credit, the sale and delivery of
goods or the rendering of services in the ordinary course of Borrower's
business; (ii) represent a valid and binding obligation enforceable in
accordance with its terms for the amount outstanding thereof without offset,
counterclaim or defense (whether actual or alleged); (iii) comply in all
respects with all applicable laws and regulations, including, but not limited
to, truth in lending and credit disclosure laws and regulations; (iv) all
amounts and information appearing thereon or furnished to Lender in connection
therewith are true and correct and undisputed by the Account Debtor thereon or
any guarantor thereof; (v) Borrower and the Account Debtor are not engaged in
any litigation regarding nonpayment of the Receivable; (vi) to the best
knowledge of Borrower neither the Account Debtor thereon nor any guarantor
thereof is subject to any receivership, insolvency or bankruptcy proceeding, is
insolvent or has failed to meet its debts as they mature; (vii) Borrower has
good and sufficient right to pledge, assign and deliver the Receivables free
from all liens, claims, encumbrances or security interests whatsoever; (viii)
neither the Account Debtor thereon nor any guarantor thereof is employed by,
related to or affiliated with Borrower; (ix) to the best knowledge of Borrower
no condition exists that materially or adversely affects the value of the
Receivables or jeopardizes any security therefor; (x) if the Receivables arise
from the sale of goods, such goods have been delivered and accepted by the
Account Debtor and are still subject to the lawful possession and control of the
Account Debtor and have not been otherwise returned to or repossessed by
Borrower; (xi) is not a renewal of any Receivable or an extension of any
Receivable previously ineligible hereunder; (xii) the original principal amount
thereof does not exceed the Maximum Amount of an Eligible Receivable (Schedule
Sections 1.11.A.) and the original term thereof does not exceed the Maximum Term
of an Eligible Receivable (Schedule Section 1.11.B.); (xiii) meets the
Eligibility Test and has been reported to Lender in compliance with the Aging
Procedures (Schedule Section 1.11.C.); (xiv) is not evidenced by a judgment or
has not been reduced to judgment; (xv) is not an open account; (xvi) is
evidenced by a written payment agreement, bearing interest or containing a time
price differential, which has been executed by the Account Debtor; (xvii) the
Account Debtor thereunder is a legal resident of the United States; (xviii)
payments under the Receivable are to be made in United States dollars; and (xix)
is not solely for the financing of a deferred down payment and/or tax, title
costs and license tag fees.
1.12. ERISA. The term "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
1.13. GAAP. The term "GAAP" shall mean generally accepted accounting
principles and other standards as promulgated by the American Institute of
Certified Public Accounts.
1.14. GUARANTOR. The term "Guarantor" shall mean any person or persons who
execute a guaranty agreement in favor of Lender guaranteeing the repayment of
the Borrower's Indebtedness to Lender (Schedule Section 4.5).
1.15. GUARANTY AGREEMENT. The term "Guaranty Agreement" shall mean that
certain agreement executed by the Guarantor, in a form and substance approved by
Lender.
1.16. GOVERNING RATE. The term "Governing Rate" shall mean the "Prime" rate
publicly announced by Citibank N.A., New York, New York (or such other "money
center" bank as Lender, in its sole discretion, may select from time to time,
but shall not be more than the highest rate of the five largest banks in the
Continental United States as their respective corporate base, reference, prime
or similar benchmark rate), provided however, that such rate may not be the
lowest rate charged to such bank's customers.
1.17. INDEBTEDNESS. The term "Indebtedness" shall mean all amounts advanced
hereunder by Lender to Borrower together with all other amounts owing or
becoming owing to Lender by Borrower, direct or indirect, absolute or
contingent, now or hereafter existing, whether pursuant to the terms of this
Agreement or any document or instrument evidencing or securing the transaction
contemplated hereby.
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1.18. LEVERAGE RATIO. The term "Leverage Ratio" shall mean, at any date of
determination, total liabilities of Borrower excluding all Subordinated Debt,
but including the outstanding balance of the Indebtedness, divided by the sum of
the amount of Borrower's Tangible Net Worth plus all Subordinated Debt.
1.19. LOAN DOCUMENTS. The term "Loan Documents" shall mean this Agreement, the
Note, the Schedule, the Guaranty, Subordination Agreements, Agency and Custodian
Agreements and all other documents executed in connection with this Agreement,
together with any and all renewals, amendments, restatements or replacements of
such documents.
1.20. MAXIMUM RATE. The term "Maximum Rate" shall mean the highest lawful and
nonusurious rate of interest applicable to the Note made and delivered by
Borrower to Lender in connection herewith, that at any time or from time to time
may be contracted for, taken, reserved, charged, or received on the Note and the
Indebtedness under the laws of the United States and the laws of such states as
may be applicable thereto, that are in effect or, to the extent allowed by such
laws, that may be hereafter in effect and that allow a higher maximum
nonusurious and lawful interest rate than would any applicable laws now allow.
1.21. NET INCOME. The term "Net Income" shall mean with respect to any fiscal
period, the net earnings of Borrower (excluding all extraordinary gains or
nonrecurring income) before provision for income taxes for such fiscal period of
Borrower, all as reflected on the financial statements of Borrower supplied to
Lender pursuant to Sections 4.4(A) and 4.4(B) hereof.
1.22. NOTE. The term "Note" shall mean the promissory note of even date
herewith, executed by Borrower and payable to the order of Lender.
1.23. PLAN. The term "Plan" shall mean any pension plan that is covered by
Title IV of ERISA and with respect to which Borrower or a Commonly Controlled
Entity is an "Employer" as defined in section 3(5) of ERISA.
1.24. REBATES. The term "Rebates" shall mean, for any period of determination,
the aggregate of all rebates of interest and insurance fees for that period.
1.25. RECEIVABLES. The term "Receivables" shall mean all accounts of Borrower
and any other right of Borrower to receive payment, including, without
limitation, all loans, extensions of credit or Borrower's right to payment for
goods sold or services rendered by Borrower.
1.26. REQUEST FOR ADVANCE. The term "Request for Advance" shall mean a written
request for an advance in the form of Exhibit "A" attached hereto and made a
part hereof.
1.27. SCHEDULE. The term "Schedule" shall mean the schedule executed in
conjunction with this Agreement of even date herewith, as may be amended from
time to time, upon written agreement of Lender and Borrower.
1.28. SUBORDINATED DEBT. The term "Subordinated Debt" shall mean the aggregate
amount of any indebtedness of Borrower to persons other than Lender that by its
terms is subordinated in all respects, including, but not limited to, the right
of payment, to the prior payment in full of the Indebtedness. A subordination
and standstill agreement, in a form and substance satisfactory to Lender, shall
be entered into by all holders of Subordinated Debt.
1.29. TANGIBLE NET WORTH. The term "Tangible Net Worth" shall mean, at any
time of determination, the shareholder's equity of Borrower determined in
accordance with GAAP minus the aggregate amount of all intangible assets and all
assets consisting of obligations due to Borrower from shareholders, directors,
officers, or any affiliate of Borrower, any shareholder of Borrower or any
Guarantor hereunder. Notwithstanding the foregoing, up to an aggregate
outstanding balance of Two Million Five Hundred Thousand of obligations due to
Borrower from shareholder, directors, officers, or any affiliate of Borrower,
any shareholder of Borrower or any Guarantor may be included in Tangible Net
Worth, provided that all such obligations are adequately collateralized by an
automobile or automobiles.
1.30. 30-DAY RECEIVABLES PERCENTAGE. The term "30-Day Receivables Percentage"
shall mean, at any date of determination, the percentage determined by the
aggregate unmatured and unpaid amount due to Borrower from all Account Debtors
named thereon, including all unearned finance charges, time price differentials,
insurance fees and other fees and charges pursuant to the Receivables that are
thirty (30) days or less past due, divided by the aggregate unmatured and unpaid
amount due to Borrower from all Account Debtors named thereon, including all
unearned finance charges, time price differentials, insurance fees and other
fees and charges pursuant to all the Receivables.
2. LOAN
2.1. AMOUNT OF LOAN. Subject to the terms, covenants and conditions
hereinafter set forth, Lender agrees upon the Borrower's request from time to
time, until the Maturity Date, to make advances to Borrower (collectively, the
"Loan"), in an aggregate amount not to exceed at any time outstanding the lesser
of the following: (a) the Amount of Revolving Credit Line (Schedule Section
2.1.A.) or (b) the Availability on Eligible Receivables (Schedule Section
2.1.B.). Within the limits of this Section 2.1, Borrower may borrow, repay and
reborrow the advances. The Loan shall be evidenced by the Note.
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2.2. INTEREST RATE. The outstanding principal balance of Loan shall bear
interest at the Stated Interest Rate (Schedule Section 2.2). If Lender is ever
prevented from charging or collecting interest at the rate set forth in Stated
Interest Rate Section (i) because interest at such rate would exceed interest at
the Maximum Rate, then the rate set forth in Stated Interest Rate Section (i)
shall continue to be the Maximum Rate until Lender has charged and collected the
full amount of interest chargeable and collectable had interest at the rate set
forth in Stated Interest Rate Section (i) always been lawfully chargeable and
collectible. As the Governing Rate changes, the rate set forth in Stated
Interest Rate Section (i) shall be increased or decreased (subject to the
Maximum Rate) on the first day of each calendar month to correspond with the
change in the Governing Rate then in effect and shall remain fixed at such rate
until the first day of the next succeeding calendar month, notwithstanding
fluctuations in the Governing Rate during the month. All changes in the
Governing Rate shall be made without notice to Borrower. The monthly interest
due on the principal balance of the Loan outstanding shall be computed for the
actual number of days elapsed during the month in question on the basis of a
year consisting of three hundred sixty (360) days and shall be calculated by
determining the average daily principal balance outstanding for each day of the
month in question. The daily rate shall be equal to 1/360th times the Stated
Interest Rate (but shall not exceed the Maximum Rate).
2.3. PAYMENTS. All payments to Lender shall be payable at FINOVA Capital
Corporation, File No. 96425, P. O. Box 668100, Charlotte, NC 28266-8100. All
payments received pursuant to this Agreement shall be applied to Borrower's
Indebtedness three (3) Business Days after the actual receipt of such payment by
Lender's depository bank if such payment is credited to Lender's account. The
Indebtedness shall be due and payable as follows:
A. Accrued but unpaid interest for each calendar month during the term hereof
shall be due and payable, in arrears, on or before the fifteenth (15th) day of
the immediately succeeding calendar month; if such accrued but unpaid interest
for the preceding month is not received by the fifteenth (15th) of the month,
such unpaid interest shall be added to the Indebtedness.
B. Costs, fees and expenses payable pursuant to this Agreement shall be due
and payable by Borrower to Lender or to such other person(s) designated by
Lender in writing on demand; and
C. The entire outstanding balance of the Indebtedness shall be due and
payable, if not prepaid, on the Maturity Date (Schedule Section 2.3.).
2.4. PAYMENT DUE ON A NON-BUSINESS DAY. If any payment of the Indebtedness
falls due on a day other than a Business Day, then such due date shall be
extended to the next succeeding Business Day.
2.5. MANDATORY PAYMENTS. Provided that Borrower is not otherwise in Default
hereunder, if at any time the amount advanced by Lender to Borrower exceeds the
maximum amount of the Loan allowed pursuant to Section 2.1, Borrower shall
immediately and without notice, repay to Lender an amount sufficient to
eliminate such excess, or, at Lender's option, assign and deliver additional
Eligible Receivables sufficient for such purpose. In the event Borrower sells,
transfers, assigns or otherwise disposes of all or any portion of its
Receivables, other than in the ordinary course of business, Borrower shall apply
all proceeds of any such sale, transfer, assignment or other disposition to
reduce the outstanding balance of the Indebtedness.
2.6. VOLUNTARY PREPAYMENTS. Borrower may, at its option, voluntarily prepay
the Indebtedness in full at any time, provided, however, that Borrower has given
Lender ninety (90) days written notice of any such intention to prepay the
Indebtedness in full. Borrower may not make such prepayment prior to the
expiration of such ninety (90) day period. Upon written notice of prepayment of
the Indebtedness in full, the commitment by Lender to advance funds to Borrower
and all the obligations of Lender shall terminate on the expiration of said
ninety (90) day notice period, and the entire amount of the Indebtedness shall
be due and payable on such date.
