EXHIBIT 10.1
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LOAN AND SECURITY AGREEMENT
by and between
NTN COMMUNICATIONS, INC.
and
COAST BUSINESS CREDIT,
a division of Southern Pacific Bank
Dated as of August 6, 1999
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Coast Business Credit Loan and Security Agreement
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TABLE OF CONTENTS
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Page
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1. DEFINITIONS..................................................... 1
Account Debtor............................................. 1
Affiliate.................................................. 1
Audit...................................................... 1
Borrower................................................... 1
Borrower's Address......................................... 1
Business Day............................................... 1
Change of Control.......................................... 1
Closing Date............................................... 1
Coast...................................................... 1
Code....................................................... 1
Collateral................................................. 1
Collections................................................ 2
Collections Loans.......................................... 2
Consolidated Tangible Net Worth............................ 2
Credit Limit............................................... 2
Default.................................................... 2
Deposit Account............................................ 2
Dollars or $............................................... 2
Early Termination Fee...................................... 2
EBIT....................................................... 2
EBITDA..................................................... 2
Eligible Collections....................................... 2
Equipment.................................................. 2
Event of Default........................................... 2
GAAP....................................................... 2
General Intangibles........................................ 2
Hospitality Accounts....................................... 3
Inventory.................................................. 3
Investment Property........................................ 3
Loan Documents............................................. 3
Loans...................................................... 3
Material Adverse Effect.................................... 3
Maturity Date.............................................. 3
Maximum Dollar Amount...................................... 3
Minimum Monthly Interest................................... 3
Non-hospitality Accounts................................... 3
Obligations................................................ 3
Permitted Liens............................................ 3
Person..................................................... 4
Prime Rate................................................. 4
Real Property.............................................. 4
Receivables................................................ 4
Renewal Date............................................... 4
Renewal Fee................................................ 4
Solvent.................................................... 4
Tangible Net Worth......................................... 5
Term....................................................... 5
Year 2000 Problem.......................................... 5
Other Terms................................................ 5
2. CREDIT FACILITIES............................................... 5
2.1 Loans...................................................... 5
3. INTEREST AND FEES............................................... 5
3.1 Interest................................................... 5
3.2 Fees....................................................... 5
4. SECURITY INTEREST............................................... 5
5. CONDITIONS PRECEDENT............................................ 6
5.1 Status of Accounts at Closing.............................. 6
5.2 Minimum Availability....................................... 6
5.3 Landlord Waiver............................................ 6
5.4 Real Property.............................................. 6
5.5 Executed Agreement......................................... 6
5.6 Opinion of Borrower's Counsel.............................. 6
5.7 Priority of Coast's Liens.................................. 6
5.8 Insurance.................................................. 6
5.9 Borrower's Existence....................................... 6
5.10 Organizational Documents................................... 6
5.11 Taxes...................................................... 6
5.12 Due Diligence.............................................. 7
5.13 Subordination Agreements................................... 7
5.14 Year 2000 Problem Assessment Certificate................... 7
5.15 Other Documents and Agreements............................. 7
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER....... 7
6.1 Existence and Authority.................................... 7
6.2 Name; Trade Names and Styles............................... 7
6.3 Place of Business; Location of Collateral.................. 7
6.4 Title to Collateral; Permitted Liens....................... 7
6.5 Maintenance of Collateral.................................. 8
Coast Business Credit Loan and Security Agreement
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6.6 Books and Records........................................ 8
6.7 Financial Condition, Statements and Reports.............. 8
6.8 Tax Returns and Payments; Pension Contributions.......... 8
6.9 Compliance with Law...................................... 8
6.10 Litigation............................................... 8
6.11 Use of Proceeds.......................................... 8
6.12 Year 2000 Problem........................................ 9
6.13 FCC Licenses............................................. 9
7. RECEIVABLES.................................................... 9
7.1 Representations Relating to Receivables.................. 9
7.2 Representations Relating to Documents and
Legal Compliance......................................... 9
7.3 Schedules and Documents relating to Receivables.......... 9
7.4 Collection of Receivables................................ 9
7.5 Remittance of Proceeds................................... 10
7.6 Disputes................................................. 10
7.7 Returns.................................................. 10
7.8 Verification............................................. 10
7.9 No Liability............................................. 10
8. ADDITIONAL DUTIES OF THE BORROWER.............................. 10
8.1 Financial and Other Covenants............................ 10
8.2 Insurance................................................ 10
8.3 Reports.................................................. 11
8.4 Access to Collateral, Books and Records.................. 11
8.5 Negative Covenants....................................... 11
8.6 Litigation Cooperation................................... 12
8.7 Further Assurances....................................... 12
8.8 Protection of FCC Licenses............................... 12
9. TERM........................................................... 12
9.1 Maturity Date............................................ 12
9.2 Early Termination........................................ 12
9.3 Payment of Obligations................................... 12
10. EVENTS OF DEFAULT AND REMEDIES................................. 13
10.1 Events of Default........................................ 13
10.2 Remedies................................................. 14
10.3 Standards for Determining Commercial Reasonableness...... 15
10.4 Power of Attorney........................................ 15
10.5 Application of Proceeds.................................. 17
10.6 Cooperation.............................................. 17
10.7 Remedies Cumulative...................................... 17
11. GENERAL PROVISIONS............................................. 17
11.1 Interest Computation..................................... 17
11.2 Application of Payments.................................. 18
11.3 Charges to Accounts...................................... 18
11.4 Monthly Accountings...................................... 18
11.5 Notices.................................................. 18
11.6 Severability............................................. 18
11.7 Integration.............................................. 18
11.8 Waivers.................................................. 18
11.9 No Liability for Ordinary Negligence..................... 18
11.10 Amendment................................................ 19
11.11 Time of Essence.......................................... 19
11.12 Attorneys Fees, Costs and Charges........................ 19
11.13 Benefit of Agreement..................................... 19
11.14 Publicity................................................ 19
11.15 Paragraph Headings; Construction......................... 19
11.16 Governing Law; Jurisdiction; Venue....................... 20
11.17 Mutual Waiver of Jury Trial.............................. 20
Coast Business Credit(R)
LOAN AND SECURITY AGREEMENT
Borrower: NTN Communications, Inc.
Address: 0000 Xx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Date: August 6, 1999
THIS LOAN AND SECURITY AGREEMENT ("Agreement") is entered into on the above date
between COAST BUSINESS CREDIT, a division of Southern Pacific Bank ("Coast"), a
California corporation, with offices at 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000, and the borrower named above (the "Borrower"),
whose chief executive office is located at the above address ("Borrower's
Address"). The Schedule to this Agreement (the "Schedule") shall for all
purposes be deemed to be a part of this Agreement, and the same is an integral
part of this Agreement. (Definitions of certain terms used in this Agreement are
set forth in Section 1 below.)
1. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
"Account Debtor" means the obligor on a Receivable or General Intangible.
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"Affiliate" means, with respect to any Person, a relative, partner,
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shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common with such Person.
"Audit" means to inspect, audit and copy Borrower's books and records and
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the Collateral.
"Borrower" has the meaning set forth in the introduction to this Agreement.
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"Borrower's Address" has the meaning set forth in the introduction to this
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Agreement.
"Business Day" means a day on which Coast is open for business.
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"Change of Control" shall be deemed to have occurred at such time as a
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"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities and Exchange Act of 1934) (other than the current holders of the
ownership interest in any Borrower) becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Securities and Exchange Act of 1934,) directly or
indirectly, as a result of any single transaction, of more than thirty percent
(30%) of the total voting power of all classes of stock or other ownership
interests then outstanding of any Borrower normally entitled to vote in the
election of directors or analogous governing body.
"Closing Date" means the date of the initial funding under this Agreement.
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"Coast" has the meaning set forth in the introduction to this Agreement.
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"Code" means the Uniform Commercial Code as adopted and in effect in the
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State of California from time to time.
"Collateral" has the meaning set forth in Section 4 hereof.
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Coast Business Credit Loan and Security Agreement
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"Collections" means all revenues actually received in immediately available
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funds by Borrower in the ordinary course of Borrower's business from the sale of
goods or rendition of services not subject to return or reserve.
"Collections Loans" means the Loans described in Section 2(a) of the
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Schedule.
"Consolidated Tangible Net Worth" means consolidated Borrower's equity plus
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subordinated debt otherwise permitted hereunder, less, goodwill, patents,
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trademarks, copyrights, franchises, formulas, leasehold interests, leasehold
improvements, non-compete agreements, engineering plans, deferred tax benefits,
organization costs, prepaid items, and any other assets of Borrower that would
be treated as intangible assets on Borrower's balance sheet prepared in
accordance with GAAP.
"Credit Limit" means the maximum amount of Loans that Coast may make to
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Borrower pursuant to the amounts and percentages shown on the Schedule.
"Default" means any event which with notice or passage of time or both,
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would constitute an Event of Default.
"Deposit Account" has the meaning set forth in Section 9105 of the Code.
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"Dollars or $" means United States dollars.
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"Early Termination Fee" means the amount set forth on the Schedule that
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Borrower must pay Coast if this Agreement is terminated by Borrower or Coast
pursuant to Section 9.2 hereof.
"EBIT" means, in any fiscal period, Borrower's consolidated net income or
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net loss (other than extraordinary or non-recurring gains of Borrower for such
period), plus (i) the amount of all interest expense and income tax expense of
Borrower for such period, on a consolidated basis, and plus or minus (as the
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case may be) (ii) any other non-cash charges which have been added or
subtracted, as the case may be, in calculating Borrower's consolidated net
income or net loss for such period.
"EBITDA" means, in any fiscal period, Borrower's consolidated net income or
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net loss (other than extraordinary or non-recurring gains of Borrower for such
period), plus (i) the amount of all interest expense, income tax expense,
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depreciation expense and amortization expense of Borrower for such period, on a
consolidated basis, and plus or minus (as the case may be) (ii) any other non-
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cash charges which have been added or subtracted, as the case may be, in
calculating Borrower's consolidated net income or net loss for such period.
"Eligible Collections" means Collections arising in the ordinary course of
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Borrower's business from the sale of goods or rendition of services on
Hospitality Accounts (as defined below), which Coast, in its sole judgment,
shall deem eligible for borrowing, based on such considerations as Coast may
from time to time deem appropriate. Eligible Collections shall not include the
following:
(a) Collections arising from the Non-hospitality Accounts;
(b) Collections on Hospitality Accounts for which Borrower does not
have executed agreements with the Account Debtor on file; and
(c) Collections that are non-recurring.
