Exhibit 10.13
INPHONIC, INC.
AND
SIMIPC ACQUISITION CORP.
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Second Amended and Restated Loan And Security Agreement (this
"Agreement") is entered into as of March 1, 2002, by and between Comerica
Bank-California, successor by merger to Imperial Bank ("Bank"), InPhonic, Inc.
("InPhonic") and SimIpc Acquisition Corp. ("SimIpc"), a Delaware corporation,
and together with InPhonic, the "Borrowers"). This Agreement amends, restates
and replaces (a) that certain Credit Terms and Conditions dated as of May 2,
2000 between InPhonic and Bank, (b) that certain Commitment Letter attached
thereto, (c) that certain Security and Loan Agreement dated as of May 2, 2000
between InPhonic and Bank, (d) that certain Commercial Security Agreement dated
as of May 2, 2000 between InPhonic and Bank, (e) that certain Amended and
Restated Loan and Security Agreement dated as of January 18, 2001 between
InPhonic and Bank (the "Amended and Restated Loan and Security Agreement"), and
(f) that certain First Amendment to Credit Terms and Conditions dated as of
January 18, 2001 between InPhonic and Bank (collectively, the "Original Loan
Documents"), in their entirety.
RECITALS
A. InPhonic and Bank are parties to the Original Loan Documents,
pursuant to which Bank agreed to make loans to InPhonic upon the terms and
conditions contained therein.
B. SimIpc is a wholly-owned subsidiary of InPhonic.
C. Borrowers have requested and Bank has agreed to amend and restate
the Original Loan Documents, subject to the terms and conditions hereinafter set
forth and the documents to be executed in connection herewith.
AGREEMENT
The parties agree as follows:
1. Definitions And Construction.
1.1 Definitions. As used in this Agreement, the following terms
shall have the definitions set forth on Exhibit A.
1.2 Accounting Terms. All accounting terms not specifically defined
on Exhibit A shall be construed in accordance with GAAP and all calculations
shall be made in accordance with GAAP. The term "financial statements" shall
include the accompanying notes and schedules.
2. Loan And Terms Of Payment.
2.1 Credit Extensions.
(a) Borrowers promise to pay to Bank, in lawful money of the
United States of America, the aggregate unpaid principal amount of all Credit
Extensions made by Bank to Borrowers, together with interest on the unpaid
principal amount of such Credit Extensions at rates in accordance with the terms
and conditions set forth herein.
1.
(b) Revolving Advances.
(i) Subject to and upon the terms and conditions of this
Agreement (1) Borrowers may request Advances in an aggregate outstanding amount
not to exceed the amount of the Committed Revolving Line at any one time;
provided, however, that at any time that the aggregate outstanding amount of
Advances exceeds $2,000,000 (the "Non-Formula Amount"), the aggregate
outstanding amount of Advances shall not exceed the lesser of (i) the Committed
Revolving Line or (ii) the Borrowing Base; provided, further that, if at any
time or from time to time, the aggregate outstanding amount of Advances exceeds
the Non-Formula and, thereafter, the aggregate outstanding amount of Advances is
reduced below the Non-Formula Amount, for so long as the aggregate outstanding
amount of Advances is less than the Non-Formula Amount, the Advances shall not
be subject to the Borrowing Base. Amounts borrowed pursuant to this Section
2.1(b) may be repaid and reborrowed at any time prior to the Revolving Maturity
Date, at which time all Advances under this Section 2.1(b), together with all
accrued and unpaid interest thereon, shall be immediately due and payable.
Borrowers may prepay any Advances without penalty or premium.
(ii) Whenever any Borrower desires an Advance, such
Borrower will notify Bank by facsimile transmission or telephone no later than
3:00 p.m. Eastern time, on the Business Day that the Advance is to be made. Each
such notification shall be promptly confirmed by a Payment/Advance Form in
substantially the form of Exhibit C. Bank is authorized to make Advances under
this Agreement, based upon instructions received from a Responsible Officer or a
designee of a Responsible Officer, or without instructions if in Bank's
discretion such Advances are necessary to meet Obligations which have become due
and remain unpaid. Bank shall be entitled to rely on any telephonic notice given
by a person who Bank reasonably believes to be a Responsible Officer or a
designee thereof, and Borrowers shall indemnify and hold Bank harmless for any
damages or loss suffered by Bank as a result of such reliance. Bank will credit
the amount of Advances made under this Section 2.1(b) to Borrowers' deposit
account.
(iii) As a condition precedent to an Advance causing
aggregate Advances to exceed the Non-Formula Amount, Bank shall conduct an audit
of each Borrower's Accounts, at each Borrower's reasonable expense, the results
of which must be satisfactory to Bank.
(c) Equipment Advances.
(i) Subject to and upon the terms and conditions of this
Agreement, on the date hereof and at any time from the date hereof through the
Tranche B Availability End Date, the Tranche C Availability End Date, the
Tranche D Availability End Date and the Tranche E Availability End Date, as
applicable, Bank agrees to make advances to Borrowers in five tranches, Tranche
A (comprised of Tranche A-1 and Tranche A-2), Tranche B, Tranche C, Tranche D
and Tranche E (each an "Equipment Advance" and collectively, the "Equipment
Advances"). Bank shall make an Equipment Advance under Tranche A-1 on the
Closing Date against invoices for equipment, furniture and software specifically
approved in advance by Bank and, unless otherwise approved in writing by Bank,
in its sole and absolute discretion, dated on or after the date ninety (90) days
prior to the Closing Date. Bank shall make
2.
an Equipment Advance under Tranche A-2 on the Closing Date against invoices for
equipment, furniture and software specifically approved in advance by Bank and
dated between April 1, 2001 and November 30, 2001. Borrowers may request
Equipment Advances under Tranche B at any time from the date hereof through the
earlier to occur of (a) the Tranche B Availability End Date and (b) the
termination of Bank's obligation to advance money pursuant to Section 9.1(b).
Borrowers may request Equipment Advances under Tranche C at any time from the
Tranche B Availability End Date through the earlier to occur of (a) the Tranche
C Availability End Date and (b) the termination of Bank's obligation to advance
money pursuant to Section 9.1(b). Borrowers may request Equipment Advances under
Tranche D at any time from the Tranche C Availability End Date through the
earlier to occur of (a) the Tranche D Availability End Date and (b) the
termination of Bank's obligation to advance money pursuant to Section 9.1(b).
Borrowers may request Equipment Advances under Tranche E at any time from the
Tranche D Availability End Date through the earlier to occur of (a) the Tranche
E Availability End Date and (b) the termination of Bank's obligation to advance
money pursuant to Section 9.1(b). The aggregate outstanding amount of Tranche A
Equipment Advances, Tranche B Equipment Advances, Tranche C Equipment Advances,
Tranche D Equipment Advances, and Tranche E Equipment Advances shall not at any
time exceed the Committed Equipment Line. Each Equipment Advance shall not
exceed 100%, in the case of Equipment Advances other than Tranche A-2 Equipment
Advances, and 80% in the case of Tranche A-2 Equipment Advances, of the invoiced
amount of new equipment, furniture and software (excluding taxes, shipping,
warranty charges, freight discounts and installation expense) ("Permitted
Equipment"), which Permitted Equipment (other than Permitted Equipment purchased
under a Tranche A-2 Advance) Borrowers shall (unless otherwise approved in
writing by Bank, in its sole and absolute discretion) have purchased within 90
days prior to the date of the corresponding Equipment Advance. Amounts of all
Equipment Advances allocated to the purchase of software shall be limited to
$300,000 in the aggregate. Tranche A-2 Equipment Advances shall not exceed
$318,000 in the aggregate. Equipment Advances may be used for Equipment Advance
Permitted Uses only.
(ii) Interest shall accrue from the date of each Equipment
Advance at the rate specified in Section 2.3(a), and shall be payable monthly on
the first day of each month through the Equipment Maturity Date.
(1) Tranche A-1 Equipment Advances. The Equipment
Advance that is made under Tranche A-1 on the Closing Date shall be due and
payable in 36 equal monthly installments of principal plus interest, beginning
on the first day of the month following the Closing Date, and continuing on the
first day of each month thereafter through the Equipment Maturity Date, at which
time all amounts due in connection with Tranche A Equipment Advances made under
this Section 2.1(c) shall be immediately due and payable; provided, however,
that any Software Advances made under Tranche A-1 on the Closing Date shall be
due and payable in 24 equal monthly installments of principal plus interest,
beginning on the first day of the month following the Closing Date, and
continuing on the first day of each month thereafter through the Software
Maturity Date, at which time all amounts due in connection with Tranche A-1
Software Advances made under this Section 2.1(c) shall be immediately due and
payable.
3.
(2) Tranche A-2 Equipment Advances. The Equipment Advance
that is made under Tranche A-2 on the Closing Date shall be due and payable in
24 equal monthly installments of principal plus interest, beginning on the first
day of the month following the Closing Date, and continuing on the first day of
each month thereafter through February 29, 2004, at which time all amounts due
in connection with Tranche A-2 Equipment Advances made under this Section 2.1(c)
shall be immediately due and payable.
(3) Tranche B Equipment Advances. Any Equipment Advances
that are outstanding under Tranche B on the Tranche B Availability End Date
shall be due and payable in 33 equal monthly installments of principal plus
interest, beginning on the first day of the month following the Tranche B
Availability End Date, and continuing on the first day of each month thereafter
through the Equipment Maturity Date, at which time all amounts due in connection
with Tranche B Equipment Advances made under this Section 2.1(c) shall be
immediately due and payable; provided, however, that any Software Advances that
are outstanding under Tranche B on the Tranche B Availability End Date shall be
due and payable in 21 equal monthly installments of principal plus interest,
beginning on the first day of the month following the Tranche B Availability End
Date, and continuing on the first day of each month thereafter through the
Software Maturity Date, at which time all amounts due in connection with Tranche
B Software Advances made under this Section 2.1(c) shall be immediately due and
payable.
(4) Tranche C Equipment Advances. Any Equipment Advances
that are outstanding under Tranche C on the Tranche C Availability End Date
shall be due and payable in 30 equal monthly installments of principal plus
interest, beginning on the first day of the month following the Tranche C
Availability End Date, and continuing on the first day of each month thereafter
through the Equipment Maturity Date, at which time all amounts due in connection
with Tranche C Equipment Advances made under this Section 2.1(c) shall be
immediately due and payable; provided, however, that any Software Advances that
are outstanding under Tranche C on the Tranche C Availability Date shall be due
and payable in 18 equal monthly installments of principal plus interest,
beginning on the first day of the month following the Tranche C Availability End
Date, and continuing on the first day of each month thereafter through the
Software Maturity Date, at which time all amounts due in connection with Tranche
C Software Advances made under this Section 2.1(c) shall be immediately due and
payable.
(5) Tranche D Equipment Advances. Any Equipment Advances
that are outstanding under Tranche D on the Tranche D Availability End Date
shall be due and payable in 27 equal monthly installments of principal plus
interest, beginning on the first day of the month following the Tranche D
Availability End Date, and continuing on the first day of each month thereafter
through the Equipment Maturity Date, at which time all amounts due in connection
with Tranche D Equipment Advances made under this Section 2.1(c) shall be
immediately due and payable; provided, however, that any Software Advances that
are outstanding under Tranche D on the Tranche D Availability Date shall be due
and payable in 15 equal monthly installments of principal plus interest,
beginning on the first day of the month following the Tranche D Availability End
Date, and continuing on the first day of each month thereafter through the
Software Maturity Date, at which time all amounts due in
4.
connection with Tranche D Software Advances made under this Section 2.1(c) shall
be immediately due and payable.
(6) Tranche E Equipment Advances. Any Equipment Advances
that are outstanding under Tranche E on the Tranche E Availability End Date
shall be due and payable in 24 equal monthly installments of principal plus
interest, beginning on the first day of the month following the Tranche E
Availability End Date, and continuing on the first day of each month thereafter
through the Equipment Maturity Date, at which time all amounts due in connection
with Tranche E Equipment Advances made under this Section 2.1(c) shall be
immediately due and payable; provided, however, that any Software Advances that
are outstanding under Tranche E on the Tranche E Availability Date shall be due
and payable in 12 equal monthly installments of principal plus interest,
beginning on the first day of the month following the Tranche E Availability End
Date, and continuing on the first day of each month thereafter through the
Software Maturity Date, at which time all amounts due in connection with Tranche
E Software Advances made under this Section 2.1(c) shall be immediately due and
payable.
(iii) Equipment Advances, once repaid, may not be reborrowed.
Borrowers may prepay any Equipment Advances at any time, in whole or in part,
without penalty or premium.
