LOAN AGREEMENT
This Loan Agreement (the "Agreement") is entered into as of August 26,
1996, between Information Systems Consulting Corp., a Corporation ("Borrower"),
with its chief executive office and principal place of business located at the
address set forth below Borrower's signature line, and Concord Growth
Corporation ("Lender"), concerning loans and other credit accommodations to be
made by Lender to Borrower.
Capitalized terms used in this Agreement shall have the meanings
assigned to them in Section 8.11, Definitions, or in such other Section of this
Agreement as is identified in Section 8.11.
1. LOANS AND OTHER CREDIT ACCOMMODATIONS
1.1. LOANS. Subject to the terms and conditions in this Agreement,
Lender shall make revolving loans to Borrower from time to time against Eligible
Accounts (each, an "Advance") up to a maximum aggregate amount outstanding at
any time not to exceed the lesser of (a) eighty five percent (85%) (the "Advance
Rate") of the aggregate amount of all Eligible Accounts, or (b) one million
Dollars ($1,000,000) (the "Maximum Credit"). Except as otherwise provided in
this Agreement, Advances may be borrowed, repaid and reborrowed.
In the event the aggregate outstanding Advances shall at any time
exceed the foregoing limitation, Borrower shall immediately repay the Advances
in the amount of such excess.
1.2. ELIGIBLE ACCOUNTS. "Eligible Accounts" are accounts which are and
remain acceptable to Lender as Collateral for lending purposes. General criteria
for Eligible Accounts are set forth below but may be revised from time to time
by Lender, in its sole judgment, upon notice to Borrower; provided, that Lender
may, in its sole discretion, make exceptions to any of the general criteria
described below on a case by case basis without implying changes to such
criteria:
(a) such account was created in the ordinary course of Borrower's
business;
(b) such account is represented by an invoice in form acceptable
to Lender;
(c) the invoice that is delivered by Borrower to the account
debtor with respect to such account instructs the account
debtor to make payment directly to the Lockbox;
(d) Borrower has delivered to Lender such original documents as
Lender may have requested pursuant to Section 3.2 in
connection with such account and, if requested by Lender,
Lender shall have received from the account debtor a
verification of such account, satisfactory to Lender;
(e) the amount of such account represented by the invoice is
absolutely owing to Borrower [except for any discounts for
prompt payment provided by Borrower to account debtors in the
normal course of Borrower's business which are approved in
advance by Lender];
(f) the goods giving rise to such account were not at the time of
the sale subject to any liens except those permitted in the
Security Agreement;
(g) such account is not evidenced by chattel paper or an
instrument of any kind;
(h) such account is due not more than thirty (30) days from the
date of the invoice;
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(i) such account arises from a bona fide completed sale of goods
or performance of services, which goods and services have been
delivered to, or performed for, and in either case accepted
by, the account debtor;
(j) such account does not arise from the delivery of any toolings,
samples, trial merchandise, promotional or demonstration
material;
(k) such account does not arise from a sale to an individual
acting with respect to his or her own personal, family or
household consumption;
(1) such account does not arise from progress xxxxxxxx (i.e.,
xxxxxxxx representing a percentage of the amount due upon
completion or achievement of a contractual milestone but where
failure to complete or deliver the remaining work or goods may
constitute an offset, defense or counterclaim to payment);
(m) such account does not arise from a retention (i.e., a
percentage of the amount payable to Borrower pursuant to the
contract which is withheld by the account debtor until a time
after completion) nor is such account subject to holdbacks for
retention;
(n) such account does not arise from a xxxx and hold sale (i.e., a
sale in which the account debtor has been invoiced without
either delivery or acceptance of the goods or services or
transfer of title of the goods, even when the goods are held
and the invoices are issued at the account debtor's request);
(o) such account does not arise from a sale on consignment, "sale
or return" or "sale on approval" (i.e., sales in which title
purports not to pass or has not passed to the account debtor
until payment, resale, acceptance or otherwise);
(p) such account does not arise from a guaranteed sale (i.e., a
sale in which the account debtor reserves the right to return
any unsold goods even if title purports to pass to the account
debtor);
(q) such account does not arise on terms under which payment may
be conditional or contingent in any way;
(r) there are no contra relationships (i.e., a situation in which
the Borrower owes the account debtor money), setoffs,
deductions, allowances, counterclaims or disputes existing
with respect to such account and there are no other facts
existing or threatened which would impair or delay the
collectibility of all or any
(s) neither the account debtor nor any officer or employee of the
account debtor is an officer, employee or agent of or is
affiliated with Borrower, directly or indirectly;
(t) the account debtor is neither the United States nor any State,
subdivision, municipality, department or agency of the United
States, unless there has been compliance with the Federal
Assignment of Claims Act or any similar State or local law, if
applicable;
(u) the ccount debtor's chief executive office and principal
place of business are located in the United States;
(v) the account debtor is not the subject of any bankruptcy or
insolvency proceeding of any kind;
(w) such account is owed by an account debtor deemed creditworthy
at all times by Lender;
(x) there are no facts existing or threatened which might result
in any adverse change in the account debtor's financial
condition;
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(y) such account has not remained unpaid for more than ninety (90)
days after the original invoice date;
(z) such account is not owed by an account debtor who is or whose
affiliates are past due upon other accounts owed to Borrower
comprising more than twenty-five percent (25%) of the accounts
of such account debtor or its affiliates owed to Borrower;
(aa) such account is owed by an account debtor whose total
indebtedness to Borrower does not exceed the amount of any
customer credit limit as established, and changed, from time
to time by Lender on notice to Borrower (accounts excluded
from Eligible Accounts solely by reason of this subsection
(aa) shall nevertheless be considered Eligible Accounts in an
amount not to exceed the customer credit limits);
(bb) the aggregate amount of all accounts owed by the account
debtor and/or such account debtor's affiliates does not exceed
twenty percent (20%) of the aggregate amount of all otherwise
Eligible Accounts (accounts excluded from Eligible Accounts
solely by reason of this subsection (bb) shall nevertheless be
considered Eligible Accounts in an amount not to exceed twenty
percent (20%) of the aggregate face amount of all otherwise
Eligible Accounts).