2.7. MAXIMUM INTEREST; CONTROLLING AGREEMENT. The contracted for rate of
interest of the Loan without limitation, shall consist of the following: (i) the
Stated Interest Rate, calculated and applied to the principal balance of the
Note in accordance with the provisions of the Note and this Agreement; (ii)
Interest After Event of Default or Due Date, calculated and applied to the
amounts due under the Note in accordance with the provisions thereof; and (iii)
all Additional Sums (as herein defined), if any. Borrower agrees to pay an
effective contracted for rate of interest which is the sum of the
above-referenced elements.
All fees, charges, goods, things in action or any other sums or things of
value (other than amounts described in the immediately previous paragraph), paid
or payable by Borrower (collectively, the "Additional Sums"), whether pursuant
to the Note, this Agreement or any other documents or instruments in any way
pertaining to this lending transaction, or otherwise with respect to this
lending transaction, that under any applicable law may be deemed to be interest
with respect to this lending transaction, for the purpose of any applicable law
that may limit the maximum amount of interest to be charged with respect to this
lending transaction, shall be payable by Borrower as, and shall be deemed to be,
additional interest and for such purposes only, the agreed upon and "contracted
for rate of interest" of this lending transaction shall be deemed to be
increased by the rate of interest resulting from the inclusion of the Additional
Sums.
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It is the intent of the parties to comply with the usury law ("Applicable
Usury Law") applicable pursuant to the terms of the preceding paragraph or such
other usury law which is applicable if the law chosen by the parties is not
applicable. Accordingly, it is agreed that notwithstanding any provisions to the
contrary in the Loan Documents, or in any of the documents securing payment
hereof or otherwise relating hereto, in no event shall the Loan Documents or
such documents require the payment or permit the collection of interest in
excess of the maximum contract rate permitted by the Applicable Usury Law. In
the event (a) any such excess of interest otherwise would be contracted for,
charged or received from Borrower or otherwise in connection with the loan
evidenced hereby, or (b) the maturity of the indebtedness evidenced by the Loan
Documents is accelerated in whole or in part, or (c) all or part of the
principal or interest of the Loan Documents shall be prepaid, so that under any
of such circumstances the amount of interest contracted for, shared or received
in connection with the loan evidenced hereby, would exceed the maximum contract
rate permitted by the Applicable Usury Law, then in any such event (1) the
provisions of this paragraph shall govern and control, (2) neither Borrower nor
any other person or entity now or hereafter liable for the payment hereof will
be obligated to pay the amount of such interest to the extent that it is in
excess of the maximum contract rate permitted by the Applicable Usury Law, (3)
any such excess which may have been collected shall be either applied as a
credit against the then unpaid principal amount hereof or refunded to Borrower,
at Lender's option, and (4) the effective rate of interest will be automatically
reduced to the maximum amount of interest permitted by the Applicable Usury Law.
It is further agreed, without limiting the generality of the foregoing, that to
the extent permitted by the Applicable Usury Law; (x) all calculations of
interest which are made for the purpose of determining whether such rate would
exceed the maximum contract rate permitted by the Applicable Usury Law shall be
made by amortizing, prorating, allocating and spreading during the period of the
full stated term of the loan evidenced hereby, all interest at any time
contracted for, charged or received from Borrower or otherwise in connection
with such loan; and (y) in the event that the effective rate of interest on the
loan should at any time exceed the maximum contract rate allowed under the
Applicable Usury Law, such excess interest that would otherwise have been
collected had there been no ceiling imposed by the Applicable Usury Law shall be
paid to Lender from time to time, if and when the effective interest rate on the
loan otherwise falls below the maximum amount permitted by the Applicable Usury
Law, to the extent that interest paid to the date of calculation does not exceed
the maximum contract rate permitted by the Applicable Usury Law, until the
entire amount of interest which would have otherwise been collected had there
been no ceiling imposed by the Applicable Usury Law has been paid in full.
Borrower further agrees that should the maximum contract rate permitted by the
Applicable Usury Law be increased at any time hereafter because of a change in
the law, then to the extent not prohibited by the Applicable Usury Law, such
increases shall apply to all indebtedness evidenced hereby regardless of when
incurred; but, again to the extent not prohibited by the Applicable Usury Law,
should the maximum contract rate permitted by the Applicable Usury Law be
decreased because of a change in the law, such decreases shall not apply to the
indebtedness evidenced hereby regardless of when incurred.
2.8. STATEMENT OF ACCOUNT. Lender shall provide Borrower, each month, with a
statement of Borrower's account, prepared from Lender's records, which shall
conclusively be deemed correct and accepted by Borrower, unless Borrower gives
Lender a written statement of exceptions within ten (10) days after receipt of
such statement.
2.9. CONDITIONS PRECEDENT TO ADVANCES. The obligation of Lender to make
advances is subject to the following conditions: (i) no Default, except to the
extent that Borrower is diligently pursuing the cure of such Default in good
faith within the cure period set forth in Section 7.1 hereof, or Event of
Default shall have occurred; (ii) all actions to be taken by Borrower in
connection with the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to Lender; (iii) the warranties and
representations of Borrower contained herein shall be true and correct on the
date hereof and shall be deemed to have been made again on the date of each
advance and shall then also be true and correct; (iv) Borrower shall have
performed and complied with all obligations or conditions required by this
Agreement to be performed or complied with prior to each advance and Borrower
shall not then be in default under any document or instrument evidencing or
securing the Indebtedness; (v) Borrower shall submit to Lender a completed
Request for Advance Report in the form and substance of Exhibit "A" attached
hereto, on the date such advance is requested or shall have complied with the
provisions concerning oral advances hereunder as set forth in Section 2.10
hereof; (vi) prior to the initial advance hereunder, Borrower shall submit to
Lender the initial Availability Report and all other documents, instruments,
financing statements, evidence of authority, evidence of compliance with
applicable laws, opinions of counsel and other information which Lender may
reasonably request; and (vii) Borrower shall submit to Lender resolutions of its
Board of Directors designating personnel authorized by Borrower to execute
Availability Reports on behalf of Borrower and each specific request for advance
shall be executed by one such person.
2.10. ORAL REQUEST FOR ADVANCE. All oral requests for advances shall be made
only by an authorized agent of Borrower designated by or acting under the
authority of a resolution of the Board of Directors of Borrower, a duly
certified or executed copy of which shall be furnished to Lender prior to any
oral request. Lender shall be entitled to rely upon such authorization until
written notice to the contrary is received by Lender. Borrower covenants and
agrees to furnish to Lender written confirmation of any such oral request within
two (2) days after such oral request, in a form set forth on Exhibit "A"
attached hereto and incorporated herein, but any such loan or advance shall be
deemed to be made under and entitled to the benefits of this
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Agreement and any other documents or instruments executed in connection herewith
irrespective of any failure by Borrower to furnish such written confirmation.
Any loan or advance shall be conclusively presumed to have been made under the
terms of this Agreement, to or for the benefit of Borrower, when made pursuant
to the terms of any written agreement executed in connection herewith; or in
accordance with such requests and directions; or when an advance is deposited to
the credit of the account of any person or persons, corporation or corporations
comprising Borrower, regardless of the fact that persons other than those
authorized hereunder may have authority to draw against such account or
regardless of the fact that the advance was not made or deposited for the
benefit of all persons or corporations comprising Borrower.
2.11. ALL ADVANCES TO CONSTITUTE ONE LOAN. All evidences of credit, loans and
advances made by Lender to Borrower under this Agreement and any other documents
or instruments executed in connection herewith shall constitute one loan, and
all indebtedness and obligations of Borrower to Lender under this Agreement and
all other such documents and instruments shall constitute one general obligation
secured by Lender's security interest in all of the Collateral and by all other
security interests, liens, claims and encumbrances heretofore, now, or at any
time or times hereafter granted by Borrower to Lender. Borrower agrees that all
of the rights of Lender set forth in this Agreement shall apply to any
modification of or supplement to this Agreement and any other such documents and
instruments.
2.12. ADVANCES. Lender shall have the right in Lender's discretion, subject to
availability hereunder on behalf of and without notice to Borrower, to make and
use advances to pay Lender for any amounts due to Lender pursuant to this
Agreement or otherwise, to cure any default hereunder, notwithstanding the
expiration of any applicable cure period.
2.13. APPLICATION OF PAYMENTS. Borrower does hereby irrevocably agree that
Lender shall have the continuing exclusive right to apply and reapply any and
all payments and collections at any time or times hereafter received by Lender
against the Indebtedness, in such manner as Lender may determine.
3. SECURITY AGREEMENT
3.1. SECURITY INTEREST. To secure the prompt payment to Lender of the
Indebtedness and any and all other obligations now existing or hereinafter
arising owed by Borrower to Lender, Borrower hereby irrevocably grants to Lender
a first and continuing security interest in the following property and interests
in property of Borrower, whether now owned or existing or hereafter acquired or
arising and wheresoever located:
A. All Receivables and all accounts, chattel paper, instruments, contract
rights and general intangibles, all of Borrower's right, remedies, security,
liens, guaranties, or other contracts of suretyship with respect thereto, all
deposits or other security or support for the obligation of any Account Debtor
thereunder and credit and other insurance acquired by Account Debtor or the
Borrower in connection therewith.;
B. All bank accounts of Borrower, except for such bank's right of offset;
C. All monies, securities and property, now or hereafter held, received by, or
intrusted to, in the possession or under the control of Lender or a bailee of
Lender;
D. All accessions to, substitutions for and all replacements, products and
proceeds of the foregoing, including, without limitation, proceeds of insurance
policies referenced in Section 3.1.A above (including but not limited to claims
paid and premium refunds); and
E. All books and records (including, without limitation, customer lists,
credit files, tapes, ledger cards, computer software and hardware, electronic
data processing software, computer printouts and other computer materials and
records) of Borrower evidencing or containing information regarding any of the
foregoing.
3.2. FINANCING STATEMENTS AND FURTHER ASSURANCES. Borrower hereby agrees to
execute UCC-1 Financing Statements, in the form and substance of Exhibit "B"
hereto, and any other instruments or documents reasonably necessary to evidence,
preserve or protect Lender's security interest in the Collateral. Borrower
agrees that financing statements shall be filed covering all of Borrower's
locations (Schedule Section 3.2.).
Upon Lender's request, Borrower agrees to deliver to Lender, at such places as
Lender may reasonably designate, schedules executed by Borrower, listing the
Receivables and fully and correctly specifying in adequate detail the aggregate
unmatured unpaid face amount of each Receivable and the amount of the deferred
installments thereof falling due each month. These schedules shall be in form
and tenor satisfactory to or supplied by Lender. All schedules of delivered
Collateral pledged to Lender shall be assigned to Lender pursuant to the
"Schedule of Receivables and Assignment" in the form and substance of Exhibit
"E" attached hereto. Borrower further warrants and agrees that in each case
where the terms of any Receivable require the Borrower or the Account Debtor
named in such Receivable to place or carry fire insurance or other insurance in
respect of the merchandise or property to which such Receivable relates, the
Borrower shall or shall cause the Account Debtor to maintain such insurance
until the full amount of such Receivable is collected and if not, Lender, at its
option, may place and maintain such insurance, charging the cost thereof to
Borrower.
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3.3. FAILURE TO DELIVER. Failure to deliver physical possession of any
instruments, documents or writings in respect of any Receivable to Lender shall
not invalidate Lender's security interest therein. To the extent that possession
may be required by applicable law for the perfection of Lender's security
interest, the original chattel paper and instruments representing the
Receivables shall be deemed to be held by Lender, although kept by the Borrower
as the custodial agent of Lender.
3.4. NOTICE OF COLLATERAL ASSIGNMENT. All contracts, documents or instruments
representing or evidencing a Receivable shall contain (by way of stamp or other
method satisfactory to Lender) the following language: "Assigned to FINOVA
Capital Corporation as Collateral".
3.5. LOCATION OF RECEIVABLES. Borrower shall, at any reasonable time and at
Borrower's own expense, physically deliver to Lender all Receivables (including
any instruments, documents or writings in respect of any Receivable together
with all instruments, documents or writings in respect of any collateral
securing each Receivable, except to the extent Borrower is required by
applicable law to retain possession of such instruments, documents or writings)
assigned to Lender to any reasonable place or places designated by Lender. All
Receivables shall, regardless of their location, be deemed to be under Lender's
domination and control (with files so labeled) and deemed to be in Lender's
possession.
3.6. RECORDS AND INSPECTIONS. Borrower shall at all times keep complete and
accurate records pertaining to the Collateral, which records shall be current on
a daily basis and located only at the locations (Schedule Section 3.2.). Lender
by or through any of its officers, agents, employees, attorneys or accountants,
shall have the right to enter any such locations, at any reasonable time or
times during regular business hours, for so long as Lender may desire, to
inspect the Collateral and to inspect, audit and make extractions or copies from
the books, records, journals, orders, receipts, correspondence or other data
relating to the Collateral or this Agreement.