(iv) When any Borrower desires to obtain an Equipment Advance,
such Borrower shall notify Bank (which notice shall be irrevocable) by facsimile
transmission to be received no later than 3:00 p.m. Eastern Standard Time one
Business Day before the day on which the Equipment Advance is to be made. Such
notice shall be substantially in the form of Exhibit C. The notice shall be
signed by a Responsible Officer or its designee and include a copy of the
invoice for any Equipment, furniture and/or software to be financed, and shall
include the serial numbers of such items.
(d) Term Loan.
(i) InPhonic acknowledges that Bank has provided a Term Loan
(as defined in the Amended and Restated Loan and Security Agreement) to InPhonic
under the Amended and Restated Loan and Security Agreement, which Term Loan is
evidenced by the Promissory Note, and that the current outstanding principal
balance of the Term Loan is $375,849.82.
(ii) The interest rate, payment terms, and certain other terms
of the Term Loan are contained in that certain Promissory Note dated as of
January 19, 2001 made by InPhonic in favor of Bank (the "Promissory Note");
provided, however, that notwithstanding anything to the contrary contained in
the Promissory Note, the outstanding principal balance and all accrued but
unpaid interest on the Term Loan shall be due and payable on April 19, 2003 (the
"Term Loan Maturity Date").
(iii) No further advances or drawdowns under the Term Loan shall
be permitted.
(e) Letter of Credit Usage and Sublimit.
5.
(i) Subject to the availability under the Committed
Revolving Line and in reliance on the representations and warranties of
Borrowers set forth herein, at any time and from time to time from the date
hereof through the Business Day immediately prior to the Revolving Maturity
Date, Bank shall issue for the account of Borrowers such standby and commercial
letters of credit (each, a "Letter of Credit" and collectively, "Letters of
Credit") as Borrowers may request, which request shall be made by delivering to
Bank a duly executed letter of credit application on Bank's standard form
substantially similar to Exhibit F attached hereto; provided, however, that the
outstanding and undrawn amounts under all such Letters of Credit (a) shall not
at any time exceed $500,000 and (b) shall be deemed to constitute Advances for
the purpose of calculating availability under the Revolving Facility. Unless
Borrowers shall have deposited with Bank cash collateral in an amount sufficient
to cover all undrawn amounts under each such Letter of Credit and Bank shall
have agreed in writing, no Letter of Credit shall have an expiration date that
is later than the Revolving Maturity Date. All Letters of Credit shall be in
form and substance acceptable to Bank in its sole discretion and shall be
subject to the terms and conditions of Bank's form application and letter of
credit agreement. Borrowers will pay any standard issuance and other fees that
Bank notifies Borrowers will be charged for issuing and processing Letters of
Credit for Borrowers.
(ii) As of the date hereof, there is an outstanding standby
letter of credit in the amount of $202,500 issued by Bank for the account of
InPhonic (the "Existing Letter of Credit"). The Existing Letter of Credit shall
be deemed to constitute a Letter of Credit hereunder and the amount of the
Existing Letter of Credit shall be deemed to constitute (a) Revolving Advances
for the purpose of calculating availability under the Revolving Facility and (b)
a Letter of Credit for purposes of determining whether outstanding and undrawn
Letters of Credit exceed the $500,000 sublimit.
2.2 Overadvances. If the aggregate amount of the outstanding Advances
exceeds the amounts permitted to be borrowed under Section 2.1(b)(i) hereof at
any time, Borrowers shall immediately pay to Bank, in cash, the amount of such
excess.
2.3 Interest Rates, Payments, and Calculations.
(a) Interest Rates.
(i) Advances. Except as set forth in Section 2.3(b), the
Advances shall bear interest, on the outstanding daily balance thereof, at a
rate equal to 0.6% above the Prime Rate.
(ii) Equipment Advances. Except as set forth in Section
2.3(b), the Equipment Advances shall bear interest, on the outstanding daily
balance thereof, at a rate equal to 1.5% above the Prime Rate.
(b) Late Fee; Default Rate. If any payment is not made within
ten (10) days after the date such payment is due, Borrowers shall pay Bank a
late fee equal to the lesser of (i) 5% of the amount of such unpaid amount or
(ii) the maximum amount permitted to be charged under applicable law. All
Obligations shall bear interest, from and after the occurrence and during the
continuance of an Event of Default, at a rate equal to five percentage
6.
points above the interest rate applicable immediately prior to the occurrence of
the Event of Default.
(c) Payments. Interest hereunder shall be due and payable
on the first calendar day of each month during the term hereof. Bank shall, at
its option, charge such interest, all Bank Expenses, and all Periodic Payments
against any of Borrowers' deposit accounts or against the Committed Revolving
Line, in which case those amounts shall thereafter accrue interest at the rate
then applicable hereunder. Any interest not paid when due shall be compounded by
becoming a part of the Obligations, and such interest shall thereafter accrue
interest at the rate then applicable hereunder.
(d) Computation. In the event the Prime Rate is changed
from time to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased, effective as of the day the Prime Rate is changed, by an
amount equal to such change in the Prime Rate. All interest chargeable under the
Loan Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed.
2.4 Crediting Payments. Prior to the occurrence of an Event of
Default, Bank shall credit a wire transfer of funds, check or other item of
payment to such deposit account or Obligation as Borrowers specify. After the
occurrence of an Event of Default, the receipt by Bank of any wire transfer of
funds, check, or other item of payment shall be immediately applied to
conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds or unless
and until such check or other item of payment is honored when presented for
payment. Notwithstanding anything to the contrary contained herein, any wire
transfer or payment received by Bank after 12:00 noon Eastern time shall be
deemed to have been received by Bank as of the opening of business on the
immediately following Business Day. Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date
that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.
2.5 Fees. Borrowers shall pay to Bank the following:
(a) Facility Fee. On the Closing Date, a Facility Fee equal
to $12,500, which shall be nonrefundable;
(b) Bank Expenses. On the Closing Date, all Bank Expenses
incurred through the Closing Date, including reasonable attorneys' fees and
expenses and, after the Closing Date, all Bank Expenses, including reasonable
attorneys' fees and expenses, as and when they become due.
2.6 Term. This Agreement shall become effective on the Closing
Date and, subject to Section 12.7, shall continue in full force and effect for a
term ending on the Equipment Maturity Date.
3. Conditions Of Loans.
7.
3.1 Conditions Precedent to Initial Credit Extension. The
obligation of Bank to make the initial Credit Extension is subject to the
condition precedent that Bank shall have received, in form and substance
satisfactory to Bank, the following:
(a) this Agreement;
(b) an officer's certificate of each Borrower with respect
to incumbency and resolutions authorizing the execution and delivery of this
Agreement;
(c) financing statements and amendments as Bank deems
necessary or appropriate;
(d) an intellectual property security agreement for each
Borrower;
(e) an agreement to provide insurance;
(f) duly executed deposit and/or investment account control
agreements as required by Bank, in form and substance acceptable to Bank;
(g) payment of the fees and Bank Expenses then due
specified in Section 2.5;
(h) current financial statements in accordance with Section
6.2; and
(i) such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.
3.2 Conditions Precedent to All Credit Extensions. The
obligation of Bank to make each Credit Extension, including the initial Credit
Extension, is further subject to the following conditions:
(a) timely receipt by Bank of the Payment/Advance Form as
provided in Section 2.1; and
(b) the representations and warranties contained in Section
5 shall be true and correct in all material respects on and as of the date of
such Payment/Advance Form and on the effective date of each Credit Extension as
though made at and as of each such date, and no Event of Default shall have
occurred and be continuing, or would exist after giving effect to such Credit
Extension (provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date). The making of each Credit Extension shall be
deemed to be a representation and warranty by each Borrower on the date of such
Credit Extension as to the accuracy of the facts referred to in this Section
3.2.
4. Creation Of Security Interest.
4.1 Grant of Security Interest. Each Borrower grants and pledges
to Bank a continuing security interest in all presently existing and hereafter
acquired or arising Collateral to
8.
secure prompt repayment of any and all Obligations and to secure prompt
performance by each Borrower of each of its covenants and duties under the Loan
Documents. Except as set forth in the Schedule, such security interest
constitutes a valid, first priority security interest in the presently existing
Collateral, and will constitute a valid, first priority security interest in
later-acquired Collateral. Notwithstanding any termination, Bank's Lien on the
Collateral shall remain in effect for so long as any Obligations are
outstanding.
4.2 Delivery of Additional Documentation Required. Each Borrower
shall from time to time execute and deliver to Bank, at the request of Bank, all
Negotiable Collateral, all financing statements and other documents that Bank
may reasonably request, in form satisfactory to Bank, to perfect and continue
perfected Bank's security interests in the Collateral and in order to fully
consummate all of the transactions contemplated under the Loan Documents.
4.3 Right to Inspect. Bank (through any of its officers,
employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrowers' usual business hours but no more than twice a
year (unless an Event of Default has occurred and is continuing), to inspect
Borrowers' Books and to make copies thereof and to check, test, and appraise the
Collateral in order to verify Borrowers' financial condition or the amount,
condition of, or any other matter relating to, the Collateral. Bank acknowledges
and agrees that any information furnished to or obtained by Bank pursuant to
this Section 4.3 shall be subject to the confidentiality provisions set forth in
Section 12.8 herein.
5. Representations And Warranties.
Each Borrower represents and warrants as follows:
5.1 Due Organization and Qualification. Each Borrower and each
Subsidiary is a corporation duly existing under the laws of its state of
incorporation and qualified and licensed to do business in any state in which
the conduct of its business or its ownership of property requires that it be so
qualified, except where the failure to do so could not reasonably be expected to
cause a Material Adverse Effect.
5.2 Due Authorization; No Conflict. The execution, delivery, and
performance of the Loan Documents are within Borrowers' powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in such Borrower's Certificate of Incorporation or Bylaws,
nor will they constitute an event of default under any material agreement by
which such Borrower is bound. Neither Borrower is in default under any agreement
by which it is bound, which default could have a Material Adverse Effect.
5.3 Collateral. Each Borrower has good title to the Collateral,
free and clear of Liens, except for Permitted Liens. The Eligible Accounts are
bona fide existing obligations. The property giving rise to such Eligible
Accounts has been delivered to the account debtor or its agent for immediate
shipment to and unconditional acceptance by the account debtor. Neither Borrower
has received notice of any actual or imminent Insolvency Proceeding of any
account debtor whose accounts are included in any Borrowing Base Certificate as
an Eligible Account.
9.
All Inventory is in all material respects of good and marketable quality, free
from all material defects, except for Inventory for which adequate reserves have
been made.
5.4 Intellectual Property Collateral. Each Borrower is the sole
owner of its Intellectual Property Collateral, except for Licenses granted by
such Borrowers to its customers in the ordinary course of business. Each of the
Copyrights, Trademarks and Patents is valid and enforceable, and no part of the
Intellectual Property Collateral has been judged invalid or unenforceable, in
whole or in part, and, to Borrowers' knowledge, no claim has been made that any
part of the Intellectual Property Collateral violates the rights of any third
party except to the extent such claim could not reasonably be expected to cause
a Material Adverse Effect. Except as set forth in the Schedule, Borrowers'
rights as licensees of intellectual property do not give rise to more than 5% of
their gross revenue in any given month, including without limitation revenue
derived from the sale, licensing, rendering or disposition of any product or
service.
5.5 Name; Location of Chief Executive Office. Except as
disclosed in the Schedule, Borrowers have not done business under any name other
than those specified on the signature page hereof. The chief executive office of
each Borrower is located at the addresses indicated in Section 10 hereof.
5.6 Litigation. Except as set forth in the Schedule, there are
no actions or proceedings pending by or against any Borrower or any Subsidiary
before any court or administrative agency in which a likely adverse decision
could reasonably be expected to have a Material Adverse Effect, or a material
adverse effect on Borrowers' interest or Bank's security interest in the
Collateral.
5.7 No Material Adverse Change in Financial Statements. All
consolidated financial statements related to any Borrower and any Subsidiary
that are delivered by Borrowers to Bank fairly present in all material respects
Borrowers' consolidated financial condition as of the date thereof and
Borrowers' consolidated results of operations for the period then ended. There
has not been a material adverse change in the consolidated financial condition
of Borrowers since the date of the most recent of such financial statements
submitted to Bank.
5.8 Solvency, Payment of Debts. Each Borrower is able to pay its
debts (including trade debts) as they mature; the fair saleable value of
Borrowers' assets (including goodwill minus disposition costs) exceeds the fair
value of their liabilities; and Borrowers are not left with an unreasonably
small amount of capital after the transactions contemplated by this Agreement
relative to the Borrowers' business and operations.
