Exhibit
10.3
REVOLVING
CREDIT LOAN AND SECURITY AGREEMENT
$5,000,000
REVOLVING CREDIT LOAN
THIS REVOLVING
CREDIT LOAN AND SECURITY AGREEMENT (the “Loan
Agreement”) is made as of this day
of October, 2009, among FIFTH THIRD BANK , a Michigan
banking corporation, having a mailing address of 201 East Kennedy
Boulevard, Suite 1800, Tampa, Florida 33602 (the
“Bank”), DEER VALLEY FINANCIAL CORP. , a Florida
corporation (“DVFC”), having its principal place of
business at 205 Carriage Street, Guin, Alabama 35563, DEER
VALLEY CORPORATION , a Florida corporation (“DVC”),
having a mailing address of 3111 West Dr. MLK Boulevard, Suite
100, Tampa, Florida 33607, and DEER VALLEY HOMEBUILDERS,
INC. , an Alabama corporation authorized to do business in the
State of Florida (“DVHI”), having its principal place
of business at 205 Carriage Street, Guin, Alabama 35563, jointly
and severally (collectively the “Borrower”).
RECITALS:
WHEREAS,
Borrower has applied to Bank for a revolving line of credit not to
exceed FIVE MILLION DOLLARS ($5,000,000.00) (the
“Loan”) to be evidenced by a revolving credit note (the
“Note”) and secured by accounts receivable, inventory,
equipment and all other tangible and intangible personal property
of each Borrower. The Loan is to be utilized for short term working
capital financing, letters of credit and as a bridge loan on
financing the sale of retail units by DVHI. The Bank has agreed to
make the Loan providing certain conditions herein outlined are
fully complied with.
NOW,
THEREFORE, in consideration of the premises and covenants
hereinafter contained, the parties hereto agree as
follows:
SECTION I.
RECITALS; DEFINITIONS
1.1
Recitals . The foregoing recitals are true and
correct and incorporated herein by reference.
1.2
Defined Terms . As used in this Loan Agreement, the
following terms shall have the following meanings:
“Accounts
Receivable” shall mean all accounts receivable, book debts,
notes, drafts, acceptances and other forms of obligations, now or
hereafter owing to each Borrower, whether arising from the sale of
goods or rendition of services (including, without limitation, any
such obligation that might be characterized as an account, contract
right, or general intangible under the Uniform Commercial Code as,
from time to time, in effect in the State of Florida or Alabama),
all of each Borrower’s rights in, to and under all purchase
orders, now or hereafter received by each Borrower
for goods or
services, and all monies due or to become due to each Borrower
under all contracts for the sale of goods or the performance of
services (whether or not yet earned by performance) or in
connection with any other transaction (including, without
limitation, the right to receive the proceeds of said purchase
orders and contracts), and all collateral security and guarantees
of any kind given by any obligor with respect to any of the
foregoing.
“Advance”
shall mean the amount advanced by the Bank to any Borrower under
the terms of this Loan Agreement and the Note.
“Affiliate”
shall mean any person, corporation, association or other business
entity which directly or indirectly controls, or is controlled by,
or is under common control with the Borrower.
“Borrowing
Base” shall mean, at any date of determination thereof (which
date of determination shall be in the Bank’s sole discretion)
an amount equal to the sum of (a) 80% of Eligible Accounts
Receivable, plus (b) 50% of Eligible Inventory (based upon the
lower of actual cost or market value with a maximum Inventory
Borrowing Base of $1,500,000.00) for DVHI only. The Bank has
bargained for and Borrower agrees and acknowledges that the
Collateral not included in the Borrowing Base is a cushion of
collateral value in excess of the secured advances under the
Loan.
“Borrowing
Base Certificate” shall mean a certificate prepared by
Borrower in substantially the form attached hereto as Exhibit
“A ”.
“Collateral”
shall have the meaning provided for such term in
Section 2.1(h) hereof.
“Default
Rate” shall mean five percent (5%) per annum above the
contract rate as set forth in the Note, but not exceeding
18% per annum.