"Equipment" means all of Borrower's present and hereafter acquired
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machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dies, jigs, goods and
other goods (other than Inventory) of every kind and description used in
Borrower's operations or owned by Borrower and any interests in any of the
foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions or improvements to any of the foregoing, wherever
located.
"Event of Default" means any of the events set forth in Section 10.1 of
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this Agreement.
"GAAP" means generally accepted accounting principles as in effect from time
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to time in the United States, consistently applied.
"General Intangibles" means all general intangibles of Borrower, whether now
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owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, Deposit Accounts, investment property,
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Coast Business Credit Loan and Security Agreement
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inventions, designs, drawings, blueprints, patents, patent applications,
trademarks and the goodwill of the business symbolized thereby, names, trade
names, trade secrets, goodwill, copyrights, registrations, licenses, franchises,
customer lists, security and other deposits, rights in all litigation presently
or hereafter pending for any cause or claim (whether in contract, tort or
otherwise), and all judgments now or hereafter arising therefrom, rights to
purchase or sell real or personal property, rights as a licensor or licensee of
any kind, royalties, telephone numbers, proprietary information, purchase
orders, and all insurance policies and claims (including without limitation life
insurance, key man insurance, credit insurance, liability insurance, property
insurance and other insurance), tax refunds and claims, computer programs,
discs, tapes and tape files, claims under guaranties, security interests or
other security held by or granted to Borrower, all rights to indemnification and
all other intangible property of every kind and nature (other than Receivables).
"Hospitality Accounts" are accounts whereby Account Debtors agree to pay
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standard monthly recurring charges/fees for the broadcast rights to Borrower-
provided programming and "Playmaker" station rentals.
"Inventory" means all of Borrower's now owned and hereafter acquired goods,
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merchandise or other personal property, wherever located, to be furnished under
any contract of service or held for sale or lease (including without limitation
all raw materials, work in process, finished goods and goods in transit,
and including without limitation all farm products), and all materials and
supplies of every kind, nature and description which are or might be used or
consumed in Borrower's business or used in connection with the manufacture,
packing, shipping, advertising, selling or finishing of such goods, merchandise
or other personal property, and all warehouse receipts, documents of title and
other documents representing any of the foregoing.
"Investment Property" has the meaning set forth in Section 9115 of the Code
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as in effect as of the date hereof.
"Loan Documents" means this Agreement, the agreements and documents
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listed in Section 5 of the Schedule, and any other agreement, instrument or
document executed in connection herewith or therewith.
"Loans" has the meaning set forth in Section 2.1 hereof.
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"Material Adverse Effects" means a material adverse effect on (i) the
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business, assets, condition (financial or otherwise) or results of operations of
Borrower or any subsidiary of Borrower or any guarantor of any of the
Obligations, (ii) the ability of Borrower or any guarantor of any of the
Obligations to perform its obligations under this Agreement (including, without
limitation, repayment of the Obligations as they come due) or (iii) the validity
or enforceability of this Agreement or any other agreement or document entered
into by any party in connection herewith, or the rights or remedies of Coast
hereunder or thereunder.
"Maturity Date" means the date that this Agreement shall cease to be
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effective, as set forth on the Schedule, subject to the provisions of Section
9.1 and 9.2 hereof.
"Maximum Dollar Amount" has the meaning set forth in Section 2 of the
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Schedule.
"Minimum Monthly Interest" has the meaning set forth in Section 3 of the
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Schedule.
"Non-hospitality Accounts" are accounts whereby Account Debtors agree to pay
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for production services and advertising and publicity on Borrower's broadcasts.
"Obligations" means all present and future Loans, advances, debts,
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liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to Coast, whether evidenced by this Agreement or any note
or other instrument or document, whether arising from an extension of credit,
opening of a letter of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by Coast in
Borrower's debts owing to others), absolute or contingent, due or to become
due, including, without limitation, all interest, charges, expenses, fees,
attorney's fees (including attorneys' fees and expenses incurred in
bankruptcy), expert witness fees, audit fees, letter of credit fees, collateral
monitoring fees, closing fees, facility fees, termination fees, minimum interest
charges and any other sums chargeable to Borrower under this Agreement or under
any other present or future instrument or agreement between Borrower and Coast.
"Permitted Liens" means the following:
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Coast Business Credit Loan Security Agreement
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(a) purchase money security interests in specific items of Equipment;
(b) leases of specific items of Equipment;
(c) liens for taxes not yet payable;
(d) additional security interests and liens consented to in writing by
Coast, which consent shall not be unreasonably withheld;
(e) security interests being terminated substantially concurrently
with this Agreement;
(f) liens of materialmen, mechanics, warehousemen, carriers, or other
similar liens arising in the ordinary course of business and securing
obligations which are not delinquent;
(g) liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by liens of the type described above in
clauses (a) or (b) above, provided that any extension, renewal or replacement
lien is limited to the property encumbered by the existing lien and the
principal amount of the indebtedness being extended, renewed or refinanced does
not increase; or
(h) liens in favor of customs and revenue authorities which secure
payment of customs duties in connection with the importation of goods.
Coast will have the right to require, as a condition to its consent under
subparagraph (d) above, that the holder of the additional security interest or
lien sign an intercreditor agreement on Coast's then standard form, acknowledge
that the security interest is subordinate to the security interest in favor of
Coast, and agree not to take any action to enforce its subordinate security
interest so long as any Obligations remain outstanding, and that Borrower agree
that any uncured default in any obligation secured by the subordinate security
interest shall also constitute an Event of Default under this Agreement.
"Person" means any individual, sole propriertorship, general partnership,
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limited partnership, limited liability partnership, limited liability company,
joint venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
"Prime Rate" means the actual "Reference Rate" or the substitute therefor of
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the Bank of America NT & SA whether or not that rate is the lowest interest rate
charged by said bank. If the Prime Rate, as defined, is unavailable, "Prime
Rate" shall mean the highest of the prime rates published in the Wall Street
Journal on the first business day of the applicable month, as the base rate on
corporate loans at large U.S. money center commercial banks.
"Real Property" means Borrower's leased real property located in 5966 La
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Xxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000.
"Receivables" means all of Borrower's now owned and hereafter acquired
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accounts (whether or not earned by performance), letters of credit, contract
rights, chattel paper, instruments, securities, documents, securities accounts,
security entitlements, commodity contracts, commodity accounts, investment
property and all other forms of obligations at any time owning to Borrower, all
guaranties and other security therefor, all merchandise returned to or
repossessed by Borrower, and all rights of stoppage in transit and all other
rights or remedies of an unpaid vendor, lienor or secured party.
"Renewal Date" shall mean the Maturity Date if this Agreement is renewed
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pursuant to Section 9.1 hereof, and each anniversary thereafter that this
Agreement is renewed pursuant to Section 9.1 hereof.
"Renewal Fee" means the fee that Borrower must pay Coast upon renewal of
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this Agreement pursuant to Section 9.1 hereof, in the amount set forth on the
Schedule.
"Solvent" means, with respect to any Person on a particular date, that on
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such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair salable value of the properties and assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, nor reasonably
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Coast Business Credit Loan and Security Agreement
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believes that it has or will, incur debts beyond such Person's ability to pay as
such debts mature, and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's properties and assets would constitute unreasonably small capital
after giving due consideration to the prevailing practices in the industry in
which such Person is engaged. In computing the amount of contingent liabilities
at any time, it is intended that such liabilities will be computed at the amount
that, in light of all the facts and circumstances existing at such time,
represents the amount that reasonably can be expected to become an actual or
matured liability.
"Tangible Net Worth" means Borrower's equity plus subordinated debt
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otherwise permitted hereunder, less, goodwill, patents, trademarks, copyrights,
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franchises, formulas, leasehold interests, leasehold improvements, non-compete
agreements, engineering plans, deferred tax benefits, organization costs,
prepaid items, and any other assets of Borrower that would be treated as
intangible assets on Borrower's balance sheet prepared in accordance with GAAP.
"Term" means the period of time between the Closing Date and Maturity Date
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of this Agreement.
"Year 2000 Problem" means the risk that computer systems, software and
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applications, used by a Person may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any dates after
December 31, 1999.
"Other Terms." All accounting terms used in this Agreement, unless
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otherwise indicated, shall have the meanings given to such terms in accordance
with GAAP. All other terms contained in this Agreement, unless otherwise
indicated, shall have the meanings provided by the Code, to the extent such
terms are defined therein.
2. CREDIT FACILITIES.
2.1 LOANS. Coast will make loans to Borrower (the "Loans"), in amounts and
in percentages to be determined by Coast in its good faith discretion, up to the
Credit Limit, provided no Default or Event of Default has occurred and is
continuing. In addition, Coast may create reasonable reserves against or reduce
its advance rates as set forth in Section 2 of the Schedule based upon Eligible
Receivables or Eligible Inventory without declaring a Default or an Event of
Default if it determines that there has occurred a Material Adverse Effect.
3. INTEREST AND FEES.
3.1 INTEREST. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule, except where expressly set forth to
the contrary in this Agreement. Interest shall be payable monthly, on the last
day of the month. Interest may, in Coast's discretion, be charged to Borrower's
loan account, and the same shall thereafter bear interest at the same rate as
the other Loans. Regardless of the amount of Obligations that may be outstanding
from time to time, Borrower shall pay Coast Minimum Monthly Interest during the
term of this Agreement with respect to the Collections Loans and the Term Loan
in the amount set forth on the Schedule.
3.2 FEES. Borrower shall pay Coast the fee(s) shown on the Schedule, which
are in addition to all interest and other sums payable to Coast and are deemed
fully earned and are nonrefundable.
4. SECURITY INTEREST.
To secure the payment and performance of all of the Obligations when due,
Borrower hereby grants to Coast a security interest in all of Borrower's
interest in the following, whether now owned or hereafter acquired, and wherever
located: All Receivables, Inventory, Equipment, Investment Property, and General
Intangibles, including, without limitation, all of Borrower's Deposit Accounts,
and all money, and all property now or at any time in the future in Coast's
possession (including claims and credit balances), and all proceeds of any of
the foregoing (including proceeds from the sale of any FCC license, proceeds of
any insurance policies, proceeds of proceeds, and claims against third parties),
all products of any of the foregoing, and all books and records related to any
of the foregoing (all of the foregoing, together with all other property in
which Coast may now or in the future be granted a lien or security interest, is
referred to herein, collectively, as the "Collateral").
