EXHIBIT 10.03
FINANCING AGREEMENT
THE CIT GROUP/BUSINESS CREDIT, INC.
(AS LENDER)
AND
AVATECH SOLUTIONS, INC.
AND ITS
SUBSIDIARIES SET FORTH ON THE
SIGNATURE PAGES HERETO
(AS BORROWER)
DATED: OCTOBER 25, 2000
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.....................................................1
SECTION 2. CONDITIONS PRECEDENT............................................9
SECTION 3. REVOLVING LOANS................................................12
SECTION 4. INTENTIONALLY OMITTED..........................................16
SECTION 5. INTENTIONALLY OMITTED..........................................16
SECTION 6. COLLATERAL.....................................................16
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS......................17
SECTION 8. INTEREST, FEES AND EXPENSES....................................21
SECTION 9. POWERS.........................................................24
SECTION 10. EVENTS OF DEFAULT AND REMEDIES.................................25
SECTION 11. TERMINATION....................................................28
SECTION 12. MISCELLANEOUS..................................................28
EXHIBIT
SCHEDULES
Schedule 1 - Collateral Information
Schedule 2 - Investor Debt
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THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation, with offices
located at Two First Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-000
(hereinafter "CIT"), is pleased to confirm the terms and conditions under which
CIT shall make revolving loans and other financial accommodations to AVATECH
SOLUTIONS, INC., a Maryland corporation with a principal place of business at
00000 Xxxxxxxx Xxxxx, Xxxxx X, Xxxxxx Xxxxx, Xxxxxxxx 00000 (herein the
"Company") and its subsidiaries listed on the signature pages hereto
(hereinafter the Company and such subsidiaries shall be collectively referred to
as the "Borrowers" or individually as a "Borrower").
SECTION 1. DEFINITIONS
ACCOUNTS shall mean all of each Borrower's now existing and future: (a) accounts
(as defined in the UCC), and any and all other receivables (whether or not
specifically listed on schedules furnished to CIT), including, without
limitation, all accounts created by, or arising from, all of each Borrower's
sales, leases, rentals of goods or renditions of services to its customers,
including but not limited to, those accounts arising under any of each
Borrower's trade names or styles, or through any of each Borrower's divisions;
(b) any and all instruments, documents, chattel paper (including electronic
chattel paper) (all as defined in the UCC); (c) unpaid seller's or lessor's
rights (including rescission, replevin, reclamation, repossession and stoppage
in transit) relating to the foregoing or arising therefrom; (d) rights to any
goods represented by any of the foregoing, including rights to returned,
reclaimed or repossessed goods; (e) reserves and credit balances arising in
connection with or pursuant hereto; (f) guarantees, supporting obligations,
payment intangibles and letter of credit rights (all as defined in the UCC); (g)
insurance policies or rights relating to any of the foregoing; (h) general
intangibles pertaining to any and all of the foregoing (including all rights to
payment, including those arising in connection with bank and non-bank credit
cards), and including books and records and any electronic media and software
thereto; (i) notes, deposits or property of account debtors securing the
obligations of any such account debtors to each Borrower; and (j) cash and
non-cash proceeds (as defined in the UCC) of any and all of the foregoing.
ADMINISTRATIVE MANAGEMENT FEE shall mean the sum of $1,000.00 per month which
shall be paid to CIT in accordance with Section 8, paragraph 8.8 hereof to
offset the expenses and costs (excluding Out-of-Pocket Expenses and auditor
fees) of CIT in connection with administration, record keeping, analyzing and
evaluating the Collateral.
ANNIVERSARY DATE shall mean the date occurring three (3) years from the Closing
Date and the same date in every year thereafter.
AVAILABILITY shall mean at any time the amount by which: (a) the Borrowing Base
exceeds (b) the sum of (i) the outstanding aggregate amount of all Obligations,
including without limitation, all Obligations with respect to Revolving Loans,
and (ii) the Availability Reserve.
AVAILABILITY RESERVE shall mean (a) any reserve which CIT may reasonably require
from time to time pursuant to this
Financing Agreement; and (b) such other
reserves as CIT deems necessary in its reasonable judgment as a result of (i)
negative forecasts and/or trends in any Borrower's
business, industry, prospects, profits, operations or financial condition or
(ii) other issues, circumstances or facts that could otherwise negatively impact
any Borrower, its business, prospects, profits, operations, industry, financial
condition or assets.
BORROWING BASE shall mean seventy-five percent (75%) of the Borrowers' aggregate
outstanding Eligible Accounts Receivable.
BUSINESS DAY shall mean any day on which CIT and The Chase Manhattan Bank are
open for business.
CAPITAL EXPENDITURES shall mean, for any period, the aggregate expenditures of
the Borrowers during such period on account of, property, plant, equipment or
similar fixed assets that in conformity with GAAP, are required to be reflected
in the balance sheet of the Borrowers.
CAPITAL IMPROVEMENTS shall mean operating Equipment facilities (other than land)
acquired or installed for use in any Borrower's business operations.
CAPITAL LEASE shall mean any lease of property (whether real, personal or mixed)
which, in conformity with GAAP, is accounted for as a capital lease or a Capital
Expenditure in the balance sheet of the Borrowers.
CHASE BANK RATE shall mean the rate of interest per annum announced by The Chase
Manhattan Bank from time to time as its prime rate in effect at its principal
office in New York City. (The prime rate is not intended to be the lowest rate
of interest charged by The Chase Manhattan Bank to its borrowers).
CHASE BANK RATE LOANS shall mean any loans or advances pursuant to this
Financing Agreement made or maintained at a rate of interest based upon the
Chase Bank Rate.
CLOSING DATE shall mean the date that this
Financing Agreement has been duly
executed by the parties hereto and delivered to CIT.
COLLATERAL shall mean all present and future Accounts, Documents of Title,
General Intangibles and Other Collateral.
COLLECTION DAYS shall mean two (2) Business Days to provide for the deposit,
clearance and collection of checks or other instruments representing the
proceeds of Collateral, the amount of which has been credited to the Borrowers'
Revolving Loan Account, and for which interest may be charged on the aggregate
amount of such deposits, at the rate provided for in Paragraph 8.1 of Section 8
of this
Financing Agreement.
CONSOLIDATED BALANCE SHEET shall mean a consolidated or compiled, as applicable,
balance sheet of the Company and its consolidated subsidiaries, eliminating all
inter-company transactions and prepared in accordance with GAAP.
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CONSOLIDATING BALANCE SHEET shall mean a Consolidated Balance Sheet plus
individual balance sheets for the Company and its consolidated subsidiaries,
showing all eliminations of inter-company transactions, including a balance
sheet for the Company exclusively, all prepared in accordance with GAAP.
COPYRIGHTS shall mean all present and hereafter acquired copyrights, copyright
registrations, recordings, applications, designs, styles, licenses, marks,
prints and labels bearing any of the foregoing, goodwill, any and all general
intangibles, intellectual property and rights pertaining thereto, and all cash
and non-cash proceeds thereof.
CURRENT ASSETS shall mean those assets of the Borrowers which, in accordance
with GAAP, are classified as current.
CURRENT LIABILITIES shall mean those liabilities of the Borrowers which, in
accordance with GAAP, are classified as "current," provided however, that,
notwithstanding GAAP, the Revolving Loans and the current portion of Permitted
Indebtedness shall be considered "current liabilities."
DEFAULT shall mean any event specified in Section 10 hereof, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, even or act, has been satisfied.
DEFAULT RATE OF INTEREST shall mean a rate of interest per annum on any
Obligations hereunder, equal to the sum of: (a) two percent (2%) and (b) the
applicable increment over the Chase Bank Rate (as set forth in paragraph 8.1
hereof) plus the Chase Bank Rate, which CIT shall be entitled to charge the
Borrowers on all Obligations due CIT by the Company, as further set forth in
Paragraph 10.2 of Section 10 of this
Financing Agreement.
DEPOSITORY ACCOUNTS shall mean the collection accounts, which are subject to
CIT's instructions, as specified in Paragraph 3.4 of Section 3 of this
Financing
Agreement.
DOCUMENTATION FEE shall mean subsequent to the Closing Date, CIT's standard fees
relating to any and all modifications, waivers, releases, amendments or
additional collateral with respect to this
Financing Agreement, the Collateral
and/or the Obligations.
DOCUMENTS OF TITLE shall mean all present and future documents (as defined in
the UCC), and any and all warehouse receipts, bills of lading, shipping
documents, chattel paper, instruments and similar documents, all whether
negotiable or not and all goods and Inventory relating thereto and all cash and
non-cash proceeds of the foregoing.
EARLY TERMINATION DATE shall mean the date on which the Borrowers terminate this
Financing Agreement or the Revolving Line of Credit which date is prior to an
Anniversary Date.
EARLY TERMINATION FEE shall: (a) mean the fee CIT is entitled to charge the
Borrowers in the event the Borrowers terminate the Revolving Line of Credit or
this
Financing Agreement on a date prior to an Anniversary Date; and (b) be
determined by multiplying the Revolving Line of
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Credit by (x) three percent (3%) if the Early Termination Date occurs on or
before one (1) year from the Closing Date, (y) two percent (2%) if the Early
Termination Date occurs after one (1) year from the Closing Date but on or
before two (2) years from the Closing Date; and (z) one percent (1%) if the
Early Termination Date occurs after two (2) years from the Closing Date but
prior to an Anniversary Date.
EBIT shall mean, in any period, all earnings of the Borrowers for said period
before all interest and tax obligations of the Borrowers for said period,
determined in accordance with GAAP on a consistent basis with the latest audited
financial statements of the Borrowers, but excluding the effect of extraordinary
or non-reoccurring gains or losses for such period.
ELIGIBLE ACCOUNTS RECEIVABLE shall mean the gross amount of each Borrower's
Trade Accounts Receivable that are subject to a valid, exclusive, first priority
and fully perfected security interest in favor of CIT, which conform to the
warranties contained herein and which, at all times, continue to be acceptable
to CIT in the exercise of its reasonable judgment, LESS, without duplication,
the sum of: (a) any returns, discounts, claims, credits and allowances of any
nature (whether issued, owing, granted, claimed or outstanding), and (b)
reserves for any such Trade Accounts Receivable that arise from or are subject
to or include: (i) sales to the United States of America, any state or other
governmental entity or to any agency, department or division thereof, except for
any such sales as to which any Borrower has complied with the Assignment of
Claims Act of 1940 or any other applicable statute, rules or regulation, to
CIT's satisfaction in the exercise of its reasonable business judgment; (ii)
foreign sales, other than sales which otherwise comply with all of the other
criteria for eligibility hereunder and are (x) secured by letters of credit (in
form and substance satisfactory to CIT) issued or confirmed by, and payable at,
banks having a place of business in the United States of America, (y) to
customers residing in Canada, or (z) insured by credit insurance satisfactory to
CIT, (iii) Accounts that remain unpaid more than ninety (90) days from invoice
date or sixty (60) days from due date; (iv) contra accounts; (v) sales to any
subsidiary, or to any company affiliated with any Borrower or in any way; (vi)
xxxx and hold (deferred shipment) or consignment sales; (vii) sales to any
customer which is: (A) insolvent, (B) the debtor in any bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceedings under any
federal or state law, (C) negotiating, or has called a meeting of its creditors
for purposes of negotiating, a compromise of its debts, or (D) financially
unacceptable to CIT or has a credit rating unacceptable to CIT; (viii) all sales
to any customer if fifty percent (50%) or more of the aggregate dollar amount of
all outstanding invoices to such customer are unpaid more than ninety (90) days
from invoice date; (ix) sales to any customer and/or its affiliates to the
extent such sales exceed at any one time twenty percent (20%) or more of all
Eligible Accounts Receivable; (x) pre-billed receivables and receivables arising
from progress billing; (xi) an amount representing, historically, returns,
discounts, claims, credits, allowances and applicable terms; (xii) sales not
payable in United States currency; and (xiii) any other reasons deemed necessary
by CIT in its reasonable judgment, including without limitation those which are
customary either in the commercial finance industry or in the lending practices
of CIT.
EQUIPMENT shall mean all present and hereafter acquired equipment (as defined in
the UCC) including, without limitation, all machinery, equipment, furnishings
and fixtures, and all additions, substitutions and replacements thereof,
wherever located, together with all
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attachments, components, parts, equipment and accessories installed thereon or
affixed thereto and all proceeds thereof of whatever sort.
ERISA shall mean the Employee Retirement Income Security Act or 1974, as amended
from time to time and the rules and regulations promulgated thereunder from time
to time.
EVENT(S) OF DEFAULT shall have the meaning provided for in Section 10 of this
Financing Agreement.
EXECUTIVE OFFICERS shall mean the Chairman, President, Chief Executive Officer,
Chief Operating Officer, Chief Financial Officer, Executive Vice President(s),
Senior Vice President(s), Treasurer, Controller and Secretary of each Borrower.
