1
CREDIT AGREEMENT
by and between
INTERACT COMMERCE CORPORATION, a Delaware corporation
and
IMPERIAL BANK, a California banking corporation
Dated as of
April 27, 2000
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TABLE OF CONTENTS
Page
RECITALS 1
ARTICLE 1 DEFINITION OF TERMS 1
1.1 Definitions 1
1.2 References 8
1.3 Accounting Terms 8
ARTICLE 2 THE RLC 9
2.1 Commitment 9
2.2 Revolving Line of Credit 9
2.3 RLC Payments 9
2.4 Excess Balance Payment 11
2.5 Conditions 11
2.6 Other RLC Advances by Lender 11
2.7 Assignment 11
2.8 Fees 12
ARTICLE 3 PAYMENTS, FEES AND EURODOLLAR PROVISIONS 12
3.1 Payments 12
3.2 [Intentionally Deleted.] 12
3.3 Maintenance of Accounts 13
3.4 Special Provisions for LIBOR Rate Advances 13
3.5 Prepayments 14
ARTICLE 4 SECURITY 15
4.1 Security 15
4.2 Security Documents 16
ARTICLE 5 CONDITIONS PRECEDENT 16
5.1 Initial or Any Subsequent Advance 16
5.2 No Event of Default 17
5.3 No Material Adverse Effect 18
5.4 Representations and Warranties 18
ARTICLE 6 REPRESENTATIONS AND WARRANTIES 18
6.1 Recitals 18
6.2 Organization and Good Standing 18
6.3 Authorization and Power 18
6.4 Security Documents 18
6.5 No Conflicts or Consents 18
6.6 No Litigation 19
6.7 Financial Condition 19
6.8 Taxes 19
6.9 [Intentionally Deleted.] 19
6.10 Advances 19
6.11 Enforceable Obligations 20
6.12 No Default 20
6.13 Significant Debt Agreements 20
6.14 ERISA 20
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6.15 Compliance with Law 20
6.16 Solvent 20
6.17 Investment Company Act 20
6.18 Title 20
6.19 [Intentionally Deleted.] 20
6.20 Environmental Matters 21
6.21 Licenses, Tradenames 21
6.22 Senior Indebtedness 21
ARTICLE 7 AFFIRMATIVE COVENANTS 21
7.1 Financial Statements, Reports and Documents 21
7.2 Maintenance of Existence and Rights; Conduct of Business; Management 22
7.3 Operations and Properties 23
7.4 Authorizations and Approvals 23
7.5 Compliance with Law 23
7.6 Payment of Taxes and Other Indebtedness 23
7.7 Compliance with Significant Debt Agreements and Other Agreements 23
7.8 Compliance with Credit Documents 23
7.9 Notice of Default 23
7.10 Other Notices 23
7.11 Books and Records; Access; Audits 24
7.12 ERISA Compliance 24
7.13 Further Assurances 24
7.14 Insurance 24
7.15 Deposit Accounts 25
7.16 Invested Capital 25
7.17 Indebtedness 25
ARTICLE 8 NEGATIVE COVENANTS 25
8.1 No Debt 25
8.2 Liens 26
8.3 Existence 26
8.4 Amendments to Organizational Documents 26
8.5 Margin Stock 26
8.6 Distributions 26
8.7 Payments 26
8.8 Transfer Collateral 26
8.9 Merger; Sale of Assets 27
8.10 Financial Covenants 27
8.11 No Amendment to Subordinated Debt Credit Agreement 27
ARTICLE 9 EVENTS OF DEFAULT 27
9.1 Events of Default 27
9.2 Remedies Upon Event of Default 30
9.3 Performance by Lender 31
ARTICLE 10 MISCELLANEOUS 31
10.1 Modification 31
10.2 Waiver 31
10.3 Payment of Expenses 32
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10.4 Notices 32
10.5 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial 33
10.6 Reference Provision 33
10.7 Invalid Provisions 34
10.8 Binding Effect 35
10.9 Entirety 35
10.10 Headings 35
10.11 Survival of Representations, Etc. 35
10.12 No Third Party Beneficiary 35
10.13 Time 35
10.14 Schedules and Exhibits Incorporated 35
10.15 Counterparts 36
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EXHIBIT "A" Form of Advance Notice
EXHIBIT "B" Form of Compliance Certificate
EXHIBIT "C" Borrowing Base Certificate
EXHIBIT "D" Subordination Agreement
EXHIBIT "E" Waiver/Release of Lien Rights
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CREDIT AGREEMENT
BY THIS CREDIT AGREEMENT (together with any amendments or
modifications, the "Credit Agreement"), entered into as of this 27th day of
April, 2000 by and between INTERACT COMMERCE CORPORATION, a Delaware corporation
(the "Borrower"), and IMPERIAL BANK, a California banking corporation (the
"Lender"), in consideration of the mutual promises herein contained and for
other valuable consideration, the parties hereto do hereby agree as follows:
RECITALS
A. Borrower has applied to Lender for a revolving line of credit
facility (the "RLC") in the principal amount of FOUR MILLION AND NO/100 DOLLARS
($4,000,000.00) for the purpose of funding Borrower's general corporate needs.
B. As a condition for extending such financial accommodations,
Lender has required that Borrower enter into this Credit Agreement, establishing
the terms and conditions thereof.
ARTICLE 1
DEFINITION OF TERMS
1.1 Definitions. For the purposes of this Credit Agreement, unless
the context otherwise requires, the following terms shall have the respective
meanings assigned to them in this Article 1 or in the Section hereof referred to
below:
"ACT! Acquisition" means Borrower's acquisition of the ACT!
product line and certain related business from Symantec pursuant to that License
Agreement dated as of December 6, 1999, between Borrower and Symantec.
"Advance" means an RLC Advance.
"Affiliate" of any Person means any Person which, directly or
indirectly, controls or is controlled by such Person. For the purposes of this
definition, "control" (including, with correlative meanings, the term
"controlled by"), as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Authorized Officer" means one or more officers of Borrower
duly authorized (and so certified to Lender by the corporate secretary of
Borrower pursuant to a certificate of authority and incumbency from time to time
satisfactory to Lender in the exercise of Lender's reasonable discretion),
acting alone, to request Advances under the provisions of this Credit Agreement
and execute and deliver documents, instruments, agreements, reports, statements
and certificates in connection herewith.
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"Banking Day" means a day of the year on which banks are not
required or authorized to close in Inglewood, California and Phoenix, Arizona.
"B of A" means BA Technology I, LLC, a Delaware limited
liability company.
"Borrower": See the Preamble hereto.
"Borrowing Base" means $4,000,000.00; provided, however, that
in the event Borrower's Liquidity is an amount less than $10,000,000.00,
Borrowing Base shall mean the lesser of (i) $4,000,000.00, or (ii) the Eligible
Cash Balance.
"Borrowing Base Certificate" means a certificate substantially
in the form attached hereto as Exhibit "C".
"Change in Control" means the occurrence or existence of the
following events or conditions without the prior written consent of Lender, if
different than the state of affairs as of the Closing Date:
(a) the acquisition by any Person or two or more Persons
acting in concert of Control of the Borrower.
"Closing Date" means the date of delivery of this Credit
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all property subject to the Security
Documents.
"Control" when used with respect to any Person means the
power, directly or indirectly, to direct the management policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Controlled Group" means, severally and collectively, the
members of the group controlling, controlled by and/or in common control of
Borrower, within the meaning of Section 4001(b) of ERISA.
"Credit Agreement": See the Preamble hereto.
"Credit Documents" means this Credit Agreement, the Note
(including any renewals, extensions and refundings thereof), the Security
Documents and any written agreements, certificates or documents (and with
respect to this Credit Agreement and such other written agreements and
documents, any amendments or supplements thereto or modifications thereof)
executed or delivered pursuant to the terms of this Credit Agreement.
"Default Rate" means at any time five percent (5%) per annum
over the then applicable interest rate.
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"Dollars" and the sign "$" mean lawful currency of the United
States of America.
"Eligible Cash Balance" means an amount equal to fifty-three
percent (53.0%) of Borrower's Liquidity less $2,500,000.00, measured on a
monthly basis.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, together with all final and permanent regulations issued
pursuant thereto. References herein to sections and subsections of ERISA are
deemed to refer to any successor or substitute provisions therefor.
"Event of Default": See Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Financial Covenants" means the financial covenants specified
in Section 8.10 hereof.
"GAAP" means those generally accepted accounting principles
and practices which are recognized as such by the American Institute of
Certified Public Accountants acting through its Accounting Principles Board or
by the Financial Accounting Standards Board or through other appropriate boards
or committees thereof and which are consistently applied for all periods after
the date hereof so as to properly reflect the financial condition, and the
results of operations and changes in the financial position, of Borrower,
including without limitation accounting rules promulgated pursuant to
Regulations SX and SK, except that any accounting principle or practice required
to be changed by the said Accounting Principles Board or Financial Accounting
Standards Board (or other appropriate board or committee of the said Boards) in
order to continue as a generally accepted accounting principle or practice may
be so changed.
"GE" means GE Capital Equity Investments, Inc., a Delaware
corporation.
"Governmental Authority" means any government (or any
political subdivision or jurisdiction thereof), court, bureau, agency or other
governmental authority having jurisdiction over Borrower or any of its business,
operations or properties.
"Indebtedness" of a Person means each of the following
(without duplication): (a) obligations of that Person to any other Person for
payment of borrowed money, (b) capital lease obligations, (c) notes and drafts
drawn or accepted by that Person payable to any other Person, whether or not
representing obligations for borrowed money (but without duplication of
indebtedness for borrowed money), (d) any obligation for the purchase price of
property the payment of which is deferred for more than one year or evidenced by
a note or equivalent instrument, (e) guarantees of Indebtedness of third
parties, and (f) a recourse or nonrecourse payment obligation of any other
Person that is secured by a Lien on any property of the first Person, whether or
not assumed by the first Person, up to the fair market value (from time to time)
of such property (absent manifest evidence to the contrary, the fair market
value of such property shall be the amount determined under GAAP for financial
reporting purposes).
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"Invested Capital Condition" means that, in the event
Borrower's Liquidity is an amount less than $15,000,000.00 at the end of each
quarter or other measurement period provided for herein, Borrower shall provide
evidence reasonably satisfactory to Lender on or before the end of the next
quarter or within ninety (90) days after such other measurement period,
whichever is later, that it has raised a minimum of $20,000,000.00 in invested
capital in the form of subordinated debt and/or equity. If such investment is
structured as subordinated debt, the terms and conditions relating to the
subordination of such subordinated debt shall be reasonably acceptable to
Lender, including the execution of a Subordination Agreement substantially in
the form attached hereof as Exhibit "D".
"Lender": See the Preamble hereto.
"LIBOR" means the London Interbank Offered Rate, determined as
provided herein, for the applicable LIBOR Interest Period to be specified by the
Borrower as provided herein. For each Advance under the LIBOR option, the LIBOR
rate will remain in effect through the end of the LIBOR Interest Period. If
prior to the due date for a LIBOR Rate Advance Borrower requests a continuation
of said LIBOR Rate Advance, Borrower's request shall comply with the request
procedure specified below and the LIBOR rate for the LIBOR Rate Advance shall be
re-determined for the next LIBOR Interest Period as provided below. LIBOR shall
mean with respect to any LIBOR Interest Period the rate equal to the arithmetic
mean (rounded upwards, if necessary, to the nearest one-sixteenth (1/16th) of
one percent (1%)) of:
(a) the offered rates per annum for deposits in U.S.
Dollars for a period equal to such LIBOR Interest Period which appears
at 11:00 a.m., London time, on the Reuters Screen LIBOR Page on the
Banking Day that is two (2) Banking Days before the first day of such
LIBOR Interest Period, in each case if at least four (4) such offered
rates appear on such page, or
(b) if clause (a) is not available, (x) the offered rate
per annum for deposits in U.S. Dollars for a period equal to such LIBOR
Interest Period for a LIBOR Rate Advance hereunder which appears as of
11:00 a.m., London time on the Telerate Monitor on Telerate Screen 3750
on the Banking Day which is two (2) Banking Days before the first day
of such LIBOR Interest Period; or (y) if clause (x) above is not
available, the arithmetic mean (rounded upwards, if necessary, to the
nearest one-sixteenth (1/16th) of one percent (1%)) of the interest
rates per annum offered by at least three (3) prime banks selected by
Lender at approximately 11:00 a.m., London time, on the Banking Day
which is two (2) Banking Days before such date for deposits in U.S.
