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HomeMy WebLinkAbout2015-677-E ED - Master Peace barber Shop Loan and Security Agreement DocuSign Envelope ID:56COB206-26C6-403B-9D33-D169069A82E4 LOAN AND SECURITY AGREEMENT THIS Loan and Security Agreement (the "Agreement") is dated as of April 13,2015, and is by and between Mark A. Holt, doing business as MasterPeace Barber Shop, a North Carolina sole proprietorship (the 'Borrower") and the Orange County Small Business Loan Program Company, a North Carolina nonprofit corporation (the "Company") The Borrower has applied for a loan from the Company, and the Company has agreed to make the loan. This Agreement sets out the terms of the loan, including the terms for payments and the security for the loan. NOW, THEREFORE, in consideration of the mutual promises set out in this Agreement, the parties agree as follows: PART ONE-AGREEMENT TO MAKE AND REPAY THE LOAN 1. The Company will loan to the Borrower the sum of fifteen thousand dollars [$15,000] (the "Loan"). The Company is making this loan by giving the Borrower a check for the full amount of the loan, reduced by the Company's loan fee of one hundred and fifty dollars [$150]. 2. The Borrower will repay the loan. The Borrower's obligation to repay the Loan will be represented by a promissory note (the "Note) in substantially the form of Exhibit A, which the Borrower will execute and deliver to the Company in exchange for the Loan proceeds. The Note will set out the terms of repayment, including payment dates and interest rates. 3. The Borrower will use the Loan for the purposes of its business (the "Business") as described in its application to the Company for this Loan. PART TWO - SECURITY FOR THE LOAN 4. To secure its obligations to the Company under the Note and this Loan Agreement, Borrower grants to the Company a security interest in the "Collateral" as described in Exhibit B. This Agreement is intended as, and constitutes, a security agreement within the meaning of the North Carolina Uniform Commercial Code (UCC) Financing Statement, with respect to the Collateral. The Borrower will execute and deliver to the Company UCC Financing Statements and such other documents as the Company may reasonably deem appropriate to secure the benefits of this Agreement. 5. To further secure the Borrower's obligations to the Company under the Note and this Loan Agreement, Mark A. Holt shall each execute a personal guarantee in substantially the form of Exhibit C. Page 1 of 9 DocuSign Envelope ID:56COB206-26C6-403B-9D33-D169069A82E4 LOAN AND SECURITY AGREEMENT PART THREE - EVENTS OF DEFAULT 6. Events of Default — The happening of any of the following events shall constitute a default under this Agreement (these are the "Events of Default"): 6.1 The Borrower fails to pay when due any amounts payable under the Note; 6.2 The Borrower breaches or fails to perform or observe any term, condition or covenant of this Agreement or the Note on its part to be observed or performed; 6.3 The Borrower moves its principal place of business outside Orange County; 6.4 The Borrower sells all or substantially all of the assets of the Business; 6.5 Any warranty, representation or statement made by the Borrower in this Agreement or otherwise to the Company in connection with this Loan is found to be incorrect or misleading in any material respect; 6.6 The Company believes in good faith that the prospect of the Borrower's payment or performance is impaired; 6.7 The Borrower seeks an order of relief under Federal Bankruptcy laws; 6.8 The Borrower becomes insolvent; or 6.9 A federal or state tax lien is filed against the assets of the Borrower. 7. Remedies on Default — Upon the continuation of any Event of Default, the Company may, without any further demand or notice, exercise any one or more of the following remedies: 7.1 Declare the unpaid balance of the Note immediately due and payable; 7.2 Proceed by appropriate court action to enforce the Borrower's performance of the applicable covenants of this Agreement or to recover for the breach thereof; 7.3 Pursue collection under the guaranties; 7.4 Pursue enforcement of the lien of the UCC Financing Statement; and 7.5 Avail itself of all other rights and remedies available at law and in equity. Page 2 of 9 DocuSign Envelope ID:56COB206-26C6-403B-9D33-D169069A82E4 LOAN AND SECURITY AGREEMENT 8. Further Remedies — In addition to the remedies described in paragraph 7, during the continuation of an Event of Default the Company may avail itself of all the rights and remedies of a secured party under the UCC, and at its option may: 8.1 Enter upon Borrower's premises to take possession of the Collateral or to render it unusable, or require Borrower to assemble the Collateral at any place designated by Company reasonably convenient to the parties; 8.2 Give notice to the Borrower before taking any action pursuant to the UCC Financing Statement by mailing such notice to the Borrower's address as shown in this Agreement, at least ten (10) days before the proposed action. 