[LOGO]
LOAN AND SECURITY AGREEMENT
JAVELIN SYSTEMS, INC.
0000 XXXXXXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
FED. TAX ID NO. 00-0000000
CCI GROUP, INC.
00000 XXXXX XXXXX XXXXX
XXXXX XXXX, XXXXXXXX 00000
FED. TAX ID NO. 00-0000000
AND
POSNET COMPUTERS, INC.
00000 XXXXXXX, XXXXX X
XXXXXXXXXX XXXXX, XXXXXXXXXX 00000
FED. TAX ID NO. 00-0000000
AS BORROWERS
$7,500,000
CREDIT LIMIT
JUNE 8, 1998
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CORPORATE FINANCE
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TABLE OF CONTENTS
PAGE
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Other Terms. . . . . . . . . . . . . . . . . . . . . . . . . . .8
2. LOANS; INTEREST RATE AND OTHER CHARGES. . . . . . . . . . . . . . . .9
2.1 Total Facility . . . . . . . . . . . . . . . . . . . . . . . . .9
2.2 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
2.3 Overlines; Overadvances. . . . . . . . . . . . . . . . . . . . .9
2.4 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . .9
2.5 Loan Account . . . . . . . . . . . . . . . . . . . . . . . . . .9
2.6 Interest; Fees . . . . . . . . . . . . . . . . . . . . . . . . .9
2.7 Default Interest Rate. . . . . . . . . . . . . . . . . . . . . .9
2.8 Examination Fee. . . . . . . . . . . . . . . . . . . . . . . . .9
2.9 Excess Interest. . . . . . . . . . . . . . . . . . . . . . . . .9
2.10 Principal Payments; Proceeds of Collateral. . . . . . . . . . 11
2.11 Application of Collateral. . . . . . . . . . . . . . . . . . . 12
2.12 Application of Payments. . . . . . . . . . . . . . . . . . . . 13
2.13 Notification of Closing. . . . . . . . . . . . . . . . . . . . 13
3. SECURITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Security Interest in the Collateral. . . . . . . . . . . . . . 13
3.2 Perfection and Protection of Security Interest . . . . . . . . 14
3.3 Preservation of Collateral . . . . . . . . . . . . . . . . . . 14
3.4 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.5 Collateral Reporting; Inventory. . . . . . . . . . . . . . . . 15
3.6 Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.7 Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.8 Other Liens; No Disposition of Collateral. . . . . . . . . . . 16
3.9 Collateral Security. . . . . . . . . . . . . . . . . . . . . . 17
4. CONDITIONS OF CLOSING . . . . . . . . . . . . . . . . . . . . . . . 17
4.1 Initial Advance. . . . . . . . . . . . . . . . . . . . . . . . 17
4.2 Subsequent Advances. . . . . . . . . . . . . . . . . . . . . . 20
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . 21
5.1 DUE ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 OTHER NAMES. . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.3 DUE AUTHORIZATION. . . . . . . . . . . . . . . . . . . . . . . 21
5.4 BINDING OBLIGATION . . . . . . . . . . . . . . . . . . . . . . 21
5.5 INTANGIBLE PROPERTY. . . . . . . . . . . . . . . . . . . . . . 21
5.6 CAPITAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.7 MATERIAL LITIGATION. . . . . . . . . . . . . . . . . . . . . . 22
5.8 TITLE; SECURITY INTERESTS OF FINOVA. . . . . . . . . . . . . . 22
5.9 RESTRICTIVE AGREEMENTS; LABOR CONTRACTS. . . . . . . . . . . . 22
5.10 LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.11 CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.12 DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.13 FINANCIAL CONDITION. . . . . . . . . . . . . . . . . . . . . . 22
5.14 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.15 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.16 LOCATIONS; FEDERAL TAX ID NO.. . . . . . . . . . . . . . . . . 23
5.17 BUSINESS RELATIONSHIPS . . . . . . . . . . . . . . . . . . . . 23
5.18 YEAR 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.19 REAFFIRMATIONS . . . . . . . . . . . . . . . . . . . . . . . . 23
6. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1 Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . 23
6.2 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . 25
7. DEFAULT AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . 28
7.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . 28
7.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.3 Standards for Determining Commercial Reasonableness. . . . . . 30
8. EXPENSES AND INDEMNITIES. . . . . . . . . . . . . . . . . . . . . . 30
8.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.2 Environmental Matters . . . . . . . . . . . . . . . . . . . . 30
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TABLE OF CONTENTS
(CONTINUED)
PAGE
9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.1 Examination of Records; Financial Reporting. . . . . . . . . . 31
9.2 Term; Termination. . . . . . . . . . . . . . . . . . . . . . . 32
9.3 Recourse to Security; Certain Waivers. . . . . . . . . . . . . 32
9.4 No Waiver by FINOVA. . . . . . . . . . . . . . . . . . . . . . 32
9.5 Binding on Successor and Assigns . . . . . . . . . . . . . . . 32
9.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.7 Amendments; Assignments. . . . . . . . . . . . . . . . . . . . 33
9.8 Integration. . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.9 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.10 Evidence of Obligations. . . . . . . . . . . . . . . . . . . . 33
9.11 Loan Requests. . . . . . . . . . . . . . . . . . . . . . . . . 33
9.12 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.13 Brokerage Fees . . . . . . . . . . . . . . . . . . . . . . . . 34
9.14 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.15 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.16 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.17 Injunctive Relief. . . . . . . . . . . . . . . . . . . . . . . 34
9.18 Counterparts; Facsimile Execution. . . . . . . . . . . . . . . 34
9.19 Construction . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.20 Time of Essence. . . . . . . . . . . . . . . . . . . . . . . . 34
9.21 Limitation of Actions. . . . . . . . . . . . . . . . . . . . . 34
9.22 Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.23 Notice of Breach by FINOVA . . . . . . . . . . . . . . . . . . 35
9.24 Application of Insurance Proceeds. . . . . . . . . . . . . . . 35
9.25 Power of Attorney. . . . . . . . . . . . . . . . . . . . . . . 36
9.26 Governing Law; Waivers . . . . . . . . . . . . . . . . . . . . 36
9.27 Mutual Waiver of Right to Jury Trial . . . . . . . . . . . . . 36
9.28 Confidential Information . . . . . . . . . . . . . . . . . . . 37
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THIS LOAN AND SECURITY AGREEMENT (collectively with the Schedule to Loan
Agreement (the "SCHEDULE") attached hereto, the "AGREEMENT") dated the date set
forth on the cover page, is entered into by and between the borrowers named on
the cover page (jointly and severally, the "Borrower"), whose address is set
forth on the cover page and FINOVA CAPITAL CORPORATION ("FINOVA"), whose address
IS 000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000.
1. DEFINITIONS.
1.1 DEFINED TERMS. As used in this Agreement, the following terms
have the definitions set forth below:
"ADA" has the meaning set forth in Section 4.1(z) hereof.
"ADDITIONAL SUMS" has the meaning set forth in Section 2.9(a) hereof.
"AFFILIATE" means any Person controlling, controlled by or under common
control with Borrower. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause direction of
the management and policies of any Person, whether through ownership of common
or preferred stock or other equity interests, by contract or otherwise. Without
limiting the generality of the foregoing, each of the following shall be an
Affiliate: any (i) officer, (ii) director, (iii) management employee,
(iv) other agent of Borrower with the power to direct or cause direction of the
management and policies of Borrower, and (v) any Material Shareholder or
subsidiary of Borrower.
"AGREEMENT" has the meaning set forth in the preamble.
"APPLICABLE USURY LAW" has the meaning set forth in Section 2.9(b)
hereof.
"BUSINESS DAY" means any day on which commercial banks in both Los
Angeles, California and Phoenix, Arizona are open for business.
"CAPITAL EXPENDITURES" means all expenditures made and liabilities
incurred for the acquisition of any fixed asset or improvement, replacement,
substitution or addition thereto which has a useful life of more than one year
and including, without limitation, those arising in connection with Capital
Leases.
"CAPITAL LEASE" means any lease of property by Borrower that, in
accordance with GAAP, should be capitalized for financial reporting purposes and
reflected as a liability on the balance sheet of Borrower.
"CCI" means CCI Group, Inc., a Missouri corporation.
"CLOSING FEE" has the meaning set forth in the Schedule.
"CLOSING DATE" means the date of the initial advance made by FINOVA
pursuant to this Agreement.
"CODE" means the Uniform Commercial Code as adopted and in effect in the
State of Arizona from time to time.
"COLLATERAL" has the meaning set forth in Section 3.1 hereof.
"COLLATERAL MONITORING FEE" has the meaning set forth in the Schedule.
"CURRENT ASSETS" at any date means the amount at which the current assets
of Borrower would be shown on a balance sheet of Borrower as at such date,
prepared in accordance with GAAP, PROVIDED that amounts due from Affiliates,
investments in Affiliates and cash from customer deposits shall be excluded
therefrom.
"CURRENT LIABILITIES" at any date means the amount at which the current
liabilities of Borrower would be shown on a balance sheet of
FINOVA LOAN AND SECURITY AGREEMENT
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Borrower as at such date, prepared in accordance with GAAP, PROVIDED that
outstanding Revolving Credit Loans shall be considered Current Liabilities
hereunder and customer deposits shall be excluded therefrom.
"DEPOSIT ACCOUNTS" has the meaning set forth in Section 9105 of the Code.
"DISCOUNTED VALUE" has the meaning set forth in the Schedule.
"DOMINION ACCOUNT" has the meaning set forth in Section 2.10(c) hereof.