“Eligible
Accounts Receivable” shall mean, at any date of determination
thereof, all Accounts Receivable of DVHI and DVFC: (a) which
are bona fide, valid and legally enforceable obligations of the
account debtors in respect thereof, which are unconditionally owing
by such account debtors, and which do not represent sales on
consignment, sales on return or other similar understandings;
(b) which, except for the security interest in the Accounts
Receivable granted to the Bank, are solely owned by the Borrower,
free and clear of any and all mortgages, liens, security interests,
encumbrances, claims or rights of others, except sellers’
rights (if any) to reclaim goods under Uniform Commercial Code
Section 2-702; (c) which are not the subject of any
defense, offset, counterclaim or claim; (d) as to which no
more than 60 days (or are 30 days past due) shall have elapsed from
the original date of the relevant invoice; (e) those account
debtors that do not have more than 25% of their respective Accounts
Receivable aged more than 60 days; (f) Accounts Receivable
with respect to a single account debtor whose total obligations
owing does not exceed 20% of all Eligible
2
Accounts
Receivable (not including Government Backed Agency receivables);
(g) as to which the account debtors are (1) solvent,
going concerns unaffiliated with any Borrower, and
(2) reasonably satisfactory to the Bank from a credit
standpoint (the Bank’s satisfaction may be assumed unless the
Bank shall at any time advise the Borrower to the
contrary).
“Eligible
Inventory” shall mean, at any date of determination thereof
(which date shall be in the Bank’s sole discretion), all
Inventory and proceeds therefrom, owned by DVHI, excluding all
work-in-process, but including (a) goods-in-transit,
(b) Inventory used for display or demonstration purposes and
obsolete Inventory and (c) Inventory in the possession of
service persons or technicians performing service for customers of
the Borrower, whether or not such service technicians are employees
or independent contractors of the Borrower. The eligibility of
Inventory shall be determined by the Bank in its reasonable
commercial discretion.
“Equipment”
shall mean all of the equipment of each Borrower (within the
meaning of the Uniform Commercial Code, as from time to time in
effect in the State of Florida or Alabama), now or hereafter owned
or acquired, and wheresoever located, as well as all parts,
accessions, and additions thereto, proceeds therefrom, and
substitutions and replacements therefor.
“Events
of Default” shall have the meaning ascribed to such term in
Section 8 hereof.
“Generally
Accepted Accounting Principles” shall mean generally accepted
accounting principles, in effect from time to time, applied on a
consistent basis.
“General
Intangibles” shall mean all of each Borrower’s right,
title and interest with respect to general intangibles (including
payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes or regulations, choses or things
in action, goodwill, patents, trade names, trademarks, service
marks, copyrights, blueprints, drawings, purchase orders, customer
lists, monies due or recoverable from pension funds, route lists,
rights to payment and other rights under any royalty or licensing
agreements, infringement claims, computer programs, information
contained on computer disks or tapes, software, literature,
reports, catalogs, money, deposit accounts, insurance premium
rebates, tax refunds and tax refund claims), and any and all
supporting obligations in respect thereof, and any other personal
property other than goods, Accounts Receivable, investment
property, negotiable collateral and chattel paper (within the
meaning of the Uniform Commercial Code, as from time to time in
effect in the State of Florida or Alabama).
“Inventory”
shall mean all of the inventory of each Borrower (within the
meaning of the Uniform Commercial Code, as from time to time in
effect in the State of Florida or Alabama), now or hereafter owned
or acquired, and wheresoever located,
3
including,
without limitation, all finished goods held for sale or lease or to
be furnished under a contract of service, goods that are leased by
Borrower as lessor, goods that are furnished by Borrower under a
contract of service, and raw materials, work-in-process, or
materials used or consumed in Borrower’s business including
all accessions, additions, attachments, improvements, substitutions
and replacements thereto and therefore.
“Investment
Property” shall mean all of the investment property of each
Borrower (within the meaning of the Uniform Commercial Code, as
from time to time in effect in the State of Florida or
Alabama).
“Letter
of Credit” shall mean any standby, documentary or trade
Letter of Credit issued by Bank hereunder as requested by Borrower
for the account or to secure obligations of Borrower in accordance
with the terms of Section 2.2(a).
“Letter
of Credit Fees” has the meaning set forth in
Section 2.2(h).
“Letter
of Credit Commitment” shall mean the commitment of Bank to
issue, in accordance with the terms hereof, and to honor payment
obligations under any Letters of Credit.
“Letter
of Credit Documents” shall mean, with respect to any Letter
of Credit, such Letter of Credit, any amendments thereto, any
documents delivered in connection therewith, any application
therefor, and any agreements, instruments, guarantees or other
documents (whether general in application or applicable only to
such Letter of Credit) governing or providing for (a) the
rights and obligations of the parties concerned or at risk or
(b) any collateral security for such obligations.