Dollars to prime banks in the London interbank market, in each case for
a period equal to such LIBOR Interest Period for a LIBOR Rate Advance
hereunder in an amount equal to the amount to which the LIBOR applies.
"Reuters Screen LIBOR Page" as used herein means the display designated
as page LIBOR on the Reuters Monitor Money Rates Service or such other
page as may replace the LIBOR page on that service for the purpose of
displaying London interbank offered rates of major banks.
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"LIBOR Based Rate" means the rate per annum equal to the sum
of LIBOR and three hundred basis points (300 b.p.).
"LIBOR Interest Period" means, for each LIBOR Rate Advance,
the period commencing on the date of such LIBOR Rate Advance and ending on the
last day of the period selected by Borrower pursuant to the provisions herein
and, thereafter, each subsequent period commencing on the last day of the
immediately preceding LIBOR Interest Period and ending on the last day of the
period selected by Borrower pursuant to the provisions herein. The duration of
each LIBOR Interest Period shall be one, two, three or six months, as selected
by Borrower (A), for a new Advance, in the request for a LIBOR Rate Advance or
(B), for an outstanding Advance, in the request for a LIBOR Rate Advance to
continue bearing interest at the LIBOR Based Rate or (C), for an outstanding
Variable Rate Advance, in the request to convert to a LIBOR Rate Advance;
provided, however, that:
(i) LIBOR Interest Periods commencing on the
same date shall be of the same duration;
(ii) Whenever the last day of any LIBOR Interest
Period would otherwise occur on a day other than a Banking
Day, the last day of such LIBOR Interest Period shall be
extended to occur on the next succeeding Banking Day, provided
that if such extension would cause the last day of such LIBOR
Interest Period to occur in the next following calendar month,
the last day of such LIBOR Interest Period shall occur on the
next preceding Banking Day; and
(iii) No LIBOR Interest Period with respect to any
Advance shall extend beyond the applicable Maturity Date.
"LIBOR Rate Advance" means an Advance designated by Borrower,
that bears, or is requested to bear, interest at a LIBOR Based Rate.
"Lien" means any lien, mortgage, security interest, tax lien,
pledge, encumbrance, conditional sale or title retention arrangement, or any
other interest in property designed to secure the repayment of Indebtedness
whether arising by agreement or under any statute or law, or otherwise.
"Liquidity" means available unrestricted cash or cash
equivalents.
"Loan" or "Loans" means the RLC.
"Material Adverse Effect" means any circumstance or event
which (i) has any material adverse effect upon the validity or enforceability of
any Credit Document, (ii) materially impairs the ability of Borrower to fulfill
its obligations under the Credit Documents, or (iii)
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causes an Event of Default or any event which, with notice or lapse of time or
both, would become an Event of Default.
"Note" means that Revolving Promissory Note of even date
herewith in the amount of the RLC, executed by Borrower and delivered pursuant
to the terms of this Credit Agreement, together with any renewals, extensions,
modifications or replacements thereof.
"Obligation" means all present and future indebtedness,
obligations and liabilities of Borrower to Lender, and all renewals and
extensions thereof, or any part thereof, arising pursuant to this Credit
Agreement or represented by the Note, including without limitation the Loan and
all interest accruing thereon, and attorneys' fees incurred in the enforcement
or collection thereof, regardless of whether such indebtedness, obligations and
liabilities are direct, indirect, fixed, contingent, joint, several or joint and
several; together with all indebtedness, obligations and liabilities of Borrower
evidenced or arising pursuant to any of the other Credit Documents, and all
renewals and extensions thereof, or part thereof.
"Payment Date" with respect to a Loan means the tenth day of
each month, commencing the tenth day of the first month after the first Advance
applicable to such Loan shall have been made, provided that if any such day is
not a Banking Day, then such Payment Date shall be the next successive Banking
Day.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or substantially all of the Pension Benefit Guaranty
Corporation's functions under ERISA.
"Permitted Liens" means:
(a) Liens in Lender's favor.
(b) Liens for taxes, assessments and governmental charges
or levies imposed upon Borrower or upon such Borrower's income or
profits or property, if the same are not yet due and payable or if the
same are being contested in good faith and as to which adequate cash
reserves have been provided to the reasonable satisfaction of Lender.
(c) Liens securing the royalty payments due Symantec as a
result of Borrower's acquisition of ACT!
(d) Liens resulting from purchase money financing as to
the personal property so financed and any sales proceeds.
(e) Liens resulting from the Master Lease dated June 7,
1996, between Borrower, as lessee, and Comdisco, Inc., as lessor, not
to exceed $500,000.00.
(f) Liens resulting from lease purchase agreements in an
aggregate amount less than $10,000,000.00.
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(g) Liens created with the permission of Lender, which
permission shall not be unreasonably withheld.
"Person" includes an individual, a corporation, a joint
venture, a partnership, a trust, a limited liability Borrower, an unincorporated
organization or a government or any agency or political subdivision thereof.
"Plan" means an employee defined benefit plan or other plan
maintained by Borrower for employees of Borrower and covered by Title IV of
ERISA, or subject to the minimum funding standards under Section 412 of the
Code.
"Prime Rate" means the interest rate per annum publicly
announced by Lender, or its successors, as its "prime rate" as in effect from
time to time. Borrower acknowledges that the Prime Rate is not necessarily the
best or lowest rate offered by Lender and Lender may lend to its customers at
rates that are at, above or below its Prime Rate.
"Quarterly End Date" means each March 31, June 30, September
30 and December 31.
"Regulation U" means Regulation U promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any other
regulation hereafter promulgated by said Board to replace the prior Regulation U
and having substantially the same function.
"Regulatory Change" means any change effective after the date
of this Agreement in United States federal, state, or foreign law, regulations,
or rules or the adoption or making after such date of any interpretation,
directive, or request applying to a class of banks including Lender, of or under
any United States federal, state, or foreign law, regulation or rule (whether or
not having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Reportable Event" means any "reportable event" as described
in Section 4043(b) of ERISA with respect to which the thirty (30) day notice
requirement has not been waived by the PBGC.
"RLC" means that revolving line of credit made available by
Lender to Borrower pursuant to Article 2 hereof.
"RLC Advance" means a disbursement of the proceeds of the RLC.
"RLC Commitment" means Four Million And No/100 Dollars
($4,000,000.00).
"RLC Fee": See Section 2.8 hereof.
"RLC Maturity Date" means April 26, 2001.
"Security Agreement": See Section 4.1 hereof.
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"Security Documents": See Section 4.2 hereof.
"Significant Debt Agreement" means all documents, instruments
and agreements executed by Borrower, evidencing, securing or ensuring any
Indebtedness of Borrower or any guaranty in excess of $100,000.00 in outstanding
principal (or principal equivalent) amount.
"Subordinated Debt" means Indebtedness of Borrower
subordinated to the payment of the Obligation pursuant to written agreements
acceptable to Lender.
"Subordination Agreement" means a Subordination Agreement
substantially in form attached hereto as Exhibit "D".
"Subsidiary" means any corporation of which more than 50% of
the outstanding shares of capital stock having general voting power under
ordinary circumstances to elect a majority of the board of directors of such
corporation, irrespective of whether or not at the time stock of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency, is at the time directly or indirectly owned by the Borrower, by
the Borrower and one or more other Subsidiaries, or by one or more other
Subsidiaries.
"Symantec" means Symantec Corporation, a Delaware corporation.
"Variable Rate" means the rate per annum equal to (i) the
Prime Rate per annum as in effect from time to time, plus (ii) one-half of one
percent (0.50%). The Variable Rate will change on each day that the "Prime Rate"
changes.
"Variable Rate Advance" means an Advance designated by
Borrower, that bears, or is requested to bear, interest at the Variable Rate.
1.2 References. Capitalized terms shall be equally applicable to
both the singular and the plural forms of the terms therein defined. References
to "Credit Agreement," "this Agreement," "herein," "hereof," "hereunder," or
other like words mean this Credit Agreement as amended, supplemented, restated
or otherwise modified and in effect from time to time.
1.3 Accounting Terms. Except as expressly provided to the contrary
herein, all accounting terms shall be interpreted and all accounting
determinations shall be made in accordance with GAAP, except as otherwise
specifically provided for herein. To the extent any change in GAAP affects any
computation or determination required to be made pursuant to this Credit
Agreement, such computation or determination shall be made as if such change in
GAAP had not occurred unless Borrower and Lender agree in writing on an
adjustment to such computation or determination to account for such change in
GAAP.
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ARTICLE 2
THE RLC
2.1 Commitment. Subject to the conditions herein set forth, Lender
agrees to make the RLC available to or for the benefit of Borrower, and Borrower
agrees to draw upon the RLC, in the manner and upon the terms and conditions
herein expressed, amounts that shall not exceed the Borrowing Base.
2.2 Revolving Line of Credit.
(a) Subject to the terms and conditions set forth in this
Credit Agreement, the RLC shall be a revolving line of credit, against
which RLC Advances may be made to Borrower, repaid by Borrower and new
RLC Advances made to Borrower, as Borrower may request, provided that
(i) no RLC Advance shall be made if an Event of Default shall be
continuing, (ii) no RLC Advance shall be made that would cause the
outstanding principal balance of the RLC to exceed the lesser of the
RLC Commitment or the Borrowing Base, and (iii) no RLC Advance shall be
made on or after the RLC Maturity Date.
(b) The RLC shall be evidenced by the Note.
2.3 RLC Payments. The RLC shall bear interest and be payable to
Lender upon the following terms and conditions:
(a) Interest shall accrue:
(i) On the unpaid principal of an RLC Advance at
the Variable Rate except to the extent that an RLC Advance
bears interest at the LIBOR Based Rate.
(ii) On the unpaid principal of an RLC Advance at
the LIBOR Based Rate to the extent Borrower shall elect and to
the extent not otherwise provided herein.
(b) All interest shall be computed on the basis of a
360-day year and accrue on a daily basis for the actual number of days
elapsed. All accrued and unpaid interest through the end of the
preceding month shall be due and payable on each Payment Date.
(c) The entire unpaid principal balance, all accrued and
unpaid interest, and all other amounts payable under the Note shall be
due and payable in full on the RLC Maturity Date.
(d) Each request for an RLC Advance shall be
substantially in the form attached hereto as Exhibit "A" from an
Authorized Officer and shall, in
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addition to complying with the other requirements in this Agreement,
(i) specify the date and amount of the requested RLC Advance, (ii)
specify whether the RLC Advance shall be an RLC Advance that bears
interest at the Variable Rate or shall be an RLC Advance that bears
interest at the LIBOR Based Rate, (iii) if the RLC Advance is to bear
interest at the LIBOR Based Rate, be in a minimum amount of $250,000.00
with integral multiples of $50,000.00 in excess thereof, and (iv) if
the RLC Advance is to bear interest at the LIBOR Based Rate, (A)
specify the LIBOR Interest Period, and (B) be delivered to Lender
before 9:00 a.m. (Phoenix, Arizona local time) at least three (3)
Banking Days prior to the date of the requested RLC Advance. Any
request for an RLC Advance not complying with the foregoing
requirements for an RLC Advance bearing interest at the LIBOR Based
Rate shall bear interest at the Variable Rate; provided that in the
event such non-compliance is due to Borrower's failure to specify the
required information, Lender agrees to notify Borrower of such failure
and to provide Borrower the opportunity to provide such information
prior to directing that the RLC Advance bear interest at the Variable
Rate.
(e) If Borrower desires that a LIBOR Rate Advance
continue to bear interest at the LIBOR Based Rate after the end of an
existing LIBOR Interest Period, Borrower shall deliver to Lender not
later than 9:00 a.m. (Phoenix, Arizona local time) at least three (3)
Banking Days prior to the end of the existing LIBOR Interest Period; a
notice making such election and specifying the new LIBOR Interest
Period. If Borrower does not deliver such notice within such time, then
after the existing LIBOR Interest Period the LIBOR Rate Advance shall
become a Variable Rate Advance and shall bear interest at the Variable
Rate.
(f) Borrower may upon written notice to and received by
Lender not later than 9:00 a.m. (Phoenix, Arizona local time) (i) on
the third Banking Day, in the case of any conversion of a Variable Rate
Advance into a LIBOR Rate Advance and (ii) on the first Banking Day in
the case of any conversion of a LIBOR Rate Advance into a Variable Rate
Advance, prior to the date of the proposed conversion, convert any RLC
Advance of one type into an RLC Advance of the other type; provided,
however, that any conversion of a LIBOR Rate Advance (A) shall only be
made on the last day of the applicable LIBOR Interest Period except as
otherwise provided herein, and (B) shall be made only as to an RLC
Advance in a minimum amount of $250,000.00 with integral multiples of
$50,000.00 in excess thereof. Each such notice of a conversion shall
specify the date of such conversion and the RLC Advance(s) to be
converted.