5.9 Compliance with Laws and Regulations. Each Borrower and each
Subsidiary have met the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA. No event has occurred resulting
from any Borrowers' failure to comply with ERISA that is reasonably likely to
result in such Borrower's incurring any liability that could have a Material
Adverse Effect. Neither Borrower is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940. Neither Borrower is engaged principally, or as one of the
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations T and U
of the Board of Governors of the Federal
10.
Reserve System). Each Borrower has complied in all material respects with all
the provisions of the Federal Fair Labor Standards Act. Each Borrower is in
compliance with all environmental laws, regulations and ordinances except where
the failure to comply is not reasonably likely to have a Material Adverse
Effect. Neither Borrower has violated any statutes, laws, ordinances or rules
applicable to it, violation of which could have a Material Adverse Effect. Each
Borrower and each Subsidiary have filed or caused to be filed all tax returns
required to be filed, and have paid, or have made adequate provision for the
payment of, all taxes reflected therein except those being contested in good
faith with adequate reserves under GAAP.
5.10 Subsidiaries. Neither Borrower owns any stock, partnership
interest or other equity securities of any Person, except for Permitted
Investments.
5.11 Government Consents. Each Borrower and each Subsidiary have
obtained all consents, approvals and authorizations of, made all declarations or
filings with, and given all notices to, all governmental authorities that are
necessary for the continued operation of such Borrowers' business as currently
conducted, except where the failure to do so could not reasonably be expected to
cause a Material Adverse Effect.
5.12 Inbound Licenses. Except as disclosed on the Schedule,
neither Borrower is party to, nor is bound by, any license or other agreement
that prohibits or otherwise restricts such Borrower from granting a security
interest in such Borrower's interest in such license or agreement or any other
property.
5.13 Full Disclosure. No representation, warranty or other
statement made by any Borrower in any certificate or written statement furnished
to Bank taken together with all such certificates and written statements
furnished to Bank contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained in
such certificates or statements not misleading, it being recognized by Bank that
the projections and forecasts provided by Borrowers in good faith and based upon
reasonable assumptions are not to be viewed as facts and that actual results
during the period or periods covered by any such projections and forecasts may
differ from the projected or forecasted results.
6. Affirmative Covenants.
Each Borrower covenants that, until payment in full of all
outstanding Obligations, and for so long as Bank may have any commitment to make
a Credit Extension hereunder, each Borrower shall do all of the following:
6.1 Good Standing and Government Compliance. Each Borrower shall
maintain its and each of its Subsidiaries' corporate existence in its
jurisdiction of incorporation and maintain qualification in each jurisdiction in
which the failure to so qualify could have a Material Adverse Effect. Each
Borrower shall meet, and shall cause each Subsidiary to meet, the minimum
funding requirements of ERISA with respect to any employee benefit plans subject
to ERISA. Each Borrower shall comply, and shall cause each Subsidiary to comply,
with all statutes, laws, ordinances and government rules and regulations to
which it is subject, and shall maintain, and shall cause each of its
Subsidiaries to maintain, in force all licenses, approvals and agreements, the
loss of which or failure to comply with which could have a Material Adverse
11.
Effect, or a material adverse effect on the Collateral or the priority of Bank's
Lien on the Collateral.
6.2 Financial Statements, Reports, Certificates. Each Borrower
shall deliver to Bank: (a) as soon as available, but in any event within 30 days
after the end of each calendar month, a company prepared consolidated balance
sheet and income statement covering such Borrower's consolidated operations
during such period, in a form acceptable to Bank and certified by a Responsible
Officer; (b) as soon as available, but in any event within 120 days after the
end of such Borrower's fiscal year, audited consolidated financial statements of
Borrowers prepared in accordance with GAAP, consistently applied, together with
an opinion which is unqualified or otherwise consented to in writing by Bank on
such financial statements of an independent certified public accounting firm
reasonably acceptable to Bank; (c) if applicable, copies of all statements,
reports and notices sent or made available generally by such Borrower to its
security holders or to any holders of Subordinated Debt and all reports on Forms
10-K and 10-Q filed with the Securities and Exchange Commission; (d) promptly
upon receipt of notice thereof, a report of any legal actions pending or
threatened against such Borrower or any Subsidiary that could result in damages
or costs to such Borrower or any Subsidiary of $100,000 or more; (e) such
budgets, sales projections, operating plans or other financial information
generally prepared by such Borrower in the ordinary course of business as Bank
may reasonably request from time to time; and (f) within 30 days of the last day
of each fiscal quarter, a report signed by such Borrower, in form reasonably
acceptable to Bank, listing any applications or registrations that Borrowers
have made or filed in respect of any Patents, Copyrights or Trademarks and the
status of any outstanding applications or registrations, as well as any material
change in such Borrower's Intellectual Property Collateral, including but not
limited to any subsequent ownership right of such Borrower in or to any
Trademark, Patent or Copyright not specified in Exhibits A, B, and C of the
Intellectual Property Security Agreement delivered to Bank by such Borrower in
connection with this Agreement.
(a) Prior to the aggregate Advances exceeding the
Non-Formula Amount and within 20 days after the last day of each month that
aggregate Advances exceed the Non-Formula Amount, Borrowers shall deliver to
Bank a Borrowing Base Certificate signed by a Responsible Officer in
substantially the form of Exhibit D hereto, together with aged listings of
accounts receivable and accounts payable and evidence of credit ratings for
publicly traded account debtors to the extent applicable.
(b) Within 30 days after the last day of each month,
Borrowers shall deliver to Bank with the monthly financial statements a
Compliance Certificate signed by a Responsible Officer in substantially the form
of Exhibit E hereto.
(c) Bank shall have a right from time to time hereafter to
audit Borrowers' Accounts and appraise Collateral at Borrowers' reasonable
expense, provided that such audits will be conducted no more often than twice
every 12 months unless an Event of Default has occurred and is continuing.
6.3 Inventory; Returns. Each Borrower shall keep all Inventory
in good and marketable condition, free from all material defects except for
Inventory for which adequate reserves have been made. Returns and allowances, if
any, as between any Borrower and its
12.
account debtors shall be on the same basis and in accordance with the usual
customary practices of such Borrower, as they exist on the Closing Date. Each
Borrower shall promptly notify Bank of all returns and recoveries and of all
disputes and claims involving more than $100,000.
6.4 Taxes. Each Borrower shall make, and cause each Subsidiary
to make, due and timely payment or deposit of all material federal, state, and
local taxes, assessments, or contributions required of it by law, including, but
not limited to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state
disability, and will execute and deliver to Bank, on demand, proof satisfactory
to Bank indicating that such Borrower or a Subsidiary has made such payments or
deposits and any appropriate certificates attesting to the payment or deposit
thereof; provided that Borrowers or a Subsidiary need not make any payment if
the amount or validity of such payment is contested in good faith by appropriate
proceedings and is reserved against (to the extent required by GAAP) by such
Borrower.
6.5 Insurance.
(a) Each Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as ordinarily insured against by
other owners in similar businesses conducted in the locations where such
Borrowers' business is conducted on the date hereof. Each Borrower shall also
maintain liability and other insurance in amounts and of a type that are
customary to businesses similar to such Borrower's.
(b) All such policies of insurance shall be in such form,
with such companies, and in such amounts as reasonably satisfactory to Bank. All
policies of property insurance shall contain a lender's loss payable
endorsement, in a form satisfactory to Bank, showing Bank as an additional loss
payee, and all liability insurance policies shall show Bank as an additional
insured and specify that the insurer must give at least 20 days notice to Bank
before canceling its policy for any reason. Upon Bank's request, Borrowers shall
deliver to Bank certified copies of the policies of insurance and evidence of
all premium payments. If no Event of Default has occurred and is continuing,
proceeds payable under any casualty policy will, at Borrowers' option, be
payable to Borrowers to replace the property subject to the claim, provided that
any such replacement property shall be deemed Collateral in which Bank has been
granted a first priority security interest. If an Event of Default has occurred
and is continuing, all proceeds payable under any such policy shall, at Bank's
option, be payable to Bank to be applied on account of the Obligations.
6.6 Primary Depository. Each Borrower shall maintain not less
than 50% of its cash with Bank. The remainder of each Borrower's cash may be
maintained at third party financial institutions only upon the execution and
delivery of account control agreements satisfactory to Bank.
6.7 Financial Covenants. Borrowers shall maintain, on a
consolidated basis, as of the last day of each calendar month unless stated
otherwise:
(a) Quick Ratio. A ratio of Quick Assets to Current
Liabilities of at least 1.50 to 1.00.
13.
(b) Tangible Net Worth. A Tangible Net Worth of not less
than:
For the Month Ending Minimum Tangible Net Worth
January 31, 2002 through May 31, 2002: $13,000,000
June 30, 2002 through December 31, 2002: $13,500,000
January 31, 2003 through May 31, 2003: $14,000,000
June 30, 2003 through December 31, 2003: $14,500,000
January 31, 2004 through May 31, 2004: $15,000,000
June 30, 2004 through December 31, 2004: $15,500,000
January 31, 2005 and each month thereafter: to be set by Bank.
6.8 Registration of Intellectual Property Rights.
(a) Each Borrower shall register or cause to be registered
on an expedited basis (to the extent not already registered) with the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable: (i) those intellectual property rights listed on Exhibits A, B and C
to the Intellectual Property Security Agreement delivered to Bank by Borrowers
in connection with this Agreement, within 30 days of the date of this Agreement,
(ii) all registrable intellectual property rights Borrowers have developed as of
the date of this Agreement but heretofore failed to register, within 30 days of
the date of this Agreement, and (iii) those additional intellectual property
rights developed or acquired by Borrowers from time to time in connection with
any product, prior to the sale or licensing of such product to any third party,
and prior to Borrowers' use of such product (including without limitation major
revisions or additions which significantly improve the functionality of the
intellectual property rights listed on such Exhibits A, B and C). Borrowers
shall give Bank notice of all such applications or registrations.
(b) Each Borrower shall execute and deliver such additional
instruments and documents from time to time as Bank shall reasonably request to
perfect Bank's security interest in the Intellectual Property Collateral.
(c) Each Borrower shall (i) protect, defend and maintain the
validity and enforceability of the Trademarks, Patents and Copyrights, (ii) use
its best efforts to detect infringements of the Trademarks, Patents and
Copyrights and promptly advise Bank in writing of material infringements
detected and (iii) not allow any material Trademarks, Patents or Copyrights to
be abandoned, forfeited or dedicated to the public without the written consent
of Bank, which shall not be unreasonably withheld.
(d) Bank may audit Borrowers' Intellectual Property
Collateral to confirm compliance with this Section 6.8, provided such audit may
not occur more often than twice per year, unless an Event of Default has
occurred and is continuing. Bank shall have the right, but not the obligation,
to take, at Borrowers' sole expense, any actions that Borrowers are required
under this Section 6.8 to take but which Borrowers fail to take, after 15 days'
notice to Borrowers. Borrowers shall reimburse and indemnify Bank for all
reasonable costs and reasonable expenses incurred in the reasonable exercise of
its rights under this Section 6.8.
14.
6.9 Consent of Inbound Licensors. Prior to entering into or
becoming bound by any license or agreement that is reasonably likely to have a
material impact on Borrowers' business or financial condition, Borrowers shall:
(i) provide written notice to Bank of the material terms of such license or
agreement with a description of its likely impact on Borrowers' business or
financial condition; and (ii) take such steps as Bank requests to obtain the
consent of, or waiver by, any person whose consent or waiver is necessary for
Borrowers' interest in such licenses or contract rights to be deemed Collateral
and for Bank to have a security interest in it that might otherwise be
restricted by the terms of the applicable license or agreement, whether now
existing or entered into in the future.
6.10 Further Assurances. At any time and from time to time
Borrowers shall execute and deliver such further instruments and take such
further action as may reasonably be requested by Bank to effect the purposes of
this Agreement.
6.11 Conversion of Revenue Recognition Policy. No later than April
30, 2002, Bank must receive reasonable verbal assurance from any "Big 5"
accounting firm that Borrowers' conversion to a non-deferral based revenue
recognition policy is acceptable and based on GAAP, and that the reserve
estimate is reasonable.
7. Negative Covenants.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until payment in full of the outstanding
Obligations or for so long as Bank may have any commitment to make any Credit
Extensions, neither Borrower will do any of the following without Bank's prior
written consent, which shall not be unreasonably withheld, conditioned or
delayed:
7.1 Dispositions. Convey, sell, lease, transfer or otherwise
dispose of (collectively, to "Transfer"), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, other than Permitted
Transfers.
