EXHIBIT 10.27
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement (this "Agreement"), dated
as of May 26, 2000, is entered into by and between Rentrak
Corporation, an Oregon corporation ("Rentrak") and 0XX.Xxx, Inc.,
a Delaware corporation (together with Rentrak, the "Companies"),
and Guaranty Business Credit Corporation d/b/a Fidelity Funding,
a Delaware corporation ("GBCC"). In consideration of the mutual
covenants and agreements contained herein, the Companies and GBCC
hereby agree as follows:
Section 1. Definitions and Construction.
1.1. When used herein, the following terms shall have the
following meanings:
"Account" means the right of either Company to payment for
goods sold or leased or for services rendered which is not
evidenced by an instrument or chattel paper, whether or not
earned by performance.
"Account Debtor" means the Person obligated to make payment
on an Account.
"Advance" has the meaning given to it in Section 2.1.
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls, or is controlled by
or under common control with, such Person.
"Affiliated Companies" means 0XX.Xxx, Inc., LRC, Inc., RTK
Xxxxxx, Ltd., Rentrak Europe B.V., Mortco, Inc., PDF, Inc.,
Streamlined Solutions, Inc., Transition Sports, Inc., Orient Link
Enterprises, Ltd., Xxxxxxxxx.xxx, Rentrak Canada Inc., Rentrak
UK, and Blowout Video.
"Blocked Account" means account number 1-536-9121-1640 with
U.S. Bank National Association.
"Blowout Video" means Blowout Video of Orlando, Inc., and
Blowout Video Holding Co. and its subsidiaries.
"Borrowing Base" means an amount equal to the sum,
determined by GBCC from time to time, of 85% of the face amount
of Eligible Accounts, not to exceed collections of Eligible
Accounts for the two (2) preceding calendar months.
Additionally, not more than 10% (in dollar amount) of Eligible
Accounts shall be accounts receivable which are due 90 days from
invoice date and not more than 10% (in dollar amount) of Eligible
Account shall be accounts receivable which are due 120 days from
invoice date. GBCC may change the percentage of Eligible
Accounts constituting the Borrowing Base from time to time based
upon dilution and other factors deemed appropriate by GBCC.
"Borrowing Base Certificate" means a certificate in the form
attached hereto as Exhibit A, duly executed by an authorized
officer of the Companies.
"Capital Expenditures" means, for any period, the aggregate
expenditures by Rentrak and its Subsidiaries and its during such
period that are classified as capital expenditures in accordance
with GAAP.
"Cash Collateral" has the meaning given to it in Section 7.
"Collateral" has the meaning given to it in Section 6.
"Concentration Limit" means, as of any date, an amount equal
to 20% of the face amount of Eligible Accounts outstanding on
such date.
"Contract Rate" means, prior to the occurrence of an Event
of Default or an event or circumstance that would, with the
giving of notice, the passage of time or both, constitute an
Event of Default, a rate of interest equal to the lesser of (a)
the Prime Rate in effect from time to time plus .25% per annum
and (b) the maximum rate permitted by applicable law and, after
the occurrence of an Event of Default or an event or circumstance
that would, with the giving of notice, the passage of time or
both, constitute an Event of Default, a rate of interest equal to
the lesser of (x) the Prime Rate in effect from time to time plus
5.25% per annum and (y) the maximum rate permitted by applicable
law. The Contract Rate shall be automatically increased or
decreased, as the case may be, without notice to the Company from
time to time as of the effective date of each change in the Prime
Rate.
"Current Assets" means, as of any date, only those assets of
Rentrak and its Subsidiaries that may, in the ordinary course of
business, be converted into cash within a period of one year from
such date, but excluding (a) amounts due from employees,
officers, shareholders or directors of Rentrak or any Subsidiary,
and (b) amounts due from Rentrak or Affiliates of the Company.
"Current Liabilities" means, as of any date, the Advances
outstanding on such date and all other Obligations of Rentrak and
its Subsidiaries that are due within one year from such date.
"Debt" means, with respect to any Person, all indebtedness,
obligations and liabilities of such Person, including without
limitation: (a) all liabilities which would be reflected on a
balance sheet of such Person prepared in accordance with GAAP,
(b) all obligations of such Person in respect of any guaranty of
any Debt of another Person, and (c) all obligations, indebtedness
and liabilities secured by any lien on or security interest in
any property or assets of such Person.
"EBITDA" means, for any period, the sum (determined without
duplication, on a consolidated basis and in accordance with GAAP)
of (a) the net income (or net loss) of Rentrak and its
Subsidiaries (including gains and losses from the sales of assets
in the ordinary course of business) for such period before
provisions for income taxes, (b) the Interest Expense of Rentrak
and its Subsidiaries for such period, and (c) any depreciation or
amortization expenses incurred by Rentrak and its Subsidiaries in
determining its net income (or net loss) for such period.
"Eligible Accounts" means, at the time of determination
thereof, all Accounts of the Companies other than (i) any Account
which has been outstanding more than 42 days from due date if
terms for payment are 60 days from invoice date, and more than 21
days from due date if terms for payment are 90 days or 120 days
from invoice date, (ii) any Account which has been outstanding
for more than 141 days from invoice date, (iii) any Account as to
which GBCC does not have a valid and perfected, first priority
security interest, (iv) to the extent that the aggregate
outstanding Accounts owed by any single Account Debtor exceeds
the Concentration Limit, any Account owed by such Account Debtor,
(v) any Account that is owed by an Account Debtor that is an
Affiliate of Rentrak or an officer or employee of either Company,
(vi) any Account that arises out of a sale made or services
performed outside of the United States or that is owed by an
Account Debtor located outside the United States, (vii) any
Account that is owed by a creditor or supplier of either Company
or with respect to which any defense, counterclaim or right of
set off has been asserted, (viii) any Account owed by an Account
Debtor if more than 50% (in dollar amount) of such Account
Debtor's Accounts are not eligible under subsection (i) of this
definition, (ix) any Account that is owed by the United States or
any department, agency or instrumentality thereof, unless the
right to payment under such Account is assigned to GBCC as
Collateral in full compliance with the Assignment of Claims Act
of 1940, as amended (31 U.S.C. 3727), and (x) any Account that
has not been approved by GBCC for inclusion in the Borrowing
Base.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, regulations, rules, orders, licenses,
agreements or other governmental restrictions relating to the
environment or to emissions, discharges or releases of pollutants
or industrial, toxic or hazardous substances into the
environment, or otherwise relating to the manufacture,
processing, treatment, transport or handling of pollutants or
industrial, toxic or hazardous substances.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, together with all rules and
regulations promulgated with respect thereto.
"ERISA Plan" means any pension benefit plan subject to Title
IV of ERISA maintained by Rentrak or any Affiliate thereof with
respect to which either Company has a fixed or contingent
liability.
"Event of Default" has the meaning given it in Section 9.
"Facility Limit" means $12,000,000.
"GAAP" means generally accepted accounting principles and
practices as promulgated by the American Institute of Certified
Public Accountants, applied on a basis consistent with past
practices.
"Guarantors" means LRC, Inc., Mortco, Inc., PDF, Inc.,
Streamlined Solutions, Inc., Transition Sports, Inc., and
Xxxxxxxxx.xxx.
"Indemnified Claims" means any and all claims, demands,
actions, causes of action, judgments, liabilities, damages and
consequential damages, penalties, fines, costs, fees, expenses
and disbursements (including, without limitation, fees and
expenses of attorneys and other professional consultants and
experts in connection with any investigation or defense) of every
kind, known or unknown, existing or hereafter arising,
foreseeable or unforeseeable, which may be imposed upon,
threatened or asserted against or incurred or paid by any
Indemnified Person at any time and from time to time, because of,
resulting from, in connection with or arising out of any
transaction, act, omission, event or circumstance in any way
connected with the Collateral or the Transaction Documents
(including but not limited to enforcement of GBCC's rights
thereunder or the defense of GBCC's actions thereunder),
excluding with respect to any Indemnified Persons, any of the
foregoing resulting from such Indemnified Person's gross
negligence or willful misconduct.
"Indemnified Persons" means GBCC and its officers,
directors, shareholders, employees, attorneys, representatives
and Affiliates.