GAAP shall mean generally accepted accounting principles in the United States of
America as in effect from time to time and for the period as to which such
accounting principles are to apply, provided that in the event the Borrowers
modifies its accounting principles and procedures as applied as of the Closing
Date, the Borrowers shall provide such statements of reconciliation as shall be
in form and substance acceptable to CIT.
GENERAL INTANGIBLES shall mean all present and hereafter acquired general
intangibles (as defined in the UCC), and shall include, without limitation, all
present and future right, title and interest in and to: (a) all Trademarks,
tradenames, corporate names, business names, logos and any other designs or
sources of business identities, (b) Patents, together with any improvements on
said Patents, utility models, industrial models, and designs, (c) Copyrights,
(d) trade secrets, (e) licenses, permits and franchises, (f) all applications
with respect to the foregoing, (g) all right, title and interest in and to any
and all extensions and renewals, (h) goodwill with respect to any of the
foregoing, (i) any other forms of similar intellectual property, (j) all
customer lists, contract rights, distribution agreements, supply agreements,
blueprints, indemnification rights and tax refunds, together with all monies and
claims for monies now or hereafter due and payable in connection with any of the
foregoing or otherwise, and all cash and non-cash proceeds thereof, including,
without limitation, the proceeds or royalties of any licensing agreements
between any Borrower and any licensee of any of such Borrower's General
Intangibles.
GUARANTY shall mean the fraud and performance guaranty from the Guarantor.
GUARANTOR shall mean Xxxxx Xxxxxx.
INDEBTEDNESS shall mean, without duplication, all liabilities, contingent or
otherwise, which are any of the following: (a) obligations in respect of
borrowed money or for the deferred purchase price of property, services or
assets, other than Inventory, or (b) lease obligations which, in accordance with
GAAP, have been, or which should be capitalized.
INSURANCE PROCEEDS shall mean proceeds or payments from an insurance carrier
with respect to any loss, casualty or damage to Collateral.
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INVENTORY shall mean all of each Borrower's present and hereafter acquired
inventory (as defined in the UCC) and including, without limitation, all
merchandise, inventory and goods, and all additions, substitutions and
replacements thereof, wherever located, together with all goods and materials
used or usable in manufacturing, processing, packaging or shipping same in all
stages of production from raw materials through work-in-process to finished
goods and all proceeds thereof of whatever sort.
LINE OF CREDIT shall mean the aggregate commitment of CIT to make Revolving
Loans pursuant to Section 3 of this Financing Agreement in the aggregate amount
equal to $4,000,000.
LOAN DOCUMENTS shall mean this Financing Agreement, the mortgage, the other
closing documents and any other ancillary loan and security agreements executed
from time to time in connection with this Financing Agreement, all as may be
renewed, amended, extended, increased or supplemented from time to time.
LOAN FACILITY FEE shall mean the fee payable to CIT in accordance with, and
pursuant to, the provisions to Paragraph 8.7 of Section 8 of this Financing
Agreement.
NET WORTH shall mean, at any date of determination, an amount equal to (a) Total
Assets minus (b) Total Liabilities, and shall be determined in accordance with
GAAP, on a consistent basis with the latest audited financial statements of the
Borrowers.
OBLIGATIONS shall mean all loans, advances and extensions of credit made or to
be made by CIT to any Borrower or to others for any Borrower's account
(including, without limitation, all Revolving Loans); any and all indebtedness
and obligations which may at any time be owing by any Borrower to CIT howsoever
arising, whether now in existence or incurred by any Borrower from time to time
hereafter; whether principal, interest, fees, costs, expenses or otherwise;
whether secured by pledge, lien upon or security interest in any of any
Borrower's Collateral, assets or property or the assets or property of any other
person, firm, entity or corporation; whether such indebtedness is absolute or
contingent, joint or several, matured or unmatured, direct or indirect and
whether any Borrower is liable to CIT for such indebtedness as principal,
surety, endorser, guarantor or otherwise. Obligations shall also include
indebtedness owing to CIT by any Borrower under any Loan Document or under any
other agreement or arrangement now or hereafter entered into between any
Borrower and CIT; indebtedness or obligations incurred by, or imposed on, CIT as
a result of environmental claims arising out of any Borrower's operations,
premises or waste disposal practices or sites in accordance with paragraph 7.7
hereof; any Borrower's liability to CIT as maker or endorser of any promissory
note or other instrument for the payment of money; any Borrower's liability to
CIT under any instrument of guaranty or indemnity, or arising under any
guaranty, endorsement or undertaking which CIT may make or issue to others for
any Borrower's account, CIT's acceptance of drafts or CIT's endorsement of notes
or other instruments for any Borrower's account and benefit; and any and all
indebtedness, liabilities or obligations or every kind, nature and description
owing by any Borrower to any affiliate of CIT.
OPERATING LEASES shall mean all leases of property (whether real, personal or
mixed) other than Capital Leases.
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OTHER COLLATERAL shall mean all now owned and hereafter acquired lockbox,
blocked account and any other deposit accounts maintained with any bank or
financial institutions into which the proceeds of Collateral are or may be
deposited; all cash and other monies and property in the possession or control
of CIT; all books, records, ledger cards, disks and related data processing
software at any time evidencing or containing information relating to any of the
Collateral described herein or otherwise necessary or helpful in the collection
thereof or realization thereon; and all cash and non-cash proceeds of the
foregoing.
OUT-OF-POCKET EXPENSES shall mean all of CIT's present and future expenses
incurred relative to this Financing Agreement or any other Loan Documents,
whether incurred heretofore or hereafter, which expenses shall include, without
being limited to: the cost of record searches, all costs and expenses incurred
by CIT in opening bank accounts, depositing checks, receiving and transferring
funds, and wire transfer charges, any charges imposed on CIT due to returned
items and "insufficient funds" of deposited checks and CIT's standard fees
relating thereto, and travel, lodging and similar expenses of CIT's personnel in
connection with inspecting and monitoring the Collateral from time to time
hereunder, any applicable counsel fees and disbursements, fees and taxes
relative to the filing of financing statements, all expenses, costs and fees set
forth in Paragraph 10.3 of Section 10 of this Financing Agreement.
OVERADVANCE RATE shall mean a rate equal to one-half of one percent (1/2%) per
annum in excess of the applicable contract rate of interest determined in
accordance with Section 8, Paragraph 8.1(a) of this Financing Agreement.
OVERADVANCES shall mean the amount by which (a) the sum of all outstanding
Revolving Loans and advances made hereunder exceed (b) the Borrowing Base.
PATENTS shall mean all of each Borrower's present and hereafter acquired
patents, patent applications, registrations, any reissues or renewals thereof,
licenses, any inventions and improvements claimed thereunder, and all general
intangible, intellectual property and patent rights with respect thereto of each
Borrower, and all income, royalties, cash and non-cash proceeds thereof.
PERMITTED ENCUMBRANCES shall mean: (a) liens existing on the date hereof
expressly permitted, or consented to in writing by CIT; (b) purchase Money
Liens: (c) liens of local or state authorities for franchise or other like
Taxes, provided that the aggregate amounts of such liens shall not exceed
$25,000.00 in the aggregate at any one time; (d) statutory liens of landlords
and liens of carriers, warehousemen, bailees, mechanics, materialmen and other
like liens imposed by law, created in the ordinary course of business and for
amounts not yet due (or which are being contested in good faith, by appropriate
proceedings or other appropriate actions which are sufficient to prevent
imminent foreclosure of such liens) and with respect to which adequate reserves
or other appropriate provisions are being maintained by the Borrowers in
accordance with GAAP; (e) deposits made (and the liens thereon) in the ordinary
course of business of each Borrower (including, without limitation, security
deposits for leases, indemnity bonds, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other types of
social security benefits or to secure the performance of tenders, bids,
contracts
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(other than for the repayment or guarantee of borrowed money or purchase money
obligations), statutory obligations and other similar obligations arising as a
result of progress payments under government contracts; (f) easements
(including, without limitation, reciprocal easement agreements and utility
agreements), encroachments, minor defects or irregularities in title, variation
and other restrictions, charges or encumbrances (whether or not recorded)
affecting the Real Estate, if applicable, and which in the aggregate (A) do not
materially interfere with the occupation, use or enjoyment by any Borrower of
its business or property so encumbered and (B) in the reasonable business
judgment of CIT do not materially and adversely affect the value of such Real
Estate; and (g) liens granted CIT by the Borrowers; (h) liens of judgment
creditors provided such liens do not exceed, in the aggregate, at any time,
$25,000.00 (other than liens bonded or insured to the reasonable satisfaction of
CIT); and (i) tax liens which are not yet due and payable or which are being
diligently contested in good faith by the applicable Borrower by appropriate
proceedings, and which liens are not (x) filed on any public records, (y) senior
to the liens of CIT or (z) for Taxes due the United States of America or any
state thereof having similar priority statutes, as further set forth in
paragraph 7.6 hereof.
PERMITTED INDEBTEDNESS shall mean: (a) current Indebtedness maturing in less
than one year and incurred in the ordinary course of business for raw materials,
supplies, equipment, services, Taxes or labor; (b) the Indebtedness secured by
Purchase Money Liens; (c) Subordinated Debt; (d) Indebtedness arising under this
Financing Agreement; (e) deferred Taxes and other expenses incurred in the
ordinary course of business; and (f) other Indebtedness existing on the date of
execution of this Financing Agreement and listed in the most recent financial
statement delivered to CIT or otherwise disclosed to CIT in writing prior to the
Closing Date.
PURCHASE MONEY LIENS shall mean liens on any item of Equipment acquired after
the date of this Financing Agreement provided that (a) each such lien shall
attach only to the property to be acquired, (b) a description of the Equipment
so acquired is furnished to CIT, and (c) the debt incurred in connection with
such acquisitions shall not exceed, in the aggregate, $50,000.00 in any fiscal
year.
REAL ESTATE shall mean each Borrower's fee and/or leasehold interests in the
real property.
REVOLVING LINE OF CREDIT shall mean the aggregate commitment of CIT to make
loans and advances pursuant to Section 3 of this Financing Agreement to the
Company, in the aggregate amount equal to the sum of $4,000,000.00.
REVOLVING LOAN ACCOUNT shall mean the account on CIT's books, in the Borrower's
names, in which the Borrowers will be charged with all Obligations under this
Financing Agreement.
REVOLVING LOANS shall mean the loans and advances made, from time to time, to or
for the account of the Borrowers by CIT pursuant to Section 3 of this Financing
Agreement.
SUBORDINATED DEBT shall mean (i) the debt due to (A) Autodesk, Inc., in the
original principal amount of $2,960,645.77 evidenced by that certain Promissory
Note, dated July 27, 2000, executed by the Borrowers in favor of Autodesk, Inc.
in the original principal amount of $2,960,645.77 and (B) the debt due to the
investors listed on Schedule 2 attached hereto and (ii)
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the debt due a Subordinating Creditor (and the note(s) evidencing such) which
has been subordinated, by a Subordination Agreement, to the prior payment and
satisfaction of the Obligations of the Company to CIT.
SUBORDINATING CREDITOR shall mean any party hereafter executing a Subordination
Agreement.
SUBORDINATION AGREEMENT shall mean the agreement (in form and substance
satisfactory to CIT) among any Borrower, a Subordinating Creditor and CIT
pursuant to which Subordinated Debt is subordinated to the prior payment and
satisfaction of such Borrower's Obligations to CIT.
TAXES shall mean all federal, state, municipal and other governmental taxes,
levies, charges, claims and assessments which are or may be due by any Borrower
with respect to its business, operations, Collateral or otherwise.
TOTAL ASSETS shall mean total assets determined in accordance with GAAP, on a
basis consistent with the latest audited financial statements of the Borrowers.
TOTAL LIABILITIES shall mean total liabilities determined in accordance with
GAAP, on a basis consistent with the latest audited financial statements of the
Company.
TRADE ACCOUNTS RECEIVABLE shall mean that portion of each Borrower's Accounts
which arises from the sale of Inventory or the rendition of services in the
ordinary course of such Borrower's business.
TRADEMARKS shall mean all present and hereafter acquired trademarks, trademark
registrations, recordings, applications, tradenames, trade styles, service
marks, prints and labels (on which any of the foregoing may appear), licenses,
reissues, renewals, and any other intellectual property and trademark rights
pertaining to any of the foregoing, together with the goodwill associated
therewith, and all cash and non-cash proceeds thereof.
UCC shall mean the Uniform Commercial Code as the same may be amended and in
effect from time to time in the state of
North Carolina.
WORKING CAPITAL shall mean Current Assets in excess of Current Liabilities.
WORKING DAY shall mean any Business Day on which dealings in foreign currencies
and exchanges between banks may be transacted.