"ELIGIBLE INVENTORY" means Inventory of Borrower which FINOVA, in its
Permitted Discretion, deems Eligible Inventory, based on such considerations as
FINOVA may from time to time deem reasonably appropriate. Without limiting the
generality of the foregoing, no Inventory shall be Eligible Inventory unless, in
FINOVA's Permitted Discretion, such Inventory (i) consists of raw materials in
good, new and salable condition which are not obsolete or unmerchantable, and
are not comprised of work in process, packaging materials, finished goods,
products manufactured by Javelin (whether held as Inventory of Javelin, CCI or
Posnet) or supplies; (iii) meets in all material respects all applicable
standards imposed by any governmental agency or authority; (iv) conforms in all
material respects to the warranties and representations set forth herein; (v) is
at all times subject to FINOVA's duly perfected, first priority security
interest; and (vi) is situated at a location in compliance with Section 5.16
hereof.
"ELIGIBLE RECEIVABLES" means Receivables arising in the ordinary course
of Borrower's business from the sale of goods or rendition of services, which
FINOVA, in its Permitted Discretion, shall deem eligible based on such
considerations as FINOVA may from time to time deem reasonably appropriate.
Without limiting the foregoing, a Receivable shall not be deemed to be an
Eligible Receivable if (i) the account debtor has failed to pay the Receivable
within a period of ninety (90) days after invoice date or, if less, within sixty
(60) days from due date, to the extent of any amount remaining unpaid after such
period; (ii) the account debtor has failed to pay more than 25% of all
outstanding Receivables owed by it to Borrower within ninety (90) days after
invoice date or, if less, within sixty (60) days past due date; (iii) the
account debtor is an Affiliate of Borrower or is another entity comprising
Borrower; (iv) the goods relating thereto are placed on consignment, guaranteed
sale, "xxxx and hold," "COD" or other terms pursuant to which payment by the
account debtor may be conditional; (v) the account debtor is not located in the
United States, unless the Receivable is supported by a letter of credit or other
form of guaranty or security, in each case in form and substance satisfactory to
FINOVA; (vi) the account debtor is the United States or any department, agency
or instrumentality thereof or any State, city or municipality of the United
States; (vii) Borrower is liable to the account debtor for goods sold or
services rendered by the account debtor to Borrower, to the extent of such
liability; (viii) the account debtor's total obligations to Borrower exceed 15%
of all Eligible Receivables of Borrower, on an aggregate basis, to the extent of
such excess; (ix) the account debtor disputes liability or makes any claim with
respect thereto (up to the amount of such liability or claim), or is subject to
any insolvency or bankruptcy proceeding, or becomes insolvent, fails or goes out
of a material portion of its business; (x) the amount thereof consists of late
charges or finance charges; (xi) the amount thereof consists of a credit balance
more than ninety (90) days past due; (xii) the face amount thereof exceeds
$100,000, unless accompanied by evidence of shipment of the goods relating
thereto satisfactory to FINOVA in its Permitted Discretion; (xiii) the invoice
constitutes a progress billing on a project not yet completed, except that the
final billing at such time as the matter has been completed and delivered to the
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customer may be deemed an Eligible Receivable; or (xiv) the amount thereof is
not yet represented by an invoice or xxxx issued in the name of the applicable
account debtor.
"EQUIPMENT" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.
"ENVIRONMENTAL COSTS" has the meaning set forth in Section 8.2(b) hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
"ERISA AFFILIATE" means each trade or business (whether or not
incorporated and whether or not foreign) which is or may hereafter become a
member of a group of which Borrower is a member and which is treated as a single
employer under ERISA Section 4001(b)(1) or IRC Section 414(b) or 414(c).
"EVENT OF DEFAULT" means any of the events set forth in Section 7.1 of
this Agreement.
"EXAMINATION FEE" has the meaning set forth in the Schedule.
"EXCESS AVAILABILITY" means, as of the date of determination thereof, the
amount by which the average daily total principal balance of the Revolving
Credit Loans facility which Borrower would be permitted to have outstanding over
the prior 30 days, based on the formulas and reserves set forth in the
Schedule, exceeds the sum of the Receivable Loans and the Inventory Loans then
actually outstanding, such excess then being reduced by an amount necessary to
provide for the payment of all accounts payable of Borrower which are more than
30 days past due date and all book overdrafts.
"EXCESS CASH FLOW" means Operating Cash Flow/Permitted less Total
Contractual Debt Service.
"FINOVA AFFILIATE" has the meaning set forth in Section 9.22 hereof.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time as set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Boards which are applicable to the circumstances
as of the date of determination consistently applied, except that, for the
financial covenants set forth in this Agreement, GAAP shall be determined on the
basis of such principles in effect on the date hereof and consistent with those
used in the preparation of the audited financial statements delivered to FINOVA
prior to the date hereof.
"GENERAL INTANGIBLES" means all general intangibles of Borrower, whether
now 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, inventions, designs, drawings, blueprints,
Trademarks, Copyrights, Licenses and Patents, 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
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policies and claims (including without limitation credit, liability, property
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 to secure payment of any of the Receivables by an
account debtor, all rights to indemnification and all other intangible property
of every kind and nature (other than Receivables).
"GUARANTOR(S)" has the meaning set forth in the Schedule.
"HAZARDOUS SUBSTANCE" has the meaning set forth in Section 8.2(a) hereof.
"INDEBTEDNESS" means all of Borrower's present and future obligations,
liabilities, debts, claims and indebtedness, contingent, fixed or otherwise,
however evidenced, created, incurred, acquired, owing or arising, whether under
written or oral agreement, operation of law or otherwise, and includes, without
limiting the foregoing (i) the Obligations, (ii) obligations and liabilities of
any Person secured by a lien, claim, encumbrance or security interest upon
property owned by Borrower, even though Borrower has not assumed or become
liable therefor, (iii) obligations and liabilities created or arising under any
lease (including Capital Leases) or conditional sales contract or other title
retention agreement with respect to property used or acquired by Borrower, even
though the rights and remedies of the lessor, seller or lender are limited to
repossession, (iv) all unfunded pension fund obligations and liabilities and
(v) deferred taxes.
"INITIAL TERM" has the meaning set forth on the Schedule.
"INSURANCE COLLATERAL" has the meaning set forth in Section 4.1(u)
hereof.
"INVENTORY" means all of Borrower's now owned and hereafter acquired
goods, merchandise or other personal property, wherever located, to be furnished
under any contract of service or held for sale or lease, all raw materials, work
in process, finished goods and materials and supplies of any kind, nature or
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
documents of title or other documents representing them.
"INVENTORY LOANS" has the meaning set forth in the Schedule.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"JAVELIN" means Javelin Systems, Inc., a Delaware corporation.
"LIFE INSURANCE POLICY" has the meaning set forth in Section 4.1(u)
hereof.
"LOANS" has the meaning set forth in Section 2.2 hereof.
"LOAN DOCUMENTS" means, collectively, this Agreement, any note or notes
executed by Borrower and payable to FINOVA, and any other present or future
agreement entered into in connection with this Agreement, together with all
alterations, amendments, changes, extensions, modifications, refinancings,
refundings, renewals, replacements, restatements, or supplements, of or to any
of the foregoing.
"LOAN PARTY" means Borrower, each Guarantor, each Subordinating Creditor
and each other party (other than FINOVA) to any Loan Document.
"LOAN RESERVES" means, as of any date of determination, such amounts as
FINOVA may from time to time establish and revise in good faith in its Permitted
Discretion, reducing the amount of Revolving Credit Loans which would otherwise
be available to Borrower under the lending formula(s) provided in the Schedule:
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(a) to reflect events, conditions, contingencies or risks which, as determined
by FINOVA in good faith in its Permitted Discretion, do or could reasonably be
expected to affect either (i) the Collateral or any other property which is
security for the Obligations or its value, (ii) the assets, business or
prospects of Borrower or any Guarantor or (iii) the security interests and other
rights of FINOVA in the Collateral (including the enforceability, perfection and
priority thereof) or (b) to reflect FINOVA's good faith belief that any
collateral report or financial information furnished by or on behalf of Borrower
or any Guarantor to FINOVA is or may have been incomplete, inaccurate or
misleading in any material respect or (c) in respect of any state of facts which
FINOVA determines in good faith constitutes an Event of Default or may, with
notice or passage of time or both, constitute an Event of Default.
"LOAN YEAR" means each twelve month period commencing on the Closing Date
or any anniversary of the Closing Date.
"MAKE WHOLE PREMIUM" has the meaning set forth in the Schedule.
"MAXIMUM INTEREST RATE" has the meaning set forth in Section 2.9(b)
hereof.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a) the
Property, business, operations, financial condition, prospects, liabilities or
capitalization of Borrower, (b) the ability of Borrower to perform its
obligations under any of the Loan Documents to which it is a party, (c) the
validity or enforceability of any of the Loan Documents, (d) the rights
remedies, powers and privileges of FINOVA under any of the Loan Documents, or
(e) the timely payment of the Obligations.
"MATERIAL SHAREHOLDER" means a Person owning 5% or more of any class of
voting securities of Borrower.
"MINIMUM INTEREST CHARGE" has the meaning set forth in the Schedule.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in ERISA
Sections 3(37) or 4001(a)(3) or IRC Section 414(f) which covers employees of
Borrower or any ERISA Affiliate.
"NET WORTH" at any date means the Borrower's net worth as determined in
accordance with GAAP.
