LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT dated as of September 5,
1997, is made by and between CNET, Inc., a Delaware corporation
("Debtor") and THE CIT GROUP/EQUIPMENT FINANCING, INC., a New York
corporation ("CIT").
SECTION 1. DEFINITIONS.
All capitalized terms which are not defined herein are
defined in Rider Q attached herto and made a part of hereof
("Rider A"). Accounting terms not specifically defined shall be
construed in accordance with generally accepted accounting
principles.
SECTION 2. AMOUNT AND TERMS OF LOANS; GRANT OF SECURITY INTEREST.
Subject to the terms and conditions hereof, CIT agrees to
make Loans to Debtor from time to time, up to the amount described
in paragraph 2 of Rider A. Each Loan shall be evidenced be
Debtor's Note, which Note shall set forth the repayment terms and
the applicable Interest Rate for such Loan.
As security for the prompt and complete payment and
performance when due of all the Obligations and in order to induce
CIT to enter into this Agreement and make the Loans and to extend
other credit from time to time to Debtor, whether under this
Agreement or otherwise, Debtor hereby grants to CIT a first
priority security interest in all Debtor's Collateral. No lien
securing the Obligations shall be released or deemed released
unless and until all Obligations are finally paid and discharged.
SECTION 3. CONDITIONS OF BORROWING.
CIT shall not be required to make any Loan hereunder unless on the
Closing Date thereof all legal matters with respect to, and all
legal documents executed in connection with, the contemplated
transactions are satisfactory to CIT and all of the following
conditions are met to the satisfaction of CIT (except that (a) and
(b) are required in connection with the initial Loan only): (a)
CIT has received satisfactory Secretary's Certificate certified by
Debtor's Secretary or Assistant Secretary; (b) Intentionally Left
Blank ( c) Debtor has executed and delivered to CIT the Note
evidencing, and a Supplement describing the Equipment to be
financed by, such Loan; (d) the Equipment being financed by such
Loan has been delivered to, and accepted by, Debtor and CIT has
received satisfactory evidence that the Equipment is insured in
accordance with the provisions hereof and that the Cost thereof
has been, or concurrently with the making of the Loan shall be,
fully paid; (e) CIT has received copies of the invoices and bills
of sale, if any, with respect to the Equipment being financed by
such Loan; (f) all filings, recordings and other actions
(including the obtaining of landlord and/or mortgagee waivers)
deemed necessary or desirable by CIT in order to perfect a first
(and only) priority security interest in the filings and
recordings have been paid by Debtor; (g) the representations and
warranties contained in this Agreement are true and correct with
the same effect as if made on and as of such date, and no Default
or Event of Default is in existence on such date or shall occur as
a result of such Loan; (h) in the sole judgment of CIT, there has
been no material adverse change in the financial condition,
business or operations of Debtor from the date referred to in
Section 4(j) hereof; (i) CIT has received from the Debtor such
other documents and information as CIT has reasonable requested;
(j) CIT has inspected and appraised the Equipment and found it
satisfactory in value and condition; (k) CIT has received
satisfactory bank and/or customer references on Debtor; (l) CIT
has received and found satisfactory Debtor's most recent quarterly
financial statement; (m) CIT has conducted a site inspection, at
CIT's expense, by and appraisal firm selected by CIT; (n) CIT has
received satisfactory references on Debtor from Vulcan Ventures
and Xxxxxxxxx & Xxxxx; (o) CIT has received a copy of the Debtor's
Revolving Credit Loan Agreement with Imperial Bank; and (p) CIT
has entered into an intercreditor agreement with Imperial Bank.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
In order to induce CIT to enter into this Agreement and to
make each Loan, Debtor represents and warrants to CIT that: (a)
Debtor is a corporation duly organized, validly existing and in