"Intangible Assets" means such of Rentrak's and the
Affiliated Companies' assets as are treated as intangible
pursuant to GAAP, including, without limitation: (a) obligations
owing by officers, directors, shareholders, employees,
subsidiaries, Affiliates or any Person in which any such officer,
director, shareholder, employee, subsidiary, or Affiliate owns
any interest and (b) any asset which is intangible or lacks
intrinsic or marketable value or collectibility, including,
without limitation, goodwill, noncompetition agreements, patents,
copyrights, trademarks, franchises, organization or research and
development costs.
"Interest Expense" means, for any period, all interest
charges paid or accrued by Rentrak and its Subsidiaries during
such period.
"Inventory" means all goods, now owned or hereafter
acquired by either Company, wherever located, that are held for
sale or lease or are to be furnished under any contract of
service (including, but not limited to raw materials, work in
process, finished goods and materials used or consumed in the
manufacture or production thereof, goods in which either Company
has an interest in mass or a joint or other interest or rights of
any kind, and goods which have been returned to or repossessed or
stopped in transit by either Company).
"Lockbox Account" means account number 00-0000000 with First
Tennessee Bank National Association.
"Net Profit" means, for any period, Rentrak's and its
Affiliated Companies' net income after tax for such period
determined in accordance with GAAP.
"Obligations" means all indebtedness, obligations and
liabilities of either Company to GBCC arising under the
Transaction Documents, and all other indebtedness, obligations
and liabilities of either Company to GBCC, whether presently
existing or hereafter arising, direct or indirect, primary or
secondary, joint or several, fixed or contingent, and whether
originally payable to GBCC or to a third party and subsequently
acquired by GBCC.
"Person" means any individual, corporation, joint venture,
partnership, trust, unincorporated organization or governmental
entity or agency.
"Prime Rate" means the rate per annum published from time to
time by The Wall Street Journal as the base rate for corporate
loans at large commercial banks (or, if more than one such rate
is published, the higher or highest of the rates so published).
If such rate is no longer published by The Wall Street Journal,
then GBCC shall, in its sole discretion substitute the base or
prime rate for corporate loans at a large commercial bank for the
base rate published in The Wall Street Journal. Such rate may
not necessarily be the lowest or best rate actually charged to
any customer of such commercial bank.
"Remittance Address" means such address as GBCC shall
direct the Company from time to time in writing in accordance
with the terms hereof.
"Shareholders Equity" means, as of any date, the sum of (a)
the shareholders' equity of Rentrak and the Affiliated Companies
as of such date determined in accordance with GAAP and (b) the
then outstanding principal balance of any Debt of either Company
subordinated to the Obligations pursuant to a subordination
agreement acceptable to GBCC between GBCC and the Person to whom
such Debt is owed.
"Subordination Agreement" means a Subordination Agreement
among Rentrak, GBCC, and Xxxx XxXxxx, upon terms and conditions
satisfactory to GBCC in its sole discretion.
"Subsidiaries" means 0XX.Xxx, Inc., LRC, Inc., Mortco, Inc.,
PDF, Inc., Streamlined Solutions, Inc., Transition Sports, Inc.,
and Xxxxxxxxx.xxx.
"Tangible Net Worth" means, as of any date, the amount
obtained by subtracting Rentrak's and the Affiliated Companies'
Intangible Assets as of such date from Shareholders' Equity as of
such date.
"Tangible New Worth Requirement" means $15,000,000.
"Term" has the meaning given to it in Section 11.4.
"Termination Event" means (a) the occurrence with respect to
any ERISA Plan of (i) a reportable event described in Sections
4043(b)(5) of ERISA or (ii) any other reportable event described
in Section 4043(b) of ERISA other than a reportable event not
subject to the provision for 30-day notice to the Pension Benefit
Guaranty Corporation pursuant to a waiver by such corporation
under Section 4043(a) of ERISA or (b) the withdrawal of Rentrak
or any Affiliate of Rentrak from any ERISA Plan during a plan
year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA, or (c) any event or condition which
might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer,
any ERISA Plan.
"Transaction Documents" means this Agreement and all other
documents and instruments executed and delivered in connection
therewith.
"UCC" means the Uniform Commercial Code as in effect in the
applicable jurisdiction.
"Working Capital" means, as of any date, the excess of
Current Assets over Current Liabilities as of such date.
"Working Capital Requirement" means $5,000,000.
1.2. Terms defined in the UCC and used but not defined
herein shall have the meanings ascribed to them in the UCC.
1.3. References herein to a particular agreement, instrument
or document also shall be deemed to refer to and include all
renewals, extensions and modifications of such agreement,
instrument or document. All addenda, exhibits and schedules
attached to this Agreement are a part hereof for all purposes.
Words in the singular form shall be construed to include the
plural and vice versa, unless the context otherwise requires.
1.4. All interest accruing hereunder shall be calculated on
the basis of actual days elapsed (including the first but
excluding the last day) plus one (1) business day and a year of
360 days. Unless otherwise expressly provided herein or unless
GBCC otherwise consents, all financial statements and reports
furnished to GBCC hereunder shall be prepared, and all financial
computations and determinations pursuant hereto shall be made, in
accordance with GAAP. All calculations with respect to Rentrak
and its Subsidiaries shall be consolidated in accordance with
GAAP. All payments received by GBCC after its internally
established time for closing business on any business day shall
be applied as of the next succeeding business day. Any payment
which is due on a day which is not a business day shall instead
be deemed to be due on the next succeeding business day, and
interest thereon shall accrue and be payable at the then
applicable rate during the time of such extension. GBCC's
records in respect of loans advanced, accrued interest, payments
received and applied and other matters in respect of calculation
of the amount of the Obligations shall be deemed conclusive
absent demonstration of error. All statements of account
rendered by GBCC to the Company relating to principal, accrued
interest or costs owing by the Company under this Agreement shall
be presumed to be correct and accurate unless, within 30 days
after receipt thereof, the Company shall notify GBCC in writing
of any claimed error therein.
Section 2. Advances.
2.1. Subject to the terms of this Agreement, including,
without limitation, Section 3, GBCC shall make advances to the
Companies (each an "Advance and collectively the "Advances") from
time to time during the Term; provided, however, that the
aggregate principal amount of Advances outstanding at any time
shall not exceed the lesser of the (i) Borrowing Base determined
by GBCC from time to time and (ii) the Facility Limit. Each
Advance must be greater than or equal to $5,000 or must equal the
unadvanced portion of the Borrowing Base. The Companies hereby
jointly and severally agree to repay to GBCC all Advances made
hereunder, together with interest thereon, in the manner provided
herein. The principal owing hereunder in respect of the Advances
at any given time shall equal the aggregate amount of Advances
made hereunder minus all principal payments thereon received by
GBCC hereunder. Subject to the terms and conditions hereof, the
Companies may borrow, repay and reborrow under this Agreement.
2.2. Each request by the Companies to GBCC for an Advance
hereunder must be in writing or promptly confirmed in writing.
Each such written request or confirmation shall be accompanied by
a "Borrowing Base Certificate" in the form attached hereto as
Exhibit A, together with such supporting information as GBCC
shall request.
2.3. Promptly after receiving each Borrowing Base
Certificate, GBCC shall, based upon such Borrowing Base
Certificate and such other information available to GBCC,
redetermine the Borrowing Base, which redetermination shall take
effect immediately and remain in effect until the next such
redetermination. If all conditions precedent to any Advance
requested have been met, GBCC will on the date requested make
such Advance available to the Companies by wire transfer to the
account designated in writing by the Companies. In the event
GBCC does not receive an appropriately completed Borrowing Base
Certificate, GBCC shall have no obligation to redetermine the
Borrowing Base or make any additional Advances hereunder.
2.4. If the aggregate unpaid principal balance of the
Advances exceeds the Borrowing Base at any time, the Companies
shall, upon receipt of notice thereof from GBCC, immediately
repay the principal of the Advances in an amount at least equal
to such excess. Any principal repaid pursuant to this Section
2.4 shall be in addition to, and not in lieu of, all payments
otherwise required to be paid under the Transaction Documents.
2.5. The aggregate unpaid principal balance of the Advances
plus all accrued but unpaid interest thereon shall be payable by
the Companies to GBCC on demand, or if no demand is made, on the
last day of the Term.