“Letter
of Credit Obligations” shall mean, at any time, the sum of
(a) the maximum amount that is, or at any time thereafter may
become, issued by Bank and available to be drawn under Letters of
Credit then outstanding, assuming compliance with all requirements
for drawings referred to in such Letters of Credit plus
(b) the aggregate amount of all drawings under Letters of
Credit honored by Bank but not theretofore reimbursed.
“Maturity
Date” shall mean, unless sooner demanded by Bank after the
occurrence of an Event of Default hereunder, 24 months from the
date hereof.
“Permitted
Liens” means: (a) Liens consisting of deposits or
pledges made in the ordinary course of business in connection with,
or to secure payment of utility payments, bids, tenders, contracts
(other than contracts for payment of money), obligations under
workers’ compensation, unemployment insurance or similar
legislation or under surety or performance bonds, in each case
arising in the ordinary course of business; (b) Liens arising
out of or resulting from any judgment or awarded, the time for the
appeal or petition for rehearing of which shall not have expired,
or in respect of
4
which the
Borrower is fully protected by insurance or in respect of which
Borrower shall at any time in good faith be prosecuting an appeal
or proceeding for a review and in respect of which a stay of
execution pending such appeal or proceeding for review shall have
been secured, and as to which appropriate reserves have been
established on the books of Borrower.
“Notice
of Request for Letter of Credit” shall mean a notice of
request for issuance of a Letter of Credit in form and substance
satisfactory to Bank.
SECTION 2. THE
LOAN AND LETTERS OF CREDIT
2.1
Revolving Loan .
(a)
Advances . Subject to the Borrowing Base limitations
and subject to Bank’s receipt of a completed Borrowing Base
Certificate, Bank may, in its discretion, make Advances to Borrower
in accordance with the terms and conditions of this Loan Agreement,
at any time and from time to time, on or after the date hereof
until the Maturity Date, or until the occurrence of an event which
with the giving of notice or the passage of time, or both, shall
constitute an Event of Default. Such Advances may be borrowed,
re-paid and re-borrowed, provided, however, the aggregate
outstanding principal amount of all Advances, together with the
aggregate face value of all issued and outstanding Letters of
Credit as of such date, shall not exceed $5,000,000.00.
(b)
Interest . The Bank shall make appropriate debits and
credits to the loan account of Borrower corresponding to each
Advance to reflect the Advances to, prepayments, payments by and
other disbursements for the account of Borrower. Each such entry
shall be prima facie evidence of the principal amount of Advances
hereunder at any time outstanding. Each Advance shall bear interest
from the date such Advance is made on the aggregate unpaid
principal amount thereof until such principal amount is paid or
shall become due and payable (whether at the stated maturity or by
acceleration) pursuant to the terms of and at a rate per annum as
set in the Note.
(c)
Calculation . Interest on principal outstanding from
time to time shall be paid monthly, and shall be calculated on the
basis of a 360-day year for the actual days elapsed.
(d)
Requests for Advances . Borrower shall request
Advances under the Loan by (1) giving oral notice thereof to
the Bank at above address, and (2) confirming such oral notice
in writing, in form and substance satisfactory to the Bank, within
two business days thereafter and delivering such written
confirmation to the Bank, together with any supporting information
it may reasonably request, at the above address.
(e)
Commitment . The giving of oral notice as aforesaid
shall irrevocably commit Borrower to accept the requested Advances
under the Loan. In the
5
event of any
discrepancy between any oral notice and written confirmation, the
oral notice shall govern as to any action taken by the Bank prior
to receipt of written confirmation.
(f)
Unused Line Fee . On the 15th day following the end
of each calendar quarter during the term of the Loan, Borrower
shall pay to Bank an unused line fee equal to 25 basis points
(0.25%) per annum times the result of: (1) the amount of the
Loan, less (2) the average daily balance of the Loan
outstanding during the immediately preceding calendar
quarter.
(g)
Limitation . In no event shall any interest charge,
collected or reserved hereunder exceed the maximum rate then
permitted by applicable law.