1.3. ACCOMMODATIONS. Lender may, in its sole discretion, provide
additional loans or financial accommodations (the "Accommodations") to Borrower.
Such Accommodations, if made, shall be evidenced by, and repayable in accordance
with, one or more secured promissory notes in form and substance acceptable to
Lender (each, an "Accommodation Note"), and shall constitute Obligations under
this Agreement.
1.4. INVENTORY LOANS. In the event Lender has agreed or hereafter
agrees to provide loans to Borrower against any inventory of Borrower, such
loans shall be upon the terms and conditions set forth in an Inventory Rider
signed by Borrower and Lender (the "Inventory Rider") and shall constitute
Obligations under this Agreement. Any such inventory loans shall not, when added
to the outstanding Advances exceed the Maximum Credit.
1.5. RESERVES. Lender shall have the right to establish reserves
against the amount of the Advances available under Section 1.1 to the extent
necessary, in Lender's credit judgment, to ensure payment of the Obligations
(the "Reserves"). Lender may, at its option, implement Reserves by either (i)
designating as ineligible a sufficient amount of accounts that would otherwise
be Eligible Accounts so as to reduce Borrower's availability by the amount of
the intended Reserve, (ii) changing the Advance Rate set forth in Section 1.1,
[or (iii) establishing a cash collateral account in Lender's name to hold
collections as Lender's cash collateral].
2. INTEREST AND FEES
2.1. FACILITY FEE. Borrower shall pay Lender on the date hereof, a
facility fee (the "Facility Fee") in the amount of one half of one percent
(.50%) of the Maximum Credit, which fee is fully earned and non-refundable as of
the date each such payment is due and shall be deducted from the proceeds of the
first advance under the Maximum Credit.
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2.2. INTEREST. Borrower shall pay interest to Lender on the outstanding
Advances under this Agreement at a floating rate per annum equal to the Prime
Rate plus two and one half percent (Prime + 2.5 % (the "Interest Rate"), which
interest shall be payable and calculated as hereinafter set forth. Borrower
shall pay such interest to Lender on the first day of each month in an amount
equal to (a) the quotient obtained by dividing the sum of the daily unpaid
Advances outstanding on each day during the immediately preceding month by the
actual number of days in such month (the "Average Daily Balance"), multiplied by
(b) the quotient obtained by dividing the Interest Rate by 360, multiplied by
(c) the actual number of days in the immediately preceding month. The lnterest
Rate shall increase or decrease monthly, on the first day of each month, by the
amount of any increase or decrease in the Prime Rate. For purposes of this
Agreement, the "Prime Rate" is the prime rate of interest publicly listed by the
Western Edition of the Wall Street Journal on the first day of each month or, if
the first day of such month is not a business day, on the last business day of
the immediately preceding month. In the event the prime commercial interest rate
listed by the Wall Street Journal is a range, the highest rate in the range
shall be the "Prime Rate".
2.3. DEFAULT RATE. Upon and after either (a) notification to Borrower
of the occurrence of an Event of Default, or (b) termination of this Agreement,
until the date that all Obligations are indefeasibly paid and satisfied in full,
interest shall accrue on all Obligations at a rate equal to the sum of the
Interest Rate otherwise payable to Lender plus twelve percent (12%).
2.4. ADMINISTRATIVE FEE. Borrower shall pay Lender on the first
day of each month an administrative fee (the "Administrative Fee") in an amount
equal to (a) the Average Daily Balance for the immediately preceding month,
multiplied by (b) six-tenths of one percent (0.6%).
2.5. MONTHLY MINIMUM FEE. Lender would not have entered into this
Agreement and agreed to provide Borrower with the financing hereunder unless
Borrower guaranteed Lender that the sum of the interest as set forth in Section
2.2, in any Inventory Rider and in any Accommodation Note, and the
administrative fees set forth in Section 2.4, in any Inventory Rider and in any
Accommodation Note, paid to Lender in each month would be at least seven
thousand five hundred Dollars ($7,500) (the "Monthly Minimum Fee"). In the event
the aggregate amount of such interest and administrative fees payable on the
first day of any month is less than the Monthly Minimum Fee, then Borrower shall
pay to Lender on the first day of such month the Monthly Minimum Fee in
satisfaction of the interest and administrative fees payable during such month.