good standing under the laws of its State of incorporation, has
the necessary authority and power to own the Equipment and its
other assets and to transact the business in which it is engaged,
is duly qualified to do business in each jurisdiction where the
Equipment is located and in each other jurisdiction in which the
conduct of its business or ownership of its assets requires such
qualification, and its chief executive office is located at the
address set forth in paragraph 5 of Rider A; (b) Debtor has full
power, authority to borrow hereunder and to grant the security
interest created hereby; ( c) This Agreement has been (and each
Note when executed and delivered shall have been) duly authorized,
executed and delivered by Debtor and constitutes (and each Note
when executed and delivered shall constitute) a legal, valid and
binding obligation of Debtor enforceable in accordance with its
terms except as such rights may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of
creditors' rights generally; (d) the execution, delivery and
performance of Debtor of this Agreement and the Notes do not and
will not violate any provision of any applicable law or regulation
or of any judgment or order of any court or governmental
instrumentality, and will not violate any provision of, or cause a
default under, any loan, other agreement, contract or judgment to
which Debtor is a party; (e) Debtor is not in default under any
material agreement, contract or judgment to which Debtor is a
party; (f) Debtor has filed all tax returns that are required to
be filed and has paid all taxes shown on said returns and
assessments received by it to the extent such taxes and
assessments have become due other than those which are being
contested in good faith by appropriate proceedings and as to which
appropriate reserves are being maintained by Debtor in accordance
with generally accepted accounting principles and so long as such
proceedings operate during the pendency thereof to prevent sale,
forfeiture, or loss of the Collateral, and Debtor does not have
any knowledge of any actual proposed deficiency or additional
assessment in connection therewith; (g) there is no action, audit,
investigation or proceeding pending or threatened against or
affecting Debtor or any of its assets which involved any of the
Equipment or any of the contemplated transactions hereunder or
which, adversely determined, could have a material adverse effect
on Debtor's business, operations or financial condition; (h) on
each Closing Date, Debtor shall have good and marketable title to
the Equipment being financed on such date and CIT shall have
perfected first (and only) Lien on such Equipment ; (i) (i)the
operations of Debtor comply with all Environmental Laws ; and (ii)
except as disclosed to CIT, (A) none of the operations of Debtor
is the subject to any judicial or administrative proceeding
alleging the violation of any Environmental Laws; (B) none of the
operations of Debtor is the subject of an investigation to
determine whether any remedial action is needed to respond to a
release of any Hazardous Material into the environment; and ( C)
Debtor has no known material contingent liability in connection
with any release of any Hazardous Material into the environment;
(j) all financial statements of Debtor which have been delivered
to CIT have been prepared in accordance with generally accepted
accounting principles consistently applied, and present fairly
Debtor's financial position as at, and the results of its
operations for, the periods ended on the dates set forth on such
financial statements, and there has been no material adverse
change in Debtor's financial condition, business or operations
since December 31, 1996, as reflected in such financial
statements; (k) except as previously disclosed to CIT, Debtor has
not changed its name in the last five years or done business under
any other name; and (l) no consent of any Person, or any license,
approval or authorization of, or registration or filing with, any
governmental authority, bureau or agency is required in connection
with the execution, delivery and performance of, and payment
under, this Agreement.
SECTION 5. COVENTANTS.
