Exhibit 10.109
Phoenix Leasing Incorporated Agreement
SENIOR LOAN AND SECURITY AGREEMENT NO. 4003
THIS SENIOR LOAN AND SECURITY AGREEMENT NO. 4003 (this "Security
Agreement") is dated as of October 19, 1998 between PLAY CO. TOYS &
ENTERTAINMENT CORP. DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., a
Delaware corporation ("Borrower") and PHOENIX LEASING INCORPORATED, a California
corporation ("Lender").
RECITALS
A. Borrower desires to borrow from Lender in one or more borrowings an
amount not to exceed $500,000 in the aggregate, and Lender desires to loan,
subject to the terms and conditions herein set forth, such amount to Borrower
(each, a "Loan" and collectively, the "Loans"). Such borrowings shall be
evidenced by one or more Senior Secured Promissory Notes (each, a "Note" and
collectively, the "Notes"), in the form attached hereto.
B. As security for Borrower's obligations to Lender under this Security
Agreement, the Notes and any other agreement between Borrower and Lender,
Borrower will grant to Lender hereunder a first priority security interest in
certain of its equipment, machinery, fixtures, other items and intangibles,
whether now owned by Borrower or hereafter acquired, and all substitutions and
replacements of and additions, improvements, accessions and accumulations to
said equipment, machinery and fixtures and other items, together with all rents,
issues, income, profits and proceeds therefrom (collectively, the "Collateral")
which is described on the Note attached hereto or any subsequently-executed Note
entered into by Lender and Borrower and which incorporates this Security
Agreement by reference.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
SECTION 1. TERM OF AGREEMENT. The term of this Security Agreement begins on
the date set forth above and shall continue thereafter and be in effect so long
as and at any time any Note entered into pursuant to this Security Agreement is
in effect. The Term and monthly payment amount payable with respect to each item
of Collateral shall be as set forth in and as stated in the respective Note(s).
The terms of each Note hereto are subject to all conditions and provisions of
this Security Agreement as it may at any time be amended. Each Note shall
constitute a separate and independent Loan and contractual obligation of
Borrower and shall incorporate the terms and conditions of this Security
Agreement and any additional provisions contained in such Note. In the event of
a conflict between the terms and conditions of this Security Agreement and any
provisions of such Note, the provisions of such Note shall prevail with respect
to such Note only.
SECTION 2. NON-CANCELABLE LOAN. This Security Agreement and each Note
cannot be canceled or terminated except as expressly provided herein. Borrower
agrees that its obligations to pay all monthly payment amounts and other sums
payable hereunder (and under any Note) and the rights of Lender and any assignee
in and to such monthly payment amounts and other sums, are absolute and
unconditional and are not subject to any abatement, reduction, setoff, defense,
counterclaim or recoupment due or alleged to be due to, or by reason of, any
past, present or future claims which Borrower may have against Lender, any
assignee, the manufacturer or seller of the Collateral, or against any person
for any reason whatsoever.
SECTION 3. LENDER COMMITMENT. (a) General Terms. Subject to the terms and
conditions of this Security Agreement and so long as no Event of Default or
event which with the giving of notice or passage of time, or both, could become
an Event of Default has occurred, Lender hereby agrees to make one or more
senior secured Loans to Borrower, subject to the following conditions: (i) each
Loan shall be evidenced by a Note; (ii) the total principal amount of the Loans
shall not exceed $500,000 in the aggregate (the "Commitment"); (iii) at the time
of each Loan, no Event of Default or event which with the giving of notice or
passage of time, or both, could become an Event of Default shall have occurred
and be continuing, as reasonably determined by Lender, and certified by
Borrower; (iv) Lender shall not be obligated to make any Loan after November 23,
1998 and satisfied the conditions specified in the Commitment Letter; (v) for
each Loan, Borrower shall present to Lender a list of proposed Collateral for
approval by Lender in its sole discretion; (vi) for each Loan, Borrower shall
have provided Lender with each of the closing documents described in the
Commitment Letter between Lender and Borrower (the "Commitment Letter" ) and in
Exhibit A hereto (which documents shall be in form and substance reasonably
acceptable to Lender)and satisfied the conditions specified in the Commitment
Letter; (vii) Borrower is performing according to its business plan referred to
as "Play Co. Toys International Projected 1999 Revised 10/12/97" (the "Business
Plan"), as may be amended from time to time in form and substance acceptable to
Lender; (viii) there shall be no material adverse change in Borrower's
condition, financial or otherwise, that would materially impair the ability of
Borrower to meet its payment and other obligations under this Loan (a "Material
Adverse Effect") as reasonably determined by Lender, and Borrower so certifies,
from (yy) the date of the most recent financial statements delivered by Borrower
to Lender to (zz) the date of the proposed Loan; (ix) Borrower shall use the
proceeds of all Loans hereunder to purchase or reimburse the purchase of
Collateral; (x) at the time of each Loan, Borrower has reimbursed Lender for all
UCC filing and search costs, inspection and labeling costs, and appraisal fees,
if any; (xi) all Collateral has been marked and labeled by Lender or Lender's
agent; and (xii) Lender has received in form and substance acceptable to Lender:
(a) Borrower's interim financial statements signed by a financial officer of
Borrower, (b) prior to each funding, evidence satisfactory to Lender of
Borrower's $500,000 cash position and/or bank line availability; (c)
Subordination or Intercreditor Agreement from Finova Capital and (d) immediately
upon availability, complete copies of the Borrower's audit reports for its most
recent fiscal year, which shall include at least Borrower's balance sheet as of
the close of such year, and Borrower's statement of income and retained earnings
and of changes in financial position for such year, prepared on a consolidated
basis and certified by independent public accountants. Such certificate shall
not be qualified or limited because of restricted or limited examination by such
accountant of any material portion of the company's records. Such reports shall
be prepared in accordance with generally accepted accounting principles and
practices consistently applied. In the event of conflict between the terms and
conditions of the Security Agreement and the Commitment Letter, the terms and
conditions of this Security Agreement shall govern.
(b) The Notes. Each Loan shall be evidenced by a Note which may not be
prepaid in whole or in part. Each Note shall bear interest and be payable at the
times and in the manner provided therein. Following payment of the Indebtedness
related to each Note, Lender shall promptly return such Note, marked "canceled,"
to Borrower.
SECTION 4. SECURITY INTERESTS. (a) Borrower hereby grants to Lender a first
security interest in all Collateral; (b) This Security Agreement secures (i) the
payment of the principal of and interest on the Notes and all other sums due
thereunder and under this Security Agreement (the "Indebtedness") and (ii) the
performance by Borrower of all of its other covenants now or hereafter existing
under the Notes, this Security Agreement and any other obligation owed by
Borrower to Lender (the "Obligations").
SECTION 5. BORROWER'S REPRESENTATIONS AND WARRANTIES. Borrower represents
and warrants that (a) it is in good standing under the laws of the state of its
formation, duly qualified to do business and will remain duly qualified during
the term of each Loan in each state where necessary to carry on its present
business and operations, including the jurisdiction(s) where the Collateral will
be located as specified on each Exhibit A to each Note, except where failure to
be so qualified would not have a Material Adverse Effect; (b) it has full
authority to execute and deliver this Security Agreement and the Notes and
perform the terms hereof and thereof, and this Security Agreement and the Notes
have been duly authorized, executed and delivered and constitute valid and
binding obligations of Borrower enforceable in accordance with their terms; (c)
the execution and delivery of this Security Agreement and the Notes will not
contravene any law, regulation or judgment affecting Borrower or result in any
breach of any material agreement or other instrument binding on Borrower; (d) no
consent of Borrower's shareholders or holder of any indebtedness, or filing
with, or approval of, any governmental agency or commission, which has not
already been obtained or performed, as appropriate, is a condition to the
performance of the terms of this Security Agreement or the Notes; (e) there is
no action or proceeding pending or threatened against Borrower before any court
or administrative agency which might have a Material Adverse Effect on the
business, financial condition or operations of Borrower; (f) at the time any
Loan is made hereunder, Borrower owns and will keep all of the Collateral free
and clear of all liens, claims and encumbrances, and, except for this Security
Agreement, there is no deed of trust, mortgage, security agreement or other
third party interest against any of the Collateral; (g) at the time any Loan is
made hereunder, Borrower has good and marketable title to the Collateral; (h) at
the time any Loan is made hereunder, all Collateral has been received, installed
and is ready for use and is satisfactory in all respects for the purposes of
this Security Agreement; (i) the Collateral is, and will remain at all times
under applicable law, removable personal property, which is free and clear of
any lien or encumbrance except in favor of Lender, notwithstanding the manner in
which the Collateral may be attached to any real property; (j) all credit and
financial information submitted to Lender herewith or at any other time is and
will at the time given be true and correct in all material respects; and (k) the
security interest granted to Lender hereunder is a first priority security
interest, and (l) on or before January 1, 2000, Borrower's computer system shall
be Year 2000 performance compliant and will thus be able to accurately process
date data from, into and between the twentieth and twenty-first centuries
including leap year calculations.