SECTION 2. CONDITIONS PRECEDENT
The obligation of CIT to make the initial loans hereunder is subject to the
satisfaction of, extension of or waiver of in writing, on or prior to, the
Closing Date, the following conditions precedent:
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(a) LIEN SEARCHES - CIT shall have received tax, judgment and Uniform
Commercial Code searches satisfactory to CIT for all locations presently
occupied or used by the Borrowers.
(b) INTENTIONALLY OMITTED.
(c) UCC FILINGS - Any financing statements required to be filed in order
to create, in favor of CIT, a first perfected security interest in the
Collateral, subject only to the Permitted Encumbrances, shall have been properly
filed in each office in each jurisdiction required in order to create in favor
of CIT a perfected lien on the Collateral. CIT shall have received
acknowledgment copies of all such filings (or, in lieu thereof, CIT shall have
received other evidence satisfactory to CIT that all such filings have been
made) and CIT shall have received evidence that all necessary filing fees and
all taxes or other expenses related to such filings have been paid in full.
(d) BOARD AND SHAREHOLDER RESOLUTIONS - CIT shall have received a copy of
the resolutions of the Board of Directors of each Borrower authorizing the
execution, delivery and performance of (i) this Financing Agreement, (ii) and
any related agreements, in each case certified by the Secretary or Assistant
Secretary of each Borrower as of the date hereof, together with a certificate of
the Secretary or Assistant Secretary of each Borrower as to the incumbency and
signature of the officers of each Borrower executing such Loan Documents and any
certificate or other documents to be delivered by them pursuant hereto, together
with evidence of the incumbency of such Secretary or Assistant Secretary. If any
subsidiary of the Company is not wholly owned by the Company, CIT shall also
have received shareholder consents satisfactory to CIT with respect to the
matters referenced above.
(e) CORPORATE ORGANIZATION - CIT shall have received (i) a copy of the
Certificate of Incorporation of each Borrower certified by the Secretary of
State of the state of its incorporation with respect to the Company and
certified by the applicable Secretary or Assistant Secretary with respect to
each other Borrower, and (ii) a copy of the By-Laws of each Borrower certified
by the Secretary or Assistant Secretary thereof, all as amended through the date
hereof.
(f) OFFICER'S CERTIFICATE - CIT shall have received an executed Officer's
Certificate of each Borrower, satisfactory in form and substance to CIT,
certifying that (i) the representations and warranties contained herein are true
and correct in all material respects on and as of the Closing Date; (ii) each
Borrower is in compliance with all of the terms and provisions set forth herein;
and (iii) no Default or Event of Default has occurred.
(g) OPINIONS - Counsel for the Borrowers and the Guarantor shall have
delivered to CIT opinions satisfactory to CIT opining, inter alia, that, subject
to the (i) filing, priority and remedies provisions of the Uniform Commercial
Code, (ii) the provisions of the Bankruptcy Code, insolvency statutes or other
like laws, (iii) the equity powers of a court of law and (iv) such other matters
as may be agreed upon with CIT: (x) this Financing Agreement, the Guaranty and
all other Loan Documents of the Borrowers and the Guarantor are (A) valid,
binding and enforceable according to their terms, (B) are duly authorized,
executed, and delivered, and (C) do not violate any terms, provisions,
representations or convenants in the charter or by-laws of any Borrower or, to
the best knowledge of such counsel, of any loan agreement, mortgage, deed of
trust, note, security or pledge agreement, indenture or other contract to which
any Borrower or the Guarantor are signatories or by which any Borrower or the
Guarantor or their assets are bound; and (y) the provisions of all federal and
state securities laws, Bulk Sales Law and the Xxxx-Xxxxx-Xxxxxx Anti-Trust
Improvements Act have been fully complied with or that compliance is not legally
required and the reasons supporting such non-compliance.
10
(h) ABSENCE OF DEFAULT - No Default or Event of Default shall have
occurred and no material adverse change shall have occurred in the financial
condition, business, prospects, profits, operations or assets of the company or
the Company's subsidiaries.
(i) LEGAL RESTRAINTS/LITIGATION - As of the Closing Date, there shall be
no: (x) litigation, investigation or proceeding (judicial or administrative)
pending or threatened against any Borrower or the Guarantor or their assets, by
any agency, division or department of any county, city, state or federal
government arising out of this Financing Agreements; (y) injunction, writ or
restraining order restraining or prohibiting the financing arrangements
contemplated under this Financing Agreement; or (z) suit, action, investigation
or proceeding (judicial or administrative) pending against any Borrower or the
Guarantor or their assets, which, in the opinion of CIT, if adversely
determined, could have a material adverse effect on the business, operation,
assets, financial condition or Collateral of any Borrower and/or the Guarantor.
(j) GUARANTY - The Guarantor shall have executed and delivered to CIT the
Guaranty.
(k) SUBORDINATION AGREEMENT - Autodesk, Inc. shall have executed and
delivered to CIT a Subordination Agreement in form and substance satisfactory to
CIT, subordinating the repayment of certain debt of the Company to Autodesk,
Inc. to the repayment of the Obligations. CIT shall have reviewed and approved
the terms and conditions of the subordinated promissory notes issued to the
investors listed on Schedule 2 attached hereto.
(l) ADDITIONAL DOCUMENTS - The Borrowers shall have executed and
delivered to CIT all Loan Documents necessary to consummate the lending
arrangement contemplated between the Borrowers and CIT.
(m) DISBURSEMENT AUTHORIZATION - The Borrowers shall have delivered to
CIT all information necessary for CIT to issue wire transfer instructions on
behalf of the Borrowers for the initial and subsequent loans and/or advances to
be made under this Financing Agreement including, but not limited to,
disbursement authorization in form acceptable to CIT.
(n) EXAMINATION & VERIFICATION - CIT shall have completed, to CIT's
satisfaction, an examination and verification of the Accounts, financial
statements, books and records of the Borrowers which examination shall indicate
that, after giving effect to all Revolving Loans, advances and extensions of
credit to be made at closing, the Borrowers shall have an opening additional
Availability of at least $500,000 as evidenced by a Borrowing Base certificate
delivered by the Company to CIT as of the Closing Date. It is understood that
such requirement contemplates that all debts and obligations are current, and
that all payables are being handled in the normal course of the Company's
business and consistent with its past practice.
(o) DEPOSITORY ACCOUNTS - The Company shall have established a system of
lockbox and blocked accounts with respect to the collection of Accounts and the
deposit of proceeds of Collateral as shall be acceptable to CIT in all respects.
Such accounts shall be subject to three party agreements (between the Company,
CIT and the depository bank), which shall be in form and substance satisfactory
to CIT.
(p) EXISTING REVOLVING CREDIT AGREEMENT - The Company's existing credit
agreement with Summit Bank (the "Existing Lender") shall be: (i) terminated;
(ii) all loans and obligations of the Borrowers and/or the Guarantor thereunder
shall be paid or satisfied in full, including through utilization of the
proceeds of the initial Revolving Loans to be made under this Financing
Agreement; and (iii) all liens or security interests in favor of the Existing
Lender on the Collateral and otherwise in connection therewith shall be
terminated and/or released upon such payment.
11
(q) WARRANTS - CIT shall have received documentation satisfactory to it
regarding the granting to CIT of warrants to purchase up to one-quarter of one
percent (.25%) of the present and future outstanding shares of voting common
stock of the Company for a nominal amount. The terms and provisions of the
Warrant (including, without limitation, anti-dilution, registration and put/call
rights) shall be mutually agreed upon between CIT and the Company.
(r) SCHEDULES The Company or its counsel shall provide CIT with schedules
of: (a) any of the Company's and its subsidiaries (i) Trademarks, (ii) Patents,
and (iii) Copyrights, as applicable and all in such detail as to provide
appropriate recording information with respect thereto, (b) any tradenames, (c)
monthly rental payments for any leased premises or any other premises where any
Collateral may be stored or processed, and (d) Permitted Encumbrances, all of
the foregoing in form and substance satisfactory to CIT.
Upon the execution of this Financing Agreement and the initial disbursement of
loans hereunder, all of the above Conditions Precedent shall have been deemed
satisfied except as otherwise set forth hereinabove or as the Borrowers and CIT
shall otherwise agree in writing.
2.2 CONDITIONS TO EACH EXTENSION OF CREDIT
Except to the extent expressly set forth in this Financing Agreement, the
agreement of CIT to make any extension of credit requested to be made by it to
the Borrowers on any date (including without limitation, the initial extension
of credit) is subject to the satisfaction of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES - Each of the representations and
warranties made by the Borrowers in or pursuant to this Financing Agreement
shall be true and correct in all material respects on and as of such date as if
made on and as of such date.
(b) NO DEFAULT - No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the extension of credit
requested to be made on such date.
(c) BORROWING BASE - Except as may be otherwise agreed to from time to
time by CIT and the Borrowers in writing and except for the consensual
Overadvances made pursuant to Section 3.1, after giving effect to the extension
of credit requested to be made by the Borrowers on such date, the aggregate
outstanding balance of the Revolving Loans owing by the Borrowers will not
exceed the lesser of (i) the Revolving Line of Credit or (ii) the Borrowing
Base.
Each borrowing by the Borrowers hereunder shall constitute a representation and
warranty by the Borrowers as of the date of such loan or advance that each of
the representations, warranties and covenants contained in the Financing
Agreement have been satisfied and are true and correct, except as the Borrowers
and CIT shall otherwise agree herein or in a separate writing.
SECTION 3. REVOLVING LOANS
3.1 CIT agrees, subject to the terms and conditions of this Financing
Agreement, from time to time (but subject to CIT's right to make
"Overadvances"), to make loans and advances to the Borrowers on a revolving
basis (i.e. subject to the limitations set forth herein, the Borrowers may
borrow, repay and re-borrow Revolving Loans). Such requests for loans and
advances shall
12
be in amounts not to exceed the lesser of (a) the Availability or (b) the
Revolving Line of Credit. All requests for loans and advances must be received
by an officer of CIT no later than 1:00 p.m., New York time, of the Business Day
on which any such Chase Bank Rate Loans and advances are required. Should CIT
for any reason honor requests for Overadvances, any such Overadvances shall be
made in CIT's sole discretion and subject to any additional terms CIT deems
necessary.
3.2 In furtherance of the continuing assignment and security interest in
each Borrower's Accounts, each Borrower will, upon the creation of Accounts,
execute and deliver to CIT in such form and manner as CIT may reasonably
require, solely for CIT's convenience in maintaining records of Collateral, such
confirmatory schedules of Accounts as CIT may reasonably request, including,
without limitation, daily schedules of Accounts, all in form and substance
satisfactory to CIT, and such other appropriate reports designating, identifying
and describing the Accounts as CIT may reasonably request, and provided further
that CIT may request any such information more frequently, from time to time,
upon its reasonable prior request. In addition, each Borrower shall provide CIT
with copies of agreements with, or purchase orders from, such Borrower's
customers, and copies of invoices to customers, proof of shipment or delivery,
access to its computers, electronic media and software programs associated
therewith (including any electronic records, contracts and signatures) and such
other documentation and information relating to said Accounts and other
Collateral as CIT may reasonably require. Failure to provide CIT with any of the
foregoing shall in no way affect, diminish, modify or otherwise limit the
security interests granted herein. Each Borrower hereby authorizes CIT to regard
such Borrower's printed name or rubber stamp signature on assignment schedules
or invoices as the equivalent of a manual signature by one of such Borrower's
authorized officers or agents.
3.3 Each Borrower hereby represents and warrants that: each Trade Account
Receivable is based on an actual and bona fide sale and delivery of Inventory or
rendition of services to customers made by each Borrower in the ordinary course
of its business; the Inventory being sold, and the Trade Accounts Receivable
created, are the exclusive property of the applicable Borrower and are not and
shall not be subject to any lien, consignment arrangement, encumbrance, security
interest or financing statement whatsoever, other than the Permitted
Encumbrances; the invoices evidencing such Trade Accounts Receivable are in the
name of the applicable Borrower; and the customers of such Borrower have
accepted the Inventory or services, owe and are obligated to pay the full
amounts stated in the invoices according to their terms, without dispute,
offset, defense, counterclaim or contra, except for disputes and other matters
arising in the ordinary course of business with respect to which such Borrower
has complied with the notification requirements of Paragraph 3.5 of this Section
3. Each Borrower confirms to CIT that any and all Taxes or fees relating to its
business, its sales, the Accounts or Inventory relating thereto, are its sole
responsibility and that same will be paid by each Borrower when due, subject to
Paragraph 7.6 of Section 6 of this Financing Agreement, and that none of said
Taxes or fees represent a lien on or claim agianst the Accounts. Each Borrower
hereby further represents and warrants that it shall not acquire any Inventory
on a consignment basis, not co-mingle its Inventory with any of it customers or
any other person, including pursuant to any xxxx and hold sale or otherwise, and
that its Inventory is marketable to its customers in the ordinary course of
business of such Borrower, except as it may otherwise report in writing to CIT
pursuant to Paragraph 3.5 hereof from time to time. Each Borrower also warrants
and
13
represents that it is a duly and validly existing corporation and is qualified
in all states where the failure to so qualify would have an adverse effect on
the business of such Borrower or the ability of such Borrower to enforce
collection of Accounts due from customers residing in that state. Each Borrower
agrees to maintain such books and records regarding Accounts and Inventory as
CIT may reasonably require and agrees that the books and records of such
Borrower will reflect CIT's interest in the Accounts. All of the books and
records of each Borrower will be available to CIT at normal business hours,
including any records handled or maintained for each Borrower by any other
company or entity.