3.7. ADDITIONAL DOCUMENTS. Borrower hereby agrees to execute any additional
documents or financing statements which Lender deems necessary in its reasonable
discretion in order to evidence Lender's security interest in the Collateral.
Borrower shall not allow any financing statement or notice of assignment of
accounts receivable, other than those executed in connection with this
Agreement, to be on file in any public office covering any Collateral, proceeds
thereof or other matters subject to the security interest granted to Lender.
3.8. COLLECTION. Borrower agrees at its own expense to promptly and diligently
collect each installment of all Receivables in trust for the exclusive account
of Lender, to hold Lender harmless from any and all loss, damage, penalty,
liability, fine or expense arising from such collection by Borrower or its
agents and to faithfully account therefor to Lender. Upon the occurrence of a
Default, Lender expressly retains the unqualified right at any time it so elects
to take over the collection of the Receivables.
3.9. BLOCKED ACCOUNTS. Upon the occurrence of a Default, except to the extent
that Borrower is diligently pursuing the cure of such Default in good faith
within the cure period set forth in Section 7.1 hereof, or an Event of Default,
at Lender's request, any checks, notes, drafts or any other payment upon and/or
proceeds of the Collateral received by Borrower (or any subsidiaries, divisions,
affiliates, proprietorships, shareholders, directors, officers, employees,
agents or those persons acting for or in concert with Borrower), shall no later
than the next Business Day following receipt thereof, be delivered to Lender, at
Lender's address set forth above, for application on account of the Indebtedness
and shall be reflected in the Statement of Account as provided in Section 2.8
herein, until such time as Lender has established a depository account at a bank
for the deposit of such payments, made arrangements for such deposits to be
transferred to Lender daily and thereafter established a lock-box arrangement or
otherwise. Borrower shall (i) deposit or cause all Items, as defined below, to
be deposited in the special account so established by Lender or transfer all
Items to Lender for application on account of the Indebtedness and to be
reflected in the Statement of Account as provided in Section 2.8 herein and (ii)
maintain copies of all checks or other items of payment and deposit slips
related thereto, together with a collection report in a form satisfactory to
Lender. All cash payments, checks, drafts, or similar items of payment upon
and/or proceeds of the Receivables (collectively "Items") by or for the account
of Borrower shall be the sole and exclusive property of Lender immediately upon
the earlier of the receipt of such Items by Lender or the receipt of such Items
by Borrower; provided, however, that no such item received by Lender shall
constitute payment to Lender and be applied to reduce the Indebtedness until the
later of: (i) three (3) Business Days from collection of such Item by Lender's
depository bank, or (ii) such Item being actually collected by Lender's
depository bank and such collection being credited to Lender's account.
Notwithstanding anything to the contrary herein, all such items of payment shall
be deemed not received if the same is subsequently dishonored or not duly
credited to Lender's depository account for any reason whatsoever.
3.10. PROTECTION OF RECEIVABLE RECORDS. Borrower hereby agrees to take the
following protective actions to prevent destruction of Borrower's Collateral and
records pertaining to such Collateral: (i) if Borrower maintains its Collateral
records on a manual system such records shall be kept in a fire proof cabinet or
on no less than a monthly basis, a record of all payments on Receivables and all
other matters relating to the Collateral shall be placed in an off site safety
deposit box (and Lender shall have access to such safety deposit box); or (ii)
if the Collateral records are computerized, Borrower agrees to create a tape or
diskette "back-up" of the computerized information and upon the request of
Lender, provide Lender with a tape or diskette copy of such "back-up"
information.
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3.11. USE OF COLLECTIONS AND MODIFICATION OF RECEIVABLES. Provided that Lender
has not required that Borrower remit all collections or proceeds of Collateral
to Lender, Borrower may use or dispose of the funds received on the Receivables
in the ordinary course of business (including returned or repossessed goods),
collect or compromise accounts or obligations and accept returned goods or make
repossessions, as Borrower shall determine based upon its reasonable discretion.
3.12. USE OF PROCEEDS. Borrower shall use the initial advance of the Loan to
pay in full all debt or obligations which are secured by the Collateral
immediately prior to the execution of this Agreement, and thereafter to use the
proceeds of the Loan in the ordinary course of business, solely in its
operations for costs incurred in the acquisition and financing of Receivables,
or for payments to Lender pursuant to Section 2.12 hereof.
3.13. RETURN OF COLLATERAL. Upon the payment in full or renewal of any
Receivable to which the written documents evidencing such Receivable are held by
Lender, Borrower shall submit all requests for the return of such documents
pursuant to the "Request For Return of Collateral" form, a copy of which is
attached hereto as Exhibit "C".
3.14. LENDER'S PAYMENT OF CLAIMS. Lender may, in its sole discretion,
discharge or obtain the release of any security interest, lien, claim or
encumbrance asserted by any person against the Collateral. All sums paid by
Lender in respect thereof shall be payable, on demand, by Borrower to Lender and
shall be a part of the Indebtedness.
4. REPORTING REQUIREMENTS
4.1. ACCOUNTING PRACTICES. Borrower shall maintain (i) a modern system of
accounting in accordance with GAAP or other systems of accounting acceptable to
Lender and (ii) standard operating procedures applicable to all of its locations
with respect to the handling and disposition of cash receipts and other proceeds
of Collateral on a daily basis, including the depositing thereof, aging of
account receivables, record keeping and such other matters as Lender may
reasonably request. For the purpose of determining compliance with the covenants
and representations in the Loan Documents, Lender shall have the right to recast
any financial statement or report presented to Lender by or on behalf of
Borrower to comply with GAAP.
4.2. PLEDGE OF RECEIVABLES. Borrower hereby agrees to pledge all Receivables
and deliver documentation evidencing such Receivables to Lender, no less often
than on the fifteenth (15th) day of each calendar month during the term of this
Agreement. If the evidence of title of the collateral securing the pledged
Receivables is not delivered to Lender with the original Receivable
documentation, such evidence of title shall be delivered to Lender not later
than fifteen (15) days after such evidence of title is received by Borrower.
Borrower shall deliver monthly to Lender, with the delivery of the documentation
evidencing the Receivables above, a "Vehicle Title Exception Report" listing all
vehicle titles which have not been received by Lender or are due from the
appropriate state motor vehicle department.
4.3. ACCOUNT DEBTORS' ADDRESSES. Borrower agrees to furnish to Lender from
time to time, promptly upon request, a list of all Account Debtors' names and
their most current addresses. Borrower agrees that Lender may from time to time,
consistent with standard or generally accepted auditing practices, verify the
validity, amount and any other matters relating to the Receivables by means of
mail, telephone or otherwise, in the name of Borrower and upon the occurrence of
an Event of Default in the name of Lender or such other name as Lender may
choose.
4.4. FINANCIAL REPORTS. Borrower shall furnish to Lender the following
financial statements and reports, in a form satisfactory to Lender:
A. As soon as practicable and in any event mailed within fifteen (15) days
after the end of each fiscal month, an Availability Report for the immediately
preceding month, reflecting information for each Contractual Life Category of
Receivables (Schedule Section 1.9.C.) and a summary Availability Report for all
Receivables, in the form and substance of Exhibits "D" and "D-1" attached
hereto;
B. As soon as practicable and in any event mailed within fifteen (15) days
after the end of each fiscal month for the immediately preceding month: (i)
Statement of Accounts Receivable showing the detailed aging of each Receivable
categorized by contractual life according to the procedures (Schedule Section
1.9.C.); (ii) a Dilution Analysis of the Receivables acquired during each fiscal
year, reflecting the aging, cumulative losses and cumulative charge-offs with
respect to such Receivables; (iii) a Collection Report, reflecting the
contractual payment obligations due to Borrower for the month of reporting from
the Receivables, the actual payments received from the Receivables and all
collections received from all sources, including payments, from the Receivables;
(iv) a monthly Profit and Loss Statement and Balance Sheet, certified by
Borrower's chief financial officer or equivalent duly elected officer of
Borrower; and (v) Schedule of Receivables and Assignment in the form and
substance of Exhibit "E" attached hereto.
C. Within ninety (90) days after the end of each of Borrower's fiscal years,
annual financial statements, or consolidated statements, as the case may be, of
Borrower prepared in accordance with GAAP, consistently applied and certified by
its chief financial officer or equivalent duly elected officer. The financial
statements shall be prepared in accordance with GAAP and shall consist of a
balance sheet as of the end of such fiscal year and comparative statements of
earnings, cash flows, and change in stockholders' equity for such fiscal year
(Schedule Section 4.4.).
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D. With reasonable promptness, such other financial data as Lender may
reasonably request, including but not limited to tax returns, business plans and
reports.
Together with each delivery of financial statements required by subsections A,
B and C above, Borrower shall deliver to Lender and shall cause each of its
subsidiaries to deliver to Lender, if requested by Lender, a certificate in form
satisfactory to Lender, certifying that no Default or Event of Default exists
under this Agreement as of the date of such certificate, or if a Default or an
Event of Default exists, specifying the nature and period of existence thereof
and what action Borrower proposes to take with respect thereto.
4.5. FINANCIAL STATEMENTS OF GUARANTORS. Guarantor (Schedule Section 4.5.)
shall furnish to Lender all form 10-Qs and 10-Ks, with all financial exhibits
(and others as requested by Lender), filed by the Guarantor with the Securities
and Exchange Commission, within thirty (30) days of the filing of the same.
4.6. NOTICE OF CHANGES. Borrower shall promptly notify Lender in writing of
any change of its officers, directors or key employees; change of location of
its principal offices, change of location of any of its principal assets; any
acquisition, disposition or reorganization of any corporate subsidiary,
affiliate or parent of Borrower; change of Borrower's name; death or withdrawal
of any partner (if Borrower is a partnership); any sale or purchase out of the
regular course of Borrower's business; litigation of which Borrower or a
Guarantor is a party; and any other material change in the business or financial
affairs of Borrower.
5. REPRESENTATIONS AND WARRANTIES OF BORROWERS AND GUARANTOR.
5.1. REPRESENTATIONS AND WARRANTIES. Borrower and Guarantor hereby
continuously represent and warrant to Lender as follows:
A. Borrower is a corporation duly incorporated, validly existing and in good
standing under the laws of the state of its incorporation, is duly qualified to
do business and is in good standing as a foreign corporation in all states where
such qualification is required, has all necessary corporate power and authority
to enter into this Agreement and each of the documents and instruments relating
hereto and to perform all of its obligations hereunder and thereunder.
B. Borrower operates its business only under the assumed names (Schedule
Section 5.1.) and has not used any other assumed name for the operation of its
business activities for the previous seven (7) years.
C. Borrower has all requisite corporate right and power and is duly authorized
and empowered to enter into, execute, deliver and perform this Agreement and all
documents and instruments relating hereto and this Agreement and all documents
and instruments relating hereto are the legal, valid and binding obligations of
Borrower and are enforceable against Borrower in accordance with their terms.
D. Each Guarantor is competent to enter into this Agreement and the Guaranty
and to perform all of Guarantor's obligations thereunder.
E. The execution, delivery and performance by Borrower of this Agreement does
not and shall not (i) violate any provision of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award presently in effect
having applicability to Borrower; (ii) violate any provision of its Articles of
Incorporation or Bylaws; or (iii) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease or
instrument to which Borrower is a party or by which it or any of its assets or
properties may be bound or affected; and Borrower is not in default of any such
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award or any such indenture, agreement, lease or instrument.
F. No consent, approval, license, exemption of or filing or registration with,
giving of notice to, or other authorization of or by, any court, administrative
agency or other governmental authority is or shall be required in connection
with the execution, delivery or performance by Borrower for the valid
consummation of the transactions contemplated by this Agreement.
G. No event has occurred and is continuing which constitutes a Default or an
Event of Default, as defined in this Agreement. There is no action, suit,
proceeding or investigation pending or threatened against or affecting Borrower
before or by any court, administrative agency or other governmental authority
that brings into question the validity of the transactions contemplated hereby,
or that might result in any material adverse change in the businesses, assets,
properties or financial conditions of Borrower or Guarantor.
H. Borrower and/or Guarantor are not in default in the payment of any taxes
levied or assessed against either of them or any of their assets or properties,
except for taxes being contested in good faith and by appropriate proceedings.
I. Borrower and Guarantor have good and marketable title to their assets and
properties as reflected in their financial statements furnished to Lender.