8.3 Use the proceeds of the disposition of any Collateral to pay and discharge the Borrower's obligations as set forth in this Agreement and in the Note; and 8.4 Without other notice (except as set forth below or in the other documents executed and delivered pursuant to or in connection with the making of the loan contemplated by this Agreement) or demand whatsoever to the Borrower, all of which are hereby waived (to the extent permitted by law), and without advertisement, sell at public or private sale or otherwise realize upon, the whole, or from time to time, any part of the collateral, or any interest which the Borrower may have therein. 8.5 If any automobile is part of the Collateral, the Borrower agrees that a sale by the Company of such vehicle at a price based upon a recognized automobile quotation, publication or a sale at a recognized automobile wholesale auction shall be deemed "commercially reasonable." 9. Financial records after a default — At any time the Borrower is in default or a payment due under the Agreement is not made, the Borrower hereby authorizes the Company to make or cause to be made, at the Borrower's expense and in such manner and at such times as the Company require, (a) inspections and audits of any books, records, and papers in custody or control of the Borrower or others, relating to the Borrower's financial or business conditions, including the making of copies thereof and extracts thereof, and (b) inspections and appraisals of any Borrower assets. Should the Borrower fail to make any payment due under the Agreement, the Borrower will furnish to the Company for each one month period from the date of disbursement of the loan proceeds covered by this Agreement, and for a six month period thereafter, and semiannually thereafter (no later than 30 days following the expiration of any such period), and at such other times and in such form as the Company may prescribe, the financial and operating statement of the business. Page 3 of 9 DocuSign Envelope ID:56COB206-26C6-403B-9D33-D169069A82E4 LOAN AND SECURITY AGREEMENT 10. Costs and expenses related to remedial action - The Borrower agrees that all costs and expenses (including reasonable attorneys' fees and expenses for legal services of every kind) of, or incidental to, the custody, care, management, sale or collection of, or realization upon, any of the Collateral, or in any way relating to the enforcement or protection of the Company's rights under this Agreement, shall be entitled to the benefits of this Agreement. The Company may at any time apply to the payment of all such costs and expenses all monies of the Borrower or other proceeds arising from the possession or disposition of all or any portion of the Collateral. 11. Other provisions regarding remedies - The Company may delay or refrain from exercising any past, present, or future right or remedy hereunder without waiving any such right or remedy. The Company shall have no obligation to proceed against real or personal property in preference to the other. PART FOUR-PROMISES BY THE BORROWER 12. The Borrower agrees that it will do the following: 12.1 Operate the Business in full compliance with applicable federal, state, and local laws, including, without limitation, federal laws relating to equal employment opportunity and occupational health and safety, the North Carolina State Building Code, and local building and land use regulations. 12.2 Promptly perform all obligations of Borrower including the payment, when due, of all amounts owed to Company secured by this Agreement; 12.3 Protect and properly care for the Collateral, and allow no Collateral to be misused, wasted, or allowed to deteriorate except for normal wear and tear; 12.4 Use the Collateral principally within the State of North Carolina and Orange County, and not to affix the Collateral to real property unless it is classified as a fixture hereinabove the requisite information is supplied; 12.5 Insure all Collateral against theft, loss or destruction, by policies acceptable to Company and payable to both Borrower and the Company as their interests may appear; that all applicable licenses and permits be obtained; that the employer ID number be provided and a privilege license be obtained; and that both property and liability insurance on the building(s) and contents be procured and maintained by the Borrower. The Borrower shall provide and maintain hazard insurance (fire and extended coverage) in an amount acceptable to the Company covering all tangible Collateral. Mortgagee endorsement is to include this loan. Page 4 of 9 DocuSign Envelope ID:56COB206-26C6-403B-9D33-D169069A82E4 LOAN AND SECURITY AGREEMENT 12.6 Pay promptly when due all ad valorem taxes and assessments upon the Collateral; 12.7 Upon the Company's request, deposit with Company additional Collateral to Company's satisfaction; 12.8 That Collateral will not be changed, transferred, or otherwise disposed of or be subjected to any unpaid charge, unless the Company consents in advance in writing to such change, transfer, or charge. 