(g) Each request for an RLC Advance as well as each
election by the Borrower that an LIBOR Rate Advance continue to bear
interest at the LIBOR Based Rate after the end of an existing LIBOR
Interest Period and each conversion request shall be irrevocable and
binding on Borrower once the request is received by Lender. Borrower
shall indemnify Lender against any cost, loss or expense incurred by
Lender as a result of Borrower's failure to fulfill, on or before the
date specified for an RLC Advance in any request for an RLC Advance,
the
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conditions to such RLC Advance set forth herein, including any cost,
loss or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by Lender to fund such RLC Advance
when such RLC Advance, as a result of such failure, is not made on the
date so specified.
(h) [Intentionally Deleted.]
(i) If any payment of interest and/or principal is not
received by Lender within ten (10) days of when such payment is due,
then in addition to the remedies conferred upon Lender under the Loan
Documents, a late charge of five percent (5%) of the amount of the
installment due and unpaid will be added to the delinquent amount to
compensate Lender for the expense of handling the delinquency,
regardless of any notice and cure period.
(j) Upon the occurrence of an Event of Default and after
maturity, including maturity upon acceleration, the unpaid principal
balance, all accrued and unpaid interest and all other amounts payable
hereunder shall bear interest at the Default Rate.
2.4 Excess Balance Payment. There shall be due and payable from
Borrower to Lender, and Borrower shall repay to Lender, within five (5) days of
written demand from Lender, from time to time, any amount by which the
outstanding principal balance of the RLC exceeds the Borrowing Base.
2.5 Conditions. Lender shall have no obligation to make any RLC
Advance unless and until all of the conditions and requirements of this Credit
Agreement are fully satisfied. However, Lender in its sole and absolute
discretion may elect to make one or more RLC Advances prior to full satisfaction
of one or more such conditions and/or requirements. Notwithstanding that such an
RLC Advance or RLC Advances are made, such unsatisfied conditions and/or
requirements shall not be waived or released thereby. Borrower shall be and
continue to be obligated to fully satisfy such conditions and requirements, and
Lender, at any time, in Lender's sole and absolute discretion, may stop making
RLC Advances until all conditions and requirements are fully satisfied.
2.6 Other RLC Advances by Lender. Lender, after giving fifteen
(15) days prior written notice to Borrower to allow for corrective action, from
time to time, may make RLC Advances in any amount in payment of (i) insurance
premiums, taxes, assessments, liens or encumbrances existing against property
encumbered by the Security Documents, (ii) interest accrued and payable upon the
RLC, (iii) any charges and expenses that are the obligation of Borrower under
this Credit Agreement or any Security Document, and (iv) any charges or matters
necessary to preserve the property encumbered by the Security Documents or to
cure any still existing Event of Default.
2.7 Assignment. Borrower shall have no right to the proceeds of
the Loan other than to have the same disbursed by Lender in accordance with the
disbursement provisions contained in this Credit Agreement. Any assignment or
transfer, voluntary or involuntary, of this Credit
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Agreement or any right hereunder shall not be binding upon or in any way affect
Lender without its written consent.
2.8 Fees. In connection with the Loan, Borrower agrees to pay to
Lender on the Closing Date a non-refundable fee in the amount of $17,500.00 (the
"RLC Fee").
ARTICLE 3
PAYMENTS, FEES AND EURODOLLAR PROVISIONS
3.1 Payments.
(a) All payments and prepayments by the Borrower of
principal of and interest on the Note and all fees, expenses and any
other Obligation payable to Lender in connection with the Loan shall be
nonrefundable and made in Dollars or immediately available funds to
Lender not later than 2:00 p.m., (Phoenix, Arizona local time) on the
dates called for under this Agreement, at the office of Lender in
Inglewood, California. Funds received after such hour shall be deemed
to have been received by Lender on the next Banking Day.
(b) Unless otherwise required by applicable law, payments
will be applied first to accrued, unpaid interest, then to principal,
and any remaining amount to any unpaid collection costs, late charges
and other charges; provided, however, upon delinquency or other
default, Lender reserve the right to apply payments among principal,
interest, late charges, collection costs and other charges at its
discretion.
(c) [Intentionally Deleted.]
(d) Whenever any payment to be made hereunder shall be
stated to be due on a day which is not a Banking Day, such payment
shall be made on the next succeeding Banking Day, and such extension of
time shall in such case be included in the computation of interest,
commission or fee, as the case may be.
(e) Borrower authorizes Lender to collect all interest,
fees, costs, and/or expenses due under this Agreement by charging
Borrower's demand deposit account maintained by Borrower with Lender as
designated on the Automatic Debit Authorization of even date herewith
executed by Borrower, for the full amount thereof. Should there be
insufficient funds in any such demand deposit account to pay all such
sums when due, the full amount of such deficiency shall be immediately
due and payable by Borrower.
3.2 [Intentionally Deleted.]
3.3 Maintenance of Accounts. Lender shall maintain, in accordance
with its usual practice, an account or accounts evidencing the indebtedness of
the Borrower and the amounts
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payable and paid from time to time hereunder. In any legal action or proceeding
in respect of this Agreement, the entries made in the ordinary course of
business in such account or accounts shall be evidence of the existence and
amounts of the obligations of the Borrower therein recorded. The failure to
record any such amount shall not, however, limit or otherwise affect the
obligations of the Borrower hereunder to repay all amounts owed hereunder,
together with all interest accrued thereon as provided in the Note.
3.4 Special Provisions for LIBOR Rate Advances.
(a) Funding: Notwithstanding any provision of the Credit
Documents to the contrary, Lender shall be entitled to fund and
maintain its funding of all or any part of any Advance in any manner it
sees fit; provided, however, that for the purposes of the Note, all
determinations thereunder shall be made as if Lender had actually
funded and maintained each Advance bearing interest at the LIBOR Based
Rate during the LIBOR Interest Period therefor through the purchase of
deposits having a maturity corresponding to the last day of the LIBOR
Interest Period and bearing an interest rate equal to the LIBOR Based
Rate for such LIBOR Interest Period.
(b) Inadequacy of Eurodollar Pricing: If, due to any
Regulatory Change, there shall be any increase in the cost to Lender of
agreeing to make or making, funding, or maintaining Advances bearing
interest at the LIBOR Based Rate (including, without limitation, any
increase in any applicable reserve requirement), then the Borrower
shall from time to time, upon written demand by Lender, pay to Lender
such amounts as Lender may reasonably determine to be necessary to
compensate Lender for any additional costs that Lender reasonably
determines are attributable to such Regulatory Change. Lender will
notify the Borrower in writing of any Regulatory Change that will
entitle Lender to compensation, detailing such compensation, pursuant
to this paragraph as promptly as practicable, but in any event within
ninety (90) days after Lender obtains knowledge thereof; provided,
however, that if Lender fails to give such notice within ninety (90)
days after it obtains knowledge of such a Regulatory Change, Lender
shall, with respect to compensation payable in respect of any costs
resulting from such Regulatory Change, only be entitled to payment for
costs incurred from and after the date that Lender does give such
notice. Lender will furnish to the Borrower a certificate setting forth
in reasonable detail the basis for the amount of each request by Lender
for compensation under this paragraph. Determinations by Lender of the
amounts required to compensate Lender shall be conclusive, absent
manifest error. Lender shall be entitled to compensation in connection
with any Regulatory Change only for costs actually incurred by Lender.
(c) Illegality: Notwithstanding any provision of the
Credit Documents, if Lender shall notify the Borrower that as a result
of a Regulatory Change it is unlawful for Lender to make Advances at
the LIBOR Based Rate, or to fund or maintain Advances bearing interest
at the LIBOR Based Rate, (i) the obligations
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of Lender to make Advances at the LIBOR Based Rate and to convert
Variable Rate Advances to the LIBOR Based Rate shall be suspended until
Lender shall notify the Borrower that the circumstances causing such
suspension no longer exist, and (ii) in the event such Regulatory
Change makes the maintenance of Advances at the LIBOR Based Rate
unlawful, the Borrower shall forthwith prepay in full all Advances
bearing interest at the LIBOR Based Rate then outstanding, together
with interest accrued thereon and all amounts in connection with such
prepayment specified herein, unless the Borrower, within five (5)
Banking Days of written notice from Lender, converts all Advances
bearing interest at the LIBOR Based Rate then outstanding into Advances
bearing interest at the Variable Rate pursuant to the conversion
procedures herein and pays all amounts in connection with such
prepayments or conversions specified herein.
(d) Market Disruption: Notwithstanding any other
provision of the Credit Documents, if prior to the commencement of any
LIBOR Interest Period, Lender shall determine (i) that United States
dollar deposits in the amount of any Advance bearing interest at the
LIBOR Based Rate to be outstanding during such LIBOR Interest Period
are not readily available to Lender in the London interbank market, or
(ii) by reason of circumstances affecting the London interbank market,
adequate and reasonable means do not exist for ascertaining the LIBOR
Based Rate for such LIBOR Interest Period in the manner prescribed in
the definition of "LIBOR Based Rate," then Lender shall promptly give
written notice thereof to the Borrower and the obligation of Lender to
create, continue, or effect by conversion any Advance bearing interest
at the LIBOR Based Rate in such amount and for such LIBOR Interest
Period shall terminate until United States dollar deposits in such
amount and for the LIBOR Interest Period shall again be readily
available in the London interbank market and adequate and reasonable
means exist for ascertaining the LIBOR Based Rate.
3.5 Prepayments.
(a) Borrower may, upon at least two (2) Banking Days'
notice in the case of LIBOR Rate Advances and one (1) Banking Day's
notice in the case of Variable Rate Advances to Lender stating the
proposed date and aggregate principal amount of the prepayment, and if
such notice is given Borrower shall, prepay the outstanding principal
balance of the Loans in whole or in part at any time prior to the
Maturity Date as stated in such notice by Borrower, subject to payment
of all amounts specified hereinbelow with respect to any LIBOR Rate
Advance.
(b) If for any reason (including voluntary prepayment,
voluntary conversion of a LIBOR Rate Advance into a Variable Rate
Advance, or prepayment due to acceleration, but excluding any mandatory
prepayment or mandatory conversion such as pursuant to Section 3.4(c)),
Lender receives all or part of the principal amount of a LIBOR Rate
Advance prior to the last Banking Day of the LIBOR Interest Period for
such Advance, the Borrower shall
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immediately on demand by Lender, pay the "LIBOR Breakage Fees," defined
as the amount (if any) by which (i) the additional interest which would
have been payable on the amount so received had it not been received
until the last day of such LIBOR Interest Period exceeds (ii) the
interest which would have been recoverable by Lender (without regard to
whether Lender actually so invest said funds) by placing the amount so
received on deposit in the certificate of deposit markets or the
offshore currency interbank markets or United States Treasury
investment products, as the case may be for a period starting on the
date on which it was so received and ending on the last day of such
LIBOR Interest Period at the interest rate determined by Lender in its
reasonable discretion. Lender's determination as to such amount shall
be conclusive and final, absent manifest error.
(c) The Borrower shall pay to Lender, upon demand, such
other amount or amounts as shall be sufficient to compensate it for any
loss, costs or expense ("LIBOR Prepayment Charges") actually incurred
by it as a result of any prepayment by the Borrower (including
voluntary prepayment, voluntary conversion of a LIBOR Rate Advance into
a Variable Rate Advance, or prepayment due to acceleration, but
excluding any mandatory prepayment or mandatory conversion such as
pursuant to Section 3.4(c)) of all or part of the principal amount of a
LIBOR Rate Advance prior to the last Banking Day of the LIBOR Interest
Period for such Advance (including without limitation, any failure by
the Borrower to borrow a LIBOR Rate Advance on the loan date for such
borrowing specified in the relevant notice of borrowing hereunder).
Such LIBOR Prepayment Charges shall include, without limitation, any
interest or fees payable by Lender to lenders of funds obtained by them
in order to make or maintain their loans based on the London interbank
Eurodollar market. Lender's determination as to such LIBOR Prepayment
Charges shall be conclusive and final, absent manifest error.
(d) Lender agrees that it shall make a best effort to
minimize any such LIBOR Breakage Fees or any such LIBOR Prepayment
Charges.