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J. Each of the financial statements furnished to Lender by the Borrower and
Guarantor was prepared in accordance with GAAP and fairly and accurately
reflects in all material respects their financial condition as of the date
thereof; and each hereby certifies that there have been no material adverse
changes in their condition, financial or otherwise, since the date of such
statements, and there are no contingent liabilities not provided for or
disclosed in such statements.
K. Neither this Agreement, any Availability Report or any statement or
document referred to herein or delivered to Lender by Borrower and/or Guarantor
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements made herein or therein not misleading.
L. Borrower has 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 Lender and except where such liens, claims,
charges, security interests and encumbrances are removed contemporaneously with
the execution of this Agreement or are subordinate to those of Lender, in a form
and substance acceptable to Lender.
M. All books, records and documents relating to the Collateral are and shall
be genuine and in all respects what they purport to be; the original amount and
the unpaid balance of each Receivable shown on the books and records of Borrower
and in the schedules represented as owing by each Account Debtor is and shall be
the correct amount actually owing or to be owing by such Account Debtor at
maturity; each Account Debtor liable upon the Receivables has and shall have
capacity to contract; Borrower has no knowledge of any fact which would impair
the validity or collectibility of any of the Receivables; and the payments shown
to have been made by each Account Debtor on the books and records of Borrower
shall reflect the amounts of and dates on which said payments were actually
made.
N. Borrower has places of business only at the locations (Schedule Section
3.2.). Borrower shall not begin or do business (either directly or through
subsidiaries) at other locations or cease to do business at any of the above
locations or at Borrower's principal place of business without first notifying
Lender.
O. The present value of all benefits vested under all Plans of Borrower or any
Commonly Controlled Entity (based on the assumptions used to fund the Plans) did
not, as of the last annual valuation date (which in case of any Plan was not
earlier than December 31, 1982) exceed the value of the assets of the Plans
applicable to such vested benefits.
P. The liability to which Borrower or any Commonly Controlled Entity would
become subject under Sections 4063 or 4064 of ERISA if Borrower or any Commonly
Controlled Entity were to withdraw from all Multi-employer Plans or if such
Multi- employer Plans were to be terminated as of the valuation date most
closely preceding the date hereof, is not in excess of One Thousand Dollars
($1,000.00);
Q. Borrower is not engaged nor shall it engage, principally or as one of its
important activities, in a business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" within the respective meanings of
each of the quoted terms under Regulations G or X of the Board of Governors of
the Federal Reserve System as now and from time to time hereafter in effect. No
part of the proceeds of any advances hereunder shall be used for "purchasing" or
"carrying" "margin stock" as so defined or for any purpose which violates, or
which would be inconsistent with, the provisions of the Regulations of such
Board of Governors. If requested by Lender, Borrower shall furnish to Lender a
statement in conformity with the requirement of Federal Reserve Form G-3
referred to in said Regulation G to the foregoing effect. All of the outstanding
securities of Borrower have been offered, issued, sold and delivered in
compliance with, or are exempt from, all federal and state laws and rules and
regulations of federal and state regulatory bodies governing the offering,
issuance, sale and delivery of securities.
R. Borrower is not an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
S. Each of the Exhibits and Schedules to this Agreement contain true, complete
and correct information.
T. To the best of Borrower's knowledge, the land and improvements owned or
leased by Borrower for use in its business operations are free of dangerous
levels of contaminates, oils, asbestos, radon, PCB's, hazardous substances or
waste as defined by federal, state or local environmental laws, regulations or
administrative orders or other materials, the removal of which is required or
the maintenance of which is prohibited, regulated or penalized by any federal,
state or local governmental authority.
U. Borrower is solvent, generally able to pay its obligations as they become
due, has sufficient capital to carry on its business and transactions and all
businesses and transactions in which it intends to engage, and the current value
of Borrower's assets, at fair saleable valuation, exceeds the sum of its
liabilities. Borrower shall not be rendered insolvent by the execution and
delivery of the Loan Documents and the consummation of the transactions
contemplated thereby and the capital remaining in Borrower is not now and shall
not foreseeably become unreasonably small to permit Borrower to carry on its
business and transactions and all businesses and transactions in which it is
about to engage. Borrower does not intend to, nor does it reasonably believe it
shall, incur debts beyond its ability to repay the same as they mature.
V. Lender has a perfected security interest in favor of Lender in all of
Borrower's right, title and interest in the Collateral, prior and superior to
any other security interest or lien, except any statutory or constitutional lien
for taxes not yet due and payable.
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W. There are no material actions, suits or proceedings pending, or threatened
against or affecting the assets of Borrower or the consummation of the
transactions contemplated hereby, at law, or in equity, or before or by any
governmental authority or instrumentality or before any arbitrator of any kind.
Neither Borrower nor Guarantor is subject to any judgment, order, writ,
injunction or decree of any court or governmental agency. There is not a
reasonable likelihood of an adverse determination of any pending proceeding
which would, individually or in the aggregate, have a material adverse effect on
the business operations or financial condition of Borrower or Guarantor.
5.2. WARRANTIES AND REPRESENTATIONS AS TO ELIGIBLE RECEIVABLES. With respect
to Eligible Receivables, Borrower and Guarantor continuously warrant and
represent to Lender that during the term of this Agreement and so long as any of
the Indebtedness remains unpaid: (i) in determining which Receivables are
"Eligible Receivables," Lender may rely upon all statements or representations
made by Borrower; and (ii) those Receivables designated as Eligible Receivables
meet each requirement set forth below at the time any request for advance is
provided to Lender.
A. The Eligible Receivables are genuine; are in all respects what they purport
to be; and are evidenced by at least one executed original instrument,
agreement, contract or document which has been or shall be delivered to Lender;
B. The Eligible Receivables represent undisputed, bona fide transactions
completed in accordance with the terms and provisions contained in any documents
related thereto;
C. The amounts of the face value shown on any schedule of Receivables provided
to Lender, and/or all invoices or statements delivered to Lender with respect to
any Eligible Receivables, are actually and absolutely owing to Borrower and are
not contingent for any reason;
D. No set-offs, counterclaims or disputes as to payments or liability thereon
exist or have been asserted with respect thereto and Borrower has not made any
agreement with any Account Debtor thereunder for any deduction therefrom, except
a discount or allowance allowed by Borrower in the ordinary course of its
business for prompt payment, all of which discounts or allowances are reflected
in the calculation of the outstanding amount of the Receivable;
E. No facts, events or occurrences exist that, in any way, impair the validity
or enforcement thereof or tend to reduce the amount payable thereunder from the
amount of the Receivable shown on any schedule, or on all contracts, invoices or
statements delivered to Lender with respect thereto;
F. All Account Debtors in connection with Eligible Receivables: (i) had the
capacity to contract at the time any contract or other document giving rise to
the Receivable was executed; and (ii) generally have the ability to pay their
debts as become due;
G. Within Borrower's knowledge, no proceedings or actions are threatened or
pending against any Account Debtor that might result in any material adverse
change in the Account Debtor's financial condition;
H. The Eligible Receivables have not been assigned or pledged to any other
person or entity;
I. The goods giving rise to the Eligible Receivables are not, and were not at
the time of the sale, rental and/or lease thereof, subject to any lien, claim,
encumbrance or security interest except those of Lender, those removed or
terminated prior to the date hereof or those subordinated to Lender's security
interest, by a subordination and standstill agreement acceptable to Lender;
J. The End of Month Delinquency set forth in Section 14 of the Availability
Report shall be delivered to Lender by Borrower hereunder as determined pursuant
to the Aging Procedures and Eligibility Test (Schedule Section 1.9.C.).
6. COVENANTS AND OTHER AGREEMENTS
6.1. AFFIRMATIVE COVENANTS. During the term of this Agreement and so long as
any of the Indebtedness remains unpaid, Borrower and Guarantor agree and
covenant, jointly and severally, that they shall:
A. Pay or cause to be paid currently all of their expenses, including all
payments on their obligations whenever due, as well as all payments of any and
all taxes of whatever nature when due. This provision shall not apply to taxes
or expenses which are due, but which are challenged in good faith.
B. Maintain, preserve, and protect the Collateral, including, but not limited
to, keeping documents, instruments or other written records otherwise evidencing
the Collateral in a fire proof cabinet.
C. Furnish to Lender written notice as to the occurrence of any Default or
Event of Default hereunder.
D. Furnish to Lender notice of: (i) any development related to the business,
financial condition, properties or assets of Borrower or Guarantor, that would
have or has a materially adverse affect on such business, financial condition,
properties or assets, or ability to perform their obligations under this
Agreement and (ii) any material and adverse litigation or investigation to which
either of them may be a party.
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E. With respect to the Borrower only, carry on and conduct its business in the
same manner and in the same fields of enterprise as it is presently engaged, and
shall preserve its corporate existence, licenses or qualifications as a domestic
corporation in the jurisdiction of its incorporation and as a foreign
corporation in every jurisdiction in which the character of its assets or
properties or the nature of the business transacted by it at any time makes
qualification as a foreign corporation necessary, and to maintain all other
material corporate rights and franchises, provided, however, nothing herein
shall be construed to prevent Borrower from closing any retail location in the
good faith exercise of its business judgment.
F. Comply, and cause each affiliate to comply, with all statutes, governmental
rules and regulations applicable to them.
G. Permit and authorize Lender, without notifying Borrower or Guarantor, to
make such inquiries through business credit or other credit reporting services
concerning Borrower or Guarantor as Lender shall deem appropriate.
H. With respect to the Borrower, provide Lender with evidence of insurance
that insures loss or damage to all tangible Collateral issued by a reputable
carrier, as reasonably required by Lender. This insurance shall reflect Lender
as the loss payee or additional insured, as required by Lender, and contain a
provision that Lender shall be notified by the carrier thirty (30) days prior to
the termination or cancellation of any such insurance.
6.2. NEGATIVE COVENANTS. During the term of this Agreement and until the
Indebtedness secured hereby has been paid in full, Borrower and Guarantor
covenant and agree that they shall not, without Lender's prior written consent,
which consent shall not be unreasonably withheld, do any of the following:
A. Incur or permit to exist any mortgage, pledge, title retention lien or
other lien, encumbrance or security interest with respect to the Collateral now
owned or hereafter acquired by Borrower, except liens in favor of Lender.
B. Delegate, transfer or assign any of their obligations or liabilities under
this Agreement, or any part thereof, to any other person or entity.
C. With respect to the Borrower only, be a party to or participate in: (i) any
merger or consolidation; (ii) any purchase or other acquisition of all or
substantially all of the assets or properties or shares of any class of, or any
partnership or joint venture interest in, any other corporation or entity; (iii)
any sale, transfer, conveyance or lease of all or substantially all of
Borrower's assets or properties; or (iv) any sale or assignment with or without
recourse of any Receivables, provided however, Borrower may sell part or all of
the Receivables upon the conditions that the sales price for such Receivables is
equal to or greater than the Availability on Eligible Receivable applicable to
such Receivables being sold and the proceeds of such sale are applied to the
balance of the Indebtedness.
D. Cause or take any of the following actions with respect to Borrower: (i)
redeem, retire, purchase or otherwise acquire, directly or indirectly, any of
Borrower's outstanding securities; or (ii) purchase or acquire, directly or
indirectly, any shares of capital stock, evidences of indebtedness or other
securities of any person or entity, except in the Borrower's ordinary course of
business.
E. Amend, supplement or otherwise modify Borrower's Articles of Incorporation
or Bylaws which would have a material adverse affect on the condition and
operations, prospects or financial condition of the Borrower.
F. With respect to the Borrower only, incur, assume or suffer to exist any
debt (including capitalized leases) other than (i) the Indebtedness, (ii)
accounts payable incurred in the ordinary course of business, (iii) Subordinated
Debt, or (iv) other Debt consented to in writing by Lender.
G. With respect to the Borrower only, directly or indirectly make loans to,
invest in, extend credit to, or guaranty the debt of any person or entity, other
than in the ordinary course of Borrower's business.
H. Amend, modify, or otherwise change in any respect any material agreement,
instrument, or arrangement (written or oral) by which Borrower, or any of its
assets, are bound.
I. Allow Borrower to be owned and controlled by any person or entity other
than the Guarantor, with such ownership by Guarantor being either direct or
indirect.
J. Allow the monthly cash receipts from Receivables, from all sources,
including but not limited to, liquidation and/or foreclosure of the collateral
securing a Receivable, to be less than the amount determined by dividing the
balance due on all Receivables (including all unearned fees and charges), as of
the last day of the previous fiscal month, by thirty (30).