3.4 (a) Until CIT has advised the Borrowers to the contrary after the
occurrence of an Event of Default, each Borrower, at its expense, will enforce,
collect and receive all amounts owing on the Accounts in the ordinary course of
its business and any proceeds it so receives shall be subject to the terms
hereof, and held on behalf of and in trust for CIT. Such privilege shall
terminate at the election of CIT, upon the occurrence of an Event of Default.
Any checks, cash, credit card sales and receipts, notes or other instruments or
property received by any Borrower with respect to any Collateral, including
Accounts, shall be held by such Borrower in trust for CIT, separate from such
Borrower's own property and funds, and promptly turned over to CIT with proper
assignments or endorsements by deposit to the Depository Accounts. Each Borrower
shall: (i) indicate on all of its invoices that funds should be delivered to and
deposited in a Depository Account; (ii) direct all of its account debtors to
deposit any and all proceeds of Collateral into the Depository Accounts; (iii)
irrevocably authorize and direct any banks which maintain such Borrower's
initial receipt of cash, checks and other items to promptly wire transfer all
available funds to a Depository Account; and (iv) advise all such banks of CIT's
security interest in such funds. Each Borrower shall provide CIT with prior
written notice of any and all deposit accounts opened or to be opened subsequent
to the Closing Date. Subject to Collection Days, all amounts received by CIT in
payment of Accounts will be credited to the Revolving Loan Account when CIT is
advised by its bank of its receipt of "collected funds" at CIT's bank account in
New York, New York on the Business Day of such advise if advised no later than
1:00 p.m. EST or on the next succeeding Business Day if so advised after 1:00 PM
EST. No checks, drafts or other instrument received by CIT shall constitute
final payment to CIT unless and until such instruments have actually been
collected.
(b) Each Borrower shall establish and maintain, in its name and at its
expense, lockbox and deposit accounts with such banks as are acceptable to CIT
(the "Blocked Accounts") into which such Borrower shall promptly cause to be
deposited: (i) all proceeds of Collateral received by such Borrowers including
all amounts payable to such Borrower from credit card issuers and credit card
processors, and (ii) all amounts on deposit in deposit accounts used by such
Borrower at each of its locations, all as further provided in Paragraph 3.4(a)
above. The banks at which the Blocked Accounts are established shall enter into
an agreement, in form and substance satisfactory to CIT (the "Blocked Account
Agreements"), providing that all cash, checks and items received or deposited in
the Blocked Accounts are the property of CIT, that the depository bank has no
lien upon, or right of set off against, the Blocked Accounts and any cash,
checks, items, wires or other funds from time to time on deposit therein, except
as otherwise provided in the Blocked Account Agreements, and that automatically,
on a daily basis the depository bank will wire, or otherwise transfer, in
immediately available funds, all funds received or deposited into the Blocked
Accounts to such bank account as CIT may from time to time designate for
14
such purpose. Each Borrower hereby confirms and agrees that all amounts
deposited in such Blocked Accounts and any other funds received and collected by
CIT, whether as proceeds of other Collateral or otherwise, shall be the property
of CIT.
3.5 Each Borrower agrees to notify CIT: (a) of any matters affecting the
value, enforceability or collectibility of any Account and of all customer
disputes, offsets, defenses, counterclaims, returns, rejections and all
reclaimed or repossessed merchandise or goods, in its daily and monthly
collateral reports (as applicable) provided to CIT hereunder, in such detail and
format as CIT may reasonably require from time to time; and (b) promptly of any
such matters which (i) are material, as a whole, to the Accounts, or (ii) which
adversely affect the value of any Account in an amount of $25,000 or more. Each
Borrower agrees to issue credit memoranda promptly (with duplicates to be
immediately forwarded to CIT) upon accepting returns or granting allowances.
Upon the occurrence of an Event of Default (which is not waived in writing by
CIT) and on notice from CIT, the Borrowers agree that all returned, reclaimed or
repossessed merchandise or goods shall be set aside by the Borrowers, marked
with CIT's name (as secured party) and held by the Borrowers for CIT's account.
3.6 CIT shall maintain a Revolving Loan Account on its book in which the
Borrowers will be charged with all loans and advances made by CIT to them or for
their account, and with any other Obligations, including any and all costs,
expenses and reasonable attorney's fees which CIT may incur in connection with
the exercise by or for CIT of any of the rights or powers herein conferred upon
CIT, or in the prosecution or defense of any action or proceeding to enforce or
protect any rights of CIT in connection with this Financing Agreement, the other
Loan Documents or the Collateral assigned hereunder, or any Obligations owing by
the Borrowers. The Borrowers will be credited with all amounts received by CIT
from the Borrowers or from others for the Borrowers' account, including, as
above set forth, all amounts received by CIT in payment of Accounts, and such
amounts will be applied to payment of the Obligations as set forth herein. In no
event shall prior recourse to any Accounts or other security granted to or by
the Borrowers be a prerequisite to CIT's right to demand payment of any
Obligation. Further, it is understood that CIT shall have no obligation
whatsoever to perform in any respect any of any Borrower's contracts or
obligations relating to the Accounts.
3.7 After the end of each month, CIT shall promptly send the Borrowers a
statement showing the accounting for the charges, loans, advances and other
transactions occurring between CIT and the Borrowers during that month. The
monthly statements shall be deemed correct and binding upon the Borrowers and
shall constitute an account stated between the Borrowers and CIT unless CIT
receives a written statement of the exceptions within thirty (30) days of the
date of the monthly statement.
3.8 Subject to the terms and provisions regarding consensual Overadvances
made pursuant to Section 3.1, in the event that any requested advance exceeds
Availability or that the outstanding balance of Revolving Loans exceeds (b)(x)
the Borrowing Base or (y) the Revolving Line of Credit, any such Overadvance
shall be due and payable to CIT immediately upon CIT's demand therefor.
15
SECTION 4. INTENTIONALLY OMITTED
SECTION 5. INTENTIONALLY OMITTED
SECTION 6. COLLATERAL
6.1 As security for the prompt payment in full of all Obligations, each
Borrower hereby pledges and grants to CIT a continuing general lien upon, and
security interest in, all of its:
(a) Accounts;
(b) General Intangibles;
(c) Documents of Title; and
(d) Other Collateral.
6.2 The security interests granted hereunder shall extend and attach to
all Collateral which is owned by any Borrower or in which any Borrower has any
interest, whether held by any Borrower or others for its account; and
6.3 Each Borrower hereby agrees to immediately forward any and all
proceeds of Collateral to the Depository Account, and to hold any such proceeds
(including any notes and instruments), in trust for CIT pending delivery to CIT.
6.4 The rights and security interests granted to CIT hereunder are to
continue in full force and effect, notwithstanding the termination of this
Financing Agreement or the fact that the Revolving Loan Account may from time to
time be temporarily in a credit position, until the final payment in full to CIT
of all Obligations and the termination of this Financing Agreement. Any delay,
or omission by CIT to exercise any right hereunder shall not be deemed a waiver
thereof, or be deemed a waiver of any other right, unless such waiver shall be
in writing and signed by CIT. A waiver on any one occasion shall not be
construed as a bar to, or waiver of, any right or remedy on any future occasion.
6.5 Notwithstanding CIT's security interest in the Collateral and to the
extent that the Obligations are now or hereafter secured by any assets or
property other than the Collateral or by the guarantee, endorsement, assets or
property of any other person, CIT shall have the right in its sole discretion to
determine which rights, liens, security interests or remedies CIT shall at any
time pursue, foreclose upon, relinquish, subordinate, modify or take any other
action with respect to, without in any way modifying or affecting any of them,
or any of CIT's rights hereunder.
6.6 Any balances to the credit of any Borrower and any other property or
assets of any Borrower in the possession or control of CIT may be held by CIT as
security for any Obligations and applied in whole or partial satisfaction of
such Obligations when due. The liens and security interests granted herein, and
any other lien or security interest CIT may have in any other assets of any
Borrower, shall secure payment and performance of all now existing and future
16
Obligations. CIT may in its discretion charge any or all of the Obligations to
the Revolving Loan Account when due.
6.7 Each Borrower possesses all General Intangibles and rights thereto
necessary to conduct its business as conducted as of the Closing Date and each
Borrower shall maintain its rights in, and the value of, the foregoing in the
ordinary course of its business, including, without limitation, by making timely
payment with respect to any applicable licensed rights. Each Borrower shall
deliver to CIT, and/or shall cause the appropriate party to deliver to CIT, from
time to time such pledge or security agreements with respect to General
Intangibles (now or hereafter acquired) of each Borrower and its subsidiaries as
CIT shall require to obtain valid first liens thereon. In furtherance of the
foregoing, each Borrower shall provide timely notice to CIT of any additional
Patents, Trademarks, tradenames, service marks, Copyrights, brand names, trade
names, logos and other trade designations acquired or applied for subsequent to
the Closing Date and each Borrower shall execute such documentation as CIT may
reasonably require to obtain and perfect its lien thereon.
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS
7.1 Each Borrower warrants, and represents that: (i) Schedule 1 hereto
correctly and completely sets forth each Borrower's (A) chief executive office,
(B) Collateral locations, (C) tradenames, and (D) all the other information
listed on said Schedule; (ii) except for the Permitted Encumbrances, after
filing of financing statements in the applicable filing clerks office at the
locations set forth in Schedule 1, this Financing Agreement creates a valid,
perfected and first priority security interest in the Collateral and the
security interests granted herein constitute and shall at all times constitute
the first and only liens on the Collateral; (iii) except for the Permitted
Encumbrances, each Borrower is, or will be, at the time additional Collateral is
acquired by it, the absolute owner of the Collateral with full right to pledge,
sell, consign, transfer and create a security interest therein, free and clear
of any and all claims or liens in favor of others; (iv) each Borrower will, at
its expense, forever warrant and, at CIT's request, defend the same from any and
all claims and demands of any other person other than a holder of a Permitted
Encumbrance; (v) each Borrower will not grant, create or permit to exist, any
lien upon, or security interest in, the Collateral, or any proceeds thereof, in
favor of any other person other than the holders of the Permitted Encumbrances;
and (vi) the Equipment is and will only be used by each Borrower in its business
and will not be held for sale or lease, or removed from its premises, or
otherwise disposed of by each Borrower except as otherwise permitted in this
Financing Agreement.
7.2 Each Borrower agrees to maintain books and records pertaining to the
Collateral in accordance with GAAP and in such additional detail, form and scope
as CIT shall reasonably require. Each Borrower agrees that CIT or its agents may
enter upon each Borrower's premises at any time during normal business hours,
and from time to time in its reasonable business judgement, for the purpose of
inspecting the Collateral and any and all records pertaining thereto. Each
Borrower irrevocably authorizes all accountants and third parties (other than
its attorneys) to disclose and deliver directly to CIT, at the Borrowers'
expense, all financial statements and information, books, records, work papers,
management reports and other information generated
17
by them or in their possession regarding any Borrower and/or the Collateral.
Each Borrower agrees to afford CIT thirty (30) days prior written notice of any
change in the location of any Collateral, other than to locations, that as of
the Closing Date, are known to CIT and at which CIT has filed financing
statements and otherwise fully perfected its liens thereon. Each Borrower is
also to advise CIT promptly, in sufficient detail, of any material adverse
change relating to the type, quantity or quality of the Collateral or on the
security interests granted to CIT therein.
7.3 Each Borrower agrees to execute and deliver to CIT, from time to
time, solely for CIT's convenience in maintaining a record of the Collateral,
such written statements, and schedules as CIT may reasonably require,
designating, identifying or describing the Collateral. Each Borrower's failure,
however, to promptly give CIT such statements, or schedules shall not affect,
diminish, modify or otherwise limit CIT's security interests in the Collateral.
7.4 Each Borrower agrees to comply with the requirements of all state and
federal laws in order to grant to CIT valid and perfected first security
interests in the Collateral, subject only to the Permitted Encumbrances. CIT is
hereby authorized by each Borrower to file (including pursuant to the applicable
terms of the UCC) from time to time any financing statements, continuations or
amendments covering the Collateral whether or not such Borrower's signature
appears thereon. Each Borrower hereby consents to and ratifies any and all
execution and/or filing of financing statements on or prior to the Closing Date
by CIT. Each Borrower agrees to do whatever CIT may reasonably request, from
time to time, by way of: (a) filing notices of liens, financing statements,
amendments, renewals and continuations thereof; (b) cooperating with CIT's
agents and employees; (c) keeping Collateral records; (d) transferring proceeds
of Collateral to CIT's possession; and (e) performing such further acts as CIT
may reasonably require in order to effect the purposes of this Financing
Agreement.