2.6. EARLY TERMINATION FEE. In the event either (a) Borrower terminates
this Agreement prior to the end of any Term, (b) Lender terminates this
Agreement with respect to further Advances, inventory loans and other
Accommodations upon and after the occurrence of any Event of Default, or (c)
this Agreement automatically terminates upon the occurrence of an Event of
Default under Sections 6.1(i) or (j) as set forth in Section 6.2, in view of the
impracticality and extreme difficult of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Lender's lost
profits, in addition to all other Obligations, Borrower shall pay to Lender,
upon the effective date of any such termination, an
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early termination fee equal to the Minimum Monthly Fee multiplied by a maximum
of three months, or the remaining number of months in this agreement.
2.7. AUDIT FEES. Lender or its designees may conduct Quarterly
examinations of the Collateral and Borrower's operations, unless an Event of
Default has occurred and is continuing, in which event the number of audits
conducted will be in Lender's reasonable discretion. Borrower shall pay Lender
audit fees not to exceed six hundred Dollars ($600) per day plus expenses per
audit. Audit fees shall be payable upon demand by Lender.
2.8. MAXIMUM LAWFUL RATE. In no event shall charges constituting
interest under this Agreement exceed the highest rate permitted under applicable
law. In the event that a court of competent jurisdiction makes a final
determination that Lender has received interest under this Agreement in excess
of the maximum lawful rate, then such excess shall be deemed a payment of
principal and applied against the principal under this Agreement, and the
interest payable under this Agreement shall be deemed amended to the amount
payable under the maximum lawful rate.
2.9. CALCULATIONS BASED ON 360 DAY YEAR. Interest and any other
amounts payable by Borrower to Lender based on a per annum rate shall be
calculated on the basis of actual number of days elapsed over a 360-day year.
2.10. CHARGES TO LOAN ACCOUNT. At Lender's option, all principal,
interest, fees, costs, expenses and other charges provided for in this
Agreement, or in any other Loan Documents may be charged to any loan account of
Borrower maintained by Lender either by (a) deducting such amounts from any
Advance requested by Borrower and made by Lender, or (b) treating such amounts
as additional Advances.
3. ADMINISTRATION AND COLLECTION
3.1. DELIVERY OF INVOICES. Borrower shall deliver a copy of each
invoice to Lender as such invoice is generated and delivered to an account
debtor or at least once per week in a batch. Borrower's granting of credits,
discounts, allowances, deductions, return authorizations or the like with
respect to any account will be promptly reported to Lender in writing.
3.2. DELIVERY OF EVIDENCE OF SHIPMENT AND OTHER ACCOUNT INFORMATION.
Borrower shall deliver to Lender proof of rendition at services, shipment, and
delivery of goods at the same time Borrower delivers the invoices to Lender with
respect to such services or goods pursuant to Section 3.1. Borrower shall
deliver to Lender such other agreements and documents relating to the accounts
or other Collateral, including assignments to Lender, at such times as Lender
may request and in the manner specified by Lender.
3.3. LOCKBOX: COLLECTION OF COLLATERAL. Borrower shall instruct each
account debtor to make all payments owed to Borrower in Borrower's name or
properly registered trade name as set forth in the Security Agreement directly
to a lockbox acceptable to Lender (the "Lockbox"). Borrower shall include on
each invoice delivered to an account debtor a stamp or computer generated
instruction directing the account debtor to make all payments directly to the
Lockbox.
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Such instructions shall not be changed without Lender's prior written consent.
Payments on all Borrower's accounts and all other proceeds of Collateral shall
be made directly to the Lockbox, whether or not Lender is providing financing
for such account. All payments received in the Lockbox by 10:00 a.m. on any
business day shall be deposited in an account designated by and acceptable to
Lender on the same day and credited to Borrower's loan account as set forth in
Section 3.5. At Lender's request, all invoices and statements sent to any
account debtor, other obligor or bailee, shall state that the accounts and such
other Collateral have been assigned to Lender and are payable directly and only
to Lender. Upon demand by Lender, Borrower shall reimburse Lender for the costs
incurred by Lender in establishing and maintaining the Lockbox.
3.4. PAYMENT IN KIND: DELIVERY TO LENDER. Notwithstanding Borrower's
instructions to account debtors and other persons, in the event Borrower
receives any payments on accounts or other proceeds of Collateral, Borrower will
hold such payments in trust and safekeeping for Lender and immediately turn over
to Lender the identical check or other form of payment received by Borrower with
any necessary endorsement or assignment.