7.2 Change in Business; Change in Control or Executive Office or
Jurisdiction of Incorporation. Engage in any business, or permit any of its
Subsidiaries to engage in any business, other than or reasonably related or
incidental to the businesses currently engaged in by Borrowers. Neither Borrower
will have a Change in Control and will not, without 30 days prior written
notification to Bank, relocate its chief executive office or change it
jurisdiction of incorporation.
7.3 Mergers or Acquisitions. Merge or consolidate, or permit any
of its Subsidiaries to merge or consolidate, with or into any other Person
(other than mergers or consolidations of a Subsidiary into another Subsidiary or
into Borrowers), or acquire, or permit any of its Subsidiaries to acquire, all
or substantially all of the capital stock or property of another Person (each of
the above transactions referred to as an "Acquisition"), except where (i) such
Acquisitions, together with all Joint Venture Investments, do not in the
aggregate exceed $500,000 in cash, stock and other consideration during the term
of this Agreement, (ii) no Event of Default has occurred, is continuing or would
exist after giving effect to such transaction and
15.
(iii) such merger constitutes a Permitted Investment. Notwithstanding the above,
SimIpc shall be permitted to acquire the assets of Simplexity, Inc.
7.4 Indebtedness. Create, incur, assume or be or remain liable
with respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness.
7.5 Encumbrances. Create, incur, assume or allow any Lien with
respect to any of its property, or assign or otherwise convey any right to
receive income, including the sale of any Accounts, or permit any of its
Subsidiaries so to do, except for Permitted Liens, or covenant to any other
Person that such Borrower in the future will refrain from creating, incurring,
assuming or allowing any Lien with respect to any of Borrowers' property.
7.6 Distributions. Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock, except that such Borrower may repurchase the stock of
former employees pursuant to stock repurchase agreements as long as an Event of
Default does not exist prior to such repurchase or would not exist after giving
effect to such repurchase.
7.7 Investments. Directly or indirectly acquire or own, or make
any Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments.
7.8 Transactions with Affiliates. Directly or indirectly enter
into or permit to exist any material transaction with any Affiliate of any
Borrower except for transactions that are in the ordinary course of Borrowers'
business, upon fair and reasonable terms that are no less favorable to such
Borrower than would be obtained in an arm's length transaction with a
non-affiliated Person.
7.9 Subordinated Debt. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without Bank's prior written consent.
7.10 Inventory and Equipment. Store the Inventory or the Equipment
with a bailee, warehouseman, or similar party unless Bank has received a pledge
of the warehouse receipt covering such Inventory. Except for Inventory sold in
the ordinary course of business and except for such other locations as Bank may
approve in writing, Borrowers shall keep the Inventory and Equipment only at the
location set forth in Section 10 and such other locations of which Borrowers
give Bank prior written notice and as to which Bank has filed a financing
statement where needed to perfect Bank's security interest.
7.11 Compliance. Become or be controlled by an "investment
company," within the meaning of the Investment Company Act of 1940, or become
principally engaged in, or undertake as one of its important activities, the
business of extending credit for the purpose of purchasing or carrying margin
stock, or use the proceeds of any Credit Extension for such purpose. Fail to
meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur, fail to comply with the
Federal Fair Labor Standards Act or violate any law or regulation, which
violation could reasonably be
16.
expected to have a Material Adverse Effect, or a material adverse effect on the
Collateral or the priority of Bank's Lien on the Collateral, or permit any of
its Subsidiaries to do any of the foregoing.
7.12 Negative Pledge Agreements. Permit the inclusion in any
contract to which it becomes a party of any provisions that could restrict or
invalidate the creation of a security interest in Borrowers' rights and
interests in any Collateral.
8. Events of Default.
Any one or more of the following events shall constitute an Event
of Default by Borrowers under this Agreement:
8.1 Payment Default. If any Borrower fails to pay any of the
Obligations as and when due and such failure continues for 3 calendar days or
more after the due date, provided that within such 3-day cure period, the
failure to pay shall not be deemed an Event of Default, but no Credit Extensions
will be made;
8.2 Covenant Default. If any Borrower fails to perform any
obligation under Article 6 or violates any of the covenants contained in Article
7 of this Agreement, or fails or neglects to perform or observe any other
material term, provision, condition, covenant contained in this Agreement, in
any of the Loan Documents, or in any other present or future agreement between
any Borrower and Bank and as to any default under such other term, provision,
condition or covenant that can be cured, has failed to cure such default within
ten (10) days after any Borrower receives notice thereof or any officer of any
Borrower becomes aware thereof; provided, however, that if the default cannot by
its nature be cured within the ten (10) day period or cannot after diligent
attempts by Borrowers be cured within such ten day period, and such default is
likely to be cured within a reasonable time, then Borrowers shall have an
additional reasonable period (which shall not in any case exceed 30 days) to
attempt to cure such default, and within such reasonable time period the failure
to have cured such default shall not be deemed an Event of Default but no Credit
Extensions will be made;
8.3 Material Adverse Change. If there occurs a material adverse
change in Borrowers' business or financial condition, or if there is a material
impairment of the prospect of repayment of any portion of the Obligations or a
material impairment of the value or priority of Bank's security interests in the
Collateral;
8.4 Attachment. If any material portion of Borrowers' assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within ten (10) days, or if any Borrower
is enjoined, restrained, or in any way prevented by court order from continuing
to conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrowers' assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrowers' assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten days
after any Borrower
17.
receives notice thereof, provided that none of the foregoing shall constitute an
Event of Default where such action or event is stayed or an adequate bond has
been posted pending a good faith contest by Borrowers (provided that no Credit
Extensions will be required to be made during such cure period);
8.5 Insolvency. If any Borrower becomes insolvent, or if an
Insolvency Proceeding is commenced by any Borrower, or if an Insolvency
Proceeding is commenced against any Borrower and is not dismissed or stayed
within 30 days (provided that no Credit Extensions will be made prior to the
dismissal of such Insolvency Proceeding);
8.6 Other Agreements. If there is a default in any agreement to
which any Borrower is a party with a third party or parties resulting in a right
by such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of $100,000 or that could
have a Material Adverse Effect;
8.7 Subordinated Debt. If any Borrower makes any payment on account
of Subordinated Debt, except to the extent the payment is allowed under any
subordination agreement entered into with Bank;
8.8 Judgments. If a judgment or judgments for the payment of money
in an amount, individually or in the aggregate, of at least $250,000 not covered
by insurance shall be rendered against any Borrower and shall remain unsatisfied
and unstayed for a period of 10 days (provided that no Credit Extensions will be
made prior to the satisfaction or stay of the judgment); or
8.9 Misrepresentations. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to Bank by any Responsible
Officer pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document.
9. Bank's Rights And Remedies.
9.1 Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default, Bank may, at its election, without notice of
its election and without demand, do any one or more of the following, all of
which are authorized by Borrowers:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
Section 8.5, all Obligations shall become immediately due and payable without
any action by Bank);
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement or under any other agreement between
any Borrower and Bank;
(c) Settle or adjust disputes and claims directly with account
debtors for amounts, upon terms and in whatever order that Bank reasonably
considers advisable;
18.
(d) Make such payments and do such acts as Bank considers
necessary or reasonable to protect its security interest in the Collateral. Each
Borrower agrees to assemble the Collateral if Bank so requires, and to make the
Collateral available to Bank as Bank may designate. Each Borrower authorizes
Bank to enter the premises where the Collateral is located, to take and maintain
possession of the Collateral, or any part of it, and to pay, purchase, contest,
or compromise any encumbrance, charge, or lien which in Bank's determination
appears to be prior or superior to its security interest and to pay all
reasonable expenses incurred in connection therewith. With respect to any of
Borrowers' owned premises, each Borrower hereby grants Bank a license to enter
into possession of such premises and to occupy the same, without charge, in
order to exercise any of Bank's rights or remedies provided herein, at law, in
equity, or otherwise;
(e) Set off and apply to the Obligations any and all (i)
balances and deposits of any Borrower held by Bank, or (ii) indebtedness at any
time owing to or for the credit or the account of any Borrower held by Bank;
(f) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Bank is hereby granted a license or other right, solely
pursuant to the provisions of this Section 9.1, to use, without charge,
Borrowers' labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section 9.1, Borrowers'
rights under all licenses and all franchise agreements shall inure to Bank's
benefit;
(g) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Borrowers' premises) as Bank
determines is commercially reasonable, and apply any proceeds to the Obligations
in whatever manner or order Bank deems appropriate;
(h) Bank may credit bid and purchase at any public sale; and
(i) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrowers.
9.2 Power of Attorney. Effective only upon the occurrence and during
the continuance of an Event of Default, Borrowers hereby irrevocably appoint
Bank (and any of Bank's designated officers, or employees) as Borrowers' true
and lawful attorney to: (a) send requests for verification of Accounts or notify
account debtors of Bank's security interest in the Accounts; (b) endorse
Borrowers' names on any checks or other forms of payment or security that may
come into Bank's possession; (c) sign Borrowers' names on any invoice or xxxx of
lading relating to any Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to account
debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims
under and decisions with respect to Borrowers' policies of insurance; (f) settle
and adjust disputes and claims respecting the accounts directly with account
debtors, for amounts and upon terms which Bank determines to be reasonable; (g)
19.
to modify, in its sole discretion, any intellectual property security agreement
entered into between Borrowers and Bank without first obtaining Borrowers'
approval of or signature to such modification by amending Exhibits A, B, and C,
thereof, as appropriate, to include reference to any right, title or interest in
any Copyrights, Patents or Trademarks acquired by any Borrower after the
execution hereof or to delete any reference to any right, title or interest in
any Copyrights, Patents or Trademarks in which a Borrower no longer has or
claims to have any right, title or interest; (h) to file, in its sole
discretion, one or more financing or continuation statements and amendments
thereto, relative to any of the Collateral; and (i) to transfer the Intellectual
Property Collateral into the name of Bank or a third party to the extent
permitted under the California Uniform Commercial Code; provided Bank may
exercise such power of attorney to sign the name of Borrowers on any of the
documents described in Section 4.2 regardless of whether an Event of Default has
occurred. The appointment of Bank as Borrowers' attorney in fact, and each and
every one of Bank's rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully repaid and performed
and Bank's obligation to provide advances hereunder is terminated.
9.3 Accounts Collection. Upon the occurrence of and during the
continuance of any Event of Default, Bank may notify any Person owing funds to
Borrowers of Bank's security interest in such funds and verify the amount of
such Account. Borrowers shall collect all amounts owing to Borrowers for Bank,
receive in trust all payments as Bank's trustee, and immediately deliver such
payments to Bank in their original form as received from the account debtor,
with proper endorsements for deposit.
9.4 Bank Expenses. If any Borrower fails to pay any amounts or
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Bank may do any or all of the
following after reasonable notice to such Borrower: (a) make payment of the same
or any part thereof; (b) set up such reserves under the Revolving Facility as
Bank deems necessary to protect Bank from the exposure created by such failure;
or (c) obtain and maintain insurance policies of the type discussed in Section
6.5 of this Agreement, and take any action with respect to such policies as Bank
deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank
Expenses, shall be immediately due and payable, and shall bear interest at the
then applicable rate hereinabove provided, and shall be secured by the
Collateral. Any payments made by Bank shall not constitute an agreement by Bank
to make similar payments in the future or a waiver by Bank of any Event of
Default under this Agreement.
9.5 Bank's Liability for Collateral. So long as Bank complies with
reasonable banking practices and Section 9-207 of the Code, Bank shall not in
any way or manner be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage thereto occurring or arising in any manner or
fashion from any cause; (c) any diminution in the value thereof; or (d) any act
or default of any carrier, warehouseman, bailee, forwarding agency, or other
person whomsoever. All risk of loss, damage or destruction of the Collateral
shall be borne by Borrowers.
9.6 Remedies Cumulative. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in
20.
equity. No exercise by Bank of one right or remedy shall be deemed an election,
and no waiver by Bank of any Event of Default on Borrowers' part shall be deemed
a continuing waiver. No delay by Bank shall constitute a waiver, election, or
acquiescence by it. No waiver by Bank shall be effective unless made in a
written document signed on behalf of Bank and then shall be effective only in
the specific instance and for the specific purpose for which it was given.
9.7 Demand; Protest. Each Borrower waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, notice of any default, nonpayment at maturity, release, compromise,
settlement, extension, or renewal of accounts, documents, Instruments, Chattel
Paper, and guarantees at any time held by Bank on which such Borrower may in any
way be liable.
10. Notices.
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by a recognized
overnight delivery service, certified mail, postage prepaid, return receipt
requested, or by telefacsimile to Borrowers or to Bank, as the case may be, at
its addresses set forth below:
If to InPhonic: InPhonic, Inc.
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Attn:
FAX: (_____) _______________
If to SimIpc: SimIpc Acquisition Corp.
