Exhibit
10.1
LOAN AND SECURITY
AGREEMENT
Between
SUMMIT FINANCIAL
RESOURCES, L.P.
Lender
and
SIELOX, LLC
Borrower
Effective Date: August
17, 2009
LOAN AND SECURITY
AGREEMENT
This Loan and Security
Agreement is made and entered into by and between Summit Financial
Resources, L.P., and Sielox, LLC.
For good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1.
Definitions
1.1
Definitions
Terms defined in the
singular shall have the same meaning when used in the plural and
vice versa. As used herein, the term:
“Accounts”
shall have the meaning set forth in the definition of
Collateral.
“Account
Advance” means an advance of the Loan made under the Accounts
Receivable Note.
“Account
Debtor” means any person or entity obligated for payment of
an Account.
“Accounting
Standards” means (i) in the case of financial statements and
reports, conformity with generally accepted accounting principles
and fully and fairly representing the financial condition as of the
date thereof and the results of operations for the period or
periods covered thereby, consistent with other financial statements
of that company previously delivered to Lender, and (ii) in the
case of calculations, definitions, and covenants, generally
accepted accounting principles consistent with those used in the
preparation of financial statements of Borrower previously
delivered to Lender.
“Accounts
Receivable Note” means the Promissory Note (Accounts
Receivable Financing) to be executed by Borrower pursuant to
Section 2.3 Promissory Notes in the form of Exhibit A
hereto, which is incorporated herein by reference, and any and all
renewals, extensions, modifications, and replacements
thereof.
“Banking Business
Day” means any day not a Saturday, Sunday, legal holiday in
the State of Utah, or day on which national banks in the State of
Utah are authorized to close.
“Borrower”
means Sielox, LLC, a limited liability company organized and
existing under the laws of the State of Delaware, its successors,
and, if permitted, assigns.
“Collateral” means the
following personal property of Borrower, wherever located, now
owned or existing or hereafter acquired or created, all additions
and accessions thereto, all replacements, insurance or condemnation
proceeds, all documents covering any of the Collateral, all leases
of any of the Collateral, all rents, revenues, issues, profits and
proceeds arising from the sale, lease, license, encumbrance,
collection, or any other temporary or permanent disposition of any
of the Collateral or any interest therein, all amendments,
modifications, renewals, extensions, and replacements thereof, and
all products and proceeds thereof: (a) all inventory (the
“Inventory”); (b) all accounts (the
“Accounts”); (c) all equipment, goods and motor
vehicles (collectively, the “Equipment”); (d) all
general intangibles, including any and all patents, trademarks and
copyrights (registered or unregistered), trade secrets, domain
names and addresses, and intellectual property licenses; (e) any
and all promissory notes and instruments payable to or owing to
Borrower or held by Borrower; any and all leases under which
Borrower is the lessor; any and all chattel paper in favor of,
owing to, or held by Borrower, including, without limitation, any
and all conditional sale contracts or other sale agreements,
whether Borrower is the original party or the assignee; and any and
all security agreements, collateral and titles to motor vehicles
which secure any of the foregoing obligations; all deposit
accounts, including without limitation, all interest, dividends or
distributions accrued or to accrue thereon, whether or not due; all
investment property, including all interest, dividends or
distributions accrued or to accrue thereon, whether or not due, all
documents; all letter-of-credit rights; and all supporting
obligations (collectively, the “Financial
Obligations”); and (f) all balances, deposits, debts or any
other amounts or obligations of Lender owing to Borrower,
including, without limitation, any Reserve, whether or not
due.
“Default
Rate” means the default interest rate provided in the
Promissory Notes.
“Effective
Date” shall mean the date the parties intend this Loan and
Security Agreement to become binding and enforceable, which is the
date stated at the conclusion of this Loan and Security
Agreement.
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“Eligible
Account” means an Account of Borrower which meets the
following specifications at the time it is created and at all times
thereafter until collected in full:
a.
The Account meets all
applicable representations and warranties concerning the Collateral
set forth in Section 3.3 Representations and Warranties
Concerning Collateral and Section 3.4 Covenants Concerning
Collateral .
b.
The Account is due and
payable not more than sixty (60) days from the date of the invoice
evidencing the Account and the Account is not more than ninety (90)
days past the date of the invoice evidencing the Account; except
that Lender shall consider up to a maximum aggregate amount of one
hundred thousand dollars ($100,000) of Accounts that are more than
ninety (90) days but less than one hundred twenty (120) days from
the date of the invoice evidencing such Accounts as Eligible
Accounts.
c.
