EXHIBIT 10.19
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement"), dated as of the 26th day of September,
1997, is made and entered into on the terms and conditions hereinafter set
forth, by and between PaySys International, Inc., a Florida corporation
("Borrower"), and SIRROM CAPITAL CORPORATION, a Tennessee corporation
("Lender").
RECITALS:
WHEREAS, Borrower has requested that Lender make available to Borrower a
term loan in the original principal amount of Four Million and No/100ths Dollars
($4,000,000) (the "Loan") on the terms and conditions hereinafter set forth, and
for the purpose(s) hereinafter set forth; and
WHEREAS, in order to induce Lender to make the Loan to Borrower, Borrower
has made certain representations to Lender; and
WHEREAS, Lender, in reliance upon the representations and inducements of
Borrower, has agreed to make the Loan upon the terms and conditions hereinafter
set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the agreement of Lender to make the
Loan, the mutual covenants and agreements hereinafter set forth, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
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THE LOAN
.1 Evidence of Loan Indebtedness and Repayment. Subject to the
terms and conditions hereof, Lender shall make the Loan to Borrower by wire
transfer in immediately available funds. The Loan shall be evidenced by a
Secured Promissory Note in the original principal amount of Four Million and
No/100ths Dollars ($4,000,000), substantially in the form of Exhibit A attached
hereto and incorporated herein by this reference (the "Note"), dated as of the
date hereof, executed by Borrower, in favor of Lender. The Loan shall be
payable in accordance with the terms of the Note. The Note, this Agreement and
any other instruments and documents executed by Borrower, any guarantor of
Borrower, or any shareholder, member, partner, subsidiary, or affiliate of
Borrower, now or hereafter evidencing, securing or in any way related to the
indebtedness evidenced by the Note are herein individually referred to as a
Loan Document" and collectively referred to as the "Loan Documents."
.2 Processing Fee. Borrower shall pay a processing fee of $80,000
to Lender of which $20,000 shall be paid prior to closing and of which $60,000
shall be paid at closing.
.3 Purpose(s) of Loan and Use of Proceeds. The purposes of the Loan
shall be (i) to repay the Secured Promissory Note in the original principal
amount of $900,000 dated May 29, 1992 executed by Borrower in favor of Sirrom
Capital, L.P., as amended by that certain letter agreement dated May 28, 1997,
(ii) to repay certain indebtedness to Intelligent Systems Corporation in the
principal amount not to exceed $430,000, (iii) to provide working capital to
Borrower, and (iv) to pay all costs and expenses incurred by the parties hereto
in connection with the making and documenting of the Loan, including attorneys'
fees and expenses. The proceeds of the Loan shall not be used for any other
purpose.
.4 Prepayment. Borrower may prepay the indebtedness evidenced by
the Note in whole or in part at any time and from time to time without premium
or penalty.
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REPRESENTATIONS AND WARRANTIES
.1 Borrower's Representations. Borrower hereby represents and
warrants to Lender as follows:
(a) Corporate Status. Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Florida; and has the corporate power to own and operate its properties, to
carry on its business as now conducted and to enter into and to perform its
obligations under this Agreement and the other Loan Documents to which it
is a party. Borrower is duly qualified to do business and in good standing
in Florida and each other state in which a failure to be so qualified and
in good standing would have a material adverse effect on Borrower's
financial positions or its ability to conduct its business in the manner
now conducted.
(b) Subsidiaries. Schedule 2.1(b) hereto is a complete list of
each corporation, partnership, joint venture or other business organization
(the "Subsidiary" or, with respect to all such organizations, the
"Subsidiaries") in which Borrower or any Subsidiary owns, directly or
indirectly, any capital stock or other equity interest, or with respect to
which Borrower or any Subsidiary, alone or in combination with others, is
in a control position, which list shows the jurisdiction of incorporation
or other organization and the percentage of stock or other equity interest
of each Subsidiary owned by Borrower. Each Subsidiary which is a
corporation is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and is duly qualified to
transact business as a foreign corporation and is in good standing in the
jurisdictions listed in Schedule 2.1(b), which are the only jurisdictions
where the properties owned or leased or the business transacted by it makes
such licensing or qualification to do business as a foreign corporation
necessary, and no other jurisdiction has demanded, requested or otherwise
indicated that (or inquired whether) it is required so to qualify. Each
Subsidiary which is not a corporation is duly organized and validly
existing under the laws of the jurisdiction of its organization. The
outstanding capital stock of each Subsidiary which is a corporation is
validly issued, fully paid and nonassessable. Borrower and the
Subsidiaries have good and valid title to the equity interests in the
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Subsidiaries shown as owned by each of them on Schedule 2.1(b), free and
clear of all liens, claims, charges, restrictions, security interests,
equities, proxies, pledges or encumbrances of any kind. Except where
otherwise indicated herein, any reference to Borrower in this Agreement
shall include Borrower and all of its Subsidiaries. All domestic
Subsidiaries are dormant and inactive as of the date hereof.
(c) Authorization. Borrower has full legal right, power and
authority to conduct its business and affairs. Borrower has full legal
right, power and authority to enter into and perform its obligations under
the Loan Documents, without the consent or approval of any other person,
firm, governmental agency or other legal entity. The execution and
delivery of this Agreement, the borrowing hereunder, the execution and
delivery of each Loan Document to which Borrower is a party, and the
performance by Borrower of its obligations thereunder are within the
corporate powers of Borrower and have been duly authorized by all necessary
corporate action properly taken, have received all necessary governmental
approvals, if any were required, and do not and will not contravene or
conflict with any provision of law, any applicable judgment, ordinance,
regulation or order of any court or governmental agency, the articles of
incorporation or bylaws of Borrower, or any agreement binding upon
Borrower. The officer(s) executing this Agreement, the Note and all of the
other Loan Documents to which Borrower is a party are duly authorized to
act on behalf of Borrower.
(d) Validity and Binding Effect. This Agreement and the other
Loan Documents are the legal, valid and binding obligations of Borrower,
enforceable in accordance with their respective terms, subject to
limitations imposed by bankruptcy, insolvency, moratorium or other similar
laws affecting the rights of creditors generally or the application of
general equitable principles.
(e) Capitalization. As of the date hereof, the authorized
capital stock of Borrower consists solely of 10,000,000 shares of
undesignated preferred stock, of which no shares are outstanding and of
30,000,000 shares of common stock, no par value per share ("Common Stock"),
of which 1,340,494 shares are issued and outstanding (the "Shares"), 31,810
shares are issued and held in the treasury and 177,270 shares of which
shall be reserved for issuance upon exercise of the Stock Purchase Warrant
dated as of the date
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hereof and issued to Lender (the "Warrant"); provided, however, that the
number of shares reserved for issuance upon exercise ofthe Warrant shall be
increased from time to time in accordance with the terms of the Warrant.