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attn:
FAX: (_____) _______________
If to Bank: Comerica Bank-California
000 Xxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000-0000
Attn:
FAX:
21.
with a copy to: Comerica Bank-California
00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn:
FAX:
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
11. Choice Of Law And Venue; Jury Trial Waiver.
This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California, without regard to
principles of conflicts of law. Each Borrower and Bank hereby submit to the
exclusive jurisdiction of the state and Federal courts located in the County of
Santa Xxxxx, State of California. BORROWERS AND BANK EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
12. General Provisions.
12.1 Successors and Assigns. This Agreement shall bind and
inure to the benefit of the respective successors and permitted assigns of each
of the parties; provided, however, that neither this Agreement nor any rights
hereunder may be assigned by Borrowers without Bank's prior written consent,
which consent may be granted or withheld in Bank's sole discretion. Bank shall
have the right without the consent of or notice to Borrowers to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank's obligations, rights and benefits hereunder.
12.2 Indemnification. Each Borrower shall defend, indemnify
and hold harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank
as a result of or in any way arising out of, following, or consequential to
transactions between Bank and Borrowers whether under this Agreement, or
otherwise (including without limitation reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.
22.
12.3 Time of Essence. Time is of the essence for the performance of
all obligations set forth in this Agreement.
12.4 Severability of Provisions. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
12.5 Amendments in Writing, Integration. All amendments to or
terminations of this Agreement must be in writing. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties hereto with respect to the subject matter of this Agreement, if any, are
merged into this Agreement and the Loan Documents.
12.6 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
12.7 Survival. All covenants, representations and warranties made
in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrowers to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities described
in Section 12.2 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Bank have run.
12.8 Confidentiality. In handling any confidential information Bank
and all employees and agents of Bank shall exercise the same degree of care that
Bank exercises with respect to its own proprietary information of the same types
to maintain the confidentiality of any non-public information thereby received
or received pursuant to this Agreement except that disclosure of such
information may be made (i) to the subsidiaries or affiliates of Bank in
connection with their present or prospective business relations with Borrowers,
(ii) to prospective transferees or purchasers of any interest in the Loans,
provided that they have entered into a comparable confidentiality agreement in
favor of Borrowers and have delivered a copy to Borrowers, (iii) as required by
law, regulations, rule or order, subpoena, judicial order or similar order, (iv)
as may be required in connection with the examination, audit or similar
investigation of Bank and (v) as Bank may determine in connection with the
enforcement of any remedies hereunder. Confidential information hereunder shall
not include information that either: (a) is in the public domain or in the
knowledge or possession of Bank when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank through no fault of Bank; or (b) is
disclosed to Bank by a third party, provided Bank does not have actual knowledge
that such third party is prohibited from disclosing such information.
13. Suretyship Waivers.
13.1 Each Borrower hereby expressly waives (a) diligence,
presentment, demand for payment, protest, benefit of any statute of limitations
affecting such Borrower's liability under the Loan Documents; (b) discharge due
to any disability of any Borrower; (c) any defenses of any Borrower to
obligations under the Loan Documents not arising under the express
23.
terms of the Loan Documents or from a material breach thereof by Bank which
under applicable law has the effect of discharging any Borrower from the
Obligations as to which this Agreement is sought to be enforced; (d) the benefit
of any act or omission by Bank which directly or indirectly results in or aids
the discharge of any Borrower from any of the Obligations by operation of law or
otherwise; (e) except as expressly provided herein, all notices whatsoever,
including notice of acceptance of the incurring of the Obligations; (f) any
right it may have to require Bank to disclose to it any information that Bank
may now or hereafter acquire concerning the financial condition or any
circumstances that bears on the risk of nonpayment by any other Borrower,
including the release of such other Borrower from its Obligations hereunder; and
(g) any requirement that Bank exhaust any right, power or remedy or proceed
against any other Borrower or any other security for, or any guarantor of, or
any other party liable for, any of the Obligations, or any portion thereof. Each
Borrower specifically agrees that it shall not be necessary or required, and
Borrowers shall not be entitled to require, that Bank (i) file suit or proceed
to assert or obtain a claim for personal judgment against any other Borrower for
all or any part of the Obligations; (ii) make any effort at collection or
enforcement of all or any part of the Obligations from any Borrower; (iii)
foreclose against or seek to realize upon the Collateral or any other security
now or hereafter existing for all or any part of the Obligations; (iv) file suit
or proceed to obtain or assert a claim for personal judgment against any
Borrower or any guarantor or other party liable for all or any part of the
Obligations; (v) exercise or assert any other right or remedy to which Bank is
or may be entitled in connection with the Obligations or any security or
guaranty relating thereto to assert; or (vi) file any claim against assets of
one Borrower before or as a condition of enforcing the liability of any other
Borrower under this Agreement. Without limiting the generality of the foregoing,
each Borrower expressly waives the benefit of California Civil Code Sections
2809, 2810, 2819, 2839, 2845, 2848, 2849, 2850, 2899 and 1432. WITHOUT LIMITING
THE FOREGOING IN ANY WAY, EACH BORROWER HEREBY IRREVOCABLY WAIVES AND RELEASES:
(a) Any and all rights it may have at any time (whether arising
directly or indirectly, by operation of law, contract or otherwise) to require
the marshaling of any assets of any Borrower, which right of marshaling might
otherwise arise from any such payments made or obligations performed;
(b) Any and all rights that would result in such Borrower being
deemed a "creditor" under the United States Code of any other Borrower or any
other Person, on account of payments made or obligations performed by such
Borrower; and
(c) Until such time as the Obligations have been satisfied in
full, any claim, right or remedy which it may now have or hereafter acquire
against any other Borrower that arises hereunder and/or from the performance by
it hereunder including any claim, remedy or right of subrogation, reimbursement,
exoneration, contribution, indemnification, or participation in any claim, right
or remedy of Bank against any other Borrower or any collateral security which
Bank now has or may hereafter acquire, whether or not such claim, right or
remedy arises in equity, under contract, by statute, under common law or
otherwise.
24.
In Witness Whereof, the parties hereto have caused this Agreement to be
executed as of the date first above written.
InPhonic, Inc.
By: /s/ Xxxxx X. Xxxxxxxxx
____________________________
Title: ____________________________
SimIpc Acquisition Corp.
By: /s/ Xxxxx X. Xxxxxxxxx
____________________________
Title: ____________________________
Comerica Bank-California
By: /s/ Xxxxxxx Steel
____________________________
Title: ____________________________
25.
Exhibit A
DEFINITIONS
"Accounts" means all presently existing and hereafter arising accounts,
contract rights, and all other forms of obligations owing to any Borrower
arising out of the sale or lease of goods (including, without limitation, the
licensing of software and other technology) or the rendering of services by any
Borrower, whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by any Borrower and such Borrower's Books relating to
any of the foregoing.
"Acquisitions" has the meaning set forth in Section 7.3.
"Advance" or "Advances" means a cash advance or cash advances under the
Revolving Facility.
"Affiliate" means, with respect to any Person, any Person that owns or
controls directly or indirectly such Person, any Person that controls or is
controlled by or is under common control with such Person, and each of such
Person's senior executive officers, directors, and partners.
"Amended and Restated Loan and Security Agreement" has the meaning set
forth in the Recitals.
"Bank Expenses" means, subject to the terms herein, all: reasonable
costs or expenses (including reasonable attorneys' fees and expenses) incurred
in connection with the preparation, negotiation, administration, and enforcement
of the Loan Documents; reasonable Collateral audit fees; and Bank's reasonable
attorneys' fees and expenses incurred in amending, enforcing or defending the
Loan Documents (including fees and expenses of appeal), incurred before, during
and after an Insolvency Proceeding, whether or not suit is brought.
"Borrowers' Books" means all of Borrowers' books and records including:
ledgers; records concerning Borrowers' assets or liabilities, the Collateral,
business operations or financial condition; and all computer programs, or tape
files, and the equipment, containing such information.
"Borrowing Base" means an amount equal to 75% of Eligible Accounts, as
determined by Bank with reference to the most recent Borrowing Base Certificate
delivered by Borrowers.
"Business Day" means any day that is not a Saturday, Sunday, or other
day on which banks in the State of California or Washington are authorized or
required to close.
"Change in Control" shall mean a transaction in which any "person" or
"group" (within the meaning of Section 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934) becomes the "beneficial owner" (as defined in Rule 13d-3
under the Securities Exchange Act of 1934), directly or indirectly, of a
sufficient number of shares of all classes of stock then outstanding of
Borrowers ordinarily entitled to vote in the election of directors, empowering
such "person" or
1.
"group" to elect a majority of the Board of Directors of Borrowers, who did not
have such power before such transaction.
"Chattel Paper" means any "chattel paper," as such term is defined in
Section 9105(1)(b) of the UCC, now owned or hereafter acquired by any Borrower
or in which any Borrower now holds or hereafter acquires an interest.
"Closing Date" means the date of this Agreement.
"Code" means the California Uniform Commercial Code.
"Collateral" means the property described on Exhibit B attached hereto
and all Negotiable Collateral and Intellectual Property Collateral to the extent
not described on Exhibit B, except to the extent any such property or rights (i)
are nonassignable by their terms without the consent of the licensor thereof or
another party (but only to the extent such prohibition on transfer is
enforceable under applicable law, including, without limitation, Section 9318(4)
of the Code), or (ii) the granting of a security interest therein is contrary to
applicable law or the terms of the agreement pursuant to which the rights or
property is acquired, provided that upon the cessation of any such restriction
or prohibition, such property shall automatically become part of the Collateral.
"Committed Revolving Line" means a Credit Extension of up to
$3,000,000.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to (i)
any indebtedness, lease, dividend, letter of credit or other obligation of
another, including, without limitation, any such obligation directly or
indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by
that Person, or in respect of which that Person is otherwise directly or
indirectly liable; (ii) any obligations with respect to undrawn letters of
credit issued for the account of that Person; and (iii) all obligations arising
under any interest rate, currency or commodity swap agreement, interest rate cap
agreement, interest rate collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices; provided, however, that the term "Contingent
Obligation" shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith; provided, however, that such
amount shall not in any event exceed the maximum amount of the obligations under
the guarantee or other support arrangement.
"Copyrights" means any and all copyright rights, copyright
applications, copyright registrations and like protections in each work or
authorship and derivative work thereof, whether published or unpublished and
whether or not the same also constitutes a trade secret, now or hereafter
existing, created, acquired or held.
"Credit Extension" means each Advance, Equipment Advance, Term Loan, or
any other extension of credit by Bank for the benefit of Borrowers hereunder.
2.
"Current Assets" means, as of any applicable date, all amounts that
should, in accordance with GAAP, be included as current assets on the
consolidated balance sheet of any Borrower and its Subsidiaries as at such date.
"Current Liabilities" means, as of any applicable date, all amounts
that should, in accordance with GAAP, be included as current liabilities on the
consolidated balance sheet of any Borrower and its Subsidiaries, as at such
date, plus, to the extent not already included therein, all outstanding Credit
Extensions made under this Agreement, including all Indebtedness that is payable
upon demand or within one year from the date of determination thereof unless
such Indebtedness is renewable or extendible at the option of such Borrower or
any Subsidiary to a date more than one year from the date of determination.
"Deposit Accounts" means any "deposit account" as such term is defined
in Section 9105(e) of the UCC, and should include, without limitation, any
demand, time, savings passbook or like account, now or hereafter maintained by
or for the benefit of any Borrower, or in which any Borrower now holds or
hereafter acquires any interest, with a bank, savings and loan association,
credit union or like organization (including Bank) and all funds and amounts
therein, whether or not restricted or designated for a particular purpose.
"Eligible Accounts" means those Accounts that arise in the ordinary
course of Borrowers' business that comply with all of Borrowers' representations
and warranties to Bank set forth in Section 5.3; provided, that Bank may change
the standards of eligibility by giving Borrowers 30 days prior written notice.
Unless otherwise agreed to by Bank, Eligible Accounts shall not include the
following:
(a) Accounts that the account debtor has failed to pay within 90 days
of invoice date;
(b) Accounts with respect to an account debtor, 25% of whose Accounts
the account debtor has failed to pay within 90 days of invoice date;
(c) Accounts with respect to which the account debtor is an officer,
employee, or agent of Borrowers;
(d) Accounts with respect to which goods are placed on consignment,
guaranteed sale, sale or return, sale on approval, xxxx and hold, or other terms
by reason of which the payment by the account debtor may be conditional;
(e) Accounts with respect to which the account debtor is an Affiliate
of Borrowers;
(f) Accounts with respect to which the account debtor does not have its
principal place of business in the United States, except for Eligible Foreign
Accounts;
(g) Accounts with respect to which the account debtor is the United
States or any department, agency, or instrumentality of the United States,
except to the extent that such Accounts are backed by a valid Assignment of
Claims of the government of the United States;
3.