"OBLIGATIONS" means all present and future loans, advances, debts,
liabilities, obligations, covenants, duties and indebtedness at any time owing
by Borrower to FINOVA, whether evidenced by this Agreement, any Guaranty, any
note or other instrument or document executed and delivered pursuant to or in
connection with this Agreement, 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 FINOVA 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, expert witness fees, Examination Fee, Collateral Monitoring Fee, Closing
Fee, Termination Fee and any other sums chargeable to Borrower hereunder or
under any other agreement with FINOVA.
"OPERATING CASH FLOW/ACTUAL" means, for any period, Borrower's net income
or loss (excluding the effect of any extraordinary gains or losses), determined
in accordance with GAAP, PLUS or MINUS each of the following items, to the
extent deducted from or added to the revenues of Borrower in the calculation of
net income or loss: (i) depreciation; (ii) amortization and other non-cash
charges; (iii) interest expense; and (iv) total federal and state income tax
expense determined as the accrued liability of Borrower in respect of such
period, regardless of what portion of such expense has actually been paid by
Borrower
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during such period, and after deduction for each of (a) federal and state income
taxes, to the extent actually paid during such period; (b) any non-cash income;
and (c) all actual Capital Expenditures made during such period and not
financed.
"OPERATING CASH FLOW/PERMITTED" means, for any period, Borrower's net
income or loss (excluding the effect of any extraordinary gains or losses),
determined in accordance with GAAP, PLUS or MINUS each of the following items,
to the extent deducted from or added to the revenues of Borrower in the
calculation of net income or loss: (i) depreciation; (ii) amortization and
other non-cash charges; (iii) interest expense; and (iv) total federal and state
income tax expense determined as the accrued liability of Borrower in respect of
such period, regardless of what portion of such expense has actually been paid
by Borrower during such period, and after deduction for each of (a) federal and
state income taxes, to the extent actually paid during such period; (b) any
non-cash income; and (c) all permitted Capital Expenditures (without regard to
any waiver given by FINOVA with respect to any limitation on such Capital
Expenditures) actually made during such period and not financed.
"OVERADVANCE" has the meaning set forth in Section 2.3.
"OVERLINE" has the meaning set forth in Section 2.3.
"PBGC" means the Pension Benefit Guarantee Corporation.
"PERMITTED DISCRETION" means FINOVA's commercially reasonable judgment
exercised in good faith based upon its consideration of any factor which FINOVA
believes in good faith: (i) will or could materially adversely affect the value
of any material portion of Collateral, the enforceability or priority of
FINOVA's liens thereon or the amount which FINOVA would be likely to receive
(after giving consideration to delays in payment and costs of enforcement) in
the liquidation of such Collateral; (ii) suggests that any collateral report or
financial information delivered to FINOVA by any Person on behalf of the
Borrower is incomplete, inaccurate or misleading in any material respect;
(iii) materially increases the likelihood of a bankruptcy, reorganization or
other insolvency proceeding involving the Borrower, any Loan Party or any of the
Collateral, or (iv) creates or reasonably could be expected to create an Event
of Default. In exercising such judgment, FINOVA may consider such factors
already included in or tested by the definition of Eligible Receivables or
Eligible Inventory, as well as any of the following: (i) the financial and
business climate of the Borrower's industry and general macroeconomic
conditions, (ii) changes in collection history and dilution with respect to the
Receivables, (iii) changes in demand for, and pricing of, Inventory,
(iv) changes in any concentration of risk with respect to Receivables and/or
Inventory, and (v) any other factors that change the credit risk of lending to
the Borrower on the security of the Receivables and Inventory.
"PERMITTED ENCUMBRANCE" means each of the liens, mortgages and other
security interests (if any) set forth on the Schedule.
"PERMITTED SENIOR INDEBTEDNESS" has the meaning set forth in the
Schedule.
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, government, or any agency or political division thereof, or
any other entity.
"PLAN" means any plan described in ERISA Section 3(2) maintained for
employees of Borrower or any ERISA Affiliate, other than a Multiemployer Plan.
6
"PLEDGOR" has the meaning set forth in Section 4.1(bb) hereof.
"POSNET" means Posnet Computers, Inc., a California corporation.
"PREPARED FINANCIALS" means the balance sheets of Javelin as of the date
set forth in the Schedule in the section entitled 'Reporting Requirements', and
as of each subsequent date on which audited balance sheets are delivered to
FINOVA from time to time hereunder, and the related statements of operations,
changes in stockholders' equity and changes in cash flow for the periods ended
on such dates.
"PRIME RATE" has the meaning set forth in the Schedule.
"PROHIBITED TRANSACTION" means any transaction described in Section 406
of ERISA which is not exempt by reason of Section 408 of ERISA, and any
transaction described in IRC Section 4975(c) which is not exempt by reason of
IRC Section 4975(c)(2).
"PROPERTY" has the meaning set forth in Section 8.2(a) hereof.
"RECEIVABLE LOANS" has the meaning set forth on the Schedule.
"RECEIVABLES" means all of Borrower's now owned and hereafter acquired
accounts (whether or not earned by performance), proceeds of any letters of
credit naming Borrower as beneficiary, contract rights, chattel paper,
instruments, documents and all other forms of obligations at any time owing to
Borrower, all guaranties and other security therefor, whether secured or
unsecured, 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.
"REINVESTMENT YIELD" has the meaning set forth in the Schedule.
"REMAINING SCHEDULED PAYMENT AMOUNT" has the meaning set forth in the
Schedule.
"RENEWAL TERM" has the meaning set forth on the Schedule.
"REPORTABLE EVENT" means a reportable event described in ERISA Section
4043 or the regulations thereunder for which notice to the PBGC is not waived
under the applicable regulations, a withdrawal from a plan described in ERISA
Section 4063, or a cessation of operations described in ERISA Section 4062(e).
"REVOLVING CREDIT LOANS" has the meaning set forth in the Schedule.
"REVOLVING CREDIT LIMIT" has the meaning set forth in the Schedule.
"REVOLVING INTEREST RATE" has the meaning set forth in the Schedule.
"SCHEDULE" has the meaning set forth in the preamble.
"SENIOR CONTRACTUAL DEBT SERVICE" means, for any period, the sum of
payments made or required to be made by Borrower during such period for
(i) interest and scheduled principal payments due on the Term Loans (excluding
voluntary prepayment and payments made from Borrower's Excess Cash Flow, as
required pursuant to the Schedule), (ii) interest only payments due on the
Revolving Credit Loans facility plus the Collateral Monitoring Fee, the Facility
Fee and the Unused Line Fee, and (iii) principal and interest payments due on
the Permitted Senior Indebtedness.
"START DATE" has the meaning set forth in the Schedule.
"STOCK PLEDGE AGREEMENT" has the meaning set forth in Section 4.1(bb)
hereof.
"SUBORDINATED DEBT" means liabilities of Borrower the repayment of which
is subordinated to the payment and performance of the Obligations pursuant to a
subordination
7
agreement acceptable to FINOVA in its sole discretion.
"SUBORDINATING CREDITOR" has the meaning set forth in the Schedule.
"TERM LOAN" has the meaning set forth in the Schedule.
"TERMINATION FEE" has the meaning set forth in Section 9.2(d) hereof.
"TOTAL CONTRACTUAL DEBT SERVICE" means, for any period, the sum of
payments made (or, as to clause (i) of this sentence, required to be made) by
Borrower during such period for (i) Senior Contractual Debt Service, and
(ii) interest and scheduled principal payments due on any and all other
Indebtedness of Borrower, including without limitation the Subordinated
Indebtedness.
"TOTAL FACILITY" has the meaning set forth in Section 2.1 hereof.
"TRADEMARKS, COPYRIGHTS, LICENSES AND PATENTS" means all of Borrower's
right, title and interest in and to, whether now owned or hereafter acquired:
(i) trademarks, trademark registrations, trade names, trade name registrations,
and trademark or trade name applications, including without limitation such as
are listed on the Schedule attached hereto and made a part hereof, as the same
may be amended from time to time, and (a) renewals thereof, (b) all income,
royalties, damages and payments now and hereafter due and/or payable with
respect thereto, including without limitation, damages and payments for past or
future infringements thereof, (c) the right to xxx for past, present and future
infringements thereof, (d) all rights corresponding thereto throughout the
world, and (e) the goodwill of the business operated by Borrower connected with
and symbolized by any trademarks or trade names; (ii) copyrights, copyright
registrations and copyright applications, including without limitation such as
are listed on the Schedule attached hereto and made a part hereof, as the same
may be amended from time to time, and (a) renewals thereof, (b) all income,
royalties, damages and payments now and hereafter due and/or payable with
respect thereto, including without limitation, damages and payments for past or
future infringements thereof, (c) the right to xxx for past, present and future
infringements thereof, and (d) all rights corresponding thereto throughout the
world; (iii) license agreements, including without limitation such as are listed
on the Schedule attached hereto and made a part hereof, and the right to prepare
for sale, sell and advertise for sale any Inventory now or hereafter owned by
Borrower and now or hereafter covered by such licenses; and (iv) patents and
patent applications, registered or pending, including without limitation such as
are listed on the Schedule attached hereto, together with all income, royalties,
shop rights, damages and payments now and hereafter due and/or payable with
respect thereto, the right to xxx for infringements thereof, and all rights
thereto throughout the world and all reissues, divisions, continuations,
renewals, extensions and continuations-in-part thereof.
"UNUSED LINE FEE" has the meaning set forth in the Schedule.
"WARRANTS" has the meaning set forth on the schedule.
"WEIGHTED AVERAGE LIFE TO MATURITY" has the meaning set forth in the
Schedule.