At the date hereof, Borrower does not have outstanding any stock or
securities convertible or exchangeable for any shares of its Common Stock
or containing any profit participation features, nor does it have
outstanding any rights or options to subscribe for or to purchase its
Common Stock or any stock or securities convertible into or exchangeable
for its Common Stock or any stock appreciation rights or phantom stock
plans, except as set forth on Schedule 2.1(e) and for the Warrant.
Schedule 2.1(e) accurately sets forth the following with respect to all
outstanding options and rights to acquire the Borrower's Common Stock from
Borrower: (i) the total number of shares issuable upon exercise of all
outstanding options, (ii) the range of exercise prices for all such
outstanding options, (iii) the number of shares issuable, the exercise
price and the expiration date for each such outstanding option and
(iv) with respect to all outstanding options, warrants and rights to
acquire Borrower's capital stock other than the Warrant, the holder, the
number of shares covered, the exercise price and the expiration date. At
the date hereof, Borrower is not be subject to any obligation (contingent
or otherwise) to repurchase, redeem, retire or otherwise acquire any shares
of its capital stock or any warrants, options or other rights to acquire
its capital stock, except as set forth in the Warrant or on Schedule
2.1(e). At the date hereof, all of the outstanding shares of Borrower's
capital stock are validly issued, fully paid and nonassessable. Except as
set forth on Schedule 2.1(e) or waived as provided below, there are no
statutory or contractual preemptive rights, rights of first refusal,
anti-dilution rights or any similar rights, held by stockholders or option
holders of Borrower, with respect to the issuance of the Warrant or the
issuance of the Common Stock upon exercise of the Warrant. All such rights
granted in the documents listed on Schedule 2.1(e) have been effectively
waived with regard to the issuance of the Warrant, the exercise of the
Warrant and the issuance of the Common Stock upon exercise of the Warrant.
Borrower has not violated any applicable federal or state securities laws
in connection with the offer, sale or issuance of any of its capital stock,
and, based upon Lender's representations in Section 2.2, the offer, sale
and issuance of the Warrant hereunder do not require registration under the
Securities Act or any applicable state securities laws. To the best of
Borrower's knowledge, there are no agreements among
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Borrower's stockholders with respect to any other aspect of Borrower's
affairs, except as set forth on Schedule 2.1(e).
(f) Trademarks, Patents, Etc. Schedule 2.1(f) is an accurate
and complete list of all patents, trademarks, tradenames, trademark
registrations, service names, service marks, copyrights, licenses, formulas
and applications therefor owned by Borrower or used or required by Borrower
in the operation of its business, title to each of which is, except as set
forth in Schedule 2.1(f) hereto, held by Borrower free and clear of all
adverse claims, liens, security agreements, restrictions or other
encumbrances. There is no infringement action, lawsuit, claim or complaint
which asserts that Borrower's operations violate or infringe the rights or
the trade names, trademarks, trademark registration, service name, service
xxxx or copyright of others with respect to any apparatus or method of
Borrower or any adversely held trademark, trade name, trademark
registration, service name, service xxxx or copyright, nor is Borrower in
any way making use of any confidential information or trade secrets of any
person except with the consent of such person.
(g) No Conflicts. Consummation of the transactions hereby
contemplated and the performance of the obligations of Borrower under and
by virtue of the Loan Documents will not result in any breach of, or
constitute a default under, any mortgage, security deed or agreement, deed
of trust, lease, bank loan or credit agreement, corporate charter or
bylaws, agreement or certificate of limited partnership, partnership
agreement, license, franchise or any other instrument or agreement to which
Borrower is a party or by which Borrower, or its respective properties may
be bound or affected or to which Borrower has not obtained an effective
waiver.
(h) Litigation. There are no actions, suits or proceedings
pending, or, to the knowledge of Borrower, threatened, against or affecting
Borrower or involving the validity or enforceability of any of the Loan
Documents at law or in equity, or before any governmental or administrative
agency; and to Borrower's knowledge, Borrower is not in default with
respect to any order, writ, injunction, decree or demand of any court or
any governmental authority.
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(i) Financial Statements. The financial statements of Borrower,
dated June 30, 1997, attached hereto as Schedule 2.1(i)(A), are true and
correct in all material respects have been prepared on the basis of
generally accepted accounting principles ("GAAP") consistently applied, and
fairly present the financial condition of Borrower as of the date(s)
thereof. No material adverse change has occurred in the financial
condition of Borrower since the date(s) thereof, and no additional
borrowings have been made by Borrower since the date(s) thereof other than
as set forth on Schedule 2.1(i)(B).
(j) Other Agreements; No Defaults. Borrower is not a party to
indentures, loan or credit agreements, leases or other agreements or
instruments, or subject to any articles of incorporation or corporate
restrictions that materially restrict the ability of Borrower to carry out
its obligations under the Loan Documents to which it is a party. Except as
set forth on Schedule 2.1(j), Borrower is not in default in any material
respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or
instrument material to its business to which it is a party, including but
not limited to this Agreement and the other Loan Documents, and no other
default or event has occurred and is continuing that with notice or the
passage of time or both would constitute a default or event of default
under any of same.
(k) Compliance With Law. Borrower has obtained all material
licenses, permits and approvals and authorizations necessary or required in
order to conduct its business and affairs as heretofore conducted and as
hereafter intended to be conducted. To Borrower's knowledge, Borrower is
in compliance with all laws, regulations, decrees and orders applicable to
it (including but not limited to laws, regulations, decrees and orders
relating to environmental, occupational and health standards and controls,
antitrust, monopoly, restraint of trade or unfair competition), except to
the extent that noncompliance, in the aggregate, cannot reasonably be
expected to have a material adverse effect on its business, operations,
property or financial condition and will not materially adversely affect
Borrower's ability to perform its obligations under the Loan Documents.
(l) Debt. Schedule 2.1(l) is a complete and correct list of all
credit agreements, indentures, purchase
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agreements, promissory notes and other evidences of indebtedness,
guaranties, capital leases and other instruments, agreements and
arrangements presently in effect providing for or relating to extensions of
credit (including agreements and arrangements for the issuance of letters
of credit or for acceptance financing) in respect of which Borrower, or any
of the properties thereof is in any manner directly or contingently
obligated; and the maximum principal or face amounts of the credit in
question that are outstanding and that can be outstanding are correctly
stated, and all liens of any nature given or agreed to be given as security
therefor are correctly described or indicated in such Schedule.