(h) Accounts with respect to which Borrowers is liable to the account
debtor for goods sold or services rendered by the account debtor to Borrowers,
but only to the extent of any amounts owing to the account debtor against
amounts owed to Borrowers;
(i) Accounts with respect to an account debtor, including Subsidiaries
and Affiliates, whose total obligations to Borrowers exceed 25% (50% for
publicly traded companies with a credit rating of BB/BA or higher) of all
Accounts, to the extent such obligations exceed the aforementioned percentage,
except as approved in writing by Bank;
(j) Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which Bank believes, in
its sole discretion, that there may be a basis for dispute (but only to the
extent of the amount subject to such dispute or claim), or is subject to any
Insolvency Proceeding, or becomes insolvent, or goes out of business; and
(k) Accounts the collection of which Bank reasonably determines after
inquiry and consultation with Borrowers to be doubtful.
"Eligible Foreign Accounts" means Accounts with respect to which the
account debtor does not have its principal place of business in the United
States and that (i) are supported by one or more letters of credit in an amount
and of a tenor, and issued by a financial institution, acceptable to Bank, or
(ii) that Bank approves on a case-by-case basis.
"Equipment" means all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which any Borrower has any interest.
"Equipment Advance" has the meaning set forth in Section 2.1(c).
"Equipment Advance Permitted Uses" means, subject to the terms and
conditions of this Agreement, the purchase of Equipment, software and furniture.
"Equipment Line" means a Credit Extension of up to $1,500,000.
"Equipment Maturity Date" means February 28, 2005.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
"Event of Default" has the meaning set forth in Section 8.
"Existing Letter of Credit" has the meaning set forth in Section
2.1(e)(ii).
"GAAP" means generally accepted accounting principles as in effect from
time to time.
"Indebtedness" means (a) all indebtedness for borrowed money or the
deferred purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
Instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.
4.
"Insolvency Proceeding" means any proceeding commenced by or against
any person or entity under any provision of the United States Bankruptcy Code,
as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
"Instruments" means any "instrument," as such term is defined in
Section 9105(1)(i) of the UCC now owned or hereafter acquired by Borrowers or in
which Borrowers now holds or hereafter acquires any interest, including, without
limitation, all notes, certificated securities, and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
"Intellectual Property Collateral" means all of Borrowers' right,
title, and interest in and to the following:
(a) Copyrights, Trademarks and Patents;
(b) Any and all trade secrets, and any and all intellectual property
rights in computer software and computer software products now or hereafter
existing, created, acquired or held;
(c) Any and all design rights which may be available to Borrowers now
or hereafter existing, created, acquired or held;
(d) Any and all claims for damages by way of past, present and future
infringement of any of the rights included above, with the right, but not the
obligation, to xxx for and collect such damages for said use or infringement of
the intellectual property rights identified above;
(e) All licenses or other rights to use any of the Copyrights, Patents
or Trademarks, and all license fees and royalties arising from such use to the
extent permitted by such license or rights;
(f) All amendments, renewals and extensions of any of the Copyrights,
Trademarks or Patents; and
(g) All proceeds and products of the foregoing, including without
limitation all payments under insurance or any indemnity or warranty payable in
respect of any of the foregoing.
"Inventory" means all present and future inventory in which any
Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of any Borrower, including such
inventory as is temporarily out of its custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above, and Borrowers' Books relating
to any of the foregoing.
5.
"Investment" means any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"Joint Venture Investment" has the meaning set forth in the definition
of "Permitted Investments" hereunder.
"Lien" means any mortgage, lien, deed of trust, charge, pledge,
security interest or other encumbrance.
"Letter of Credit" has the meaning set forth in Section 2.1(e)(i).
"Loan Documents" means, collectively, this Agreement, any note or notes
executed by any Borrower, any Warrant to Purchase Stock, and any other agreement
entered into between any Borrower and Bank in connection with this Agreement,
all as amended or extended from time to time.
"Material Adverse Effect" means a material adverse effect on (i) the
business operations or condition (financial or otherwise) of any Borrower and
its Subsidiaries taken as a whole or (ii) the ability of Borrowers to repay the
Obligations or otherwise perform its obligations under the Loan Documents.
"Negotiable Collateral" means all of Borrowers' present and future
letters of credit of which it is a beneficiary, notes, drafts, Instruments,
securities, documents of title, and Chattel Paper, and Borrowers' Books relating
to any of the foregoing.
"Non-Formula Amount" has the meaning set forth in Section 2.1(b)(i).
"Obligations" means all debt, principal, interest, Bank Expenses and
other amounts owed to Bank by Borrowers pursuant to this Agreement or any other
agreement, whether absolute or contingent, due or to become due, now existing or
hereafter arising, including any interest that accrues after the commencement of
an Insolvency Proceeding and including any debt, liability, or obligation owing
from any Borrower to others that Bank may have obtained by assignment or
otherwise.
"Original Loan Documents" has the meaning set forth in the Recitals.
"Patents" means all patents, patent applications and like protections
including without limitation improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same.
"Periodic Payments" means all installments or similar recurring
payments that Borrowers may now or hereafter become obligated to pay to Bank
pursuant to the terms and provisions of any instrument, or agreement now or
hereafter in existence between Borrowers and Bank.
6.
"Permitted Equipment" has the meaning set forth in Section 2.1(c)(i).
"Permitted Indebtedness" means:
(a) Indebtedness of any Borrower in favor of Bank arising under this
Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed in the
Schedule;
(c) Indebtedness secured by a lien described in clause (c) of the
definition of "Permitted Liens," provided such Indebtedness does not exceed the
lesser of the cost or fair market value of the equipment financed with such
Indebtedness;
(d) Indebtedness arising from the endorsement of instruments in the
ordinary course of business;
(e) Subordinated Debt;
(f) Trade payables incurred in the ordinary course of business; and
(g) Indebtedness of SimIpc set forth on Schedule A attached hereto;
provided, however, that such Indebtedness shall cease to be deemed "Permitted
Indebtedness" on August 31, 2002.
"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed in the Schedule;
(b) (i) Marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency or any State thereof
maturing within one year from the date of acquisition thereof, (ii) commercial
paper maturing no more than one year from the date of creation thereof and
currently having rating of at least A-2 or P-2 from either Standard & Poor's
Corporation or Xxxxx'x Investors Service, (iii) Bank's certificates of deposit
maturing no more than one year from the date of investment therein or
certificates of deposit of any other financial institution organized under the
laws of the United States having total assets in excess of $250,000,000, and
(iv) Bank's money market accounts or money market accounts of any other
financial institution organized under the laws of the United States having total
assets in excess of $250,000.000; provided that in the case of (iii) and (iv)
above, Bank shall have received a control agreement acceptable to Bank in order
to perfect its security interest in each such investment;
(c) Repurchases of stock from former employees or directors of any
Borrower under the terms of applicable repurchase agreements in an aggregate
amount not to exceed $100,000 in the aggregate in any fiscal year, provided that
no Event of Default has occurred, is continuing or would exist after giving
effect to the repurchases;
(d) Investments accepted in connection with Permitted Transfers;
7.
(e) Investments of Subsidiaries in or to other Subsidiaries or any
Borrower and Investments by any Borrower in Subsidiaries not to exceed $100,000
in the aggregate in any fiscal year;
(f) Investments consisting of (i) travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors relating to the
purchase of equity securities of any Borrower or its Subsidiaries pursuant to
employee stock purchase plan agreements approved by Borrowers' Board of
Directors;
(g) Investments (including debt obligations) received in connection
with the bankruptcy or reorganization of customers or suppliers and in
settlement of delinquent obligations of, and other disputes with, customers or
suppliers arising in the ordinary course of Borrowers' business;
(h) Investments consisting of notes receivable of, or prepaid royalties
and other credit extensions, to customers and suppliers who are not Affiliates,
in the ordinary course of business, provided that this subparagraph (h) shall
not apply to Investments of any Borrower in any Subsidiary; and
(i) Joint ventures or strategic alliances in the ordinary course of
Borrowers' business consisting of the non-exclusive licensing of technology, the
development of technology or the providing of technical support (each of the
above hereinafter referred to as a "Joint Venture Investment"), provided that
such Joint Venture Investments by Borrowers, together with all Acquisitions, do
not exceed $500,000 in cash, stock and other consideration in the aggregate
during the term of this Agreement.
"Permitted Liens" means the following:
(a) Any Liens existing on the Closing Date and disclosed in the
Schedule or arising under this Agreement or the other Loan Documents;
(b) Liens for taxes, fees, assessments or other governmental charges or
levies, either not delinquent or being contested in good faith by appropriate
proceedings and for which Borrowers maintain adequate reserves, provided the
same have no priority over any of Bank's security interests;
(c) Liens, not to exceed $500,000 in the aggregate, (i) upon or in any
Equipment acquired or held by any Borrower or any of its Subsidiaries to secure
the purchase price of such Equipment or indebtedness incurred solely for the
purpose of financing the acquisition of such Equipment, or (ii) existing on such
Equipment at the time of its acquisition, provided that the Lien is confined
solely to the property so acquired and improvements thereon, and the proceeds of
such Equipment;
(d) Liens to secure payment of workers' compensation, employment
insurance, old age pensions, social security or other like obligations incurred
in the ordinary course of business;
(e) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in
clauses (a) through (c) above, provided
8.
that any extension, renewal or replacement Lien shall be limited to the property
encumbered by the existing Lien and the principal amount of the indebtedness
being extended, renewed or refinanced does not increase;
(f) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Sections 8.4 or 8.8;
(g) Liens in favor of other financial institutions arising in
connection with Borrowers' Deposit Accounts held at such institutions, provided
that Bank has a perfected security interest in the amounts held in such Deposit
Accounts; and
(h) Other Liens not described above arising in the ordinary course of
business and not having or not reasonably likely to have a Material Adverse
Effect on Borrowers and their Subsidiaries taken as a whole.
"Permitted Transfer" means (a) the transfer of cash from InPhonic to
SimIpc for payment of any of the liabilities set forth in Schedule A attached
hereto or (b) the conveyance, sale, lease, transfer or disposition by any
Borrower or any Subsidiary of:
(i) Inventory in the ordinary course of business;
(ii) licenses and similar arrangements for the use of the property of
any Borrower or its Subsidiaries in the ordinary course of business;
(iii) surplus, worn-out or obsolete Equipment; or
(iv) other assets of Borrowers or their Subsidiaries which do not in
the aggregate exceed $100,000.
"Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.
"Prime Rate" means the variable rate of interest, per annum, most
recently announced by Bank, as its "prime rate," whether or not such announced
rate is the lowest rate available from Bank.
"Promissory Note" has the meaning set forth in Section 2.1(d)(ii).
"Quick Assets" means, at any date as of which the amount thereof shall
be determined, the unrestricted cash and cash-equivalents, plus net trade
accounts receivable with maturities not to exceed 90 days, of Borrowers
determined in accordance with GAAP.
"Responsible Officer" means each of the Chief Executive Officer, the
Chief Operating Officer, the Chief Financial Officer and the Controller of any
Borrower.
"Revolving Facility" means the facility under which Borrowers may
request Bank to issue Advances, as specified in Section 2.1(b) hereof.
9.
"Revolving Maturity Date" means January 18, 2003.
"Schedule" means the schedule of exceptions attached hereto, if any.
"Software Advance" means an Equipment Advance to finance the purchase
of software.
"Software Maturity Date" means February 29, 2004.
"Subordinated Debt" means any debt incurred by any Borrower that is
subordinated to the debt owing by Borrowers to Bank on terms reasonably
acceptable to Bank (and identified as being such by Borrowers and Bank).
"Subsidiary" means any corporation or partnership in which (i) any
general partnership interest or (ii) more than 50% of the stock of which by the
terms thereof ordinary voting power to elect the Board of Directors, managers or
trustees of the entity, at the time as of which any determination is being made,
is owned by any Borrower, either directly or through an Affiliate.
"Tangible Net Worth" means at any date as of which the amount thereof
shall be determined, the sum of the capital stock and additional paid-in capital
plus retained earnings (or minus accumulated deficit) of Borrowers and their
Subsidiaries minus intangible assets, plus Subordinated Debt, on a consolidated
basis determined in accordance with GAAP.
"Term Loan Maturity Date" has the meaning set forth in Section
2.1(d)(ii).
"Total Liabilities" means at any date as of which the amount thereof
shall be determined, all obligations that should, in accordance with GAAP be
classified as liabilities on the consolidated balance sheet of any Borrower,
including in any event all Indebtedness.