Debtor covenants and agrees that from and after the date
hereof and so long as the Commitment or any of the Notes is
outstanding:
A. It will: (1) promptly give written notice to CIT of the
occurrence of any Event of Loss; (2) observe all material
requirements of any governmental authorities relating to the
conduct of its business, to the performance of its obligations
hereunder, to the use, operation or ownership of the Equipment, or
to its properties or assets, maintain its existence as a legal
entity and obtain and keep in full force and effect all rights
franchises, licenses and permits which are necessary to the proper
conduct of its business, and pay all fees, taxes, assessments and
governmental charges or levies imposed upon any of the Equipment;
(3) at an reasonable time or times, and upon reasonable notice,
permit CIT or its authorized representatives to inspect the
Equipment and, following the occurrence and during the
continuation of an Event of Default, to inspect the books and
records of Debtor as they relate to the Equipment; (4) in
accordance with generally accepted accounting principles, keep
proper books of record and account in which entries will be made
of all dealings or transactions in relation to its business and
activities; (5) furnish to CIT the following financial statements,
all in reasonable detail, prepared in accordance with generally
accepted accounting principles applied on a basis consistently
maintained throughout the period involved, (a) no later than 15
days after filing with the Securities and Exchange Commission,
Debtor's Annual Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934; and (b) no later than 15 days after filing
with the Securities and Exchange Commission, Debtor's Quarterly
Report under Section 13 and 15(d) of the Securities and Exchange
Act of 1934; (6) (i)
furnish to CIT, together with the Reports described in clauses
5(a) and 5(b) above, a statement signed by Debtor's chief
financial officer, provided that such statement shall only be
provided if Debtor is not in compliance with all financial
covenants contained in any document evidencing a financial
obligation of Debtor to CIT hereunder or to any bank or financing
company providing revolving credit to Debtor, and such statement
will set forth the nature of such noncompliance or default, and
the status thereof (such statement shall set forth the actual
calculations of any financial covenants and the details of any
amendments or modifications of any financial covenants), and (ii)
promptly, such additional financial and other information as CIT
may from time to time reasonably request; (7) promptly, at
Debtor's expense, execute and deliver to CIT such instruments and
documents, and take such action, as CIT may from time to time
reasonably request in order to carry out the intent and purpose of
this Agreement and to establish and protect the rights, interest
and remedies created, or intended to be created, in favor of CIT
hereby, including, without limitation, the execution, delivery,
recordation and filing of financing statements (hereby authorizing
CIT, in such jurisdictions where such action is authorized by law,
to effect any such recordation or filing of financing statements
without Debtor's signature, and to file as valid financing
statements in the applicable financing statement records,
photocopies hereof, of the Supplements and of any other financing
statement executed in connection herewith); (8) warrant and defend
its good and marketable title to the Equipment, and CIT's
perfected first (and only) priority security interest in the
Collateral, against all claims and demands whatsoever (hereby
agreeing that the Equipment shall be and at all times remain
separately identifiably personal property, and shall not become
part of any other real estate), and will, at its expense, take
such action as may be necessary to prevent any other Person from
acquiring any right or interest in the Equipment; (9) at Debtor's
expense, if requested by CIT in writing, attach to the Equipment a
notice satisfactory to CIT disclosing CIT's security interest in
the Equipment; (10) at Debtor's expense, maintain the Equipment in
good condition and working order and furnish all parts,
replacements and servicing required therefor so that the value,
condition and operating efficiency thereof will at all times be
maintained, normal wear and tear expected, and any repairs,
replacements and parts added to the Equipment in connection with
any repair or maintenance or with any improvement, change,
addition or alteration shall immediately, without further act,
become part of the Equipment and subject to the security interest
created by this Agreement; and (11) obtain and maintain at all
times on Collateral, at Debtor's expense, "All-Risk" physical
damage (excluding coverages for earthquakes and flood) and, if
required by CIT, liability insurance (including bodily injury and
property damage) in such amounts, against such risks, in such form
and with such insurers as shall be satisfactory to CIT; provided,
however, that the amount of physical damage insurance shall not be
less that the then aggregate outstanding principal amount of the
Notes, nor more that the original principal amount of the Notes.
All physical damage insurance policies shall be made payable to
CIT as its interest may appear; If liability insurance is required
by CIT, the liability insurance policies shall name CIT as an
additional insured. Debtor shall maintain and deliver to CIT the
original certificates ofd insurance or other documents
satisfactory to CIT prior to policy expiration or upon CIT's
request, but CIT shall bear no duty or liability to ascertain the
existence or adequacy of such insurance. Each insurance policy
shall, among other things, require that the insurer give CIT at
least 30 days' prior written notice of any alteration of the terms
of such policy or the cancellation thereof and that the interests
of CIT be continued insured regardless of any breach of or
violation by Debtor of any warranties, declarations or conditions
contained in such insurance policy. The insurance maintained by
the Debtor shall be primary with no other insurance maintained by
CIT (if any) contributory.