ARTICLE 4
SECURITY
4.1 Security. So long as any Loan is outstanding, Borrower shall
cause such Loan and Borrower's obligations under this Credit Agreement to be
secured at all times by a valid and effective security agreement (the "Security
Agreement"), duly executed and delivered by or on behalf of Borrower, granting
Lender a valid and enforceable security interest in all of its personal property
as described therein, subject to no prior Liens except for Permitted Liens. Upon
repayment and performance in full by Borrower of the Note and the Credit
Documents, the security interest of Lender shall terminate and all rights in the
Collateral shall revert to Borrower. Upon repayment and performance by Borrower,
Lender shall execute and deliver to Borrower
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such documents as Borrower shall reasonably request to evidence the termination
of Lender's security interest in the Collateral.
4.2 Security Documents. All of the documents required by this
Article 4 shall be in form satisfactory to Lender and Lender's counsel, and,
together with any financing statements for filing and/or recording, and any
other items required by Lender to fully perfect and effectuate the liens and
security interests of Lender contemplated by the Security Agreement, and this
Credit Agreement, may heretofore or hereinafter be referred to as the "Security
Documents."
ARTICLE 5
CONDITIONS PRECEDENT
The obligation of Lender to make the any Loan and to make each and any
Advance hereunder is subject to the full prior satisfaction at each such time of
each of the following conditions precedent:
5.1 Initial or Any Subsequent Advance. Prior to its making the
initial Advance or any subsequent Advance, Lender shall have received the
following each in form and substance satisfactory to Lender:
(a) This Credit Agreement. This Credit Agreement, duly
executed and delivered to Lender by Borrower.
(b) The Note. The Note, duly executed, drawn to the order
of Lender and otherwise as provided in Article 2 hereof.
(c) Organizational Documents. A copy of the current
Certificate of Incorporation (or other charter documents, however named) of
Borrower, including all amendments thereto, certified as current and complete by
the appropriate authority of the state of said corporation's incorporation,
together with evidence of said corporation's good standing in said corporation's
state of incorporation and in every other state in which it is doing business or
the conduct of said corporation's business requires such standing for the
enforcement of material contracts.
(d) Secretary Certificate. A certificate of the corporate
secretary of Borrower, signed by the duly appointed secretary thereof and issued
as of the Closing Date, certifying that (i) attached thereto is a true and
complete copy of the corporate by-laws of Borrower in effect on the date of
passage of the corporate resolutions described immediately below and at all
subsequent times to and including the date of the certificate, (ii) attached
thereto is a true and complete copy of the resolutions adopted by the Board of
Directors of Borrower authorizing the Loan, the execution, delivery, and
performance of this Credit Agreement, the Note, the Credit Documents, and all
advances of credit hereunder, and that such resolutions have not been modified,
rescinded, or amended and are in full force
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and effect, (iii) no change has been made to Borrower's charter documents other
than as reflected in the certified copies submitted in connection with the
delivery of this Credit Agreement or as approved in writing by Lender, and (iv)
set forth therein and appropriately identified are the names, current official
titles, and signatures of the officers of Borrower authorized to sign this
Credit Agreement and other documents to be delivered hereunder and/or to act as
Authorized Officers hereunder.
(e) Security Agreement. The Security Agreement, duly
executed and delivered to Lender by Borrower.
(f) Lender's Fees and Costs. Payment of the RLC Fee plus
Lender's other fees and costs as provided herein (including, without
limitation reasonable attorneys' fees and costs pursuant to Section
10.3 and the costs associated with the annual audit conducted pursuant
to Section 7.11 herein).
(g) Compliance Certificate. A Compliance Certificate
substantially in the form of Exhibit "B" attached hereto, indicating
that Borrower is in compliance with the Financial Covenants as of March
31, 2000.
(h) Financing Statements. Financing statements, duly
executed and delivered to Lender by Borrower.
(i) Subordination Agreements. A subordination agreement
acceptable to Lender, duly executed by BofA and GE.
(j) Landlord Waiver. A Lien waiver substantially in the
form of Exhibit "E" attached hereto, executed by the landlord of the
leased premises where Borrower's principal place of business is
located.
(k) Borrower's Financial Statements. Borrower's 1999
fiscal year end financial statements audited by a certified public
accountant reasonably acceptable to Lender. For the purposes of this
paragraph, Ernst & Young LLP shall be deemed acceptable.
(l) Additional Information. Such other information and
documents as may reasonably be required by Lender or Lender's counsel.
5.2 No Event of Default. No Event of Default known to Borrower
shall have occurred and be continuing, or result from Lender's making of any
Loan.
5.3 No Material Adverse Effect. Since the date of the most recent
financial statements provided to Lender by Borrower, no change shall have
occurred in the business or financial condition of Borrower that could have a
Material Adverse Effect.
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5.4 Representations and Warranties. The representations and warranties
contained in Article 6 hereof shall be true and correct in all material
respects, with the same force and effect as though made on and as of the Closing
Date (other than those of such representations which by their express terms
speak to a date prior to that date, which representations shall, in all material
respects, be true and correct as of such respective date).
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
To induce Lender to make the Loans, Borrower represents and warrants to
Lender that:
6.1 Recitals. The recitals and statements of intent appearing in this
Credit Agreement are true and correct.
6.2 Organization and Good Standing. It is duly organized, validly
existing and in good standing in all states and/or countries in which the nature
of its business and property makes such qualifications necessary or appropriate.
It has the legal power and authority to own its properties and assets and to
transact the business in which it is engaged and is or will be qualified in
those states and/or countries wherein the nature of its proposed business and
property will make such qualifications necessary or appropriate in the future.
6.3 Authorization and Power. It has the corporate power and requisite
corporate authority to execute, deliver and perform this Credit Agreement, the
Note and the other Credit Documents to be executed by it; it is duly authorized
to, and has taken all action, corporate or otherwise, necessary to authorize it
to, execute, deliver and perform this Credit Agreement, the Note and such other
Credit Documents and is and will continue to be duly authorized to perform this
Credit Agreement, the Note and such other Credit Documents.
6.4 Security Documents. The liens, security interests and assignments
created by the Security Documents will, when granted, be valid, effective and
enforceable liens, security interests and assignments, except to the extent (if
any) otherwise agreed in writing by Lender.
6.5 No Conflicts or Consents. Neither the execution and delivery of
this Credit Agreement, the Note or the other Credit Documents to which it is a
party, nor the consummation of any of the transactions herein or therein
contemplated, nor compliance with the terms and provisions hereof or with the
terms and provisions thereof, (a) will materially contravene or conflict with:
(i) any provision of law, statute or regulation to which it is subject, (ii) any
judgment, license, order or permit applicable to it, (iii) any indenture, credit
agreement, mortgage, deed of trust, or other agreement or instrument to which it
is a party or by which it may be bound, or to which it may be subject, or (b)
will violate any provision of its organizational documents. No consent,
approval, authorization or order of any court or Governmental Authority or other
Person is required in connection with the execution and delivery by it of the
Credit Documents or to consummate the transactions contemplated hereby or
thereby, or if required, such consent, approval, authorization or order shall
have been obtained.
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6.6 No Litigation. Except for those matters that have been previously
disclosed to Lender in writing, there are no actions, suits or legal, equitable,
arbitration or administrative proceedings pending, or to its actual knowledge
overtly threatened, against Borrower that would, if adversely determined, have a
Material Adverse Effect.
6.7 Financial Condition. It has delivered to Lender copies of the
Borrower's financial statements for the quarter ending March 31, 2000. Such
financial statements, in all material respects, fairly and accurately present
the financial position of Borrower as of such date, have been prepared in
accordance with GAAP and neither contain any untrue statement of a material fact
nor fail to state a material fact required in order to make such financial
statements not misleading. Since the date thereof, Borrower has not discovered
any obligations, liabilities or indebtedness (including contingent and indirect
liabilities and obligations or unusual forward or long-term commitments) which
in the aggregate are material and adverse to the financial position or business
of Borrower that should have been but were not reflected in such financial
statements. No changes having a Material Adverse Effect have occurred in the
financial condition or business of Borrower since the date of such financial
statements.
6.8 Taxes. It has filed or caused to be filed all returns and reports
which are required to be filed by any jurisdiction, and has paid or made
provision for the payment of all taxes, assessments, fees or other governmental
charges imposed upon its properties, income or franchises, as to which the
failure to file or pay would have a Material Adverse Effect, except such
assessments or taxes, if any, which are being contested in good faith by
appropriate proceedings.
6.9 [Intentionally Deleted.]
6.10 Advances. Each request for an Advance or for the extension of any
financial accommodation by Lender whatsoever shall constitute an affirmation
that the representations and warranties contained herein are, true and correct
as of the time of such request. All representations and warranties made herein
shall survive the execution of this Credit Agreement, all advances of proceeds
of the Loans and the execution and delivery of all other documents and
instruments in connection with the Loans and/or this Credit Agreement, so long
as Lender has any commitment to lend hereunder and until the Loans have been
paid in full and all of Borrower's obligations under this Credit Agreement, the
Note and all Security Documents have been fully discharged. Any investigation at
any time made by or on behalf of Lender shall not diminish Lender's right to
rely on the representations and warranties herein.
6.11 Enforceable Obligations. This Credit Agreement, the Note and the
other Credit Documents are the legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms, except
as limited by bankruptcy, insolvency or other laws or equitable principles of
general application relating to the enforcement of creditors' rights.
6.12 No Default. No event or condition has occurred and is continuing
that constitutes an Event of Default.
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6.13 Significant Debt Agreements. It is not in default in any material
respect under any Significant Debt Agreement.
6.14 ERISA. (a) No Reportable Event has occurred and is continuing with
respect to any Plan; (b) PBGC has not instituted proceedings to terminate any
Plan; (c) neither the Borrower, any member of the Controlled Group, nor any
duly-appointed administrator of a Plan (i) has incurred any liability to PBGC
with respect to any Plan other than for premiums not yet due or payable or (ii)
has instituted or intends to institute proceedings to terminate any Plan under
Section 4041 or 4041A of ERISA; and (d) each Plan of Borrower has been
maintained and funded in all material respects in accordance with its terms and
in all material respects in accordance with all provisions of ERISA applicable
thereto. Neither the Borrower nor any of its Subsidiaries participates in, or is
required to make contributions to, any Multi-employer Plan (as that term is
defined in Section 3(37) of ERISA).
6.15 Compliance with Law. It is in substantial compliance with all
laws, rules, regulations, orders, writs, injunctions and decrees that are
applicable to it, or its properties, noncompliance with which would have a
Material Adverse Effect.
6.16 Solvent. It (both before and after giving effect to the Loans
contemplated hereby) is solvent, has assets having a fair value in excess of the
amount required to pay its probable liabilities on its existing debts as they
become absolute and matured, and has, and will have, access to adequate capital
for the conduct of its business and the ability to pay its debts from time to
time incurred in connection therewith as such debts mature.
6.17 Investment Company Act. It is not, and is not directly or
indirectly controlled by, or acting on behalf of, any person which is, an
"Investment Company" within the meaning of the Investment Company Act of 1940,
as amended.
6.18 Title. It has good and marketable title to the Collateral.
6.19 [Intentionally Deleted.]
6.20 Environmental Matters. Except as previously disclosed to Lender in
writing, it, to the best of its knowledge after due investigation, is in
compliance in all material respects with all applicable environmental, health
and safety statutes and regulations and Borrower does not have any material
contingent liability in connection with any improper treatment, disposal or
release into the environment of any hazardous or toxic waste or substance.
6.21 Licenses, Tradenames. It, as of the date hereof, owns or possesses
the right to use all necessary trademarks, tradenames, copyrights, patents,
patent rights, and licenses to conduct its business as now operated, without any
known conflict with valid trademarks, tradenames, copyright patents and license
rights of others.
6.22 Senior Indebtedness. For purposes of that Senior Subordinated Note
and Warrant Purchase Agreement dated as of December 31, 1999, among Borrower, B
of A and GE (the
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"Subordinated Debt Credit Agreement"), the Loan and the other obligations of
Borrower under this Credit Agreement is designated as "Senior Indebtedness."
ARTICLE 7
AFFIRMATIVE COVENANTS
Until payment in full of the Loan and the complete performance of the
Obligation, Borrower agrees that:
7.1 Financial Statements, Reports and Documents. It shall deliver, or
cause to be delivered, to Lender each of the following:
(a) Annual Statements of Borrower. As soon as available and in
any event within ninety (90) days after the close of each fiscal year
of Borrower, audited financial statements of Borrower, including its
balance sheet as of the close of such fiscal year and statements of
income of Borrower for such fiscal year, in each case setting forth in
comparative form the figures for the preceding fiscal year, all in
reasonable detail and accompanied by an unqualified opinion thereon of
independent public accountants of recognized national standing selected
by Borrower and acceptable to Lender, to the effect that such financial
statements have been prepared in accordance with GAAP.