K. Allow Borrower to collect less than an average of ninety percent (90%) of
all contractual payments due pursuant to the Receivables (specifically excluding
proceeds received from the liquidation of and/or foreclosure of a lien on
collateral securing a Receivable), for any one hundred and eighty (180) day
period from any date of determination.
L. Permit the Leverage Ratio to be more than the Leverage Ratio Limit
(Schedule Section 6.2.A.).
M. Permit the Net Income to be less than the Minimum Net Income requirement
(Schedule Section 6.2.B.).
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N. With respect to Borrower only, make or allow Distributions, in the
aggregate, to exceed the distributions limitation (Schedule Section 6.2.C.);
provided, however, that no Distribution shall be made if a Default or an Event
of Default shall exist.
O. Allow the 30-Day Receivables Percentage, on any calendar month end, to be
less than the Minimum 30-Day Receivables Percentage (Schedule Section 6.2.D.).
7. EVENTS OF DEFAULT AND REMEDIES
7.1. EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an "Event of Default":
A. If any payment of principal or interest or any other amount due Lender is
not paid within five (5) days after the same shall be due and payable.
B. If Borrower or Guarantor fails or neglects to perform, keep or observe any
of the terms, provisions, conditions or covenants, contained in this Agreement,
any of the other Loan Documents or any other agreement or document executed in
connection with the transactions contemplated by this Agreement or if any
representation, warranty or certification made by Borrower herein or in any
certificate or other writing delivered pursuant hereto shall prove to be untrue
in any material respect as of the date upon which the same was made or at any
time thereafter, and the same is not cured to Lender's satisfaction within
fifteen (15) days after Lender has given written notice to Borrower identifying
such default.
C. If the validity or enforceability of any lien, charge, security interest,
mortgage, pledge or other encumbrance granted to Lender to secure the
Indebtedness shall be impaired in any respect or to any degree, for any reason,
or if any other lien, charge, security interest, mortgage, pledge or other
encumbrance shall be created or imposed upon the Collateral unless such lien,
charge, security interest, mortgage, pledge or other encumbrance is subordinate
to that of Lender, pursuant to a subordination and standstill agreement in a
form and substance acceptable to Lender.
D. If any judgment against Borrower not covered by insurance in an amount in
excess of Twenty-Five Thousand Dollars ($25,000.00), or any attachment or other
levy against the properties or assets of Borrower with respect to a claim for
any amount in excess of Twenty-Five Thousand Dollars ($25,000.00), remains
unpaid, unstayed on appeal, undischarged, unbonded, undismissed or otherwise
contested in good faith for a period of thirty (30) days.
E. Default in the payment of any sum due under any instrument of indebtedness
for borrowed money owed by Borrower or any Guarantor to any person (with respect
to the Guarantor only on indebtedness in excess of One Hundred Thousand Dollars
($100,000.00), or any other default under such instrument of indebtedness for
borrowed money that permits such indebtedness for borrowed money to become due
prior to its stated maturity or permits the holders of such indebtedness for
borrowed money to elect a majority of the board of directors or manage the
business of Borrower or any Guarantor.
F. If a court or governmental authority of competent jurisdiction shall enter
an order, judgment or decree appointing, with or without Borrower's or
Guarantor's consent or acquiescence, a receiver, custodian, liquidator, trustee
or other officer with similar powers of Borrower or Guarantor or of the whole or
any substantial part of its properties or assets, or approving a petition filed
against Borrower or Guarantor seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under the federal
bankruptcy laws or any other applicable law, and such order, judgment or decree
shall remain unvacated, unstayed or not set aside for an aggregate of thirty
(30) days (whether or not consecutive) from the date of the entry thereof or if
any petition seeking such relief shall be filed against Borrower or Guarantor
and such petition shall not be dismissed within thirty (30) days.
G. An event shall occur which shall have a material adverse affect on the
condition and operations, prospects or financial condition of the Borrower or
Guarantor.
H. If either Borrower or Guarantor shall: (i) be generally not paying their
respective debts as they become due; (ii) file a petition in bankruptcy or a
petition to take advantage of any insolvency act or other act for the relief or
aid of debtors; (iii) make an assignment for the benefit of their creditors;
(iv) consent to or acquiesce in the appointment of a receiver, custodian,
liquidator, trustee or other officer with similar powers of either of their
properties or assets; (v) file a petition or answer seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under the federal bankruptcy laws or any other applicable law; (vi) be
adjudicated insolvent or be liquidated; (vii) admit in writing either of their
inability to pay debts as they become due; (viii) voluntarily suspend
transaction of usual business; or (ix) take any action, corporate or otherwise,
for the purpose of any of the foregoing.
I. Any of the following shall occur: (i) entry of a court order that enjoins,
restrains or in any way prevents Borrower from conducting all or any material
part of its business affairs in the ordinary course of business or (ii)
withdrawal or suspension of any license or authority required for the conduct of
any material part of Borrower's business.
J. If any Guarantor gives notice of termination or terminates his liability
pursuant to the Guaranty Agreement executed in conjunction with this Agreement.
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7.2. ACCELERATION OF THE INDEBTEDNESS. Upon and after an Event of Default, the
outstanding principal balance together with all accrued but unpaid interest on
the Indebtedness and all other sums due and payable by Borrower to Lender may,
at the option of Lender and without demand, presentment, notice of dishonor,
notice of intent to demand or accelerate payment, diligence in collecting,
grace, notice and protest or a legal process of any kind, all of which are
hereby expressly waived, be declared, and immediately shall become due and
payable.
7.3. LOUISIANA CONFESSION OF JUDGMENT. In the event that Borrower is domiciled
in, or Collateral is located in, Louisiana, and to the extent of such domicile
or location where Louisiana law is applicable to this Agreement:
A. Borrower hereby confesses judgment, up to the full amount of principal,
interest and attorney's fees and for any sums that Lender may advance during the
life of this Agreement for the payment of premiums of insurance, taxes and
assessments or for the protection and preservation of this Agreement as
authorized elsewhere in this Agreement, and does by these presents, consent,
agree and stipulate that, in the event of any payment of principal or interest
due hereunder not being promptly and fully paid when the same becomes due and
payable, or in the event of failure to comply with any of the obligations set
forth herein, the Indebtedness shall, at the option of Lender become due and
payable, and it shall be lawful for Lender, without making a demand and without
notice or putting in default, the same being hereby expressly waived, to cause
all and singular the Collateral herein secured to be seized and sold by
executory process issued by any competent court or to proceed with enforcement
of its security interest in any other manner provided by law; and
B. Borrower hereby expressly waives: (a) the benefit of appraisement, as
provided in Articles 2332, 2336, 2723, and 2724, Louisiana Code of Civil
Procedure, and all other laws conferring the same; (b) the demand and three (3)
days delay according by Articles 2639 and 2721, Louisiana Code of Civil
Procedure, and all other laws conferring the same; (c) the notice of seizure
required by Articles 2293 and 2721, Louisiana Code of Civil Procedure, and all
other laws conferring the same; (d) the three (3) days delay provided by
Articles 2331 and 2722, Louisiana Code of Civil Procedure, and all other laws
conferring the same; and (e) the benefit of the other provisions of Articles
2331, 2722 and 2723, Louisiana Code of Civil Procedure, and all other Articles
not specifically mentioned above; and Borrower expressly agrees to the immediate
seizure of the Collateral in the event of suit thereon.
7.4. REMEDIES. Upon and after an Event of Default, Lender shall have the
following rights and remedies, which individual remedies shall be non-exclusive,
cumulative and in addition to each and every other remedy set forth in the Loan
Documents or in this Agreement:
A. All of the rights and remedies of a secured party under the Uniform
Commercial Code as enacted in the State of Arizona, as amended, or other
applicable law.
B. The right, to the fullest extent permissible by law, to: (i) enter upon the
premises of Borrower, or any other place or places where the Collateral is
located and kept, without any obligation to pay rent to Borrower, through
self-help and without judicial process, without first obtaining a final judgment
or giving Borrower notice and opportunity for a hearing on the validity of
Lender's claim, and remove the Collateral therefrom to the premises of Lender or
any agent of Lender, for such time as Lender may desire, in order to effectively
collect and liquidate the Collateral; and/or (ii) require Borrower to assemble
the Collateral and make it available to Lender at a place to be designated by
Lender, in Lender's reasonable discretion.
C. The right to sell or otherwise dispose of any or all Collateral in its then
condition at public or private sale or sales, in lots or in bulk, for cash or on
credit, all as Lender, in its discretion, may deem advisable; provided that such
sales may be adjourned from time to time with or without notice. The requirement
of reasonable notice to Borrower of the time and place of any public sale of the
Collateral or of the time after which any private sale either by Lender or at
its option, a broker, or any other intended disposition thereof is to be made,
shall be met if such notice is mailed, postage prepaid, to Borrower at the
address of Borrower designated herein at least ten (10) Business Days before the
date of any public sale or at least ten (10) Business Days before the time after
which any private sale or other disposition is to be made unless applicable law
requires otherwise.
Lender shall have the right to conduct such sales on Borrower's premises or
elsewhere and shall have the right to use Borrower's premises without charge for
such sales for such time or times as Lender may see fit. Lender is hereby
granted a license or other right to use, without charge, Borrower's labels,
copyrights, rights of use of any name, trade secrets, trade names, trademarks
and advertising matter, or any property of a similar nature, as it pertains to
the Collateral, in advertising for sale and selling any Collateral and
Borrower's rights under all licenses and all franchise agreements shall inure to
Lender's benefit. Lender agrees to hold Borrower harmless from any liability
arising out of Lender's use of Borrower's premises, labels, copyrights, rights
of use of any name, trade secrets, trade names, trademarks and advertising
matter, or any property of a similar nature as it pertains to advertising for
sale, marshalling or selling the Collateral.
Lender shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Lender may purchase all or part of the Collateral at public or, if permitted
by law, private sale and, in lieu of actual payment of such purchase price, may
set off the amount of such price against the Indebtedness owing by Borrower to
Lender. The proceeds realized from the sale of any Collateral shall
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be applied first to reasonable costs and expenses, attorney's fees, expert
witness fees incurred by Lender for collection and for acquisition, completion,
protection, removal, storage, sale and delivery of the Collateral; second to all
payments, other than principal and interest, due under this Agreement; third to
interest due upon any of the Indebtedness; fourth to the principal balance owing
on the Indebtedness; and fifth the remainder, if any, to Borrower, its
successors or assigns, or to whomsoever may be lawfully entitled to receive the
same. If any deficiency shall arise, Borrower shall remain liable to Lender
therefor.
D. In the event that Borrower is domiciled in, or Collateral is located in,
Louisiana, and to the extent of such domicile or location where Louisiana law is
applicable to this Agreement, the right to cause all and singular the
hereinabove described Collateral to be seized and sold under executory process
without appraisement, appraisement being hereby expressly waived, as an entirety
or in parcels, as Lender may determine, to the highest bidder for cash.
E. The right to appoint or seek appointment of a receiver, custodian or
trustee of Borrower or any of its properties or assets pursuant to court order.
F. The right to cease all advances hereunder.
G. All other rights and remedies that Lender may have at law or in equity.
7.5. NO WAIVER. No delay, failure or omission of Lender to exercise any right
upon the occurrence of any Default or Event of Default shall impair any such
right or shall be construed to be a waiver of any such Default or Event of
Default or an acquiescence therein. Lender may, from time to time, in a writing
waive compliance by the other parties with any of the terms of this Agreement
and its rights and remedies upon any Default or Event of Default, and, Borrower
agrees that no waiver by Lender shall ever be legally effective unless such
waiver shall be acknowledged and agreed in writing by Lender. No waiver of any
Default or Event of Default shall impair any right or remedy of Lender not
specifically waived. No single, partial or full exercise of any right of Lender
shall preclude any other or further exercise thereof. No modification or
amendment of or supplement to this Agreement or any other written agreement
between the parties hereto shall be valid or effective (or serve as a basis of
reliance by way of estoppel) unless the same is in writing and signed by the
party against whom it is sought to be enforced. The acceptance by Lender at any
time and from to time of a partial payment or partial performance of any of
Borrower's obligations set forth herein shall not be deemed a waiver, reduction,
modification or release from any Default or Event of Default then existing. No
waiver by Lender of any Default or Event of Default shall be deemed to be a
waiver of any other existing or any subsequent Default or Event of Default.