3.5. CREDITING OF PAYMENTS. All Obligations shall be payable at
Lender's office set forth below, at Lender's bank as identified to Borrower, or
at such other place as Lender may expressly designate from time to time. For
purposes of determining availability under this Agreement, payments on financed
accounts and other payments with respect to the Collateral and Obligations will
be credited to the loan account of Borrower upon the date of Lender's receipt of
advice from Lender's bank that such payments have been credited to Lender's
account or in the case of payments received directly in kind by Lender, upon the
date of Lender's deposit thereof at Lender's bank, subject in either case to
final payment and collection. Solely for the purpose of calculating interest and
fees under this Agreement, including interest and fees under any Inventory Rider
and any Accommodation Note, payments on financed accounts and other payments
with respect to Collateral and Obligations shall be deemed received by Lender
two (2) business days after the date of Lender's receipt of advice from Lender's
bank that such payments have been credited to Lender's account or in the case of
payments received directly in kind by Lender, two (2) business days after the
date of Lender's deposit thereof at Lender's bank, subject in either case to
final payment and collection.
3.6. Intentionally omitted.
3.7. ACCOUNT VERIFICATION. Lender may at any time, but without any duty
to do so, whether or not an Event of Default has occurred, and without notice to
or assent of Borrower, in Lender's own name, pseudonymously, or by its designee:
(a) request any account debtor, other obligor or bailee by telephone or in
writing for verification of accounts and other Collateral; (b) notify any
account debtor that the accounts and other Collateral that includes a monetary
obligation have been assigned to Lender by Borrower and that payment thereof is
to be made directly to Lender; and (c) demand, collect or enforce payment of any
accounts or such other Collateral. Upon Lander's request, Borrower shall assist
Lender in connection with any request, notification or demand hereunder.
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3.8. LOAN ACCOUNT. Lender shall render to Borrower monthly a loan
account statement. Each statement shall be considered correct and binding upon
Borrower as an account stated, except to the extent that Lender receives, within
thirty (30) days after the mailing of such statement, written notice from
Borrower of any specific exceptions by Borrower to that statement.
4. INTENTIONALLY OMITTED.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS.
Borrower hereby represents, warrants and covenants to Lender the
following, the truth and accuracy of which, and compliance with which, shall be
continuing conditions to making any Advances, inventory and other loans and
Accommodations by Lender to Borrower:
5.1. ACCOUNT REPRESENTATIONS AND WARRANTIES. Each account submitted to
Lender meets each of the eligibility requirements in Section 1.2, except as
either (a) disclosed in writing to Lender at the time Borrower submits such
account to Lender, or (b) is evident on the invoice representing such account.
Each account, including Eligible and non-Eligible Accounts, (i) is a bona fide
account, (ii) represents indebtedness owed to Borrower, and (iii) is in all
respects what it purports to be. All statements made and all unpaid balances and
other information appearing in the invoices, agreements, proofs of rendition of
services and delivery of goods and other documentation relating to the accounts,
and all confirmatory assignments, schedules, statements of account and books and
records with respect thereto, are true and correct and in all respects what they
purport to be.
5.2. USE OF PROCEEDS; SINGLE LOAN. Borrower shall use the proceeds of
Advances and other loans or Accommodations made by Lender to Borrower for legal
and proper business purposes, and not for any personal, family, or household
purposes. All Advances and other loans and Accommodations shall constitute one
general Obligation and shall be secured by Lender's security interest in all of
the Collateral.
5.3. COMPLIANCE WITH LAWS; PAYMENT OF TAXES. Borrower is and at all
times will continue to be in compliance with the requirements of all material
laws, rules, regulations and orders of any governmental authority relating to
its business, including those relating to taxes (including payment and
withholding of payroll taxes, employer and employee contributions and similar
items), securities, employee retirement and welfare benefits, employee health
and safety, labor and environmental matters, and all material agreements or
other instruments binding on Borrower or its property. Borrower shall pay all
taxes, assessments and governmental charges against Borrower same are being
contested in good faith and, at Lender's option, Reserves are established for
the amount contested and penalties which may accrue thereon.
5.4. DELIVERY OF AGINGS AND FINANCIAL INFORMATION. Borrower shall keep
and maintain its books and records in accordance with generally accepted
accounting principles, consistently applied. Borrower shall, at its sole
expense, deliver to Lender (a) on or before the thirtieth (3Oth) day at each
month, true and complete monthly agings of its accounts receivable and accounts
and notes payable, and monthly inventory reports and bank statements, and (b) on
or before the
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thirtieth (30th) day of each month, true and correct monthly internally prepared
interim financial statements. Annually, Borrower shall, at its sole expense,
deliver to Lender true and correct (a) financial statements of Borrower prepared
according to generally accepted accounting principles, as soon as available, but
in no event later than one hundred five (105) days after the end of Borrower's
fiscal year, and (b) tax returns within ten (10) days after such tax returns are
filed with the appropriate taxing authorities. Lender may require that annual
financial statements be prepared and certified by an independent certified
public accountant acceptable to Lender. Borrower shall also cause each person or
entity that is or becomes a guarantor to deliver to Lender year end financial
statements of such guarantor within forty five (45) days after the end of each
such period. All of the information required above shall be in such form, and
together with such other information with respect to the business of Borrower or
any guarantor, as Lender may request.