(m) Taxes. Borrower has filed or caused to be filed all tax
returns that to Borrower's knowledge are required to be filed (except for
returns that have been appropriately extended), and has paid, or will pay
when due, all taxes shown to be due and payable on said returns and all
other taxes, impositions, assessments, fees or other charges imposed on
them by any governmental authority, agency or instrumentality, prior to any
delinquency with respect thereto (other than taxes, impositions,
assessments, fees and charges currently being contested in good faith by
appropriate proceedings, for which appropriate amounts have been reserved).
No tax liens have been filed against Borrower, or any of the property
thereof.
(n) [Intentionally Omitted]
(o) Certain Transactions. Except as set forth on Schedule
2.1(o) hereto, Borrower is not indebted, directly or indirectly, to any of
its shareholders, officers, or directors or to their respective spouses or
children, in any amount whatsoever; none of said shareholders, officers or
directors or any members of their immediate families, are indebted to
Borrower or have any direct or indirect ownership interest in any firm or
corporation with which Borrower has a business relationship, or any firm or
corporation which competes with Borrower, except that shareholders,
officers and/or directors of Borrower may own no more than 4.9% of
outstanding stock of publicly traded companies which may compete with
Borrower. No officer or director of Borrower or any member of their
immediate families, is, directly or indirectly, interested in any material
contract with Borrower. Borrower is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
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(p) Statements Not False or Misleading. No representation or
warranty given as of the date hereof by Borrower contained in this
Agreement or any schedule attached hereto or any statement in any document,
certificate or other instrument furnished or to be furnished by Borrower to
Lender pursuant hereto, taken as a whole, contains or will (as of the time
so furnished) contain any untrue statement of a material fact, or omits or
will (as of the time so furnished) omit to state any material fact which is
necessary in order to make the statements contained therein not misleading.
(q) Margin Regulations. Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock.
No proceeds received pursuant to this Agreement will be used to purchase or
carry any equity security of a class which is registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended.
(r) Significant Contracts. Schedule 2.1(r) is a complete and
correct list of all contracts, agreements and other documents pursuant to
which Borrower receives revenues in excess of $500,000 per fiscal year.
Each such contract, agreement and other document is in full force and
effect as of the date hereof and Borrower knows of no reason why such
contracts, agreements and other documents would not remain in full force
and effect pursuant to the terms thereof.
(s) Environment. Borrower has duly complied with, and its
business, operations, assets, equipment, property, leaseholds or other
facilities are in compliance with, the provisions of all federal, state and
local environmental, health, and safety laws, codes and ordinances, and all
rules and regulations promulgated thereunder, except to the extent that
failure to do so would not have a material adverse effect on its business.
Borrower has been issued and will maintain all required federal, state and
local permits, licenses, certificates and approvals relating to (1) air
emissions; (2) discharges to surface water or groundwater; (3) noise
emissions; (4) solid or liquid waste disposal; (5) the use, generation,
storage, transportation or disposal of toxic or hazardous substances or
wastes (which shall include any and all such materials listed in any
federal, state or local law, code or ordinance and all rules and
regulations promulgated thereunder as hazardous or potentially hazardous);
or (6) other environmental, health
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or safety matters, except to the extent that failure to do so would not
have a material adverse effect on its business. Borrower has not received
notice of, or knows of, or suspects facts which might constitute any
violations of any federal, state or local environmental, health or safety
laws, codes or ordinances, and any rules or regulations promulgated
thereunder with respect to its businesses, operations, assets, equipment,
property, leaseholds, or other facilities. Except in accordance with a
valid governmental permit, license, certificate or approval, Borrower has
made no emission, spill, release or discharge into or upon (1) the air;
(2) soils, or any improvements located thereon; (3) surface water or
groundwater; or (4) the sewer, septic system or waste treatment, storage or
disposal system servicing the premises, of any toxic or hazardous
substances or wastes at or from the premises. To Borrower's knowledge
there has been no complaint, order, directive, claim, citation or notice by
any governmental authority or any person or entity to Borrower or with
respect to which Borrower is an interested party with respect to (1) air
emissions; (2) spills, releases or discharges to soils or improvements
located thereon, surface water, groundwater or the sewer, septic system or
waste treatment, storage or disposal systems servicing the premises;
(3) noise emissions; (4) solid or liquid waste disposal; (5) the use,
generation, storage, transportation or disposal of toxic or hazardous
substances or waste; or (6) other environmental, health or safety matters
affecting Borrower or its business, operations, assets, equipment,
property, leaseholds or other facilities. Except with respect to normal
office refuse and routine cleaning materials, Borrower has no indebtedness,
obligation or liability (absolute or contingent, matured or not matured),
with respect to the storage, treatment, cleanup or disposal of any solid
wastes, hazardous wastes or other toxic or hazardous substances (including
without limitation any such indebtedness, obligation, or liability with
respect to any current regulation, law or statute regarding such storage,
treatment, cleanup or disposal).
(t) Fees; Commissions. Borrower has not agreed to pay any
finder's fee, commission, origination fee (except for the processing and
commitment fees due pursuant to Section 1.2) or other fee or charge to any
person or entity with respect to the Loan and investment transactions
contemplated hereunder.
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(u) ERISA. Borrower is in compliance in all material respects
with all applicable provisions of ERISA (as defined in Section 3.11
hereof). Neither a reportable event nor a prohibited transaction (as
defined in ERISA) has occurred and is continuing with respect to any Plan
(as defined in Section 3.11 hereof); no notice of intent to terminate a
Plan has been filed nor has any Plan been terminated; no circumstances
exist which constitute grounds entitling the Pension Benefit Guaranty
Corporation (together with any entity succeeding to any or all of its
functions, the "PBGC") to institute proceedings to terminate, or appoint
a trustee to administer, a Plan, nor has the PBGC instituted any such
proceedings; neither Borrower nor any commonly controlled entity (as
defined in ERISA) has completely or partially withdrawn from a
multiemployer plan (as defined in ERISA); Borrower and each commonly
controlled entity has met its minimum funding requirements under ERISA
with respect to all of its Plans and the present fair market value of all
Plan property exceeds the present value of all vested benefits under each
Plan, as determined on the most recent valuation date of the Plan and in
accordance with the provisions of ERISA and the regulations thereunder
for calculating the potential liability of Borrower or any commonly
controlled entity to the PBGC or the Plan under Title IV of ERISA; and
neither Borrower nor any commonly controlled entity has incurred any
liability to the PBGC under ERISA.
(v) Title to Properties. Borrower has good, indefeasible and
insurable title to, or valid leasehold interests in, all its real
properties and good title to its other assets, free and clear of all liens
other than Permitted Liens (as defined in Section 3.15 hereof).