7.6. GENERAL INDEMNIFICATION. Borrower hereby agrees to indemnify and hold
Lender harmless from and against any and all claims, liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements (collectively "Claim" or "Claims") of any kind or nature
whatsoever, asserted by any party other than Borrower, or with respect to
Borrower only as otherwise provided in this Agreement or pursuant to applicable
law regarding Lender's obligations to Borrower, which may be imposed on,
incurred by or asserted against Lender, or any of its officers, directors,
employees or agents (including accountants, attorneys or other professionals
hired by Lender) in any way relating to or arising out of the Loan Documents or
any action taken or omitted by Lender, or any of its officers, directors,
employees or agents (including accountants, attorneys or other professionals
hired by Lender) under the Loan Documents, except to the extent such indemnified
matters are finally found by a court to be caused by Lender's gross negligence
or wilful misconduct.
7.7. APPLICATION OF PROCEEDS. After an Event of Default shall have occurred
and is continuing, all amounts received by Lender on account of any Indebtedness
and realized by Lender with respect to the Collateral, including any sums which
may be held by Lender, or the proceeds of any thereof, shall be applied in the
same manner as proceeds of Collateral as set forth in Section 7.4.C. hereof.
7.8. APPOINTMENT OF LENDER AS ATTORNEY-IN-FACT. Borrower irrevocably
designates, makes, constitutes and appoints Lender (and all persons reasonably
designated by Lender), with full power of substitution, as Borrower's true and
lawful attorney-in-fact (and not agent-in-fact) and Lender, or Lender's agent,
may, without notice to Borrower, and at such time or times thereafter as Lender
or said agent, in its discretion, may determine, in Borrower's or Lender's name,
at no duty or obligation on Lender, do the following:
A. All acts and things necessary to fulfill Borrower's administrative duties
pursuant to this Agreement, including, but not limited to, the execution of
financing statements;
B. Upon the occurrence of any Default, all acts and things necessary to
fulfill Borrower's obligations under this Agreement and the Loan Documents,
except as set forth in Section 7.8.C below, at the cost and expense of Borrower.
C. In addition to, but not in limitation of the foregoing, at any time or
times upon the occurrence of an Event of Default, Lender shall have the right:
(i) to enter upon Borrower's premises and to receive and open all mail directed
to Borrower and remove all payments to Borrower on the Receivables; however,
Lender shall turn over to Borrower all of such mail not relating to Receivables;
(ii) in the name of Borrower, to notify the Post Office authorities to change
the address for the delivery of mail addressed to Borrower to such address as
Lender may designate (notwithstanding the
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foregoing, for the purposes of notice and service of process to or upon Borrower
as set forth in this Agreement, Lender's rights to change the address for the
delivery of mail shall not give Lender the right to change the address for
notice and service of process to or upon Borrower in this Agreement); (iii)
demand, collect, receive for and give renewals, extensions, discharges and
releases of any Receivable; (iv) institute and prosecute legal and equitable
proceedings to realize upon the Receivables; (v) settle, compromise, compound or
adjust claims in respect of any Receivable or any legal proceedings brought in
respect thereof; (vi) generally, sell in whole or in part for cash, credit or
property to others or to itself at any public or private sale, assign, make any
agreement with respect to or otherwise deal with any of the Receivables as fully
and completely as though Lender were the absolute owner thereof for all
purposes, except to the extent limited by any applicable laws and subject to any
requirements of notice to Borrower or other persons under applicable laws; (vii)
take possession and control in any manner and in any place of any cash or
non-cash items of payment or proceeds of Receivables; (viii) endorse the name of
Borrower upon any notes, acceptances, checks, drafts, money orders, chattel
paper or other evidences of payment of Receivables that may come into Lender's
possession; and (vii) sign Borrower's name on any instruments or documents
relating to any of the Collateral, or on drafts against Account Debtors; .
The appointment of Lender as attorney-in-fact for Borrower is coupled with an
interest and is irrevocable.
8. MISCELLANEOUS
8.1. REIMBURSEMENT FOR EXPENSES. Upon the occurrence of a Default, except as
set forth in the Schedule Section 8.1., Borrower agrees to reimburse Lender,
upon demand, for all reasonable out-of-pocket expenses (including costs of
establishing and maintaining accounts or arrangements set forth in Section 3.9,
attorney's fees, expert witness fees and legal expenses) incurred in connection
with the evaluation of collateral, preservation of collateral, or collection of
the indebtedness.
8.2. NOTICES. All notices, demands, billings, requests and other written
communications hereunder shall be deemed to have been properly given: (i) upon
personal delivery; (ii) on the third Business Day following the day sent, if
sent by registered or certified mail; (iii) on the next Business Day following
the day sent, if sent by overnight express courier; or (iv) on the day sent or
if such day is not a Business Day on the next Business Day after the day sent if
sent by telecopy providing the receiving party has acknowledged receipt by
return telecopy, in each case, to Lender, Borrower or Guarantors at its address
and/or telecopy number as set forth in this Agreement or Schedule Section 8.2,
or at such other address and/or telecopy number as either party may designate
for such purpose in a written notice given to the other party.
Lender shall have the right, on or after initial funding pursuant to the terms
of this Agreement, to issue a press release or other brochure announcing the
consummation of the Loan Documents and to distribute that information to third
parties in the normal course of Lender's business, at no cost to Borrower.
8.3. PARTICIPATIONS. Borrower and Guarantors acknowledge and agree that Lender
may from time to time sell or offer to sell interests in the Indebtedness and
the Loan Documents to one or more participants. Borrower and Guarantors
authorize Lender to disseminate any information it has pertaining to the
Indebtedness, including without limitation, complete and current credit
information on Borrower and any of its principals and Guarantors, to any such
participant or prospective participant. Nothwithstanding any provision contained
herein to the contrary, if Lender requests information that is not available to
the public from Borrower or Guarantor for the purposes of providing that
information to a participant or prospective participant, upon Borrower's or
Guarantor's request, Lender shall obtain a written agreement from such
participant that it will not trade in the securities of Borrower or Guarantor
unless or until such non-public information provided to such participant has
been made available to the public.
8.4. SURVIVAL OF AGREEMENTS. All of the various representations, warranties,
covenants and agreements of Borrower (including without limitation, any
agreements to pay costs and expenses and to indemnify Lender) in the Loan
Documents shall survive the execution and delivery of the Loan Documents and the
performance under such Loan Documents, and shall further survive until one (1)
year and one (1) month after all of the Indebtedness is paid in full to Lender
and all of Lender's obligations to Borrower under the Loan Documents are
terminated.
8.5. NO OBLIGATION BEYOND MATURITY. Borrower agrees and acknowledges that upon
the Maturity Date, Lender shall have no obligation to renew, extend, modify or
rearrange the Loan and shall have the right to require all amounts due and owing
under the Loan to be paid in full upon such date.
8.6. PRIOR AGREEMENTS SUPERSEDED. This Agreement constitutes the sole and only
agreement of the parties hereto and supersedes any prior understandings or
written or oral agreements between the parties respecting the subject matter of
this Agreement. No provision of this Agreement or other document or instrument
relating hereto may be modified, waived or terminated except by instrument in
writing executed by the party against whom a modification, waiver or termination
is sought to be enforced.
8.7. PARTIES BOUND. This Agreement shall be binding on and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns, except as
otherwise expressly provided for herein. Borrower and Guarantor shall not assign
any of their respective rights or obligations pursuant this Agreement.
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8.8. NUMBER AND GENDER. Whenever used herein, the singular number shall
include the plural and the plural the singular, and the use of any gender shall
be applicable to all genders. The duties, covenants, obligations and warranties
of Borrower in this Agreement shall be joint and several obligations of Borrower
and of each Borrower if more than one.
8.9. NO THIRD PARTY BENEFICIARY. This Agreement is for the sole benefit of
Lender and Borrower and is not for the benefit of any third party.
8.10. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original, and all
of which taken together shall constitute but one and the same instrument.
8.11. SEVERABILITY OF PROVISIONS. Any provision which is determined to be
unconscionable, against public policy or any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
8.12. HEADINGS. The Article and Section headings used in this Agreement are
for convenience only and shall not affect the construction of this Agreement.
8.13. SCHEDULES AND EXHIBITS. Any and all exhibits hereto are hereby expressly
incorporated by reference as though fully set forth at that point verbatim. All
terms and provisions as defined or set forth in Article 1 and in any Schedule
are hereby incorporated into and made a part of this Agreement. Each reference
in this Agreement and the Schedule hereto to any information or definitions
contained in Article 1 or the Schedule shall mean and refer to the information
or definitions as set forth in Article 1 and the Schedule unless the context
specifically requires otherwise. Any terms used in Article 1 and in the Schedule
which are not defined shall have the meanings ascribed to such terms, as of the
date of this Agreement, by the Uniform Commercial Code as enacted in the State
of Arizona to the extent the same are defined therein.
8.14. FURTHER INSTRUMENTS. Borrower and Guarantors shall from time to time
execute and deliver, and shall cause each of Borrower's subsidiaries to execute
and deliver, all such amendments, supplements and other modifications hereto and
to the other Loan Documents and all such financing statements or continuation
statements, instruments of further assurance and any other instruments, and
shall take such other actions, as Lender reasonably requests and deems necessary
or advisable in furtherance of the agreements contained herein.
8.15. LENDER'S EXPENSES AND ATTORNEY'S FEES. UPON AND AFTER AN EVENT OF
DEFAULT, LENDER SHALL BE ENTITLED TO RECOVER FROM BORROWER AND GUARANTORS ALL OF
LENDER'S ATTORNEY'S FEES AND REASONABLE COSTS AND EXPENSES INCURRED IN THE
EXERCISE OF LENDER'S RIGHTS SET FORTH IN THIS AGREEMENT, AND ALL DAMAGES
SUSTAINED BY LENDER BY REASON OF MISREPRESENTATION, BREACH OF WARRANTY OR BREACH
OF COVENANT OF BORROWER HEREIN, EXPRESSED OR IMPLIED, WHETHER CAUSED BY THE ACTS
OR DEFAULTS OF BORROWER, ACCOUNT DEBTORS OR OTHERS; INCLUDING WITHOUT
LIMITATION, ALL ATTORNEY'S FEES ARISING FROM SUCH SERVICES, EXPERT WITNESS FEES
AND ANY EXPENSES, COSTS AND CHARGES RELATING THERETO, AND ALL OF THE FOREGOING
SHALL CONSTITUTE PART OF THE INDEBTEDNESS SECURED BY THE COLLATERAL AND SHALL BE
PAYABLE ON DEMAND.
8.16. GOVERNING LAW. THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED BY
BORROWER AND GUARANTOR AND ACCEPTED BY LENDER IN MARICOPA COUNTY, ARIZONA AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS
OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ARIZONA.
8.17. JURISDICTION AND VENUE. TO INDUCE THE LENDER TO ENTER INTO THIS
AGREEMENT, BORROWER, GUARANTORS AND LENDER IRREVOCABLY AGREE THAT, SUBJECT TO
THE LENDER'S ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT,
ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR
THE COLLATERAL SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE COUNTY OF
MARICOPA, STATE OF ARIZONA. BORROWER, GUARANTORS AND LENDER HEREBY CONSENT AND
SUBMIT TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN
SAID COUNTY AND STATE AND WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS UPON
BORROWER, AND AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED
MAIL DIRECTED TO BORROWER AT THE ADDRESS SET FORTH IN SCHEDULE SECTION 8.17 AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.
8.18. WAIVER. EXCEPT AS OTHERWISE PROVIDED FOR IN THIS AGREEMENT AND TO THE
EXTENT NOT PROHIBITED BY APPLICABLE LAW, BORROWER AND
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EACH GUARANTOR HEREBY WAIVES (i) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF
PRESENTMENT, PROTEST, DEFAULT, NON-PAYMENT, MATURITY, RELEASE, COMPROMISE,
SETTLEMENT, AND ONE OR MORE EXTENSIONS OR RENEWALS OF ANY OR ALL ACCOUNTS,
CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY
TIME HELD BY THE LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER THE LENDER MAY DO IN THIS REGARD; (ii) ALL RIGHTS
TO NOTICE AND HEARING PRIOR TO THE LENDER'S TAKING POSSESSION OR CONTROL OF, OR
THE LENDER'S REPLEVIN, ATTACHMENT OR LEVY ON OR OF THE COLLATERAL OR ANY BOND OR
SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING THE LENDER TO
EXERCISE ANY OF THE LENDER'S REMEDIES; AND (iii) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT OR EXEMPTION LAWS.