5.5. NO SALE OF COLLATERAL, MERGER OR ACQUISITION OF INTEREST. Borrower
shall not, directly or indirectly, without the prior written consent of Lender:
(a) sell, lease, transfer, assign, or otherwise dispose of any part of the
Collateral or any material portion of its other assets other than sales of
inventory to buyers in the ordinary course of business; (b) consolidate with or
merge into any other entity.
5.6. NO LOANS, DIVIDENDS, TRANSACTIONS WITH AFFILIATES. Borrower shall
not, directly or indirectly, without the prior written consent of Lender: (a)
lend money or property to, guarantee, pay or assume indebtedness of, or invest
in (by capital contribution or otherwise), any person, corporation or other
entity (including any officer, director, employee, shareholder or affiliate of
Borrower); (b) declare or pay any dividends on, redeem, or otherwise make any
distributions on account of, any shares of any class of stock or other equity
interest of Borrower now or hereafter outstanding; or (c) enter into any sale,
lease or other transaction with any officer, director, employee, shareholder or
affiliate of Borrower on terms that are less favorable to Borrower than those
which might be obtained at the time from persons who are not an officer,
director, employee, shareholder or affiliate of Borrower.
5.7. REPLACEMENT OF OFFICERS AND GENERAL PARTNERS. If Borrower is a
corporation and the chief executive officer, chief operating officer or chief
financial officer existing on the date of this agreement shall resign or
otherwise cease to be actively employed by Borrower in such capacity, Borrower
shall appoint a replacement or substitution reasonably satisfactory to Lender
within fifteen (15) days after the effective date of such resignation or the
date such person ceases to be actively employed by Borrower. If Borrower is a
partnership and any general partner withdraws or ceases to perform its duties in
such capacity, such general partner shall be replaced with a new general partner
reasonably satisfactory to lender within fifteen (15) days after the effective
date of such withdrawal or the date such general partner ceases to perform its
duties.
5.8. FINANCIAL COVENANTS. Borrower shall:
(a) at all times maintain working capital of not less than NA Dollars
($NA), as determined in accordance with generally accepted accounting principles
in effect on the date hereof, consistently applied;
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(b) at all times maintain net worth of not less than NA Dollars ($NA),
as determined in accordance with generally accepted accounting principles in
effect on the date hereof, consistently applied: and
(c) not, directly or indirectly, expend or commit to expend, for fixed
or capital assets (including capital lease obligations) an amount in excess of
NA Dollars ($NA ) in any fiscal year of Borrower;
(d) maintain positive cash flow (defined as Earnings Before Interest,
Taxes, Depreciation, Amortization) on a quarterly basis, as determined in
accordance with generally accepted accounting principles in effecting the date
hereof, consistently applied.
(e) maintain profitability of no less than fifty thousand Dollars
($50,000), on a quarterly basis, as determined in accordance with generally
accepted accounting principles in effect on the date hereof, consistently
applied.
5.9. LITIGATION. There are no actions, suits, proceedings,
investigations or claims pending, or to the knowledge of Borrower threatened,
against Borrower or any of Borrower's assets, except as disclosed to Lender in
writing before the date of this Agreement. Borrower shall promptly notify Lender
in writing of any loss, damage, suit, proceeding, investigation, or claim
relating to a material portion of the Collateral or that may result in a
material adverse change in Borrower's business, assets, liabilities or
condition.
5.10. NO PAYMENTS TO SUBORDINATED CREDITORS. Borrower shall not make
any payments to any of the Subordinated Creditors on account of principal,
interest or any other indebtedness other than permitted payments as consented to
by Lender in writing, unless and until all of the Obligations are indefeasibly
paid and satisfied in full.
5.11. SURVIVAL AND CONTINUATION OF REPRESENTATIONS. Each representation
and warranty contained in this Agreement and the other Loan Documents shall be
continuous and shall remain accurate, complete and not misleading during the
Term of this Agreement, and all such representations and warranties shall
survive the execution and delivery by Borrower and Lender of this Agreement and
the other Loan Documents.
5.12. ORGANIZATION AND QUALIFICATION. Borrower is, and shall continue
to be, a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation. Borrower is qualified and
authorized to do business and is, and shall continue to be, in good standing as
a foreign corporation in each State where is conducts business and in which the
failure to so qualify would have a material adverse effect on the financial
condition, business or properties of Borrower.
5.13. CORPORATE POWER AND AUTHORITY. Borrower is duly authorized and
empowered to enter into, execute, deliver and perform this Agreement and each of
the other Loan Documents to which it is a party. The execution, delivery and
performance of this Agreement and each of the other Loan Documents have been
duly authorized by all necessary corporate action and do not
CORPDAL:64287.1 28722-00003
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and will not contravene Borrower's charter, articles or certificate of
incorporation or by-laws or result in a breach of or constitute a default under
any indenture, loan agreement or any other agreement, lease or instrument to
which Borrower is a party or by which it or its properties may be bound.
5.14. ENFORCEABLE AGREEMENT. This Agreement is, and each of the
other Loan Documents when delivered under this Agreement will be, a legal, valid
and binding obligation of Borrower enforceable against it in accordance with its
terms.