(b) Monthly Statements of Borrower. As soon as available, and
in any event within thirty (30) days after the end of each month
(except for that at the close of the fiscal year), monthly financial
statements, including copies of the balance sheet of Borrower as of the
end of such month, cash flow statement and statement of income of
Borrower for that month and for the portion of the fiscal year ending
with such month, in each case setting forth in comparative form the
figures for the corresponding period of the preceding fiscal year, all
in reasonable detail and fairly stated, certified by the chief
financial officer of Borrower and prepared by Borrower in accordance
with GAAP, subject to normal year-end adjustment (and the absence of
footnotes and presentation items).
(c) Compliance Certificate of Borrower. Within thirty (30)
days after the end of each month, a certificate signed by the chief
financial officer of the Borrower, substantially in the form of Exhibit
"B" attached hereto certifying that after a review of the activities of
Borrower during such period, Borrower has observed, performed and
fulfilled each and every obligation and covenant contained herein and
no Event of Default exists under any of the same or, if any Event of
Default shall have occurred, specifying the nature and status thereof,
and stating that all financial statements of Borrower delivered to
Lender during the respective period pursuant to Sections 7.1(a) and
7.1(b) hereof, to his/her knowledge, fairly present in all material
respect the financial position of the Borrower and the results of its
operations at the dates and for the periods
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indicated, and have been prepared in accordance with GAAP, together
with a calculation of the Financial Covenants.
(d) Borrowing Base Certificate. Within fifteen (15) days after
the end of each month, a Borrowing Base Certificate substantially in
the form attached hereto as Exhibit "C" signed by the chief financial
officer of Borrower. Borrower shall be required to provide a Borrowing
Base Certificate only in the event Borrower's Liquidity is an amount
less than $10,000,000.00
(e) Promptly after the sending or filing thereof with the
Securities and Exchange Commission or any other regulatory agency,
copies of any material filings, including, without limitation, copies
of Borrower's Quarterly 10Q Reports and the Borrower's Annual 10K
Report.
(f) Other Monthly Reports. Within fifteen (15) days after the
end of each month, reports as to its accounts receivable and inventory
as well as an aging report as to its accounts payable, except Lender in
its sole discretion may not require any of these reports. Lender's
waiver of this requirement for any particular month shall not
constitute a waiver for any subsequent month.
(g) Other Information. Such other information concerning the
business, properties or financial condition of Borrower as Lender shall
reasonably request.
7.2 Maintenance of Existence and Rights; Conduct of Business;
Management. It will preserve and maintain its existence and all of its rights,
privileges, licenses, permits, franchises and other rights necessary or
desirable in the normal conduct of its business, conduct its business in an
orderly and efficient manner consistent with good business practices and
maintain professional management of its business.
7.3 Operations and Properties. It will keep in good working order and
condition, ordinary wear and tear excepted, all of its assets and properties
which are necessary to the conduct of its business.
7.4 Authorizations and Approvals. It will maintain, at its own expense,
all such governmental licenses, authorizations, consents, permits and approvals
as may be required to enable it to comply with its obligations hereunder and
under the other Credit Documents and to operate its businesses as presently or
hereafter duly conducted.
7.5 Compliance with Law. It will comply with all applicable laws,
rules, regulations, and all final, nonappealable orders of any Governmental
Authority applicable to it or any of its property, business operations or
transactions, including without limitation, any environmental laws applicable to
it, a breach of which could result in a Material Adverse Effect.
7.6 Payment of Taxes and Other Indebtedness. It will pay and discharge
(i) all income taxes and payroll taxes, (ii) all taxes, assessments, fees and
other governmental charges
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imposed upon it or upon its income or profits, or upon any property belonging to
it, before delinquent, which become due and payable, (iii) all lawful claims
(including claims for labor, materials and supplies), which, if unpaid, might
become a Lien upon any of its property and (iv) all of its Indebtedness as it
becomes due and payable, except as prohibited hereunder; provided, however, that
it shall not be required to pay any such tax, assessment, charge, levy, claims
or Indebtedness if and so long as the amount, applicability or validity thereof
shall currently be contested in good faith by appropriate actions and
appropriate accruals and reserves therefor have been established in accordance
with GAAP.
7.7 Compliance with Significant Debt Agreements and Other Agreements.
It will comply in all material respects with (i) all Significant Debt
Agreements, and (ii) all agreements and contracts to which it is a party, a
breach of which could result in a Material Adverse Effect.
7.8 Compliance with Credit Documents. It will comply with any and all
covenants and provisions of this Credit Agreement, the Note and all other Credit
Documents.
7.9 Notice of Default. It will furnish to Lender immediately upon
becoming actually aware of the existence of any event or condition that
constitutes an Event of Default, a written notice specifying the nature and
period of existence thereof and the action which it is taking or proposes to
take with respect thereto.
7.10 Other Notices. It will promptly notify Lender of (a) any Material
Adverse Effect, (b) any waiver, release or default under any Significant Debt
Agreement, (c) any claim not covered by insurance against Borrower or any of
Borrower's properties, and (d) the commencement of, and any material
determination in, any litigation with any third party or any proceeding before
any Governmental Authority affecting it, except litigation or proceedings which,
if adversely determined, would not have a Material Adverse Effect.
7.11 Books and Records; Access; Audits. Upon three (3) Banking Days
notice from Lender, it will give any authorized representative of Lender access
during normal business hours to, and permit such representative to examine, copy
or make excerpts from, any and all books, records and documents in its
possession of and relating to the Loan, and to inspect any of its properties. It
will maintain complete and accurate books and records of its transactions in
accordance with good accounting practices. In addition, it will give any
authorized representative of Lender access during normal business hours to
conduct an annual accounts receivable audit and the costs of such audit shall be
for the account of Borrower and, provided no Event of Default exists, shall not
exceed $2,500.00 annually.
7.12 ERISA Compliance. With respect to its Plans, it shall (a) at all
times comply with the minimum funding standards set forth in Section 302 of
ERISA and Section 412 of the Code or shall have duly obtained a formal waiver of
such compliance from the proper Governmental Authority; (b) at Lender's request,
within thirty (30) days after the filing thereof, furnish to Lender copies of
each annual report/return (Form 5500 Series), as well as all schedules and
attachments required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA, in connection with each of its Plans
for each year of the Plan; (c) notify Lender within a reasonable time of any
fact, including, but not limited to, any Reportable
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Event arising in connection with any of its Plans, which constitutes grounds for
termination thereof by the PBGC or for the appointment by the appropriate United
States District Court of a trustee to administer such Plan, together with a
statement, if requested by Lender, as to the reason therefor and the action, if
any, proposed to be taken with respect thereto; and (d) furnish to Lender within
a reasonable time, upon Lender's request, such additional information concerning
any of its Plans as may be reasonably requested.
7.13 Further Assurances. It will make, execute or endorse, and
acknowledge and deliver or file or cause the same to be done, all such notices,
certifications and additional agreements, undertakings or other assurances, and
take any and all such other action, as Lender may, from time to time, deem
reasonably necessary or proper to fully evidence the Loan.
7.14 Insurance. It shall maintain in full force and effect at all times
all insurance coverages required under the terms of this Credit Agreement and/or
the Security Documents to which it is a party. In addition, it shall maintain in
full force and effect at all times:
(a) Policies of all risk coverage insurance covering all
tangible personalty in which Lender has been granted or obtained a
security interest to secure the Obligation, in coverage amounts not
less than, from time to time, the fair market value thereof.
(b) Policies of insurance evidencing personal liability and
property damage liability coverages in amounts not less than
$1,000,000.00 (combined single limit for bodily injury and property
damage), and an umbrella excess liability coverage in an amount not
less than $2,000,000.00 shall be in effect with respect to Borrower.
(c) Policies of workers' compensation insurance in amounts and
with coverages as legally required.
Without limitation of the foregoing, it shall at all times maintain insurance
coverages in scope and amount not less than, and not less extensive than, the
scope and amount of insurance coverages customary in the trades or businesses in
which it is from time to time engaged. All of the aforesaid insurance coverages
shall be issued by insurers reasonably acceptable to Lender.
Copies of all policies of insurance evidencing such coverages in effect
from time to time and showing Lender as an additional insured and loss payee
shall be delivered to Lender within fifteen (15) days of the Closing Date and
upon reasonable notice upon issuance of new policies thereafter. From time to
time, promptly upon Lender's request, it shall provide evidence satisfactory to
Lender (i) that required coverage in required amounts is in effect, and (ii)
that Lender is shown as an additional insured and loss payee with respect to all
such coverages, as Lender's interest may appear, by standard (non-attribution)
loss payable endorsement, additional insured endorsement, insurer's certificate
or other means acceptable to Lender in its reasonable discretion. At Lender's
option, it shall deliver to Lender certified copies of all such policies of
insurance in effect from time to time, to be retained by Lender so long as
Lender shall have any commitment to lend hereunder and/or any portion of the
Obligation shall be outstanding or
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unsatisfied. All such insurance policies shall provide for at least thirty (30)
days prior written notice of the cancellation or modification thereof to Lender.
7.15 Deposit Accounts. It shall maintain its principal depository
accounts with Lender.
7.16 Invested Capital. Borrower shall satisfy the Invested Capital
Condition.
7.17 Indebtedness. At least five (5) Banking Days prior to incurring
any such Indebtedness, other than Indebtedness incurred in the ordinary course
of business subject to a Permitted Lien, Borrower shall inform Lender in writing
of any Indebtedness (i) with a Person that is not an Affiliate of Borrower, or
(ii) with a Person that is an Affiliate of Borrower unless such Indebtedness
consists of Subordinated Debt.
ARTICLE 8
NEGATIVE COVENANTS
Until payment in full of the Loan and the performance of the
Obligation, Borrower shall not, without receiving the prior express written
consent of Lender:
8.1 No Debt. Become or remain obligated either directly or as a
guarantor or surety for any Indebtedness for borrowed money, or for any
Indebtedness incurred in connection with the acquisition of any property, real
or personal, tangible or intangible including, but not limited to, lease
purchase agreements that exceed $10,000,000.00 in the aggregate, except:
(a) Indebtedness to the Lender.
(b) Indebtedness secured by liens permitted under Section 8.2
hereof.
8.2 Liens. On and after the date hereof, Borrower will not create or
suffer to exist Liens upon its property, real or personal, including without
limitation its patents, copyrights and trademarks, except (i) Liens, if any, for
the benefit of Lender, and (ii) Permitted Liens.
8.3 Existence. Dissolve or liquidate, or merge or consolidate with or
into any other entity (except for mergers with Borrower's Subsidiaries in which
Borrower is the surviving entity), or turn over the management or operation of
its property, assets or business to any other Person or make any substantial
change in the character of its business.
8.4 Amendments to Organizational Documents. Amend its organizational
documents if the result thereof could result in the occurrence directly or
indirectly of a Material Adverse Effect.
8.5 Margin Stock. Use any proceeds of the Loans, or any proceeds of any
other or future financial accommodation from Lender for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any "margin stock"
as that term is defined in Regulation U or to reduce or retire any indebtedness
undertaken for such purposes within the meaning of said
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Regulation U, and will not use such proceeds in a manner that would involve
Borrower in a violation of Regulation U or of any other Regulation of the Board
of Governors of the Federal Reserve System, nor use such proceeds for any
purpose not permitted by Section 7 of the Exchange Act, or any of the rules or
regulations respecting the extensions of credit promulgated thereunder.
8.6 Distributions. Declare or pay any dividends or make any
distribution of any kind.
8.7 Payments. Make any payment on its Subordinated Debt in any month
unless it is in full compliance with all Financial Covenants prior to and after
giving effect to such payment. Whenever Borrower incurs any debt with a Person
that is an Affiliate of Borrower which has not previously executed a
Subordination Agreement for the benefit of Lender, Borrower shall cause such
Affiliate to execute and deliver to Lender a Subordination Agreement.
8.8 Transfer Collateral. Assign, transfer or convey any of its right,
title and interest in the Collateral, except in the ordinary course of business.
8.9 Merger; Sale of Assets. (i) Sell, lease, transfer or dispose of
substantially all of the Collateral to another entity; or (ii) consolidate with
or merge into another entity, or permit any transfer of the ownership of the
Collateral, permit any other entity to merge into it or consolidate with it, or
permit any transfer of the ownership or power to control Borrower.