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Coast Business Credit Loan and Security Agreement
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5. CONDITIONS PRECEDENT.
The obligation of Coast to make the Loans is subject to the satisfaction,
in the sole discretion of Coast, at or prior to the first advance of funds
hereunder, of each, every and all of the following conditions:
5.1 STATUS OF ACCOUNTS AT CLOSING. No account payable shall be due and
unpaid ninety (90) days past its invoice date except for such accounts payable
being contested in good faith in appropriate proceedings and for which adequate
reserves have been provided.
5.2 MINIMUM AVAILABILITY. Borrower shall have minimum availability
immediately following the initial funding in the amount set forth on the
Schedule.
5.3 LANDLORD WAIVER. Coast shall have received duly executed
(a) landlord waivers and access agreements in form and substance
satisfactory to Coast, in Coast's sole and absolute discretion, and, when deemed
appropriate by Coast, in form for recording in the appropriate recording office,
with respect to all leased locations where Borrower maintains any inventory or
equipment.
(b) mortgagee waivers in form and substance satisfactory to Coast, in
Coast's sole and absolute discretion, and when deemed appropriate by Coast, in
form for recording in the appropriate recording office, with respect to all
mortgaged locations where Borrower maintains any inventory or equipment.
(c) warehouse waivers in form and substance satisfactory to Coast, in
Coast's sole and absolute discretion, and when deemed appropriate by Coast, in
form for recording in the appropriate recording office, with respect to all
warehouse locations where Borrower maintains any inventory or equipment.
5.4 REAL PROPERTY. Coast shall have received duly executed mortgages
and/or deeds of trust in form and substance satisfactory to Coast, in Coast's
sole and absolute discretion, in form for recording in the appropriate recording
office, with respect to any real property owned by Borrower.
5.5 EXECUTED AGREEMENT. Coast shall have received this Agreement duly
executed and in form and substance satisfactory to Coast in its sole and
absolute discretion.
5.6 OPINION OF BORROWER'S COUNSEL. Coast shall have received an opinion
of Borrower's counsel, in form and substance satisfactory to Coast in its sole
and absolute discretion.
5.7 PRIORITY OF COAST'S LIENS. Coast shall have received the results of
"of record" searches satisfactory to Coast in its sole and absolute discretion,
reflecting its Uniform Commercial Code filings against Borrower indicating that
Coast has a perfected, first priority lien in and upon all of the Collateral,
subject only to Permitted Liens.
5.8 INSURANCE. Coast shall have received copies of the insurance binders
or certificates evidencing Borrower's compliance with Section 8.2 hereof,
including lender's loss payee endorsements.
5.9 BORROWER'S EXISTENCE. Coast shall have received copies of Borrower's
articles or certificate of incorporation and all amendments thereto, and a
Certificate of Good Standing, each certified by the Secretary of State of the
state of Borrower's organization, and dated a recent date prior to the Closing
Date, and Coast shall have received Certificates of Foreign Qualification for
Borrower from the Secretary of State of each state wherein the failure to be so
qualified could have a Material Adverse Effect.
5.10 ORGANIZATIONAL DOCUMENTS. Coast shall have received copies of
Borrower's By-laws and all amendments thereto, and Coast shall have received
copies of the resolutions of the board of directors of Borrower, authorizing the
execution and delivery of this Agreement and the other documents contemplated
hereby, and authorizing the transactions contemplated hereunder and thereunder,
and authorizing specific officers of Borrower to execute the same on behalf of
Borrower, in each case certified by the Secretary or other acceptable officer of
Borrower as of the Closing Date.
5.11 TAXES. Coast shall have received evidence from Borrower that
Borrower has complied with all tax withholding and Internal Revenue Service
regulations, in form and substance satisfactory to Coast in its sole and
Coast Business Credit Loan Security Agreement
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absolute discretion.
5.12 DUE DILIGENCE. Coast shall have completed its due diligence with
respect to Borrower.
5.13 SUBORDINATION AGREEMENTS. Subordination Agreements, in form and
substance acceptable to Coast, as required by Coast.
5.14 YEAR 2000 PROBLEM ASSESSMENT CERTIFICATE. Coast shall have received
a certificate from the relevant officer of Borrower to the effect that, as the
result of a reasonable assessment undertaken by Borrower of Borrower's computer
systems, software and applications and after due inquiry made to Borrower's
material suppliers, vendors and customers, Borrower knows of no facts that would
cause Borrower to reasonably believe that the Year 2000 Problem will cause a
Material Adverse Effect.
5.15 OTHER DOCUMENTS AND AGREEMENTS. Coast shall have received such other
agreements, instruments and documents as Coast may require in connection with
the transactions contemplated hereby, all in form and substance satisfactory to
Coast in Coast's sole and absolute discretion, and in form for filing in the
appropriate filing office, including, but not limited to, those documents listed
in Section 5 of the Schedule.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
In order to induce Coast to enter into this Agreement and to make Loans,
Borrower represents and warrants to Coast as follows, and Borrower covenants
that the following representations will continue to be true, and that Borrower
will at all times comply with all of the following covenants:
6.1 EXISTENCE AND AUTHORITY. Borrower is and will continue to be, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Borrower is and will continue to be qualified
and licensed to do business in all jurisdictions in which any failure to do so
would have a Material Adverse Effect. The execution, delivery and performance by
Borrower of this Agreement, and all other documents contemplated hereby (a) have
been duly and validly authorized, (b) are enforceable against Borrower in
accordance with their terms (except as enforcement may be limited by equitable
principles and by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to creditors' rights generally), and (c) do not violate Borrower's
articles or certificate of incorporation, or Borrower's by-laws, or any law or
any material agreement or instrument which is binding upon Borrower or its
property, and (d) do not constitute grounds for acceleration of any material
indebtedness or obligation under any material agreement or instrument which is
binding upon Borrower or its property.
6.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule are all
prior names of Borrower and all of Borrower's present and prior trade names.
Borrower shall give Coast thirty (30) days' prior written notice before changing
its name or doing business under any other name. Borrower has complied, and will
in the future comply, with all laws relating to the conduct of business under a
fictitious business name.
6.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in
the heading to this Agreement is Borrower's chief executive office. In addition,
Borrower has places of business and Collateral is located only at the locations
set forth on the Schedule. Borrower will give Coast at least thirty (30) days'
prior written notice before opening any additional place of business, changing
its chief executive office, or moving any of the Collateral to a location other
than Borrower's Address or one of the locations set forth on the Schedule.
6.4 TITLE TO COLLATERAL; PERMITTED LIENS. Borrower is now, and will at
all times in the future be, the sole owner of all the Collateral, except for
items of Equipment which are leased by Borrower. The Collateral now is and will
remain free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for Permitted Liens. Coast now has, a
first-priority perfected and enforceable security interest in all of the
Collateral, subject only to the Permitted Liens, and Borrower will at all times
defend Coast and the Collateral against all claims of others. None of the
Collateral now is or will be affixed to any real property in such a manner, or
with such intent, as to become a fixture. Borrower is not and will not become a
lessee under any real property lease pursuant to which the lessor may obtain any
rights in any of the Collateral and no such lease now prohibits, restrains,
impairs or will prohibit, restrain or impair Borrower's right to remove any
Collateral from the leased premises. Whenever any Collateral is
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located upon premises in which any third party has an interest (whether as
owner, mortgagee, beneficiary under a deed of trust, lien or otherwise),
Borrower shall, whenever requested by Coast, use its best efforts to cause such
third party to execute and deliver to Coast, in form acceptable to Coast, such
waivers and subordinations as Coast shall specify, so as to ensure that Coast's
rights in the Collateral are, and will continue to be, superior to the rights of
any such third party. Borrower will keep in full force and effect, and will
comply with all the terms of, any lease of real property where any of the
Collateral now or in the future may be located.
6.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the Collateral in
good working condition, and Borrower will not use the Collateral for any
unlawful purpose. Borrower shall file a patent application on all patentable
material and register any trademarks, copyrights and copyrightable material
which comprises the Collateral and is of sufficient value to warrant such
protections, and advise Coast of the acquisition, existence, filing and/or
registration thereof. Borrower will promptly advise coast in writing of any
material loss or damage to the Collateral.
6.6 BOOKS AND RECORDS. Borrower has maintained and will maintain at
Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with GAAP.
6.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial statements
now or in the future delivered to Coast have been, and will be, prepared in
conformity with GAAP (except, in the case of unaudited financial statements, for
the absence of footnotes and subject to normal year-end adjustments) and now and
in the future will fairly reflect the financial condition of Borrower, at the
times and for the periods therein stated. Between the last date covered by any
such statement provided to Coast and the date hereof, there has been no Material
Adverse Effect. Borrower is now and will continue to be Solvent.
6.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has timely
filed, and will timely file, all tax returns and reports required by foreign,
federal, state and local law, and Borrower has timely paid, and will timely pay,
all foreign, federal, state and local taxes, assessments, deposits and
contributions now or in the future owed by Borrower. Borrower may, however,
defer payment of any contested taxes, provided that Borrower (i) in good faith
contests Borrower's obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted, (ii) notifies Coast in writing
of the commencement of, and any material development in, the proceedings, and
(iii) posts bonds or takes any other steps required to keep the contested taxes
from becoming a lien upon any of the Collateral. As of the date hereof, Borrower
is unaware of any claims or adjustments proposed for any of Borrower's prior tax
years which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid, and shall continue to pay all amounts necessary to
fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not and will not withdraw
from participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any such plan which could result
in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.
Borrower shall, at all times, utilize the services of an outside payroll service
providing for the automatic deposit of all payroll taxes payable by Borrower.
6.9 COMPLIANCE WITH LAW. Borrower has complied, and will comply, in all
material respects, with all provisions of all material foreign, federal, state
and local laws and regulations relating to Borrower, including, but not limited
to, the Fair Labor Standards Act, and those relating to Borrower's ownership of
real or personal property, the conduct and licensing of Borrower's business, and
environmental matters.
6.10 LITIGATION. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of Borrower's
knowledge) threatened by or against or affecting Borrower in any court or before
any governmental agency (or any basis therefor known to Borrower) which may
result, either separately or in the aggregate, in a Material Adverse Effect.
Borrower will promptly inform Coast in writing of any claim, proceeding
litigation or investigation in the future threatened or instituted by or against
Borrower involving an amount set forth on the Schedule.