6. EVENTS OF DEFAULT AND REMEDIES
6.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute an "Event of Default" under this Agreement:
(a) Borrower fails to pay as and when due any of the Obligations;
(b) Borrower fails to perform or breaches any of the material covenants
or terms of this Agreement, the Security Agreement or any other Loan Document
(other than a covenant or term which is dealt with specifically elsewhere in
this Section 6.1);
(c) Any representation, warranty or statement of fact made by Borrower
to Lender in this Agreement, the Security Agreement or any other Loan Document
or otherwise, or to any affiliate of Lender, shall be inaccurate or misleading
in any material respect;
(d) Any guarantor revokes, terminates or fails to perform any of the
terms of any guaranty, endorsement or other agreement of such party in favor of
Lender or any affiliate of Lender;
(e) Notice of a federal tax lien is filed against Borrower or Borrower
fails to pay any payroll or withholding taxes;
(f) Any judgment, writ of attachment or similar process involving an
amount in excess of twenty thousand Dollars ($20,000) is obtained against
Borrower or any guarantor, or any of their representative assets, and remains
undischarged for thirty (30) days after it is obtained;
(g) Borrower or any guarantor (if Borrower or guarantor is a
partnership or corporation) or any general partner of Borrower or any guarantor
(if such general partner is a corporation), is dissolved, or Borrower or any
guarantor (if Borrower or guarantor is a corporation) fails to maintain its
corporate existence in good standing, or the usual business of Borrower or any
guarantor ceases or is suspended;
(h) Borrower (if Borrower is a natural person), any guarantor (if such
guarantor is a natural person) or any general partner of Borrower or any
guarantor (if Borrower or such guarantor is a partnership and the general
partner is a natural person), dies and. with respect to the death of a guarantor
or a general partner such guarantor or general partner has not been
CORPDAL:64287.1 28722-00003
10
replaced within ten (10) days of the death of such guarantor or general partner
by another person as creditworthy in Lender's reasonable judgment as the
original guarantor or general partner;
(i) Borrower or any guarantor becomes insolvent, makes an assignment
for the benefit of creditors, makes or sends notice of a bulk transfer or calls
a general meeting of its creditors or principal creditors;
(j) Any petition or application for any relief under the bankruptcy
laws of the United States now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed by or against Borrower or any guarantor
(k) The indictment of Borrower or any guarantor under any criminal
statute, or commencement of criminal or civil proceedings against Borrower or
any guarantor, pursuant to which statute or proceedings the penalties or
remedies sought or available include forfeiture of any at the property of
Borrower or such guarantor;
(1) Any default or event of default exists under any agreement,
document or instrument at any time executed and/or delivered to Lender or any of
its affiliates, by an affiliate of Borrower;
(m) If Borrower is a corporation, any change in the controlling
ownership of Borrower occurs;
(n) Borrower makes any payment to a Subordinated Creditor in violation
of the terms of any agreement entered into between such Subordinated Creditor
and Lender, a copy of which has been delivered to Borrower.
6.2. REMEDIES. Upon the occurrence of an Event of Default and at any
time thereafter, Lender may, without notice, exercise any or all of the rights
and remedies provided in the Security Agreement, the other Loan Documents or
under applicable law, including the immediate termination of any further
Advances, inventory and other loans and Accommodations, the declaration of all
Obligations to be immediately due and payable, and the enforcement of Lender's
security interest in all or any portion of the Collateral, provided, that
immediately upon the occurrence at an Event of Default of a type described in
Section 6.1 (i) or (ii), this Agreement shall automatically terminate without
notice or demand of any kind and the Obligations shall be immediately due and
payable.
7. GOVERNING LAW; WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION;
OTHER WAIVERS.
7.1. INCORPORATION OF SECURITY AGREEMENT PROVISIONS RELATING TO
GOVERNING LAW, WAIVER OF JURY TRIAL, CONSENT TO JURISDICTION NO IMPLIED WAIVER
AND RELEASE. Sections 5.1, 5.2, 5.3, 5.4 and 5.5 of the Security Agreement
relating to governing law, waiver of jury trial, consent to jurisdiction, no
implied waiver and release apply to this Agreement and to the Security
CORPDAL:64287.1 28722-00003
11
Agreement and other Loan Documents, and are hereby incorporated into this
Agreement by reference.
7.2. WAIVER OF SETOFF. Borrower hereby irrevocably waives any right
to offset against amounts owed by Borrower to Lender under the Loan Documents
any claims or counterclaims that may be asserted by Borrower.
8. OTHER FEES AND EXPENSES; TERM OF AGREEMENT; MISCELLANEOUS
8.1. OTHER FEES AND EXPENSES. Borrower shall pay Lender immediately
upon demand, those fees and expenses described in Section 3.6 of the Security
Agreement.