(w) Material Adverse Effect. Since June 30, 1997, no event has
occurred which has resulted or which Borrower reasonably believes could be
expected to result in a material adverse effect on Borrower or Borrower's
ability to perform its obligations under the Loan Documents. No default or
event of default under any other agreement will occur as a result of the
transactions contemplated by this Agreement or by the Warrant.
(x) Financial Solvency. Borrower is not entering into the
arrangements contemplated by this Agreement and the other Loan Documents
with actual intent to hinder, delay or defraud either present or future
creditors. On and as of the date hereof on a pro forma basis after giving
effect to
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the transactions contemplated by the Loan Documents and to all
debts incurred or to be created in connection herewith:
(i) the present fair salable value of the assets of Borrower (on
a going concern basis) will exceed the probable liability of Borrower on its
debts (including its contingent obligations);
(ii) Borrower has not incurred, nor does it intend to or believe
that it will incur, debts (including contingent obligations) beyond its ability
to pay such debts as such debts mature (taking into account the timing and
amounts of cash to be received from any source, and of amounts to be payable on
or in respect of debts); and the amount of cash available to Borrower after
taking into account all other anticipated uses of funds is anticipated to be
sufficient to pay all such amounts on or in respect of debts, when such amounts
are required to be paid; and
(iii) Borrower will have sufficient capital with which to
conduct its present and proposed business and the property of Borrower does not
constitute unreasonably small capital with which to conduct its current business
at present levels of operations.
For purposes of this Section 2.1(x) "debt" means any liability on a
(i) right to payment whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured; or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such a right to an equitable remedy is reduced to
judgment, fixed, contingent, unmatured, disputed, undisputed, secured, or
unsecured.
(y) Offering of Note and Warrant. Neither Borrower nor anyone acting
on its behalf has offered the Note, the Warrant or any similar securities for
sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof, with, any person other than Lender
and not more than 35 other institutional investors. Neither Borrower nor anyone
acting on its behalf has taken, or will take, any action which would make
unavailable an exemption from the registration requirements of Section 5 of
the Securities Act of 1933, as amended, or from the registration or
qualification
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provisions of the blue sky laws of any state with respect to the issuance
or sale of the Note and Warrant.
(z) Registration Rights. Except as described in the Warrant,
Borrower is not under any obligation to register under the Securities Act
of 1933, as amended, or the Trust Indenture Act of 1939, as amended, any of
its presently outstanding securities or any of its securities that may
subsequently be issued.
(aa) Employees. Borrower has no current labor problems or
disputes which have resulted or Borrower reasonably believes could be
expected to have a material adverse effect.
(bb) Issuance Taxes. All taxes imposed on Borrower in connection
with the issuance, sale and delivery of the Note, the Warrant and the
capital stock issuable upon exercise of the Warrant have been or will be
fully paid, and all laws imposing such taxes have been or will be fully
satisfied by Borrower.
(cc) List of Deposit Institutions. Schedule 2.1(ac) hereto sets
forth a true and complete list of all deposit institutions at which
Borrower has or maintains an account or deposits of any kind.
(dd) Locations and Names. Except as described on Schedule
2.1(ad), Borrower has not, during the five years preceding the date of this
Agreement, been known as or used any other corporate, trade or fictitious
name, nor acquired all or substantially all of the assets, capital stock or
operating units of any person. Borrower has not, during the five years
preceding the date of this Agreement, had a business location at any
address other than addresses set forth on Schedule 2.1(ad).
(ee) Household International, Inc. Borrower has delivered a
complete and accurate copy of its Software Development Agreement with
Household International, Inc., as amended (the "Household Agreement"). The
Household Agreement, Borrower's relationship to Household International,
Inc. pursuant thereto, and Borrower's rights and obligations thereunder are
deemed incorporated as appropriate into any and all Schedules under this
Article 2.
.2 Lender's Representations. Lender hereby represents to Borrower
that Lender is acquiring the Warrant for its own
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account, for investment and not with a view to, or for resale in connection
with any distribution or public offering thereof within the meaning of the
Securities Act of 1933 (the "Securities Act"). Lender acknowledges that the
issuance of the Warrant has not been registered under the Securities Act or
under the securities laws of any state applicable to this transaction, and it
may not be transferred unless the disposition thereof is registered under the
Securities Act and applicable state securities laws or is exempt from
registration thereunder.
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COVENANTS AND AGREEMENTS
Borrower covenants and agrees that during the term of this Agreement:
.1 Payment of Obligations. Borrower shall pay the indebtedness
evidenced by the Note according to the terms thereof, and shall timely pay or
perform, as the case may be, all of the other obligations of Borrower to Lender,
direct or contingent, however evidenced or denominated, and however and whenever
incurred, including but not limited to indebtedness incurred pursuant to any
present or future commitment of Lender to Borrower, together with interest
thereon, and any extensions, modifications, consolidations and/or renewals
thereof and any notes given in payment thereof.
.2 Financial Statements and Reports. Borrower shall furnish to
Lender (i) as soon as practicable and in any event within ninety (90) days after
the end of each fiscal year of Borrower, an audited balance sheet of Borrower as
of the close of such fiscal year, an audited statement of earnings and retained
earnings of Borrower as of the close of such fiscal year and an audited
statement of cash flows for Borrower for such fiscal year, prepared in
accordance with GAAP consistently applied and accompanied by an unqualified
audit report prepared by an independent certified public accountant acceptable
to Lender showing the financial condition of Borrower at the close of such year
and the results of its operations during such year and accompanied by a
certificate of the President of Borrower, stating that to the best of the
knowledge of such officer, Borrower has kept, observed, performed and fulfilled
each covenant, term and condition of this Agreement and the other Loan Documents
during the preceding fiscal year and that no Event of Default has occurred and
is continuing (or if an Event of Default has occurred and is continuing,
specifying the nature of same, the period of existence of same and the action
Borrower proposes to take in connection therewith), (ii) within thirty (30) days
of
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the end of each calendar month, a status report indicating the financial
performance of Borrower during such month and the financial position of Borrower
as of the end of such month in the format required by Lender (which format will
be delivered to Borrower on a diskette), (iii) within thirty (30) days of the
end of each quarter, other than the fourth quarter, a balance sheet of Borrower
as of the close of such quarter and a statement of earnings and retained
earnings of Borrower as of the close of such quarter, all in reasonable detail,
and prepared substantially in accordance with GAAP consistently applied (except
for the absence of footnotes and subject to year-end adjustments), and (iv) with
reasonable promptness, such other financial data as Lender may reasonably
request. Without Lender's prior written consent, Borrower shall not modify or
change any accounting policies or procedures in effect on the date hereof.