6.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for
lawful business purposes. Borrower is not purchasing or carrying any "margin
stock" (as defined in Regulation U of the Board of Governors of the Federal
Reserve System) and no part of the proceeds of any Loan
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will be used to purchase or carry any "margin stock" or to extend credit to
others for the purpose of purchasing or carrying any "margin stock."
6.12 YEAR 2000 COMPLIANCE. As the result of a reasonable assessment
undertaken by Borrower of Borrower's computer systems, software and applications
and after due inquiry made of Borrower's material suppliers, vendors and
customers, Borrower is informed and reasonably believes that the Year 2000
Problem will not result in a Material Adverse Effect.
6.13 FCC LICENSES. All FCC licenses currently held by Borrower are
validly issued. Borrower has taken all material actions and performed all of its
material obligations that are necessary to maintain the FCC licenses without
adverse modification or impairment. No event has occurred to the best of
Borrower's knowledge or in the exercise of reasonable due diligence Borrower
would have known that will result in revocation, suspension, impairment,
termination, forfeiture, revocation, adverse modification, or non-renewal of any
FCC license. To the best of Borrower's knowledge, the FCC licenses will be
renewed for the full term of each. Borrower has filed all information and
documents required by the FCC rules and will continue to do so during the Term
hereof.
7. RECEIVABLES.
7.1 REPRESENTATIONS RELATING TO RECEIVABLES. Borrower represents and
warrants to Coast as follows: Each Receivable with respect to which Loans are
requested by Borrower shall, on the date each Loan is requested and made,
represent an undisputed bona fide existing unconditional obligation of the
Account Debtor created by the sale, delivery and acceptance of goods or the
rendition of services in the ordinary course of Borrower's business.
7.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE. Borrower
represents and warrants to Coast as follows: All statements made and all unpaid
balances appearing in all invoices, instruments and other documents evidencing
the Receivables are and shall be true and correct and all such invoices,
instruments and other documents and all of Borrower's books and records are and
shall be genuine and in all respects what they purport to be. All sales and
other transactions underlying or giving rise to each Receivable shall fully
comply with all applicable laws and governmental rules and regulations. All
signatures and endorsements on all documents, instruments, and agreements
relating to all Receivables are and shall be genuine, and all such documents,
instruments and agreements are and shall be legally enforceable in accordance
with their terms.
7.3 SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES. Borrower shall
deliver to Coast via facsimile, unless otherwise directed by Coast, at such
locations and at such intervals as Coast may request, transaction reports and
loan requests, schedules of Receivables, and schedules of collections, all on
Coast's standard forms; provided, however, that Borrower's failure to execute
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and deliver the same shall not affect or limit Coast's security interest and
other rights in all of Borrower's Receivables, nor shall Coast's failure to
advance or lend against a specific Receivable affect or limit Coast's security
interest and other rights therein. Loan requests received after 10:30 A.M. Los
Angeles, California time, will not be considered by Coast until the next
Business Day. Together with each such schedule, or later if requested by Coast,
Borrower shall furnish Coast with copies (or, at Coast's request, originals) of
all contracts, orders, invoices, and other similar documents, and all original
shipping instructions, delivery receipts, bills of lading, and other evidence of
delivery, for any goods the sale or disposition of which gave rise to such
Receivables, and Borrower warrants the genuineness of all of the foregoing.
Borrower shall also furnish to Coast an aged accounts receivable trial balance
in such form and at such intervals as Coast shall request. In addition, Borrower
shall deliver to Coast the originals of all instruments, chattel paper, security
agreements, guarantees and other documents and property evidencing or securing
any Receivables, upon receipt thereof and in the same form as received, with all
necessary endorsements, all of which shall be with recourse. Borrower shall also
provide Coast with copies of all credit memos as and when requested by Coast.
7.4 COLLECTION OF RECEIVABLES. Borrower shall have the right to collect
all Receivables, unless and until an Event of Default has occurred. Borrower
shall hold all payments on, and proceeds of, Receivables in trust for Coast, and
Borrower shall deliver all such payments and proceeds to Coast within one (1)
Business Day after receipt by Borrower, in their original form, duly endorsed to
Coast, to be applied to the Obligations in such order as Coast shall determine.
Coast may, in its discretion, require that all proceeds of Collateral be
deposited by Borrower into a lockbox account, or such other "blocked account" as
Coast
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may specify, pursuant to a blocked account agreement in such form as Coast may
specify. Coast or its designee may, at any time, notify Account Debtors that
Coast has been granted a security interest in the Receivables.
7.5 REMITTANCE OF PROCEEDS. All proceeds arising from the disposition of
any Collateral shall be delivered to Coast within one (1) Business Day after
receipt by Borrower, in their original form, duly endorsed to Coast, to be
applied to the Obligations in such order as Coast shall determine. Borrower
agrees that it will not commingle proceeds of Collateral with any of Borrower's
other funds or property, but will hold such proceeds separate and apart from
such other funds and property and in an express trust for Coast. Nothing in this
Section limits the restrictions on disposition of Collateral set forth elsewhere
in this agreement.
7.6 DISPUTES. Borrower shall notify Coast promptly of all disputes or
claims relating to Receivables. Borrower shall not forgive (completely or
partially), compromise or settle any Receivable for less than payment in full,
or agree to do any of the foregoing, except that Borrower may do so, provided
that: (a) Borrower does so in good faith, in a commercially reasonable manner,
in the ordinary course of business, and in arm's length transactions, which are
reported to Coast on the regular reports provided to Coast; (b) no Default or
Event of Default has occurred and is continuing; and (c) taking into account all
such discounts settlements and forgiveness, the total outstanding Loans will not
exceed the Credit Limit. Coast may, at any time after the occurrence of an Event
of Default, settle or adjust disputes or claims directly with Account Debtors
for amounts and upon terms which Coast considers advisable in its reasonable
credit judgment and, in all cases, Coast shall credit Borrower's Loan account
with only the net amounts received by Coast in payment of any Receivables.
7.7 RETURNS. Provided no Event of Default has occurred and is continuing,
if any Account Debtor returns any Inventory to Borrower in the ordinary course
of its business, Borrower shall promptly determine the reason for such return
and promptly issue a credit memorandum to the Account Debtor in the appropriate
amount. In the event any attempted return occurs after the occurrence of any
Event of Default, Borrower shall (a) hold the returned Inventory in trust for
Coast, (b) segregate all returned Inventory from all of Borrower's other
property, (c) conspicuously label the returned Inventory as subject to Coast's
security interest, and (d) immediately notify Coast of the return of any
Inventory, specifying the reason for such return, the location and condition of
the returned Inventory, and on Coast's request deliver such returned Inventory
to Coast.
7.8 VERIFICATION. Coast may, from time to time, verify directly with the
respective Account Debtors the validity, amount and other matters relating to
the Receivables, by means of mail, telephone or otherwise, either in the name of
Borrower or Coast or such other name as Coast may choose.
7.9 NO LIABILITY. Coast shall not under any circumstances be responsible
or liable for any shortage or discrepancy in, damage to, or loss or destruction
of, any goods, the sale or other disposition of which gives rise to a
Receivable, or for any error, act, omission or delay of any kind occurring in
the settlement, failure to settle, collection or failure to collect any
Receivable, or for settling any Receivable in good faith for less than the full
amount thereof, nor shall Coast be deemed to be responsible for any of
Borrower's obligations under any contract or agreement giving rise to a
Receivable. Nothing herein shall, however, relieve Coast from liability for its
own gross negligence or willful misconduct.
8. ADDITIONAL DUTIES OF THE BORROWER.
8.1 FINANCIAL AND OTHER COVENANTS. Borrower shall at all times comply
with the financial and other covenants set forth in the Schedule.
8.2 INSURANCE. Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Coast, in such form and amounts as Coast may
reasonably require, and Borrower shall provide evidence of such insurance to
Coast, so that Coast is satisfied that such insurance is, at all times, in full
force and effect. All liability insurance policies of Borrower shall name Coast
as an additional insured, and all property casualty and related insurance
policies of Borrower shall name Coast as a loss payee thereon and Borrower shall
cause a lender's loss payee endorsement in form reasonably acceptable to Coast.
Upon receipt of the proceeds of any such insurance, Coast shall apply such
proceeds in reduction of the Obligations as Coast shall determine in its sole
discretion, except that, provided no Default or Event or Default has occurred
and is continuing, Coast shall release
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to Borrower insurance proceeds with respect to Equipment totaling less than the
amount set forth in Section 8 of the Schedule, which shall be utilized by
Borrower for the replacement of the Equipment with respect to which the
insurance proceeds were paid. Coast may require reasonable assurance that the
insurance proceeds so released will be so used. If Borrower fails to provide or
pay for any insurance, Coast may, but is not obligated to, obtain the same at
Borrower's expense. Borrower shall promptly deliver to Coast copies of all
reports made to insurance companies.
8.3 REPORTS. Borrower, at its expense, shall provide Coast with the
written reports set forth in Section 8 of the Schedule, and such other written
reports with respect to Borrower (including budgets, sales projections,
operating plans and other financial documentation), as Coast shall from time to
time reasonably specify.
8.4 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times but not
less frequently than quarterly and on one (1) Business Day's notice, Coast, or
its agents, shall have the right to perform Audits. Coast shall take reasonable
steps to keep confidential all confidential information obtained in any Audit,
but Coast shall have the right to disclose any such information to its auditors,
regulatory agencies, and attorneys, and pursuant to any subpoena or other legal
process. The Audits shall be at Borrower's expense and the charge for the Audits
shall be Seven Hundred Fifty Dollars ($750) per person per day (or such higher
amount as shall represent Coast's then current standard charge for the same),
plus reasonable out-of-pocket expenses. Borrower will not enter into any
agreement with any accounting firm, service bureau or third party to store
Borrower's books or records at any location other than Borrower's Address,
without first notifying Coast of the same and obtaining the written agreement
from such accounting firm, service bureau or other third party to give Coast the
same rights with respect to access to books and records and related rights as
Coast has under this Loan Agreement. Borrower shall also take all necessary
steps to assure that this material accounting and software systems and
applications, and those of its accounting firm, service bureau or any other
third party vendor or supplier, will, on a timely basis, adequately and
completely address the Year 2000 Problem in all material respects.