8.10 Financial Covenants.
(a) Cash. Permit Borrower's Liquidity for any month to be an
amount less than $2,500,000.00.
(b) Quick Ratio. Permit Borrower's Quick Ratio to be less than
2.0 to 1 at the end of any month. As used herein, "Quick Ratio" means
Borrower's Liquidity plus accounts receivable, divided by the sum of
trade payables, accrued liabilities and the outstanding principal
balance of the RLC. Borrower's deferred revenue accounts and royalty
payments to Symantec shall not be included in calculating Borrower's
Quick Ratio.
(c) Sales. Permit:
(i) Its quarterly sales for the quarterly period
ending March 31, 2000, to be an amount less than
$15,560,000.00
(ii) Its quarterly sales for the quarterly period
ending June 30, 2000, to be an amount less than $18,428,000.00
(iii) Its quarterly sales for the quarterly period
ending September 30, 2000, to be an amount less than
$23,629,000.00.
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(iv) Its quarterly sales for the quarterly period
ending December 31, 2000, to be an amount less than
$27,614,000.00
8.11 No Amendment to Subordinated Debt Credit Agreement. Amend the
terms of Article XI of the Subordinated Debt Credit Agreement without the prior
written consent of Lender.
ARTICLE 9
EVENTS OF DEFAULT
9.1 Events of Default. An "Event of Default" shall exist if any one or
more of the following events (herein collectively called "Events of Default")
shall occur and be continuing:
(a) Borrower shall fail to pay any principal of, or interest
on, the Note when the same shall become due or payable and such failure
continues for five (5) Banking Days after written notice thereof to
Borrower.
(b) Any failure or neglect to perform or observe any of the
covenants, conditions, provisions or agreements of Borrower contained
herein, or in any of the other Credit Documents (other than a failure
or neglect described in one or more of the other provisions of this
Section 9.1) and such failure or neglect either cannot be remedied or,
if it can be remedied, it continues unremedied for a period of thirty
(30) days after written notice thereof to Borrower.
(c) Any warranty, representation or statement contained in
this Credit Agreement or any of the other Credit Documents, or which is
contained in any certificate or statement furnished or made to Lender
pursuant hereto or in connection herewith or with the Loan, shall be or
shall prove to have been false when made or furnished.
(d) The occurrence of any material "event of default" or
"default" by Borrower under any Credit Document, or any agreement, now
or hereafter existing, to which Lender or an Affiliate of Lender, and
Borrower or an Affiliate of Borrower are a party.
(e) Borrower shall (i) fail to pay any Indebtedness of
Borrower (other than the Note) due under any Significant Debt
Agreement, or any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or
otherwise) or within any applicable grace period, (ii) fail to perform
or observe any term, covenant, or condition on its part to be performed
or observed under any agreement or instrument relating to such
Indebtedness, within any applicable grace period when required to be
performed or observed, if the effect of such failure to perform or
observe is to accelerate the maturity of such Indebtedness, or any such
Indebtedness shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled
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prepayment), prior to the stated maturity thereof, or (iii) allow the
occurrence of any material event of default with respect to such
Indebtedness.
(f) Any one or more of the Credit Documents shall have been
determined to be invalid or unenforceable against Borrower executing
the same in accordance with the respective terms thereof, or shall in
any way be terminated or become or be declared ineffective or
inoperative, so as to deny Lender the substantial benefits contemplated
by such Credit Document or Credit Documents.
(g) Borrower shall (i) apply for or consent to the appointment
of a receiver, trustee, custodian, intervenor or liquidator of itself
or of all or a substantial part of its assets, (ii) file a voluntary
petition in bankruptcy or admit in writing that it is unable to pay its
debts as they become due, (iii) make a general assignment for the
benefit of creditors, (iv) file a petition or answer seeking
reorganization of an arrangement with creditors or to take advantage of
any bankruptcy or insolvency laws, (v) file an answer admitting the
material allegations of, or consent to, or default in answering, a
petition filed against it in any bankruptcy, reorganization or
insolvency proceeding, or (vi) take corporate action for the purpose of
effecting any of the foregoing
(h) An involuntary petition or complaint shall be filed
against Borrower, seeking bankruptcy or reorganization of Borrower, or
the appointment of a receiver, custodian, trustee, intervenor or
liquidator of Borrower, or all or substantially all of its assets, and
such petition or complaint shall not have been dismissed within sixty
(60) days of the filing thereof; or an order, order for relief,
judgment or decree shall be entered by any court of competent
jurisdiction or other competent authority approving a petition or
complaint seeking reorganization of Borrower, appointing a receiver,
custodian, trustee, intervenor or liquidator of Borrower, or all or
substantially all of its assets, and such order, judgment or decree
shall continue unstayed and in effect for a period of sixty (60) days.
(i) Any final judgment(s) (excluding those the enforcement of
which is suspended pending appeal) for the payment of money in excess
of the sum of $500,000.00 in the aggregate (other than any judgment
covered by insurance where coverage has been acknowledged by the
insurer) shall be rendered against Borrower, and such judgment or
judgments shall not be satisfied, settled, bonded or discharged at
least ten (10) days prior to the date on which any of its assets could
be lawfully sold to satisfy such judgment.
(j) Either (i) proceedings shall have been instituted to
terminate, or a notice of termination shall have been filed with
respect to, any Plans (other than a Multi-Employer Pension Plan as that
term is defined in Section 4001(a)(3) of ERISA) by Borrower, any member
of the Controlled Group, PBGC or any representative of any thereof, or
any such Plan shall be terminated, in each case under Section 4041 or
4042 of ERISA, and such termination shall give rise to a
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liability of the Borrower or the Controlled Group to the PBGC or the
Plan under ERISA having an effect in excess of $250,000.00 or (ii) a
Reportable Event, the occurrence of which would cause the imposition of
a lien in excess of $250,000.00 under Section 4062 of ERISA, shall have
occurred with respect to any Plan (other than a Multi-Employer Pension
Plan as that term is defined in Section 4001(a)(3) of ERISA) and be
continuing for a period of sixty (60) days.
(k) Any of the following events shall occur with respect to
any Multi-Employer Pension Plan (as that term is defined in Section
4001(a)(3) of ERISA) to which Borrower contributes or contributed on
behalf of its employees and Lender determines in good faith that the
aggregate liability likely to be incurred by Borrower, as a result of
any of the events specified in Subsections (i), (ii) and (iii) below,
will have an effect in excess of $100,000.00; (i) Borrower incurs a
withdrawal liability under Section 4201 of ERISA; (ii) any such plan is
"in reorganization" as that term is defined in Section 4241 of ERISA;
or (iii) any such Plan is terminated under Section 4041A of ERISA.
(l) [Intentionally Deleted.]
(m) The dissolution, liquidation, sale, transfer, lease or
other disposal of all or substantially all of the assets or business of
Borrower.
(n) Any failure to observe any of the Financial Covenants.
(o) A substantial change in the duties, responsibilities or
authority of Xxxxxxx Xxxxxxxx.
(p) The occurrence of any adverse change in the financial
condition of Borrower that Lender in its reasonable discretion deems
material, or if Lender in good faith shall believe that the prospect of
payment or performance of the Loans is impaired.
9.2 Remedies Upon Event of Default. If an Event of Default shall have
occurred and be continuing, then Lender may, at its sole option, exercise any
one or more of the following rights and remedies, and any other remedies
provided in any of the Credit Documents, as Lender in its sole discretion may
deem necessary or appropriate, all of which remedies shall be deemed cumulative,
and not alternative:
(i) Cease making Advances or extensions of financial
accommodations in any form to or for the benefit of Borrower,
(ii) Declare the principal of, and all interest then
accrued on, the Note and any other liabilities hereunder to be
forthwith due and payable, whereupon the same shall become
immediately due and payable without presentment, demand,
protest, notice of default, notice of acceleration or of
intention to
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accelerate or other notice of any kind all of which Borrower
hereby expressly waives, anything contained herein or in the
Note to the contrary notwithstanding,
(iii Reduce any claim to judgment, and/or
(iv Without notice of default or demand, pursue and
enforce any of Lender' rights and remedies under the Credit
Documents, or otherwise provided under or pursuant to any
applicable law or agreement; provided, however, that if any
Event of Default specified in Sections 9.1(g) and 9.1(h) shall
occur, the principal of, and all interest on, the Note and
other liabilities hereunder shall thereupon become due and
payable concurrently therewith, without any further action by
Lender and without presentment, demand, protest, notice of
default, notice of acceleration or of intention to accelerate
or other notice of any kind, all of which Borrower hereby
expressly waives.
Upon the occurrence and during the continuance of any Event of Default,
Lender is hereby authorized at any time and from time to time, with five (5)
days written notice to Borrower, to setoff and apply any and all moneys,
securities or other property of Borrower and the proceeds therefrom, now or
hereafter held or received by or in transit to Lender or its agents, from or for
the account of Borrower, whether for safe keeping, custody, pledge,
transmission, collection or otherwise, and also upon any and all deposits
(general or special) and credits of Borrower, and any and all claims of Borrower
against Lender at any time existing. Lender agrees promptly to notify Borrower
in writing prior to and after any such setoff and application, provided that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of Lender under this Section 9.2 are in addition to
other rights and remedies (including, without limitation, other rights of
setoff) which Lender may have.
9.3 Performance by Lender. Should Borrower fail to perform any
covenant, duty or agreement with respect to the payment of taxes, obtaining
licenses or permits, or any other requirement contained herein or in any of the
Credit Documents within the period provided herein, if any, for correction of
such failure, Lender may, with fifteen (15) days prior written notice, at its
option, perform or attempt to perform such covenant, duty or agreement on behalf
of Borrower. In such event, Borrower shall, at the request of Lender, promptly
pay any amount expended by Lender in such performance or attempted performance
to Lender at its office in Inglewood, California, together with interest thereon
at the Default Rate, from the date of such expenditure until paid.
Notwithstanding the foregoing, it is expressly understood that Lender does not
assume any liability or responsibility for the performance of any duties of
Borrower hereunder or under any of the Credit Documents or other control over
the management and affairs of Borrower.
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ARTICLE 10
MISCELLANEOUS
10.1 Modification. All modifications, consents, amendments or waivers
of any provision of any Credit Document, or consent to any departure by Borrower
therefrom, shall be effective only if the same shall be in writing and accepted
by Lender.
10.2 Waiver. No failure to exercise, and no delay in exercising, on the
part of Lender, any right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other further exercise
thereof or the exercise of any other right. The rights of Lender hereunder and
under the Credit Documents shall be in addition to all other rights provided by
law. No modification or waiver of any provision of this Credit Agreement, the
Note or any Credit Documents, nor consent to departure therefrom, shall be
effective unless in writing and no such consent or waiver shall extend beyond
the particular case and purpose involved. No notice or demand given in any case
shall constitute a waiver of the right to take other action in the same, similar
or other instances without such notice or demand.
10.3 Payment of Expenses. Borrower shall pay all costs and expenses of
Lender (including, without limitation, the attorneys' fees of Lender's legal
counsel) incurred by Lender (subject, with respect to the following clause (i)
only, to a limit of $7,500.00) in connection with (i) the documentation of the
Loans, and (ii) the preservation and enforcement of Lender's rights under this
Credit Agreement, the Note, and/or the other Credit Documents; provided,
however, that notwithstanding the aforesaid, with respect to any legal action
between the parties hereto that is pursued to judgment the prevailing party only
shall be reimbursed by the other party for all costs and expenses (including,
without limitation, reasonable attorneys' fees and costs) incurred in connection
with the preservation and enforcement of its rights under this Credit Agreement,
the Note and/or other Credit Documents. In addition, Borrower shall pay all
costs and expenses of Lender in connection with the negotiation, preparation,
execution and delivery of any and all amendments, modifications and supplements
of or to this Credit Agreement, the Note or any other Credit Document. Borrower
shall receive a written estimate of all legal fees and related legal costs and
will have an opportunity to review all such estimates prior to its approval,
which shall not be unreasonably withheld.