"Trademarks" means any trademark and servicemark rights, whether
registered or not, applications to register and registrations of the same and
like protections, and the entire goodwill of the business of Borrowers connected
with and symbolized by such trademarks.
"Tranche A" means Tranche A-1 and Tranche A-2.
"Tranche A-1" has the meaning set forth in Section 2.1(c)(i).
"Tranche A-2" has the meaning set forth in Section 2.1(c)(i).
"Tranche B" has the meaning set forth in Section 2.1(c)(i).
"Tranche C" has the meaning set forth in Section 2.1(c)(i).
"Tranche D" has the meaning set forth in Section 2.1(c)(i).
"Tranche E" has the meaning set forth in Section 2.1(c)(i).
"Tranche B Availability End Date" means May 31, 2002.
"Tranche C Availability End Date" means August 31, 2002.
10.
"Tranche D Availability End Date" means November 30, 2002.
"Tranche E Availability End Date" means February 28, 2003.
"Tranche A Equipment Advance" means the Equipment Advance made under
Tranche A.
"Tranche A-1 Equipment Advance" means the Equipment Advance made under
Tranche A-1.
"Tranche A-2 Equipment Advance" means the Equipment Advance made under
Tranche A-2.
"Tranche B Equipment Advance" or "Tranche B Equipment Advances" means
any Equipment Advance(s) made under Tranche B.
"Tranche C Equipment Advance" or "Tranche C Equipment Advances" means
any Equipment Advance(s) made under Tranche C.
"Tranche D Equipment Advance" or "Tranche D Equipment Advances" means
any Equipment Advance(s) made under Tranche D.
"Tranche E Equipment Advance" or "Tranche E Equipment Advances" means
any Equipment Advance(s) made under Tranche E.
"UCC" means the Uniform Commercial Code as the same may from time to
time be in effect in the State of California (and each reference in this
Agreement to an Article thereof (denoted as a Division of the UCC as adopted and
in effect in the State of California) shall refer to that Article (or Division,
as applicable) as from time to time in effect, which in the case of Article 9
shall include and refer to Revised Article 9 from and after the date Revised
Article 9 shall become effective in the State of California); provided, however,
in the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the Secured Party's security interest in
any collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of California, the term "UCC" shall mean the
Uniform Commercial Code (including the Articles thereof) as in effect at such
time in such other jurisdiction for purposes of the provisions hereof relating
to such attachment, perfection or priority and for purposes of definitions
related to such provisions.
"Warrant to Purchase Stock" means that certain Warrant to Purchase
Stock issued concurrently herewith by InPhonic to Bank for the purchase of
75,758 of InPhonic's Common Stock and at an initial exercise price per share of
$1.32 (split adjusted), with a maturity of seven (7) years from issuance and
setting forth certain provisions including, without limitation, net exercise and
anti-dilution protection provisions of the same type granted to holders of
Inphonic's Series D-3 Preferred Shares.
11.
DEBTORS: INPHONIC, INC. AND SIMIPC ACQUISITION CORP.
SECURED PARTY: COMERICA BANK - CALIFORNIA
Exhibit B
COLLATERAL DESCRIPTION ATTACHMENT
TO LOAN AND SECURITY AGREEMENT
All personal property of Debtors of every kind, whether presently existing or
hereafter created, written, produced or acquired, including, but not limited to:
(a) all accounts (including health-care-insurance receivables), chattel paper
(including tangible and electronic chattel paper), deposit accounts, documents
(including negotiable documents), equipment (including all accessions and
additions thereto), general intangibles (including payment intangibles and
software), goods (including fixtures), instruments (including promissory notes),
inventory (including all goods held for sale or lease or to be furnished under a
contract of service, and including returns and repossessions), investment
property (including securities and securities entitlements), letter of credit
rights, money, and all of Debtors' books and records with respect to any of the
foregoing, and the computers and equipment containing said books and records;
(b) all common law and statutory copyrights and copyright registrations,
applications for registration, now existing or hereafter arising, in the United
States of America or in any foreign jurisdiction, obtained or to be obtained on
or in connection with any of the forgoing, or any parts thereof or any
underlying or component elements of any of the forgoing, together with the right
to copyright and all rights to renew or extend such copyrights and the right
(but not the obligation) of Secured Party to xxx in its own name and/or in the
name of the Debtors for past, present and future infringements of copyright; (c)
all trademarks, service marks, trade names and service names and the goodwill
associated therewith, together with the right to trademark and all rights to
renew or extend such trademarks and the right (but not the obligation) of
Secured Party to xxx in its own name and/or in the name of the Debtors for past,
present and future infringements of trademark; (d) all (i) patents and patent
applications filed in the United States Patent and Trademark Office or any
similar office of any foreign jurisdiction, and interests under patent license
agreements, including, without limitation, the inventions and improvements
described and claimed therein, (ii) licenses pertaining to any patent whether
Debtors are licensor or licensee, (iii) income, royalties, damages, payments,
accounts and accounts receivable now or hereafter due and/or payable under and
with respect thereto, including, without limitation, damages and payments for
past, present or future infringements thereof, (iv) right (but not the
obligation) to xxx in the name of Debtors and/or in the name of Secured Party
for past, present and future infringements thereof, (v) rights corresponding
thereto throughout the world in all jurisdictions in which such patents have
been issued or applied for, and (vi) reissues, divisions, continuations,
renewals, extensions and continuations-in-part with respect to any of the
foregoing; and (e) any and all cash proceeds and/or noncash proceeds of any of
the foregoing, including, without limitation, insurance proceeds, and all
supporting obligations and the security therefor or for any right to payment.
All terms above have the meanings given to them in the California Uniform
Commercial Code, as amended or supplemented from time to time, including revised
Division 9 of the Uniform Commercial Code-Secured Transactions, added by Stats.
1999, c.991 (S.B. 45), Section 35, operative July 1, 2001.
1.
Exhibit C
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., E.S.T.
TO: 0000 Xx Xxxxxx Xxxx, Xxxxx 000, Xxxx Xxxx, XX 00000 DATE: _______________
FAX #: 000-000-0000 TIME: _______________
--------------------------------------------------------------------------------------------------
FROM: InPhonic, Inc./SimIpc Acquisition Corpo.
--------------------------------------------------------------------------------------------
CLIENT NAME (BORROWERS) InPhonic, Inc./SimIpc Acquisition Corp.
REQUESTED BY:____________________________________________________________________________________
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:____________________________________________________________________________
PHONE NUMBER:____________________________________________________________________________________
FROM ACCOUNT # ______________________ TO ACCOUNT # __________________________________________
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
-------------------------- ---------------------
$_____________________________________________________
PRINCIPAL INCREASE (ADVANCE) $_____________________________________________________
PRINCIPAL PAYMENT (ONLY) $_____________________________________________________
INTEREST PAYMENT (ONLY) $_____________________________________________________
PRINCIPAL AND INTEREST (PAYMENT) $_____________________________________________________
OTHER INSTRUCTIONS: _____________________________________________________________________________
--------------------------------------------------------------------------------
All representations and warranties of Borrowers stated in the Second Amended and
Restated Loan and Security Agreement are true, correct and complete in all
material respects as of the date of the telephone request for an Advance
confirmed by this Borrowing Certificate; provided, however, that those
representations and warranties expressly referring to another date shall be
true, correct and complete in all material respects as of such date.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
BANK USE ONLY
TELEPHONE REQUEST:
-----------------
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
_____________________________________________ _________________________________
Authorized Requester Phone #
_____________________________________________ _________________________________
Received By (Bank) Phone #
_____________________________________________
Authorized Signature (Bank)
--------------------------------------------------------------------------------
1.
Exhibit D
BORROWING BASE CERTIFICATE
Borrowers: InPhonic, Inc./SimIpc Acquisition Corp. Lender: Comerica Bank-California
Commitment Amount: $3,000,000
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of _________ $___________
2. Additions (please explain on reverse) $___________
3. TOTAL ACCOUNTS RECEIVABLE $___________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $___________
5. Balance of 25% over 90 day accounts $___________
6. Concentration Limits $___________
7. Foreign Accounts $___________
8. Governmental Accounts $___________
9. Contra Accounts $___________
10. Demo Accounts $___________
11. Intercompany/Employee Accounts $___________
12. Other (please explain on reverse) $___________
13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $___________
14. Eligible Accounts (#3 minus #13) $___________
15. LOAN VALUE OF ACCOUNTS (75% of #14) $___________
BALANCES
16. Maximum Loan Amount $___________
17. Total Funds Available (Lesser of #16 or #15) $___________
18. Present balance owing on Line of Credit $___________
19. Outstanding under Sublimits (Letters of Credit) $___________
20. RESERVE POSITION (#17 minus #18 and #19) $___________
The undersigned represents and warrants that the foregoing is true,
complete and correct, and that the information reflected in this Borrowing Base
Certificate complies with the representations and warranties set forth in the
Second Amended and Restated Loan and Security Agreement between the undersigned
and Comerica Bank-California.
InPhonic, Inc. SimIpc Acquisition Corp.
By: __________________________________ By: ____________________________
Authorized Signer Authorized Signer
1.
Exhibit E
COMPLIANCE CERTIFICATE
TO: Comerica Bank - California
FROM: InPhonic, Inc./SimIpc Acquisition Corp.
The undersigned authorized officer of Borrowers hereby certify that in
accordance with the terms and conditions of the Second Amended and Restated Loan
and Security Agreement between Borrowers and Bank (the "Agreement"), (i)
Borrowers are in complete compliance for the period ending _______________ with
all required covenants, including without limitation Section 6.8, except as
noted below and (ii) all representations and warranties of Borrowers stated in
the Agreement are true and correct in all material respects as of the date
hereof. Attached herewith are the required documents supporting the above
certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.
Please indicate compliance status by circling Yes/No under "Complies" column.
Reporting Covenant Required Complies
------------------ -------- --------
Monthly financial statements Monthly within 30 days Yes No
Annual (CPA Audited) FYE within 120 days Yes No
10K and 10Q (as applicable) Yes No
A/R & A/P Agings, Borrowing Base Cert. Monthly within 20 days Yes No
A/R Audit Initial and Semi-Annual Yes No
IP Report Quarterly within 30 days Yes No
Financial Covenant Required Actual Complies
------------------ -------- ------ --------
Maintain on a Monthly Basis:
Minimum Quick Ratio _____:1.00 _____:1.00 Yes No
Minimum Tangible Net Worth $_________ $_________ Yes No
________________________________
Comments Regarding Exceptions: See Attached.
BANK USE ONLY
Received by:___________________
Sincerely, AUTHORIZED SIGNER
Date:__________________________
Verified:______________________
_______________________________________________ AUTHORIZED SIGNER
SIGNATURE
Date:__________________________
_______________________________________________
TITLE
Compliance Status Yes No
_______________________________________________
DATE
________________________________
1.
SCHEDULE OF EXCEPTIONS
Permitted Indebtedness (Exhibit A)
Permitted Investments (Exhibit A)
Permitted Liens (Exhibit A)
Prior Names (Section 5.5)
Litigation (Section 5.6)
1.
SCHEDULE A
List of Liabilities Acquired From Simplexity
[See Attached]
1.
CORPORATE RESOLUTIONS TO BORROW
Borrower: InPhonic, Inc.
I, the undersigned officer of InPhonic, Inc. (the "Corporation"),
HEREBY CERTIFY that the Corporation is organized and existing under and by
virtue of the laws of the State of Delaware.
I Further Certify that attached hereto as Attachments 1 and 2 are true
and complete copies of the Certificate of Incorporation, as amended, and the
Bylaws of the Corporation, each of which is in full force and effect on the date
hereof.
I Further Certify that at a meeting of the Directors of the
Corporation, duly called and held, at which a quorum was present and voting (or
by other duly authorized corporate action in lieu of a meeting), the following
resolutions were adopted.
Be It Resolved, that any one (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:
NAMES POSITION ACTUAL SIGNATURES
------------------------ -------------------------- -------------------------
________________________ __________________________ _________________________
________________________ __________________________ _________________________
________________________ __________________________ _________________________
________________________ __________________________ _________________________
acting for and on behalf of this Corporation and as its act and deed be, and
they hereby are, authorized and empowered:
Borrow Money. To borrow from time to time from Comerica Bank-California
("Bank"), on such terms as may be agreed upon between the officers, employees,
or agents of the Corporation and Bank, such sum or sums of money as in their
judgment should be borrowed, without limitation, including such sums as are
specified in that certain Second Amended and Restated Loan and Security
Agreement dated as of March 1, 2002, (the "Loan Agreement").