8.19. ADVICE OF COUNSEL. BORROWER AND EACH GUARANTOR ACKNOWLEDGES THAT THEY
HAVE BEEN REPRESENTED AND ADVISED BY INDEPENDENT LEGAL COUNSEL WITH RESPECT TO
THE NEGOTIATION, EXECUTION AND ACCEPTANCE OF THIS AGREEMENT AND THE TRANSACTION
GOVERNED BY THIS AGREEMENT AND SPECIFICALLY WITH RESPECT TO THE PROVISIONS
CONTAINED IN SECTIONS 7.3, 8.15, 8.16, 8.17, 8.18, 8.19 and 8.20 HEREOF AND HAS
RELIED UPON THE ADVICE OF ITS INDEPENDENT LEGAL COUNSEL IN AGREEING TO THE TERMS
AND CONDITIONS HEREIN AND IN EXECUTING AND DELIVERING THIS AGREEMENT, AND THAT
THEY HAVE FREELY AND VOLUNTARILY ENTERED INTO THIS AGREEMENT AS THE PRODUCT OF
ARMS' LENGTH NEGOTIATIONS.
8.20. WAIVER OF RIGHT TO TRIAL BY JURY. LENDER, BORROWER AND GUARANTORS HEREBY
COVENANT AND AGREE THAT IN ANY SUIT, ACTION OR PROCEEDING IN RESPECT OF ANY
MATTER ARISING OUT OF THIS AGREEMENT, THE DOCUMENTS EXECUTED IN CONNECTION
HEREWITH, ANY WRITTEN AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER NOW EXISTING
OR HEREAFTER ARISING OR IN ANY WAY RELATED TO, CONNECTED WITH OR INCIDENTAL TO
THE DEALINGS OF THE PARTIES HERETO OR TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE, TRIAL SHALL BE TO A
COURT OF COMPETENT JURISDICTION AND NOT TO A JURY; LENDER, BORROWER AND EACH
GUARANTOR HEREBY EXPRESSLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY. ANY
PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
8.21. TIME OF ESSENCE Time is of the essence for the performance the
obligations set forth in this Agreement and the Loan Documents.
(Intentionally Left Blank)
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first set forth above.
BORROWER:
AUTOINFO FINANCE OF VIRGINIA, INC.
a Virginia corporation
By:
---------------------------------------------
Jason Bacher, Vice President (Date)
GUARANTOR:
AUTOINFO, INC.
a Delaware corporation
- --------------------------------------------
Jason Bacher, Vice President (Date)
LENDER:
FINOVA CAPITAL CORPORATION
a Delaware corporation
By:
-----------------------------------------------
J. Steven Cammack, Vice President (Date)
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FINOVA Capital Corporation
Rediscount Finance
PROMISSORY NOTE
$42,000,000.00 PHOENIX, ARIZONA December 19, 1995
FOR VALUE RECEIVED, the undersigned ("MAKER"), hereby unconditionally
promises to pay to the order of FINOVA CAPITAL CORPORATION, a Delaware
corporation ("HOLDER"), at HOLDER's branch address at 13355 Noel Road, Suite
800, Dallas, Texas 75240, or at such other place as HOLDER may designate in
writing, the principal sum of Forty-Two Million Dollars ($42,000,000.00) or so
much thereof as shall be advanced or readvanced, with interest thereon at the
Stated Interest Rate calculated on the average daily balance outstanding, as
follows:
1. DEFINITIONS. When used herein, the following terms have the meanings
given in this paragraph:
A. Loan Agreement. The term "Loan Agreement" shall mean that certain
Loan and Security Agreement of even date herewith, entered into by and
between FINOVA CAPITAL CORPORATION, as Lender, and MAKER, as Borrower, and
all amendments, substitutions, renewals and extensions thereof. All terms
used herein which are not expressly defined herein shall have the meanings
ascribed to them in the Loan Agreement.
B. Maximum Rate. The term "Maximum Rate" shall mean the highest lawful
rate of interest applicable to this NOTE. In determining the Maximum Rate,
due regard shall be given to all payments, fees, charges, deposits,
balances and agreements which may constitute interest or be deducted from
principal when calculating interest.
2. PAYMENT. The principal and interest of this NOTE are payable as follows:
A. Accrued but unpaid interest for each calendar month during the term
hereof shall be due and payable monthly, in arrears, on the fifteenth
(15th) day of the immediately succeeding calendar month commencing January
15, 1996. All outstanding principal together with all accrued and unpaid
interest shall be due and payable, if not sooner paid on September 30,
1999. All payments received hereunder shall be applied as set forth in the
Loan Agreement.
B. Notwithstanding the foregoing, principal shall be immediately due
and payable without written notice and demand from Lender in such amounts
so that the outstanding balance hereunder does not, at anytime, exceed the
amount of the Loan as determined pursuant to Section 2.1 of the Loan
Agreement. The amount of such payments shall be determined by HOLDER
pursuant to the terms of the Loan Agreement and based upon the principal
balance of this NOTE then outstanding as determined pursuant to the Loan
Agreement and as shown on the books and records of HOLDER, maintained in
accordance with its usual practice, the entries of which being conclusive
evidence of the existence and amounts as therein recorded.
C. All of the principal hereunder may be prepaid in full at any time;
however, such voluntary prepayments shall be subject to the voluntary
prepayment provisions set forth in Article 2.6 of the Loan Agreement.
3. PRINCIPAL BALANCE. The unpaid principal balance of this NOTE at any time
shall be the total amounts loaned or advanced hereunder by HOLDER, less the
amount of payments or prepayments of principal made hereon by or for the account
of MAKER. It is contemplated that by reason of payments or prepayments hereon
there may be times when no indebtedness is owing hereunder; but notwithstanding
such occurrences, this NOTE shall remain valid and shall be in force and effect
as to loans or advances
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made pursuant to and under the terms of this NOTE subsequent to each such
occurrence. All loans or advances and all payments or prepayments made hereunder
on account of principal or interest may be evidenced by HOLDER, or any
subsequent holder, maintaining in accordance with its usual practice an account
or accounts evidencing the indebtedness of MAKER resulting from all loans or
advances and all payments or prepayments hereunder from time to time in the
amounts of principal and interest payable and paid from time to time hereunder,
in which event, in any legal action or proceeding in respect of this NOTE,
subject to Section 2.8 of the Loan Agreement, the entries made in such account
or accounts shall be conclusive evidence of the existence and amounts of the
obligations of MAKER therein recorded. In the event that the unpaid principal
amount hereof, at any time and for any reason, exceeds the maximum amount
hereinabove specified, MAKER covenants and agrees to pay the excess principal
amount immediately without notice or demand; such excess principal amount shall
in all respects be deemed to be included among the loans or advances made
pursuant to the other terms of this NOTE and shall bear interest at the rate
hereinabove stated.
4. ADVANCES. This Promissory Note is the "Note" referred to in the Loan
Agreement and the Holder is entitled to all the rights, remedies and benefits of
the Lender thereunder. Reference is hereby made to the Loan Agreement for the
terms and conditions under which this Note is to be made and to be repaid.
5. DEFAULT, REMEDIES. Upon the occurrence of any one or more of the Events
of Default set forth in the Loan Agreement, at the option of the holder of this
NOTE, the entire unpaid principal balance and accrued and unpaid interest hereon
shall at once become due and payable without notice or demand and the Holder may
foreclose and enforce all liens and security interests securing this NOTE.
If this NOTE is not paid when due, whether at maturity or by acceleration,
or if it is collected through a bankruptcy, probate, or other judicial
proceeding, whether before or after maturity, MAKER agrees to pay attorney's
fees, together with all actual expenses of collection and litigation and costs
of court incurred by the Holder, whether or not suit is actually filed or not.
6. WAIVER. MAKER and all other makers, signers, sureties, guarantors and
endorsers of this NOTE waive demand, presentment, notice of dishonor, notice of
intent to demand or accelerate payment hereof, diligence in the collecting,
grace, notice and protest, and agree to one or more extensions for any period or
periods of time and partial payments, before or after maturity, without
prejudice to HOLDER.
7. SECURITY. This NOTE is secured by certain security interests as set
forth in the Loan Agreement.
8. CONTROLLING AGREEMENT. The contracted for rate of interest of the Loan
without limitation, shall consist of the following: (i) the Stated Interest
Rate, calculated and applied to the principal balance of the Note in accordance
with the provisions of this Note and the Loan Agreement; (ii) interest after
event of default or due date, calculated and applied to the amounts due under
this Note in accordance with the provisions thereof; and (iii) all Additional
Sums (as herein defined), if any. Borrower agrees to pay an effective contracted
for rate of interest which is the sum of the above-referenced elements.
All fees, charges, goods, things in action or any other sums or things of
value (other than amounts described in the immediately previous paragraph), paid
or payable by Borrower (collectively, the "Additional Sums"), whether pursuant
to this Note, the Loan Agreement or any other documents or instruments in any
way pertaining to this lending transaction, or otherwise with respect to this
lending transaction, that under any applicable law may be deemed to be interest
with respect to this lending transaction, for the purpose of any applicable law
that may limit the maximum amount of interest to be charged with respect to this
lending transaction, shall be payable by Borrower as, and shall be deemed to be,
additional interest and for such purposes only, the agreed upon and "contracted
for rate of interest" of this lending transaction shall be deemed to be
increased by the rate of interest resulting from the inclusion of the Additional
Sums.
It is the intent of the parties to comply with the usury law ("Applicable
Usury Law") applicable pursuant to the terms of the preceding paragraph or such
other usury law which is applicable if the law chosen by the parties is not
applicable. Accordingly, it is agreed that notwithstanding any provisions to the
contrary in this NOTE, or in any of the documents securing payment hereof or
otherwise relating hereto, in no event shall this NOTE or such documents require
the payment or permit the collection of interest in excess of the maximum
contract rate permitted by the Applicable Usury Law. In the event (a) any such
excess of interest otherwise would be contracted for, charged or received from
Maker or otherwise in connection with the loan evidenced hereby, or (b) the
maturity of the indebtedness evidenced by this NOTE is accelerated in whole or
in part, or (c) all or part of the principal or interest of
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this NOTE shall be prepaid, so that under any of such circumstances the amount
of interest contracted for, shared or received in connection with the loan
evidenced hereby, would exceed the maximum contract rate permitted by the
Applicable Usury Law, then in any such event (1) the provisions of this
paragraph shall govern and control, (2) neither Maker nor any other person or
entity now or hereafter liable for the payment hereof will be obligated to pay
the amount of such interest to the extent that it is in excess of the maximum
contract rate permitted by the Applicable Usury Law, (3) any such excess which
may have been collected shall be either applied as a credit against the then
unpaid principal amount hereof or refunded to Maker, at Holder's option, and (4)
the effective rate of interest will be automatically reduced to the maximum
amount of interest permitted by the Applicable Usury Law. It is further agreed,
without limiting the generality of the foregoing, that to the extent permitted
by the Applicable Usury Law; (x) all calculations of interest which are made for
the purpose of determining whether such rate would exceed the maximum contract
rate permitted by the Applicable Usury Law shall be made by amortizing,
prorating, allocating and spreading during the period of the full stated term of
the loan evidenced hereby, all interest at any time contracted for, charged or
received from Maker or otherwise in connection with such loan; and (y) in the
event that the effective rate of interest on the loan should at any time exceed
the maximum contract rate allowed under the Applicable Usury Law, such excess
interest that would otherwise have been collected had there been no ceiling
imposed by the Applicable Usury Law shall be paid to Holder from time to time,
if and when the effective interest rate on the loan otherwise falls below the
maximum amount permitted by the Applicable Usury Law, to the extent that
interest paid to the date of calculation does not exceed the maximum contract
rate permitted by the Applicable Usury Law, until the entire amount of interest
which would have otherwise been collected had there been no ceiling imposed by
the Applicable Usury Law has been paid in full. Maker further agrees that should
the maximum contract rate permitted by the Applicable Usury Law be increased at
any time hereafter because of a change in the law, then to the extent not
prohibited by the Applicable Usury Law, such increases shall apply to all
indebtedness evidenced hereby regardless of when incurred; but, again to the
extent not prohibited by the Applicable Usury Law, should the maximum contract
rate permitted by the Applicable Usury Law be decreased because of a change in
the law, such decreases shall not apply to the indebtedness evidenced hereby
regardless of when incurred.
9. APPLICABLE LAW. This NOTE shall be construed in accordance with the laws
of the State of Arizona and the laws of the United States applicable to
transactions in the State of Arizona.