SECTION 6. METHOD AND PLACE OF PAYMENT. Borrower shall pay to Lender, at
such address as Lender specifies in writing, all amounts payable to it under
this Security Agreement and the Notes.
SECTION 7. LOCATION; INSPECTION; LABELS. All of the Collateral shall be
located at the address (the "Collateral Location") shown on Exhibit A to each
Note and shall not be moved without Lender's prior written consent which
location shall in all events be within the United States. All of the records
regarding the Collateral shall be located at 550 Rancheros Drive, San Marcos, CA
92069, or such other location of which Borrower has given notice to Lender in
accordance with this Security Agreement. Lender shall have the right to inspect
Collateral, including records relating thereto, and Borrower's books and records
at any time (upon reasonable notification) during regular business hours, such
books and records to be maintained in accordance with generally accepted
accounting principles. Borrower shall be responsible for all labor, material and
freight charges incurred in connection with any removal or relocation of
Collateral which is requested by Borrower and consented to by Lender, as well as
for any charges due to the installation or moving of the Collateral. Payments
under the Notes and under this Security Agreement shall continue during any
period in which the Collateral is in transit during a relocation. During
Borrower's regular business hours and upon at least two days' notice to
Borrower, Lender or its agent shall mark and label Collateral, which labels (to
be provided by Lender) shall state that such Collateral is subject to a security
interest of Lender, and Borrower shall keep such labels on the Collateral as so
labeled.
SECTION 8. COLLATERAL MAINTENANCE. (a) General. Borrower will reasonably
permit Lender to inspect each item of Collateral and its maintenance records
during Borrower's regular business hours. Borrower will at its sole expense
comply with all applicable laws, rules, regulations, requirements and orders
with respect to the use, maintenance, repair, condition, storage and operation
of each item of Collateral. Any addition or improvement that is so required or
cannot be so removed will immediately become Collateral of Lender. (b) Service
and Repair. With respect to computer equipment, other than personal computers,
Borrower has entered into, and will maintain in effect, vendor's standard
maintenance contract or another contract satisfactory to Lender for a period
equal to the term of each Loan and extensions thereto which provides for the
maintenance of the Collateral in good condition and working order and repairs
and replacement of parts thereof, all in accordance with the terms of such
maintenance contract. Borrower shall have that Collateral certified for the
vendor's standard maintenance agreement before Lender acquires any interest in
the Collateral as provided in this Security Agreement. With respect to any other
Collateral, Borrower will at its sole expense maintain and service and repair
any damage to each item of Collateral in a manner consistent with prudent
industry practice and Borrower's own practice so that such item of Collateral is
at all times (i) in the same condition as when delivered to Borrower, except for
ordinary wear and tear, and (ii) in good operating order for the function
intended by its manufacturer's warranties and recommendations.
SECTION 9. LOSS OR DAMAGE. Borrower assumes the entire risk of loss to the
Collateral through use, operation or otherwise. Borrower hereby indemnifies and
holds harmless Lender from and against all claims, loss of Loan payments, costs,
damages, and expenses relating to or resulting from any loss, damage or
destruction of the Collateral, any such occurrence being hereinafter called a
"Casualty Occurrence." No later than the first payment date following such
Casualty Occurrence, or, if there is no such payment date, no later than thirty
(30) days after such Casualty Occurrence, Borrower shall, at its election,
either: (a) repair the Collateral returning it to good operating condition, or
(b) replace the Collateral with Collateral acceptable to Lender in its
reasonable discretion, in good condition and repair taking all steps required by
Lender to perfect Lender's first priority security interest therein, which
replacement Collateral shall be subject to the terms of this Security Agreement,
or (c) on the first day payment is due on any Note following the Casualty
Occurrence, or if there is no such payment date, thirty (30) days after such
Casualty Occurrence, pay to Lender an amount equal to the Balance Due (as
defined below) for each lost or damaged item of Collateral. The Balance Due for
each such item is the sum of: (i) all amounts for each item which may be then
due or accrued to the payment date, plus (ii) as of such payment date, an amount
equal to the product of the fraction specified below times the sum of all
remaining payments under the respective Note, including the amount of any
mandatory or optional payment required or permitted to be paid by Borrower to
Lender at the maturity of the Note. The numerator of the fraction shall be the
collateral value (as set forth on the applicable Note) of the item and the
denominator shall be the aggregate collateral value of all items under the Note.
Upon the making of such payments, Lender shall release such item of Collateral
from its lien hereunder.
SECTION 10. INSURANCE. Borrower at its expense shall keep the Collateral
insured against all risks of physical loss for at least the replacement value of
the Collateral (including, in the case of Collateral which is vehicles,
comprehensive and collision coverage) and in no event for less than the amount
payable following a Casualty Occurrence (as provided in Section 9). Such
insurance shall provide for a loss payable endorsement to Lender and/or any
assignee of Lender. Borrower shall maintain commercial general liability
insurance, including products liability and completed operations coverage, with
respect to loss or damage for personal injury, death or property damage in an
amount not less than $2,000,000 in the aggregate, (and in the case of Collateral
which is vehicles, in an amount not less than $1,000,000 covering bodily injury
and property damage in a combined single limit) naming Lender and/or Lender's
assignee as additional insured. Such insurance shall contain insurer's agreement
to give thirty (30) days' advance written notice to Lender before cancellation
or material change of any policy of insurance. Borrower will provide Lender and
any assignee of Lender with a certificate of insurance from the insurer
evidencing Lender's or such assignee's interest in the policy of insurance. Such
insurance shall cover any Casualty Occurrence to any unit of Collateral.
Notwithstanding anything in Section 9 or this Section 10 to the contrary, this
Security Agreement and Borrower's obligations hereunder shall remain in full
force and effect with respect to any unit of Collateral which is not subject to
a Casualty Occurrence. If Borrower fails to provide or maintain insurance as
required herein, Lender shall have the right, but shall not be obligated, to
obtain such insurance. In that event, Borrower shall pay to Lender the cost
thereof.
SECTION 11. MISCELLANEOUS AFFIRMATIVE COVENANTS. So long as any portion of
the Indebtedness is unpaid and as long as any of the Obligations are outstanding
Borrower will: (a) duly pay all governmental taxes and assessments at the time
they become due and payable; provided, however, Borrower may contest the same in
good faith so long as no payment default by Borrower has occurred and is
continuing; (b) comply with all applicable material governmental laws, rules and
regulations relating to its business and the Collateral where a failure to
comply would have a Material Adverse Effect; (c) take no action to adversely
affect Lender's security interest in the Collateral as a first and prior
perfected security interest; (d) furnish Lender with its annual audited
financial statements within ninety (90) days following the end of Borrower's
fiscal year, unaudited quarterly financial statements within forty-five (45)
days after the end of each fiscal quarter, and within thirty (30) days of the
end of each month a financial statement for that month prepared by Borrower, and
including an income statement and balance sheet, all of which shall be certified
by an officer of Borrower as true and correct and shall be prepared in
accordance with generally accepted accounting principles consistently applied,
and such other information as Lender may reasonably request; and (e) promptly
(but in no event more than five (5) days after the occurrence of such event)
notify Lender of any change in Borrower's condition during the commitment period
which constitutes a Material Adverse Effect, and of the occurrence of any Event
of Default.
SECTION 12. INDEMNITIES. Borrower will protect, indemnify and save harmless
Lender and any assignees from and against all liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses (including reasonable
attorneys' fees and expenses), imposed upon or incurred by or asserted against
Lender or any assignee of Lender by Borrower or any third party by reason of the
occurrence or existence (or alleged occurrence or existence) of any act or event
relating to or caused by any portion of the Collateral, or its purchase,
acceptance, possession, use, maintenance or transportation, including without
limitation, consequential or special damages of any kind, any failure on the
part of Borrower to perform or comply with any of the terms of this Security
Agreement or any Note, claims for latent or other defects, claims for patent,
trademark or copyright infringement and claims for personal injury, death or
property damage, including those based on Lender's negligence or strict
liability in tort and excluding only those based on Lender's gross negligence or
willful misconduct. In the event that any action, suit or proceeding is brought
against Lender by reason of any such occurrence, Borrower, upon Lender's
request, will, at Borrower's expense, resist and defend such action, suit or
proceeding or cause the same to be resisted and defended by counsel designated
and approved by Lender. Borrower's obligations under this Section 12 shall
survive the payment in full of all the Indebtedness and the performance of all
Obligations with respect to acts or events occurring or alleged to have occurred
prior to the payment in full of all the Indebtedness and the performance of all
Obligations.