8.5 NEGATIVE COVENANTS. Borrower shall not, without Coast's prior written
consent, do any of the following:
(a) merge or consolidate with another entity, except in a transaction
in which (i) the owners of the Borrower hold at least fifty percent (50%) of the
ownership interest in the surviving entity immediately after such merger or
consolidation, (ii) the Borrower is the surviving entity, and (ii) does not
violate any FCC rule;
(b) acquire any assets, except (i) in the ordinary course of business,
or (ii) in a transaction or a series of related transactions not involving the
payment of an aggregate amount in excess of the amount set forth in Section 8 of
the Schedule;
(c) enter into any material transaction outside the ordinary course of
business;
(d) sell or transfer any Collateral, except for the sale of finished
Inventory in the ordinary course of Borrower's business, and except for the sale
of obsolete or unneeded Equipment in the ordinary course of business;
(e) store any Inventory or other Collateral with any warehouseman or
other third party;
(f) sell any Inventory on a sale-or-return, guaranteed sale,
consignment, or other contingent basis;
(g) make any loans of any money or other assets, except (i) advances
to customers or suppliers in the ordinary course of business, (ii) travel
advances, employee relocation loans and other employee loans and advances in the
ordinary course of business, and (iii) loans to employees, officers and
directors for the purpose of purchasing equity securities of the Borrower;
(h) incur any debts, outside the ordinary course of business, which
would have a Material Adverse Effect;
(i) guarantee or otherwise become liable with respect to the
obligations of another party or entity;
(j) pay or declare any dividends or distributions on the ownership
interests in Borrower (except for dividends or distributions payable solely in
stock form of ownership interests in Borrower);
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Coast Business Credit Loan and Security Agreement
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(k) make any change in Borrower's capital structure which would have a
Material Adverse Effect; or
(l) dissolve or elect to dissolve.
Transactions permitted by the foregoing provisions of this Section are only
permitted if no Default or Event of Default is continuing or would occur as a
result of such transaction.
8.6 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against Coast with respect to any Collateral or relating to
Borrower, Borrower shall, without expense to Coast, make available Borrower and
its officers, employees and agents and Borrower's books and records, to the
extent that Coast may deem them reasonably necessary in order to prosecute or
defend any such suit or proceeding.
8.7 FURTHER ASSURANCES. Borrower agrees, at its expense, on request by
Coast, to execute all documents and take all actions, as Coast, may deem
reasonably necessary or useful in order to perfect and maintain Coast's
perfected security interest in the Collateral, and in order to fully consummate
the transactions contemplated by this Agreement.
8.8 PROTECTION OF FCC LICENSES. Borrower will use commercially
reasonable efforts and perform all of its material obligations necessary to
maintain the FCC licenses without adverse modification or impairment. Borrower
shall not knowingly permit any event to occur that will result in revocation,
rescission, cancellation, suspension, impairment, termination, forfeiture,
adverse modification, or non-renewal of any FCC license. Borrower will file all
information and documents required by the FCC rules to maintain and renew the
licenses throughout the Term hereof.
9. TERM
9.1 MATURITY DATE. This Agreement shall continue in effect until the
Maturity Date; provided that the Maturity Date shall automatically be extended,
and this Agreement shall automatically and continuously renew, for successive
additional terms of one year each, unless one party gives written notice to the
other, not less than ninety (90) days prior to the Maturity Date or the next
Renewal Date, that such party elects to terminate this Agreement effective on
the Maturity Date or such next Renewal Date. If this Agreement is renewed under
this Section 9.1, Borrower shall pay to Coast a Renewal Fee in the amount shown
in Section 3 of the Schedule. The Renewal Fee shall be due and payable on the
Renewal Date and thereafter shall bear interest at a rate equal to the rate
applicable to the Receivable Loans.
9.2 EARLY TERMINATION. This Agreement may be terminated prior to the
Maturity Date as follows: (a) by Borrower, effective three (3) Business Days
after written notice of termination is given to Coast; or (b) by Coast at any
time after the occurrence of an Event of Default, without notice, effective
immediately. Notwithstanding the preceding sentence, Coast shall use reasonable
good faith efforts to provide notice of termination, however, Coast's failure to
give such notice shall not affect any of Coast's rights and remedies pursuant to
this Agreement. If this Agreement is terminated by Borrower or by Coast under
this Section 9.2, Borrower shall pay to Coast an Early Termination Fee in the
amount shown in Section 3 of the Schedule. The Early Termination Fee shall be
due and payable on the effective date of termination and thereafter shall bear
interest at a rate equal to the rate applicable to the Collections Loans and
Term Loan.
9.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether or
not all or any part of such Obligations are otherwise then due and payable.
Notwithstanding any termination of this Agreement, all of Coast's security
interests in all of the Collateral and all of the terms and provisions of this
Agreement shall continue in full force and effect until all Obligations have
been paid and performed in full; provided that, without limiting the fact that
Loans are subject to the discretion of Coast, Coast may, in its sole discretion,
refuse to make any further Loans after termination. No termination shall in any
way affect or impair any right or remedy of Coast, nor shall any such
termination relieve Borrower of any Obligation to Coast, until all of the
Obligations have been paid and performed in full. Upon payment and performance
in full of all the Obligations and termination of this Agreement, Coast shall
promptly deliver to Borrower termination statements, requests for reconveyances
and such other documents as may be required to fully terminate Coast's security
interests.
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10. EVENTS OF DEFAULT AND REMEDIES.
10.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and Borrower shall
give Coast prompt written notice thereof:
(a) Any warranty, representation, statement, report or certificate
made or delivered to Coast by Borrower or any of Borrower's officers, employees
or agents, now or in the future, shall be untrue or misleading and results in a
Material Adverse Effect; or
(b) Borrower shall fail to pay when due any Loan or any interest
thereon or any other monetary Obligation; or
(c) the total Loans and other Obligations outstanding at any time
shall exceed the Credit Limit; or
(d) Borrower shall fail to deliver the proceeds of Collateral to
Coast as provided in Section 7.5 above, or shall fail to give Coast access to
its books and records or Collateral as provided in Section 8.4 above, or shall
breach any negative covenant set forth in Section 8.5 above; or
(e) Borrower shall fail to comply with the financial covenants (if
any) set forth in the Schedule or shall fail to perform any other non-monetary
Obligation which by its nature cannot be cured; or
(f) Borrower shall fail to perform any other non-monetary Obligation,
which failure is not cured within five (5) Business Days after the date due; or
(g) Any levy, assessment, attachment, seizure, lien or encumbrance
(other than a Permitted Lien) is made on all or any part of the Collateral which
is not cured within ten (10) days after the occurrence of the same; or
(h) any default or event of default occurs under any obligation
secured by a Permitted Lien, which is not cured within any applicable cure
period or waived in writing by the holder of the Permitted Lien, unless
contested in good faith by Borrower, or
(i) Borrower breaches any material contract or obligation, which has
or may reasonably be expected to have a Material Adverse Effect; or
(j) Dissolution, termination of existence, insolvency or business
failure of Borrower or any guarantor of any of the Obligations; or appointment
of a receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any
proceeding by Borrower or any guarantor of any of the Obligations under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in the effect; or
(k) the commencement of any proceeding against Borrower or any
guarantor of any of the Obligations under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect, which is (i) not
timely controverted, or (ii) not cured by the dismissal thereof within
forty-five (45) days after the date commenced; or
(l) revocation or termination of, or limitation or denial of
liability upon, any guaranty of the Obligations or any attempt to do any of the
foregoing, or commencement of proceedings by any guarantor of any of the
Obligations under any bankruptcy or insolvency law; or
(m) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset of any kind pledged by any third party to secure any or all of
the Obligations, or any attempt to do any of the foregoing, or commencement of
proceedings by or against any such third party under any bankruptcy or
insolvency law; or
(n) Borrower or any guarantor of any of the Obligations makes any
payment on account of any indebtedness or obligation which has been subordinated
to the Obligations, other than as permitted in the applicable subordination
agreement, or if any Person who has subordinated such indebtedness or
obligations terminates or in any way limits his subordination agreement; or
(o) Except as permitted under Section 8.5(a), Borrower shall suffer
or experience any Change of Control without Coast's prior written consent, which
consent shall be in the discretion of Coast in the exercise of its reasonable
business judgment; or
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(p) Borrower shall generally not pay its debts as they become due, or
Borrower shall conceal, remove or transfer any part of its property, with intent
to hinder, delay or defraud its creditors, or make or suffer any transfer of any
of its property which may be fraudulent under any bankruptcy, fraudulent
conveyance or similar law; or
(q) Borrower shall fail to file a patent application on any
patentable material or register any trademark, copyright or copyrightable
material which is a part of the Collateral and is of sufficient value to
warrant such protections, or advise Coast of the acquisition, creation,
existence, filing on or registration of any such Collateral; or
(r) Revocation, rescission, cancellation, suspension, impairment,
termination, forfeiture, material adverse modification, or non-renewal of any
FCC license, or renewal on terms that result in a Material Adverse Effect of the
commercial value thereof, or any proceedings shall have been instituted by or
have been commenced before any court, the FCC, or any other regulatory body that
are likely to result in revocation, rescission, cancellation, suspension,
impairment, termination, forfeiture, material adverse modification of any FCC
license or result in such modification of any FCC license that is likely to have
a Material Adverse Effect.
(s) there shall be any Material Adverse Effect.
Coast may cease making any Loans or extending any credit hereunder during any of
the above cure periods.
10.2 REMEDIES. Upon the occurrence, and during the continuance, of any
Event of Default, Coast, at its option, and without notice or demand of any kind
(all of which are hereby expressly waived by Borrower), may do any one or more
of the following:
(a) Cease making Loans or otherwise extending credit to Borrower
under this Agreement or any other document or agreement;
(b) Accelerate and declare all or any part of the Obligations to be
immediately due, payable and performable, notwithstanding any deferred or
installment payments allowed by any instrument evidencing or relating to any
Obligation;
(c) Take possession of any or all of the Collateral wherever it may
be found, and for that purpose Borrower hereby authorizes Coast without judicial
process to enter onto any of Borrower's premises without interference to search
for, take possession of, keep, store or remove any of the Collateral, and remain
on the premises or cause a custodian to remain on the premises in exclusive
control thereof, without charge for so long as Coast deems it reasonably
necessary in order to complete the enforcement of its rights under this
Agreement or any other agreement; provided, however, that should Coast seek to
-----------------
take possession of any of the Collateral by Court process, Borrower hereby
irrevocably waives:
(i) any bond and any surety or security relating thereto
required by any statute, court rule or otherwise as an incident to such
possession;
(ii) any demand for possession prior to the commencement of any
suit or action to recover possession thereof; and
(iii) any requirement that Coast retain possession of, and not
dispose of, any such Collateral until after trial or final judgment;
(d) Require Borrower to assemble any or all of the Collateral and
make it available to Coast at Borrower's Address, and to remove the Collateral
to such locations as Coast may deem advisable;
(e) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Coast shall have the right to use Borrower's premises,
vehicles, hoists, lifts, cranes, equipment and all other property without
charge. Coast is hereby granted a license or other right to use, without charge,
Borrower's 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 Borrower's
rights under all licenses and all franchise agreements shall inure to Coast's
benefit;
(f) Sell, lease or otherwise dispose of any of the Collateral, in its
condition at the time Coast obtains
14
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
possession of it or after further manufacturing, processing or repair, at one or
more public and/or private sales, in lots or in bulk, for cash, exchange or
other property, or on credit, and to adjourn any such sale from time to time
without notice other than oral announcement at the time scheduled for sale.