7.5 INTENTIONALLY OMITTED.
7.6 Each Borrower agrees to pay, when due, all Taxes, including sales
taxes, assessments, claims and other charges lawfully levied or assessed upon
any Borrower or the Collateral unless such Taxes are being diligently contested
in good faith by the applicable Borrower by appropriate proceedings and adequate
reserves are established in accordance with GAAP. Notwithstanding the foregoing,
if any lien shall be filed or claimed thereunder (a) for Taxes due the United
States of America, or (b) which in CIT's opinion might create a valid obligation
having priority over the rights granted to CIT herein (exclusive of Real
Estate), such lien shall not be deemed to be a Permitted Encumbrance hereunder
and the Borrowers shall immediately pay such tax and remove the lien of record.
If the Borrowers fail to do so promptly, then at CIT's election, CIT may (i)
create an Availability Reserve in such amount as it may deem appropriate in its
business judgement, or (ii) upon the occurrence of a Default or Event of
Default, imminent risk of seizure, filing of any priority lien, forfeiture, or
sale of the Collateral, pay Taxes on the Borrowers' behalf, and the amount
thereof shall be an Obligation secured hereby and due on demand.
7.7 Each Borrower: (a) agrees to comply with all acts, rules, regulations
and orders of any legislative, administrative or judicial body or official,
which the failure to comply with would have a material and adverse impact on the
Collateral, or any material part thereof, or on
18
the business or operations of any Borrower, provided that the applicable
Borrower may contest any acts, rules, regulations, orders and directions of such
bodies or officials in any reasonable manner which will not, in CIT's reasonable
opinion, materially and adversely effect CIT's rights or priority in the
Collateral; (b) agrees to comply with all environmental statutes, acts, rules,
regulations or orders as presently existing or as adopted or amended in the
future, applicable to the Collateral, the ownership and/or use of its real
property and operation of its business, which the failure to comply with would
have a material and adverse impact on the Collateral, or any material part
thereof, or on the operation of the business of any Borrower; and (c) shall not
be deemed to have breached any provision of this Paragraph 7.7 if (i) the
failure to comply with the requirements of this Paragraph 7.7 resulted from good
faith error or innocent omission, (ii) each Borrower promptly commences and
diligently pursues a cure of such breach, and (iii) such failure is cured within
(30) days following the applicable Borrower's receipt of notice of such failure,
or if such cannot in good faith be cured within thirty (30) days, then such
breach is cured within a reasonable time frame based upon the extent and nature
of the breach and the necessary remediation, and in conformity with any
applicable consent order, consensual agreement and applicable law.
7.8 Until termination of this Financing Agreement and payment and
satisfaction of all Obligations due hereunder, the Borrowers agree that, unless
CIT shall have otherwise consented in writing, the Borrowers will furnish to
CIT: (a) within ninety (90) days after the end of each fiscal year of the
Company, an audited Consolidated Balance Sheet, with a Consolidating Balance
Sheet attached thereto, as at the close of such year, and statements of profit
and loss, cash flow and reconciliation of surplus of the Company and its
consolidated subsidiaries for such year, audited by independent public
accountants selected by the Company and satisfactory to CIT; (b) within thirty
(30) days after the end of each month a Consolidated Balance Sheet as at the end
of such period and statements of profit and loss and surplus of the Company and
all subsidiaries for such period, certified by an authorized financial or
accounting officer of the Company; and (c) from time to time, such further
information regarding the business affairs and financial condition of the
Company and its consolidated subsidiaries as CIT may reasonably request,
including, without limitation (i) the accountant's management practice letter
and (ii) annual cash flow projections in form satisfactory to CIT. Each
financial statement which the Borrowers are required to submit hereunder must be
accompanied by an officer's certificate, signed by the President, Vice
President, Controller, or Treasurer, pursuant to which any one such officer must
certify that: (x) the financial statement(s) fairly and accurately represent(s)
the Borrowers' financial condition at the end of the particular accounting
period, as well as the Borrowers' operating results during such accounting
period, subject to year-end audit adjustments; and (y) during the particular
accounting period: (A) there has been no Default or Event of Default under this
Financing Agreement, PROVIDED, HOWEVER, that if any such officer has knowledge
that any such Default or Event of Default, has occurred during such period, the
existence of and a detailed description of same shall be set forth in such
officer's certificate; (B) no Borrower has received any notice of cancellation
with respect to its property insurance policies; (C) no Borrower has received
any notice that could result in a material adverse effect on the value of the
Collateral taken as a whole; and (D) the exhibits attached to such financial
statement(s) constitute detailed calculations showing compliance with all
financial covenants contained in this Financing Agreement.
19
7.9 Until termination of the Financing Agreement and payment and
satisfaction of all Obligations hereunder, each Borrower agrees that, without
the prior written consent of CIT, except as otherwise herein provided, each
Borrower will not:
(a) Mortgage, assign, pledge, transfer or otherwise permit any lien,
charge, security interest, encumbrance or judgment, (whether as a
result of a purchase money or title retention transaction, or other
security interest, or otherwise) to exist on any of any Borrower's
Collateral or any other assets, whether now owned or hereafter
acquired, except for the Permitted Encumbrances;
(b) Incur or create any Indebtedness other than the Permitted
Indebtedness;
(c) Sell, lease, assign, transfer or otherwise dispose of (i)
Collateral, except as otherwise specifically permitted by this
Financing Agreement, or (ii) either all or substantially all of any
Borrower's assets, which do not constitute Collateral;
(d) Merge, consolidate or otherwise alter or modify its corporate name,
principal place of business, structure, or existence, re-incorporate
or re-organize, or enter into or engage in any operation or activity
materially different from that presently being conducted by any
Borrower, except that any Borrower may change its corporate name or
address; provided that: (i) such Borrower shall give CIT thirty (30)
days prior written notice thereof, and (ii) such Borrower shall
execute and deliver, prior to or simultaneously with any such
action, any and all documents and agreements requested by CIT to
confirm the continuation and preservation of all security interests
and liens granted to CIT hereunder;
(e) Assume, guarantee, endorse, or otherwise become liable upon the
obligations of any person, firm, entity or corporation, except by
the endorsement of negotiable instruments for deposit or collection
or similar transactions in the ordinary course of business;
(f) Declare or pay any dividend or distributions of any kind on, or
purchase, acquire, redeem or retire, any of the capital stock or
equity interest, of any class whatsoever, whether now or hereafter
outstanding; provided, however, (i) the Borrowers may continue to
make payments with respect to previous stock repurchases which have
been approved by CIT and (ii) the Borrowers may repurchase stock
from employees pursuant to employee stock option plans so long as
CIT approves in writing all payments with respect thereto;
(g) Make any advance or loan to, or any investment in, any firm, entity,
person or corporation or purchase or acquire all or substantially
all of the stock or assets of any entity, person or corporation; or
(h) Pay any management, consulting or other similar fees to any person,
corporation or other entity affiliated with any Borrower.
7.10 INTENTIONALLY OMITTED.
7.11 INTENTIONALLY OMITTED.
7.12 Each Borrower hereby agrees to indemnify and hold harmless CIT and
its officers, directors, employees, attorneys and agents (each an "Indemnified
Party") from, and holds each of them harmless against, any and all losses,
liabilities, obligations, claims, actions, damages, costs
20
and expenses (including attorney's fees) and any payments made by CIT pursuant
to any indemnity provided by CIT with respect to or to which any Indemnified
Party could be subject insofar as such losses, liabilities, obligations, claims,
actions, damages, costs, fees or expenses with respect to the Loan Documents,
including without limitation those which may arise from or relate to: (a) the
Depository Account, the Blocked Accounts, the lockbox and/or any other
depository account and/or the agreements executed in connection therewith; and
(b) any and all claims or expenses asserted against CIT as a result of any
environmental pollution, hazardous material or environmental clean-up relating
to the Real Estate; or any claim or expense which results from any Borrower's
operations (including, but not limited to, any Borrower's site disposal
practices) and use of the Real Estate, which CIT may sustain or incur (other
than solely as a result of the physical actions of CIT on any Borrower's
premises which are determined to constitute gross negligence or willful
misconduct by a court of competent jurisdiction), all whether through the
alleged or actual negligence of such person or otherwise, except and to the
extent that the same results solely and directly from the gross negligence or
willful misconduct of such Indemnified Party as finally determined by a court of
competent jurisdiction. Each Borrower hereby agrees that this indemnity shall
survive termination of this Financing Agreement, as well as payments of
Obligations which may be due hereunder. CIT may, in its sole business judgement,
establish such Availability Reserves with respect thereto as it may deem
advisable under the circumstances and, upon any termination hereof, hold such
reserves as cash reserves for any such contingent liabilities.
7.13 Without the prior written consent of CIT, each Borrower agrees that
it will not enter into any transaction, including, without limitation, any
purchase, sale, lease, loan or exchange of property with any other Borrower or
any subsidiary or affiliate of any other Borrower, provided that, except as
otherwise set forth in this Financing Agreement, any Borrower may enter into
sale and service transactions in the ordinary course of its business and
pursuant to the reasonable requirements of such Borrower, and upon standard
terms and conditions and fair and reasonable terms, no less favorable to such
Borrower than such Borrower could obtain in a comparable arms length transaction
with an unrelated third party, provided further that no Default or Event of
Default exists or will occur hereunder prior to and after giving effect to any
such transaction.
SECTION 8. INTEREST, FEES AND EXPENSES
8.1 (a) Interest shall be payable monthly as of the end of each month in
an amount equal to the Chase Bank Rate plus one and one-half percent (1 1/2%)
per annum on the average of the net balances owing by the Company to CIT in the
Revolving Loan Account at the close of each day during such month. In the event
of any change in said Chase Bank Rate, the rate hereunder for Chase Bank Rate
Loans shall change, as of the date of such change, so as to remain one and
one-half percent (1 1/2%) above the Chase Bank Rate. The rate hereunder shall be
calculated based on a 360-day year. CIT shall be entitled to charge the
Revolving Loan Account at the rate provided for herein when due until all
Obligations have been paid in full.
(b) Notwithstanding any provision to the contrary contained in this
section 8, in the event that the outstanding Revolving Loans exceed the lesser
of either (x) the maximum aggregate amount available under Section 3 of this
Financing Agreement or (y) the Revolving Line of Credit: (A) as a result of
Revolving Loans advanced by CIT at the request of the
21
Borrowers (herein "Requested Overadvances"), for any one (1) or more days in any
month, or (B) for any other reason whatsoever (herein "Other Overadvances") and
such Other Overadvances continue for five (5) or more days in any month, the
average net balance of all Revolving Loans for such month shall bear interest at
the Overadvance Rate.
(c) Upon and after the occurrence of an Event of Default and the giving
of any required notice by CIT in accordance with the provisions of Section 10,
Paragraph 10.2 hereof, all Obligations shall bear interest at the Default Rate
of Interest.
8.2 INTENTIONALLY OMITTED
8.3 INTENTIONALLY OMITTED
8.4 INTENTIONALLY OMITTED
8.5 The Borrowers shall reimburse or pay CIT, as the case may be, for:
(a) all Out-of-Pocket Expenses and (b) any applicable Documentation Fee.
8.6 Upon the last Business Day of each month, commencing on October 31,
2000, the Borrowers shall pay to CIT interest on the Collection Days. Interest
will be computed at the rate, and in the manner, set forth in Paragraph 8.1 of
this Financing Agreement.
8.7 To induce CIT to enter into this Financing Agreement and to extend to
the Borrowers the Revolving Loan, the Borrowers shall pay to CIT a Loan Facility
Fee in the amount of: $25,000.00 upon execution of this Financing Agreement.
8.8 The Borrowers shall pay to CIT the Administrative Management Fee in
the amount of $1,000.00 per month on the first Business Day of each month.
8.9 The Borrowers shall pay CIT's standard charges and fees for CIT's
personnel used by CIT for reviewing the books and records of the Borrowers and
for verifying, testing, protecting, safeguarding, preserving or disposing of all
or any part of the Collateral (which fees shall be in addition to the
Administrative Management Fee and any Out-of-Pocket Expenses).
8.10 The Borrowers hereby authorizes CIT to charge the Revolving Loan
Account with the amount of all payments due hereunder as such payments become
due. The Borrowers confirm that any charges which CIT may so make to the
Revolving Loan Account as herein provided will be made as an accommodation to
the Borrowers and solely at CIT's discretion.