1.2 OTHER TERMS. All accounting terms used in this Agreement, unless
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.
8
2. LOANS; INTEREST RATE AND OTHER CHARGES.
2.1 TOTAL FACILITY. Upon the terms and conditions set forth herein
and provided that no Event of Default or event which, with the giving of notice
or the passage of time, or both, would constitute an Event of Default, shall
have occurred and be continuing, FINOVA shall, upon the request of each company
comprising Borrower, make advances to such company from time to time in an
aggregate outstanding principal amount for all such companies not to exceed the
Total Facility amount (the "TOTAL FACILITY") set forth on the Schedule hereto,
or for each such company, its lending limit set forth on the Schedule hereto,
subject to deduction of Loan Reserves for accrued interest and other permitted
purposes, and less amounts FINOVA may be obligated to pay in the future on
behalf of Borrower. If the reason for FINOVA's implementation of a Loan Reserve
ceases to exist, FINOVA shall promptly release such Loan Reserve. The Schedule
is an integral part of this Agreement and all references to "herein", "herewith"
and words of similar import shall for all purposes be deemed to include the
Schedule.
2.2 LOANS. Advances under the Total Facility ("LOANS" and
individually, a "LOAN") shall be comprised of the amounts shown on the Schedule.
2.3 OVERLINES; OVERADVANCES. If at any time or for any reason the
outstanding amount of advances extended pursuant hereto exceeds any of the
dollar limitations ("OVERLINE") or percentage limitations ("OVERADVANCE") in the
Schedule, then Borrower shall, upon FINOVA's demand, immediately pay to FINOVA,
in cash, the full amount of such Overline or Overadvance which shall be applied
to reduce the outstanding principal balance of the Loans; PROVIDED, HOWEVER,
that Borrower shall have three (3) Business Days to cure an Overadvance (but not
an Overline) of less than $100,000. Without limiting Borrower's obligation to
repay to FINOVA on demand the amount of any Overline or Overadvance, Borrower
agrees to pay FINOVA interest on the outstanding principal amount of any
Overline or Overadvance, on demand, at the rate set forth on the Schedule and
applicable to the Revolving Credit Loans.
2.4 INTENTIONALLY OMITTED.
2.5 LOAN ACCOUNT. All advances made hereunder shall be added to and
deemed part of the Obligations when made. FINOVA may from time to time charge
all Obligations of Borrower to Borrower's loan account with FINOVA.
2.6 INTEREST; FEES. Borrower shall pay FINOVA interest on the daily
outstanding balance of the Obligations at the applicable per annum rates set
forth on the Schedule. Borrower shall also pay FINOVA the fees set forth on the
Schedule.
2.7 DEFAULT INTEREST RATE. Upon the occurrence and during the
continuation of an Event of Default, Borrower shall at FINOVA's election pay
FINOVA interest on the daily outstanding balance of the Obligations at rates per
annum which are in each case two percent (2%) in excess of the rate which would
otherwise be applicable thereto pursuant to the Schedule.
2.8 EXAMINATION FEE. Borrower agrees to pay to FINOVA the Examination
Fee in the amount set forth on the Schedule in connection with each audit or
examination of Borrower performed by FINOVA prior to or after the date hereof.
2.9 EXCESS INTEREST. The contracted for rate of interest of the loan
contemplated hereby, without limitation, shall consist of the following:
(i) the interest rate set forth on the Schedule, calculated and applied to
9
the principal balance of the Obligations in accordance with the provisions of
this Agreement; (ii) interest after an Event of Default, calculated and applied
to the amount of the Obligations in accordance with the provisions hereof; and
(iii) all Additional Sums (as herein defined), if any. Borrower agrees to pay an
effective contracted for rate of interest which is the sum of the
above-referenced elements. The Examination Fee, attorneys fees, expert witness
fees, collateral monitoring fees, closing fees, Unused Line Fees, Termination
Fees, Minimum Interest Charges, other charges, goods, things in action or any
other sums or things of value paid or payable by Borrower (collectively, the
"ADDITIONAL SUMS"), whether pursuant to this Agreement or any other documents or
instruments in any way pertaining to this lending transaction, or otherwise with
respect to this lending transaction, that under any applicable law may be deemed
to be interest with respect to this lending transaction, for the purpose of any
applicable law that may limit the maximum amount of interest to be charged with
respect to this lending transaction, shall be payable by Borrower as, and shall
be deemed to be, additional interest and for such purposes only, the agreed upon
and "contracted for rate of interest" of this lending transaction shall be
deemed to be increased by the rate of interest resulting from the inclusion of
the Additional Sums.
(b) It is the intent of the parties to comply with the
usury laws of the State of Arizona (the "APPLICABLE USURY LAW"). Accordingly,
it is agreed that notwithstanding any provisions to the contrary in this
Agreement, or in any of the documents securing payment hereof or otherwise
relating hereto, in no event shall this Agreement or such documents require the
payment or permit the collection of interest in excess of the maximum contract
rate permitted by the Applicable Usury Law (the "MAXIMUM INTEREST RATE"). In
the event (a) any such excess of interest otherwise would be contracted for,
charged or received from Borrower or otherwise in connection with the loan
evidenced hereby, or (b) the maturity of the Obligations is accelerated in whole
or in part, or (c) all or part of the Obligations shall be prepaid, so that
under any of such circumstances the amount of interest contracted for, shared or
received in connection with the loan evidenced hereby, would exceed the Maximum
Interest Rate, then in any such event (1) the provisions of this paragraph shall
govern and control, (2) neither Borrower nor any other Person now or hereafter
liable for the payment of the Obligations shall be obligated to pay the amount
of such interest to the extent that it is in excess of the Maximum Interest
Rate, (3) any such excess which may have been collected shall be either applied
as a credit against the then unpaid principal amount of the Obligations or
refunded to Borrower, at FINOVA's option, and (4) the effective rate of interest
shall be automatically reduced to the Maximum Interest Rate. It is further
agreed, without limiting the generality of the foregoing, that to the extent
permitted by the Applicable Usury Law; (x) all calculations of interest which
are made for the purpose of determining whether such rate would exceed the
Maximum Interest Rate shall be made by amortizing, prorating, allocating and
spreading during the period of the full stated term of the loan evidenced
hereby, all interest at any time contracted for, charged or received from
Borrower or otherwise in connection with such loan; and (y) in the event that
the effective rate of interest on the loan should at any time exceed the Maximum
Interest Rate, such excess interest that would otherwise have been collected had
there been no ceiling imposed by the Applicable Usury Law shall be paid to
FINOVA from time to time, if and when the effective interest rate on the loan
otherwise falls below the Maximum Interest Rate, to the extent that interest
paid to the date of calculation does not exceed the Maximum Interest Rate, until
the entire amount of interest which would otherwise have been collected had
there been no ceiling imposed by
10
the Applicable Usury Law has been paid in full. Borrower further agrees that
should the Maximum Interest Rate be increased at any time hereafter because of a
change in the Applicable Usury Law, then to the extent not prohibited by the
Applicable Usury Law, such increases shall apply to all indebtedness evidenced
hereby regardless of when incurred; but, again to the extent not prohibited by
the Applicable Usury Law, should the Maximum Interest Rate be decreased because
of a change in the Applicable Usury Law, such decreases shall not apply to the
indebtedness evidenced hereby regardless of when incurred.
2.10 PRINCIPAL PAYMENTS; PROCEEDS OF COLLATERAL.
(a) PRINCIPAL PAYMENTS. Except where evidenced by notes
or other instruments issued or made by Borrower to FINOVA specifically
containing payment provisions which are in conflict with this Section 2.10 (in
which event the conflicting provisions of said notes or other instruments shall
govern and control), that portion of the Obligations consisting of principal
payable on account of Loans shall be payable by Borrower to FINOVA immediately
upon the earliest of (i) the receipt by FINOVA or Borrower of any proceeds of
any of the Collateral, to the extent of said proceeds, (ii) the occurrence of an
Event of Default in consequence of which FINOVA elects to accelerate the
maturity and payment of such loans, or (iii) any termination of this Agreement
pursuant to Section 9.2 hereof; PROVIDED, HOWEVER, that any Overadvance or
Overline shall be payable on demand pursuant to the provisions of Section 2.3
hereof.
(b) COLLECTIONS. Until FINOVA notifies Borrower to the
contrary, Borrower may make collection of all Receivables for FINOVA by
directing all account debtors and other third parties to remit all payments
owing to Borrower to the respective Dominion Account. In the event Borrower
shall nevertheless directly receive any payments or other financial proceeds of
any Collateral outside of the Dominion Account, Borrower shall receive all such
payments as trustee of FINOVA and immediately deliver all payments to FINOVA in
their original form as set forth below, duly endorsed in blank or cause the same
to be deposited into a Dominion Account. FINOVA or its designee may, at any
time during the continuance of an Event of Default, notify account debtors that
the Receivables have been assigned to FINOVA and of FINOVA's security interest
therein, and may collect the Receivables directly and charge the collection
costs and expenses to Borrower's loan account. Borrower agrees that, in
computing the charges under this Agreement, all items of payment shall be deemed
applied by FINOVA on account of the Obligations two (2) Business Days after
receipt by FINOVA of good funds which have been finally credited to FINOVA's
account, whether such funds are received directly from Borrower or from the
Dominion Account bank, pursuant to Section 2.10(c) hereof, and this provision
shall apply regardless of the amount of the Obligations outstanding or whether
any Obligations are outstanding; PROVIDED that so long as no Event of Default is
continuing (i) proceeds of a secondary offering of Javelin's common stock may be
deposited directly to Javelin's operating account without first passing through
the Dominion Account, and (ii) items of payment received by FINOVA that are not
proceeds of Collateral shall, upon Borrower's written notice within five (5)
Business Days after the end of the month in which such items of payment are
received by FINOVA, be deemed applied by FINOVA on account of the Obligations on
the day of receipt by FINOVA of good funds which have been finally credited to
FINOVA's account; and, PROVIDED FURTHER, that if any such good funds are
received after 12:00 noon (Los Angeles time) on any Business Day or at any time
on any day not constituting a Business
11
Day, such funds shall be deemed received on the immediately following Business
Day. FINOVA is not, however, required to credit Borrower's account for the
amount of any item of payment which is unsatisfactory to FINOVA in its Permitted
Discretion and FINOVA may charge Borrower's loan account for the amount of any
item of payment which is returned to FINOVA unpaid.
