Exhibit 10.8
Demand Promissory Note, dated February 5, 1999, of Greg Manning Auctions, Inc.
(Maker) to Brown Brothers Harriman & Co. (Holder)
SECURED PROMISSORY NOTE
(PLEDGE OF COLLATERAL) 6,750,000.00
________________ Date: February 5, 1999
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Name of Maker: Greg Manning Auctions. Inc
Due On: Demand
interest Payable on: Last day of each month
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FOR VALUE RECEIVED the Maker promises to pay on the due date set forth above, to
the order of BROWN BROTHERS HARRIMAN & CO. ("Payee') at its office at 59 Wall
Street, New York, New York 10005, the face amount hereof. Interest on the
balance from time to time outstanding shall accrue at the rate of (B+-1)8 3/4 %
per annum, and shall be payable as set forth above.
All advances pursuant to this Note and all repayments of principal due hereunder
shall be endorsed by the Payee on the schedule on the reverse side hereof, or
any continuation of such schedule attached hereto and denominated a part hereof.
Said endorsement on such schedule by an authorized agent of the Payee shall be
conclusive evidence of (he unpaid balance due on this Note.
The indebtedness evidenced hereunder, as well as all other indebtedness now or
hereafter owing by the Maker to the Payee ("Obligation(s)') is secured by
certain collateral more fully described in the annexed Schedule "A", together
with all the Maker's personal properly now or hereafter existing or acquired, of
any type or description, including but not limited to inventory, documents of
title covering any inventory, equipment, accounts, contract rights, general
intangibles (including tax refunds, instruments, investment securities, chattel
paper, notes, drafts, acceptances and all bank balances of the undersigned
("Collateral") which the Maker has pledged, deposited and delivered to the Payee
and granted to the Payee a security interest in.
The rate of interest hereunder is based upon the Payee's present base rate of 7
3/4% Per annum (the "Base Rate"). In the event of an increase or decrease in the
Base Rate, then the rate of interest hereunder shall be automatically increased
or decreased to the same extent and on the same day as any increase or decrease
in the Base Rate. Post-maturity or post-demand (as the case may be) interest
shall accrue and be payable at 120 % of the rate payable on the due date or
demand, computed from said dale to the dale of actual payment.
Maker affirms and certifies that the Obligation evidenced by this Note was not
and will not be incurred for the purposes of purchasing, carrying or trading in
securities as defined in the Federal Reserve Board's Regulation T. except in
compliance with said Regulation.
In no contingency or event whatsoever shall the interest rate charged hereunder
exceed the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the
event that such a court determines that the Payee has received interest
hereunder in excess of said highest permissible rate. Payee shall promptly
refund such excess interest to Maker.
So long as the Obligations are not in default, the Maker shall have the right to
vote any shares of stock included in the Collateral on all corporate questions
and the Payee shall, if required, execute due and timely proxies in favor of the
Maker to this end.
The Maker warrants and represents that there are no restrictions upon the
transfer of the Collateral, other than may appear on the face of the
certificates and that the Maker has the right to pledge the Collateral free of
any encumbrances and without obtaining the consents of the other shareholders.
In the event that, prior to repayment of the Obligations, any stock dividend,
reclassification, readjustment or other change is declared or made in the
capital structure of any issuer of the Collateral, all new, substituted and
additional shares or other securities issued to Maker by reason of any such
change shall be delivered to Payee in kind to be held by the Payee under the
terms of this agreement in the same manner as all other Collateral. The Payee
may at any time, without notice to the Maker, transfer to and/or register in
Payee's name, or in the name of Payee's nominee, any or all of the Collateral.
In the event that it becomes necessary, in Payee's opinion, to comply with any
Federal or Slate law or regulation or to make or file any registration
thereunder in order for Payee to exercise any of its rights hereunder, Maker
expressly agrees to do or will cause to be done all acts and prepare and execute
all documents necessary to effect such compliance or registration, and to bear
all costs in connection therewith. Maker agrees to indemnify and to hold Payee
harmless from and against any claim or liability caused by any untrue statement
of material fact, or omission to state a material fact, as may be required in
any registration statement or prospectus; or caused by a failure to register or
comply with any such law or regulation. The Maker shall pay any and all
expenses, including reasonable attorneys' fees incurred by Payee in registering
the Collateral, or in securing an exemption for any such registration.