The Account is a bona
fide obligation of the Account Debtor for the amount identified on
the records of Borrower and there have been no payments,
deductions, credits, payment terms, or other modifications or
reductions in the amount owing on such Account except as reported
to Lender prior to Lender making any advance based upon the
Account.
d.
To Borrower’s
knowledge, there are no defenses or setoffs to payment of the
Account which can be asserted by way of defense or counterclaim
against Borrower or Lender and the Account will be timely paid in
full by the Account Debtor.
e.
Performance of all
services giving rise to the Account has been completed and all
goods giving rise to the Account have been delivered.
f.
All services performed
and goods sold which give rise to the Account have been rendered or
sold in compliance with all applicable laws, ordinances, rules and
regulations and were performed or sold in the ordinary course of
Borrower’s business.
g.
There have been no
extensions, modifications, or other agreements relating to payment
of the Account except as otherwise shown on the records of Borrower
and disclosed to Lender prior to Lender making any advance based
upon the Account.
h.
The Account Debtor is
located or authorized to do business within the United States and
maintains an office and transacts business in the United States of
America or the Account is backed by a letter of credit or credit
insurance in a form and issued by a bank or insurer, as the case
may be, acceptable to Lender.
i.
No proceeding has been
commenced or petition filed under any bankruptcy or insolvency law
by or against the Account Debtor; no receiver, trustee or custodian
has been appointed for any part of the property of the Account
Debtor; and no property of the Account Debtor has been assigned for
the benefit of creditors.
j.
Neither the Account,
nor any invoice, credit application, bill, billing memorandum,
correspondence, or any other document relating to an Account,
contracts for or charges any interest or any other charge in excess
of the maximum non-usurious rate allowed pursuant to applicable
law.
k.
If twenty-five percent
(25%) or more of the Accounts owing to Borrower by any particular
Account Debtor do not qualify as Eligible Accounts, all Accounts
owing by such Account Debtor shall not be Eligible
Accounts.
l.
The Account is not
owing by an Account Debtor for whom the terms of sale by Borrower
are cash on delivery (“COD”) or considered a cash
sale.
m.
The Borrower does not
owe an account payable to the Account Debtor which could be set off
against the Account.
n.
If the total of all
outstanding Accounts owing by any single Account Debtor equals
sixty percent (60%) or more of the total outstanding current
Accounts owing to Borrower, the amount of Accounts owing by that
Account Debtor which equal or exceed this sixty percent (60%)
requirement shall not be Eligible Accounts unless Lender has
received satisfactory credit information concerning the Account
Debtor and Lender has agreed in writing to accept the amount in
excess of this requirement as Eligible Accounts.
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o.
If the Account is
subject to any type of retainage, only the non-retainage portion of
the Account shall be an Eligible Account.
p.
The Account is not
owing with respect to any job which is bonded.
q.
The Account does not
arise from goods placed on consignment, guaranteed sale, or other
terms by reason of which the payment by the Account Debtor may be
conditional.
r.
The Account is not
owing by an employee, officer, or director of Borrower.
s.
The Account is not
owing by a parent, subsidiary, sister company, or other company
related to or an affiliate of Borrower.
t.
The Account is not
owing by the United States government or any agency, department, or
division thereof, except as otherwise agreed.
u.
The Account has not
been deemed by Lender to be unacceptable.
v.
The Account is not
owing by Simplex Time Recorder Company, Sielox Security Systems,
Security Group, PM-B Pte Ldt, EAS Systems, or any other Account
Debtor deemed by Lender to be unacceptable.
“Eligible
Inventory” means Inventory which is finished goods or raw
materials that can be readily marketed for sale without further
processing and which is subject to no security interest, lien, or
encumbrance of any nature whatsoever with priority over the
security interest created by the Loan Documents, except any liens
for current taxes and assessments which are not delinquent, but
excluding Inventory which, in the sole discretion of Lender, is
damaged, out-dated, obsolete, or otherwise unacceptable to
Lender.
“Event of
Default” shall have the meaning set forth in Section 7.1
Events of Default .
“Equipment”
shall have the meaning set forth in the definition of
Collateral.
“Inventory”
shall have the meaning set for in the definition of
Collateral.