B. Without the prior written consent of CIT, it will not:
(1) sell, convey, transfer, exchange, lease, or otherwise
relinquish possession or dispose of any of the Collateral or
attempt or offer to do any of the foregoing; (2) create, assume or
suffer to exist any Lien upon the Collateral except for the
security interest created hereby; (3) liquidate or dissolve; (4)
change the form of organization of its business; or (5) without
thirty (30) days prior written notice to CIT, change its name or
its chief executive office; (6) move any of the Equipment from the
location specified on the Supplement relating thereto without the
prior written consent of CIT which consent shall not be
unreasonably withheld (except Debtor may move Equipment within the
San Francisco, California locations without CIT's prior written
consent); or (7) make or authorize any improvement, change,
addition or alteration to the Equipment which would impair its
originally intended function or use or its value.
SECTION 6. EVENTS OF DEFAULT; REMEDIES.
The following events shall each constitute an "Event of
Default" hereunder: (a) Debtor shall fail to pay any Obligation
within 10 Business days after the same becomes due (whether at the
stated maturity, by acceleration or otherwise); (b) any
representation or warranty made by Debtor in this Agreement or in
any document, certificate or financial or other statement now or
hereafter furnished by Debtor in connection with this Agreement or
any Loan shall at any time prove to be untrue or misleading in any
material respect as of the time when made; ( c) Debtor shall fail
to observe covenant, condition, or agreement contained in Section
5.A(11) or 5.B hereof or in paragraph 4 or 7 of Rider A; (d)
Debtor shall fail to observe or perform any other covenant or
condition contained in this Agreement, and such failure shall
continue unremedied for a period of 30 days after the earlier of
the date on which Debtor obtains knowledge of such failure or the
date on which the notice thereof shall be given by CIT to Debtor;
(e) Debtor shall default in the payment of, or other performance
under, any obligation for payment or lease (whether or not
capitalized) or any guarantee (i) to CIT beyond the period of
grace, if any, provided with respect thereto, or (ii) to Imperial
Bank, or any other bank or financial institution providing
revolving credit to Debtor, beyond the period of grace, if any,
provided with respect thereto; or (f) a complaint in bankruptcy or
for the arrangement or reorganization or for relief under any
insolvency law is filed by or against Debtor (and when filed
against Debtor is in effect for 60 days) or Debtor admits it
inability to pay its debts as they mature.
If an Event of Default shall occur, CIT may, by notice
of default given to Debtor, do any one or more of the
following: (a) terminate the Commitment and/or (b) declare
the Notes to be due and payable, whereupon the principal
amount of the Notes, together with the accrued interest
thereon and all other amounts owing under this Agreement and
the Notes, shall become immediately due payable without
presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived (and in the case of
any Event of Default specified in clause (f) of the above
paragraph, such acceleration of the Notes shall be
automatic, without any notice by CIT). In addition, if an
Event of Default shall occur and be continuing, CIT may
exercise all other rights and remedies available to it,
whether under this Agreement, under any other instrument or
agreement securing, evidencing or relating to the
Obligations, under the Code, or otherwise available at law
or in equity. Without limiting the generality of the
foregoing, Debtor agrees that in any such event, CIT,
without demand of performance or other demand, advertisement
or notice of any kind (except the notice specified below
time and place of public or private sale) to or upon Debtor
or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived), may
forthwith do any one or more of the following: collect,
purchase or otherwise dispose of and deliver, the Collateral
(or contract to do so), or any part thereof, in one or more
parcels at public or private sale or sales at such places
and at such prices as it may deem best, for cash or on
credit or for future delivery without the assumption of any
credit risk. CIT shall have the right upon any such public
sale or sales, and sold, free of any right or equity of
redemption of Debtor, which right or equity is hereby
expressly released. Debtor further agrees, at CIT's
request, to assemble (at Debtor's expense) the Collateral
and make it available to CIT at such places which CIT shall
select, whether at Debtor's premises or elsewhere. CIT
shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale (after
deduction all reasonable out-of pocket costs and expenses of
every kind incurred therein or incidental to the care,
safekeeping or otherwise of any or all of the Collateral or
in any way relating to the rights of CIT hereunder,