.3 Maintenance of Books and Records; Inspection. Borrower shall
maintain its books, accounts and records in accordance with GAAP consistently
applied, and after reasonable notice from Lender, shall permit Lender, its
officers, employees and any professionals designated by Lender in writing, at
Borrower's expense, to visit, inspect and/or audit any of its properties, books
and financial records, and to discuss its accounts, affairs and finances with
Borrower or the principal officers of Borrower during reasonable business hours,
all at such times as Lender may reasonably request; provided that no such visit,
inspection and/or audit shall materially interfere with the conduct of
Borrower's business.
.4 Insurance. Without limiting any of the requirements of any of
the other Loan Documents, Borrower shall maintain in amounts customary for
entities engaged in comparable business activity (a) to the extent required by
applicable law, worker's compensation insurance (or maintain a legally
sufficient amount of self insurance against worker's compensation liabilities,
with adequate reserves, under a plan approved by Lender, such approval not to be
unreasonably withheld or delayed) and (b) fire and "all risk" casualty insurance
on its properties against such hazards and in at least such amounts as are
customary in Borrower's business. Borrower will make reasonable efforts to
obtain and maintain general liability insurance in an amount, and at a cost,
deemed reasonable to the Borrower's Board of Directors. At the request of
Lender, Borrower will deliver forthwith a certificate specifying the details of
such insurance in effect.
.5 Taxes and Assessments. Borrower shall (a) file all tax returns
and appropriate schedules thereto that are required to be
15
filed under applicable law, prior to the date of delinquency, (b) pay and
discharge all taxes, assessments and governmental charges or levies imposed
upon Borrower upon its income and profits or upon any properties belonging to
it, prior to the date on which penalties attach thereto, and (c) pay all
taxes, assessments and governmental charges or levies that, if unpaid, might
become a lien or charge upon any of its properties; provided, however, that
Borrower in good faith may contest any such tax, assessment, governmental
charge or levy described in the foregoing clauses (b) and (c) so long as
appropriate reserves are maintained with respect thereto.
.6 Corporate Existence. Borrower shall maintain its corporate
existence and good standing in the state of its incorporation, and its
qualification and good standing as a foreign corporation in each jurisdiction in
which failure to be so qualified and in good standing would have a material
adverse effect on Borrower's financial positions or its ability to conduct its
business in the manner now conducted.
.7 Compliance with Law and Other Agreements. Except where the
failure to do so would not materially adversely affect Borrower's operations or
its ability to fulfill its obligations under the Loan Documents, Borrower shall
maintain its business, operations and property owned or used in connection
therewith in compliance with (a) all applicable federal, state and local laws,
regulations and ordinances governing such business operations and the use and
ownership of such property, and (b) all agreements, licenses, franchises,
indentures and mortgages to which Borrower is a party or by which Borrower or
any of its properties is bound. Without limiting the foregoing, Borrower shall
pay all of its indebtedness promptly in accordance with the terms thereof.
.8 Notice of Default. Borrower shall give written notice to Lender
of the occurrence of any default, event of default or Event of Default under
this Agreement or any other Loan Document promptly upon the occurrence thereof.
.9 Notice of Litigation. Borrower shall give notice, in writing, to
Lender of (a) any actions, suits or proceedings instituted by any persons
whomsoever against Borrower, or affecting any of the assets of Borrower, wherein
the amount at issue is in excess of Twenty-Five Thousand and No/100ths Dollars
($25,000.00), and (b) any dispute, not resolved within sixty (60) days of the
commencement thereof, between Borrower on the one hand and any governmental
regulatory body on the other hand, which dispute might materially interfere with
the normal operations of Borrower.
16
.10 Conduct of Business, Name and Location of Business. Borrower
will continue to engage in a business of the same general type and manner as
conducted by it on the date of this Agreement. Without Lender's prior written
consent, Borrower shall not modify or change any terms or conditions of any
material contracts and/or agreements to which Borrower is a party on the date
hereof. Without ten (10) days' prior written notice to Lender, Borrower shall
not change its name or its location(s) of doing business. In the event Borrower
makes a change of its name or location of business, Borrower shall promptly
execute any and all financing statements, and amendments or continuations
thereof and any other documents that Lender may reasonably request to evidence,
continue, and/or perfect any security interest in or pledge of collateral
securing the Loan.
.11 ERISA Plan. If Borrower has in effect, or hereafter institutes,
a pension plan that is subject to the requirements of Title IV of the Employee
Retirement Income Security Act of 1974, Pub. L. No. 93-406, September 2, 1974,
88 Stat. 829, 29 U.S.C.A. Section 1001 et seq. (1975), as amended from time to
time ("ERISA"), then the following warranty and covenants shall be applicable
during such period as any such plan (the "Plan") shall be in effect: (a)
Borrower hereby warrants that no fact that might constitute grounds for the
involuntary termination of the Plan, or for the appointment by the appropriate
United States District Court of a trustee to administer the Plan, exists at the
time of execution of this Agreement, (b) Borrower hereby covenants that
throughout the existence of the Plan, Borrower's contributions under the Plan
will meet the minimum funding standards required by ERISA and Borrower will not
institute a distress termination of the Plan, and (c) Borrower covenants that it
will send to Lender a copy of any notice of a reportable event (as defined in
ERISA) required by ERISA to be filed with the Labor Department or the Pension
Benefit Guaranty Corporation, at the time that such notice is so filed.
17
.12 Dividends, Distributions, Stock Rights, etc. Borrower shall not
declare or pay any dividend of any kind (other than stock dividends payable to
all holders of any class of capital stock), in cash or in property, on any class
of the capital stock of Borrower, or purchase, redeem, retire or otherwise
acquire for value any shares of such stock, nor make any distribution of any
kind in cash or property in respect thereof, nor make any return of capital of
shareholders, nor make any payments in cash or property in respect of any stock
options, stock bonus or similar plan (except as required or permitted
hereunder), nor grant any preemptive rights with respect to the capital stock of
Borrower, without the prior written consent of Lender.
.13 Guaranties; Loans; Payment of Debt. Without Lender's prior
express written consent, Borrower shall not guarantee nor be liable in any
manner, whether directly or indirectly, or become contingently liable after the
date of this Agreement in connection with the obligations or indebtedness of any
person or entity whatsoever, except for the endorsement of negotiable
instruments payable to Borrower for deposit or collection in the ordinary course
of business. Without Lender's prior express written consent, Borrower shall not
(a) make any loan, advance or extension of credit to any person other than in
the normal course of its business, or (b) make any payment on any subordinated
debt.
.14 Debt. Without the express prior written consent of Lender,
Borrower shall not create, incur, assume or suffer to exist indebtedness of any
description whatsoever excluding:
(a) the indebtedness evidenced by the Note;
(b) the endorsement of negotiable instruments payable to Borrower for
deposit or collection in the ordinary course of business;
(c) debts incurred in the ordinary course of business and capital
leases (each of which, individually, does not exceed $50,000); and
(d) the indebtedness listed on Schedule 2.1(l) hereto.