“Inventory
Advance” means an advance of the Loan made under the
Inventory Note.
“Inventory
Note” means the Promissory Note (Inventory Financing) to be
executed by Borrower pursuant to Section 2.3 Promissory
Notes in the form of Exhibit B hereto, which is incorporated
herein by reference, and any and all renewals, extensions,
modifications, and replacements thereof.
“Lender”
means Summit Financial Resources, L.P., a Hawaii limited
partnership, its successors, and assigns.
“Liquidation
Costs” means the reasonable costs and out of pocket expenses
incurred by Lender in obtaining possession of any Collateral, in
storage and preparation for sale, lease or other disposition of any
Collateral, in the sale, lease, or other disposition of any or all
of the Collateral, and/or otherwise incurred in foreclosing on any
of the Collateral, including, without limitation, (a) reasonable
attorneys fees and legal expenses, (b) transportation and storage
costs, (c) advertising costs, (d) sale commissions, (e) sales tax
and license fees, (f) costs for improving or repairing any of the
Collateral, and (g) costs for preservation and protection of any of
the Collateral.
“Loan”
means the loan to be made pursuant to Section 2 Loan
Description .
“Loan and
Security Agreement” means this agreement, together with any
exhibits, amendments, addendums, and modifications.
“Loan
Documents” means the Loan and Security Agreement, Promissory
Notes, Security Documents, all other agreements and documents
contemplated by any of the aforesaid documents, and all amendments,
modifications, addendums, and replacements, whether presently
existing or created in the future.
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“Lock Box”
means that certain Lock Box owned by Lender, located at 22397
Network Place, Chicago, Illinois 60673-1123.
“Material Adverse
Effect” means a material adverse effect on Borrower’s
financial condition, conduct of its business, or ability to perform
its obligations under the Loan Documents.
“Organizational
Documents” means, in the case of a corporation, its Articles
of Incorporation and By-Laws; in the case of a general partnership,
its Articles of Partnership; in the case of a limited partnership,
its Articles of Limited Partnership; in the case of a limited
liability company, its Articles of Organization and Operating
Agreement or Regulations, if any; in the case of a limited
liability partnership, its Articles of Limited Liability
Partnership; and all amendments, modifications, and changes to any
of the foregoing which are currently in effect.
“Permitted
Encumbrances” means liens for taxes and assessments not yet
due and payable or, if due and payable, those being contested in
good faith by appropriate proceedings and for which appropriate
reserves are maintained, security interests and liens created by
the Loan Documents, and security interests and liens authorized in
writing by Lender.
“Promissory
Notes” means, individually and collectively, as the context
requires, the Accounts Receivable Note and the Inventory
Note.
“Reserve”
means the amount available for disbursement under the Promissory
Notes based upon the records and reports submitted to Lender by
Borrower, which has not been disbursed. Disbursement of any
such amount shall be subject to all terms and conditions of this
Loan and Security Agreement.
“Security
Documents” means all security agreements, including this Loan
and Security Agreement, assignments, pledges, financing statements,
and other documents which create or evidence any security interest,
assignment, lien or other encumbrance in favor of Lender to secure
any or all of the obligations created or contemplated by any of the
Loan Documents, and all amendments, modifications, addendums, and
replacements, whether presently existing or created in the
future.
“Uniform
Commercial Code” means the Uniform Commercial Code as adopted
now or in the future in the State of Utah.
2.
Loan
Description
2.1
Amount of
Loan
Upon fulfillment of all
conditions precedent set forth in this Loan and Security Agreement,
and so long as no Event of Default exists, and no other breach has
occurred under the Loan Documents, Lender agrees to loan Borrower
the sum of one million five hundred thousand dollars
($1,500,00.00).
2.2
Nature and Duration
of Loan
The Loan shall be a
revolving loan payable in full upon the date and upon the terms and
conditions provided in the Promissory Notes. Lender and
Borrower intend the Loan to be in the nature of a line of credit
under which Borrower may repeatedly draw funds on a revolving basis
in accordance with the terms and conditions of this Loan and
Security Agreement and the Promissory Notes. The right of
Borrower to draw funds and the obligation of Lender to advance
funds shall not accrue until all of the conditions set forth in
Section 4 Conditions to Loan Disbursements have been fully
satisfied, and shall terminate: (i) upon occurrence of an
Event of Default or (ii) upon maturity of the Promissory Notes,
unless the Promissory Notes are renewed or extended by Lender in
which case such termination shall occur upon the maturity of the
final renewal or extension of the Promissory Notes. Upon such
termination, any and all amounts owing to Lender pursuant to the
Promissory Notes and this Loan and Security Agreement shall
thereupon be due and payable in full.