2.6. The aggregate unpaid principal balance of all Advances
shall bear interest at the Contract Rate in effect from time to
time. Except as provided in Section 2.12, all accrued but unpaid
interest hereunder shall be due and payable by the Companies to
GBCC on the last day of each calendar month.
2.7. The Companies shall pay to GBCC a facility fee in the
amount of one percent (1%) of the Facility Limit, payable on the
date hereof. The Companies hereby authorize GBCC, at its sole
discretion, to deduct any facility fee from any Advance
hereunder, unless the Companies pay such fee at closing in
immediately available funds.
2.8. The Companies shall pay to GBCC a collateral monitoring
fee in the amount of $750.00 for each calendar month. The
collateral monitoring fee for each calendar month shall be due
and payable on the first day of the next calendar month, and
shall be prorated for any partial calendar month during the Term.
2.9. In addition to, and not in lieu of, any termination fee
required by Section 11.4, the Companies shall pay to GBCC a
liquidation fee (in this section called the "Liquidation Fee") in
the amount of five percent (5%) of the face amount of each
Eligible Account included in the Borrowing Base that is
outstanding at any time during the Liquidation Period (as defined
below). The Liquidation Fee shall be payable on the earlier to
occur of (i) the date on which GBCC collects the applicable
Eligible Account and (ii) the ninetieth day after the invoice
date of the applicable Eligible Account. For purposes of this
section, the term "Liquidation Period" means a period beginning
on the earliest of (i) the date of commencement against or by
either Company of any voluntary or involuntary case under the
federal Bankruptcy Code, (ii) the date of any general assignment
by either Company for the benefit of its creditors; (iii) the
date of any appointment or taking possession by a receiver,
liquidator, assignee, custodian or similar official of all or a
substantial part of either Company's assets, or (iv) the date of
the cessation of business of either Company, and ending on the
date on which GBCC has actually received all fees, costs,
expenses and other amounts owing to it hereunder.
2.10. Contemporaneously with the execution and delivery
hereof, the Companies shall pay to GBCC a fee of $25,000.00 plus
out-of-pocket expenses to cover the legal costs of the
negotiation, preparation, execution and delivery of the
Transaction Documents. In addition, the Companies shall pay or
reimburse GBCC upon demand for all other costs and expenses
incurred by GBCC in connection with its due diligence review of
the Companies and all Affiliated Companies and the closing of the
transactions contemplated hereby and all reasonable attorney's
fees, court costs and other expenses incurred by GBCC (whether or
not litigation is commenced or judgment issued, and if litigation
is commenced whether at trial or any appellate level) in
connection with the enforcement by GBCC of this Agreement or any
other Transaction Document, the protection or enforcement of
GBCC's interest in the Collateral, the collection by GBCC of the
Collateral, or the representation of GBCC in connection with any
bankruptcy case or insolvency proceeding involving either
Company, the Collateral, or any Account Debtor, including,
without limitation, any representation involving relief from a
stay motion, a cash collateral dispute, an assumption or
rejection motion or a dispute concerning any proposed disclosure
statement and plan proposed in any such proceeding.
2.11. GBCC shall be entitled to collect upon demand its
normal and customary charges for the following routine services
provided or obtained in the course of performing its functions
with respect to the Collateral: lock box charges, credit
reports, wire transfers, overnight mail delivery, UCC, judgment,
litigation and tax lien searches and filings.
2.12. All interest, fees and other amounts due to GBCC
pursuant to this Section 2 shall be payable on demand, and may,
in GBCC's sole discretion, be deducted from Advances or paid from
the Cash Collateral.
2.13. The parties hereto intend to contract in strict
compliance with applicable usury law from time to time in effect.
In furtherance thereof, the parties hereto stipulate and agree
that none of the terms and provisions contained in this Agreement
or any other Transaction Document shall ever be construed to
create a contract to pay, for the use, forbearance or detention
of money, interest in excess of the maximum amount of interest
permitted to be charged by applicable law from time to time in
effect. Neither Company, nor any present or future guarantor or
any other Person hereafter becoming liable for the payment of the
Obligations, shall ever be liable for unearned interest thereon
or shall ever be required to pay interest thereon in excess of
the maximum amount that may be lawfully charged under applicable
law from time to time in effect, and the provisions of this
paragraph shall control over all other provision of the
Transaction Documents which may be in conflict therewith. If any
indebtedness or obligation owed by the Companies under the
Transaction Documents is prepaid or accelerated and as a result
any amounts held to constitute interest are determined to be in
excess of the legal maximum, or GBCC shall otherwise collect
moneys which are determined to constitute interest which would
otherwise increase the interest on all or any part of such
obligations to an amounts in excess of that permitted to be
charged by applicable law then in effect, then all such sums
determined to constitute interest in excess of such legal limit
shall, without penalty, be promptly applied to reduce the then
outstanding principal of the related indebtedness or obligations
or, at GBCC's option returned to the Companies or the other payor
thereof upon such determination. In determining whether or not
any amount paid or payable, under any circumstance, exceeds the
maximum amount permitted under applicable law, GBCC and the
Companies shall to the greatest extent permitted under applicable
law, characterize any non-principal payment as an expense, fee or
premium rather than as interest, and amortize, prorate, allocate
and spread the total amount of interest throughout the entire
contemplated term of this Agreement in accordance with the
amounts outstanding from time to time hereunder and the Maximum
Rate from time to time in effect under applicable law in order to
lawfully charge the maximum amount of interest permitted under
applicable law. If at any time the rate at which interest is
payable hereunder exceeds the Maximum Rate, the amount
outstanding hereunder shall bear interest at the Maximum Rate
only, but shall continue to bear interest at the Maximum Rate
until such time as the total amount of interest accrued hereunder
equals (but does not exceed) the total amount of interest which
would have accrued hereunder had there been no Maximum Rate
applicable hereto. In the event applicable law provides for an
interest ceiling under Chapter 303 of the Texas Finance Code,
that ceiling shall be the weekly ceiling and shall be used when
appropriate in determining the maximum rate permitted by
applicable law. As used in this paragraph, (i) the term
"applicable law" means the laws of the State of Texas or the laws
of the United States of America, whichever laws allow the greater
interest, as such laws now exist or may be changed or amended or
come into effect in the future, and (ii) the term "Maximum Rate"
means, at the time of determination, the maximum rate of interest
which, under applicable law, may then be charged hereunder. The
parties agree that this Agreement shall not be subject to
Chapter 346 of the Texas Finance Code.
Section 3. Conditions Precedent to Advances.
3.1. GBCC shall not be obligated to make any Advance
hereunder (including the first) until it shall have received the
following documents, duly executed in form and substance
satisfactory to GBCC and its counsel:
3.1.1. continuing unconditional and absolute
guarantees by all Guarantors of all Obligations;
3.1.2. a certificate executed by the President and
the Secretary of each Company and each Guarantor
certifying (i) the names and signatures of the officers
of each such Person authorized to execute Transaction
Documents, (ii) the resolutions duly adopted by the
Board of Directors of each such Person authorizing the
execution of the Transaction Documents, and (iii)
correctness and completeness of the copy of the bylaws
of each such Person;
3.1.3. a certificate executed by the President and
the Chief Financial Officer of each Company certifying
the satisfaction of the conditions set forth in Section
3.2;
3.1.4. certificates regarding the due formation,
valid existence and good standing of each Company and
each Guarantor in the state of its organization issued
by the appropriate governmental authorities in such
jurisdiction;
3.1.5. a release executed by Silicon Valley Bank and
any other Person (other than Xxxx XxXxxx) with liens in
the Collateral, releasing all existing liens and
security interests in the Collateral, and the
Subordination Agreement with respect to liens in the
Collateral in favor of Xxxx XxXxxx;
3.1.6. landlord/mortgagee's lien waivers
subordinating the security interest of the Landlord at
Rentrak's Portland, Oregon, headquarters, in the
Collateral to the security interest therein of GBCC
granted herein;
3.1.7. a favorable opinion of counsel for the
Companies and the Guarantor covering such matters as
GBCC may request in its sole discretion;
3.1.8. endorsements naming GBCC as an additional
insured or loss payee as its interest may appear, as
appropriate, on all liability insurance and all
property insurance policies of the Companies;
3.1.9. a lockbox and deposit account agreement and a
blocked account agreement upon terms satisfactory to
GBCC in its sole discretion; and
3.1.10. such other documents, certificates, opinions,
and information as GBCC may request in its sole
discretion.