10.4 Notices. Except for telephonic notices permitted herein, any
notices or other communications required or permitted to be given by this Credit
Agreement or any other documents and instruments referred to herein must be (i)
given in writing and personally delivered or mailed by prepaid certified or
registered mail or sent by overnight delivery service, or (ii) made by
telefacsimile delivered or transmitted, to the party to whom such notice or
communication is directed, to the address of such party as follows:
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Borrower: Interact Commerce Corporation
0000 Xxxxx Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Telecopier: (000) 000-0000
with a copy to: Xxxxxx Xxxxxxx, P.A.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
Lender: Imperial Bank
0000 Xxxxx Xx Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Lending Services
Telecopier: (000) 000-0000
With a copy to: Imperial Bank
000 Xxxx Xxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopier: (000) 000-0000
Any notice to be personally delivered may be delivered to the principal offices
(determined as of the date of such delivery) of the party to whom such notice is
directed. Any such notice or other communication shall be deemed to have been
given (whether actually received or not) on the day it is personally delivered
as aforesaid; or, if mailed, on the third day after it is mailed as aforesaid;
or, if transmitted by telefacsimile, on the day that such notice is transmitted
as aforesaid. Any party may change its address for purposes of this Credit
Agreement by giving notice of such change to the other parties pursuant to this
Section 10.4.
10.5 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial. The Loan
Documents shall be governed by and construed in accordance with the substantive
laws (other than conflict laws) of the State of California, except to the extent
Lender has greater rights or remedies under Federal law, whether as a national
bank or otherwise, in which case such choice of California law shall not be
deemed to deprive Lender of any such rights and remedies as may be available
under Federal law. Subject to the provisions of Section 10.6 hereof, each party
consents to the personal jurisdiction and venue of the state courts located in
Los Angeles, State of California in connection with any controversy related to
this Agreement, waives any argument that venue in any such forum is not
convenient and agrees that any litigation initiated by any of them in connection
with this Agreement shall be venued in the Superior Court of Los Angeles County,
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California. The parties waive any right to trial by jury in any action or
proceeding based on or pertaining to this Agreement or any of the Credit
Documents.
10.6 Reference Provision.
(a Each controversy, dispute or claim ("Claim") between the
parties arising out of or relating to this Agreement and/or any of the
Credit Documents, which is not settled in writing within ten days after
the "Claim Date" (defined as the date on which a party gives written
notice to all other parties that a controversy, dispute or claim
exists), will be settled by a reference proceeding in Los Angeles,
California, in accordance with the provisions of Section 638 et seq. of
the California Code of Civil Procedure, or their successor section
("CCP"), which shall constitute the exclusive remedy for the settlement
of any Claim, including whether such Claim is subject to the reference
proceeding and the parties waive their rights to initiate any legal
proceedings against each other in any court or jurisdiction other than
the Superior Court of Los Angeles (the "Court"). The referee shall be a
retired Judge selected by mutual agreement of the parties, and if they
cannot so agree with in thirty days (30) after the Claim Date, the
referee shall be selected by the Presiding Judge of the Court. The
referee shall be appointed to sit as a temporary judge, as authorized
by law. The referee shall (a) be requested to set the matter for
hearing within sixty (60) days after the Claim Date and (b) try any and
all issues of law or fact and report a statement of decision upon them,
if possible, within ninety (90) days of the Claim Date. Any decision
rendered by the referee will be final, binding and conclusive and
judgment shall be entered pursuant to CCP 644 in the Court. All
discovery permitted by this Agreement shall be completed no later than
fifteen (15) days before the first hearing date established by the
referee. The referee may extend such period in the event of a party's
refusal to provide requested discovery for any reason whatsoever,
including, without limitation, legal objections raised to such
discovery or unavailability of a witness due to absence or illness. No
party shall be entitled to "priority" in conducing discovery.
Depositions may be taken by either party upon seven (7) days written
notice, and, request for production of inspection of documents shall be
responded to within ten (10) days after service. All disputes relating
to discovery which cannot be resolved by the parties shall be submitted
to the referee whose decision shall be final and binding upon the
parties.
(b The referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the State
of California. The rules of evidence applicable to proceedings at law
in the State of California will be applicable to the reference
proceeding. The referee shall be empowered to enter equitable as well
as legal relief, to provide all temporary and/or provisional remedies
and to enter equitable orders that will be binding upon the parties.
The referee shall issue a single judgment at the close of the reference
proceeding which shall dispose of all of the claims of the parties that
are the subject to the reference. The parties hereto expressly reserve
the right to contest or appeal from
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the final judgment or any appealable order or appealable judgment
entered by the referee. The parties expressly reserve the right to
findings of fact, conclusions of law, a written statement of decision,
and the right to move for a new trial or a different judgment, which
new trial, if granted, is also to be a reference proceeding under this
provision.
(c No provision of Paragraphs (a) or (b) of this Section 10.6,
however, shall limit the right of Lender to bring action for possession
of any Collateral in any jurisdiction, wherever located, in accordance
with the provisions of the Security Documents.
10.7 Invalid Provisions. If any provision of any Credit Document is
held to be illegal, invalid or unenforceable under present or future laws during
the term of this Credit Agreement, such provision shall be fully severable; such
Credit Document shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of such Credit Document; and
the remaining provisions of such Credit Document shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from such Credit Document. Furthermore, in lieu of
each such illegal, invalid or unenforceable provision there shall be added as
part of such Credit Document a provision mutually agreeable to Borrower and
Lender as similar in terms to such illegal, invalid or unenforceable provision
as may be possible and be legal, valid and enforceable.
10.8 Binding Effect. The Credit Documents shall be binding upon and
inure to the benefit of Borrower and Lender and their respective successors,
assigns and legal representatives; provided, however, that Borrower may not,
without the prior written consent of Lender, assign any rights, powers, duties
or obligations thereunder.
10.9 Entirety. The Credit Documents embody the entire agreement between
the parties and supersede all prior agreements and understandings, if any,
relating to the subject matter hereof and thereof.
10.10 Headings. Section headings are for convenience of reference only
and shall in no way affect the interpretation of this Credit Agreement.
10.11 Survival of Representations, Etc. All representations and
warranties by Borrower herein shall survive the making of any Loan and the
execution and delivery of any Note; any investigation at any time made by or on
behalf of Lender shall not diminish Lender's right to rely on the
representations and warranties herein.
10.12 No Third Party Beneficiary. The parties do not intend the
benefits of this Credit Agreement to inure to any third party, nor shall this
Credit Agreement be construed to make or render Lender liable to any
materialman, supplier, contractor, subcontractor, purchaser or lessee of any
property owned by Borrower, or for debts or claims accruing to any such persons
against Borrower. Notwithstanding anything contained herein or in the Note, or
in any other Credit Document, or any conduct or course of conduct by any or all
of the parties hereto, before or after signing this Credit Agreement or any of
the other Credit Documents, neither this Credit
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Agreement nor any other Credit Document shall be construed as creating any
right, claim or cause of action against Lender, or any of its officers,
directors, agents or employees, in favor of any materialman, supplier,
contractor, subcontractor, purchaser or lessee of any property owned by
Borrower, nor to any other person or entity other than Borrower.
10.13 Time. Time is of the essence hereof.
10.14 Schedules and Exhibits Incorporated. All schedules and exhibits
attached hereto, if any, are hereby incorporated into this Credit Agreement by
each reference thereto as if fully set forth at each such reference.
10.15 Counterparts. This Credit Agreement may be executed in multiple
counterparts, each of which, when so executed, shall be deemed an original but
all such counterparts shall constitute but one and the same agreement.
IN WITNESS WHEREOF, the undersigned have executed this Credit Agreement
as of the day and year first above written.
INTERACT COMMERCE CORPORATION, a
Delaware corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
IMPERIAL BANK, a California banking
corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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EXHIBIT "A"
FORM OF ADVANCE NOTICE
Imperial Bank
000 Xxxx Xxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxx Date:______________
Telecopier: (000) 000-0000 Time:______________
Dear Ladies and Gentlemen:
The undersigned ("Borrower") refers to the Credit Agreement dated as of
April 27, 2000 (as it may hereafter be amended, modified, extended or restated
from time to time, the "Credit Agreement"), between Interact Commerce
Corporation, a Delaware corporation (the "Borrower"), and Imperial Bank.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
The Borrower hereby gives notice that it requests an Advance pursuant
to Section 2.3 of the Credit Agreement and sets forth below the terms of such
requested Advance:
A. Date of Advance ____________________
B. Principal Amount of Advance(1) ____________________
C. Type of Advance(2) ____________________
--------
(1) Each RLC Advance that is to bear interest at the LIBOR Based Rate shall be
a principal amount which is not less than $250,000.00 with integral multiples of
$50,000.00. There shall be no minimum principal amount for Variable Rate
Advances.
(2) Variable Rate or LIBOR Rate Advance.
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From: Through:
----- --------
D. LIBOR Interest Period(3) ____________________ ____________________
Applicable Loan Maturity Date ____________________
E. Conversion (Identity of Advance
to be Converted)
Date ____________________
Type ____________________
Amount ____________________
Applicable Maturity Date ____________________
Sincerely,
INTERACT COMMERCE CORPORATION, a
Delaware corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
--------
(3) One, two, three or six months and end not later than the RLC Maturity Date.
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EXHIBIT "B"
COMPLIANCE CERTIFICATE
FOR PERIOD ENDING
------------------
("REPORTING PERIOD")
Imperial Bank Arizona
000 Xxxx Xxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopier: (000) 000-0000 Date: _____________(4)
Dear Ladies and Gentlemen:
This Compliance Certificate refers to the Credit Agreement dated as of
April 27, 2000 (as it may hereafter be amended, modified, extended or restated
from time to time, the "Credit Agreement"), between Interact Commerce
Corporation, a Delaware corporation (the "Borrower") and Imperial Bank, a
California banking corporation. Capitalized terms used and not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.
Pursuant to Section 7.1(c) of the Credit Agreement, the undersigned,
hereby certifies that:
1. To the best of the undersigned's knowledge, after a review of the
activities of Borrower during the Reporting Period, Borrower has observed,
performed and fulfilled each and every obligation and covenant contained in the
Credit Agreement and no "Event of Default" thereunder exists [or if so,
specifying the nature and extent thereof and any corrective actions taken or to
be taken].
2. All financial statements of Borrower delivered to Lender during the
Reporting Period, to the undersigned's knowledge, fairly present in all material
respect the financial position of the Borrower and the results of its operations
at the dates and for the periods indicated and have been prepared in accordance
with GAAP, subject to normal year-end adjustment (and the absence of footnotes
and presentation items).
--------
(4) To be submitted within 30 days after the end of each month.
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3. As of the last Reporting Period, the computations below were true
and correct:
Section 8.10 - Financial Covenants
(a Cash. The Borrower _____ satisfies _____ does not satisfy
the requirement that the Borrower's Liquidity for the previous month is
not an amount less than $2,500,000.00. In addition, a Borrowing Base
Certificate [is] [is not] attached hereto as a result of Borrower's
Liquidity being an amount [less than] [greater than] $10,000,000.00.
(b Quick Ratio.
Numerator:
Liquidity, plus A $__________
Accounts Receivables B $__________
Denominator
Trade Payables, plus C $__________
Accrued Liabilities, plus D $__________
Outstanding Principal Balance of RLC E $__________
(A+B)/(C+D+E) __________x
Minimum 2.0 to 1
(c) Sales
(a) Quarterly sales for quarter ending March 31, 2000:
(i) Actual $_______________.
(ii) Required $15,560,000.00.
(b) Quarterly sales for quarter ending June 30, 2000:
(i) Actual $_______________.
(ii) Required $18,428,000.00.
(c) Quarterly sales for quarter ending September 30, 2000:
(i) Actual $_______________.
(ii) Required $23,629,000.00.
(d) Quarterly sales for quarter ending December 31, 2000:
(i) Actual $_______________.
(ii) Required $27,614,000.00.
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INTERACT COMMERCE CORPORATION, a
Delaware corporation
By:
--------------------------------
Name:
------------------------------
Its:
-------------------------------
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EXHIBIT "C"
BORROWING BASE CERTIFICATE
FOR PERIOD ENDING
------------------
("Reporting Period")
Imperial Bank Arizona
000 Xxxx Xxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopier: (000) 000-0000 Date: _____________(5)
Dear Ladies and Gentlemen:
This Borrowing Base Certificate refers to the Credit Agreement dated as
of April 27, 2000 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Credit Agreement"), between Interact Commerce
Corporation, a Delaware corporation (the "Borrower"), and Imperial Bank, a
California banking corporation. Capitalized terms used and not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.
Pursuant to Section 7.1(d) of the Credit Agreement, the undersigned,
hereby certifies that:
1. Borrower's Liquidity is an amount equal to: $__________________ (A).
2. Eligible Cash Balance: (A-$2,500,000.00)(.53) = $__________________.
INTERACT COMMERCE CORPORATION, a
Delaware corporation
By:
-----------------------------------
Name:
---------------------------------
Its:
----------------------------------
---------
(5) To be submitted within 30 days after the end of each month if Borrower's
Liquidity is an amount less than $10,000,000.00.