(h)
Collateral . From the date hereof as security for the
payment and the performance of the Loan, each Borrower extends,
sells, assigns, conveys, mortgages, pledges, transfers, grants, and
re-grants to the Bank a continuing, first priority security
interest in and to all of its respective rights, title and interest
in, to and under all (1) Accounts Receivable;
(2) Equipment; (3) Inventory; (4) General
Intangibles; (5) books and records; (6) deposit accounts;
(7) cash and cash equivalents; (8) to the extent not
included in the foregoing, all other tangible and intangible
personal property of Borrower (within the meaning of the Uniform
Commercial Code, as from time to time in effect in the State of
Florida or Alabama); (9) Investment Property; and
(10) all other property and money of the Borrower now or
hereafter in the possession, custody or control of the Bank; and as
to each of the foregoing, the products and proceeds thereof,
replacements and accessions thereto; all of which shall constitute
the “Collateral”.
2.2
Letters of Credit .
(a)
Issuance . From the date hereof until the Maturity
Date, subject to the terms and conditions hereof and of the Letter
of Credit Documents, and upon such other terms and conditions which
Bank may reasonably require, Bank may issue Letters of Credit as
Borrower may from time to time request for the benefit of Borrower.
No Letter of Credit shall have an expiration date later than the
earlier of: (1) the Maturity Date, or (2) one year after
the date of issuance thereof; provided, however, that Borrower may
request issuance or renewal of a Letter of Credit with a later
expiration if, at the time of such issuance or renewal, Borrower
deposits an amount equal to the face amount of such Letter of
Credit with Bank as cash collateral for such Letter of Credit. Each
Letter of Credit shall require that all draws thereon must be
presented to Bank by the expiration date therefor, regardless of
whether presented prior to such date to any other institution. Each
Letter of Credit shall comply with the related Letter of Credit
Documents. The issuance date of each Letter of Credit shall be a
business day.
(b)
Notice and Reports . The request for the issuance of
a Letter of Credit shall be submitted by Borrower to Bank at least
ten (10) business days prior to the requested date of issuance
(or such shorter period as may be agreed by Bank)
6
pursuant to a
Notice of Request for Letter of Credit, accompanied by such
applications and other related documents as may be required by
Bank. If the Notice of Request for Letter of Credit, related
applications and the requested form of such Letter of Credit is
acceptable to Bank, Bank will, upon fulfillment of the applicable
conditions set forth herein, make such Letter of Credit available
to Borrower.
(c)
Reimbursement . In the event of any drawing under any
Letter of Credit, Bank will promptly notify Borrower, and Borrower
shall request, or be deemed to have requested, an Advance in the
amount of such drawing, the proceeds of which will be used to
satisfy the related reimbursement obligations. Upon the making of
any such Advance, Borrower shall be required to immediately
reimburse Bank for application to the respective Letter of Credit
Obligations. Borrower’s reimbursement obligations hereunder
shall be absolute and unconditional under all circumstances
irrespective of any rights of setoff, counterclaim or defense to
payment Borrower may claim or have against Bank or the beneficiary
of the Letter of Credit drawn upon or any other person, including
without limitation any defense based on any failure of Borrower to
receive consideration or the legality, validity, regularity or
unenforceability of the Letter of Credit.
(d)
Borrower as Account Party . Notwithstanding anything
to the contrary set forth in this Loan Agreement, in the event that
Bank permits a Letter of Credit issued hereunder to statement to
the effect that such Letter of Credit is issued for the account, or
to secure obligations, of an Affiliate or subsidiary of Borrower,
notwithstanding such statement, Borrower shall be the actual
account party for all purposes of this Loan Agreement for such
Letter of Credit. Such statement shall not affect Borrower’s
reimbursement obligations hereunder with respect to such Letter of
Credit.
(e)
International Standby Practices . The Bank may issue
Letters of Credit subject to Rules on International Standby
Practices (ISP98), as adopted as of the date of issue by the
International Chamber of Commerce (the “ISP”), in which
case the ISP may be incorporated therein and deemed in all respects
to be a part thereof.