3.2. Furthermore, GBCC shall not be obligated to make any
Advance hereunder (including the first), unless: (i) all
representations and warranties made by each Company in the
Transaction Documents are true on and as of the date of such
Advance as if such representations and warranties had been made
as of the date of such Advance, (ii) each Company has performed
and complied with all agreements and conditions required in the
Transaction Documents to be performed or complied with by it on
or prior to the date of such Advance, (iii) no Event of Default
or any event or circumstance that, with the passage of time, the
giving of notice or both, would become an Event of Default shall
have occurred, (iv) such Advance shall not be prohibited by any
law or any regulation or any order of any court or governmental
agency or authority, (v) no Company shall have repudiated or made
any anticipatory breach of any of its obligations under any
Transaction Document, and (vi) GBCC shall not have disapproved
such Advance in whole or in part.
Section 4. Each Company's Representations and
Warranties. Each Company represents and warrants to GBCC on the
date hereof, and shall be deemed to represent and warrant to GBCC
on each date on which an Advance is made to either Company
hereunder, that:
4.1. Each Company is a corporation duly organized, validly
existing and in good standing (or, in the case of Oregon, on
active status) under the laws of the state of its incorporation,
with all requisite power and authority to execute, deliver and
perform its obligations under this Agreement and the other
Transaction Documents to which it is a party and to conduct its
business as presently conducted. Each Company is duly qualified
and authorized to do business as a foreign corporation and is in
good standing (or, in the case of Oregon, on active status) in
all states in which such qualification and good standing are
necessary or desirable for the conduct by each Company of its
business or the performance by each company of its obligations
hereunder. The execution, delivery and performance by each
Company of this Agreement and the other Transaction Documents to
which each is a party does not and will not constitute (a) a
violation of any applicable law or any Company's articles or
certificate of incorporation or bylaws or (b) a material breach
of any other document, agreement or instrument to which any
Company is a party or by which any Company is bound. This
Agreement and the other Transaction Documents to which each
Company is a party have been duly authorized, executed and
delivered by each Company, and are legal, valid and binding
obligations of each Company enforceable against each Company in
accordance with its terms. No consent of, approval by,
registration or filing with or authorization from any
governmental authority or agency is required in connection with
the execution, delivery or performance by each Company of this
Agreement or the other Transaction Documents to which each is a
party. Rentrak has no Affiliates other than the Guarantors and
the Affiliated Companies. The Affiliated Companies (other than
0XX.Xxx, Inc.) that are not Guarantors are incorporated under the
laws of foreign jurisdictions and have few if any assets and
activities, other than Rentrak Canada Inc. and Blowout Video.
4.2. Effective at the time of closing and payment in full of
Silicon Valley Bank, none of the Eligible Accounts or any other
Collateral is subject to any lien, encumbrance, security interest
or other claim of any kind or nature. Neither Company has
transferred, sold, pledged or given a security interest in any of
its Accounts, to anyone other than GBCC. There are no financing
statements on file in any public office governing any property of
either Company of any kind, real or personal, in which either
Company is named in or has signed as the debtor, except the
financing statement or statements filed or to be filed in respect
of this Agreement. Notwithstanding the foregoing, certain
Collateral is subject to a security interest in favor of Xxxx
XxXxxx which is subject to the Subordination Agreement.
4.3. Each Company is the sole owner and holder of, and has
good and marketable title to, all Collateral. This Agreement
creates a valid security interest in the Collateral in favor of
GBCC, and such security interest is a perfected, first priority
security interest in the Collateral superior to the rights of any
other Persons therein.
4.4. The amount of each Eligible Account is due and owing to
the Companies and represents an accurate statement of a bona fide
sale, delivery and acceptance of Inventory or performance of
service by the Companies to or for an Account Debtor. The terms
for payment of the Eligible Accounts are as represented to GBCC
and the payment of the Eligible Accounts is not contingent upon
the fulfillment by either Company of any further performance of
any nature whatsoever. There are no set-offs, allowances,
discounts, deductions, counterclaims against the Eligible
Accounts or any claims by Account Debtors, of any kind
whatsoever, valid or invalid, that have been or may be asserted
as a basis for refusing to pay an Eligible Account, in whole or
in part, either at the time it is accepted by GBCC for inclusion
in the Borrowing Base or prior to the date it is to be paid. To
the best of each Company's knowledge, each Account Debtor's
business is solvent.
4.5. The address set forth below each Company's signature
hereon is, and for at least the last six months has been, such
Company's mailing address, its chief executive office, its
principal place of business, the office where all of the books
and records concerning the Eligible Accounts are maintained and
the location of all Collateral, except that 0XX.Xxx, Inc.'s
office either simultaneous with execution hereof or promptly
thereafter will move to the Skokie, Illinois, address set forth
on the signature page hereon. Neither Company transacts
business, and has not transacted business during the past five
years, under any trade, fictitious or assumed name other than
those set forth under such Company's signature hereon. During the
past five years, neither Company has been a party to a merger or
consolidation and acquired all or substantially all of the assets
of any Person.
4.6. Each Company has filed all tax reports and returns
required to be filed by it and has paid all federal, state and
local taxes and governmental charges imposed upon such Company.
4.7. Each Company is in compliance with ERISA, and is not
required to contribute to any "multiemployer plan" as defined in
Section 4001 of ERISA. Each Company has conducted its business
in material compliance with all applicable laws, including but
not limited to, applicable Environmental Laws, and maintains and
is in compliance with all licenses and permits required under any
such laws to conduct its business and perform its obligations
hereunder. Neither Company has any known material contingent
liability under any Environmental Law.
4.8. The application made by the Companies to GBCC in
connection with this Agreement and the statements made therein
and in any materials furnished in connection therewith are true
and correct as of the date hereof. All financial statements
furnished by the Companies to GBCC in connection with such
application or hereunder have been prepared in accordance with
GAAP and fairly present the financial condition and results of
operations of the Companies as of the dates and for the periods
indicated therein.
4.9. There is no fact which either Company has not disclosed
to GBCC in writing which could materially adversely affect the
properties, business or financial condition of either Company, or
any of the Collateral, or which it is necessary to disclose in
order to keep the foregoing representations and warranties from
being misleading. GBCC acknowledges that a possible public
offering of shares of 0XX.Xxx, Inc. and a possible mezzanine
financing for 0XX.Xxx, Inc. have been disclosed to it.
Section 5. Covenants of Each Company. From the date
hereof and until the payment and performance in full of all of
the Obligations, each Company covenants with GBCC that:
5.1. Each Company shall preserve and maintain its corporate
existence, good standing and authority to transact business in
all jurisdictions where necessary for the proper conduct of its
business, and shall maintain all of its properties, rights,
privileges and franchises necessary or desirable in the normal
conduct of its business.
5.2. Each Company shall permit GBCC and its representatives,
including any appraisers, auditors and accountants selected by
GBCC, to inspect any of the Collateral at any time during normal
business hours. In addition, GBCC shall have the right, from
time to time, to audit any Company's books and records during
normal business hours. Each Company shall pay all costs
associated with any such audits at the rate of $750 per day per
auditor plus reasonable out-of-pocket expenses.
5.3. Each Company shall maintain its and its Subsidiaries'
books and records in accordance with GAAP. Each Company shall
furnish GBCC, upon request, such information and statements as
GBCC shall request from time to time regarding its business
affairs, financial condition and results of its operations.
Without limiting the generality of the foregoing, each Company
shall provide GBCC, within 45 days after the end of each calendar
quarter, unaudited consolidated and consolidating financial
statements with respect to the prior quarter and, within 90 days
after the end of each of the Company's fiscal years, annual
audited consolidated and consolidating financial statements and
such certificates and additional financial reports as GBCC may
from time to time request including, without limitation, a
monthly certificate from the president and chief financial
officer of each Company stating whether any Events of Default
have occurred and stating in detail the nature thereof. Each
Company shall provide GBCC a Borrowing Base Certificate,
appropriately completed and with all attachments, at any time
that GBCC shall request and on or before the last day of each
month in which the Company does not request an Advance. In
addition, each Company shall furnish to GBCC upon request a
current listing of all open and unpaid accounts payable and
accounts receivable, names, addresses and contact persons for
Account Debtors, and such other items of information that GBCC
may deem necessary or appropriate from time to time. Each
Company immediately shall notify GBCC in writing upon becoming
aware of the existence of any condition or circumstance that
constitutes an Event of Default or that would, with the giving of
notice, the passage of time or both, constitute an Event of
Default. Any such written notice shall specify the nature of
such condition or circumstance, the period of the existence
thereof and the action that any Company proposes to take with
respect thereto.