The Payee shall have no responsibility of any kind, nature or description to
arrange for the redelivery of the Collateral or any part thereof to any issuer
or transfer agent in order to preserve or maintain any conversion or dividend
rights with respect thereto; the Payee's only obligation being to maintain
physical possession or control thereof. The Payee agrees to comply with any
request received by it from Maker with respect to conversion, reclassification,
or the like of the Collateral, to the extent that such instructions are not
inconsistent with the intents and purposes hereof. Upon payment and performance
of all Obligations the Payee shall, at the request of the Maker, redeliver the
Collateral to the Maker.
Upon the occurrence of any of the following events of default, to wit: the
non-payment when due of any Obligation, the failure of the Maker forthwith, upon
demand, to furnish satisfactory additional Collateral, or to make payments on
account as may be agreed in any of the Obligations, the death, failure in
business, dissolution or termination of existence of the Maker of any endorser,
guarantor or surely of any Obligation (hereinafter referred to as "Obligor(s)'),
any petition for relief under the Bankruptcy Code being filed by or against any
Obligor or any proceedings in bankruptcy, or under any Acts of Congress relating
to the relief of debtors, being commenced for the relief or readjustment of any
indebtedness of any Obligor either through reorganization, composition,
extension or otherwise; the making by any Obligor of an assignment for the
benefit of creditors or for taking advantage by any of the same of any
insolvency law, any seizure, vesting or intervention by or under authority of a
government, by which the management of any Obligor is displaced or its authority
in the conduct of us business is curtailed: the appointment of any receiver of
any property of any Obligor; the attachment or distraint of any of the
Collateral or of same becoming subject at any time to any mandatory court order
or Other legal process: the failure of any Obligor co perform any of its duties
as specified in any agreement(s) with respect to the Obligations; the expulsion
or suspension of any Obligor from membership in any national securities
association or any national securities exchange or other organized exchange, or
any clearing association; the admission in writing by any Obligor of inability
to pay its debts generally as they become due, the commencement of any
proceedings against any Obligor under Article 5l or 52 of the New York Civil
Practice Law and Rules (as heretofore or hereafter amended); the Pension Benefit
Guaranty Corporation shall commence proceedings (including proceedings under
ss.4042 of the Employee Retirement Income Security Act of 1974) to terminate any
employee pension benefit plan of the Maker; any misstatement or false Statement
of any Obligor in connection with any agreement between any Obligor and the
Payee has been made; then in such event the Maker shall immediately be liable
without notice and shall pay on demand all Obligations (whether or not otherwise
due), together with all collection costs and expenses, including reasonable
attorneys' fees, in connection with the collection of such indebtedness.
Payee shall have all rights and remedies of a secured par(y under the Uniform
Commercial Code. Further, upon the occurrence of any Event of Default, all
obligations shall automatically become due and payable without notice and
Payee's commitment to make further loans or extensions of credit or other
financial accommodations to the Maker shall thereupon automatically and without
notice be terminated. In addition thereto, the Maker further agrees that (i) in
the event notice is necessary under applicable law, written notice mailed to the
Maker at the address then reflected in Payee's records 5 business days prior to
the date of public sale of any of the Collateral or prior to the date after
which private sale or any Other disposition of the Collateral will be made shall
constitute reasonable notice, but notice given in any other reasonable manner or
at any other time shall be sufficient; (ii) in the event of the sale or Other
disposition of any Collateral, Payee may apply the net proceeds thereof first to
the satisfaction of Payee's reasonable attorneys' fees, legal expenses, and
other costs and expenses incurred in connection with Payee's taking, re-taking,
holding, preparing for sale, and selling of the Collateral; then to repayment of
principal and interest on the Obligations, with the Maker remaining liable for
any deficiency: (iii) without precluding any other methods of sate, the sale of
Collateral shall have been made in a commercially reasonable manner if conducted
in conformity with reasonable commercial practices of banks disposing of similar
property, but in any event Payee may sell on such terms as Payee may choose,
without assuming any credit risk and without any obligation to advertise or give
notice of any kind, and (iv) Payee may require the Maker to assemble Collateral,
taking all necessary or appropriate action to preserve and keep in good
condition; and make such available to Payee at a place and time convenient to
both parties; all at the expense of the Maker. To the extent permitted under
applicable law, full power and authority is hereby given Payee to sell, assign,
and deliver all or any part of the Collateral, at any time at any brokerage
board, or at public or private sale, at Payee's option, and no delay on Payee's
part in exercising any power of sale or any other rights or options hereunder,
and no notice or demand, which may be given to or made upon the Maker by Payee
with respect to any power or sale or other right or option hereunder, shall
constitute a waiver thereof, or limit or impair Payee's right to take any action
or to exercise any power of sale and any other rights hereunder, without notice
or demand, or prejudice Payee's rights as against the Maker in any respect.