SECTION 13. TAXES. Borrower agrees to reimburse Lender (or pay directly if
instructed by Lender) and any assignee of Lender for, and to indemnify and hold
Lender and any assignee harmless from, all fees (including, but not limited to,
license, documentation, recording and registration fees), and all sales, use,
gross receipts, personal property, occupational, value added or other taxes,
levies, imposts, duties, assessments, charges, or withholdings of any nature
whatsoever, together with any penalties, fines, additions to tax, or interest
thereon (the foregoing collectively "Impositions"), except same as may be
attributable to Lender's income, arising at any time prior to or during the term
of any Notes or of this Security Agreement, or upon termination or early
termination of this Security Agreement and levied or imposed upon Lender
directly or otherwise by any Federal, state or local government in the United
States or by any foreign country or foreign or international taxing authority
upon or with respect to (a) the Collateral, (b) the exportation, importation,
registration, purchase, ownership, delivery, leasing, financing, possession,
use, operation, storage, maintenance, repair, return, sale, transfer of title,
or other disposition thereof, (c) the rentals, receipts, or earnings arising
from the Collateral, or any disposition of the rights to such rentals, receipts,
or earnings, (d) any payment pursuant to this Security Agreement or the Notes,
or (e) this Security Agreement, the Notes or any transaction or any part hereof
or thereof.
SECTION 14. RELEASE OF LIENS. Upon payment of all of the Indebtedness and
performance of all of the Obligations, Lender shall execute UCC termination
statements and such other documents as Borrower shall reasonably request to
evidence the release of Lender's lien relating to the Collateral.
SECTION 15. ASSIGNMENT. WITHOUT LENDER'S PRIOR WRITTEN CONSENT WHICH
CONSENT WILL NOT BE UNREASONABLY WITHHELD OR DELAYED, BORROWER SHALL NOT (a)
ASSIGN, TRANSFER, PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE OF THIS SECURITY
AGREEMENT, ANY NOTE, ANY COLLATERAL, OR ANY INTEREST THEREIN, (b) LEASE OR LEND
COLLATERAL OR PERMIT IT TO BE USED BY ANYONE OTHER THAN BORROWER OR BORROWER'S
EMPLOYEES, CONTRACTORS AND AGENTS OR (c) MERGE INTO, CONSOLIDATE WITH OR CONVEY
OR TRANSFER ITS PROPERTIES SUBSTANTIALLY AS AN ENTIRETY TO ANY OTHER PERSON OR
ENTITY EXCEPT TO A SUCCESSOR IN INTEREST TO ALL OR SUBSTANTIALLY ALL OF THE
BUSINESS OF BORROWER; PROVIDED, HOWEVER, THAT, THE FINANCIAL CONDITION OF SUCH
SUCCESSOR IS GREATER THAN OR EQUAL TO BORROWER AS DETERMINED IN GOOD FAITH BY
LENDER AND THE SUCCESSOR'S BUSINESS AND ITS MAJOR INVESTORS ARE REASONABLY
ACCEPTABLE TO LENDER. LENDER MAY ASSIGN ANY OF THE NOTES, THIS SECURITY
AGREEMENT OR ITS SECURITY INTEREST IN ANY OR ALL COLLATERAL, OR ANY OR ALL OF
THE ABOVE, IN WHOLE OR IN PART TO ONE OR MORE ASSIGNEES OR SECURED PARTIES
WITHOUT NOTICE TO BORROWER. If Borrower is given notice of such assignment it
agrees to acknowledge receipt thereof in writing and Borrower shall execute such
additional documentation as Lender's assignee and/or secured party shall
reasonably require at Lender's expense. Each such assignee and/or secured party
shall have all of the rights, but (except as provided in this Section 15) none
of the obligations, of Lender under this Security Agreement, unless such
assignee or secured party expressly agrees to assume such obligations in
writing. Borrower shall not assert against any assignee and/or secured party any
defense, counterclaim or offset that Borrower may have against Lender.
Notwithstanding any such assignment, and providing no Event of Default has
occurred and is continuing, Lender, or its assignees, secured parties, or their
agents or assigns, shall not interfere with Borrower's right to quietly enjoy
use of Collateral subject to the terms and conditions of this Security
Agreement. Subject to the foregoing, the Notes and this Security Agreement shall
inure to the benefit of, and are binding upon, the successors and assignees of
the parties hereto. Borrower acknowledges that any such assignment by Lender
will not change Borrower's duties or obligations under this Security Agreement
and the Notes or increase any burden or risk on Borrower.
SECTION 16. DEFAULT. (a) Events of Default. Any of the following events or
conditions shall constitute an "Event of Default" hereunder: (i) Borrower's
failure to pay any monies due to Lender hereunder or under any Note beyond the
tenth (10th) day after the same is due; (ii) Borrower's failure to comply with
its obligations under Section 10 or Section 15; (iii) any representation or
warranty of Borrower made in this Security Agreement or the Notes or in any
other agreement, statement or certificate furnished to Lender in connection with
this Security Agreement or the Notes shall prove to have been incorrect in any
material respect when made or given; (iv) Borrower's failure to comply with or
perform any material term, covenant or condition of this Security Agreement or
any Note or under any other agreement between Borrower and Lender or under any
lease or mortgage of real property covering the location of the Collateral if
such failure to comply or perform is not cured by Borrower within thirty (30)
days after Borrower knows of the noncompliance or nonperformance or notice from
Lender or such longer period that Borrower is diligently attempting to effect
such cure; (v) seizure of any of the Collateral under legal process; (vi) the
filing by or against Borrower or any guarantor under any guaranty executed in
connection with this Security Agreement ("Guarantor") of a petition for
reorganization or liquidation under the Bankruptcy Code or any amendment thereto
or under any other insolvency law providing for the relief of debtors; (vii) the
voluntary or involuntary making of an assignment of a substantial portion of its
assets by Borrower or by any Guarantor for the benefit of its creditors, the
appointment of a receiver or trustee for Borrower or any Guarantor or for any of
Borrower's or Guarantor's assets, the institution by or against Borrower or any
Guarantor of any formal or informal proceeding for dissolution, liquidation,
settlement of claims against or winding up of the affairs of Borrower or any
Guarantor provided that in the case of all such involuntary proceedings, same
are not dismissed within sixty (60) days after commencement; (viii) the making
by Borrower or by any Guarantor of a transfer of all or a material portion of
Borrower's or Guarantor's assets or inventory not in the ordinary course of
business; or (ix) any default or breach by any Guarantor of any of the terms of
its guaranty to Lender in connection with this Security Agreement.
(b) Remedies. If any Event of Default has occurred, Lender may in its sole
discretion exercise one or more of the following remedies with respect to any or
all of the Collateral: (i) declare due any or all of the aggregate sum of all
remaining payments under the Notes, including the amount of any mandatory or
optional payment required or permitted to be paid by Borrower to Lender at the
maturity of the Notes ("Remaining Payments"); (ii) proceed by appropriate court
action or actions either at law or in equity to enforce Borrower's performance
of the applicable covenants of the Notes and this Security Agreement or to
recover all damages and expenses incurred by Lender by reason of an Event of
Default; (iii) except as provided by law, without court order or prior demand,
enter upon the premises where the Collateral is located and take immediate
possession of and remove it without liability of Lender to Borrower or any other
person or entity; (iv) terminate this Security Agreement and sell the Collateral
at public or private sale, or otherwise dispose of, hold, use or lease any or
all of the Collateral in a commercially reasonable manner; or (v) exercise any
other right or remedy available to it under applicable law. If Lender has
declared due any or all of the Remaining Payments, Borrower will pay immediately
to Lender, without duplication, (A) the Remaining Payments, (B) all amounts
which may be then due or accrued, and (C) all other amounts due under this
Security Agreement and under the Notes (Lender's Return, as referred to below,
means the amounts described in clauses (A), (B) and (C) above). The net proceeds
of any sale or lease of such Collateral will be credited against Lender's
Return. The net proceeds of a sale of the Collateral pursuant to this Section
16(b) is defined as the sales price of the Collateral less selling expenses,
including, without limitation, costs of remarketing the Collateral and all
refurbishing costs and commissions paid with respect to such remarketing. The
net proceeds of a lease of the Collateral pursuant to this Section 16(b) is
defined as the amount equal to the monthly payments due under such lease
(discounted at 6% per annum compounded monthly on the basis of a 360 day year
(the "Discount Rate") plus the residual value of the Collateral at the end of
the basic term of such lease, as reasonably determined by Lender, and discounted
at the Discount Rate.