2.3
Promissory
Notes
The Loan shall be
evidenced by the Promissory Notes. The Promissory Notes shall
be executed and delivered to Lender upon execution and delivery of
this Loan and Security Agreement.
4
For all purposes,
including the calculation of interest owing, Payments delivered to
the Lock Box, bank, or other agent on behalf of Lender shall be
deemed received two (2) Banking Business Days after the date of
receipt of advice by Lender from the bank or agent that the
payments received have been credited to the account of Lender.
2.4
Limitations on
Advances
a.
Account
Advances .
Notwithstanding anything to the contrary in the Loan
Documents, no Account Advances shall be made if, after making the
requested Account Advance, the total, principal amount of all
Account Advances outstanding will exceed:
i.
eighty-five percent
(85%) of the outstanding Eligible Accounts;
ii.
one million five
hundred thousand dollars ($1,500,000.00); or
iii.
together with the
aggregate amount of all outstanding Inventory Advances, one million
five hundred thousand dollars ($1,500,000.00).
Borrower will at all
times maintain Eligible Accounts so that the total, aggregate,
principal amount of all Account Advances at any time outstanding
and unpaid shall be in compliance with this formula. If at
any time the total, aggregate, principal amount of all Account
Advances outstanding and unpaid exceeds the amount allowable under
this formula, Borrower shall immediately make payment to Lender in
a sufficient amount to bring the amount of such advances back into
compliance, and if such payment is not immediately made, interest
shall accrue on such amount at the Default Rate, regardless of
whether Lender waives the Event of Default caused by such
non-payment.
b.
Inventory
Advances .
Notwithstanding anything to the contrary in the Loan
Documents, no Inventory Advances shall be made if, after making the
requested Inventory Advance, the total principal amount of all
Inventory Advances outstanding will exceed:
i.
fifty percent (50%) of
the cost of Eligible Inventory (as determined by Lender in its sole
discretion);
ii.
fifty percent (50%) of
the amount of outstanding Eligible Accounts;
iii.
five hundred thousand
dollars ($500,000.00); or
iv.
together with the
aggregate amount of all outstanding Account Advances, one million
five hundred thousand dollars ($1,500,000.00).
Borrower will maintain
at all times Eligible Inventory so that the total, aggregate,
principal amount of all Inventory Advances at any time outstanding
and unpaid shall be incompliance with this formula. If at any
time the total aggregate principal amount of all Inventory Advances
outstanding and unpaid exceeds the amount allowable under this
formula, Borrower shall immediately make payment to Lender in a
sufficient amount to bring the amount of such advances back into
compliance, and if such payment is not immediately made, interest
shall accrue on such amount at the Default Rate, regardless of
whether Lender waives the Event of Default caused by such
non-payment.
2.5
Notice and Manner of
Borrowing
Requests by Borrower
for advances on the Promissory Notes shall be given in writing or
orally no later than one (1) Banking Business Day prior to the date
on which the advance is to be made.
Each request for an
advance shall be accompanied by such reports and information as
requested by Lender, in the form requested by Lender, including an
itemization of outstanding Eligible Accounts, details and
information concerning outstanding Eligible Accounts, and an
updated report on collections on Eligible Accounts.
2.6
Administration
Fees
a.
Accounts Receivable
Note .
Borrower shall pay Lender a monthly administration fee in an
amount equal to one and one-tenths percent (1.1%) of the average
outstanding daily principal balance on the Accounts Receivable Note
each month. The administration fee shall be payable monthly
in arrears. Lender is authorized to disburse a sufficient
amount of the funds pursuant to the Accounts Receivable Note each
month to pay this administration fee.
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b.
Inventory
Note .
Borrower shall pay Lender a monthly administration fee in an
amount equal to one and one-tenths percent (1.1%) of the average
outstanding daily principal balance on the Inventory Note each
month. The administration fee shall be payable monthly in
arrears. Lender is authorized to disburse a sufficient amount
of the funds pursuant to the Inventory Note each month to pay this
administration fee.
The administration fees
are not intended to be and shall not be construed to be
interest.