.15 No Liens. Borrower shall not create, incur, assume or suffer to
exist any lien, security interest, security title, mortgage, deed of trust or
other encumbrance upon or with respect to any of its properties, now owned or
hereafter acquired, except the following permitted liens (the "Permitted
Liens"):
18
(a) liens in favor of Lender;
(b) liens for taxes or assessments or other governmental charges or
levies if not yet due and payable;
(c) liens in connection with the leasing of equipment in favor of the
lessor of such equipment; and
(d) liens described on Schedule 2.1(l) hereto.
.16 Mergers, Consolidations, Acquisitions; Sales. Without the prior
written consent of Lender, Borrower shall not (a) be a party to any merger,
consolidation or corporate reorganization, nor (b) purchase or otherwise acquire
all or substantially all of the assets or stock of, or any partnership or joint
venture interest in, any other person, firm or entity, nor (c) sell, transfer,
convey, grant a security interest in or lease all or any substantial part of its
assets, nor (d) create any Subsidiaries nor convey any of its assets to any
Subsidiary, nor (e) permit any domestic Subsidiary to become active or do any
business after the date hereof.
.17 Transactions With Affiliates. Borrower shall not enter into any
transaction, including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of Borrower's
business and upon fair and reasonable terms no less favorable to Borrower than
Borrower would obtain in a comparable arm's length transaction with a person not
an affiliate. For the purposes of this Section 3.17, "affiliate" shall mean a
person, corporation, partnership or other entity controlling, controlled by or
under common control with Borrower.
.18 Environment. Borrower shall be and remain in compliance with the
provisions of all federal, state and local environmental, health, and safety
laws, codes and ordinances, and all rules and regulations issued thereunder;
notify Lender immediately of any notice of a hazardous discharge or
environmental complaint received from any governmental agency or any other
party; notify Lender immediately of any hazardous discharge by Borrower from or
affecting Borrower's premises; immediately contain and remove the same, in
compliance with all applicable laws; promptly pay any fine or penalty assessed
in connection therewith; permit Lender to inspect the premises, to conduct tests
thereon, and to inspect all books, correspondence, and records pertaining
thereto; and at Lender's request, and at Borrower's expense, provide a report of
a qualified environmental engineer, satisfactory in scope, form, and content to
19
Lender, and such other and further assurances reasonably satisfactory to Lender
that the condition has been corrected.
4
CONDITIONS TO CLOSING
.1 Closing of the Loan. The obligation of Lender to fund the Loan
on the date hereof (the "Closing Date") is subject to the fulfillment, on or
prior to the Closing Date, of each of the following conditions:
(a) Borrower shall have performed and complied in all material
respects with all of the covenants, agreements, obligations and conditions
required by this Agreement.
(b) Lender shall have received an opinion of the Borrower's
counsel, Xxxxxxxxxx Xxxxxxxx, LLP, dated the Closing Date, in form and
substance satisfactory to Lender's counsel, Xxxxxxxxx, Xxxxxx & Xxxxxxx,
P.C.
(c) Borrower shall have delivered to Lender the Note executed by
Borrower.
(d) Borrower shall have delivered to Lender a Stock Purchase
Warrant together with a Warrant Valuation Letter, both executed by
Borrower, in form acceptable to Lender.
(e) Borrower shall have delivered to Lender a Security Agreement
executed by Borrower (in form acceptable to Lender) and related UCC-1
Financing Statement(s) (in form acceptable to Lender) executed by Borrower.
(f) Borrower shall have delivered to Lender a Pledge and
Security Agreement (in a form acceptable to Lender) and related stock
proxies, stock powers, and stock certificates (all in form acceptable to
Lender), executed by Borrower, and related stock pledge letters (all in
form acceptable to Lender) executed by each domestic Subsidiary.
(g) Borrower shall have delivered to Lender a Trademark and
Patent Security Agreement executed by Borrower (in a form acceptable to
Lender) and related UCC-1 Financing Statements(s) (in a form acceptable to
Lender) executed by Borrower.
(h) Borrower shall have delivered a Copyright and Royalty
20
Security Agreement executed by Borrower (in a form acceptable to Lender)
and related UCC-1 Financing Statement(s) (in a form acceptable to Lender).
(i) Lender shall have received copies of the articles of
incorporation and other publicly filed organizational documents of Borrower
and each Subsidiary, certified by the Secretary of State or other
appropriate public official in the jurisdictions in which Borrower and each
Subsidiary are incorporated.
(j) Lender shall have received certified (as of the date of this
Agreement) copies of all corporate action taken by Borrower, including
resolutions of its Board of Directors, authorizing the execution, delivery
and performance of the Loan Documents.
(k) Lender shall have received a certificate as to the legal
existence and good standing of Borrower and each Subsidiary, issued by the
Secretary of State or other appropriate public official in the
jurisdictions in which Borrower and each Subsidiary are incorporated.
(l) Lender shall have received certificates of the Secretaries
of State or other appropriate public officials as to the qualifications of
Borrower and each Subsidiary to do business and good standing in each
jurisdiction in which a failure to be so qualified would have a material
adverse effect on their financial positions or their ability to conduct
their business in the manner now conducted and as hereafter intended to be
conducted.
(m) Borrower shall have delivered to Lender a Landlord's Consent
and Subordination of Lien, executed by each of Borrower's landlords, all in
a form acceptable to Lender.
(n) Borrower shall have delivered to Lender an Authorization
Agreement for Pre-Authorized Payments (Debit) executed by Borrower, in form
acceptable to Lender.