Borrower agrees to pay all reasonable out-of-pocket costs of Lender
incurred in enforcement of this Security Agreement, the Notes or any instrument
or agreement required under this Security Agreement, including, but not limited
to reasonable attorneys' fees and litigation expenses and fees of collection
agencies ("Remedy Expenses"). At Lender's request, Borrower shall assemble the
Collateral and make it available to Lender at such time and location as Lender
may reasonably designate. Borrower waives any right it may have to redeem the
Collateral.
Declaration that any or all amounts under this Security Agreement and/or
the Notes are immediately due and payable and Lender's taking possession of any
or all Equipment shall not terminate this Security Agreement or any of the Notes
unless Lender so notifies Borrower in writing. None of the above remedies is
intended to be exclusive but each is cumulative and may be enforced separately
or concurrently.
In addition to the foregoing remedies, if an Event of Default hereunder
shall have occurred and be continuing, Lender shall have the right to cause its
representative or representatives to attend any meeting of Borrower's Board of
Directors or any committee thereof. In such case, Borrower shall provide Lender
with the same notice of any such Board or committee meeting that is given to the
members of Borrower's Board or committee thereof.
(c) Application of Proceeds. The proceeds of any sale of all or any part of
the Collateral and the proceeds of any remedy afforded to Lender by this
Security Agreement shall be paid to and applied as follows:
First, to the payment of reasonable costs and expenses of suit or
foreclosure, if any, and of the sale, if any, including, without limitation,
refurbishing costs, costs of remarketing and commissions related to remarketing,
all Remedy Expenses, all expenses, liabilities and advances incurred or made
pursuant to this Security Agreement or any Note by Lender in connection with
foreclosure, suit, sale or enforcement of this Security Agreement or the Notes,
and taxes, assessments or liens superior to Lender's security interest granted
by this Security Agreement;
Second, to the payment of all other amounts not described in item Third
below due under this Security Agreement and all Notes;
Third, to pay Lender an amount equal to Lender's Return, to the extent not
previously paid by Borrower; and
Fourth, to the payment of any surplus to Borrower or to whomever may lawfully be
entitled to receive it.
(d) Effect of Delay; Waiver; Foreclosure on Collateral. No delay or
omission of Lender, in exercising any right or power arising from any Event of
Default shall prevent Lender from exercising that right or power if the Event of
Default continues. No waiver of an Event of Default, whether full or partial, by
Lender or such holder shall be taken to extend to any subsequent Event of
Default, or to impair the rights of Lender in respect of any damages suffered as
a result of the Event of Default. The giving, taking or enforcement of any other
or additional security, collateral or guaranty for the payment or discharge of
the Indebtedness and performance of the Obligations shall in no way operate to
prejudice, waive or affect the security interest created by this Security
Agreement or any rights, powers or remedies exercised hereunder or thereunder.
Lender shall not be required first to foreclose on the Collateral prior to
bringing an action against Borrower for sums owed to Lender under this Security
Agreement or under any Note.
SECTION 17. LATE PAYMENTS. Borrower shall pay Lender a late charge of 10%
of any payment owed Lender by Borrower which is not paid when due (taking into
account applicable grace periods), for every month such payment is not paid when
due, but in no event an amount greater than the highest rate permitted by
applicable law. If such amounts have not been received by Lender at Lender's
place of business or by Lender's designated agent by the date such amounts are
due under this Security Agreement or the Notes, Lender shall bill Borrower for
such charges. Borrower acknowledges that invoices for amounts due hereunder or
under the Notes are sent by Lender for Borrower's convenience only. Borrower's
non-receipt of an invoice will not relieve Borrower of its obligation to make
payments hereunder or under the Notes.
SECTION 18. PAYMENTS BY LENDER. If Borrower shall fail to make any payment
or perform any act required hereunder (including, but not limited to,
maintenance of any insurance required by Section 10), then Lender may, but shall
not be required to, after such notice to Borrower as is reasonable under the
circumstances, make such payment or perform such act with the same effect as if
made or performed by Borrower. Borrower will upon demand reimburse Lender for
all sums paid and all reasonable costs and expenses incurred in connection with
the performance of any such act.
SECTION 19. FINANCING STATEMENTS. Borrower hereby appoints Lender (and each
of Lender's officers, employees or agents designated by Lender) with full power
of substitution by Lender, as Borrower's attorney, with power to execute and
deliver on Borrower's behalf, financing statements and other documents necessary
to perfect and/or give notice of Lender's security interest in any of the
Collateral. Notwithstanding the above, Borrower will, upon Lender's request,
execute all financing statements pursuant to the Uniform Commercial Code and all
such other documents reasonably requested by Lender to perfect Lender's security
interests hereunder. Borrower authorizes Lender to file financing statements
signed only by Lender (where such authorization is permitted by law) at all
places where Lender deems necessary.
SECTION 20. NATURE OF TRANSACTION. Lender makes no representation
whatsoever, express or implied, concerning the legal character of the
transaction evidenced hereby, for tax or any other purpose.
SECTION 21. SUSPENSION OF LENDER'S OBLIGATIONS. The obligations of Lender
hereunder will be suspended to the extent that Lender is hindered or prevented
from complying therewith because of labor disturbances, including but not
limited to strikes and lockouts, acts of God, fires, floods, storms, accidents,
industrial unrest, acts of war, insurrection, riot or civil disorder, any order,
decree, law or governmental regulations or interference, failure of the
manufacturer to deliver any item of Collateral or any cause whatsoever not
within the sole and exclusive control of Lender.
SECTION 22. LENDER'S EXPENSE. Borrower shall pay Lender all reasonable
costs and expenses including reasonable attorney's fees and the fees of
collection agencies, incurred by Lender (a) in enforcing any of the terms,
conditions or provisions hereof and related to the exercise of its remedies, and
(b) in connection with any bankruptcy or post-judgment proceeding, whether or
not suit is filed and, in each and every action, suit or proceeding, including
any and all appeals and petitions therefrom.
SECTION 23. ALTERATIONS; ATTACHMENTS. No alterations or attachments shall
be made to the Collateral without Lender's prior written consent, which shall
not be given for changes that will affect the reliability and utility of the
Collateral or which cannot be removed without damage to the Collateral, or which
in any way affect the value of the Collateral for purposes of resale or lease.
All attachments and improvements to the Collateral shall be deemed to be
"Collateral" for purposes of the Security Agreement, and a first priority
security interest therein shall immediately vest in Lender.
SECTION 24. CHATTEL PAPER. (a) One executed copy of the Security Agreement
will be marked "Original" and all other counterparts will be duplicates. To the
extent, if any, that this Security Agreement constitutes chattel paper (as such
term is defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction) no security interest in the Security Agreement may be created in
any documents other than the "Original." (b) There shall be only one original of
each Note and it shall be marked "Original," and all other counterparts will be
duplicates. To the extent, if any, that any Notes to this Security Agreement
constitutes chattel paper (or as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction) no security interest in any
Note(s) may be created in any documents other than the "Original."
SECTION 25. COMMITMENT FEE. Borrower has paid to Lender a commitment fee
("Fee") of $2,500. The Fee shall be applied by Lender first to reimburse Lender
for all out-of-pocket UCC and other search costs, inspections and labeling costs
and appraisal fees, if any, incurred by Lender, and then proportionally to the
first monthly payment for each Note hereunder in the proportion that the
Collateral value for such Note bears to Lender's entire commitment. However, the
portion of the Fee which is not applied to such monthly payments shall be
non-refundable except if Lender defaults in its obligation to fund Loans
pursuant to Section 3.
SECTION 26. NOTICES. All notices hereunder shall be in writing, by
registered mail, or reliable messenger or delivery service (including overnight
service) and shall be directed, as the case may be, to Lender at 2401 Kerner
Boulevard, San Rafael, California 94901, Attention: Asset Management and to
Borrower at 550 Rancheros Drive, San Marcos, CA 92069, Attention: Jim Frakes.