5.4. Each Company promptly shall notify GBCC of any
attachment or any other legal process levied against any Company
and any action, suit, proceeding or other similar claim initiated
against any Company.
5.5. Each Company shall keep and maintain adequate insurance
by insurers acceptable to GBCC with respect to its business and
all Collateral. Such insurance shall cover loss, damages and
liability of amounts not less than reasonably requested by GBCC
and shall include, at a minimum, general premises liability,
fire, casualty, theft and all risk. Each Company shall cause
GBCC to be an additional insured and loss payee under all
policies of insurance covering any of the Collateral, to the
extent of GBCC's interest. Each Company shall deliver copies of
each insurance policy to GBCC upon request.
5.6. Each Company shall file all tax reports and returns
required to be filed by it in the manner and at the times
required by applicable law, and shall pay all federal, state and
local taxes and charges imposed upon any Company when due.
5.7. Each Company shall comply with ERISA and shall not
become required to contribute to any "multiemployee plan" as
defined in Section 4001 of ERISA. Each Company shall conduct its
business in material compliance with all applicable laws, and
shall maintain and comply with all licenses and permits required
under any such laws to conduct its business and perform its
obligations hereunder. Without limiting the generality of the
foregoing, each Company shall comply in all material respects
with all Environmental Laws now or hereafter applicable to each
Company and shall obtain, at or prior to the time required by
applicable Environmental Laws, all environmental, health and
safety permits, licenses and other authorizations necessary for
its operations. Each Company promptly shall furnish to GBCC all
written notices of violation, complaints, penalty assessments,
suits or other proceedings received by the Company with respect
to any alleged violation of or non-compliance with any
Environmental Laws.
5.8. Rentrak shall maintain a Tangible Net Worth of not less
than the Tangible Net Worth Requirement at all times.
5.9. Rentrak and the Affiliated Companies' Net Profit on a
consolidated basis for each fiscal year shall equal or exceed
$1.00.
5.10. Rentrak and the Affiliated Companies shall
maintain Working Capital on a consolidated basis of not less than
the Working Capital Requirement at all times.
5.11. No Company shall grant, create or allow to exist
any security interest, lien or other encumbrance on any of the
Collateral or on any assets of any of its Subsidiaries other than
(a) the lien and security interest granted to GBCC herein, (b)
the lien of Xxxx XxXxxx which is subject to the Subordination
Agreement, and (c) liens on assets acquired pursuant to
financings permitted by Section 5.13(b) of this Agreement which
attach only to the assets acquired pursuant to such financings,
and no Company shall execute any financing statement in favor of
any Person other than GBCC. No Company shall change its mailing
address, chief executive office, principal place of business or
place where such records are maintained, open any new place of
business, close any existing place of business or change the
location of any of the Collateral or transact business under any
trade, fictitious or assumed name other than those set forth
under any Company's signature hereon without providing at least
30 days' prior written notice thereof to GBCC.
5.12. No Company shall accept any returns or grant any
allowance or credit (other than those returns, allowances and
credits accepted or granted in the ordinary course of any
Company's business) to any Account Debtor without notice to and
the prior written approval of GBCC, which approval shall be
required only on credits given outside the ordinary course of
business. Each Company shall provide to GBCC for each Account
Debtor on Eligible Accounts a weekly report, in form and
substance satisfactory to GBCC, itemizing all such returns and
allowances made outside the ordinary course of business during
the previous week with respect to such Eligible Accounts.
5.13. No Company shall incur or permit any Subsidiaries
to incur, directly, or indirectly, any Debt for borrowed money or
otherwise under any promissory note, bond, indenture or similar
instrument, or in connection with the obligations of any Person
(whether by guaranty, suretyship, purchase or repurchase
agreement or agreement to make investments or otherwise), other
than (a) in favor of GBCC, (b) capital or operating leases and
Debt incurred in connection with the purchase of equipment
required in connection with the business of the Companies
incurred when no Event of Default has occurred or will result
therefrom and with respect to Rentrak and its Subsidiaries (other
than 0XX.Xxx, Inc.) which do not in the aggregate exceed
$250,000.00 in principal at any time outstanding, and which with
respect to 0XX.Xxx, Inc. do not at any time exceed $2,000,000.00
in the aggregate at any time outstanding, and (c) existing Debt
owed to Xxxx XxXxxx.
5.14. No Company shall use any of the funds paid to the
Companies hereunder directly or indirectly for personal, family,
household or agricultural purposes.
5.15. No Company shall directly or indirectly become
liable in connection with the Debt of any Person, whether by
guarantee, surety, endorsement (other than endorsement of
negotiable instruments for collection in the ordinary course of
business), agreement to purchase or repurchase, agreement to make
investments, agreement to provide funds or maintain working
capital, or any agreement to assure a creditor against loss, nor
shall they permit their Subsidiaries to do so, other than in
favor of GBCC. Notwithstanding the foregoing, the Companies may
make investments in or provisions of working capital to its
retailer network at any time when no Event of Default has
occurred or will result therefrom and in an aggregate amount of
up to $1,000,000.00 outstanding at any time.
5.16. No Company shall discontinue, or make any material
change in, its business as currently established, or enter any
new or different line of business not directly related to that
Company's existing line of business.
5.17. No Company shall declare, pay or issue any
dividends or other distributions in respect of its capital stock
or distribute, reserve, secure, or otherwise make or commit
distributions on account of its capital stock, or make any
payment on account of the purchase, redemption or other
acquisition or retirement of any shares of its capital stock,
unless immediately prior thereto and after giving effect thereto,
no Event of Default or any event or circumstance that, with the
giving of notice, the passage of time or both, would constitute
an Event of Default, has occurred.
5.18. No Company shall make any loans or advances to or
for the benefit of any employee, officer, director or shareholder
of any Company except (a) advances for routine expense allowances
in the ordinary course of business, (b) loans to employees of
Rentrak to allow such employees to exercise outstanding options
for the purchase of shares of Rentrak issued by Rentrak to such
employees and outstanding on the date of this Agreement, and
(c) other loans or advances to employees not to exceed $100,000
per individual at any time outstanding or $500,000 in the
aggregate at any time outstanding so long as no Event of Default
has occurred or will result therefrom. No Company shall make any
loans or advances to or for the benefit of any Affiliate of any
Company; provided that so long as no Event of Default has
occurred or will result therefrom, the Companies may make loans
or advances to Affiliates in an amount not to exceed
$2,000,000.00 in the aggregate at any time outstanding. No
Company shall make any payment on any obligation owing to any
officer, director, shareholder or Affiliate of any Company, other
than regularly scheduled payments to Xxxx XxXxxx on Debt existing
on the date hereof which is secured solely by liens on Collateral
which are subject to the Subordination Agreement.
5.19. No Company shall purchase or otherwise acquire
assets from any Person outside the ordinary course of business of
any Company.
5.20. No Company shall invest in or otherwise purchase
or acquire the securities of any Person, except for investments
in the Companies' retailer network permitted by Section 5.15 or
acquisitions by Rentrak of its shares as a result of foreclosure
on the security for loans made to employees to finance the
exercise of options to purchase of shares of Rentrak .
5.21. No Company shall sell or dispose of any of its
assets other than the sale of Inventory in the ordinary course of
business or permit any Subsidiary to do so, and no Company shall
dissolve or liquidate or become a party to any merger or
consolidation with any Person or permit any Subsidiary to do so.
Notwithstanding the foregoing, so long as no Event of Default
then exists or will result therefrom, GBCC hereby agrees to
release its lien upon the assets of 0XX.Xxx, Inc. which
constitute Collateral at the time of a financing for the benefit
of 0XX.Xxx, Inc., or an initial public offering of the shares of
0XX.Xxx, Inc., if at either such time all Advances then
outstanding to 0XX.Xxx, Inc. are repaid in full and after such
release of the assets of 0XX.Xxx, Inc., the outstanding principal
amount of the Advances does not exceed the Borrowing Base.