(f)
Letter of Credit Obligations Absolute . With regard
to each Letter of Credit, the obligations of Borrower to the Bank
under this Loan Agreement, any Letter of Credit Document and any
other agreement or instrument relating to any Letter of Credit
shall be unconditional and irrevocable, and shall be paid strictly
in accordance with the terms of this Loan Agreement, such Letter of
Credit Document and such other agreement or instrument under all
circumstances, including without limitation the following
circumstances:
(1) any lack
of validity or enforceability of this Loan Agreement, any Letter of
Credit Document, any Letter of Credit or any other agreement or
instrument relating thereto (this Loan Agreement and all of the
other foregoing being, collectively, the “L/C Related
Documents”);
7
(2)
any change in the time, manner or place of payment of, or in any
other term of, all or any of the obligations of Borrower in respect
of any L/C Related Document or any other amendment or waiver of or
any consent to departure from all or any of the L/C Related
Documents;
(3) the
existence of any claim, set-off, defense or other right that
Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), Bank or any
other person, whether in connection with the transactions
contemplated thereby or any other unrelated transaction;
(4) any
statement or any other document presented under a Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(5) payment by
Bank under a Letter of Credit against presentation of a draft or
certificate that does not strictly comply with the terms of such
Letter of Credit;
(6) any
exchange, release or non-perfection of any Collateral, or any
release or amendment or waiver of or consent to departure from any
loan document; or
(7) any other
circumstance or happening whatsoever, whether or not similar to any
of the foregoing, including without limitation any other
circumstance that might otherwise constitute a defense available
to, or a discharge of, Borrower.
(g)
Conflict with Letter of Credit Documents . In the
event of any conflict between this Loan Agreement and any Letter of
Credit Document (including any letter of credit application), the
Letter of Credit Documents shall control.
(h)
Letter of Credit Fees . For each Letter of Credit
issued by Bank hereunder, Borrower shall pay to Bank, upon
issuance, a fee equal to 100 basis points (1.00%) multiplied
by the face amount of such Letter of Credit, together with
Bank’s standard fees in effect during the issuance term of
such Letter of Credit (including, without limitation, any renewal
or drawing fees).
SECTION 3.
REPRESENTATIONS AND WARRANTIES.
From the date
hereof, each Borrower represents and warrants to the Bank as
follows:
3.1
Organization, Standing, Corporate Powers .
(a) Duly
Organized . In respect of each Borrower, it (1) is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Florida or Alabama, as the
case may be; (2) has all requisite power and authority,
corporate or otherwise, to conduct its business as now being
conducted and to own its properties and assets; and (3) is
duly qualified to do business in every jurisdiction wherein the
failure to so qualify would have a material adverse
effect.
8
(b)
Powers . It has all requisite power and authority,
corporate or otherwise, to execute, deliver, and to perform all of
its obligations under this Loan Agreement and under other documents
or agreements relating to the transactions contemplated herein to
which it is a party.
(c)
Binding Obligation . This Loan Agreement and all
corporate notes, guarantees, assignments, security agreements and
all other loan and security agreements executed in connection
therewith are legal, valid and binding obligations of the Borrower
and enforceable in accordance with their respective terms, subject
to the enforcement of remedies to bankruptcy, insolvency and other
laws affecting creditors’ rights generally and to moratorium
laws, from time to time in effect, and to general equitable
principles which may limit the right to obtain the remedy of
specific performance.
3.2
Authorization of Borrowing . The execution, delivery
and performance of this Loan Agreement and the borrowings
hereunder: (a) have been duly authorized by all requisite
corporate action; (b) will not violate any provision of
applicable law, any governmental rule or regulation, any order of
any court or other agency of government to which either of such
parties is subject or the articles of incorporation or by-laws of
the Borrower; or (c) do not violate any provision of any
indenture, agreement or other instrument to which Borrower is a
party or by which Borrower or its properties or assets are bound
and which is material to the conduct or operation of
Borrower’s business and financial affairs, or conflict with,
result in a breach of or constitute (with due notice or lapse of
time or both) a default under any provision of such indenture,
agreement or other instruments, or result in the creation or
imposition of any lien, charge or encumbrance of any nature
whatsoever upon the property or assets of the Borrower, other than
as provided herein.
3.3
Financial Statements . Each Borrower has heretofore
furnished to the Bank financial statements which fairly present the
financial condition and the results of operations of each Borrower
as of the date and for the period indicated, show all known
material liabilities, direct or contingent, as of the respective
dates thereof, and were prepared in accordance with Generally
Accepted Accounting Principles applied on a consistent
basis.
3.4
Adverse Change, etc. There has been no material
adverse change in the business, properties or condition (financial
or otherwise) of any Borrower since the date of the most recent of
the financial statements delivered to the Bank.