Payee may be a purchaser, free from any right of redemption (which Maker hereby
expressly waives and releases) at any public or private sale of Collateral.
Should such net proceeds be inadequate to pay all the Obligations, the Maker
agrees to pay the Payee on demand any balance that may be due to the Payee.
The Maker recognizes that the Payee may be unable to effect a public sale of all
or part of the Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, is now or hereafter in effect, or applicable
Blue Sky or other state securities law, as now or hereafter in effect, but may
be compelled to resort to one or more private sales to a restricted group of
purchasers who will be obliged to agree, among other things, to acquire the
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. The Maker agrees that private sales so made may
be at prices and other terms less favorable to the Payee than if such Collateral
were sold at public sales, and that the Payee has no obligation to delay sale of
any such Collateral for the period of time necessary to permit the issuer of the
Collateral, even if such issuer would agree, to register the Collateral for
public sate under such applicable securities laws. The Maker agrees that private
sales made under the foregoing circumstances shall be deemed to have been made
in a commercially reasonable manner.
The Maker at the request of the Payee will sign and deliver to the Payee a
security agreement or a trust receipt or other writing, together with financing
statement(s) or a Statement of trust receipt financing or other writing,
covering any Collateral in order to comply with or to enable the Payee to obtain
the benefits of the Uniform Commercial Code or any other similar Statute now or
hereafter enacted, of New York or of any other jurisdiction where the Collateral
may at any time be located. The Maker agrees to supply the Payee with any
information the Payee may reasonably request with respect to any financing
statement(s) or security agreement relating to the Maker or to any property of
the Maker, and the Maker agrees that without written consent of the Payee the
Maker will not enter into any security agreement which creates a security
interest in any category of the Maker's personal property generally (as
distinguished from any specific items thereof) or in any after-acquired property
other than accessions and fixtures. The rights of the Payee specified herein
shall be in addition to those previously or otherwise created or existing. The
Maker agrees to use every effort and to take every action that may be necessary
or appropriate to enable the Payee to enforce, protect and preserve its rights
and interests hereunder, hereby granting unto the Payee, as the Maker's
attorney-in-fact, full power and authority to take any and all such action,
either in the name of the Payee or in the name of the Maker as the Payee may in
its sole discretion determine.
The Maker authorizes the Payee, with or without notice to the Maker, to cause to
be transferred or registered at the expense of the Maker any of the Collateral
into the name of the Payee or its nominee and to receive any income derived
therefrom and to hold such income as security for any of the Obligations or
apply it upon principal or interest due on any such Obligations. The Maker will
execute and deliver to the Payee such consents, endorsements, assignments and
stock powers as may appear to the Payee proper to further the negotiability of
any of the Collateral and will pay the expenses and charges of so furthering
negotiability. The Payee may at any time demand, sue for, collect of make any
compromise or settlement with reference to the Collateral as the Payee in its
sole discretion may determine. Any bonds or Other obligations of or guaranteed
by the United States Government constituting part of the Collateral may be
pledged by the Payee (either alone or so mingled with other securities) to
secure deposits or other obligations of the Payee, whether or not such deposits
or other obligations be in excess of the Obligations.
The Maker agrees that the Payee assumes no responsibility for the correctness,
validity, genuineness or sufficiency of the instruments, documents and/or
chattel paper constituting the Collateral, or for the existence, character,
quantity, quality, condition, weight, packing, value or delivery of any goods
specified in any such documents. The Payee shall not be required to take any
Steps necessary to preserve any rights against prior parties to any of the
Collateral. The Maker hereby waives presentment, notice of dishonor and protest
of all instruments evidencing or included in the Obligations and the Collateral.