10. NO WAIVER. No delay on the part of the HOLDER in the exercise of any
power or right under this NOTE, or under the LOAN AGREEMENT or any other
instrument executed in connection herewith, shall operate as a waiver thereof,
nor shall a single or partial exercise of any power or right preclude other or
further exercise thereof or exercise of any other power or right. Enforcement by
HOLDER of any security for the payment hereof shall not constitute any election
by it of remedies so as to preclude the exercise of any other remedy available
to it.
11. SUCCESSORS, ASSIGNS. The term "HOLDER" shall include all of HOLDER's
successors and assigns to whom the benefits of this NOTE shall inure.
MAKER:
AutoInfo Finance of Virginia, Inc.,
a Virginia corporation
By:_________________________________
Jason Bacher, Vice President
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FINOVA Capital Corporation
Rediscount Finance
GUARANTY
(Continuing/Unlimited)
TO: FINOVA CAPITAL CORPORATION
Ladies/Gentlemen:
1. THE GUARANTEED DEBT. In consideration of any and all loans, advances,
acceptances and extensions of credit made by FINOVA CAPITAL CORPORATION, a
Delaware corporation, ("FINOVA") to, for the account of, or on behalf of
AutoInfo Finance of Virginia, Inc., a Virginia corporation, ("Borrower") and as
an inducement for FINOVA to make future loans, advances, acceptances and
extensions of credit to, for the account of, or on behalf of Borrower, the
undersigned (the "Guarantor"), absolutely and unconditionally, guarantees to
FINOVA the punctual payment in full at maturity, whether due pursuant to
acceleration or otherwise, of the principal, interest and other sums due or to
become due from Borrower to FINOVA at any time and from time to time from the
date of this Guaranty until termination. The guaranteed debt includes, without
limitation, all obligations, indebtedness and liability of Borrower to FINOVA,
whether now existing or hereafter incurred; whether direct, indirect or
contingent; and whether otherwise guaranteed or secured. All of these
obligations, indebtedness and liability are hereinafter referred to as the
"debt". Guarantor hereby acknowledges that it will receive a materially
financial and economic benefit from the extension of credit by FINOVA to
Borrower.
2. DURATION. This Guaranty shall operate as a continuing guaranty and shall
terminate as to the Guarantor only upon written notice signed by such Guarantor
and actually received by FINOVA, effective as of the opening of business on the
day following the date of receipt. Such termination shall be effective only as
to that portion of the debt incurred after such termination date, and this
Guaranty shall remain in full force and effect as to all debt incurred before
that time. Regardless of when a renewal or extension of pre-termination debt
occurs (with or without adjustment of interest rate or other terms), the debt is
deemed to have been incurred prior to termination to the extent of the renewal
or extension, and to be fully covered by this Guaranty. This Guaranty shall be
binding upon the undersigned Guarantor and its successors and assigns and shall
inure to the benefit of FINOVA and its successors and assigns.
3. NO CONDITIONS. This is an unconditional Guaranty; it is unlimited as to
time, until termination. The Guarantor warrants that there are no conditions,
oral or otherwise, on the effectiveness of this Guaranty. This writing
constitutes the entire agreement of the parties regarding the Guaranty.
4. DISCLOSURE OF CONDITION OF BORROWER. The Guarantor warrants and
represents to FINOVA that: (a) this Guaranty is executed at the Borrower's
request; (b) the Guarantor has established adequate means of obtaining from the
Borrower on a continuing basis financial and other information pertaining to the
Borrower's affairs or business; and (c) the Guarantor is now and will be
familiar with the affairs, business, operation and condition of the Borrower and
its assets. The Guarantor hereby waives any duty on the part of FINOVA to
disclose to the Guarantor any matter relating to the affairs, business,
operation or condition of the Borrower and its assets now known or hereafter
known to FINOVA during the life of this continuing Guaranty. With respect to any
debt of the Borrower to FINOVA, FINOVA need not inquire into the powers of the
Borrower or the officers, directors or agents acting or purporting to act on its
behalf, and any debt created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
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5. WAIVERS REGARDING THE GUARANTEED DEBT. The Guarantor expressly waives
the following: notice of the incurring of debt by the Borrower; notice of
default on the debt or intent to accelerate; notice of acceleration; notice of
intent to accelerate; the acceptance of this Guaranty by FINOVA; presentment and
demand for payment, protest, notice of protest and notice of dishonor or
nonpayment of any instrument evidencing debt of the Borrower; any right to
require the pursuit of any remedies against the Borrower or any other Guarantor,
including commencement of suit, before enforcing this Guaranty (this is a
guaranty of payment, not a guaranty of collection); any right to have security
or the right of setoff applied before enforcing this Guaranty; and any and all
right of subrogation to FINOVA's rights against the Borrower, other guarantors
or any other person or entity; all diligence in collection and failure or delay
by FINOVA in protection or exercise of FINOVA's rights against Borrower; and any
other action or any other encumbrance whatsoever which might constitute a
defense to the enforcement of this Guaranty.
The Guarantor hereby consents and agrees that renewals and extensions of
time of payment (including interest rate adjustments), surrender, release,
exchange, substitution, dealing with or taking of additional collateral,
modifying any obligations of, taking or release of other guarantors, abstaining
from taking advantage of or realizing upon any collateral security or other
guaranty and any and all other forbearances or indulgences granted by FINOVA to
the Borrower or any other party may be made, granted or effected by FINOVA
without notice to the Guarantor and without affecting in any manner Guarantor's
liability hereunder. The Guarantor hereby expressly consents to any impairment
of collateral including, but not limited to, failure to perfect a security
interest and release of collateral.
Any adjustment or compromise may be made by FINOVA with the Borrower or any
other party to the debt, and a lesser sum than the face amount thereof may be
accepted in full payment and discharge. Any of the collateral or other security
granted by the Borrower or any other party which FINOVA may hold or which may
come to it or its possession may be released or otherwise dealt with by FINOVA
in all respects as if this Guaranty were not in existence and the obligation of
the Guarantor shall in no way be affected thereby. The Guarantor hereby waives
and forgoes any right in respect of any such action by FINOVA.
6. FINOVA'S COLLECTION RIGHTS AGAINST GUARANTOR. The Guarantor agrees to
pay to FINOVA any and all costs, expenses and reasonable attorney's fees paid or
incurred by FINOVA in collecting or endeavoring to collect the debt of the
Borrower or in enforcing or endeavoring to enforce this Guaranty, unless
recovery of attorney's fees is invalid under applicable state or federal law. In
addition to its other rights and remedies under this Guaranty, FINOVA may
require, at FINOVA's option, collateral security to support the Guarantor's
obligations upon Borrower's default of any loan agreement with FINOVA and that
FINOVA reasonably deems itself insecure; if such a requirement is imposed, now
or in the future, FINOVA shall have any rights and remedies contained in any
mortgage, security agreement or other document executed by the Guarantor. If the
Guarantor refuses to execute such documents, the debt of the Borrower shall, for
the purposes of this Guaranty, be deemed to have matured.
7. BANKRUPTCY OF BORROWER. Guarantor agrees that this Guaranty shall not be
discharged except (subject to the limitations expressly contained herein) by
complete performance of Borrower's obligations to FINOVA and further agree that
the obligations of the Guarantor hereunder shall not be discharged, reduced or
affected in any way by any receivership, insolvency, bankruptcy or other
proceedings affecting the Borrower or any of its assets or the release or
discharge of the Borrower from the performance of any obligations to FINOVA,
whether by operation of law or otherwise or any other cause, whether similar or
dissimilar to the foregoing.
8. ASSIGNMENT. FINOVA may assign its rights hereunder in whole or in part
and upon any such assignment all the terms and provisions of this Guaranty shall
inure to the benefit of such assignee, to the extent so assigned.
9. MATURITY, PAYMENT. The Guarantor agrees that if the maturity of any of
the debt is accelerated by bankruptcy or otherwise, such maturity shall also be
deemed accelerated for the purpose of this Guaranty without demand or notice of
any kind to the Guarantor. Guarantor further agrees that, to the extent that the
Borrower or any other Person makes a payment to FINOVA on account of the
Indebtedness, or FINOVA receives any proceeds of collateral, which payment or
any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside, or otherwise required to be repaid to the Borrower or
any other party, including without limitation, it's estate, trustee or receiver,
under any bankruptcy, insolvency, or other similar law, whether state or federal
or under any common law or equitable claim; then to the extent of such payment
or repayment, the obligation or part thereof which has been paid, reduced or
satisfied by such amount shall be reinstated and continued in full force and
effect as of the date such initial payment, reduction or satisfaction occurred.
The Guarantor shall defend and indemnify FINOVA of and from any claim or loss
under this paragraph including FINOVA's attorneys' fees and expenses in the
defense of any such action or suit. The Guarantor will,
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forthwith upon notice from FINOVA of the Borrower's failure to pay any debt at
maturity, pay to FINOVA at FINOVA's principal offices the amount due and unpaid
by the Borrower and guaranteed hereby. The failure of FINOVA to give this or any
notice shall not in any way release the Guarantor hereunder.
10. NO ORAL MODIFICATIONS. This Guaranty Agreement shall not be suspended,
amended, released, terminated or modified in any manner except by an instrument
in writing signed by all parties to be bound.
11. WAIVER OF DEFAULT. No wavier by FINOVA of any default of any provision
of this Guaranty Agreement shall be deemed a waiver of any other pre-existing or
subsequently existing default, nor shall any such waiver by FINOVA be deemed a
continuing waiver. No delay or omission by FINOVA in exercising any right
hereunder, at any law or in equity, or otherwise, shall impair any such right or
be construed as a waiver thereof, acquiescence therein, nor shall any single or
partial exercise of any right preclude other or further exercise of any other
right that may exist or that may thereafter exist.
12. INDEMNIFICATION. In the event of the breach of this Guaranty Agreement,
by Guarantor, Guarantor hereby agrees to indemnify and hold FINOVA harmless from
any and all resulting claims and damages, including attorney's fees, and all
other costs.
13. GOVERNING LAW. This Guaranty is executed and delivered by Guarantor and
is performable in Maricopa County, Arizona, and shall be governed by and
construed in accordance with the laws of the State of Arizona.
14. JURISDICTION AND VENUE. Any suit, action or proceeding against
Guarantor with respect to this Agreement, the Loan Documents or any judgment
entered by any court in respect thereof, may be brought in any local, state or
federal court in the State of Arizona located in Maricopa County and Guarantor
hereby submits to the nonexclusive jurisdiction of such courts for the purpose
of any such suit, action or proceeding. Guarantor hereby further irrevocably
consents to the service of process in any suit, action or proceeding in said
court by the mailing thereof by Lender by registered or certified mail, postage
thereon prepaid, to Guarantor at the following address, 536 West 21st Street,
Norfolk, Virginia 23517. Guarantor hereby irrevocably waives any objections
which they may now or hereafter have to the laying of venue of any suit, action
or proceeding arising out of or relating to this Agreement or the Loan Documents
brought in any local, state or federal court of the State of Arizona located in
Maricopa County and hereby further irrevocably waive any claim that any such
suit, action or proceeding brought in any such court has been brought in any
inconvenient forum.
15. WAIVER OF RIGHT TO TRIAL BY JURY. GUARANTOR AND FINOVA HEREBY COVENANT
AND AGREE THAT IN ANY SUIT, ACTION OR PROCEEDING IN RESPECT OF ANY MATTER
ARISING OUT OF THIS AGREEMENT, THE LOAN DOCUMENTS OR TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE, TRIAL SHALL
BE TO A COURT OF COMPETENT JURISDICTION AND NOT TO A JURY; GUARANTOR HEREBY
EXPRESSLY WAIVES ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY. ANY PARTY MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
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16. ADVICE OF COUNSEL. Guarantor acknowledges that it has been advised by
counsel with respect to the transaction governed by this Agreement and
specifically with respect to the terms of Sections 13, 14 and 15.
IN WITNESS WHEREOF, this Guaranty has been executed and delivered to FINOVA
by the undersigned Guarantor on this 19th day of December, 1995.
AutoInfo, Inc.
By:____________________________________
Jason Bacher, Vice President
THE STATE OF ARIZONA )
)
COUNTY OF MARICOPA )
BE IT REMEMBERED, that on this 19th day of December, 1995, before me, the
undersigned, a Notary Public within and for the County and State aforesaid, came
Jason Bacher, who is personally known to me to be the same person who executed
the within instrument of writing, and duly acknowledged the execution of the
same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal, the day and year last above written.
__________________________________________
NOTARY PUBLIC, STATE OF ARIZONA
My commission expires:____________________
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