Coast shall have the right to conduct such disposition on Borrower's premises
without charge, for such time or times as Coast deems reasonable, or on Coast's
premises, or elsewhere and the Collateral need not be located at the place of
disposition. Coast may directly or through any affiliated company purchase or
lease any Collateral at any such public disposition, and if permissible under
applicable law, at any private disposition. Any sale or other disposition of
Collateral shall not relieve Borrower of any liability Borrower may have if any
Collateral is defective as to title or physical condition or otherwise at the
time of sale;
(g) Demand payment of, and collect any Receivables and General
Intangibles comprising Collateral and, in connection therewith, Borrower
irrevocably authorizes Coast to endorse or sign Borrower's name on all
collections, receipts, instruments and other documents, to take possession of
and open mail addressed to Borrower and remove therefrom payments made with
respect to any item of the Collateral or proceeds thereof, and, in Coast's sole
discretion, to grant extensions of time to pay, compromise claims and settle
Receivables and the like for less than face value; and
(h) Demand and receive possession of any of Borrower's federal and
state income tax returns and the books and records utilized in the preparation
thereof or referring thereto.
All reasonable attorneys' fees, expenses, costs, liabilities and obligations
incurred by Coast (including reasonable attorneys' fees and expenses incurred in
connection with bankruptcy) with respect to the foregoing shall be due from the
Borrower to Coast on demand. Coast may charge the same to Borrower's loan
account, and the same shall thereafter bear interest at the same rate as is
applicable to the Loans. Without limiting any of Coast's rights and remedies,
from and after the occurrence of any Event of Default, the interest rate
applicable to the Obligations shall be increased by an additional three percent
per annum.
10.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and
Coast agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable:
(a) Notice of the sale is given to Borrower at least seven (7) days
prior to the sale, and, in the case of a public sale, notice of the sale is
published at least seven (7) days before the sale in a newspaper of general
circulation in the county where the sale is to be conducted;
(b) Notice of the sale describes the collateral in general,
non-specific terms;
(c) The sale is conducted at a place designated by Coast, with or
without the Collateral being present;
(d) The sale commences at any time between 8:00 a.m. and 6:00 p.m.
Los Angeles, California time;
(e) Payment of the purchase price in cash or by cashier's check or
wire transfer is required; and
(f) With respect to any sale of any of the Collateral, Coast may (but
is not obligated to) direct any prospective purchaser to ascertain directly from
Borrower any and all information concerning the same.
Coast shall be free to employ other methods of noticing and selling the
Collateral, in its discretion, if they are commercially reasonable. However,
notwithstanding any other provision of this Agreement, and foreclosure on, sale,
transfer or other disposition of, or the exercise of any right to vote or
consent with respect to, any of the Collateral as provided herein or any other
action taken or proposed to be taken by Coast hereunder which would affect the
operational, voting or other control of any entity holding an FCC License shall
be made in accordance with the Communications Act, the terms of each FCC
License, and any applicable FCC Rules, including any requirement that there be a
public or private sale.
10.4 POWER OF ATTORNEY. Borrower grants to Coast an irrevocable power of
attorney coupled with an interest, authorizing and permitting Coast (acting
through any of its employees, attorneys or agents) at any time, at its option,
but without obligation, with or without notice to Borrower,
15
Coast Business Credit Loan and Security Agreement
-------------------------------------------------------------------------------
and at Borrower's expense, to do any or all of the following, in Borrower's name
or otherwise, but Coast agrees to exercise the following powers in a
commercially reasonable manner:
(a) Execute on behalf of Borrower any documents that Coast may, in its
sole discretion, deem advisable in order to perfect and maintain Coast's
security interest in the Collateral, or in order to exercise a right of Borrower
or Coast, or in order to fully consummate all the transactions contemplated
under this Agreement, and all other present and future agreements;
(b) Execute on behalf of Borrower any document exercising,
transferring or assigning any option to purchase, sell or otherwise dispose of
or to lease (as lessor or lessee) any real or personal property which is part of
Coast's Collateral or in which Coast has an interest;
(c) Execute on behalf of Borrower, any invoices relating to any
Receivable, any draft against any Account Debtor and any notice to any Account
Debtor, any proof of claim in bankruptcy, any Notice of Lien, claim of
mechanic's, materialman's or other lien, or assignment or satisfaction of
mechanic's, materialman's or other lien;
(d) Take control in any manner of any cash or non-cash items of
payment or proceeds of Collateral; endorse the name of Borrower upon
any instruments, or documents, evidence of payment or Collateral that may come
into Coast's possession;
(e) Endorse all checks and other forms of remittances received by
Coast;
(f) Pay, contest or settle any lien, charge, encumbrance, security
interest and adverse claim in or to any of the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same;
(g) Grant extensions of time to pay, compromise claims and settle
Receivables and General Intangibles for less than face value and execute all
releases and other documents in connection therewith;
(h) Pay any sums required on account of Borrower's taxes or to secure
the release of any liens therefor, or both;
(i) Settle and adjust, and give releases of, any insurance claim that
relates to any of the Collateral and obtain payment therefor;
(j) Instruct any third party having custody or control of any books or
records belonging to, or relating to, Borrower to give Coast the same rights of
access and other rights with respect thereto as Coast has under this Agreement;
and
(k) Take any action or pay any sum required of Borrower pursuant to
this Agreement and any other present or future agreements.
Any and all sums paid and any and all costs, expenses, liabilities,
obligations and reasonable attorneys' fees incurred by Coast (including
reasonable attorneys' fees and expenses incurred pursuant to bankruptcy) with
respect to the foregoing shall be added to and become part of the Obligations,
and shall be payable on demand. Coast may charge the foregoing to Borrower's
loan account and the foregoing shall thereafter bear interest at the same rate
applicable to the Receivable Loans. In no event shall Coast's rights under the
foregoing power of attorney or any of Coast's other rights under this Agreement
be deemed to indicate that Coast is in control of the business, management or
properties of Borrower. Borrower shall pay, indemnify, defend, and hold Coast
and each of its officers, directors, employees, counsel, agents, and attorneys-
in-fact (each, an "Indemnified Person") harmless (to the fullest extent
permitted by law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, and damages, and all attorneys fees and
disbursements and other costs and expenses actually incurred in connection
therewith (as and when they are incurred and irrespective of whether suit is
brought), at any time asserted against, imposed upon, or incurred by any of them
in connection with or as a result of or related to the execution, delivery,
enforcement, performance, and administration of this Agreement and any other
Loan Documents or the transactions contemplated herein, and with respect to any
investigation, litigation, or proceeding related to this Agreement, any other
Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event or circumstance in any manner related thereto (all the
foregoing, collectively, the "Indemnified Liabilities"). Borrower shall have no
obligation to any Indemnified
16
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
Person hereunder with respect to any Indemnified Liability that a court of
competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Indemnified Person. This provision
shall survive the termination of this Agreement and the repayment of the
Obligations.
10.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any
sale of the Collateral shall be applied by Coast first to the costs, expenses,
liabilities, obligations and reasonable attorneys' fees incurred by Coast in the
exercise of its rights under this Agreement, second to the interest due upon any
of the Obligations, and third to the principal of the Obligations, in such order
as Coast shall determine in its sole discretion. Any surplus shall be paid to
Borrower or other persons legally entitled thereto; Borrower shall remain liable
to Coast for any deficiency. If, Coast, in its sole discretion, directly or
indirectly enters into a deferred payment or other credit transaction with any
purchaser at any sale of Collateral, Coast shall have the option, exercisable at
any time, in its sole discretion, of either reducing the Obligations by the
principal amount of purchase price or deferring the reduction of the Obligations
until the actual receipt by Coast of the cash therefor.
10.6 COOPERATION. If an Event of Default shall have occurred and is
continuing, each Borrower shall take any action which Coast may request in the
exercise of its rights and remedies under this Agreement, including, but not
limited to, the execution and delivery of any documents reasonably requested by
Coast, in order to transfer and assign to Coast or to one or more third parties
as Coast may designate, including but not limited to, a receiver or trustee or
to a combination of the foregoing, the Collateral for the purposes of a public
or private sale. Upon the occurrence and during the continuance of an Event of
Default, each Borrower shall further use its best efforts to assist in obtaining
the approval of the FCC (and that required by any other Governmental Authority)
for any action or transaction contemplated by this Agreement, including without
limitation, the preparation, execution and filing with the FCC of the assignor's
or transferor's portion of any application or applications for consent to the
assignment of any FCC License or transfer of control of any entity holding or
controlling any FCC License as may be necessary or appropriate under the FCC
Rules. Each Borrower further agrees that, because of the unique nature of its
undertaking provided for herein, the same may be specifically enforced, and
Borrower hereby waives, and agrees to waive, any claim or defense that Coast
would have an adequate remedy at law for the breach of this undertaking and any
requirement for the posting of a bond or other security. Each Borrower hereby
agrees that in the event that such Borrower has been given five (5) Business
Days prior written notice and such Borrower has not responded by executing any
such applications or other instruments, the clerk of the court of any court of
competent jurisdiction may execute in the place of such Borrower any application
or other instrument necessary as appropriate for the obtaining of such consent.
The rights and remedies provided for herein shall not be deemed to limit any
other rights and/or remedies of Coast available under applicable law and
consistent.