Execute Loan Documents. To execute and deliver to Bank the Loan
Agreement and any other agreement entered into between Corporation and Bank in
connection with the Loan Agreement, all as amended or extended from time to time
(collectively, with the Loan Agreement, the "Loan Documents"), and also to
execute and deliver to Bank one or more renewals, extensions, modifications,
refinancings, consolidations, or substitutions for the Loan Documents, or any
portion thereof.
1.
Grant Security. To grant a security interest to Bank in the Collateral
described in the Loan Documents, which security interest shall secure all of the
Corporation's Obligations, as described in the Loan Documents.
Negotiate Items. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness payable
to or belonging to the Corporation or in which the Corporation may have an
interest, and either to receive cash for the same or to cause such proceeds to
be credited to the account of the Corporation with Bank, or to cause such other
disposition of the proceeds derived therefrom as they may deem advisable.
Warrants. To issue a warrant to purchase the Corporation's capital
stock.
Letters of Credit; Foreign Exchange. To execute letters of credit
applications, foreign exchange agreements and other related documents pertaining
to Bank's issuance of letters of credit and foreign exchange contracts.
Further Acts. In the case of lines of credit, to designate additional
or alternate individuals as being authorized to request advances thereunder, and
in all cases, to do and perform such other acts and things, to pay any and all
fees and costs, and to execute and deliver such other documents and agreements
as they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions.
Be It Further Resolved, that any and all acts authorized pursuant to
these resolutions and performed prior to the passage of these resolutions are
hereby ratified and approved, that these Resolutions shall remain in full force
and effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.
I Further Certify that the officers, employees, and agents named above
are duly elected, appointed, or employed by or for the Corporation, as the case
may be, and occupy the positions set forth opposite their respective names; that
the foregoing Resolutions now stand of record on the books of the Corporation;
and that the Resolutions are in full force and effect and have not been modified
or revoked in any manner whatsoever.
In Witness Whereof, I have hereunto set my hand on March 1, 2002 and
attest that the signatures set opposite the names listed above are their genuine
signatures.
CERTIFIED AND ATTESTED BY:
X ____________________________________
2.
CORPORATE RESOLUTIONS TO BORROW
Borrower: SimIpc Acquisition Corp.
I, the undersigned officer of InPhonic, Inc. (the "Corporation"),
HEREBY CERTIFY that the Corporation is organized and existing under and by
virtue of the laws of the State of Delaware.
I Further Certify that attached hereto as Attachments 1 and 2 are true
and complete copies of the Certificate of Incorporation, as amended, and the
Bylaws of the Corporation, each of which is in full force and effect on the date
hereof.
I Further Certify that at a meeting of the Directors of the
Corporation, duly called and held, at which a quorum was present and voting (or
by other duly authorized corporate action in lieu of a meeting), the following
resolutions were adopted.
Be It Resolved, that any one (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:
NAMES POSITION ACTUAL SIGNATURES
-------------------------- ------------------------- ---------------------------
________________________ __________________________ __________________________
________________________ __________________________ __________________________
________________________ __________________________ __________________________
________________________ __________________________ __________________________
acting for and on behalf of this Corporation and as its act and deed be, and
they hereby are, authorized and empowered:
Borrow Money. To borrow from time to time from Comerica Bank-California
("Bank"), on such terms as may be agreed upon between the officers, employees,
or agents of the Corporation and Bank, such sum or sums of money as in their
judgment should be borrowed, without limitation, including such sums as are
specified in that certain Second Amended and Restated Loan and Security
Agreement dated as of March 1, 2002, (the "Loan Agreement").
Execute Loan Documents. To execute and deliver to Bank the Loan
Agreement and any other agreement entered into between Corporation and Bank in
connection with the Loan Agreement, all as amended or extended from time to time
(collectively, with the Loan Agreement, the "Loan Documents"), and also to
execute and deliver to Bank one or more renewals, extensions, modifications,
refinancings, consolidations, or substitutions for the Loan Documents, or any
portion thereof.
1.
Grant Security. To grant a security interest to Bank in the Collateral
described in the Loan Documents, which security interest shall secure all of the
Corporation's Obligations, as described in the Loan Documents.
Negotiate Items. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness payable
to or belonging to the Corporation or in which the Corporation may have an
interest, and either to receive cash for the same or to cause such proceeds to
be credited to the account of the Corporation with Bank, or to cause such other
disposition of the proceeds derived therefrom as they may deem advisable.
Letters of Credit; Foreign Exchange. To execute letters of credit
applications, foreign exchange agreements and other related documents pertaining
to Bank's issuance of letters of credit and foreign exchange contracts.
Further Acts. In the case of lines of credit, to designate additional
or alternate individuals as being authorized to request advances thereunder, and
in all cases, to do and perform such other acts and things, to pay any and all
fees and costs, and to execute and deliver such other documents and agreements
as they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions.
Be It Further Resolved, that any and all acts authorized pursuant to
these resolutions and performed prior to the passage of these resolutions are
hereby ratified and approved, that these Resolutions shall remain in full force
and effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.
I Further Certify that the officers, employees, and agents named above
are duly elected, appointed, or employed by or for the Corporation, as the case
may be, and occupy the positions set forth opposite their respective names; that
the foregoing Resolutions now stand of record on the books of the Corporation;
and that the Resolutions are in full force and effect and have not been modified
or revoked in any manner whatsoever.
In Witness Whereof, I have hereunto set my hand on March 1, 2002 and
attest that the signatures set opposite the names listed above are their genuine
signatures.
CERTIFIED AND ATTESTED BY:
X ____________________________________
2.
COMERICA BANK - CALIFORNIA
Member FDIC
ITEMIZATION OF AMOUNT FINANCED
DISBURSEMENT INSTRUCTIONS
(Revolver)
Name(s): InPhonic, Inc./Simipc Acquisition Corp. Date: ________________
$3,000,000 credited to deposit account No. 1891668467 when
Advances are requested or disbursed to Borrowers by
cashiers check or wire transfer
Amounts paid to others on your behalf:
$ [Paid] to Comerica Bank-California for Facility Fee
$ to Comerica Bank-California for accounts receivable
audit (estimate)
$ to Bank counsel fees and expenses
$ to _______________
$ to _______________
$ TOTAL (AMOUNT FINANCED)
Upon consummation of this transaction, this document will also serve as the
authorization for Comerica Bank-California to disburse the loan proceeds as
stated above.
_____________________________________ _____________________________________
Signature Signature
1.
COMERICA BANK - CALIFORNIA
Member FDIC
ITEMIZATION OF AMOUNT FINANCED
DISBURSEMENT INSTRUCTIONS
(Equipment Loan)
Name(s): InPhonic, Inc./SimIpc Acquisition Corp. Date: _______________
$ credited to deposit account No. 1891668467 when
Equipment Advances are requested or disbursed to
Borrowers by cashiers check or wire transfer
Amounts paid to others on your behalf:
$ [Paid] to Comerica Bank-California for Facility Fee
$ to Comerica Bank-California for accounts
receivable audit (estimate)
$ to Bank counsel fees and expenses
$ to _______________
$ to _______________
$ TOTAL (AMOUNT FINANCED)
Upon consummation of this transaction, this document will also serve as the
authorization for Comerica Bank-California to disburse the loan proceeds as
stated above.
_____________________________________ _____________________________________
Signature Signature
1.
AGREEMENT TO PROVIDE INSURANCE
TO: COMERICA BANK - CALIFORNIA Date: _______________
c/o Hibernia Xxxxxxx Insurance Services
Xxxx Xxxxxx Xxx 0000
Xxxxxx Xxxxx, XX 00000-0000 Borrowers: InPhonic, Inc./SimIpc
Acquisition Corp.
In consideration of a loan in the amount of $3,500,000 secured by all
tangible personal property including inventory and equipment.
I/We agree to obtain adequate insurance coverage to remain in force
during the term of the loan.
I/We also agree to advise the below named agent to add Comerica
Bank-California as lender's loss payable on the new or existing insurance
policy, and to furnish Bank at above address with a copy of said
policy/endorsements and any subsequent renewal policies.
I/We understand that the policy must contain:
1. Fire and extended coverage in an amount sufficient to cover:
(a) The amount of the loan, OR
(b) All existing encumbrances, whichever is greater,
But not in excess of the replacement value of the improvements on the
real property.
2. Lender's "Loss Payable" Endorsement Form 438 BFU in favor of
Comerica Bank-California, or any other form acceptable to Bank.
INSURANCE INFORMATION
Insurance Co./Agent Telephone No.:
Agent's Address:
Signature of Obligor: _____________________________
Signature of Obligor: _____________________________
FOR BANK USE ONLY
INSURANCE VERIFICATION: Date: ___________
Person Spoken to: ______________________
Policy Number: ______________________
Effective From: ______ To: ______________
Verified by: ____________________________
1.
COMERICA BANK - CALIFORNIA
California's Business Banks AUTOMATIC DEBIT AUTHORIZATION
Member FDIC
To: Comerica Bank-California
Re: Loan # ___________________________________
You are hereby authorized and instructed to charge account No. 1891668467 in the
name of InPhonic, Inc./SimIpc Acquisition Corp.
for principal and interest payments due on above referenced loan as set forth
below and credit the loan referenced above.
____ Debit each interest payment as it becomes due according
to the terms of the note and any renewals or amendments
thereof.
____ Debit each principal payment is at becomes due according
to the terms of the note and any renewals or amendments
thereof.
This Authorization is to remain in full force and effect until revoked in
writing.
________________________________________________________________________________
Borrowers Signature Date
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
COMERICA BANK - CALIFORNIA
California's Business Banks AUTOMATIC DEBIT AUTHORIZATION
Member FDIC
To: Comerica Bank-California
Re: Loan # ___________________________________
You are hereby authorized and instructed to charge account No. 1891668467 in the
name of InPhonic, Inc.
for principal and interest payments due on above referenced loan as set forth
below and credit the loan referenced above.
____ Debit each interest payment as it becomes due according
to the terms of the note and any renewals or amendments
thereof.
____ Debit each principal payment is at becomes due according
to the terms of the note and any renewals or amendments
thereof.
This Authorization is to remain in full force and effect until revoked in
writing.
________________________________________________________________________________
Borrowers Signature Date
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
SIGNATURE AUTHORIZATION
To: Comerica Bank-California Address: 0000 Xxxxx Xx Xxxxxxx Xxxx.,
Lending Services Xxxxx 000 Xxxxxxxxx, XX 00000
This Authorization is in reference to that certain Credit Terms and
Conditions, Loan Agreement or Credit Agreement ("Agreement") executed by the
undersigned Borrowers ("Borrowers") concerning a loan or loans from Comerica
Bank - California ("Bank") to Borrowers. Each individual signing below hereby
certifies that he/she has been authorized by Borrowers to designate certain
individuals who are employees or agents of Borrowers to perform such acts as are
contemplated by and in furtherance of the Agreement.
The individuals named below, any one acting alone, are hereby
authorized and appointed for and on behalf of Borrowers from time to time to do
any of the following:
(1) To request advances of credit under the Agreement and to effect
repayment of any credit outstanding under the Agreement.
(2) To execute and deliver assignments, borrowing certificates,
instruments, schedules, reports, invoices, bills, shipping
documents and such other documents or certificates as may be
necessary or appropriate under the Agreement or any other
agreement or instrument relating thereto or delivered in
connection therewith;
(3) To transfer and endorse to Bank in payment of Borrowers'
obligations to Bank any checks, drafts, notes or other
instruments payable to Borrowers; and
(4) To do or perform any and all other acts or matters in any way
relating to any or all of the foregoing.
The undersigned individuals each further certifies that the specimen
signatures below are the genuine signatures of the individuals designated herein
and that their signatures shall be binding on Borrowers until Bank receives
written notice of termination if the authority of any such designated
individuals.
Dated: _______________________________ Dated: _____________________________
InPhonic, Inc. SimIpc Acquisition Corp.
By: __________________________________ By: ________________________________
Name: ________________________________ Name: ______________________________
Title: _______________________________ Title: _____________________________
By: __________________________________
Name: ________________________________
Title: _______________________________
(Authorized Individuals and Specimen Signatures on Next Page)
Authorized Individuals and Specimen Signatures:
Name (Typed or Printed) Signature
_______________________________________ ___________________________________or
_______________________________________ ___________________________________or
_______________________________________ ___________________________________or
_______________________________________ ___________________________________or
_______________________________________ ___________________________________or
_______________________________________ ___________________________________or
_______________________________________ ___________________________________or
_______________________________________ ___________________________________or
_______________________________________ ___________________________________or
_______________________________________ ___________________________________or
_______________________________________ ___________________________________or
_______________________________________ ___________________________________or
_______________________________________ ___________________________________or