8.11 In the event that CIT or any participant hereunder (or any financial
institution which may from time to time become a participant or lender
hereunder) shall have determined in the exercise of its reasonable business
judgement that, subsequent to the Closing Date, any change in applicable law,
rule, regulation or guideline regarding capital adequacy, or any change in the
interpretation or administration thereof, or compliance by CIT or such
participant with any new request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the
22
rate of return on CIT's or such participant's capital as a consequence of its
obligations hereunder to a level below that which CIT or such participant could
have achieved but for such adoption, change or compliance (taking into
consideration CIT or such participant's policies with respect to capital
adequacy) by an amount reasonably deemed by CIT or such participant to be
material, then, from time to time, the Borrowers shall pay no later that five
(5) days following demand to CIT or such participant such additional amount or
amounts as will compensate CIT's or such participant's for such reduction. In
determining such amount or amounts, CIT or such participant may use any
reasonable averaging or attribution methods. The protection of this Paragraph
8.11 shall be available to CIT or such participant regardless of any possible
contention of invalidity or inappicability with respect to the applicable law,
regulation or condition. A certificate of CIT or such participant setting forth
such amount or amounts as shall be necessary to compensate CIT or such
participant with respect to this Section 8 and the calculation thereof when
delivered to the Borrowers shall be conclusive on the Borrowers absent manifest
error. Notwithstanding anything in this paragraph to the contrary, in the event
CIT or such participant has exercised its rights pursuant to this paragraph, and
subsequent thereto determines that the additional amounts paid by the Borrowers
in whole or in part exceed the amount which CIT or such participant actually
required to be made whole, the excess, if any, shall be returned to the
Borrowers by CIT or such participant.
8.12. In the event that any applicable law, treaty or governmental
regulation, or any change therein or in the interpretation or application
thereof, or compliance by CIT or such participant with any request or directive
(whether or not having the force of law) from any central bank or other
financial, monetary or other authority, shall:
(a) subject CIT or such participant to any tax of any kind whatsoever
with respect to this Financing Agreement or change the basis of taxation of
payments to CIT or such participant of principal, fees, interest or any other
amount payable hereunder or under any other documents (except for changes in the
rate of tax on the overall net income of CIT or such participant by the federal
government or the jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by CIT or such
participant by reason of or in respect to this Financing Agreement and the Loan
Documents, including (without limitation) pursuant to Regulation D of the Board
of Governors of the Federal Reserve System; or
(c) impose on CIT or such participant any other condition with respect to
this Financing Agreement or any other document, and the result of any of the
foregoing is to increase the cost to CIT or such participant of making, renewing
or maintaining its loans hereunder by an amount that CIT or such participant
deems to be material in the exercise of its reasonable business judgement or to
reduce the amount of any payment (whether of principal, interest or otherwise)
in respect of any of the loans by an amount that CIT or such participant deems
to be material in the exercise of its reasonable business judgment, then, in any
case the Borrowers shall pay CIT or such participant, within five (5) days
following its demand, such additional cost or such reduction, as the case may
be. CIT or such participant shall certify the amount of such additional cost or
reduced amount to the Borrowers and the calculation thereof and such
certification shall
23
be conclusive upon the Borrowers absent manifest error. Notwithstanding anything
in this paragraph to the contrary, in the event CIT or such participant has
exercised its rights pursuant to this paragraph, and subsequent thereto
determine that the additional amounts paid by the Borrowers in whole or in part
exceed the amount which CIT or such participant actually required pursuant
hereto, the excess, if any, shall be returned to the Borrowers by CIT or such
participant.
8.13 For purposes of this Financing Agreement and Section 8 thereof, any
reference to CIT shall include any financial institution which may become a
participant or co-lender subsequent to the Closing Date.
SECTION 9. POWERS
Each Borrower hereby constitutes CIT, or any person or agent CIT may
designate, as its attorney-in-fact, at the Borrowers' cost and expense, to
exercise all of the following powers, which being coupled with an interest,
shall be irrevocable until all Obligations to CIT have been paid in full:
(a) To receive, take, endorse, sign, assign and deliver, all in the name
of CIT or any Borrower, any and all checks, notes, drafts, and other documents
or instruments relating to the Collateral;
(b) To receive, open and dispose of all mail addressed to any Borrower
and to notify postal authorities to change the address for delivery thereof to
such address as CIT may designate;
(c) To request from customers indebted on Accounts at any time, in the
name of CIT information concerning the amounts owing on the Accounts;
(d) To request from customers indebted on Accounts at any time, in the
name the applicable Borrower, in the name of certified public accountant
designated by CIT or in the name of CIT's designee, information concerning the
amounts owing on the Accounts;
(e) To transmit to customers indebted on Accounts notice of CIT's
interest therein and to notify customers indebted on Accounts to make payment
directly to CIT for the applicable Borrower's account; and
(f) To take or bring, in the name of CIT or any Borrower, all steps,
actions, suits or proceedings deemed by CIT necessary or desirable to enforce or
effect collection of the Accounts.
Notwithstanding anything hereinabove contained to the contrary, the powers
set forth in (b) and (f) above may only be exercised after the occurrence of an
Event of Default and until such time as such Event of Default is waived in
writing by CIT.
24
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Notwithstanding anything hereinabove to the company, CIT may
terminate this Financing Agreement immediately upon the occurrence of any of the
following Events of Default:
(a) cessation of the business of any Borrower or of the Guarantor or the
calling of a meeting of the creditors of any Borrower or of the
Guarantor for purposes of compromising the debts and obligations of
any Borrower or the Guarantor;
(b) the failure of any Borrower or of the Guarantor to generally meet its
or his debts as they mature;
(c) (i) the commencement by any Borrower or by the Guarantor of any
bankruptcy, insolvency, arrangement, reorganization, receivership or
similar proceedings under any federal or state law; (ii) the
commencement against any Borrower or the Guarantor of any bankruptcy,
insolvency, arrangement, reorganization, receivership or similar
proceeding under any federal or state law by creditors of any
Borrower or of the Guarantor, provided that such Default shall not be
deemed an Event of default if such proceeding is controverted within
ten (10) days and dismissed and vacated within thirty (30) days of
commencement, except in the event that any of the actions sought in
any such proceeding shall occur or any Borrower or the Guarantor
shall take action to authorize or effect any of the actions in any
such proceeding; or (iii) the commencement (x) by any subsidiaries of
any Borrower, or any one of them, of any bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceeding under
any applicable state law, or (y) against any Borrower's subsidiaries,
or any one of them, of any involuntary bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceeding under
applicable law, provided that such Default shall not be deemed an
event of Default if such proceeding is controverted within ten (10)
days and dismissed or vacated within thirty (30) days of
commencement, except in the event that any of the actions sought in
any such proceeding shall occur or any of any Borrower's
subsidiaries, or any one of them, shall take action to authorize or
effect any of the actions in any such proceeding;
(d) breach by any Borrower of any warranty, representation or covenant
contained herein (other than those referred to in sub-paragraph (e)
below) or in any other written agreement between any Borrower or CIT,
provided that such Default by any Borrower of any of the warranties,
representations or covenants referred in this clause (d) shall not be
deemed to be an Event of Default unless and until such Default shall
remain unremedied to CIT's satisfaction for a period of ten (10) days
from the date of such breach;
(e) breach by any Borrower of any warranty, representation or covenant of
Paragraphs 3.3 (other than the fourth sentence or Paragraph 3.3) and
3.4 of Section 3 hereof; Paragraphs 6.3 and 6.4 (other than the first
sentence of Paragraph 6.4) of Section 6 hereof; Paragraphs 7.1, 7.5,
7.6, and 7.8 through 7.14 hereof;
(f) failure of any Borrower to pay any of the Obligations within five (5)
Business Days of the due date thereof, provided that nothing
contained herein shall prohibit
25
CIT from charging such amounts to the Revolving Loan Account on the
due date thereof;
(g) any Borrower shall (i) engage in any "prohibited transaction" as
defined in ERISA, (ii) have any "accumulated funding deficiency" as
defined in ERISA, (iii) have any "reportable event" as defined in
ERISA, (iv) terminate any "plan", as defined in ERISA or (v) be
engaged in any proceeding in which the Pension Benefit Guaranty
Corporation shall seek appointment, or is appointed, as trustee or
administrator of any "plan", as defined in ERISA, and with respect to
this sub-paragraph (h) such event or condition (x) remains uncured
for a period of thirty (30) days from date or occurrence and (y)
could, in the reasonable opinion of CIT, subject any Borrower to any
tax, penalty or other liability material to the business, operations
or financial condition of any Borrower;
(h) without the prior written consent of CIT and, except as permitted in
the Subordination Agreement, any Borrower shall (x) amend or modify
the Subordinated Debt, (y) make any prepayment on account of
Subordinated Debt or (z) make any payment on account of the
Subordination Agreement;
(i) the occurrence of any default or event of default (after giving
effect to any applicable grace or cure periods) under any instrument
or agreement evidencing (x) Subordinated Debt or (y) any other
Indebtedness of any Borrower having a principal amount in excess of
$25,000;
(j) (i) The Guarantor ceases for any reason whatsoever (other than as a
result of death) to be actively engaged in the management of the
Borrowers, (ii) the Company fails to own 100% of the issued and
outstanding capital stock of any of its subsidiaries or (iii) any
change in control with respect to the Company shall occur;
(k) if the Guarantor dies or terminates his Guaranty or otherwise fails
to perform any of the terms of the Guaranty, all prior to termination
of this Financing Agreement and payment in full of all Obligations;
(l) any judgment or judgments aggregating in excess of $25,000 or any
injunction or attachment is obtained or enforced against the
Guarantor and which remains unstayed for more than ten (10) Business
Days; or
(m) Autodesk, Inc. shall at any time fail to provide trade credit to the
Borrowers on terms satisfactory to CIT.
10.2 Upon the occurrence of a Default and/or an Event of Default, at the
option of CIT, all loans, advances and extensions of credit provided for in
Sections 3, 4 and 5 of this Financing Agreement shall be thereafter in CIT's
sole discretion and the obligation of CIT to make Revolving Loans shall cease
unless such Default is cured to CIT's satisfaction or Event of Default is waived
in writing by CIT, and at the option of CIT upon the occurrence of an Event of
Default; (a) all Obligations shall become immediately due and payable; (b) CIT
may charge the Borrowers the Default Rate of Interest on all then outstanding or
thereafter incurred Obligations in lieu of the interest provided for in Section
8 of this Financing Agreement, and (c) CIT may immediately terminate this
Financing Agreement upon notice to the Borrowers; provided, however, that upon
the occurrence of an Event of Default listed in Paragraph 10.1(c) of this
Section 10, this Financing Agreement shall automatically terminate and all
Obligations
26
shall become due and payable, without any action, declaration, notice or demand
by CIT. The exercise of any option is not exclusive of any other option, which
may be exercised at any time by CIT.
10.3 Immediately upon the occurrence of any Event of Default, CIT may, to
the extent permitted by law: (a) remove from any premises where same may be
located any and all books and records, computers, electronic media and software
programs associated with any Collateral (including any electronic records,
contracts and signatures pertaining thereto), documents, instruments, files and
records, and any receptacles or cabinets containing same, relating to the
Accounts, or CIT may use, at the Borrowers' expense, such of any Borrower's
personnel, supplies or space at any Borrower's places of business or otherwise,
as may be necessary to properly administer and control the Accounts or the
handling of collections and realizations thereon; (b) bring suit, in the name of
any Borrower or CIT, and generally shall have all other rights respecting said
Accounts, including without limitation the right to: accelerate or extend the
time of payment, settle, compromise, release in whole or in part any amounts
owing on any Accounts and issue credits in the name of any Borrower or CIT; (c)
sell, assign and deliver the Collateral, with or without advertisement, at
public or private sale, for cash, on credit or otherwise, at CIT's sole option
and discretion, and CIT may bid or become a purchaser at any such sale, free
from any right of redemption, which right is hereby expressly waived by each
Borrower; (d) foreclose the security interests in the Collateral created herein
or by the Loan Documents by any available judicial procedure, or to take
possession of any or all of the Collateral, including Other Collateral without
judicial process, and to enter any premises where any Other Collateral may be
located for the purpose of taking possession of or removing the same; and (e)
exercise any other rights and remedies provided in law, in equity, by contract
or otherwise. CIT shall have the right, without notice or advertisement, to
sell, lease, or otherwise dispose of all or any part of the Collateral, whether
in its then condition or after further preparation or processing, in the name of
any Borrower or CIT, or in the name of such other party as CIT may designate,
either at public or private sale or at any broker's board, in lots or in bulk,
for cash or for credit, with or without warranties or representations, and upon
such other terms and conditions as CIT in its sole discretion may deem
advisable, and CIT shall have the right to purchase at any such sale. If notice
of intended disposition of any Collateral is required by law, it is agreed that
ten (10) days notice shall constitute reasonable notification and full
compliance with the law. The net cash proceeds resulting from CIT's exercise of
any of the foregoing rights, (after deducting all charges, costs and expenses,
including reasonable attorneys' fees) shall be applied by CIT to the payment of
the Obligations, whether due or to become due, in such order as CIT may elect,
and the Borrowers shall remain liable to CIT for any deficiencies, and CIT in
turn agrees to remit to the applicable Borrower or its successors or assigns,
any surplus resulting therefrom. The enumeration of the foregoing rights is not
intended to be exhaustive and the exercise of any right shall not preclude the
exercise of any other rights, all of which shall be cumulative. Each Borrower
hereby indemnifies CIT and holds CIT harmless from any and all costs, expenses,
claims, liabilities, Out-of-Pocket Expenses or otherwise, incurred or imposed on
CIT by reason of the exercise of any of its rights, remedies and interests
hereunder, including, without limitation, from any sale or transfer of
Collateral, preserving, maintaining or securing the Collateral, defending its
interests in Collateral (including pursuant to any claims brought by any
Borrower, any Borrower as debtor-in-possession, any secured or unsecured
creditors of any Borrower, any trustee or receiver in bankruptcy, or otherwise),
and
27
each Borrower hereby agrees to so indemnify and hold CIT harmless, absent CIT's
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction. The foregoing indemnification shall survive termination
of this Financing Agreement until such time as all Obligations (including the
foregoing) have been finally and indefeasibly paid in full. In furtherance
thereof CIT, may establish such reserves for Obligations hereunder (including
any contingent Obligations) as it may deem advisable in its reasonable business
judgement.