2.7
Origination
Fee
Borrower shall pay
Lender an origination fee in an amount equal to one percent (1%) of
the face amount of the Accounts Receivable Note. No portion
of such fee shall be refunded in the event of early termination of
this Loan and Security Agreement or any termination or reduction of
the right of Borrower to request advances under this Loan and
Security Agreement. Lender is authorized and directed, upon
execution of this Loan and Security Agreement and fulfillment of
all conditions precedent hereunder, to disburse a sufficient amount
of the Loan proceeds to pay the origination fee in full.
2.8
Annual Facility
Fee
On each anniversary of
the Effective Date, so long as the Loan has not been terminated,
Borrower shall pay Lender an annual facility fee in an amount equal
to one percent (1%) of the face amount of the Accounts Receivable
Note. No portion of such fee shall be refunded in the event
of early termination of this Loan and Security Agreement or any
termination or reduction of the right of Borrower to request
advances under this Loan and Security Agreement. Lender is
authorized and directed to disburse a sufficient amount of the Loan
proceeds to pay each annual facility fee in full.
2.9
Early Termination
Fee
If Borrower elects to
terminate the Loan at any time prior to the maturity of the
Promissory Notes, Borrower shall provide at least ninety (90) days
written notice of intent to terminate. Upon such termination,
or if an Event of Default accelerates payment of the Loan, Borrower
shall pay Lender an early termination fee equal to one percent (1%)
of the face amount of the Accounts Receivable Note; provided,
however, that in the event Borrower obtains financing provided by
BBVA Compass to replace the Loan, Lender shall waive the foregoing
early termination fee so long as Borrower provides Lender at least
sixty (60) days written notice of its intent to replace this
financing with financing provided by BBVA Compass, which notice
shall itemize the material financial terms of the proposed
financing from BBVA Compass. In the event Borrower provides
Lender written notice of its intent to replace the Loan with
financing provided by BBVA Compass, Lender may, within thirty (30)
days of receipt of such notice, provide written notice to Borrower
that Lender will match the material terms of the proposed financing
from BBVA Compass whereupon Lender and Borrower shall amend the
Loan Documents to match the material financial terms of the
proposed financing from BBVA Compass and the Loan Documents shall
remain in force and no early termination fee shall be due to
Lender.
2.10
Excess
Interest
It is the intent of the
parties to comply with any usury law applicable to the Loan and to
all amounts owing pursuant to the Loan Documents and it is
understood and agreed that in no event and upon no contingency
shall Borrower or any guarantor be required to pay interest in
excess of the rate allowed by any laws of any state which are
determined to be applicable and governing. The intention of
the parties being to conform strictly to any applicable usury laws,
the Loan Documents shall be held to be subject to reduction to the
amount allowed under any applicable and governing usury laws as now
or hereafter construed by the courts having jurisdiction. In
the event Lender receives any interest under the Loan Documents in
excess of any highest permissible rate under any applicable and
governing law, such excess interest (including simple interest
thereon at the interest rate at the highest permissible rate which
is applicable and governing) shall be promptly applied to any
unpaid principal balance owed by Borrower. To the extent such
excess interest is greater than the unpaid principal balance,
Lender shall promptly remit such overage to Borrower.
3.
Security for
Loan
3.1
Grant of Security
Interest
Borrower hereby grants
Lender a security interest in the Collateral. Borrower and
Lender acknowledge their mutual intent that all security interests
contemplated herein are given as a contemporaneous exchange for new
value to Borrower, regardless of when advances to Borrower are
actually made or when the Collateral is created or
acquired.
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The Collateral shall
secure all of Borrower’s present and future debts,
obligations, and liabilities of whatever nature, and without any
limitation whatsoever, to Lender, including, without limitation,
(a) the Loan, (b) the Promissory Notes, (c) all obligations of
Borrower under the Loan Documents, (d) all advances of the same
kind and quality relating to this transaction, and (e) transactions
in which the documents evidencing the indebtedness refer to this
grant of security interest as providing security
thereof.
Borrower’s
obligations under this Loan and Security Agreement may also be
secured by other collateral as may be evidenced by other
documentation if signed by Borrower apart from this Loan and
Security Agreement.
3.2
Collection of
Accounts
a.