(c) ESTABLISHMENT OF A LOCKBOX ACCOUNT OR DOMINION
ACCOUNT. Unless Borrower shall be otherwise directed by FINOVA in writing, each
of Javelin, CCI and Posnet shall cause all proceeds of Collateral to be
deposited into a depository account in the name of such company ("Dominion
Account") pursuant to an arrangement with FINOVA and such bank as may be
selected by such company and be acceptable to FINOVA which proceeds, unless
otherwise provided herein, shall be forwarded on a daily basis to such company's
loan account with FINOVA and applied in payment of the Obligations in such order
as FINOVA determines in its sole discretion. Borrower shall issue to any such
bank an irrevocable letter of instruction directing said bank to transfer such
funds so deposited to FINOVA, either to any account maintained by FINOVA at said
bank or by wire transfer to appropriate account(s) of FINOVA. All funds
deposited in a Dominion Account shall immediately become subject to the security
interest of FINOVA and Borrower shall obtain the agreement by such bank to waive
any offset rights against the funds so deposited. FINOVA assumes no
responsibility for any Dominion Account arrangement, including without
limitation, any claim of accord and satisfaction or release with respect to
deposits accepted by any bank thereunder.
(d) PAYMENTS WITHOUT DEDUCTIONS. Borrower shall pay
principal, interest, and all other amounts payable hereunder, or under any other
Loan Document, without any deduction whatsoever, including, but not limited to,
any deduction for any setoff or counterclaim.
(e) COLLECTION DAYS UPON REPAYMENT. In the event
Borrower repays the Obligations in full at any time hereafter, such payment in
full shall be credited (conditioned upon final collection) to Borrower's loan
account two (2) Business Days after FINOVA's receipt thereof.
(f) MONTHLY ACCOUNTINGS. FINOVA 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 FINOVA),
unless Borrower notifies FINOVA in writing to the contrary within thirty (30)
days after each account is rendered, describing the nature of any alleged errors
or admissions.
2.11 APPLICATION OF COLLATERAL. Except as otherwise provided herein,
FINOVA shall have the continuing and exclusive right to apply or, after notice
to Borrower, reverse and re-apply any and all payments to any portion of the
Obligations in such order and manner as FINOVA shall determine in its sole
discretion. To the extent that Borrower makes a payment or FINOVA receives any
payment or proceeds of the Collateral for Borrower's benefit which is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, debtor in possession, receiver or any
other party under any bankruptcy law, common law or equitable cause, or
otherwise, then, to such extent, the Obligations or part thereof intended to be
satisfied shall be revived and continue as if such payment or proceeds had not
been received by FINOVA.
12
2.12 APPLICATION OF PAYMENTS. The amount of all payments or amounts
received by FINOVA with respect to the Loan shall be applied to the extent
applicable under this Agreement: (i) first, to accrued interest through the date
of such payment, including any Default Interest; (ii) then, to any late fees,
overdue risk assessments, Examination Fee and expenses, collection fees and
expenses and any other fees and expenses due to FINOVA hereunder; and
(iii) last, the remaining balance, if any, to the unpaid principal balance of
the Loan; provided however, while an Event of Default exists under this
Agreement, or under any other Loan Document, each payment hereunder shall be
(x) at FINOVA's election, reasonably exercised, held as cash collateral to
secure Obligations relating to any contingent obligations arising under the Loan
Documents and/or (y) applied to amounts owed to FINOVA by Borrower as FINOVA in
its sole discretion may determine. In calculating interest and applying
payments as set forth above: (a) interest shall be calculated and collected as
provided in Section 2.10(b); (b) interest on the outstanding balance shall be
charged during any grace period permitted hereunder; (c) at the end of each
month, all accrued and unpaid interest and other charges provided for hereunder
shall be added to the principal balance of the Loan; and (d) to the extent that
Borrower makes a payment or FINOVA receives any payment or proceeds of the
Collateral for Borrower's benefit that is subsequently invalidated, set aside or
required to be repaid to any other Person, then, to such extent, the Obligations
intended to be satisfied shall be revived and continue as if such payment or
proceeds had not been received by FINOVA and FINOVA may adjust the Loan balances
as FINOVA, in its sole discretion, deems appropriate under the circumstances.
2.13 NOTIFICATION OF CLOSING. Borrower shall provide FINOVA with at
least forty-eight (48) hours prior written notice of the Closing Date, to enable
FINOVA to arrange for the availability of funds (subject to such longer period
as may be required if a fixed interest rate option is selected by Borrower for
the Term Loan). In the event the closing does not take place on the date
specified in Borrower's notice to FINOVA, other than through the fault of
FINOVA, Borrower agrees to reimburse FINOVA for FINOVA's costs to maintain the
necessary funds available for the closing, at the Term Interest Rate with
respect to the amount of the Term Loan specified in the Schedule, and at the
Revolving Interest Rate with respect to an amount equal to the initial advance
under the Revolving Credit Loans facility which is to be made on the Closing
Date, for the number of days which elapse between the date specified in
Borrower's notice and the date upon which the closing actually occurs (which
number of days shall not include the date specified in Borrower's notice, but
shall include the Closing Date).
3. SECURITY.
3.1 SECURITY INTEREST IN THE COLLATERAL. To secure the payment and
performance of the Obligations when due, Borrower hereby grants to FINOVA a
first priority security interest (subject only to Permitted Encumbrances) in all
of Borrower's now owned or hereafter acquired or arising Inventory, Equipment,
Receivables, life insurance policies and the proceeds thereof, Trademarks,
Copyrights, Licenses and Patents, Investment Property (as defined in Section
9-115 of the Code) and General Intangibles, including, without limitation, all
of Borrower's Deposit Accounts, money, any and all property now or at any time
hereafter in FINOVA's possession (including claims and credit balances), and all
proceeds (including proceeds of any insurance policies, proceeds of proceeds and
claims against third parties), all products and all books and records and
computer data related to any of the foregoing (all of the foregoing, together
with all other property in
13
which FINOVA may be granted a lien or security interest, is referred to herein,
collectively, as the "COLLATERAL"); PROVIDED that there shall be excluded from
the "Collateral" all licenses and other General Intangibles which by their terms
(if valid and enforceable) or as a matter of law are not assignable without the
consent of the licensor or other third Person where and to the extent that the
assignment effected by the foregoing creation of a security interest (or the
perfection thereof) would result in a default under such license or other
General Intangible for which the available remedies for such default would
include the right to terminate such license or other General Intangible;
PROVIDED FURTHER, however, that nothing herein shall be deemed to limit FINOVA's
security interest in the proceeds of or payments resulting from any such
excluded licenses or other General Intangibles.
3.2 PERFECTION AND PROTECTION OF SECURITY INTEREST. Borrower shall,
at its expense, take all reasonable actions requested by FINOVA at any time to
perfect, maintain, protect and enforce FINOVA's first priority security interest
and other rights in the Collateral and the priority thereof from time to time,
including, without limitation, (i) executing and filing financing or
continuation statements and amendments thereof as FINOVA shall require, all in
form and substance satisfactory to FINOVA, (ii) maintaining a perpetual
inventory and complete and accurate stock records, (iii) delivering to FINOVA
warehouse receipts covering any portion of the Collateral located in warehouses
and for which warehouse receipts are issued, and transferring Inventory to
warehouses designated by FINOVA, (iv) placing notations on Borrower's books of
account to disclose FINOVA's security interest therein and (v) delivering to
FINOVA all letters of credit on which Borrower is named beneficiary. FINOVA may
file, without Borrower's signature, one or more financing statements disclosing
FINOVA's security interest under this Agreement. Borrower agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement. If any Collateral
is at any time in the possession or control of any warehouseman, bailee or any
of Borrower's agents or processors, Borrower shall notify such Person of
FINOVA's security interest in such Collateral and, upon FINOVA's request,
instruct them to hold all such Collateral for FINOVA's account subject to
FINOVA's instructions. From time to time, Borrower shall, upon FINOVA's
request, execute and deliver confirmatory written instruments pledging the
Collateral to FINOVA, but Borrower's failure to do so shall not affect or limit
FINOVA's security interest or other rights in and to the Collateral. Until the
Obligations have been fully satisfied and FINOVA's obligation to make further
advances hereunder has terminated, FINOVA's security interest in the Collateral
shall continue in full force and effect.
3.3 PRESERVATION OF COLLATERAL. FINOVA may, in its Permitted
Discretion, at any time discharge any lien or encumbrance on the Collateral or
bond the same, pay any insurance, maintain guards, pay any service bureau,
obtain any record or take any other action to preserve the Collateral and charge
the cost thereof to Borrower's loan account as an Obligation.