12.9 Upon the Company's request, provide a list of buyer, commission merchants and selling agents to or through whom the Borrower intends to sell the products granted as Collateral; 12.10 Keep proper books of account in a manner satisfactory to the Company; 12.11 Submit an annual financial statement reviewed or compiled by an independent public accountant within sixty (60) days of the close of the Borrower's fiscal year for the Business; 12.12 Submit a copy of its annual tax return to the Company within one month of filing. The Borrower hereby authorizes all federal, state and municipal authorities to furnish reports of examinations, records, and other information relating to the condition and affairs of the business and any desired information from reports, returns, files, and records of such authorities upon request therefore by the company; 12.13 Keep and maintain books, records, and other documents relating directly to the receipt and disbursement of loan funds and the fulfillment of this Agreement. Each party agrees that any duly authorized representative of the Company shall at all reasonable times, have access to and the right to inspect, copy, audit and examine all of the books, records and other documents relating to the loan and fulfillment of this Agreement. 13. The Borrower agrees that it will not do any of the following without the Company's prior written consent: 13.1 Effect a change of ownership or control of the Business; 13.2 Consolidate or merge with any other company, unless the procedures for assignment and/or assumption are complied with; or 13.3 At any time the Borrower is in default, give any preferential treatment, make any advance, directly or indirectly controlling or affiliated with or controlled by the Page 5 of 9 DocuSign Envelope ID:56COB206-26C6-403B-9D33-D169069A82E4 LOAN AND SECURITY AGREEMENT Borrower, or any other company, or to any officer, director, or employee of the Borrower, or of any such company; 13.4 For two years after the date of this Agreement, undertake additional debt financing without prior written consent of the Company, except that this provision shall not prohibit Borrower from (a) purchase money financing of ordinary and necessary equipment or (b) credit purchases of inventory. The Company's consent, when required under this provision, shall not be unreasonably withheld. 13.5 Permit or suffer to exist any other lien, security interest or encumbrance upon the Collateral, except for the existing security interest described in Exhibit D and the security interest created pursuant to this Agreement and any other agreements delivered by the Borrower pursuant to this Agreement. 13.6 Use the Collateral for any illegal purposes. 13.7 Assert a claim or defense held against the Company against any assignee of this Agreement 14. The Borrower further represents to the Company and acknowledges that the following things are true: 14.1 No financing statement, other than those financing statement(s) on file with the North Carolina Secretary of State at the date of execution of this Agreement and described in Exhibit D, covers the Collateral; there is no adverse lien or security interest in the Collateral; that Borrower has the right to transfer a security interest in the Collateral; and that the Borrower will defend the title to the Collateral and its proceeds against the claims of others 14.2 The Borrower's correct address appears below its signature to this Agreement 14.3 The Company may act as attorney for Borrower in adjusting any insurance coverage and in endorsing any insurance draft and may retain for the satisfaction of the Borrower's obligation any insurance proceeds and/or unearned premium on such insurance. 14.4 All information supplied and statements made by or in support of the Borrower in its application for this credit are true and correct. 14.5 Any loss or destruction of the Collateral shall not release the Borrower from the payment and performance of its obligations under this Agreement. Page 6 of 9 DocuSign Envelope ID:56COB206-26C6-403B-9D33-D169069A82E4 LOAN AND SECURITY AGREEMENT 14.6 The Borrower has only one place of business in North Carolina and that place of business is in Orange County. 