47
EXHIBIT "D"
SUBORDINATION AGREEMENT
TO: IMPERIAL BANK
The undersigned ("We") are interested in the financial success of
INTERACT COMMERCE CORPORATION, a Delaware corporation (the "Borrower"), and
agree that financial accommodations from IMPERIAL BANK ("Bank" or "You") to
Borrower pursuant to that Credit Agreement dated as of April 27, 2000 (the
"Credit Agreement") are necessary, and we accordingly request that you grant to
or renew for Borrower such financial accommodation as you may deem proper, and
for the purpose of inducing you to grant, renew or extend such financial
accommodation, we hereby severally agree as follows:
All claims of each of the undersigned against Borrower now or hereafter
existing, whether matured or not (subject to the maximum if specified below),
are and shall be at all times subordinate and subject to any and all claims on
your part against Borrower now or hereafter existing, whether matured or not, so
long as any such claim on your part against Borrower shall remain unpaid, in
whole or in part, and each of the undersigned agrees not to xxx upon, or to
collect, or to receive payment upon, by setoff or in any other manner, any claim
or claims on his/hers or its part against Borrower now or hereafter existing,
nor to sell, assign, transfer, pledge, or give a security interest in the same
(except subject expressly to this Agreement), nor to enforce or apply any
security now or hereafter existing, nor to join in any petition in bankruptcy or
any assignment for the benefit of creditors or any creditors agreement, nor to
take any lien or security on any of Borrower's property, real or personal, nor
to incur any obligation to nor receive any loans, advances or gifts from
Borrower, so long as any such claim on your part against Borrower shall exist or
so long as you are committed or otherwise obligated to make any loans to, or
grant any credit to, Borrower. In addition, so long as any claim on your part
against Borrower shall remain unpaid, in whole or in part, Bank shall have a
prior security interest in the assets of Borrower consisting of Collateral (as
defined in the Credit Agreement), now owned or hereafter acquired by Borrower
and each of the undersigned hereby subordinates any security interest, including
without limitation any purchase money security interest, which each of the
undersigned now has or hereafter acquires in the Collateral to all security
interests which Bank now has or hereafter acquires in the Collateral.
All claims on your part against Borrower now or hereafter existing
shall be first paid by Borrower before any payment shall be made by Borrower to
any of the undersigned unless Borrower is in full compliance with all Financial
Covenants (as defined in the Credit Agreement) contained in the Credit
Agreement, prior to and after giving effect to such payment. Said priority of
payment shall apply during the ordinary course of Borrower's business and in
case of any
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assignment by Borrower for the benefit of Borrower's creditors, and in case of
any bankruptcy proceedings instituted by or against Borrower, and in case of the
appointment of any receiver for Borrower or Borrower's business or assets, and
in case of any dissolution or other winding up of the affairs of Borrower, or of
Borrower's business, and in all such cases respectively, the officers of
Borrower and any assignee, trustee in bankruptcy, receiver, and other person or
persons in charge, are hereby directed to pay to you the full amount of your
claims against Borrower before making any payment to any of the undersigned, and
so far as may be necessary for that purpose, each of the undersigned hereby
transfers and assigns to you all of his/her or its rights to any payment or
distribution which might otherwise be coming to him/her or it. You are hereby
irrevocably constituted and appointed the attorney-in-fact of each of the
undersigned to file any and all proofs of claim and any other documents and to
take all other action, either in your name, or in the name of the undersigned,
or any of them, which in your opinion is necessary or desirable to enable you to
obtain all such payments.
Each of the undersigned agrees that if part or all of any claim of the
undersigned shall be evidenced by a promissory note or other instrument, the
undersigned shall cause to be placed thereon a legend stating that the payment
thereof is subordinate to the payment of all claims on your part against
Borrower pursuant to the terms of this Subordination Agreement, and each of the
undersigned agrees to xxxx all books of account in such manner to indicate that
payment thereof is subordinated pursuant to the terms of this Subordination
Agreement.
Each of the undersigned further agrees that in case he, she or it
should take or receive any security interest in, or lien by way of attachment,
execution, or otherwise on any of the property, real or personal, of Borrower,
or should take or join in any other measure or advantage contrary to this
Agreement, while any claim exists on your part against Borrower, you shall be
entitled to have the same vacated, dissolved and set aside by such proceedings
at law, or otherwise, as you may deem proper, and this Agreement shall be and
constitute full and sufficient ground therefor and shall entitle you to be and
become a party to any proceedings at law, or otherwise, initiated by you or by
any other party, in or by which you may deem it proper to protect your interest
hereunder, and the party so violating this Agreement shall be liable to you for
all loss and damage sustained by you by reason of such breach, including
attorney's fees in any such legal action.
If the undersigned, or any of them, shall receive any payment or
property in violation of this Agreement, such payment of property shall be
received by such undersigned in trust for you and forthwith will be delivered
and transferred to you.
No subordination of obligations of Borrower to the undersigned have
previously been executed by the undersigned for the benefit of anyone else, and
any such subordinations hereafter executed will be, and shall be expressed to be
subject and subordinate to the effect hereof. This Agreement shall be continuing
in effect, it shall not be cancelled or otherwise rendered ineffective by the
payment or discharge at any time of all of Borrower's obligations to you, and it
shall apply to any and all financial accommodations subsequently granted,
renewed or extended by you for Borrower, unless the undersigned shall deliver to
you a written notice of revocation as to future transactions, at a time when
Borrower is no longer obligated to you in any
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49
way, and while you are not committed or otherwise obligated to make any loans
to, or grant any credit to, Borrower.
--------------------------------------
--------------------------------------
By:
-----------------------------------
Name:
---------------------------------
Its:
----------------------------------
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ACCEPTANCE OF SUBORDINATION AGREEMENT BY BORROWER
The undersigned, being the Borrower named in the foregoing
Subordination Agreement, hereby accepts and consents thereto and agrees to be
bound by all of the provisions thereof and to recognize all priorities and other
rights granted thereby to IMPERIAL BANK, and to pay said Bank in accordance
therewith.
Dated
------------------------
INTERACT COMMERCE CORPORATION, a
Delaware corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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EXHIBIT "E"
When recorded, return to:
Xxxxxxx Xxxx, P.A.
Renaissance Xxx
Xxx Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxx, Esq.
WAIVER/RELEASE OF LIEN RIGHTS
To induce IMPERIAL BANK, a California banking corporation, whose
address is 000 Xxxx Xxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 (hereinafter
called "Lender"), to grant and/or continue financial accommodations to INTERACT
COMMERCE CORPORATION, a Delaware corporation, whose address is 0000 Xxxxx Xxxxxx
Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000 (hereinafter called
"Debtor"), the undersigned covenants and agrees as follows:
1. Debtor has executed a Security Agreement dated April 27, 2000
(hereinafter called the "Security Agreement"), granting to Lender a security
interest in that property of Debtor described in the Security Agreement and on
Schedule "A" attached hereto and made a part hereof (hereinafter called the
"Collateral"). The Collateral includes, but is not limited to, fixtures,
equipment, machinery, furniture and furnishings that are now or hereafter may be
installed, placed or located on the real property described on Schedule "B"
attached hereto (hereinafter called the "Real Property"), which is owned by the
undersigned or in which the undersigned has or claims a lien or interest.
2. The undersigned hereby consents to the Security Agreement and to all
liens, security interests and rights of Lender in the Collateral arising from
the Security Agreement and waives and releases all rights of levy for rent and
all liens, security interests, claims, rights and demands of every kind against
the Collateral.
3. The undersigned hereby grants permission to Lender, its officers,
agents and employees, to enter, at any time, the Real Property or any other
premises where the Collateral may be found and to remove the Collateral,
provided that Lender shall promptly reimburse the undersigned for the cost of
repairing any physical injury done to the Real Property as a result of the
removal of the Collateral.
4. The Collateral shall at all times be personal property, shall not
constitute fixtures or be part of the Real Property and shall not be subject to
distraint or execution by the undersigned or to any claim of the undersigned.
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5. The undersigned shall notify any purchaser of the Real Property, and
any subsequent mortgagee or other encumbrance holder or claimant, of the
existence of this Waiver/Release Agreement, which shall be binding upon the
executors, administrators, successors, assigns and transferees of the
undersigned and shall inure to the benefit of the successors and assigns of
Lender.
6. In the event of any default under its lease or agreement with
Debtor, then prior to: (i) terminating its lease or agreement with Debtor, (ii)
incurring any attorneys' fees, or (iii) incurring any other expenses which it
would, but for this provision, charge Debtor, the undersigned shall notify
Lender in writing at the above address of such default and allow Lender 30 days
after receipt of such notice to remedy any such default on behalf of Debtor;
provided, however, that if the default cannot reasonably be remedied within that
30-day period, the undersigned shall not terminate its lease or agreement with
Debtor or incur any attorneys' fees or other expenses so long as Lender shall
commence to remedy the default within that 30-day period and thereafter
diligently prosecute the remedy to completion.
IN WITNESS WHEREOF, the undersigned has executed this Agreement this
_____ day of ______________, 2000.
--------------------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address:
--------------------------------------
--------------------------------------
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STATE OF _____________ )
) ss.
County of ____________ )
The foregoing instrument was acknowledged before me this _____ day of
____________, 2000, by __________________________________________, the
_______________________ of _____________________________________________________
on behalf of said ______________.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
------------------------------------------
Notary Public
My commission expires:
----------------------
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SCHEDULE "A"
COLLATERAL DESCRIPTION
All of the property described below in, to or under which Debtor now
has or hereafter acquires any right, title or interest, whether present, future
or contingent, and in Debtor's expectancy to acquire such property (all of the
property described on this schedule is herein called the "Collateral"):
(a) All accounts, general intangibles, instruments, documents
and chattel paper (including all accounts receivable, notes, drafts,
lease agreements and security agreements), and all goods, if any,
represented thereby, whether now existing or hereafter acquired or
created from time to time in the course of Debtor's business;
(b) All inventory now owned or hereafter acquired, including
all goods held for sale or lease in Debtor's business, as now or
hereafter conducted, and all materials, work in process and finished
goods used or to be consumed in Debtor's business (whether or not the
inventory is represented by warehouse receipts or bills of lading or
has been or may be placed in transit or delivered to a public
warehouse);
(c) All equipment now owned or hereafter acquired, including
all furniture, fixtures, furnishings, vehicles (whether titled or
non-titled), machinery, materials and supplies, wherever located,
including but not limited to such items described on the collateral
schedule (if any) attached hereto and by this reference made a part
hereof, together with all parts, accessories, attachments, additions
thereto or replacements therefor;
(d) All instruments, documents and chattel paper now held by
or hereafter delivered to Secured Party, together with all property
rights and security interests evidenced thereby, all increases thereof
(including, without limitation, stock dividends), all profits therefrom
and all transformations thereof, including but not limited to such
items described on the collateral schedule (if any) attached hereto and
by this reference made a part hereof;
(e) All tax refund claims, all policies or certificates of
insurance covering any of the Collateral, all contracts, agreements or
rights of indemnification, guaranty or surety relating to any of the
Collateral, and all claims, awards, loss payments, proceeds and premium
refunds that may become payable with respect to any such policies,
certificates, contracts, agreements or rights;
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55
(f) All ledger cards, invoices, delivery receipts, worksheets,
books of accounts, statements, correspondence, customer lists, files,
journals, ledgers and records in any form, written or otherwise,
related to any of the Collateral;
(g) Tradenames, trademarks, trademark applications,
copyrights, copyright applications, service marks, domain names and the
entire goodwill of or associated with the business now or hereafter
conducted by the Debtor; provided, however, that Debtor shall not be
required to register any copyrights on material it regards trade
secrets;
(h) All claims for loss or damage to or in connection with any
of the Collateral, all other claims in any form for the payment of
money, including tort claims, and all rights with respect to such
claims and all proceeds thereof;
(i) All accessions to any of the Collateral; and
(j) All products and proceeds of the Collateral, in any form,
including all proceeds received, due or to become due from any sale,
exchange or other disposition of any of the Collateral, whether such
proceeds are cash or noncash in nature or are represented by checks,
drafts, notes or other instruments for the payment of money.
All "Collateral Schedules," if any, attached hereto are hereby incorporated into
this collateral description as if set forth here and at each reference thereto.
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SCHEDULE "B"
REAL PROPERTY