The Maker will keep the Collateral adequately covered by insurance satisfactory
to the Payee, and will .assign the policies or certificates of insurance to the
Payee, or make the loss or adjustment payable to the Payee, a( the option of the
Payee, and the Maker will furnish to the Payee evidence of acceptance by the
insurers of such assignment. Should the Maker fail to effect and maintain such
insurance, the Payee may do so for the account of the Maker.
No failure on the part of Payee to exercise, and no delay in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise by Payee of any right, power or remedy hereunder
preclude any o(her or fur(her exercise thereof or the exercise of any other
right, power or remedy.
If any provision hereof is held invalid or unenforceable, the remainder and the
application of such provision to other parties or circumstances will not be
affected thereby, the provisions being severable in any such instance.
In any litigation hereunder, all Obligors hereby waive trial by fury and waive
the right to interpose any defense based upon any Statute of Limitations or any
claim of laches. Each Obligor hereby consents to the in personam jurisdiction of
the Courts of New York State, arid the United States District Court, the
Southern District of New York in connection with any claim arising hereunder. In
the event that any action is commenced hereunder in any such court, service of
process may be made on any Obligor by mailing a copy of the Summons to said
party at its address then reflected in Payee's records.
This Note shall be governed by the laws of the Slate of New York.
All Obligors hereby forever waive presentment, demand, protest, notice of
protest and notice of dishonor of this Note and consent without notice to any
and all extensions of time or terms of payment including any compromise or
settlement thereof.
ENDORSEMENT
FOR VALUE RECEIVED each of the undersigned endorsers assent to all of the terms
and conditions of the within Note and hereby forever waive presentment, demand,
protest, notice of protest, and notice of dishonor of the within Note, and trial
by jury, and the undersigned and each of them guarantees the payment of said
Note when due and consents without notice to any and all extensions of time or
terms of payment, and the release or substitution, or failure to perfect a
security interest in any collateral made, agreed to or granted to or by the
Payee.
By: William Tully
Title: Chief Operating Officer
By: James Smith
Title: Chief Financial Officer
SCHEDULE -A"
LIST OF COLLATERAL
ALL PERSONAL PROPERTY AND FIXTURES OF THE DEBTOR, WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHEREVER LOCATED, OF EVERY KIND AND DESCRIPTION, TANGIBLE
OR INTANGIBLE, INCLUDING WITHOUT LIMITATION ALL GOODS, INCLUDING WITHOUT
LIMITATION EQUIPMENT AND INVENTORY; ACCOUNTS; CONTRACT RIGHTS; DOCUMENTS,
INCLUDING WITHOUT LIMITATION BILLS OF LADING, DOCK WARRANTS, DOCK RECEIPTS,
WAREHOUSE RECEIPTS AND OTHER DOCUMENTS OF TITLE; CHATTEL PAPER; GENERAL
INTANGIBLES, INCLUDING WITHOUT LIMITATION TAX REFUNDS, DUTY DRAWBACKS AND
PROCEEDS OF INSURANCE AS TO ANY PROPERTY OF THE DEBTOR DESCRIBED HEREIN;
INSTRUMENTS, INCLUDING WITHOUT LIMITATION LETTERS OF CREDIT NAMING DEBTOR AS
BENEFICIARY; THE BALANCE OF EVERY DEPOSIT ACCOUNT; ALL SECURITIES, OPTIONS,
FUTURES CONTRACTS AND OTHER ASSETS DUE FROM OR HELD WITH ANY BANK, BROKER OR
DEPOSITORY INSTITUTION; MONEY; COMMODITIES; CREDITS, CLAIMS, DEMANDS AND
SECURITY INTERESTS ARISING IN FAVOR OF THE DEBTOR AND ANY OTHER PROPERTY, RIGHTS
AND INTERESTS OF THE DEBTOR; AND ALL CASH AND NON-CASH PROCEEDS, PRODUCTS AND
ACCESSIONS FROM THE SALE, LIQUIDATION OR DISPOSITION OF ANY OF THE FOREGOING.