10.7 REMEDIES CUMULATIVE. In addition to the rights and remedies set
forth in this Agreement, Coast shall have all the other rights and remedies
accorded a secured party in equity, under the Code, and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between Coast and Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise by
Coast of one or more of its rights or remedies shall not be deemed an election,
nor bar Coast from subsequent exercise or partial exercise of any other rights
or remedies. The failure or delay of Coast to exercise any rights or remedies
shall not operate as a waiver thereof, but all rights and remedies shall
continue in full force and effect until all of the Obligations have been
indefeasibly paid and performed.
11. GENERAL PROVISIONS.
11.1 INTEREST COMPUTATION. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by Coast (including
proceeds of Receivables and payment of the Obligations in full) shall be deemed
applied by Coast on account of the Obligations three (3) Business Days after
receipt by Coast of immediately available funds, and, for purposes of the
foregoing, any such funds received after 10:30 AM Los Angeles, California time,
on any day shall be deemed received on the next Business Day. Coast shall be
entitled to charge Borrower's account for such three (3) Business Days of
"clearance" or "float" at the rate(s) set forth in Section 3 of the Schedule on
all checks, wire transfers and other items received by Coast, regardless of
whether such three (3) Business Days of "clearance" or "float" actually occur,
and shall be deemed to be the equivalent of charging
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
three (3) Business Days of interest on such collections. This across-the-board
three (3) Business Day clearance or float charge on all collections is
acknowledged by the parties to constitute an integral aspect of the pricing of
Coast's financing of Borrower. Coast shall not, however, be required to credit
Borrower's account for the amount of any item of payment which is unsatisfactory
to Coast in its sole discretion, and Coast may charge Borrower's loan account
for the amount of any item of payment which is returned to Coast unpaid.
11.2 APPLICATION OF PAYMENTS. Subject to Section 10.5 hereof, all
payments with respect to the Obligations may be applied, and in Coast's sole
discretion reversed and re-applied, to the Obligations, in such order and manner
as Coast shall determine in its sole discretion.
11.3 CHARGES TO ACCOUNTS. Coast may, in its discretion, require that
Borrower pay monetary Obligations in cash to Coast, or charge them to Borrower's
Loan account, in which event they will bear interest from the date due to the
date paid at the same rate applicable to the Loans.
11.4 MONTHLY ACCOUNTINGS. Coast shall provide Borrower monthly with an
account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Coast), unless Borrower
notifies Coast in writing to the contrary within thirty (30) days after each
account is rendered, describing the nature of any alleged errors or omissions.
11.5 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service or by regular first-class mail, facsimile or certified mail return
receipt requested, addressed to Coast or Borrower at the addresses shown in the
heading to this Agreement, or at any other address designated in writing by one
party to the other party. Notices to Coast shall be directed to the Commercial
Finance Division, to the attention of the Division Manager or the Division
Credit Manager. All notices shall be deemed to have been given upon delivery in
the case of notices personally delivered, faxed (at time of confirmation of
transmission), or at the expiration of one (1) Business Day following delivery
to the private delivery service, or two (2) Business Days following the deposit
thereof in the United States mail, with postage prepaid.
11.6 SEVERABILITY. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.
11.7 INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between Borrower and Coast and supersede
all prior and contemporaneous negotiations and oral representations and
agreements, all of which are merged and integrated in this Agreement. There are
---------
no oral understandings, representations or agreements between the parties which
-------------------------------------------------------------------------------
are not set forth in this Agreement or in other written agreements signed by the
--------------------------------------------------------------------------------
parties in connection herewith.
------------------------------
11.8 WAIVERS. The failure of Coast at any time or times to require
Borrower to strictly comply with any of the provisions of this Agreement or any
other present or future agreement between Borrower and Coast shall not waive or
diminish any right of Coast later to demand and receive strict compliance
therewith. Any waiver of any Default shall not waive or affect any other
Default, whether prior or subsequent, and whether or not similar. None of the
provisions of this Agreement or any other agreement now or in the future
executed by Borrower and delivered to Coast shall be deemed to have been waived
by any act or knowledge of Coast or its agents or employees, but only by a
specific written waiver signed by an authorized officer of Coast and delivered
to Borrower. Borrower waives demand, protest, notice of protest and notice of
default or dishonor, notice of payment and nonpayment, release, compromise,
settlement, extension or renewal of any commercial paper, instrument, account,
General Intangible, document or guaranty at any time held by Coast on which
Borrower is or may in any way be liable, and notice of any action taken by
Coast, unless expressly required by this Agreement.
11.9 NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Coast, nor any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Coast shall be liable for any claims, demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower
or any other party through the
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
ordinary negligence of Coast, or any of its directors, officers, employees,
agents, attorneys or any other Person affiliated with or representing Coast, but
nothing herein shall relieve Coast from liability for its own gross negligence
or willful misconduct.
11.10 AMENDMENT. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by Borrower and a duly
authorized officer of Coast.
11.11 TIME OF ESSENCE. Time is of the essence in the performance by
Borrower of each and every obligation under this Agreement.
11.12 ATTORNEYS FEES, COSTS AND CHARGES. Borrower shall reimburse Coast
for all reasonable attorneys' fees (including reasonable attorneys' fees and
expenses incurred pursuant to bankruptcy) and all filing, recording, search,
title insurance, appraisal, audit, and other costs incurred by Coast, pursuant
to, or in connection with, or relating to this Agreement (whether or not a
lawsuit is filed), including, but not limited to, any reasonable attorneys' fees
and costs (including reasonable attorneys' fees and expenses incurred pursuant
to bankruptcy) Coast incurs in order to do the following: prepare and negotiate
this Agreement and the documents relating to this Agreement; obtain legal advice
in connection with this Agreement or Borrower; enforce, or seek to enforce, any
of its rights; prosecute actions against, or defend actions by, Account Debtors;
commence, intervene in, or defend any action or proceeding; initiate any
complaint to be relieved of the automatic stay in bankruptcy; file or prosecute
any probate claim, bankruptcy claim, third-party claim, or other claim; examine,
audit, copy, and inspect any of the Collateral or any of Borrower's books and
records; protect, obtain possession of, lease, dispose of, or otherwise enforce
Coast's security interest in, the Collateral; and otherwise represent Coast in
any litigation relating to Borrower. If either Coast or Borrower files any
lawsuit against the other predicated on a breach of this Agreement, the
prevailing party in such action shall be entitled to recover its costs and
reasonable attorneys' fees (including reasonable attorneys' fees and expenses
incurred pursuant to bankruptcy), including (but not limited to) attorneys' fees
and costs incurred in the enforcement of, execution upon or defense of any
order, decree, award or judgment. Borrower shall also pay Coast's standard
charges for returned checks and for wire transfers, in effect from time to time.
All attorneys' fees, costs and charges (including attorneys' fees and expenses
incurred pursuant to bankruptcy) and other fees, costs and charges to which
Coast may be entitled pursuant to this Agreement may be charged by Coast to
Borrower's loan account and shall thereafter bear interest at the same rate as
the Receivable Loans.
11.13 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of Borrower and Coast; provided,
--------
however, that Borrower may not assign or transfer any of its rights under this
-------
Agreement without the prior written consent of Coast, and any prohibited
assignment shall be void. No consent by Coast to any assignment shall release
Borrower from its liability for the Obligations. Coast may assign its rights and
delegate its duties hereunder by the sale of assignment or participation
interests, all without the consent of Borrower. Coast reserves the right to
syndicate all or a portion of the transaction created herein or sell, assign
transfer, negotiate, or grant participations in all or any part of, or any
interest in Coast's rights and benefits hereunder. In connection with any such
syndication, assignment or participation, Coast may disclose all documents and
information which Coast now or hereafter may have relating to Borrower or
Borrower's business. To the extent that Coast assigns its rights and obligations
hereunder to a third Person, Coast thereafter shall be released from such
assigned to Borrower.
11.14 PUBLICITY. Coast is hereby authorized, at its expense, to issue
appropriate press releases and to cause a tombstone to be published announcing
the consummation of this transaction and the aggregate amount thereof.
11.15 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used
in this Agreement for convenience. Borrower and Coast acknowledge that the
headings may not describe completely the subject matter of the applicable
paragraph, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement. The term
"including", whenever used in this Agreement, shall mean "including (but not
limited to)". This Agreement has been fully reviewed and negotiated between the
parties and no uncertainty or ambiguity in any term or provision of this
Agreement shall be construed strictly against Coast or Borrower under any rule
of construction or otherwise.
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
11.16 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts and
transactions hereunder and all rights and obligations of Coast and Borrower
shall be governed by the internal laws of the State of California, without
regard to its conflicts of law principles. As a material part of the
consideration to Coast to enter into this Agreement, Borrower (a) agrees that
all actions and proceedings relating directly or indirectly to this Agreement
shall, at Coast's option, be litigated in courts located within California, and
that the exclusive venue therefor shall be Los Angeles County; (b) consents to
the jurisdiction and venue of any such court and consents to service of process
in any such action or proceeding by personal delivery or any other method
permitted by law; and (c) waives any and all rights Borrower may have to object
to the jurisdiction of any such court, or to transfer or change the venue of any
such action or proceeding.
11.17 MUTUAL WAIVER OF JURY TRIAL. BORROWER AND COAST EACH HEREBY WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN COAST AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF COAST OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH COAST OR BORROWER, IN ALL
OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
BORROWER:
NTN COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
And by: /s/ Xxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer and Secretary
COAST:
COAST BUSINESS CREDIT,
a division of Southern Pacific Bank
By: /s/ Xxxxxx X. Xxxxxx
----------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
--------------------------------------------------------------------------------
Coast Business Credit(R)
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
Borrower: NTN Communications, Inc.
Address: 0000 Xx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Date: August 6, 1999
This Schedule forms an integral part of the Loan and Security Agreement between
Coast Business Credit, a division of Southern Pacific Bank, and the
above-borrower of even date.
--------------------------------------------------------------------------------
SECTION 2 - CREDIT FACILITIES
Section 2.1 - Credit Limit: Loans in a total amount at any one time
outstanding not to exceed the lesser of a total of Four Million Dollars
($4,000,000.00) (the "Maximum Dollar Amount"), or the total amount advanced
under sub-paragraph (a) below:
(a) Collection Loans in an amount not to exceed the lesser of:
(i) Three (3.0) times the total monthly Eligible Collections, measured
monthly on a trailing three (3) month moving average, or
(ii) Three (3) times annualized trailing EBITDA, based on the last six
(6) months.