including reasonable attorney's fees and legal expenses) to
the payment in whole or in part of the Obligations, in such
order as CIT may elect. Debtor agrees that CIT not give
more than 10 days' notice of the time and place of any
public sale or of the time after which a private sale may
take place that such notice is reasonable notification of
such matters. Debtor shall be liable for any deficiency if
the proceeds of any sale or disposition of the Collateral
are insufficient to pay all amounts to which CIT is
entitled. Debtor agrees to pay all costs of CIT, including
reasonable attorney's fees, incurred with respect to
collection of any of the Obligations and enforcement of any
of CIT's rights hereunder. To the extent permitted by law,
Debtor hereby waives presentment demand, protest or any
notice (except as expressly provided in this Section 6) of
any kind in connection with this Agreement or any
Collateral.
SECTION 7. MISCELLANEOUS.
No failure or delay by CIT in exercising any right,
remedy or privilege hereunder or under any Note shall
operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy or privilege hereunder or
thereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy or privilege. No
right or remedy in this Agreement is intended to be
exclusive but each shall be cumulative and in addition to
any other remedy referred to herein or otherwise available
to CIT to at law or in equity; and the exercise by CIT of
any one or more of such remedies shall not preclude the
simultaneous or later exercise by CIT of any or all such
other remedies. No express or implied waiver by CIT of an
Event of Default shall in any way be, or be construed to be
a waiver by Default. The acceptance by CIT of any regular
installment payment or any other sum owing hereunder shall
not (a) constitute a waiver in any Event of Default in
existence at the time, regardless of CIT's knowledge or lack
of knowledge thereof at the time of such acceptance, or (b)
constitute a waiver of any Event of Default unless CIT shall
have agreed in writing to waive the Event of Default.
All notices, requests and demands to or upon any party
hereto shall be deemed duly given or made when sent, if
given by telecopier, when delivered, if given by personal
delivery or overnight commercial carrier, on the fifth
calendar day after deposit in the United States mail,
certified mail, return receipt requested, addressed to such
party at its address (or telecopier number) set forth in
paragraph 5 of Rider A or such other address or telecopier
number as may be hereafter designated in writing by such
party to the other party hereto.
Debtor agrees, whether or not the contemplated
transactions are consummated, (A) to pay or reimburse CIT
for (i) all out-of-pocket expenses of CIT in connection with
the documentation thereof; (ii) all fees, taxes and expenses
of whatever nature incurred in connection with the creation,
preservation and protection of CIT's security interest in
the Collateral, including, without limitation, all filing
and lien search fees, payment or discharge of any taxes or
Liens upon, or in respect to, the Collateral, and all other
fees and out-of-pocket expenses in connection with
protecting or maintaining the Collateral or in connection
with defending or prosecuting any actions, suits or
proceedings arising out of, or related to, the Collateral;
and (iii) all out-of-pocket costs and expenses (including
reasonable legal fees and disbursements) of ICT in
connection with the enforcement of this Agreement and the
Notes, and (B) to pay, and to indemnify and hold CIT
harmless from and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions,
judgments, suits, out-of-pocket costs, expenses (including
reasonable legal expenses) or disbursements of any kind or
nature whatsoever arising out of or with respect to (a) this
Agreement, the Collateral or CIT's interest therein,
including, without limitation, the execution, delivery,
enforcement, performance or administration of this Agreement
and the Notes and the manufacture, purchase, ownership,
possession, use, selection, operation or condition of the
Collateral or any part thereof, or (b) Debtor's violation or
alleges violation of any Environmental Laws or any law or
regulation relating to Hazardous Materials (the foregoing
being referred to as the "indemnified liabilities"),
provided, that Debtor shall have no obligation hereunder
with respect to indemnified liabilities arising from the
gross negligence or willful misconduct of CIT. If Debtor
fails to perform or comply with any of its agreements
contained in this Agreement and CIT shall itself perform,
comply or cause performance compliance, the expenses of CIT
so incurred, together with the interest thereon at the Later
Charge Rate, shall be payable by Debtor to CIT on demand and
until such payment is made shall constitute Obligations
hereunder. The agreements and indemnities contained in this
paragraph shall survive termination of this Agreement and
payment of the Notes.