9
3.5
Litigation . There are no actions, suits or
proceedings pending or, to the knowledge of any Borrower, overtly
threatened against or affecting any of them, at law or in equity,
or before or by any Federal, state, municipal or other governmental
court, tribunal, department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which involve any of the
transactions herein contemplated or the possibility of any judgment
or liability which would result in any material adverse change in
the business, operations, properties or assets or in the financial
condition of any of them, or materially and adversely affect the
ability of any of them to perform hereunder. No Borrower is in
default with respect to (a) any judgment, order, writ,
injunction or decree; or (b) any rule or regulation of any
court or Federal, state, municipal or other governmental court,
tribunal, department, commission, board, bureau, agency or
instrumentality, domestic or foreign which would have a material
adverse effect on its business, properties or condition (financial
or otherwise).
3.6
Payments of Taxes . Each Borrower has filed or caused
to be filed all Federal, state and local tax returns that are
required to be filed and has paid or caused to be paid all taxes as
shown on such returns or on any assessment received by it, to the
extent that such taxes have become due, except taxes the validity
of which is being contested in good faith by appropriate
proceedings and for which, in the exercise of reasonable business
judgment, there have been set aside adequate reserves with respect
to any such tax or assessment so contested the tax or assessment so
contested shall not materially affect its ability to perform
hereunder.
3.7
Priority of Security Interest . Subject (a) to
filing and recordation of the appropriate instruments in the
appropriate offices of the proper jurisdiction or possession by the
Bank or its agent where perfection is based upon possession;
(b) to the enforcement of remedies to bankruptcy, insolvency,
and other laws affecting creditors’ rights generally and to
moratorium laws, from time to time in effect; and (c) to
general equitable principles which may limit the right to obtain
the remedy of specific performance, each of the security interests
granted to the Bank as identified under Section 2 of this Loan
Agreement constitutes a valid first priority security interest or
lien in and to the property covered thereby, granting all rights
and remedies to a secured party under the Uniform Commercial Code,
as in effect in the State of Florida and Alabama, as the same may
be modified or amended from time to time, except as otherwise
permitted hereunder.
3.8
Eligible Accounts Receivable and Eligible Inventory .
All Eligible Inventory included in the Borrowing Base meet the
criteria for Eligible Inventory and all Eligible Accounts
Receivable included in the Borrowing Base meet the criteria for
Eligible Accounts Receivable.
3.9
Location of Collateral . All of the Collateral is
used or held for use by Borrower at the following locations: 205
Carriage Street, Guin, Alabama 35563, and 7668 Highway 278,
Sulligent, Alabama 35586.
10
3.10 Loan
Subordinations . Any related party notes payable by any
Borrower, to any other Borrower or to owners of any Borrower, or to
other related parties, now existing or hereafter made are and shall
be subordinated to the lien of the Loan granted herein. Each
Borrower confirms that all related party debts are fully disclosed
on the financial statements provided to the Bank and in the event
the Bank so requires, such related parties shall enter into
subordination agreements to evidence the requirements of this
Section.
SECTION 4.
CONDITIONS OF LENDING AND
ISSUANCE
OF LETTERS OF CREDIT.
The obligation
of the Bank to extend credit and issue Letters of Credit hereunder
is subject to the following conditions:
4.1
Representations and Warranties . At the date of each
Advance or issuance of any Letter of Credit, the representations
and warranties set forth in Section 3 hereof shall be true and
correct on and as of such date, with the same effect as though such
representations and warranties had been made on and as of such
date, except to the extent that such representations and warranties
relate solely to an earlier date.
4.2
Certificates . On or before the date hereof, the Bank
shall have received: (a) from the Borrower: (1) a copy of
its certificate of corporate status and Articles of Incorporation
with all amendments, certified by the respective Secretary of State
of Florida or Alabama, as the case may be, dated as of a recent
date; (2) the certificate of its secretary or assistant
secretary, dated the date hereof and certifying that attached
thereto is a true and complete copy of its Bylaws prior to the
adoption of the resolutions by its Board of Directors authorizing
the execution, delivery and performance of this Loan Agreement; and
certification that its articles of incorporation have not been
amended since the date of the last amendment thereof, if any,
indicated on the certificate of the respective Secretary of State;
and (b) such other documents as the Bank may reasonably
request.