SECTION 27. MISCELLANEOUS. (a) Borrower shall provide Lender with such
corporate resolutions, financial statements and other documents as Lender shall
reasonably request from time to time. (b) Borrower represents that the
Collateral hereunder is used solely for business purposes. (c) Time is of the
essence with respect to this Security Agreement. (d) Borrower acknowledges that
Borrower has read this Security Agreement and the Notes, understands them and
agrees to be bound by their terms and further agrees that this Security
Agreement and the Notes constitute the entire agreement between Lender and
Borrower with respect to the subject matter hereof and supersede all previous
agreements, promises, or representations. (e) This Security Agreement and the
Notes may not be changed, altered or modified except by an instrument signed by
an officer or authorized representative of Lender and Borrower. (f) Any failure
of Lender to require strict performance by Borrower or any waiver by Lender of
any provision herein or in a Note shall not be construed as a consent or waiver
of any other breach of the same or any other provision. (g) If any provision of
this Security Agreement or any Note is held invalid, such invalidity shall not
affect any other provisions hereof or thereof. (h) The obligations of Borrower
to pay the Indebtedness and perform the Obligations shall survive the expiration
or earlier termination of this Security Agreement and each Note until all
Obligations of Borrower to Lender have been met and all liabilities of Borrower
to Lender and any assignee have been paid in full. (i) Borrower will notify
Lender at least 30 days before changing its name, principal place of business or
chief executive office. (j) Borrower will, at its expense, promptly execute and
deliver to Lender such documents and assurances (including financing statements)
and take such further action as Lender may reasonably request in order to carry
out the intent of this Security Agreement and Lender's rights and remedies.
SECTION 28. JURISDICTION AND WAIVER OF JURY TRIAL. This Security Agreement
and each Note shall be deemed to have been made under and shall be governed by
the laws of the State of California in all respects, including matters of
construction, validity and performance. At Lender's sole discretion, option and
election, jurisdiction and venue for any legal action between the parties
arising out of or relating to this Security Agreement or any Note shall be in
the Superior Court of Marin County, California, or, in cases where federal
diversity jurisdiction is available, in the United States District Court for the
Northern District of California located in San Francisco, California. BORROWER,
TO THE EXTENT IT MAY LAWFULLY DO SO, HEREBY WAIVES ITS RIGHT TO TRIAL BY JURY IN
ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS SECURITY AGREEMENT, ANY NOTE, ANY
SECURITY DOCUMENTS, OR ANY OTHER AGREEMENTS EXECUTED IN CONNECTION HEREWITH.
IN WITNESS WHEREOF, Borrower and Lender have caused this Security Agreement
to be executed as of the date and year first above written.
PHOENIX LEASING INCORPORATED PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL
AND TOY CO.
By: __ By:
Name: Name (Print):
Title:__ Title:
HEADQUARTERS LOCATION:
550 Rancheros Drive
San Marcos, CA 92069
County of San Diego
EXHIBIT A TO
SENIOR LOAN AND SECURITY AGREEMENT NO. 4003
DATED OCTOBER 19, 1998
CLOSING MEMORANDUM
1* Duly executed Senior Loan and Security Agreement.
2. Duly executed Senior Security Promissory Note with Exhibit A Collateral
description attached.
3. Insurance certificates reflecting coverage required under Section 10 of
the Senior Loan and Security Agreement.
4.* Resolutions of Borrower's board of directors.
5. UCC-1 Financing Statements with respect to the Collateral.
6. UCC search (Lender will obtain).
7. Certificate of Chief Financial Officer stating that (i) there are no
liens, charges, security interests or other encumbrances that may affect
Lender's right, title and interest in the Collateral and there are no UCC-1
financing statements filed or in the process of being filed against any of the
Collateral, (ii) Borrower is performing according to Borrower's business plan,
(iii) no change which is a Material Adverse Effect has occurred in the financial
condition of Borrower, (iv) no default has occurred, and (v) the representations
and warranties in Section 5 of the Senior Loan and Security Agreement are true
and correct as if made on the date of the Loan.
8.* Certificate from the Secretary of State of Borrower's state of
incorporation, and from the state in which Borrower's chief executive office is
located, if different, stating the Borrower is in good standing or is authorized
to transact business, as the case may be, dated not more than thirty days prior
to the first Loan (Lender will obtain).
9.* Borrower's Business Plan.
10. Borrower's most recent financial statements.
11. List of proposed Collateral.
12. Purchase documentation verifying Borrower's ownership of equipment.
13. See Section 3 of the Senior Loan and Security Agreement for additional
conditions to closing. 14. Subordination/Intercreditor Agreement from Finova and
other entities.
* First Loan only.
** Required if any Equipment is a fixture, i.e., attached to real property,
or located in certain states.
NOTE NO. 01
TO SENIOR LOAN AND SECURITY AGREEMENT NO. 4003
DATED AS OF OCTOBER 19, 1998
BETWEEN PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO.
AS BORROWER AND
PHOENIX LEASING INCORPORATED AS LENDER
SENIOR SECURED PROMISSORY NOTE
$232,098.21 _________________, 199___
FOR VALUE RECEIVED, the undersigned, PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., a Delaware corporation
("Borrower"), hereby promises to pay to the order of PHOENIX LEASING
INCORPORATED, or its assigns (the "Lender") the principal sum of Two Hundred
Thirty-two Thousand Ninety-eight and 21/100 Dollars ($232,098.21), together with
interest thereon until the principal is fully repaid. Principal and interest
shall be payable in consecutive monthly installments, each of which shall be
equal to the percentage specified below of the principal sum and in the amounts
each month specified below.
Month Payment Amount Percentage
1-60 $5,312.73 2.289%
The first payment shall be due on the first day of the month immediately
following the date of this Note (unless the date of this Note is the first day
of the month in which case such payment is due on that day), and each succeeding
payment shall be made on the first day of each succeeding month. An interim
payment will be due on the same date as the first payment for the period from
the date Lender funds the principal amount of this Note until the first day of
the following month and shall be equal to 1/30 of the monthly loan payment
multiplied by the number of days, if any, between (and including) the funding
date and the first day of the following month.
This Note may not be prepaid in whole or in part.
Borrower shall pay Lender a late charge of 10% of any payment owed Lender
by Borrower which is not paid when due (taking into account applicable grace
periods), for every month such payment is not paid when due, but in no event an
amount greater than the highest rate permitted by applicable law.
Payments of principal and interest hereunder shall be made in lawful money
of the United States of America at the offices of Lender at 2401 Kerner
Boulevard, San Rafael, California 94901, or such other place as the Lender shall
designate to the Borrower in writing.
This Note is secured by a Senior Loan and Security Agreement, dated as of
October 19, 1998 between Borrower and Lender (the "Security Agreement") and is
entitled to the benefits of the Security Agreement which contains, among other
things, provisions for (i) events of default and the Lender's rights and
remedies following an event of default (which include, but are not limited to,
acceleration of this Note), (ii) Collateral which secures the repayment of this
Note and is more particularly described on Exhibit A, and (iii) other rights and
remedies of Lender.
This Note may be declared due prior to its expressed maturity date only in
the events, on the terms and in the manner provided in the Security Agreement.
This Note shall be deemed to have been made under and shall be governed by
the laws of the State of California in all respects, including matters of
construction, validity and performance. At Lender's sole discretion, option and
election, jurisdiction and venue for any legal action between the parties
arising out of or relating to this Note shall be in the Superior Court of Marin
County, California, or, in cases where federal diversity jurisdiction is
available, in the United States District Court for the Northern District of
California located in San Francisco, California.
The Borrower hereby expressly waives presentment for payment, demand for
payment, notice of dishonor, protest, notice of protest, notice of nonpayment,
and all lack of diligence or delays in collection or enforcement of this Note.
BORROWER:
PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL
AND TOY CO.
By:
Name (Print):
Title:
EXHIBIT A to
SENIOR SECURED PROMISSORY NOTE NO. 01
(Insert Exhibit A here)
OFFICER'S CERTIFICATE
The undersigned, ____________________, hereby certifies that:
(i) I am the __________________ of PLAY CO. TOYS & ENTERTAINMENT CORP. DBA
PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., a Delaware corporation (the
"Borrower");
(ii) as such officer, I am familiar with the terms and conditions of that
certain Senior Loan and Security Agreement (the "Security Agreement") dated as
of October 19, 1998 between Borrower and PHOENIX LEASING INCORPORATED
("Lender");
(iii) the equipment, machinery, furniture, fixtures and other items on the
attached list are free and clear of any and all liens, charges, security
interests or other encumbrances that may affect Lender's right, title or
interest in and to the equipment and other items, and no UCC-1 financing
statements or other grants of security interests have been or are in the process
of being filed against any of such equipment or other items;
(iv) Borrower is performing according to Borrower's business plan described
in Section 3 of the Security Agreement, a true copy of which business plan has
been delivered to Lender;
(v) there has been no material adverse change in the financial condition of
Borrower from the date of its most recent financial statements, true copies of
which have been delivered to Lender;
(vi) as of the date hereof, no Event of Default (as defined in the Security
Agreement) or event which with the giving of notice or passage of time, or both,
could become an Event of Default has occurred and is continuing; and
(vii) the representations and warranties in Section 5 of the Security
Agreement are true and correct as if made on the date of the Loan.