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5
DEFAULT AND REMEDIES
.1 Events of Default. The occurrence of any of the following shall
constitute an Event of Default hereunder:
(a) Default by Borrower in the payment of the principal of or
interest on the indebtedness evidenced by the Note in accordance with the
terms of the Note, which default is not cured within five (5) days;
(b) Any misrepresentation by Borrower, any guarantor of
Borrower, or any shareholder, member, partner, subsidiary, or affiliate of
Borrower as to any material matter hereunder or under any of the other Loan
Documents, or delivery by Borrower of any schedule, statement, resolution,
report, certificate, notice or writing to Lender that is untrue in any
material respect on the date as of which the facts set forth therein are
stated or certified;
(c) Failure of Borrower, any guarantor of Borrower, or any
shareholder, member, partner, subsidiary, or affiliate of Borrower to
perform any of its material obligations, covenants or agreements under this
Agreement, the Note or any of the other Loan Documents;
(d) Borrower (i) shall generally not pay or shall be unable to
pay its debts as such debts become due; or (ii) shall make an assignment
for the benefit of creditors or petition or apply to any tribunal for the
appointment of a custodian, receiver or trustee for it or a substantial
part of its assets; or (iii) shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution
or liquidation law or statute of any jurisdiction, whether now or hereafter
in effect; or (iv) shall have had any such petition or application filed or
any such proceeding commenced against it in which an order for relief is
entered or an adjudication or appointment is made; or (v) shall indicate,
by any act or intentional and purposeful omission, its consent to, approval
of or acquiescence in any such petition, application, proceeding or order
for relief or the appointment of a custodian, receiver or trustee for it or
a substantial part of its assets; or (vi) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for a
period of sixty (60) days or more;
22
(e) Borrower shall be liquidated, dissolved, partitioned or
terminated, or the charter thereof shall expire or be revoked;
(f) A default or event of default shall occur under any of the
other Loan Documents and, if subject to a cure right, such default or event
of default shall not be cured within the applicable cure period;
(g) Borrower shall default in the timely payment or performance
of any material obligation now or hereafter owed to Lender in connection
with any other indebtedness of Borrower now or hereafter owed to Lender;
(h) Borrower shall have defaulted and continue to be in default
in the timely payment or performance of any other indebtedness or
obligation, which in the aggregate exceeds Twenty-Five Thousand and
No/100ths Dollars ($25,000.00) or materially adversely affects Borrower's
financial condition.
With respect to any Event of Default described above that is capable of
being cured and that does not already provide its own cure procedure (a "Curable
Default"), the occurrence of such Curable Default shall not constitute an Event
of Default hereunder if such Curable Default is fully cured and/or corrected
within thirty (30) days (ten (10) days, if such Curable Default results from
default in the payment of a sum of money) of notice thereof to Borrower given in
accordance with the provisions hereof; provided, however, that this provision
shall not require notice to Borrower and an opportunity to cure any Curable
Default of which Borrower has had actual knowledge for the requisite number of
days set forth.
.2 Acceleration of Maturity; Remedies. Upon the occurrence of any
Event of Default described in subsection 5.1(d), the indebtedness evidenced by
the Note as well as any and all other indebtedness of Borrower to Lender shall
be immediately due and payable in full; and upon the occurrence of any other
Event of Default described above, Lender at any time thereafter may at its
option accelerate the maturity of the indebtedness evidenced by the Note as well
as any and all other indebtedness of Borrower to Lender; all without notice of
any kind. Upon the occurrence of any such Event of Default and the acceleration
of the maturity of the indebtedness evidenced by the Note:
(a) Lender shall be immediately entitled to exercise any and all
rights and remedies possessed by Lender pursuant to the terms of the Note
and all of the other Loan Documents; and
23
(b) Lender shall have any and all other rights and remedies that
Lender may now or hereafter possess at law, in equity or by statute.
.3 Remedies Cumulative; No Waiver. No right, power or remedy
conferred upon or reserved to Lender by this Agreement or any of the other Loan
Documents is intended to be exclusive of any other right, power or remedy, but
each and every such right, power and remedy shall be cumulative and concurrent
and shall be in addition to any other right, power and remedy given hereunder,
under any of the other Loan Documents or now or hereafter existing at law, in
equity or by statute. No delay or omission by Lender to exercise any right,
power or remedy accruing upon the occurrence of any Event of Default shall
exhaust or impair any such right, power or remedy or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein, and every right,
power and remedy given by this Agreement and the other Loan Documents to Lender
may be exercised from time to time and as often as may be deemed expedient by
Lender.
.4 Proceeds of Remedies. Any or all proceeds resulting from the
exercise of any or all of the foregoing remedies shall be applied as set forth
in the Loan Document(s) providing the remedy or remedies exercised; if none is
specified, or if the remedy is provided by this Agreement, then as follows:
First, to the costs and expenses, including, without limitation,
reasonable attorney's fees incurred by Lender in connection with the exercise of
its remedies;
Second, to the expenses of curing the default that has occurred, in
the event that Lender elects, in its sole discretion, to cure the default that
has occurred;
Third, to the payment of the obligations of Borrower under the Loan
Documents (the "Obligations"), including but not limited to the payment of the
principal of and interest on the indebtedness evidenced by the Note, in such
order of priority as Lender shall determine in its sole discretion; and
Fourth, the remainder, if any, to Borrower or to any other person
lawfully thereunto entitled.
24
6
TERMINATION
.1 Termination of this Agreement. This Agreement shall remain in
full force and effect until the later of (a) the Maturity Date (as defined in
the Note), or (b) the payment by Borrower of all amounts owed to Lender, at
which time Lender shall cancel the Note and deliver it to Borrower; provided,
however, that if at any time Borrower has satisfied all obligations to Lender,
Borrower may terminate this Agreement by providing written notice to Lender.
7
MISCELLANEOUS
.1 Performance By Lender. If Borrower shall default in the payment,
performance or observance of any covenant, term or condition of this Agreement,
which default is not cured within the applicable cure period, then Lender may,
at its option, pay, perform or observe the same, and all payments made or costs
or expenses incurred by Lender in connection therewith (including but not
limited to reasonable attorney's fees), with interest thereon at the highest
default rate provided in the Note (if none, then at the maximum rate from time
to time allowed by applicable law), shall be immediately repaid to Lender by
Borrower and shall constitute a part of the Obligations. Lender shall be the
sole judge of the necessity for any such actions and of the amounts to be paid.
.2 Successors and Assigns Included in Parties. Whenever in this
Agreement one of the parties hereto is named or referred to, the heirs, legal
representatives, successors, successors-in-title and assigns of such parties
shall be included, and all covenants and agreements contained in this Agreement
by or on behalf of Borrower or by or on behalf of Lender shall bind and inure to
the benefit of their respective heirs, legal representatives,
successors-in-title and assigns, whether so expressed or not.
.3 Costs and Expenses. Borrower agrees to pay all reasonable costs
and expenses incurred by Lender in connection with the making of the Loan,
including but not limited to filing fees, recording taxes, indebtedness taxes,
and reasonable attorneys' fees, promptly upon demand of Lender. Borrower
further agrees to pay all premiums for insurance required to be maintained by
Borrower pursuant to the terms of the Loan Documents and all of the
out-of-pocket costs and expenses incurred by Lender in connection with the
collection
25
of the Loan, amendment to the Loan Documents, or prepayment of the Loan,
including but not limited to reasonable attorneys' fees, promptly upon demand of
Lender.