8.2. EFFECTIVENESS; TERM. This Agreement shall only become effective
upon execution and delivery by Borrower and Lender and, unless earlier
terminated as provided in this Agreement, shall continue in full force and
effect for an initial term of twelve (12) months from the date of this Agreement
as set forth in the introductory paragraph hereof and shall be deemed
automatically renewed for successive twelve (12)-month periods. Unless earlier
terminated as provided in this Agreement, all Obligations shall be due and
payable in full at the expiration of the last renewal Term. This Agreement may
be terminated prior to the end of the initial or any renewal term (each, a
"Term") as follows:
(a) Borrower or Lender may terminate this Agreement as of the end of
any Term by either party giving the other written notice at least thirty (30)
days prior to the end of such Term. If either Borrower or Lender so notifies the
other, all Obligations shall be due and payable in full at the end of such Term;
(b) In addition to being able to terminate this Agreement at the end of
each Term, Borrower may terminate this Agreement at any other time after giving
Lender at least thirty (30) days prior written notice and paying Lander an Early
Termination Fee as set forth in Section 2.6. Any such termination shall be
effective upon payment to Lender in full at all Obligations, including the Early
Termination Fee; and
(c) Lender shall also have the right to terminate this Agreement as set
forth in Section 6.2 upon and after the occurrence of an Event of Default or, as
set forth in Section 6.2, this Agreement shall automatically terminate following
the occurrence of an Event of Default under Section 6.1(i) or(j). Upon any such
termination following an Event of Default, all Obligations, including the Early
Termination Fee, shall be due and payable in full.
8.3. DEPOSIT TO ALLOW FOR OPEN ACCOMMODATIONS AND REMITTANCE ITEMS.
Upon termination of this Agreement by Borrower, as permitted herein, in addition
to payment of all Obligations, Borrower shall deposit such amount of cash
collateral as Lender determines is necessary to secure Lender from loss or
expense, including reasonable attorneys' fees, in connection with any open
Accommodations or remittance items or other payments provisionally credited to
the Obligations and/or to which Lender has not yet received final and
indefeasible payment.
CORPDAL:64287.1 28722-00003
12
8.4. CONTINUING OBLIGATIONS UPON TERMINATION. No termination of this
Agreement, including any termination set forth in Section 8.2 or 6.2, shall
relieve or discharge Borrower of its obligations, duties and covenants hereunder
until such time as all Obligations to Lender have been indefeasibly paid and
satisfied in full. Without limiting the generality of the foregoing, all
security interests and liens of Lender in and upon all then-existing and
thereafter-arising or acquired Collateral, and all warranties, representations,
covenants, agreements and waivers of Borrower, shall continue in full force and
effect until released and terminated by Lender in writing after full and final
payment of all Obligations.
8.5. NOTICES. Except as otherwise provided, all notices, requests and
demands hereunder shall be (a) made to Lender at its address set forth below its
signature line and to Borrower at its chief executive office set forth below its
signature line, or to such other address as either party may designate by
written notice to the other in accordance with this provision, and (b) deemed to
have been given or made: if by hand, immediately upon delivery; if by telex,
telegram or telecopy, immediately upon receipt: if by overnight delivery
service, one
8.6. PARTICIPATIONS; SECURITIZATION. Lender may assign and sell
Participations in its rights and obligations under this Agreement and the other
Loan Documents. Lender may include the loans made pursuant to this Agreement and
the other Loan Documents in a pool of loans in which Lender sells undivided
interests as part of a securitization program.
(a) Assignment of Loans. Borrower understands that Lender may from time
to time transfer and assign Loans and its rights under this Agreement to one or
more assignees. Borrower hereby consents to these transfers and assignments by
Lender to one or more assignees. Borrower hereby consents that any such assignee
may exercise the rights of Lender hereunder. Borrower further hereby consents
and acknowledges that any and all defenses, claims or counterclaims that it may
have against Lender shall be limited to, and may only be brought against, Lender
and shall not extend to any assignee, including but not limited to funding
obligations.
(b) Borrower and Lender intend that any and all direct or indirect
assignees of the Lender of the type set forth above shall be third party
beneficiaries of this Agreement.
8.7. SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable, such provision shall not affect the Agreement as a
whole, but this Agreement shall be construed as though it did not contain the
particular provision held to be invalid or unenforceable.
8.8 INTEGRATION. This Agreement, the Security Agreement and the other
Loan Documents contain the entire agreement at the parties as to the subject
matter hereof. All prior commitments, proposals and negotiations concerning the
subject matter hereof are merged herein. Neither this Agreement, the Security
Agreement nor any of the other Loan Documents shall be amended, modified or
discharged orally or by course of conduct, but only by a written agreement
signed by an authorized officer of Lender and Borrower. This Agreement shall be
binding upon and inure to the benefit of each at the parties hereto and their
respective successors and assigns,
CORPDAL:64287.1 28722-00003
13
except that Borrower shall not assign this Agreement or any of its rights
hereunder without the prior written consent of Lender.
8.9. HEADINGS. All title and section headings used in this Agreement
are for convenience only and shall not be used in interpreting this Agreement.
8.10. COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which shall be an original but all of which shall
constitute one and the same agreement.