5.22. Each Company shall keep and maintain its
furniture, fixtures machinery and equipment in good operating
condition and repair (normal wear and tear excepted), and shall
make all necessary repairs thereto so that the value and
operating efficiency thereof shall at all times be maintained and
preserved. Each Company shall notify GBCC immediately in writing
of any material loss or damage to any item of its furniture,
fixtures, machinery and equipment.
5.23. If either Company now owns or hereafter acquires
any vehicles, aircraft, watercraft or other machinery and
equipment for which a certificate of title has been issued or
applied for, such Company immediately shall deliver to GBCC,
properly endorsed, each certificate of title or application for
title or other evidence of ownership for each such item of
machinery and equipment, unless such asset is acquired pursuant
to a financing permitted by Section 5.13(b) of this Agreement and
is subject to a lien permitted by Section 5.11(c) of this
Agreement. Each Company shall take all actions necessary to have
GBCC's security interest properly recorded on each such
certificate of title and shall take all other actions necessary
to perfect GBCC's security interest in all such assets now or
hereafter acquired by either Company.
Section 6. Collateral. In order to secure the payment
of all Obligations each Company hereby grants to GBCC a security
interest in and lien upon such Company's right, title and
interest in and to all of the following, whether now owned or
hereafter acquired by either Company: (a) all Accounts, contract
rights and general intangibles, receivables and claims whether
now or hereafter arising, all guaranties and security therefor
and all of either Company's right, title and interest in the
goods purchased and represented thereby, if any, including all of
either Company's rights in and to returned goods and rights of
stoppage in transit, replevin and reclamation as unpaid vendor;
(b) all chattel paper; (c) all documents and instruments; (d) all
letters of credit and letter-of-credit rights; (e) all deposit
accounts; (f) all investment property and financial assets; (g)
all Inventory and all accessions thereto and products thereof and
documents therefor; (h) all furniture, fixtures, equipment and
machinery, wherever located and whether now or hereafter
existing, and all parts thereof, accessions thereto, and
replacements therefor and all documents and general intangibles
covering or relating thereto; (i) all trademarks, trade names,
corporate names, company names, business names, fictitious
business names, trade styles, service marks, logos and any other
designs or sources of business identifiers, indicia of origin or
similar devices, all registrations with respect thereto, all
applications with respect to the foregoing, and all extensions
and renewals with respect to any of the foregoing, together with
all of the goodwill associated therewith, in each case whether
now or hereafter existing, and all rights and interest associated
with the foregoing; (j) all copyrights, and all copyrights of
works based on, incorporated in, derived from or relating to
works covered by such copyrights, and all right, title and
interest to make and exploit all derivative works based on or
adopted from works covered by such copyrights, all registrations
with respect thereto, all applications with respect to the
foregoing, and all extensions and renewals with respect to any of
the foregoing, together with all rights and interests associated
with the foregoing; (k) all patents, patent applications, and
patentable inventions, all continuations, divisions, renewals,
extensions, modifications, substitutions, continuations-in-part,
or reissues of any of the foregoing, the right to xxx for past,
present, and future infringements of any of the foregoing, all
income, royalties, profits, damages, awards, and payments
relating to or payable under any of the foregoing, and all other
rights and benefits relating to any of the foregoing throughout
the world; (l) the Lockbox Account, the Blocked Account, and
all amounts credited thereto or on deposit therein from time to
time; (m) all books and records pertaining to the foregoing,
including but not limited to computer programs, data,
certificates, records, circulation lists, subscriber lists,
advertiser lists, supplier lists, customer lists, customer and
supplier contracts, sales orders, and purchasing records; and (n)
all proceeds of the foregoing (collectively, the "Collateral").
Each Company agrees to comply with all appropriate laws in order
and to take all actions necessary or desirable in GBCC's judgment
to perfect GBCC's security interest in and to the Collateral, to
execute any financing statement or additional documents as GBCC
may request and to deliver to GBCC a list of all locations of its
Inventory, equipment and machinery and landlord and or mortgagee
lien waivers with respect to each site where Inventory, equipment
or machinery is located and which is either leased by any Company
or has been mortgaged by any Company, upon request by GBCC.
Section 7. Collection. Each invoice representing an
Account shall state on its face that amounts payable thereunder
are payable only at the Remittance Address. GBCC shall have the
right at any time, either before or after the occurrence of an
Event of Default and without notice to either Company, to notify
any or all Account Debtors on the Collateral of the assignment of
the Collateral to GBCC and to direct such Account Debtors to make
payment of all amounts due or to become due to either Company
directly to GBCC, and to the extent permitted by law, to enforce
collection of any Collateral and to adjust, settle or compromise
the amount or payment thereof. So long as no Event of Default or
event that, with the passage of time, the giving of notice or
both, would become an Event of Default has occurred and is
continuing, all collections of Collateral received by GBCC shall
be applied by GBCC to the payment of the Obligations of the
Companies to GBCC whether or not then due and any remaining funds
shall be delivered to the Companies. Upon the occurrence of an
Event of Default or an event that, with the passage of time, the
giving of notice or both, would become an Event of Default, any
such remaining funds may be held by GBCC as cash collateral
("Cash Collateral") until all Obligations have been paid in full
and GBCC has no further obligation to advance funds to the
Companies. All amounts and proceeds (including instruments and
writings) received by the Companies in respect of the Collateral
shall be received in trust for the benefit of GBCC hereunder,
shall be segregated from other funds of the Companies and shall
be immediately paid over to GBCC in the same form as received
(with any necessary endorsement) to be applied in the same manner
as payments received directly by GBCC or paid over to the Blocked
Account.
Section 8. Power of Attorney. Each Company grants to
GBCC an irrevocable power of attorney coupled with an interest
authorizing and permitting GBCC, at its option, with or without
notice to either Company, to do any or all of the following: (a)
endorse the name of any Company on any checks or other evidences
of payment whatsoever that may come into the possession of GBCC
regarding Collateral, including checks received by GBCC pursuant
to Section 7 hereof; (b) receive, open and forward any mail
addressed to any Company and put GBCC's address on any statements
mailed to Account Debtors; (c) pay, settle, compromise, prosecute
or defend any action, claim, conditional waiver and release, or
proceeding relating to Collateral; (d) upon the occurrence of an
Event of Default, notify, in the name of either Company, the U.S.
Post Office to change the address for delivery of mail addressed
to such Company to such address as GBCC may designate (provided
that GBCC shall turn over to such Company all such mail not
relating to Collateral); (e) verify, sign, acknowledge, record,
file for recording, serve as required by law, any claim of
mechanic's lien, stop notice or bonded stop notice in the sole
and absolute discretion of GBCC relating to any Collateral; (f)
insert all recording or service information in any mechanic's
lien or assignment of rights under stop notice/bonded stop notice
which either Company has signed in connection with this
Agreement, recorded or served to enforce payment of the
Collateral; (g) execute and file on behalf of either Company any
financing statement, amendment thereto or continuation thereof
(i) deemed necessary or appropriate by GBCC to protect GBCC's
interest in and to the Collateral or (ii) required or permitted
under any provision of this Agreement; and (h) do all other
things necessary and proper in order to carry out this Agreement.
The authority granted to GBCC herein is irrevocable until this
Agreement is terminated and all amounts due to GBCC hereunder
have been paid in full.
Section 9. Default. An event of default ("Event of
Default") shall be deemed to have occurred hereunder, and GBCC
shall have no further obligation to make any further Advances and
may immediately exercise its rights and remedies with respect to
the Collateral under this Agreement, the Uniform Commercial Code
and applicable law, upon the happening of one or more of the
following:
9.0.1. Either Company shall fail to pay on demand or
otherwise as and when required or due any amount required to be
paid or owed by either Company to GBCC, whether hereunder or
otherwise.
9.0.2. Either Company shall breach any covenant or
agreement made herein or in any other Transaction Document.
9.0.3. Any warranty or representation made herein or in
any other Transaction Document shall be untrue when made or any
report, certificate, schedule, financial statement, profit and
loss statement or other statement furnished by either Company, or
by any other person on behalf of either Company, to GBCC is not
true and correct when furnished.