This Agreement contains the complete, final and
exclusive statement of the terms of the agreement between
CIT and Debtor related to the contemplated business
transactions, and neither this Agreement, nor any terms
hereof, may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the
party against which enforcement of a change, waiver,
discharge or termination is sought.
This Agreement shall be binding upon, and inure to the
benefit of, Debtor and CIT and their respective successors
and assigns, except that Debtor may not assign or transfer
its rights hereunder or any herein without the prior written
consent of CIT.
Headings and sections and paragraphs are for
convenience only, are not part of this Agreement and shall
not be deemed to affect the meaning or construction of any
of the provisions hereof. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating
the remaining provisions hereof, and any such prohibition or
unenforceability shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Debtor hereby authorizes CIT to correct patent errors
and to fill in such blanks as serial numbers and dates
herein and in the Notes, Supplements and in any document
executed in connection herewith.
This Agreement may be executed by the parties hereto
on any number of separate counterparts, each of which when
so executed shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
CIT hereby agrees that upon payment in full of all
monetary Obligations hereunder, and provided no Default or
Event of Default has occurred or is continuing at the time
all monetary Obligations are paid in full, it will release
its security interest in the Collateral.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, ANS
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK. DEBTOR HEREBY IRREVOCABLY
CONSENTS AND AGREES THAT ANY LEGAL ACTION IN CONNECTION WITH
THIS AGREEMENT MAY BE INSTITUTED IN THE COURST OF THE STATE
OF NEW YORK, IN THE COUNTY OF NEW YORK OR THE UNITED STATES
COURTS FOR THE SOUTHERN DISTRICT OF NEW YORK, AS CIT MAY
ELECT, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
DEBOTR HEREBY IRREVOCABLY ACCEPTS AND SUBMITS TO, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, THE NON-EXCLUSIVE
JURISDICTION OF ANY SUCH COURT, AND TP ALL PROCEEDINGS IN
SUCH COURTS. DEBTOR AND CIT ACKNOWLEDGE THAT JURY TRIALS
OFTEN ENTAIL ADDITIONAL EXPENSES AND DELAYS NOT OCCASIONED
BY NONJURY TRIALS. JUDGE BY MEANS OF A BENCH TRUAL WITHOUT
A JUTY. IN VIEW OD THE FOREGOING, AND AS A SPECIFICALLY
NEGOTIATED PROVISION F THIS AGREEMENT, DEBTOR AND CIT HEREBY
EXPRESSLY WAIVE ANY RIGHT TO TRUAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS
AGREEMENT, OR THE TRANSACTIONS RELATED HERETO, WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE; AND DEBTOR AND CIT HEREBY
AGREE AND CONSENT THAT DEBTOR OR CIT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and delivered by their duly
authorized officers as of September 5, 1997.
CIT: Debtor:
The CIT GROUP/EQUIPMENT CNET, Inc.
FINANCING, INC. a Delaware Corporation
a New York Corporation
By: Xxxxx Xxxxxxx By: Xxxxx Xxxxxxxx
Title: Vice President Title: VP Finance
& Administration