.4 Assignment. The Note, this Agreement and the other Loan
Documents, other than the Warrant, which may be assigned only under its own
terms, may be endorsed, assigned and/or transferred in whole or in part by
Lender, and any such holder and/or assignee of the same shall succeed to and be
possessed of the rights and powers of Lender under all of the same to the extent
transferred and assigned. Lender may grant participations in all or any portion
of its interest in the indebtedness evidenced by the Note, and in such event
Borrower shall continue to make payments due under the Loan Documents to Lender
and Lender shall have the sole responsibility of allocating and forwarding such
payments in the appropriate manner and amounts. Borrower shall not assign any
of its rights nor delegate any of its duties hereunder or under any of the other
Loan Documents without the prior express written consent of Lender.
.5 Time of the Essence. Time is of the essence with respect to each
and every covenant, agreement and obligation of Borrower hereunder and under all
of the other Loan Documents.
.6 Severability. If any provision(s) of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
.7 Interest and Loan Charges Not to Exceed Maximum Allowed by Law.
Anything in this Agreement, the Note or any of the other Loan Documents to the
contrary notwithstanding, in no event whatsoever, whether by reason of
advancement of proceeds of the Loan, acceleration of the maturity of the unpaid
balance of the Loan or otherwise, shall the interest and loan charges agreed to
be paid to Lender for the use of the money advanced or to be advanced hereunder
exceed the maximum amounts collectible under applicable laws in effect from time
to time. It is understood and agreed by the parties that, if for any reason
whatsoever the interest or loan charges paid or contracted to be paid by
Borrower in respect of the indebtedness evidenced by the Note shall exceed the
maximum amounts collectible under applicable laws in effect from time to time,
then ipso facto, the obligation to pay such interest and/or loan charges shall
be reduced to the maximum amounts collectible under applicable laws in effect
from time to time, and any amounts collected by Lender that exceed such maximum
amounts shall be applied to the reduction of the principal balance of the
26
indebtedness evidenced by the Note and/or refunded to Borrower so that at no
time shall the interest or loan charges paid or payable in respect of the
indebtedness evidenced by the Note exceed the maximum amounts permitted from
time to time by applicable law.
.8 Article and Section Headings; Defined Terms. Numbered and titled
article and section headings and defined terms are for convenience only and
shall not be construed as amplifying or limiting any of the provisions of this
Agreement.
.9 Notices. Any and all notices, elections or demands permitted or
required to be made under this Agreement or any of the Loan Documents shall be
in writing, signed by the party giving such notice, election or demand and shall
be delivered personally, telecopied, or sent by certified mail or overnight via
nationally recognized courier service (such as Federal Express), to the other
party at the address set forth below, or at such other address as may be
supplied in writing and of which receipt has been acknowledged in writing. The
date of personal delivery, telecopy or telex or two (2) business days after the
date of mailing (or the next business day after delivery to such courier
service), as the case may be, shall be the date of such notice, election or
demand. For the purposes of this Agreement:
The Address of Lender is: Sirrom Capital Corporation
Suite 200
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxx Xxxxxxx
Telecopy: 615/726-1208
with a copy to: Xxxxxxxxx, Xxxxxx & Xxxxxxx, P.C.
0000 Xxxxxx Xxxxxxxx
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: J. Xxxxxxx Xxxxxx, Esq.
Telecopy: 423/265-9574
The Address of Borrower is: PaySys International, Inc.
Xxx Xxxx Xxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, CFO
Telecopy: 770/564-5679
with a copy to: Xxxxxxxxxx Xxxxxxxx, LLP
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Telecopy: 404/815-6555
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.10 Entire Agreement. This Agreement and the other written
agreements between Borrower and Lender represent the entire agreement between
the parties concerning the subject matter hereof, and all oral discussions and
prior agreements are merged herein; provided, if there is a conflict between
this Agreement and any other document executed contemporaneously herewith with
respect to the Obligations, the provision of this Agreement shall control. The
execution and delivery of this Agreement and the other Loan Documents by the
Borrower were not based upon any fact or material provided by Lender, nor was
the Borrower induced or influenced to enter into this Agreement or the other
Loan Documents by any representation, statement, analysis or promise by Lender.
.11 Governing Law and Amendments. This Agreement and all of the Loan
Documents shall be construed and enforced under the laws of the State of
Tennessee applicable to contracts to be wholly performed in such State except to
the extent certain rights and privileges may be granted Lender under applicable
federal laws in which event federal law shall control. No amendment or
modification hereof shall be effective except in a writing executed by each of
the parties hereto.
.12 Survival of Representations and Warranties. All covenants,
representations and warranties contained herein or in any of the Loan Documents,
or made by or furnished on behalf of the Borrower in connection herewith or any
of the Loan Documents, shall survive the execution and delivery of this
Agreement and all other Loan Documents and shall continue in full force and
effect so long as the Obligations are unpaid.
.13 Jurisdiction and Venue. Borrower hereby consents to the
jurisdiction of the courts of the State of Tennessee and the United States
District Court for the Middle District of Tennessee, as well as to the
jurisdiction of all courts from which an appeal may be taken from such courts,
for the purpose of any suit, action or other proceeding arising out of any of
its obligations arising under this Agreement or any other Loan Documents or with
respect to the transactions contemplated hereby, and expressly waives any and
all objections it may have as to venue in any of such courts.
.14 Waiver of Trial by Jury. LENDER AND BORROWER HEREBY WAIVE TRIAL
BY JURY IN ANY ACTIONS, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN
CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO
THIS AGREEMENT OR THE LOAN DOCUMENTS.
28
.15 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.
.16 Construction and Interpretation. Should any provision of this
Agreement require judicial interpretation, the parties hereto agree that the
court interpreting or construing the same shall not apply a presumption that the
terms hereof shall be more strictly construed against one party by reason of the
rule of construction that a document is to be more strictly construed against
the party that itself or through its agent prepared the same, it being agreed
that the Borrower, Lender and their respective agents have participated in the
preparation hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
have caused this Agreement to be executed by their duly authorized officers, as
of the day and year first above written.
LENDER:
SIRROM CAPITAL CORPORATION, a Tennessee corporation
By:_______________________________
Title:____________________________
BORROWER:
PAYSYS INTERNATIONAL, INC., a Florida corporation
By:_______________________________
Title:____________________________
29
Index of Schedules and Attachments
Exhibit A - Form of Note
Schedule 2.1(b) - Subsidiaries
Schedule 2.1(e) - Options, Warrants, Stock Rights, Etc.
Schedule 2.1(f) - Trademarks, Patents, Etc.
Schedule 2.1(i)(A) and (B) - Financial Statements
Schedule 2.1(l) - Debt and Liens
Schedule 2.1(o) - Shareholder Loans
Schedule 2.1(r) - Significant Contracts
Schedule 2.1(ac) - Deposit Institutions
Schedule 2.1(ad) - Names and Locations
30