8.11. DEFINITIONS. All terms used herein which are defined in the
Uniform Commercial Code as in effect in California shall have the meanings given
therein unless otherwise defined in this Agreement. All references to the
singular or plural herein shall include the singular and plural, unless the
context otherwise requires. Unless otherwise specified any reference to a
"Section" shall refer to the relevant Section of this Agreement. The term
"including" is not limiting or exclusive. Capitalized terms used in this
Agreement shall have the following respective meanings when used herein:
"Accommodations" shall have the meaning set forth in Section 1.3.
"Accommodation Note" shall have the meaning set forth in Section 1.3.
"Administrative Fee" shall have the meaning set forth in Section 2.4.
"Advance" shall have the meaning set forth in Section 1.1.
"Advance Rate" shall have the meaning set forth in Section 1.1.
"Agreement" shall mean this Loan Agreement, as the same may be amended,
supplemented, extended or restated from time to time.
"Average Daily Balance" shall have the meaning set forth in
Section 2.2.
"Borrower" shall mean the Borrower as identified in the introductory
paragraph of this Agreement, and its successors and assigns.
"Collateral" shall have the meaning set forth in the Security
Agreement.
"Early Termination Fee" shall have the meaning set forth in
Section 2.6.
"Eligible Accounts" shall have the meaning set forth in Section 1.2.
"Event of Default" shall have the meaning set forth in Section 6.1.
"Facility Fee" shall have the meaning set forth in Section 2.1.
CORPDAL:64287.1 28722-00003
14
"Interest Rate" shall have the meaning set forth in Section 2.2.
"Inventory Rider" shall have the meaning set forth in Section 1.4.
"Lender" shall mean the Lender as identified in the introductory
paragraph of this Agreement, and its successors and assigns.
"Loan Documents" shall mean this Agreement, any Inventory Rider, any
Accommodation Notes, the Security Agreement, and all instruments, documents,
agreements and other writings signed by Borrower or any Guarantor and delivered
to Lender in connection with this Agreement or otherwise, whether now existing
or hereafter arising, as the same may be amended, supplemented, extended or
restated from time to time.
"Lockbox" shall have the meaning set forth in Section 3.3.
"Maximum Credit" shall have the meaning set forth in Section 1.1.
"Monthly Minimum Fee" shall have the meaning set forth in Section 2.5.
"Obligations" shall mean any and all loans, advances, fees, charges,
indebtedness and obligations of every kind owing by Borrower to Lender, and/or
Lender's affiliates, or incurred by Lender on behalf of Borrower, or otherwise,
and whether now existing or hereafter arising, including all Advances, inventory
loans, Accommodations, Finance Fees, interest, Administrative Fees, Early
Termination Fees, Facility Fees, attorneys' fees and expenses.
"Reserves" shall have the meaning set forth in Section 1.5.
"Security Agreement" shall mean the Security Agreement executed by
Borrower and Lender dated August 26 , 1996, pursuant to which Borrower grants to
Lender a security interest in and lien upon its personal property, as the same
may be amended, supplemented, extended or restated from time to time.
"Subordinated Creditors" shall mean NA.
"Term" shall have the meaning set forth in Section 8.2.
CORPDAL:64287.1 28722-00003
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
at the date first stated above.
"Borrower"
Information Systems Consulting Corp.
By:
----------------------
Title:
-------------------
Address of Borrower's Chief Executive Office and Principal Place
of Business
00000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
"Lender"
CONCORD GROWTH CORPORATION
By:
----------------------
Title:
-------------------
Address:
0000 Xxxx Xxxxxx Xxxxx
Xxxx Xxxx, XX 00000-0000
Telephone: 000-000-0000
Facsimile: 000-000-0000
CORPDAL:64287.1 28722-00003
16
ADDENDUM TO
LOAN AGREEMENT
The LOAN AGREEMENT dated August 26, 1996 (the "Agreement"), between
Concord Growth Corporation, a California corporation, and Information Systems
Consulting Corp., a corporation; and
The LOAN AGREEMENT dated August 26, 1996 (the "Agreement"), between
Concord Growth Corporation, a California corporation, and Preferred Funding
Corporation, a corporation, are hereby amended in the specific sections(s) as
follows:
Section 1.1 (b) Loans. Notwithstanding the terms set forth herein,
the Maximum Credit shall not at any time exceed the
lesser of One Million Dollars ($1,000,000) in
aggregate among the two above mentioned Borrowers.
THIS ADDENDUM AFFECTS ONLY THE ABOVE LISTED SECTION(S) OF THE AGREEMENT
AND ALL OTHER PROVISIONS OF THE AGREEMENT SHALL REMAIN UNCHANGED AND IN FORCE AS
WRITTEN OR THEREAFTER AMENDED IN WRITING.
This addendum is attached to and made a part of the Loan Agreement
between Lender and the undersigned on August 26, 1996.
BORROWER:
INFORMATION SYSTEMS CONSULTING CORP.
BY:
----------------------------------------
----------------------------------------
(PRINT NAME AND TITLE)
DATE:
--------------------------------------
BORROWER:
PREFERRED FUNDING CORPORATION
BY:
----------------------------------------
----------------------------------------
(PRINT NAME AND TITLE)
DATE:
--------------------------------------
CORPDAL:64287.1 28722-00003
17