IN WITNESS WHEREOF, I hereby execute this certificate on this ______ day of
_______________, 19__.
-----------------------------------
NOTE NO. 02
TO SENIOR LOAN AND SECURITY AGREEMENT NO. 4003
DATED AS OF OCTOBER 19, 1998
BETWEEN PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO.
AS BORROWER AND
PHOENIX LEASING INCORPORATED AS LENDER
SENIOR SECURED PROMISSORY NOTE
$188,048.92 _________________, 199___
FOR VALUE RECEIVED, the undersigned, PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., a Delaware corporation
("Borrower"), hereby promises to pay to the order of PHOENIX LEASING
INCORPORATED, or its assigns (the "Lender") the principal sum of One Hundred
Eighty-eight Thousand Forty-eight and 92/100 Dollars ($188,048.92), together
with interest thereon until the principal is fully repaid. Principal and
interest shall be payable in consecutive monthly installments, each of which
shall be equal to the percentage specified below of the principal sum and in the
amounts each month specified below.
Month Payment Amount Percentage
1-60 $4,304.44 2.289%
The first payment shall be due on the first day of the month immediately
following the date of this Note (unless the date of this Note is the first day
of the month in which case such payment is due on that day), and each succeeding
payment shall be made on the first day of each succeeding month. An interim
payment will be due on the same date as the first payment for the period from
the date Lender funds the principal amount of this Note until the first day of
the following month and shall be equal to 1/30 of the monthly loan payment
multiplied by the number of days, if any, between (and including) the funding
date and the first day of the following month.
This Note may not be prepaid in whole or in part.
Borrower shall pay Lender a late charge of 10% of any payment owed Lender
by Borrower which is not paid when due (taking into account applicable grace
periods), for every month such payment is not paid when due, but in no event an
amount greater than the highest rate permitted by applicable law.
Payments of principal and interest hereunder shall be made in lawful money
of the United States of America at the offices of Lender at 2401 Kerner
Boulevard, San Rafael, California 94901, or such other place as the Lender shall
designate to the Borrower in writing.
This Note is secured by a Senior Loan and Security Agreement, dated as of
October 19, 1998 between Borrower and Lender (the "Security Agreement") and is
entitled to the benefits of the Security Agreement which contains, among other
things, provisions for (i) events of default and the Lender's rights and
remedies following an event of default (which include, but are not limited to,
acceleration of this Note), (ii) Collateral which secures the repayment of this
Note and is more particularly described on Exhibit A, and (iii) other rights and
remedies of Lender.
This Note may be declared due prior to its expressed maturity date only in
the events, on the terms and in the manner provided in the Security Agreement.
This Note shall be deemed to have been made under and shall be governed by
the laws of the State of California in all respects, including matters of
construction, validity and performance. At Lender's sole discretion, option and
election, jurisdiction and venue for any legal action between the parties
arising out of or relating to this Note shall be in the Superior Court of Marin
County, California, or, in cases where federal diversity jurisdiction is
available, in the United States District Court for the Northern District of
California located in San Francisco, California.
The Borrower hereby expressly waives presentment for payment, demand for
payment, notice of dishonor, protest, notice of protest, notice of nonpayment,
and all lack of diligence or delays in collection or enforcement of this Note.
BORROWER:
PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL
AND TOY CO.
By:
Name (Print):
Title:
EXHIBIT A to
SENIOR SECURED PROMISSORY NOTE NO. 02
(Insert Exhibit A here)
OFFICER'S CERTIFICATE
The undersigned, ____________________, hereby certifies that:
(i) I am the __________________ of PLAY CO. TOYS & ENTERTAINMENT CORP. DBA
PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., a Delaware corporation (the
"Borrower");
(ii) as such officer, I am familiar with the terms and conditions of that
certain Senior Loan and Security Agreement (the "Security Agreement") dated as
of October 19, 1998 between Borrower and PHOENIX LEASING INCORPORATED
("Lender");
(iii) the equipment, machinery, furniture, fixtures and other items on the
attached list are free and clear of any and all liens, charges, security
interests or other encumbrances that may affect Lender's right, title or
interest in and to the equipment and other items, and no UCC-1 financing
statements or other grants of security interests have been or are in the process
of being filed against any of such equipment or other items;
(iv) Borrower is performing according to Borrower's business plan described
in Section 3 of the Security Agreement, a true copy of which business plan has
been delivered to Lender;
(v) there has been no material adverse change in the financial condition of
Borrower from the date of its most recent financial statements, true copies of
which have been delivered to Lender;
(vi) as of the date hereof, no Event of Default (as defined in the Security
Agreement) or event which with the giving of notice or passage of time, or both,
could become an Event of Default has occurred and is continuing; and
(vii) the representations and warranties in Section 5 of the Security
Agreement are true and correct as if made on the date of the Loan.
IN WITNESS WHEREOF, I hereby execute this certificate on this ______ day of
_______________, 19__.
-----------------------------------
NOTE NO. 03
TO SENIOR LOAN AND SECURITY AGREEMENT NO. 4003
DATED AS OF OCTOBER 19, 1998
BETWEEN PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO.
AS BORROWER AND
PHOENIX LEASING INCORPORATED AS LENDER
SENIOR SECURED PROMISSORY NOTE
$71,322.25 _________________, 199___
FOR VALUE RECEIVED, the undersigned, PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., a Delaware corporation
("Borrower"), hereby promises to pay to the order of PHOENIX LEASING
INCORPORATED, or its assigns (the "Lender") the principal sum of Seventy-One
Thousand Three Hundred Twenty-Two and 25/100 Dollars ($71,322.25), together with
interest thereon until the principal is fully repaid. Principal and interest
shall be payable in consecutive monthly installments, each of which shall be
equal to the percentage specified below of the principal sum and in the amounts
each month specified below.
Month Payment Amount Percentage
1-60 $1,632.57 2.289%
The first payment shall be due on the first day of the month immediately
following the date of this Note (unless the date of this Note is the first day
of the month in which case such payment is due on that day), and each succeeding
payment shall be made on the first day of each succeeding month. An interim
payment will be due on the same date as the first payment for the period from
the date Lender funds the principal amount of this Note until the first day of
the following month and shall be equal to 1/30 of the monthly loan payment
multiplied by the number of days, if any, between (and including) the funding
date and the first day of the following month.
This Note may not be prepaid in whole or in part.
Borrower shall pay Lender a late charge of 10% of any payment owed Lender
by Borrower which is not paid when due (taking into account applicable grace
periods), for every month such payment is not paid when due, but in no event an
amount greater than the highest rate permitted by applicable law.
Payments of principal and interest hereunder shall be made in lawful money
of the United States of America at the offices of Lender at 2401 Kerner
Boulevard, San Rafael, California 94901, or such other place as the Lender shall
designate to the Borrower in writing.
This Note is secured by a Senior Loan and Security Agreement, dated as of
October 19, 1998 between Borrower and Lender (the "Security Agreement") and is
entitled to the benefits of the Security Agreement which contains, among other
things, provisions for (i) events of default and the Lender's rights and
remedies following an event of default (which include, but are not limited to,
acceleration of this Note), (ii) Collateral which secures the repayment of this
Note and is more particularly described on Exhibit A, and (iii) other rights and
remedies of Lender.
This Note may be declared due prior to its expressed maturity date only in
the events, on the terms and in the manner provided in the Security Agreement.
This Note shall be deemed to have been made under and shall be governed by
the laws of the State of California in all respects, including matters of
construction, validity and performance. At Lender's sole discretion, option and
election, jurisdiction and venue for any legal action between the parties
arising out of or relating to this Note shall be in the Superior Court of Marin
County, California, or, in cases where federal diversity jurisdiction is
available, in the United States District Court for the Northern District of
California located in San Francisco, California.
The Borrower hereby expressly waives presentment for payment, demand for
payment, notice of dishonor, protest, notice of protest, notice of nonpayment,
and all lack of diligence or delays in collection or enforcement of this Note.
BORROWER:
PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL
AND TOY CO.