3.4 INSURANCE. Borrower will maintain and deliver evidence to FINOVA
of such insurance as is required by FINOVA, written by insurers, in amounts, and
with lender's loss payee, additional insured, and other endorsements, reasonably
satisfactory to FINOVA. All premiums with respect to such insurance shall be
paid by Borrower as and when due. Accurate and certified copies of the policies
shall be delivered by Borrower to FINOVA. If Borrower fails to comply with this
Section, FINOVA may (but shall not be required to) procure such insurance and
14
endorsements at Borrower's expense and charge the cost thereof to Borrower's
loan account as an Obligation.
3.5 COLLATERAL REPORTING; INVENTORY.
(a) INVOICES. Borrower shall not re-date any invoice or
sale from the original date thereof or make sales on extended terms beyond those
customary in Borrower's industry, or otherwise extend or modify the term of any
Receivable. If Borrower becomes aware of any material matter affecting any
material Receivable, including information affecting the credit of the account
debtor thereon, Borrower shall promptly notify FINOVA in writing.
(b) INSTRUMENTS. In the event any one or more
Receivables in an aggregate amount in excess of $25,000 are or become evidenced
by one or more promissory notes, trade acceptances or any other instruments for
the payment of money, Borrower shall immediately deliver such instrument(s) to
FINOVA appropriately endorsed to FINOVA and, regardless of the form of any
presentment, demand, notice of dishonor, protest and notice of protest with
respect thereto, Borrower shall remain liable thereon until such instrument(s)
are paid in full.
(c) PHYSICAL INVENTORY. Borrower shall conduct a
physical count of the Inventory at such intervals as FINOVA reasonably requests
and promptly supply FINOVA with a copy of such accounts accompanied by a report
of the value (calculated at the lower of cost or market value on a first in,
first out basis) of the Inventory and such additional information with respect
to the Inventory as FINOVA may request from time to time. Notwithstanding the
foregoing, Borrower shall not be required to conduct more than two physical
counts of the Inventory during any calendar year in which no Event of Default
occurred or was continuing.
(d) RETURNS. For so long as no Event of Default has
occurred and is continuing and subject to the provisions of Section 3.6(b), 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 (sending a copy to
FINOVA) in the appropriate amount. In the event any attempted return occurs
after the occurrence of any Event of Default, Borrower shall (i) hold the
returned Inventory in trust for FINOVA, (ii) segregate all returned Inventory
from all of Borrower's other property, (iii) conspicuously label the returned
Inventory as FINOVA's property, and (iv) immediately notify FINOVA of the return
of any Inventory, specifying the reason for such return, the location and
condition of the returned Inventory, and on FINOVA's request deliver such
returned Inventory to FINOVA.
(e) CONSIGNMENTS. Borrower shall not consign any
Inventory.
3.6 RECEIVABLES.
(a) ELIGIBILITY. Borrower represents and warrants
that each Receivable covers and shall cover a bona fide sale or lease and
delivery by it of goods or the rendition by it of services in the ordinary
course of its business, and shall be for a liquidated amount and FINOVA's
security interest shall not, unless Borrower notifies FINOVA in writing, be
subject to any offset, deduction, counterclaim, rights of return or
cancellation, lien or other condition. If any representation or warranty herein
is breached as to any Receivable or any Receivable ceases to be an Eligible
Receivable for any reason other than payment thereof, then FINOVA may, in
addition to its other rights hereunder, designate
15
any and all Receivables owing by that account debtor as not Eligible
Receivables; PROVIDED, that FINOVA shall in any such event retain its security
interest in all Receivables, whether or not Eligible Receivables, until the
Obligations have been fully satisfied and FINOVA's obligation to provide loans
hereunder has terminated.
(ii) FINOVA, in the good faith exercise of its
Permitted Discretion based upon such business and other factors as it deems
material, at any time shall be entitled to (i) establish and increase or
decrease reserves against Eligible Receivables and Eligible Inventory,
(ii) reduce the advance rates in the Schedule or restore such advance rates to
any level equal to or below the advance rates set forth in the Schedule or
(iii) impose additional restrictions (or eliminate the same) to the standards of
eligibility set forth in the definitions of "Eligible Receivables" and "Eligible
Inventory." FINOVA may but shall not be required to rely on the schedules
and/or reports delivered to FINOVA in connection herewith in determining the
then eligibility of Receivables and Inventory. Reliance thereon by FINOVA from
time to time shall not be deemed to limit the right of FINOVA to revise advance
rates or standards of eligibility as provided above. Without limiting FINOVA's
discretion as described above, FINOVA shall establish a dilution reserve in an
amount equal to 1% of the gross amount of Receivables (excluding inter-Borrower
Receivables) for each percent of dilution between 7.5% and 10.0%, and equal to
2% of the gross amount of Receivables (excluding inter-Borrower Receivables) for
each percent of dilution in excess of 10.0%.
(b) DISPUTES. Borrower shall notify FINOVA promptly of
all disputes or claims and settle or adjust such disputes or claims at no
expense to FINOVA, but no discount, credit or allowance shall be granted to any
account debtor and no returns of merchandise shall be accepted by Borrower
without FINOVA's consent, except for discounts, credits and allowances made or
given in the ordinary course of Borrower's business. FINOVA may, at any time
after the occurrence and during the continuance of an Event of Default, settle
or adjust disputes or claims directly with account debtors for amounts and upon
terms which FINOVA considers advisable in its reasonable credit judgment and, in
all cases, FINOVA shall credit Borrower's loan account with only the net amounts
received by FINOVA in payment of any Receivables.
3.7 EQUIPMENT. Borrower shall keep and maintain the Equipment in good
operating condition and repair and make all necessary replacements thereto to
maintain and preserve the value and operating efficiency thereof at all times
consistent with Borrower's past practice, ordinary wear and tear excepted.
Borrower shall not permit any item of Equipment to become a fixture (other than
a trade fixture) to real estate or an accession to other property.
3.8 OTHER LIENS; NO DISPOSITION OF COLLATERAL. Borrower represents,
warrants and covenants that except for FINOVA's security interest, Permitted
Encumbrances, and such other liens, claims and encumbrances as may be permitted
by FINOVA in its sole discretion from time to time in writing, (a) all
Collateral is and shall continue to be owned by it free and clear of all liens,
claims and encumbrances whatsoever and (b) Borrower shall not, without FINOVA's
prior written approval, sell, encumber or dispose of or permit the sale,
encumbrance or disposal of any Collateral or all or any substantial part of any
of its other assets (or any interest of Borrower therein), except for the sale
of Inventory and obsolete or unusable equipment in the ordinary course of
Borrower's business. In the event FINOVA gives any such prior written approval
with respect to any such sale of Collateral, the same may be conditioned on the
sale price being equal to, or greater than,
16
an amount acceptable to FINOVA. The proceeds of any such sales of Collateral
shall be remitted to FINOVA pursuant to this Agreement for application to the
Obligations; provided that Borrower may use the proceeds of permitted Equipment
sales to purchase new or replacement Equipment to be used in its business.
3.9 COLLATERAL SECURITY. The Obligations shall constitute one loan
secured by the Collateral. FINOVA may, in its sole discretion, (i) exchange,
enforce, waive or release any of the Collateral, (ii) apply Collateral and
direct the order or manner of sale thereof as it may determine, and
(iii) settle, compromise, collect or otherwise liquidate any Collateral in any
manner without affecting its right to take any other action with respect to any
other Collateral.
4. CONDITIONS OF CLOSING.
4.1 INITIAL ADVANCE. The obligation of FINOVA to make the initial
advance hereunder is subject to the fulfillment, to the satisfaction of FINOVA
and its counsel, of each of the following conditions on or prior to the date set
forth on the Schedule (or such later date as is set forth in Section 4.1(p) and
4.1(u)):
(a) LOAN DOCUMENTS. FINOVA shall have received each of
the following Loan Documents: (i) the Agreement fully and properly executed by
Borrower; (ii) promissory notes in such amounts and on such terms and
conditions as FINOVA shall specify, executed by Borrower; (iii) Guaranties
executed by each of the Guarantors; (iv) such security agreements, intellectual
property assignments, pledge agreements, mortgages and deeds of trust as FINOVA
may reasonably require with respect to this Agreement and any Guaranties,
executed by each of the parties thereto and, if applicable, duly acknowledged
for recording or filing in the appropriate governmental offices;
(v) Subordination Agreements in form and substance acceptable to FINOVA,
executed by each of the Subordinating Creditors, together with copies of all
instruments subject thereto showing a legend indicating such subordination;
(vi) such Blocked Account or Dominion Account agreements as it shall determine;
and (vii) such other documents, instruments and agreements in connection
herewith as FINOVA shall reasonably require, executed, certified and/or
acknowledged by such parties as FINOVA shall designate;
(b) MINIMUM EXCESS AVAILABILITY. Borrower shall have
Excess Availability under the Revolving Credit Loans facility of not less than
the amount specified in the Schedule, after paying accounts payable to within
the number of days specified on the Schedule, after giving effect to the initial
advance hereunder and after giving effect to any applicable Loan Reserves
against borrowing availability under the Revolving Credit Loans.