9.0.4. There shall be commenced by or against either
Company or any guarantor of the Obligations any voluntary or
involuntary case under the federal Bankruptcy Code, or either
Company or any guarantor of the Obligations shall make an
assignment for the benefit of its creditors, or of a receiver or
custodian shall be appointed for either Company or any guarantor
of the Obligations for a substantial portion of its assets.
9.0.5. Either Company shall become insolvent in that its
debts are greater than the fair value of its assets, or either
Company is generally not paying its debts as they become due.
9.0.6. Any involuntary lien, garnishment, attachment or
the like shall be issued against or shall attach to the
Collateral and the same is not released within ten days.
9.0.7. An event or circumstance shall have occurred which
GBCC believes has or may result in a material adverse change in
either Company's or any Guarantor's financial condition, business
or operations or the value of the Collateral.
9.0.8. Either Company shall have a federal or state tax
lien filed against any of its properties, or shall fail to pay
any federal or state tax when due, or shall fail to file any
federal or state tax form or report as and when due.
9.0.9. Either (i) any "accumulated funding deficiency"
(as defined in Section 412(a) of the Internal Revenue Code of
1986, as amended) in excess of $25,000 exists with respect to any
ERISA Plan, or (ii) any Termination Event occurs with respect to
any ERISA Plan and the then current value of such ERISA Plan's
benefit liabilities exceeds the then current value of such ERISA
Plan's assets available for the payment of such benefit
liabilities by more than $25,000.
9.0.10. Either Company suffers the entry against it a
final judgment for the payment of money in excess of $25,000.
9.0.11. GBCC believes that the prospect for payment or
performance of the Obligations has become impaired.
9.0.12. Any guarantor of the Obligations shall repudiate
his, her or its obligations in respect of such guaranty.
9.0.13. An "event of default" shall have occurred under
any agreement, document or instrument evidencing Debt of any
Company, or any Debt of any Company is accelerated or called for
payment prior to the due date thereof.
9.0.14. 0XX.Xxx, Inc. shall at any time fail to remit all
collections of its Accounts to the Blocked Account more than one
(1) Business Day after such collections are received by 0XX.Xxx,
Inc.
Upon the occurrence of an Event of Default described in
subsections (d) or (e) of this section, all of the Obligations
owing by the Companies to GBCC under any of the Transaction
Documents shall thereupon be immediately due and payable, without
demand, presentment, notice of demand or of dishonor and
nonpayment, or any other notice or declaration of any kind, all
of which are hereby expressly waived by each Company. During the
continuation of any other Event of Default, GBCC, at any time and
from time to time, may declare any or all of the Obligations
owing by the Companies to GBCC under any of the Transaction
Documents immediately due and payable, all without notice,
demand, presentment, notice of demand or of dishonor and
nonpayment, or any notice or declaration of any kind, all of
which are hereby expressly waived by each Company. After any
such acceleration (whether automatic or due to declaration by
GBCC), any obligation of GBCC to make any further Advances or
loans of any kind under this Agreement or any other agreement
with the Companies shall terminate.
The enumeration of Events of Default shall not impair the
nature of the Obligations as demand obligations, at all times
payable upon demand pursuant hereto. All Advances hereunder are
subject to approval by GBCC in its sole discretion, and may be
declined in whole or in part, without prior notice to either
Company, whether or not an Event of Default may then be in
existence.
Section 10. Remedies and Application of Proceeds.
10.1. In addition to, and without limitation of, the
foregoing provisions of this Agreement, if an Event of Default
shall have occurred and be continuing, GBCC may from time to time
in its discretion, without limitation and without notice except
as expressly herein: (a) exercise in respect of the Collateral,
in addition to other rights and remedies provided for herein,
under the other Transaction Documents or otherwise available to
it, all the rights and remedies of a secured party on default
under the UCC (whether or not the UCC applies to the affected
Collateral); (b) require the Companies to, and the Companies
hereby agree that they will at their expense, assemble all or
part of the Collateral as directed by GBCC and make it available
to GBCC at a place to be designated by GBCC that is reasonably
convenient to both parties; (c) reduce its claim to judgment or
foreclose or otherwise enforce, in whole or in part, the security
interest created hereby by any available judicial procedure;
(d) dispose of, at its office, on the premises of either Company
or elsewhere, all or any part of the Collateral, as a unit or in
parcels, by public or private proceedings; (e) buy the
Collateral, or any part thereof, at any public sale, or at any
private sale if the Collateral is of a type customarily sold in a
recognized market or is of a type that is the subject to widely
distributed standard price quotations; (f) apply by appropriate
judicial proceedings for appointment of a receiver for the
Collateral, or any part thereof, and each Company hereby consents
to any such appointment; and (g) at its discretion, retain the
Collateral in satisfaction of the Obligations whenever the
circumstances are such that GBCC is entitled to do so under the
UCC or otherwise. Each Company agrees that, to the extent notice
of sale shall be required by law, at least five days' notice to
the Companies of the time and place of any public sale or the
time after which any private sale is to be made shall constitute
reasonable notification. GBCC shall not be obligated to make any
sale of Collateral regardless of whether any notice of sale has
been given. GBCC may adjourn any public or private sale from
time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
10.2. If any Event of Default shall have occurred and be
continuing, GBCC may in its discretion apply any Cash Collateral,
and any cash proceeds received by GBCC in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral, to any or all of the following in such order as GBCC
may elect: (a) the repayment of all or any portion of the
Obligations; (b) the repayment of reasonable costs and expenses,
including reasonable attorneys' fees and legal expenses, incurred
by GBCC in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of,
or the sale of, collection from, or other realization upon, any
Collateral, (iii) the exercise or enforcement of any of the
rights of GBCC hereunder, or (iv) the failure of either Company
to perform or observe any of the provisions hereof; (c) the
payment or other satisfaction of any liens and other encumbrances
upon any of the Collateral; (d) the reimbursement of GBCC for the
amount of any obligations of either Company paid or discharged by
GBCC, and of any expenses of GBCC payable by either Company
hereunder or under the other Transaction Documents; (e) by
holding the same as Collateral; (f) the payment of any other
amounts required by applicable law (including, without
limitation, Part 5 of Article 9 of the UCC or any successor or
similar applicable statutory provision); and (g) by delivery to
either Company or to whomsoever shall be lawfully entitled to
receive the same or as a court of competent jurisdiction shall
direct.
Section 11. Miscellaneous.
11.1. In the event that any Company commits any act or
omission that prevents or unreasonably interferes with (a) GBCC's
exercise of the rights and privileges arising under the power of
attorney granted in Section 8 of this Agreement or (b) GBCC's
perfection of or levy upon the security interest granted in the
Collateral, including any seizure of any Collateral, each Company
acknowledges that such conduct will cause immediate, severe,
incalculable and irreparable harm and injury, and agrees that
such conduct shall constitute sufficient grounds to entitle GBCC
to an injunction, writ of possession, or other applicable relief
in equity, and to make such application for such relief in any
court of competent jurisdiction, without any prior notice to the
Company.
11.2. All rights, remedies and powers granted to GBCC in
this Agreement, or in any other instrument or agreement given by
each Company to GBCC or otherwise available to GBCC in equity or
at law, are cumulative and may be exercised singularly or
concurrently with such other rights as GBCC may have. These
rights may be exercised from time to time as to all or any part
of the Collateral as GBCC in its discretion may determine. No
waiver by GBCC of its rights and remedies shall be effective
unless the waiver is in writing and signed by GBCC. A waiver by
GBCC of a right or remedy under this Agreement or any other
Transaction Document on one occasion shall not be deemed to be a
waiver of such right or remedy on any subsequent occasion. An
Advance by GBCC during the continuation of an Event of Default
shall not obligate GBCC to make any further Advances during the
continuation of such Event of Default.
11.3. Any notice or communication with respect to this
Agreement or any other Transaction Document shall be given in
writing, sent by (i) personal delivery, (ii) expedited delivery
service with proof of delivery, (iii) United States mail, postage
prepaid, registered or certified mail, or (iv) prepaid telegram,
telex or telecopy, addressed to each party hereto at its address
set forth below its signature hereon or to such other address or
to the attention of such other Person as hereafter shall be
designated in writing by the applicable party sent in accordance
herewith. Any such notice or communication shall be deemed to
have been given either at the time of personal delivery or, in
the case of delivery service or mail, as of the date of first
attempted delivery at the address and in the manner provided
herein, or in the case of telegram, telex or telecopy, upon
receipt. Each Company hereby agrees that GBCC may publicize the
amount of and borrowers under the transaction contemplated by
this Agreement in newspapers, trade and similar publications
including, without limitation, the publication of a "tombstone".