SECTION 11. TERMINATION
Except as otherwise permitted herein, CIT may terminate this Financing
Agreement at any time by giving the Company at least sixty (60) days prior
written notice of termination. Notwithstanding the foregoing CIT may terminate
the Financing Agreement immediately upon the occurrence of an Event of Default,
provided, however, that if the Event of Default is an event listed in Paragraph
10.1(c) of Section 10 of this Financing Agreement, this Financing Agreement
shall terminate in accordance with paragraph 10.2 of Section 10. This Financing
Agreement, unless terminated as herein provided, shall automatically continue
from Anniversary Date to Anniversary Date. The Borrowers may terminate this
Financing Agreement at any time upon sixty (60) days' prior written notice to
CIT, provided that the Borrowers pay to CIT on the applicable termination date
an Early Termination Fee, if applicable. All Obligations shall become due and
payable as of any termination hereunder or under Section 10 hereof and, pending
a final accounting, CIT may withhold any balances in the Company's account
(unless supplied with an indemnity satisfactory to CIT) to cover all of the
Obligations, whether absolute or contingent, including, but not limited to, cash
reserves for any contingent Obligations. All of CIT's rights, liens and security
interests shall continue after any termination until all Obligations have been
paid and satisfied in full.
SECTION 12. MISCELLANEOUS
12.1 The Borrowers hereby waives diligence, notice of intent to
accelerate, notice of acceleration, demand, presentment and protest and any
notices thereof as well as notice of nonpayment. No delay or omission of CIT or
the Borrowers to exercise any right or remedy hereunder, whether before or after
the happening of any Event of Default, shall impair any such right or shall
operate as a waiver thereof or as a waiver of any such Event of Default. No
single or partial exercise by CIT of any right or remedy precludes any other or
further exercise thereof, or precludes any other right or remedy.
12.2 This Financing Agreement and the Loan Documents executed and
delivered in connection therewith constitute the entire agreement between the
Borrowers and CIT; supersede any prior agreements; can be changed only by a
writing signed by both the Borrowers and CIT; and shall bind and benefit the
Borrowers and CIT and their respective successors and assigns.
12.3 In no event shall the Borrowers, upon demand by CIT for payment of
any Indebtedness relating hereto, by acceleration of the maturity thereof, or
otherwise, be obligated to pay interest and fees in excess of the amount
permitted by law. Regardless of any provision herein or in any agreement made in
connection herewith, CIT shall never be entitled to receive, charge or apply, as
interest on any indebtedness relating hereto, any amount in excess of the
28
maximum amount of interest permissible under applicable law. If CIT ever
receives, collects or applies any such excess, it shall be deemed a partial
repayment of principal and treated as such; and if principal is paid in full,
any remaining excess shall be refunded to the Borrowers. This paragraph shall
control every other provision hereof, the Loan Documents and of any other
agreement made in connection herewith.
12.4 If any provision hereof or of any other agreement made in connection
herewith is held to be illegal or unenforceable, such provision shall be fully
severable, and the remaining provisions of the applicable agreement shall remain
in full force and effect and shall not be affected by such provision's
severance. Furthermore, in lieu of any such provision, there shall be added
automatically as a part of the applicable agreement a legal and enforceable
provision as similar in terms to the severed provision as may be possible.
12.5 EACH BORROWER AND CIT EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING ARISING OUT OF THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREUNDER. EACH BORROWER HEREBY IRREVOCABLY WAIVES
PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE OF PROCESS BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED. IN NO EVENT WILL CIT BE LIABLE FOR
LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.
12.6 Except as otherwise herein provided, any notice or other
communication required hereunder shall be in writing (provided that, any
electronic communications from the Borrowers with respect to any request,
transmission, document, electronic signature, electronic mail or facsimile
transmission shall be deemed binding on the Borrowers for purposes of this
Financing Agreement, provided further that any such transmission shall not
relieve the Borrowers from any other obligation hereunder to communicate further
in writing), and shall be deemed to have been validly served, given or delivered
when hand delivered or sent by facsimile, or three days after deposit in the
United State mails, with proper first class postage prepaid and addressed to the
party to be notified or to such other address as any party hereto may designate
for itself by like notice, as follows:
(A) if to CIT, at:
The CIT Group/Business Credit, Inc.
Two First Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attn: Regional Credit Manager
Fax No.: (000) 000-0000
(B) if to the Company at:
Avatech Solutions, Inc.
00000 Xxxxxxxx Xxxxx, Xxxxx X
Xxxxxx Xxxxx, Xxxxxxxx 00000
29
Attn: Xxxxx Xxxxxx
Fax No. 000-000-0000
With a copy to:
Xxxxxxx Xxxx & Guinot
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: K. Xxx Xxxxx, Xx., Esq.
Fax. No. 000-000-0000
12.7 THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FINANCING
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF
NORTH CAROLINA, EXCEPT TO THE EXTENT THAT ANY OTHER LOAN DOCUMENT
INCLUDES AN EXPRESS ELECTION TO BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.
12.8 CONCERNING JOINT AND SEVERAL LIABILITY OF BORROWERS. (a) Each
Borrower is accepting joint and several liability hereunder in consideration of
the financial accommodation to be provided by CIT under this Financing
Agreement, for the mutual benefit, directly and indirectly, of each of such
Borrowers and in consideration of the undertakings of each of such Borrowers to
accept joint and several liability for the obligations of each of them.
(b) Each of the Borrowers jointly and severally hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers with respect to the payment and
performance of all of the Obligations, it being the intention of the parties
hereto that all the Obligations shall be the joint and several obligations of
each of the Borrowers with preferences or distinction among them;
(c) If and to the extent that any of the Borrowers shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such
event, the other Borrowers will make such payment with respect to, or perform,
such Obligation.
(d) The obligations of each Borrower under the provisions of this Section
12.8 constitute full recourse obligations of such Borrower, enforceable against
it to the full extent of its properties and assets, irrespective of the
validity, regularity or enforceability of this Financing Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided herein or required by law,
each Borrower hereby waives notice of acceptance of its joint and several
liability, notice of any Revolving Loan made under this Financing Agreement,
notice of occurrence of any Event of Default, or of any demand for any payment
under this Financing Agreement, notice of occurrence of any Event of Default, or
of any demand for any payment under this Financing Agreement, notice of any
action at any time taken or omitted by CIT under or in respect of any of the
Obligations, any requirement of diligence and, generally, all demands, notices
and other formalities of every kind
30
in connection with this Financing Agreement. Each Borrower hereby assents to,
and waives notice of, any extension or postponement of the time for the payment
of any of the Obligations, the acceptance of any partial payment thereon, any
waiver, consent or other action or acquiescence by CIT at any time or times in
respect of any default by any Borrower in the performance or satisfaction of any
term, covenant, condition or provision of this Financing Agreement, any and all
other indulgences whatsoever by CIT in respect of any of the Obligations, and
the taking, addition, substitution or release, in whole or in part, at any time
or times, of any security for any of the Obligations or in part, at any time or
times, of any security for any of the Obligations or the addition, substitution
or release, in whole or in part, of any Borrower. Without limiting the
generality of the foregoing, each Borrower assents to any other action or delay
in acting or failure to act on the part of CIT, including, without limitation,
any failure strictly or diligently to assert any right or to pursue any remedy
or to comply fully with the applicable laws or regulations thereunder which
might, but for the provisions of this Section 12.8, afford grounds for
terminating, discharging or relieving such Borrower, in whole or in part, from
any of its obligations under this Section 12.8, it being the intention of each
Borrower that, so long as any of the Obligations remain unsatisfied, the
obligations of such Borrower under this Section 12.8 shall not be discharged
except by performance and then only to the extent of such performance. The
Obligations of each Borrower under this Section 12.8 shall not be diminished or
rendered unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any Borrower
or CIT. The joint and several liability of the Borrowers hereunder shall
continue in full force and effect notwithstanding any absorption, merger,
amalgamation or any other change whatsoever in the name, membership,
constitution or place of formation of any Borrower or CIT.
(f) The provisions of this Section 12.8 are made for the benefit of CIT
and its successors and assigns, and may be enforced by CIT from time to time
against any of the Borrowers as often as occasion therefor may arise and without
requirement on the part of CIT first to marshal any of its claims or to exercise
any of its rights against any of the other Borrowers or to exhaust any remedies
available to it against any of the other Borrowers or to resort to any other
source or means of obtaining payment of any of the Obligations or to elect any
other remedy. The provisions of this Section 12.8 shall remain in effect until
all the Obligations shall have been paid in full or otherwise fully satisfied.
If at any time, any payment, or any part thereof, made in respect of any of the
Obligations, is rescinded or must otherwise be restored or returned by CIT upon
the insolvency, bankruptcy or reorganization of any of the Borrowers, or
otherwise, the provisions of this Section 12.8 will forthwith be reinstated in
effect, as though such payment had not been made.
(g) Notwithstanding any provision to be contrary contained herein or in
the Revolving Note, to the extent the joint obligations of a Borrower shall be
adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of each Borrower
hereunder shall be limited to be maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
federal bankruptcy code).
(h) The Borrowers hereby agree, as among themselves, that if any Borrower
shall become an Excess Funding Borrower (as defined below), each other Borrower
shall, on demand
31
of such Excess Funding Borrower (but subject to the next sentence hereof and to
subsection (B) below), pay to such Excess Funding Borrower an amount equal to
such Borrower's Pro Rata Share (as defined below and determined, for this
purpose, without reference to the properties, assets, liabilities and debts of
such Excess Funding Borrower) of such Excess Payment (as defined below). The
payment obligation of any Borrower to any Excess Funding Borrower under this
Section 12.8(h) shall be subordinate and subject in right of payment to the
prior payment in full of the obligations of such Borrower under the other
provisions of this Financing Agreement, and such Excess Funding Borrower shall
not exercise any right or remedy with respect to such excess until payment and
satisfaction in full of all of such obligations. For purposes hereof, (i)
"Excess Funding Borrower" shall mean, in respect of any Obligations arising
under the other provisions of this Financing Agreement (hereafter, the "Joint
Obligations"), a Borrower that has paid an amount in excess of its Pro Rata
Share of the Joint Obligations; (ii) "Excess Payment" shall mean, in respect of
any Joint Obligations, the amount paid by an Excess Funding Borrower in excess
of its Pro Rata Share of such Joint Obligations; and (iii) "Pro Rata Share", for
the purposes of this Section 12.8(h), shall mean, for any Borrower, the ratio
(expressed as a percentage) of (A) the amount by which the aggregate present
fair salable value of all of its assets and properties exceeds the amount of all
debts and liabilities of such Borrower (including contingent, subordinated,
unmatured, and unliquidated liabilities, but excluding the obligations of such
Borrower hereunder) to (B) the amount by which the aggregate present fair
salable value of all assets and other properties of such Borrower and all of the
other Borrowers exceeds the amount of all of the debts and liabilities
(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of such Borrower and the other Borrowers
hereunder) of such Borrower and all of the other Borrowers, all as of the date
hereof (if any Borrower becomes a party hereto subsequent to the date hereof,
then for the purposes of this Section 12.8(h) such subsequent Borrower shall be
deemed to have been a Borrower as of the date hereof and the information
pertaining to, and only pertaining to, such Borrower as of the date such
Borrower became a Borrower shall be deemed true as of the date hereof).
32
IN WITNESS WHEREOF, the parties hereto have caused this Financing Agreement
to be effective, executed, accepted and delivered at Charlotte,
North Carolina,
by their proper and duly authorized officers as of the date set forth above.