By:
Name (Print):
Title:
EXHIBIT A to
SENIOR SECURED PROMISSORY NOTE NO. 03
(Insert Exhibit A here)
OFFICER'S CERTIFICATE
The undersigned, ____________________, hereby certifies that:
(i) I am the __________________ of PLAY CO. TOYS & ENTERTAINMENT CORP. DBA
PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., a Delaware corporation (the
"Borrower");
(ii) as such officer, I am familiar with the terms and conditions of that
certain Senior Loan and Security Agreement (the "Security Agreement") dated as
of October 19, 1998 between Borrower and PHOENIX LEASING INCORPORATED
("Lender");
(iii) the equipment, machinery, furniture, fixtures and other items on the
attached list are free and clear of any and all liens, charges, security
interests or other encumbrances that may affect Lender's right, title or
interest in and to the equipment and other items, and no UCC-1 financing
statements or other grants of security interests have been or are in the process
of being filed against any of such equipment or other items;
(iv) Borrower is performing according to Borrower's business plan described
in Section 3 of the Security Agreement, a true copy of which business plan has
been delivered to Lender;
(v) there has been no material adverse change in the financial condition of
Borrower from the date of its most recent financial statements, true copies of
which have been delivered to Lender;
(vi) as of the date hereof, no Event of Default (as defined in the Security
Agreement) or event which with the giving of notice or passage of time, or both,
could become an Event of Default has occurred and is continuing; and
(vii) the representations and warranties in Section 5 of the Security
Agreement are true and correct as if made on the date of the Loan.
IN WITNESS WHEREOF, I hereby execute this certificate on this ______ day of
_______________, 19__.
-----------------------------------
CORPORATE RESOLUTION TO BORROW
RESOLVED: That this corporation, PLAY CO. TOYS & ENTERTAINMENT CORP. DBA
PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., borrow funds from PHOENIX LEASING
INCORPORATED, a California corporation, ("Lender") and grant as collateral for
such borrowings such items of personal property and fixtures, and upon such
terms and conditions, as the officer or officers hereinafter authorized, in
their discretion, may deem necessary or advisable; provided, however, that the
aggregate principal amount of borrowings hereunder shall not exceed the sum of
$500,000.
RESOLVED FURTHER: That:
(Print or type name) (Title of Corporate Officer) (specimen signature) or
(Print or type name) (Title of Corporate Officer) (specimen signature)
of this corporation (this officer or officers authorized to act pursuant
hereto being hereinafter designated as "authorized officers"), are individually
authorized, directed and empowered, in the name of this corporation, to execute
and deliver to Lender, and Lender is requested to accept, any notes, security
agreements, and other documents or agreements that may be required by Lender in
connection with such borrowings.
RESOLVED FURTHER: That the authorized officers are individually authorized,
directed and empowered, in the name of this corporation, to do or cause to be
done all such further acts and things as they shall deem necessary, advisable,
convenient, or proper in connection with the execution and delivery of any such
notes, security agreements, and other documents or agreements and in connection
with or incidental to the carrying of the same into effect, including without
limitation, the execution, acknowledgment, and delivery of all instruments and
documents which may reasonably be required by Lender under or in connection with
any such borrowing.
RESOLVED FURTHER: That Lender is authorized to act upon these resolutions
until written notice of their revocation is delivered to Lender, and that the
authority hereby granted shall apply with equal force and effect to the
successors in office of the officers herein named.
I, _______________________, Secretary of PLAY CO. TOYS & ENTERTAINMENT
CORP. DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., a corporation
incorporated under the laws of the State of Delaware, do hereby certify that the
foregoing is a full, true and correct copy of resolutions of the Board of
Directors of the said corporation, duly and regularly passed or adopted by the
Board of Directors of said corporation as required by law and by the by-laws of
the said corporation on the _______ day of __________________________, 19__.
I further certify that said resolutions are still in full force and effect
and have not been amended or revoked and that the specimen signatures appearing
above are the signatures of the officers authorized to sign for this corporation
by virtue of the said resolutions.
IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary, and affixed
the corporate seal of the said corporation, this _______ day of
__________________, 19__.
AFFIX CORPORATE
SEAL HERE SECRETARY OF PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL
AND TOY CO.
[PERSON WHO SIGNS HERE MUST BE DIFFERENT FROM PERSON(S) WHO SIGNED ABOVE.]
INSTRUCTIONS FOR COMPLETING
REAL PROPERTY WAIVER DOCUMENTS
To: PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO.
Borrower
If you lease the real property on which your business is located, the
attached Waiver must be signed by your landlord. Your landlord should mark the
(_____ Landlord/Real Property Lessor) block in the last paragraph of the Waiver.
If you lease the real property on which your business is located but your
landlord is, in turn, leasing the real property from another party, then two
Waivers must be signed. A Waiver must be signed by your landlord who should mark
the (_____ Sublandlord/Real Property Sublessor) block in the last paragraph of
the Waiver, and a Waiver must also be signed by the other party from whom your
landlord is leasing the real property. That party should mark the (_____
Landlord/Real Property Lessor) block in the last paragraph of the Waiver.
If you own the real property on which your business is located and there is
a mortgage, the attached Waiver must be signed by your mortgage holder. Your
mortgage holder should mark the (_____ Mortgagee) block in the last paragraph of
the Waiver. If a Deed of Trust rather than a mortgage is involved, the (_____
Beneficiary (Deed of Trust)) block in the last paragraph of the Waiver should be
marked by the holder of the Deed of Trust.
If you own the real property on which your business is located and it is
free and clear of mortgages, the attached Waiver must be signed by you. You
should mark the (_____ Owner) block in the last paragraph of the Waiver.
THE SIGNATURE(S) OF ALL APPROPRIATE SIGNERS MUST BE NOTARIZED.
A LEGAL DESCRIPTION OF THE REAL PROPERTY MUST BE ATTACHED.
REAL PROPERTY WAIVER
To: PHOENIX LEASING INCORPORATED
2401 Kerner Boulevard
San Rafael, CA 94901
Attention: Asset Management
Re: PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO.
Borrower
As holder ("Holder") of an interest in the real property ("Real Property")
described below, I (we) (1) acknowledge and consent to your agreement to finance
and install on the Real Property the equipment (the "Equipment") financed
pursuant to Senior Loan and Security Agreement dated as of October 19, 1998, and
Senior Secured Promissory Note(s) thereto between you and Borrower, (2) disclaim
any ownership or other interest in subject Equipment and other Equipment that
may be added from time to time, and (3) recognize your right to enter, and will
permit you to enter upon the Real Property, but only for the purposes of
inspecting or removing the Equipment.
This Real Property Waiver shall be binding upon the heirs, successors and
assigns of Holder.
I (we), as Holder, am (are) the (Please Check Appropriate Line Below):
___Beneficiary (Deed of Trust) ___Mortgagee ___Landlord/Real Property Lessor
___Sublandlord/Real Property Sublessor ___Owner with respect to the Real
Property.
Signed,
- --------------------------------------
Full Legal Name of Holder
- -------------------------- --------------------------
Signature Title Date
Real Property located at: One Mills Circle #302
Ontario, CA 01764
(For use when agreement is executed in California)
ACKNOWLEDGMENT OF A NOTARY PUBLIC:
ALL-PURPOSE CERTIFICATE
(For use when agreement is executed in California)
State of California
County of ______________________
On _____________________ before me _______________________________,
personally appeared ________________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature__________________________ (Seal)
ACKNOWLEDGMENT OF A NOTARY PUBLIC:
REGISTERED LIMITED LIABILITY PARTNERSHIP ACKNOWLEDGMENT
(For use when agreement is executed in California)
STATE OF )
) ss:
COUNTY OF )
On this _____ day of ________________, 19__, before me, a Notary Public in
and for said County, personally appeared ____________________, personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person
who executed the within instrument on behalf of said registered limited
liability partnership and acknowledged to me that he (or she) executed the same
in his/her authorized capacity as the free act and deed of said registered
limited liability partnership for the purposes therein stated.
- --------------------------------
My commission expires: NOTARY PUBLIC
[Notary Seal]
(For use when agreement is executed in States other than California)
ACKNOWLEDGMENT OF A NOTARY PUBLIC:
INDIVIDUAL ACKNOWLEDGMENT
STATE OF )
) ss:
COUNTY OF )
On this ______ day of ____________________, 199___, before me, a Notary
Public in and for said County, personally appeared
______________________________, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged that he/she executed the
same.