11.4. (a) The term of this Agreement shall be for five
(5) years from the date hereof (the original term and any
extension thereof are herein called the "Term") and from year to
year thereafter unless either party hereto gives notice to the
other party hereto not more than 90 days or less than 60 days
prior to the end of the Term; provided, however, that GBCC may
terminate this Agreement at any time effective immediately upon
the occurrence of an Event of Default. Each Company acknowledges
that it shall have no right to terminate this Agreement prior to
the end of the Term, that termination of this Agreement by either
Company at any time prior to the end of the Term would result in
the loss by GBCC of benefits under this Agreement and that the
damages incurred by GBCC as a result of such termination would be
difficult and impractical to ascertain. Therefore, in the event
this Agreement is or terminated for any reason during the first
year of the Term, the Companies shall pay to GBCC an early
termination fee in the amount of three percent (3%) of the
Facility Limit; and if this Agreement is terminated for any
reason during the second year of the Term, the Companies shall
pay to GBCC an early termination fee in the amount of two percent
(2%) of the Facility Limit; and if this Agreement is terminated
for any reason during the third year of the Term, the Companies
shall pay to GBCC an early termination fee in the amount of one
percent (1%) of the Facility Limit, and if this Agreement is
terminated for any reason during the fourth year of the Term, the
Companies shall pay to GBCC an early termination fee in the
amount of one-half percent (.50%) of the Facility Limit; and if
this Agreement is terminated for any reason during the fifth year
of the Term or thereafter, the Companies shall pay to GBCC an
early termination fee in the amount of one-quarter percent (.25%)
of the Facility Limit, in each case to the maximum extent
permitted by applicable law and subject to Section 2.13 hereof.
Any termination of this Agreement shall not affect GBCC's
security interest in the Collateral, and this Agreement shall
continue to be effective, until all transactions entered into and
obligations incurred hereunder have been completed and satisfied
in full.
(b) Each Company hereby agrees that in the event either
Company receives an offer either during or at the end of the Term
from a third party to provide financing or factoring to such
Company, which offer such Company intends to accept, it shall
require the offeror to reduce such offer to a written Facility
Limit (the "new Facility Limit"). In addition, each Company will
(a) notify GBCC in writing of the identity of the offeror and the
complete terms of the new Facility Limit and (b) if, within 30
days after GBCC's receipt of such notice and a signed copy of the
new Facility Limit, GBCC elects, in its sole discretion, to offer
to terminate this Agreement in accordance with Section 11.4(a)
and match the new Facility Limit, accept GBCC's offer.
11.5. Each and every provision, condition, covenant and
representation contained in this Agreement is, and shall be
construed, to be a separate and independent covenant and
agreement. If any term or provision of this Agreement shall to
any extent be invalid or unenforceable, the remainder of the
Agreement shall not be affected thereby.
11.6. Each Company hereby jointly and severally
indemnifies and agrees to hold harmless and defend all
Indemnified Persons from and against any and all Indemnified
Claims. THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT
SUCH INDEMNIFIED CLAIMS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN
WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY,
OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR
OMISSION OF ANY INDEMNIFIED PERSON. Upon notification and
demand, each Company agrees to provide defense of any Indemnified
Claim and to pay all costs and expenses of counsel selected by
any Indemnified Person in respect thereof. Any Indemnified
Person against whom any Indemnified Claim may be asserted
reserves the right to settle or compromise any such Indemnified
Claim as such Indemnified Person may determine in its sole
discretion, and the obligations of such Indemnified Person, if
any, pursuant to any such settlement or compromise shall be
deemed included within the Indemnified Claims. Except as
specifically provided in this section, each Company waives all
notices from any Indemnified Person. The provisions of this
Section 11.6 shall survive for four (4) years after the
termination of this Agreement.
11.7. All grants, covenants and agreements contained in
this Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns; provided,
however, that neither Company may delegate or assign any of
their respective duties or obligations under this Agreement
without the prior written consent of GBCC. GBCC RESERVES THE
RIGHT TO ASSIGN ITS RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT
IN WHOLE OR IN PART TO ANY PERSON OR ENTITY, provided that GBCC
will give the Companies timely notice of such assignment.
Without limiting the generality of the foregoing, GBCC may from
time to time grant participations in all or any part of the
Obligations to any Person on such terms and conditions as may be
determined by GBCC in its sole and absolute discretion, provided
that the grant of such participation shall not relieve GBCC of
its obligations hereunder nor create any additional obligation of
either Company.
11.8. Any action permitted or provided to be taken or
omitted by GBCC hereunder may be taken or omitted, as the case
may be, by GBCC in its sole and absolute discretion, and any
consent or waiver required of GBCC or determination to be made by
GBCC hereunder may be given, withheld or made, as the case may
be, by GBCC in its sole and absolute discretion.
11.9. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF
LAW. EACH COMPANY HEREBY IRREVOCABLY SUBMITS ITSELF TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
TEXAS AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE
UPON IT IN ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT, ANY
BORROWING HEREUNDER OR ANY OTHER RELATIONSHIP BETWEEN GBCC AND
THE COMPANY BY ANY MEANS ALLOWED UNDER STATE OR FEDERAL LAW. ANY
LEGAL PROCEEDING ARISING OUT OF OR IN ANY WAY RELATED TO THIS
AGREEMENT, ANY BORROWING HEREUNDER OR ANY OTHER RELATIONSHIP
BETWEEN GBCC AND EITHER COMPANY SHALL BE BROUGHT AND LITIGATED
EXCLUSIVELY IN ANY ONE OF THE STATE OR FEDERAL COURTS LOCATED IN
THE STATE OF TEXAS HAVING JURISDICTION. THE PARTIES HERETO
HEREBY WAIVE AND AGREE NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE OR OTHERWISE, THAT ANY SUCH PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS IMPROPER.
11.10. EACH COMPANY AND GBCC HEREBY (A) IRREVOCABLY
WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR
ASSOCIATED HEREWITH; (B) IRREVOCABLY WAIVES, TO THE MAXIMUM
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE
OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION
TO, ACTUAL DAMAGES; (C) CERTIFIES THAT NO PARTY HERETO NOR ANY
REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS, AND (D) ACKNOWLEDGES THAT IT HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
CONTAINED IN THIS PARAGRAPH.
11.11. THIS AGREEMENT AND THE SECURITY DOCUMENTS
DESCRIBED HEREIN AND DELIVERED IN CONNECTION HEREWITH REPRESENT
THE FINAL AGREEMENT OF THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES. NO MODIFICATION OR AMENDMENT OF OR SUPPLEMENT TO
THIS AGREEMENT OR TO ANY SUCH SECURITY DOCUMENTS SHALL BE VALID
OR EFFECTIVE UNLESS THE SAME IS IN WRITING AND SIGNED BY THE
PARTY AGAINST WHOM IT IS SOUGHT TO BE ENFORCED.
The undersigned have entered into this Agreement as of the
date first written above.
GUARANTY BUSINESS CREDIT CORPORATION RENTRAK CORPORATION,
D/B/A FIDELITY FUNDING, a Delaware corporation an Oregon
corporation
By: By:
Name: Name:
Title: Title:
Mailing Address: 0000 Xxxxxxx Xxxxxx, Xxxxx 000
Mailing Address:
Xxxxxx, Xxxxx 00000
Street Address: 0000 Xxxxxxx Xxxxxx, Xxxxx 000
Street Address:
Xxxxxx, Xxxxx 00000
Trade Names:
Blowout Entertainment (no longer used)
Entertainment One (no longer used)
Super Center (no longer used)
0XX.XXX, INC.,
a Delaware corporation
By:
Name:
Title:
Mailing Address:
Street Address:
New Illinois chief executive office and principal place of
business effective on ________, 2000:
Trade Names:
ComAlliance, Inc. (prior name)
Exhibits:
A - Borrowing Base Report
Schedules:
None at present.
DAL 3285336.14
112:21676-23