AVATECH SOLUTIONS, INC.
BY: /s/ Xxxxx X. Xxxxxx
-----------------------------
TITLE: CHMN & CEO
--------------------------
AVATECH OF CALIFORNIA, INC.
BY: /s/ Xxxxx X. Xxxxxx
-----------------------------
TITLE: PRES
--------------------------
AVATECH OF CONNECTICUT, INC.
BY: /s/ Xxxxx X. Xxxxxx
-----------------------------
TITLE: PRES
--------------------------
AVATECH OF FLORIDA, INC.
BY: /s/ Xxxxx X. Xxxxxx
-----------------------------
TITLE: PRES
--------------------------
AVATECH OF MARYLAND, INC.
BY: /s/ Xxxxx X. Xxxxxx
-----------------------------
TITLE: PRES
--------------------------
AVATECH OF MICHIGAN, INC.
BY: /s/ Xxxxx X. Xxxxxx
-----------------------------
TITLE: PRES
--------------------------
AVATECH OF NEBRASKA, INC.
BY: /s/ Xxxxx X. Xxxxxx
-----------------------------
TITLE: PRES
--------------------------
AVATECH OF NEW JERSEY, INC.
BY: /s/ Xxxxx X. Xxxxxx
-----------------------------
TITLE: PRES
--------------------------
AVATECH OF NEW YORK, INC.
BY: /s/ Xxxxx X. Xxxxxx
-----------------------------
TITLE: PRES
--------------------------
AVATECH OF VIRGINIA, INC.
BY: /s/ Xxxxx X. Xxxxxx
-----------------------------
TITLE: PRES
--------------------------
AVATECH SOLUTIONS OF COLORADO, INC.
BY: /s/ Xxxxx X. Xxxxxx
-----------------------------
TITLE: PRES
--------------------------
TECHNICAL LEARNINGWARE COMPANY, INC.
BY: /s/ Xxxxx X. Xxxxxx
-----------------------------
TITLE: PRES
--------------------------
THE CIT GROUP/BUSINESS CREDIT, INC.
BY:
-----------------------------
TITLE:
--------------------------
2
AVATECH OF NEW YORK, INC.
BY:
-----------------------------
TITLE:
--------------------------
AVATECH OF VIRGINIA, INC.
BY:
-----------------------------
TITLE:
--------------------------
AVATECH SOLUTIONS OF COLORADO, INC.
BY:
-----------------------------
TITLE:
--------------------------
TECHNICAL LEARNINGWARE COMPANY, INC.
BY:
-----------------------------
TITLE:
--------------------------
THE CIT GROUP/BUSINESS CREDIT, INC.
BY: /s/ [ILLEGIBLE]
-----------------------------
TITLE: ASSISTANT VICE PRESIDENT
--------------------------
2
SCHEDULE 1 - COLLATERAL INFORMATION
EXACT COMPANY NAME IN STATE ORGANIZATION: AVATECH SOLUTIONS, INC.
STATE OF INCORPORATION OR FORMATION: DELAWARE
FEDERAL TAX I.D. NO. 00-0000000
CHIEF EXECUTIVE OFFICE: 00000X XXXXXXXX XXXXX
XXXXXX XXXXX, XX 00000
COLLATERAL LOCATION: 00000X XXXXXXXX XXXXX
XXXXXX XXXXX, XX 00000
0000 XXXXX XXXXXXXX XXXX
XXXXX X-000
XXXXXX, XX 00000
0000 XXXXX XXXXX XXXXXXXXX
XXXXX 000
XXXXXX, XX 00000
THE ATRIUM AT XXXXXXX RIDGE
0000 X-00 XXXX
XXXXX 000-00
XXXXXXXX, XX 00000
TRADEMARK(S):
TRADEMARK SERIAL OR REGISTRATION NUMBER
AVATECH SOLUTIONS 2,191,518
(INT'L. CLASS 42)
AVATECH SOLUTIONS 75/269,510
(INT'L. CLASS 9)
AVANEWS 2,285,467
TRADENAME(S): CADWORKS
SCHEDULE 1 - COLLATERAL INFORMATION (CONT'D)
EXACT COMPANY NAME IN STATE ORGANIZATION: AVATECH OF CALIFORNIA, INC.
STATE OF INCORPORATION OR FORMATION: DELAWARE
FEDERAL TAX I.D. NO. 00-0000000
CHIEF EXECUTIVE OFFICE: 0000 XXXXXXXXXXXX XXXXX
XXXXX 000
XXXXXXXXXX, XX 00000
COLLATERAL LOCATION: 0000 XXXXXXXXXXXX XXXXX
XXXXX 000
XXXXXXXXXX, XX 00000
TRADENAME(S): NONE
SCHEDULE 1 - COLLATERAL INFORMATION (CONT'D)
EXACT COMPANY NAME IN STATE ORGANIZATION: AVATECH SOLUTIONS OF COLORADO, INC.
STATE OF INCORPORATION OR FORMATION: DELAWARE
FEDERAL TAX I.D. NO. 00-0000000
CHIEF EXECUTIVE OFFICE: 0000 XXXX XXXXXXXX XXXXX
XXXXX 000
XXXXXXXXX, XX 00000
COLLATERAL LOCATION: 0000 XXXX XXXXXXXX XXXXX
XXXXX 000
XXXXXXXXX, XX 00000
TRADENAME(S): CAD-PRO
AVATECH SOLUTIONS
SCHEDULE 1 - COLLATERAL INFORMATION (CONT'D)
EXACT COMPANY NAME IN STATE ORGANIZATION: AVATECH OF CONNECTICUT, INC.
STATE OF INCORPORATION OR FORMATION: DELAWARE
FEDERAL TAX I.D. NO. 00-0000000
CHIEF EXECUTIVE OFFICE: 00 XXXXXXXX XXXX XXXX
XXXXXXX, XX 00000
COLLATERAL LOCATION: 00 XXXXXXXX XXXX XXXX
XXXXXXX, XX 00000
TRADENAME(S): NONE
SCHEDULE 1 - COLLATERAL INFORMATION (CONT'D)
EXACT COMPANY NAME IN STATE ORGANIZATION: AVATECH FLORIDA, INC.
STATE OF INCORPORATION OR FORMATION: DELAWARE
FEDERAL TAX I.D. NO. 00-0000000
CHIEF EXECUTIVE OFFICE: 000 XXXXXXXXXX XXXXX
XXXXXXXX, XX 00000
COLLATERAL LOCATION: 000 XXXXXXXXXX XXXXX
XXXXXXXX, XX 00000
000 XXXXX XXX XXXXXX
XXXXX 000, XXXXXX XX. 00-X
XXXXX, XX 00000
TRADENAME(S): NONE
SCHEDULE 1 - COLLATERAL INFORMATION (CONT'D)
EXACT COMPANY NAME IN STATE ORGANIZATION: AVATECH OF MARYLAND, INC.
STATE OF INCORPORATION OR FORMATION: DELAWARE
FEDERAL TAX I.D. NO. 00-0000000
CHIEF EXECUTIVE OFFICE: 00000-X XXXXXXXX XXXXX
XXXXXX XXXXX, XX 00000
COLLATERAL LOCATION: 00000-X XXXXXXXX XXXXX
XXXXXX XXXXX, XX 00000
0000 XXXXXXX XXXXX
XXXXX 000
XXXXXXXXX, XX 00000
TRADENAME(S): NONE
SCHEDULE 1 - COLLATERAL INFORMATION (CONT'D)
EXACT COMPANY NAME IN STATE ORGANIZATION: AVATECH OF MICHIGAN, INC.
STATE OF INCORPORATION OR FORMATION: DELAWARE
FEDERAL TAX I.D. NO. 00-0000000
CHIEF EXECUTIVE OFFICE: 0000 XXXXXXXXX XXXXX
XXX XXXXX, XX 00000
COLLATERAL LOCATION: 0000 XXXXXXXXX XXXXX
XXX XXXXX, XX 00000
000 XXXXXX XXXXX
XXXXXX, XX 00000
TRADENAME(S): NONE
SCHEDULE 1 - COLLATERAL INFORMATION (CONT'D)
EXACT COMPANY NAME IN STATE ORGANIZATION: AVATECH OF NEBRASKA, INC.
STATE OF INCORPORATION OR FORMATION: DELAWARE
FEDERAL TAX I.D. NO. 00-0000000
CHIEF EXECUTIVE OFFICE: 0000 X. 00XX XXXXXX
XXXXX, XX 00000
COLLATERAL LOCATION: 0000 X. 00XX XXXXXX
XXXXX, XX 00000
000 0XX XXXXXX XX
XXXXX 000
XXXXX XXXXXX, XX 00000
0000 XX 000XX XXXXXX
XXXXX 000
XXXXX, XX 00000
TRADENAME(S): NONE
SCHEDULE 1 - COLLATERAL INFORMATION (CONT'D)
EXACT COMPANY NAME IN STATE ORGANIZATION: AVATECH OF NEW JERSEY, INC.
STATE OF INCORPORATION OR FORMATION: DELAWARE
FEDERAL TAX I.D. NO. 00-0000000
CHIEF EXECUTIVE OFFICE: 000 XXXXX XXXX
XXXX XXXXXXXXX, XX 00000
COLLATERAL LOCATION: 000 XXXXX XXXX
XXXX XXXXXXXXX, XX 00000
TRADENAME(S): AVATECH
SCHEDULE 1 - COLLATERAL INFORMATION (CONT'D)
EXACT COMPANY NAME IN STATE ORGANIZATION: AVATECH OF NEW YORK, INC.
STATE OF INCORPORATION OR FORMATION: DELAWARE
FEDERAL TAX I.D. NO. 00-0000000
CHIEF EXECUTIVE OFFICE: 000 0XX XXXXX XXXXXX
XXXXX 000
XXXXXXXXX, XX 00000
COLLATERAL LOCATION: 000 0XX XXXXX XXXXXX
XXXXX 000
XXXXXXXXX, XX 00000
TRADENAME(S): NONE
SCHEDULE I - COLLATERAL INFORMATION (CONT'D)
EXACT COMPANY NAME IN STATE ORGANIZATION: AVATECH OF VIRGINIA, INC.
STATE OF INCORPORATION OR FORMATION: DELAWARE
FEDERAL TAX I.D. NO. 00-0000000
CHIEF EXECUTIVE OFFICE: 0000 XXXXX XXXX
XXXXXXXX XXXXX, XX 00000
COLLATERAL LOCATION: 0000 XXXXX XXXX
XXXXXXXX XXXXX, XX 00000
0000 XXXXXX XXXX
XXXXX X
XXXXXXXX, XX 00000
TRADENAME(S): AVATECH
SCHEDULE I - COLLATERAL INFORMATION (CONT'D)
EXACT COMPANY NAME IN STATE ORGANIZATION: TECHNICAL LEARNINGWARE COMPANY, INC.
STATE OF INCORPORATION OR FORMATION: DELAWARE
FEDERAL TAX I.D. NO. 00-0000000
CHIEF EXECUTIVE OFFICE: 00 XXXXXXXX XXXX XXXX
XXXXXXX, XX 00000
COLLATERAL LOCATION: 00 XXXXXXXX XXXX XXXX
XXXXXXX, XX 00000
TRADENAME(S): NONE
SCHEDULE 2 - INVESTOR DEBT
NAME OF INVESTOR AMOUNT OF INVESTOR DEBT
---------------- -----------------------
Xxxxx Xxxxxxx $ 65,000
Xxxxx Xxxxxxx $ 15,000
Xxxxx Xxxxxxx $ 20,000
Xxxxxx Xxxxxx $125,000
Xxxxxxxx Xxx $100,000
Xxxxx Xxxxxxxxx $ 25,000
Xxxxxx Xxxx $100,000
Xxxxxxx Xxxxxxx $100,000
X.X. Xxxxxxx $125,000
Xxxx X. Xxxxxxx $ 25,000
Xxxx X. Xxxxxx $ 25,000
X.X. Xxxxx Profit Sharing $100,000
Xxxxxx X. Xxxxxxxxxx $ 50,000
Xxxxxx Xxxxxxx Xx. $100,000
Xxxxxx X. Xxxxxxxx $ 50,000
Xxxxxx X. Xxxxxx $ 25,000
H. Xxxxx Shumport $ 25,000
Xxxxx Xxxxxxxx $100,000
Xxxxxxx X. Xxxxx $ 50,000
Xxxx X. Xxxxxx $ 25,000
Xxxx X. Xxxxx Transfer from Xxxxxx
Xxxxxxxx X. XxXxxxx $ 12,500
Xxxxxx XxXxxxx $ 12,500
Raloid Corporation $ 25,000
Xxxxxx Xxxxxx $ 50,000
Xxxx Xxxxxx $125,000
X. Xxxx $ 25,000
X. Xxxxxxxxx $100,000