4.3 No
Default . At the date of each Advance or issuance of any
Letter of Credit, no Event of Default, or event which with the
giving of notice or of the passage of time, or both, would
constitute an Event of Default, shall have occurred and be
continuing, and the representations and warranties of each Borrower
contained herein shall remain true and correct as of such date,
except to the extent that such representations and warranties
relate to an earlier date. Each request for an Advance shall
constitute the confirmation by each Borrower that at the date
thereof the conditions contained in this Section shall have been
satisfied.
11
4.4
Other Conditions Precedent . On or before the date
hereof, there shall have been delivered to the Bank all of the
financial statements, reports and other documents required by the
Loan Commitment dated August 27, 2009.
SECTION 5.
CROSS-DEFAULT AND CROSS-COLLATERALIZATION.
Any Event of
Default under the terms of the Loan shall constitute and hereby is
declared to be an immediate and absolute default under the terms of
all loans between Bank and any Borrower. Should an event of default
occur under the terms of any of said loans, which event is subject
to notice and cure periods, if any, failure to cure such event of
default within such curative period shall constitute an immediate
default under this Loan and all such other loans owed by any
Borrower to Bank. Each of the foregoing loans between Bank and any
Borrower shall also be cross-collateralized, whether such loans are
now existing or hereafter entered into between Bank and Borrower at
any time.
SECTION 6.
AFFIRMATIVE COVENANTS
From the date
hereof and so long as the Loan shall be unpaid or unperformed, each
Borrower will:
6.1
Existence and Properties . To the extent that the
same are necessary for the proper and advantageous conduct of its
business, do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its corporate existence,
rights, licenses and permits and comply with all laws and
regulations applicable to it and conduct and operate its business
in substantially the manner in which it is presently conducted and
operated.
6.2
Insurance .
(a) Cause to
be maintained at all times during the term of the Loan, general
liability insurance with limits reasonably satisfactory to or as
reasonably required by, Bank.
(b) Cause the
Collateral to be adequately insured at all times, by financially
sound and reputable insurers, in an amount not less than the value
thereof.
(c) Cause the
Bank to be a named insured to the extent of its interest in respect
the policies of insurance required by Section 6.2(a) and
(b) hereinabove.
6.3
Obligations, Taxes and Laws . Pay or cause to be paid
all indebtedness and obligations promptly and in accordance with
their respective terms, including, without limitation, sales, use
and personal property taxes as the same may be imposed upon any
Borrower from time to time, and pay and discharge or cause to be
paid and discharged promptly all taxes, assessments, and
governmental charges or levies
12
imposed upon
it or in respect of its property before the same shall become in
default, as well as all lawful claims for labor, materials, and
supplies or otherwise which, if unpaid, might become a lien or
charge upon such property or any part thereof, and timely comply
with all applicable laws and governmental rules and regulations;
provided, however, that the Borrower shall not be required to pay
or discharge or cause to be paid or discharged any such tax,
assessment, charge, lien or claim, or timely comply with the laws
and governmental rules so long as the validity thereof shall be
contested by appropriate legal proceedings timely initiated and
conducted in good faith, and (a) in the case of an unpaid tax,
assessment, governmental charge or levy, lien, encumbrance, charge
or claim, such proceedings shall be effective to suspend the
collection thereof from the Borrower and its property;
(b) neither such property nor any part thereof, nor any
interest therein would be in any danger of being sold, forfeited or
lost; (c) in the case of a law and governmental rule or
regulation, neither any Borrower nor the Bank would be in any
danger of criminal liability for failure to comply therewith;
(d) there shall have been established such reserve or other
appropriate provision, if any, with respect thereto on the books of
the entity involved, as shall be required by Generally Accepted
Accounting Principles with respect to any such tax, assessment,
charge, lien, claim, encumbrance, law, rule or regulation, so
contested.
6.4
Financial Statements and Reports . Each Borrower
shall maintain systems of accounting established and administered
in accordance with Generally Accepted Accounting Principles. Each
Borrower, as appropriate, will furnish to the Bank:
(a) Within one
hundred twenty (120) days after the end of each fiscal year,
each Borrower shall deliver to the Bank, consolidated, audited
balance sheets and statements of income, retained earnings and
changes in financial position for such year, an audited inventory
of DVHI, all of which shall be accompanied by supporting schedules
and the unqualified opinion of independent certified public
accountants of recognized standing reasonably acceptable to the
Bank, and upon filing, all filings required in accordance with SEC
regulations, if any.
(b) Within
thirty (30) days after the end of each fiscal quarter-end,
deliver to the Bank the following financial statement