Notwithstanding the above, Borrower acknowledges that if Eligible Collections
decrease in excess of twenty percent (20%) per month, measured on a month to
month basis, and/or the NFL Contract is not renewed or replaced to the
satisfaction of Coast, Coast shall have the right to adjust the advance multiple
of the Collection Loans.
21
Coast Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
================================================================================
SECTION 3 - INTEREST AND FEES
Section 3.1 - Interest Rate: A rate equal to the Prime Rate plus 1.50% per
annum, calculated on the basis of a 360-day year
for the actual number of days elapsed. The
interest rate applicable to all Loans shall be
adjusted monthly as of the first day of each
month, and the interest to be charged for each
month shall be based on the highest Prime Rate in
effect during the prior month, but in no event
shall the rate of interest charged on any Loans in
any month be less than 9.00% per annum.
Section 3.1 - Minimum Monthly
Interest: An Amount equal to the Interest Rate described
above charged against an outstanding daily loan
balance equal to forty percent (40%) of the
Maximum Dollar Amount.
Section 3.2 - Loan Fee: One Hundred Twenty Thousand Dollars
($120,000.00), such amount being fully earned on
the Closing Date, and payable Forty Thousand
Dollars ($40,000.00) on the Closing Date, and
Forty Thousand Dollars ($40,000.00) on each of the
first two (2) anniversaries of the Closing Date
thereafter.
Section 9.1 - Renewal Fee: 0.50% of the Maximum Dollar Amount per year,
commencing on the first day of Year 4.
Section 9.2 - Early
Termination
Fee: An amount equal to three percent (3%) of the
Maximum Dollar Amount, if termination occurs on or
before the first anniversary of the Closing Date,
and two percent (2%) of the Maximum Dollar Amount,
if termination occurs thereafter.
================================================================================
22
Coast Business Credit Schedule to Loan and Security Agreement
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SECTION 5 - CONDITIONS PRECEDENT
Section 5.2 - Minimum Availability: $500,000.00 at funding
Section 5.13 - Other Documents and
Agreements:
1. Hospitality Contracts;
2. NFL Contract;
3. UCC-1 financing statements, fixture
filings and termination statements;
4. Security Agreements (including those
covering copyrights, patents and
trademarks);
5. Subordination Agreements of
shareholders' debt;
================================================================================
SECTION 6 - REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.2 - Prior Names of
Borrower: Learn Star, Inc.
New World Computing, Inc.
Tapco, Inc.
National Telecommunicator Network, Inc.
Section 6.2 - Prior Trade Names
of Borrower: None
Section 6.2 - Existing Trade Names
of Borrower: NTN Network
NTN Studios
IWN, Inc.
IWN, L.P.
Section 6.3 - Other Locations and
Addresses: None.
Section 6.10 - Material Adverse
Litigation:
Xxxxxx v. Borrower, USDC
------------------
GITV v. Borrower, State Court of Georgia
----------------
Interactive Network v. Borrower, Federal
-------------------------------
Court Canada
See supplemental Representations and
Warranties for details.
Section 6.10 - Future Claims and
Litigation: Borrower will promptly inform Coast in
writing of any claim,
23
Coast Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
proceeding, litigation or investigation in
the future threatened or instituted by or
against Borrower involving any single claim
of Fifty Thousand Dollars ($50,000.00) or
more, or involving One Hundred Thousand
Dollars ($100,000) or more in the
aggregate.
================================================================================
SECTION 8 - ADDITIONAL DUTIES OF BORROWER
Section 8.1 - Other Provisions: 1. Borrower shall have no accounts
payable over ninety (90) days past
invoice date at the time of funding.
2. All of Borrower's applicable taxes
shall be paid and current at the time
of funding and at all times during the
Term of the Loan and Security
Agreement.
3. Borrower shall ensure that Coast is
granted a first priority and only
perfected security interest, except for
Permitted Liens, on all of Borrower's
tangible and intangible assets,
including, without limitation, accounts
receivables, inventory, machinery and
equipment, and all other tangible and
intangible assets including patents,
trademarks and/or copyrights.
4. Daily remittances shall be collected
via a lockbox, in form and substance
approved by Coast.
5. Borrower shall, at the end of fiscal
year end 1999, maintain a minimum
Tangible Net Worth of not less than
Three Million Dollars ($3,000,000.00),
to be measured monthly and certified by
an officer of Borrower. At all times
during the Term of this Agreement
thereafter, Borrower shall maintain a
minimum Tangible Net Worth in an amount
adjusted annually based on projections
supplied by Borrower to Coast.
6. Review and assignment of hospitality
contracts acceptable to Coast.
7. Satisfactory review of Borrower's last
twelve (12) months recurring revenue
Collections.
8. Subordination of all shareholder debt,
in form and substance satisfactory to
Coast, with interest only payments
(provided no Event or Default) from
free cash flow only.
9. Sidestreaming of funds to Borrower's
Affiliates shall be prohibited during
the Term hereof.
10. Borrower acknowledges that Coast shall
have the right to reduce the advance
rate multiple against total monthly
Eligible Collections.
11. Review of Borrower's NFL contract
acceptable to Coast.
24
Coast Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
Borrower acknowledges that in the event
the NFL contract is not renewed or
replaced to the satisfaction of Coast,
Coast shall have the right to reduce
the advance multiple applicable to the
Collection Loans.
12. The initial availability of the
Collections Loans are subject to
Coast's satisfactory review of
Borrower's contracts and verification
of Borrower's recurring Collections.
Section 8.2 - Insurance: Subject to the limitations set forth in
Section 8.2 of the Agreement, Coast shall
release to Borrower insurance proceeds with
respect to Equipment totaling less than
Fifty Thousand Dollars ($50,000.00).
Section 8.3 - Reporting: Borrower shall provide Coast with the
following:
1. Monthly Receivable agings, aged by
invoice date, within five (5) days
after the end of each month.
2. Monthly accounts payable agings, aged
by invoice date, and outstanding or
held check registers within five (5)
days after the end of each month.
3. Monthly Collection report, separated
by Hospitality Accounts and Non-
hospitality Accounts, within five (5)
days after the end of each month.
4. Monthly internally prepared financial
statements, on a consolidating to
consolidated basis, as soon as
available, and in any event within
thirty (30) days after the end of each
month.
5. Monthly reports of additions,
cancellations and suspensions of
Hospitality Accounts, within five (5)
days after the end of each month.
6. Quarterly internally prepared
financial statements as well quarterly
reported financial statements (10-Q),
on a consolidating to consolidated
basis, as soon as available, and in any
event within forty-five (45) days after
the end of each fiscal quarter of
Borrower.
7. Quarterly customer lists, including
customer name, address, and phone
number.
25
Coast Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
8. Annual financial statements as well as
annual audited reported financial
statements (10-K), on a consolidating
to consolidated basis, as soon as
available, and in any event within
ninety (90) days following the end of
Borrower's fiscal year, containing the
unqualified opinion of, and certified
by, an independent certified public
accountant acceptable to Coast.
9. Borrower shall maintain executed
contracts on file for all Hospitality
Accounts for which Borrower requests
Collection Loan advances.
Section 8.5 - Negative Covenants
(Acquired Assets): Fifty Thousand Dollars ($50,000.00).
================================================================================
SECTION 9 - TERM
Section 9.1 - Maturity Date: August 31, 2002 subject to automatic
renewal as provided in Section 9.1 of the
Agreement, and early termination as
provided in Section 9.2 of the Agreement.
26
Coast Business Credit(R)
First Amendment to Loan and Security Agreement
Borrower: NTN Communications, Inc.
Address: 0000 Xx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Date: September 2, 1999
THIS FIRST AMENDMENT TO THE LOAN AND SECURITY AGREEMENT is entered into as of
the above date between COAST BUSINESS CREDIT, a division of Southern Pacific
Bank ("Coast"), a California corporation, with offices at 00000 Xxxxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, and NTN Communications,
Inc. ("Borrower") whose chief executive office is located at the above address
("Borrower's Address"). This Amendment shall for all purposes be deemed to be a
part of the Loan and Security Agreement ("Loan Agreement"), and the same is an
integral part of the Loan Agreement.
AMENDMENT
1. Section 8.1 of the Schedule to the Loan Agreement is hereby amended to add
an additional sub-paragraph 13 as follows:
13. Borrower and its litigation counsel shall keep Coast apprised of all
material developments as they are occurring in connection with
Borrower's litigation presently entitled Xxxxxx v. NTN Communications,
-----------------------------
Inc. and currently pending in the United States District Court in and
----
for the Southern District of California as case number 97 CV 1116 TW
(JAH) ("Xxxxxx Case"). Any failure to comply with the provisions of
this sub-paragraph or any development which Coast, in its good faith
business judgment, determines may lead to a Material Adverse Effect,
shall be an Event of Default under Section 10.1 of the Loan Agreement.
2. Section 8.3 of the Schedule to the Loan Agreement is hereby amended to add
an additional sub-paragraph 10 as follows:
10. Copies of all material notices, pleadings, letters, agreements and
other documents served, filed, entered, and otherwise exchanged or
generated in
1
connection with the Xxxxxx Case, within five (5) days after receipt,
filing, entering or generating any such document.
EXCEPT AS EXPRESSLY PROVIDED FOR HEREIN, ALL OF THE TERMS AND CONDITIONS OF THE
LOAN AND SECURITY AGREEMENT AND ALL OTHER DOCUMENTS AND AGREEMENTS BETWEEN COAST
AND BORROWER SHALL CONTINUE IN FULL FORCE AND EFFECT AND THE SAME ARE HEREBY
RATIFIED AND AFFIRMED. THE WAIVERS CONTAINED HEREIN DO NOT CONSTITUTE A WAIVER
OF ANY OTHER PROVISION OR TERM OF THE LOAN AND SECURITY AGREEMENT NOR ANY
RELATED DOCUMENT OR AGREEMENT, NOR AN AGREEMENT TO WAIVE ANY TERM OR CONDITION
OF THE LOAN AND SECURITY AGREEMENT NOR ANY RELATED DOCUMENT OR AGREEMENT IN THE
FUTURE.
Borrower: Coast:
NTN COMMUNICATIONS, INC. COAST BUSINESS CREDIT, a division
of Southern Pacific Bank
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------- By:
Xxxxxxx X. Xxxxxx, CFO -----------------------------
Xxxxxx X. Xxxxxx, Vice President
And by: /s/ Xxxxxx Xxxxxx
------------------------
Xxxxxx Xxxxxx, Secretary
Signature Page to First Amendment to Loan and Security Agreement
2