14.7 If more than one Borrower executes this Agreement, their obligations under this Agreement shall be joint and several. PART FIVE-THE COMPANY'S POLICIES AND PROCEDURES 15. The Borrower has been given a copy of the Company's Policies and Procedures, and has been given an opportunity to review the policies and procedures and ask questions about them. The Borrower will not use the loan proceeds for any purpose that the Company's policies and procedures say is an improper use of the loan proceeds. 16. If at any time the Borrower has any questions about whether a particular use of the loan proceeds is permitted, or has any other questions about the policies and procedures or the terms of the loan documents (or wants to request any changes or any permission to vary the terms), Borrower will ask the Company for the desired information. The Borrower recognizes that it is the Borrower's responsibility to comply with the policies and procedures and the terms of the loan documents, and it is not the Company's responsibility to make sure the Borrower either understands the terms or complies with the terms. The Company may take action against the Borrower if the Borrower fails to comply with the policies and procedures and the terms of the loan documents. The Borrower is entitled to rely on a waiver by the Company of a requirement of the policies and procedures and the terms of the loan documents only if that waiver is in writing. PART SIX- OTHER AGREEMENTS BETWEEN THE PARTIES 17. Communication- 17.1 Any communication required or permitted by this Agreement must be in writing. 17.2 Any communication under this Agreement shall be sufficiently given and deemed given when delivered by hand or on the date shown as the date of delivery on a United States Postal Service return receipt, if addressed as follows: 18.2.1 If to the Company, addressed as follows: Orange County Small Business Loan Program Company, Post Office Box 1177, Hillsborough, NC 27278; or, 18.2.2 If to the Borrower, addressed to the address shown below the Borrower's signature to this Agreement. Page 7 of 9 DocuSign Envelope ID:56COB206-26C6-403B-9D33-D169069A82E4 LOAN AND SECURITY AGREEMENT 17.3 Any addressee may designate additional or different addresses for communications by notice given under this Section to each of the others. 18. The Borrower shall not sell or assign any interest in this Agreement. 19. The parties intend that North Carolina law shall govern this Agreement. If any provision of this Agreement shall be determined to be unenforceable, that shall not affect any other provision of this Agreement. If the date for making any payment or the last day for performance of any act or the exercising of any right shall not be a business day, such payment shall be made or act performed or right exercised on or before the next preceding business day. The parties agree that time is of the essence of this Agreement. 20. This Agreement, together with the documents referenced in this Agreement, constitutes the entire agreement between the Borrower and the Company with respect to its general subject matter. Only a writing signed on behalf of each party may amend this Agreement. 21. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original,but all of which together shall constitute one and the same instrument. For purposes hereof, a facsimile copy of this Agreement, including the signature pages hereto, shall be deemed to be an original. Notwithstanding the foregoing, the parties shall deliver original execution copies of this Agreement to one another as soon as practicable following execution thereof. IN WITNESS WHEREOF, the parties have duly signed, sealed and delivered this Agreement in duplicate originals as of the day and year first above written. [SEAL] ORANGE COUNTY SMALL BUSINESS LOAN PROGARAM COMPANY DocuSigned by: DocuSigned by: � . �� �Y SE8119CE5ED545B.. By: 3FDC528BC82MBD Yvonne Scarlett Date Jim Evans Date Secretary-Treasurer President Approved as to technical content: ��jjDocuSigned by: 3�KN� 373D4EFAC1BE410- Steve Brantley Date Economic Development Director Page 8 of 9 DocuSign Envelope ID:56COB206-26C6-403B-9D33-D169069A82E4 LOAN AND SECURITY AGREEMENT Annroved as to form and legal sufficiency: EDocuSigned by: j 328DC480549A4F5.. James Bryan Date Staff Attorney This instrument has been pre-audited in the manner required by the Local Government BudQ-et and Fiscal Control Act. DocuSigned by: tau LA btti 232DFFC2CFA847B.. Paul Laughton, Finance Officer Date Mark A. Holt, doing business as MasterPeace Barber Shop 407 Hwy 57 Hillsborough, North Carolina 27278 By: Mark A. Holt, owner Date Exhibits: A-Form of Promissory Notes B-Description of Collateral C - Form of Personal Guaranty Page 9 of 9