Unless directed
otherwise in writing by Lender, Borrower shall promptly mail an
invoice to each Account Debtor on each Account, which invoice shall
be stamped or printed with a notice, in a form acceptable to
Lender, stating that the Account is payable to Lender and providing
payment instructions. Except as agreed otherwise in writing
by Lender, Lender shall have the exclusive right to collect and to
receive all payments on all Accounts. Borrower shall not
otherwise bill for, submit any invoice, or otherwise attempt to
collect any Account, except as authorized in writing by Lender or
as otherwise expressly authorized in this Section 3.2 Collection
of Accounts . Lender is authorized to notify Account
Debtors of the assignment of Borrower's Accounts and to direct
Account Debtors to make all payments on Accounts directly to
Lender.
b.
Borrower authorizes
Lender to contact Account Debtors concerning verification and
payment of Accounts.
c.
Upon inquiry from a
customer or upon request of Lender, Borrower shall notify the
customer to make payment directly the Lock Box and shall advise the
customer of the assignment of payment to Lender.
d.
Except as otherwise
expressly set forth in this Section 3.2 Collection of
Accounts , all collections of Accounts shall be handled by
Lender. Collection of Accounts in a commercially reasonable
manner does not require, and Lender is not obligated, to commence
any legal action, including the sending of an attorney's demand
letter, to collect any Account. Borrower acknowledges and
agrees that Lender is not a collection agency and will not provide
debt collection services for Borrower's Accounts. If any
Account is not timely paid, Lender may, but is not obligated to,
engage a collection agency, attorney or other service provider to
collect the Accounts. All commissions, fees and charges of
any such collection agency, attorney or other service provider
shall be paid by Borrower.
e.
Borrower shall
immediately notify Lender of any dispute concerning any Account and
of any bankruptcy filing, lien, garnishment or other legal action
concerning any Account or Account Debtor.
f.
Lender may, but has no
duty to, and Borrower hereby authorizes Lender to, execute
and file, on behalf of Borrower or in Lender's
name, mechanic's liens and all other notices and documents to
create, perfect, preserve, foreclose and/or release any
lien for work performed or materials provided to
improve real property. Except as otherwise instructed by
Lender, Borrower is authorized to file any such mechanic's liens
and other notices and documents in Borrower's
discretion.
g.
Borrower does hereby
make, constitute and appoint Lender and its designees as
Borrower’s true and lawful attorney in fact, with full power
of substitution, to endorse Borrower’s name upon notes,
checks, acceptances, drafts, money orders, and other forms of
payment of the Accounts of Borrower. Borrower agrees to
execute and deliver any documents and take such actions as may be
reasonably requested by Lender.
h.
Any payments received by
Borrower on Accounts shall be held in trust by Borrower for Lender.
In the event a customer makes payment to Borrower on any
Account, Borrower shall immediately notify Lender of the payment
and deliver the payment to Lender. If payment is made by
check or similar instrument, such instrument shall be immediately
delivered to Lender in the form received without negotiation.
If any payment received by Borrower on any Account is
deposited or negotiated by Borrower, or if Borrower fails to tender
the payment to Lender within five (5) Banking Business Days of
receipt by Borrower, Borrower shall promptly pay Lender a payment
conversion fee equal to ten percent (10%) of the amount of the
payment. Lender is authorized to disburse a sufficient amount
of the funds pursuant to the Promissory Notes to pay any payment
conversion fees.
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i.
So long as no Event of
Default has occurred and until otherwise instructed by Lender,
Borrower is authorized to submit invoices for Accounts and to
contact Account Debtors concerning payment of Accounts so long as
Borrower notifies any such Account Debtor that payment of the
Account has been assigned to Lender and instructs any such Account
Debtor to make all payments on all Accounts directly to the Lock
Box.
3.3
Representations and
Warranties Concerning Collateral
Borrower represents and
warrants that:
a.
Borrower is the sole
owner of the Collateral.
b.
The Inventory and
Accounts are not subject to any security interest, lien, prior
assignment, or other encumbrance of any nature whatsoever except
Permitted Encumbrances.
c.
The Accounts are each a
bona fide obligation of the obligor identified therein for the
amount identified in the records of Borrower, except for normal and
customary disputes which arise in the ordinary course of business
and which do not affect a material portion of the
Accounts.
d.
To Borrower’s
knowledge, there are no defenses or setoffs to payment of the
Accounts which can be asserted by way of defense or counterclaim
against Borrower or Lender, except for normal and customary
disputes which arise in the ordinary course of business
an