Notary Public in and for the
State of
County of
(SEAL) My commission expires
ACKNOWLEDGMENT OF A NOTARY PUBLIC:
PARTNERSHIP ACKNOWLEDGMENT
STATE OF )
) ss:
COUNTY OF )
On this _____ day of ________________, 19__, before me, a Notary Public in
and for said County, personally appeared ____________________, personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person
who executed the within instrument on behalf of said partnership and
acknowledged to me that he (or she) executed the same in his/her authorized
capacity as the free act and deed of said partnership for the purposes therein
stated.
My commission expires: NOTARY PUBLIC
[Notary Seal]
(For use when agreement is executed in States other than California)
ACKNOWLEDGMENT OF A NOTARY PUBLIC:
LIMITED LIABILITY COMPANY ACKNOWLEDGMENT
STATE OF )
) ss:
COUNTY OF )
On this _____ day of ________________, 19__, before me, a Notary Public in
and for said County, personally appeared ____________________, personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person
who executed the within instrument on behalf of said limited liability company
and acknowledged to me that he (or she) executed the same in his/her authorized
capacity as the free act and deed of said limited liability company for the
purposes therein stated.
My commission expires: NOTARY PUBLIC
[Notary Seal]
ACKNOWLEDGMENT OF A NOTARY PUBLIC:
CORPORATE ACKNOWLEDGMENT
STATE OF )
) ss:
COUNTY OF )
On this _____ day of _____________, 19__, before me, a Notary Public in and
for said County, personally appeared ______________ personally known to me (or
proved to me on the basis of satisfactory evidence) to be the
___________________ of the corporation that executed the within instrument, and
acknowledged to me that he/she executed the within instrument on behalf of said
corporation and that the within instrument was signed on behalf of said
corporation by authority of its board of directors, and that the within named
officer of said corporation executed the same as the free act and deed of said
corporation for the purposes therein stated.
My commission expires: NOTARY PUBLIC
[Notary Seal]
(For use when agreement is executed in States other than California)
ACKNOWLEDGMENT OF A NOTARY PUBLIC:
TRUST ACKNOWLEDGMENT
STATE OF )
) ss:
COUNTY OF )
On this _____ day of ________________, 19__, before me, a Notary Public in
and for said County, personally appeared
_______________________________________________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the Trustee of
_______________________________________________________________________________
(Name of Trust)
who executed the within instrument in his/her authorized capacity on behalf of
said Trust and acknowledged to me that he (or she) executed the same as the free
act and deed of said Trust for the purposes therein stated.
My commission expires: NOTARY PUBLIC
[Notary Seal]
ACKNOWLEDGMENT OF A NOTARY PUBLIC:
FOREIGN LIMITED LIABILITY PARTNERSHIP ACKNOWLEDGMENT
STATE OF )
) ss:
COUNTY OF )
On this _____ day of ________________, 19__, before me, a Notary Public in
and for said County, personally appeared ____________________, personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person
who executed the within instrument on behalf of said foreign limited liability
partnership and acknowledged to me that he (or she) executed the same in his/her
authorized capacity as the free act and deed of said partnership for the
purposes therein stated.
My commission expires: NOTARY PUBLIC
[Notary Seal]
CONTINUING GUARANTY
THIS CONTINUING GUARANTY AGREEMENT ("Guaranty") is executed by UNITED
TEXTILES & TOYS CORP, a ____________________ corporation ("Guarantor"), in favor
of PHOENIX LEASING INCORPORATED, a California corporation ("Lender") at the
request of PLAY CO. TOYS & ENTERTAINMENT CORP. DBA PLAY CO. TOYS, TOYS
INTERNATIONAL AND TOY CO. ("Borrower").
WHEREAS, Lender will make loans to Borrower secured by certain property
which may be personal property, real property or other items pursuant to a
Senior Loan and Security Agreement No. 4003 dated as of October 19, 1998
("Security Agreement") which term "Security Agreement" in this Guaranty includes
any and all promissory notes and other agreements now or hereafter executed by
Borrower in connection with the Security Agreement between Lender and Borrower.
WHEREAS, Guarantor acknowledges that Lender would not enter into the
Security Agreement or make any loans to Borrower pursuant thereto, unless
Guarantor enters into and delivers this Guaranty.
WHEREAS, it is of a business benefit to Guarantor that Lender make the
loans under the Security Agreement to Borrower.
NOW, THEREFORE, to induce Lender to enter into the Security Agreement with
Borrower, and in consideration of the benefits accruing from the Security
Agreement to Guarantor by virtue of its business relationship with Borrower and
for other good and valuable consideration, receipt of which is hereby
acknowledged, Guarantor agrees, subject to the Terms and Conditions of
Continuing Guaranty attached hereto and made a part hereof, (i) to guaranty the
full satisfaction and payment of Borrower's Obligations (as defined in such
Terms and Conditions) to Lender and (ii) to be liable for, and legally bound by,
all other terms, conditions, covenants and obligations set forth in such Terms
and Conditions.
IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty on
the date set forth below, and by such signature acknowledges and agrees that
Guarantor has read and is in agreement with the attached Terms and Conditions of
Continuing Guaranty.
DATED: _______________________
[GUARANTOR'S SIGNATURE ON THIS DOCUMENT MUST BE NOTARIZED]
UNITED TEXTILES & TOYS CORP. ("Guarantor")
By:
Name (Print):
Title:
Address:
Telephone Number:
Federal Tax I.D. Number:
CORPORATE ACKNOWLEDGMENT
STATE OF )
) ss:
COUNTY OF )
On this ________ day of ______________________, 199___, before me, a Notary
Public in and for said County, personally appeared
____________________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the ______________ of the corporation
that executed the within instrument, and acknowledged to me that he/she executed
the within instrument on behalf of said corporation and that the within
instrument was signed on behalf of said corporation by authority of its board of
directors, and that the within named officer of said corporation executed the
same as the free act and deed of said corporation for the purposes therein
stated.
My commission expires: NOTARY PUBLIC
[Notary Seal]
Insert here the pre-printed, duplexed copy of
TERMS AND CONDITIONS OF CONTINUING GUARANTY - LOAN
(This version is for both the FrLn and AsLn Continuing Guaranty - Short
Form)
CORPORATE RESOLUTION AUTHORIZING EXECUTION OF GUARANTY
WHEREAS, PHOENIX LEASING INCORPORATED ("Lender"), is willing to enter into
a senior loan and security agreement or senior loan and security agreements with
PLAY CO. TOYS & ENTERTAINMENT CORP. DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND
TOY CO. ("Borrower") if the obligations of Borrower arising thereunder are
guaranteed by this corporation; and
WHEREAS, it is of a business benefit to this corporation that such
agreement or agreements be entered into by Lender and Borrower;
NOW, THEREFORE, BE IT RESOLVED that this corporation guarantee the
obligations of Borrower to Lender under the terms and conditions of any loan or
other senior loan and security agreement or senior loan and security agreements
entered into between Lender and Borrower prior to actual receipt by Lender of
written notice of revocation of this resolution as to future agreements.
BE IT FURTHER RESOLVED that:
- -------------------------- -------------------------- ------------------------
(Print or type name) (Title of Corporate Officer) (specimen signature)
or
- -------------------------- -------------------------- ------------------------
(Print or type name) (Title of Corporate Officer) (specimen signature)
of this corporation are hereby individually authorized and directed on
behalf of this corporation to execute a guaranty in such form as may be agreed
upon by any of said officers and Lender, and the signatures of either of said
officers to the guaranty shall evidence their agreement.
RESOLVED FURTHER that Lender is authorized to act upon these Resolutions
until written notice of their revocation is delivered to Lender and that the
authority hereby granted shall apply with equal force and effect to the
successors in office of the officers herein named.
I, ________________, Secretary of UNITED TEXTILES & TOYS CORP., a
corporation incorporated under the laws of the State of Delaware, do hereby
certify that the foregoing is a full, true and correct copy of resolutions of
the Board of Directors of said corporation, duly and regularly passed or adopted
by the Board of Directors of said corporation as required by law and by the
by-laws of said corporation, on the ___ day of ________________, 19__.
I further certify that said resolutions are still in full force and effect
and have not been amended or revoked and that the specimen signatures appearing
above are the signatures of the officers authorized to sign for this corporation
by virtue of said resolutions.
IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary, and
affixed the corporate seal of said corporation, this ___ day of ______________,
19__.
AFFIX CORPORATE
SEAL HERE SECRETARY OF UNITED TEXTILES & TOYS CORP.
[PERSON WHO SIGNS HERE MUST BE DIFFERENT FROM PERSON(S) WHO SIGNED ABOVE.]