(c) TERMINATIONS BY EXISTING LENDER. Borrower's
existing lender(s) shall have executed and delivered UCC termination statements
and other documentation evidencing the termination of its liens and security
interests in the assets of Borrower or a subordination agreement in form and
substance satisfactory to FINOVA in its sole discretion;
(d) CHARTER DOCUMENTS. FINOVA shall have received
copies of Borrower's By-laws and Articles or Certificate of Incorporation, as
amended, modified, or supplemented to the Closing Date, certified by the
Secretary of Borrower;
(e) GOOD STANDING. FINOVA shall have received a
certificate of corporate status with respect to Borrower, dated within ten (10)
days of the Closing Date, by the Secretary of State of the state of
incorporation
17
of Borrower, which certificate shall indicate that Borrower is in good standing
in such state;
(f) FOREIGN QUALIFICATION. FINOVA shall have received
certificates of corporate status with respect to Borrower and each other Loan
Party, each dated within ten (10) days of the Closing Date, issued by the
Secretary of State of each state in which such party's failure to be duly
qualified or licensed would have a material adverse effect on its financial
condition or assets, or on the ability of Borrower to collect its Receivables,
indicating that such party is in good standing;
(g) AUTHORIZING RESOLUTIONS AND INCUMBENCY. FINOVA
shall have received a certificate from the Secretary of Borrower attesting to
(i) the adoption of resolutions of Borrower's Board of Directors, and
shareholders or members if necessary, authorizing the borrowing of money from
FINOVA and execution and delivery of this Agreement and the other Loan Documents
to which Borrower is a party, and authorizing specific officers of Borrower to
execute same, and (ii) the authenticity of original specimen signatures of such
officers;
(h) INSURANCE. FINOVA shall have received the insurance
certificates and copies of policies required by Section 3.4 hereof, in form and
substance satisfactory to FINOVA and its counsel, together with an additional
insured endorsement in favor of FINOVA with respect to all liability policies
and a lender's loss payable endorsement in favor of FINOVA with respect to all
casualty and business interruption policies, each in form and substance
acceptable to FINOVA and its counsel;
(i) MERGER. Each of CCI's subsidiaries shall have
merged with and into CCI, with CCI as the surviving entity, all on terms and in
form and substance acceptable to FINOVA.
(j) SEARCHES; CERTIFICATES OF TITLE. FINOVA shall have
received searches reflecting the filing of its financing statements and fixture
filings in such jurisdictions as it shall determine, and shall have received
certificates of title with respect to the Collateral which shall have been duly
executed in a manner sufficient to perfect all of the security interests granted
to FINOVA;
(k) LANDLORD, BAILEE AND MORTGAGEE WAIVERS. FINOVA
shall have received landlord, bailee and/or mortgagee waivers from the lessors,
bailees and/or mortgagees of all locations requested by FINOVA where any
Collateral is located;
(l) FEES. Borrower shall have paid all fees payable by
it on the Closing Date pursuant to this Agreement;
(m) OPINION OF COUNSEL. FINOVA shall have received an
opinion of Borrower's counsel covering such matters as FINOVA shall determine in
its sole discretion;
(n) OFFICER CERTIFICATE. FINOVA shall have received a
certificate of the President and the Chief Financial Officer or similar official
of Borrower, attesting to the accuracy of each of the representations and
warranties of Borrower set forth in this Agreement and the fulfillment of all
conditions precedent to the initial advance hereunder;
(o) SOLVENCY CERTIFICATE. If requested, FINOVA shall
have received a signed certificate of the Borrower's duly elected Chief
Financial Officer concerning the solvency and financial condition of Borrower,
on FINOVA's standard form;
18
(p) DOMINION ACCOUNT. The Dominion Accounts referred to
in Section 2.10(c) hereof shall be established to the satisfaction of FINOVA in
its sole discretion within 30 days after the Closing Date;
(q) INTENTIONALLY OMITTED.
(r) INTENTIONALLY OMITTED.
(s) SEARCH AND REFERENCES. FINOVA shall have received
and approved the results of UCC, tax lien, litigation, judgment, and bankruptcy
searches regarding Borrower, and shall have received satisfactory customer,
vendor and credit reference checks on Borrower.
(t) INTENTIONALLY OMITTED.
(u) LIFE INSURANCE. FINOVA shall require that within 30
days after the Closing Date Borrower establish and maintain a life insurance
policy on the life of the persons specified in the Schedule in an amount
specified in the Schedule (the "LIFE INSURANCE POLICY"). The Life Insurance
Policy shall within 30 days after the Closing Date be collaterally assigned to
FINOVA (pursuant to an assignment in form satisfactory to FINOVA, hereinafter
referred to as the "ASSIGNMENT OF LIFE INSURANCE") and be accepted and
acknowledged in writing by the applicable insurer or its authorized
representative. Borrower hereby grants to FINOVA a security interest in the
Life Insurance Policy, all replacements thereof, any supplementary contract
issued in connection therewith, and all proceeds of the foregoing (including
without limitation, the beneficiary's interest therein, collectively referred to
as the "INSURANCE COLLATERAL") to secure Borrower's payment and performance of
all the Obligations. The insurer under the Life Insurance Policy and the terms
and conditions of the Life Insurance Policy are subject to the approval of
FINOVA. The original of the policy evidencing the Life Insurance Policy, signed
by an authorized insurance company representative, shall be delivered to FINOVA
at the closing together with a duly executed Collateral Assignment of Life
Insurance which has been accepted and acknowledged in writing by the applicable
insurer or its authorized representative. The Life Insurance Policy shall
require the insurer to provide FINOVA with thirty (30) days advance written
notice of any cancellation and/or any material change in coverage. Borrower
warrants and represents that it is and will be (throughout the entire term of
the Loan) the owner and beneficiary of the Life Insurance Policy.
Notwithstanding anything herein to the contrary, upon the maturity of the Life
Insurance Policy or upon the death of the individual insured, the proceeds of
the Life Insurance Policy shall be paid directly to FINOVA, shall (at the option
of FINOVA) be treated as a prepayment and, if treated as a prepayment, shall be
applied in order against (a) all of Borrower's Obligations, other than as set
forth in the remaining subsections of this paragraph, (b) all costs and expenses
of FINOVA in connection with such prepayment, (c) accrued interest, and (d) the
unpaid principal balance of the Loans in such manner as FINOVA shall elect. No
prepayment premium or Termination Fee shall be due and owing in connection with
such prepayment. To the extent that the proceeds of said Life Insurance Policy
exceed the amount of Borrower's Obligations, any such excess shall be paid by
FINOVA directly to Borrower. Notwithstanding anything to the contrary herein,
the obligations, undertakings and representations of Borrower under this
Section 4.1(u) shall survive the Closing Date and shall be a continuing
obligation and agreement of Borrower hereunder.
(v) NO MATERIAL ADVERSE CHANGES. Between March 31, 1998
19
and the Closing Date, there shall have occurred no material adverse change in
the business, operations, profits or prospects of Borrower or in the condition
of the assets of Borrower.
(w) MATERIAL AGREEMENTS. FINOVA shall have received,
reviewed and approved all material agreements to which Borrower shall be a
party.
(x) INTENTIONALLY OMITTED.
(y) INTENTIONALLY OMITTED.
(z) ADA COMPLIANCE. If necessary, as of the Closing
Date, Borrower shall be in compliance in all material respects with the
Americans with Disabilities Act of 1990 ("ADA") or, if any renovations of
Borrower's facilities or modifications of Borrower's employment practices shall
be required to bring them into compliance with the ADA, review and reasonable
approval by FINOVA of Borrower's proposed plan to come into such compliance.
Borrower shall deliver representations and warranties to FINOVA concerning
Borrower's compliance in all material respects with the ADA, and no evidence
shall have come to the attention of FINOVA indicating that Borrower is not in
compliance with the ADA (except to the extent that FINOVA has reviewed and
approved Borrower's plan to come into compliance).
(aa) INTENTIONALLY OMITTED.
(bb) STOCK PLEDGE. The Pledgor under the Stock Pledge
Agreement ("PLEDGOR") of even date herewith ("STOCK PLEDGE AGREEMENT") shall
have executed and delivered the Stock Pledge Agreement, pledging in favor of
FINOVA all of the issued and outstanding common capital stock of CCI and Posnet.
FINOVA shall be in possession on the Closing Date of original stock certificates
evidencing the shares of stock so pledged to FINOVA, and of undated stock powers
and Assignments Apart from Certificate, executed in blank by Pledgor with
respect to all such shares.
(cc) INTENTIONALLY OMITTED.
(dd) INTENTIONALLY OMITTED.
(ee) INTENTIONALLY OMITTED.
(ff) TRANSACTION COSTS. Borrower shall provide to
FINOVA a complete, itemized summary of all broker's fees or costs of investment
bankers paid or incurred by Borrower in connection with the making of the Loans.
(gg) SCHEDULE CONDITIONS. Borrower shall have complied
with all additional conditions precedent as set forth in the Schedule attached
hereto.
(hh) OTHER MATTERS. All other documents and legal
matters in connection with the transactions contemplated by this Agreement shall
have been delivered, executed and recorded and shall be in form and substance
satisfactory to FINOVA and its counsel including, without limitation, each of
the items listed on the Closing Checklist attached as EXHIBIT 4.1 hereto.
4.2 SUBSEQUENT ADVANCES. The obligation of FINOVA to make any advance
hereunder (including the initial advance) shall be subject to the further
conditions precedent that, on and as of the date of such advance: (a) the
representations and warranties of Borrower set forth in this Agreement shall be
accurate, before and after giving effect to such advance and to the application
of any proceeds thereof; (b) no Event of Default and no event
20
which, with notice or passage of time or both, would constitute an Event of
Default has occurred and is continuing, or would result from such advance or
from the application of any proceeds thereof; (c) no material adverse change has
occurred in the Borrower's business, operations, financial condition, in the
condition of the Collateral or other assets of Borrower or in the prospect of
repayment of the Obligations; and (d) FINOVA shall have received such other
approvals, opinions or documents as FINOVA shall reasonably request.
5. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants that:
5.1 DUE ORGANIZATION. It is a corporation duly organized, validly
existing and in good standing under the laws of the State set forth on the
Schedule, is qualified and authorized to do business and is in good standing in
all states in which such qualification and good standing are necessary in order
for it to conduct its business and own its property and where the failure to so
qualify could reasonably be expected to have a Material Adverse Effect, and has
all requisite power and authority to conduct its business as presently
conducted, to own its property and to execute and deliver each of the Loan
Documents to which it is a party and perform all of its Obligations thereunder,
and has not taken any steps to wind-up, dissolve or otherwise liquidate its
assets;
5.2 OTHER NAMES. Borrower has not, during the preceding five (5)
years, been known by or used any other corporate or fictitious name except as
set forth on the Schedule, nor has Borrower been the surviving corporation of a
merger or consolidation or acquired all or substantially all of the assets of
any Person during such time (other than (a) the December 1997 acquisition by
Javelin of the stock of CCI and Posnet and (b) the merger contemplated by
Section 4.1(i) hereof);
5.3 DUE AUTHORIZATION. The execution, delivery and performance by
Borrower of the Loan Documents to which it is a party have been authorized by
all necessary corporate action and do not and shall not constitute a violation
of any applicable law or of Borrower's Articles or Certificate of Incorporation
or By-Laws or any other document, agreement or instrument to which Borrower is a
party or by which Borrower or its assets are bound;
5.4 BINDING OBLIGATION. Each of the Loan Documents to which Borrower
is a party is the legal, valid and binding obligation of Borrower enforceable
against Borrower in accordance with its terms, except as enforcement thereof may
be limited by bankruptcy, insolvency or other laws affecting the enforcement of
creditors' rights generally or by the application of equitable principles;
5.5 INTANGIBLE PROPERTY. Borrower possesses adequate assets,
licenses, patents, patent applications, copyrights, trademarks, trademark
applications and trade names for the present and planned future conduct of its
business without any known conflict with the rights of others, and each is valid
and, to the extent Borrower has, in accordance with Section 6.1.15 hereof or in
the exercise of its business judgment determined to register or file the same,
has been duly registered or filed with the appropriate governmental authorities;
each of Borrower's patents, patent applications, copyrights, trademarks and
trademark applications which have been registered or filed with any governmental
authority (including the U.S. Patent and Trademark Office and the Library of
Congress) are listed by name, date and filing number on the Schedule;
21
5.6 CAPITAL. Borrower has capital sufficient to conduct its business,
is able to pay its debts as they mature, and owns property having a fair salable
value greater than the amount required to pay all of its debts (including
contingent debts);
5.7 MATERIAL LITIGATION. Borrower has no pending or overtly
threatened litigation, actions or proceedings which would materially and
adversely affect its business, assets, operations, prospects or condition,
financial or otherwise, or the Collateral or any of FINOVA's interests therein;
5.8 TITLE; SECURITY INTERESTS OF FINOVA. Borrower has good and
merchantable title to the Collateral and, upon the execution and delivery of the
Loan Documents, the filing of UCC-1 Financing Statements, delivery of the
certificate(s) evidencing any pledged securities, the filing of any collateral
assignments or security agreements regarding Trademarks, Copyrights, Licenses
and/or Patents, if any, with the appropriate governmental offices and the
recording of any mortgages or deeds of trust with respect to real property, in
each case in the appropriate offices, this Agreement and such documents shall
create valid and perfected first priority liens in the Collateral, subject only
to Permitted Encumbrances;
5.9 RESTRICTIVE AGREEMENTS; LABOR CONTRACTS. Borrower is not a party
or subject to any contract or subject to any charge, corporate restriction,
judgment, decree or order materially and adversely affecting its business,
assets, operations, prospects or condition, financial or otherwise, or which
restricts its right or ability to incur Indebtedness, and it is not party to any
labor dispute. In addition, no labor contract is scheduled to expire during the
Initial Term of this Agreement, except as disclosed to FINOVA in writing prior
to the date hereof;
5.10 LAWS. Borrower is not in violation of any applicable statute,
regulation, ordinance or any order of any court, tribunal or governmental
agency, in any respect materially and adversely affecting the Collateral or its
business, assets, operations, prospects or condition, financial or otherwise;
5.11 CONSENTS. Borrower has obtained or caused to be obtained or
issued any required consent of a governmental agency or other Person in
connection with the financing contemplated hereby;
5.12 DEFAULTS. Borrower is not in default with respect to any note,
indenture, loan agreement, mortgage, lease, deed or other agreement to which it
is a party or by which it or its assets are bound, having an aggregate amount
outstanding of at least $100,000, nor has any event occurred which, with the
giving of notice or the lapse of time, or both, would cause such a default;
5.13 FINANCIAL CONDITION. The Prepared Financials fairly present
Borrower's financial condition and results of operations and those of such other
Persons described therein as of the date thereof in accordance with GAAP; there
are no material omissions from the Prepared Financials or other material facts
or circumstances not reflected in the Prepared Financials; and there has been no
material and adverse change in such financial condition or operations since the
date of the initial Prepared Financials delivered to FINOVA hereunder;
5.14 ERISA. The Borrower and any Plans are in compliance in all
material respects with the provisions of ERISA and the qualification
requirements of IRC Section 401(a) and Borrower has received no notice
indicating that it or any Plan does not so comply. No notice of intent to
terminate a Plan has been filed under Section 4041 of ERISA, nor has any Plan
been terminated under ERISA.
22
The PBGC has not instituted proceedings to terminate, or appointed a trustee to
administer, a Plan. No lien upon the assets of Borrower has arisen with respect
to a Plan. No Prohibited Transaction or Reportable Event has occurred with
respect to a Plan. Neither Borrower nor any ERISA Affiliate has incurred any
withdrawal liability with respect to any Multiemployer Plan. Borrower and each
ERISA Affiliate have made all contributions required to be made by them to any
Plan or Multiemployer Plan when due. There is no accumulated funding deficiency
in any Plan, whether or not waived;
5.15 TAXES. Borrower has filed all tax returns and such other reports
as it is required by law to file and has paid or made adequate provision for the
payment on or prior to the date when due of all taxes, assessments and similar
charges that are due and payable, except to the extent Borrower in good faith
and by appropriate proceedings is contesting its liability thereunder and has
fully reserved such amounts in its financial statements, provided that in any
such case no lien could arise in favor of a taxing authority, which lien could
impair the enforceability or priority of FINOVA's security interest in the
Collateral;
5.16 LOCATIONS; FEDERAL TAX ID NO. Borrower's chief executive office
and the offices and locations where it keeps the Collateral (except for
Inventory in transit) are at the locations set forth on the Schedule, except to
the extent that such locations may have been changed after notice to FINOVA in
accordance with Section 6.4 hereof; Borrower's federal tax identification number
is as shown on the Schedule;
5.17 BUSINESS RELATIONSHIPS. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower and any customer or any group of
customers whose purchases individually or in the aggregate are material to the
business of Borrower, or with any material supplier, and there exists no present
condition or state of facts or circumstances which would materially and
adversely affect Borrower or prevent Borrower from conducting such business
after the consummation of the transactions contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted;
5.18 YEAR 2000. Borrower has taken all action necessary to assure that
there will be no material adverse change to Borrower's business by reason of the
advent of the year 2000, including without limitation that all computer-based
systems, embedded microchips and other processing capabilities effectively
recognize and process dates after April 1, 1999; and
5.19 REAFFIRMATIONS. Each request for a loan made by Borrower pursuant
to this Agreement shall constitute (i) an automatic representation and warranty
by Borrower to FINOVA that there does not then exist any Event of Default and
(ii) a reaffirmation as of the date of said request of all of the
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents.
6. COVENANTS.
6.1 AFFIRMATIVE COVENANTS. Borrower covenants that, so long as any
Obligation remains outstanding and this Agreement is in effect, it shall:
6.1.1 TAXES. File all tax returns and pay or make adequate
provision for the payment of all taxes, assessments and other charges on or
prior to the date when due, except to the extent Borrower in good faith and by
23
appropriate proceedings is contesting its liability thereunder and has fully
reserved such amounts in its financial statements, provided that in any such
case no lien could arise in favor of a taxing authority, which lien could impair
the enforceability or priority of FINOVA's security interest in the Collateral;
6.1.2 NOTICE OF LITIGATION. Promptly notify FINOVA in writing
of any litigation, suit or administrative proceeding which may materially and
adversely affect the Collateral or Borrower's business, assets, operations,
prospects or condition, financial or otherwise, whether or not the claim is
covered by insurance;
6.1.3 ERISA. Notify FINOVA in writing (i) promptly upon the
occurrence of any Reportable Event with respect to a Plan, other than a
termination, partial termination or merger of a Plan or a transfer of a Plan's
assets and (ii) prior to any termination, partial termination or merger of a
Plan or a transfer of a Plan's assets;
6.1.4 CHANGE IN LOCATION. Notify FINOVA in writing thirty (30)
days prior to any change in the location of Borrower's chief executive office or
the location of any Collateral, or Borrower's opening or closing of any other
place of business;
6.1.5 CORPORATE EXISTENCE. Maintain its corporate existence and
its qualification to do business and good standing in all states necessary for
the conduct of its business and the ownership of its property and maintain
adequate assets, licenses, patents, copyrights, trademarks and trade names for
the conduct of its business;
6.1.6 LABOR DISPUTES. Promptly notify FINOVA in writing of any
labor dispute to which Borrower is or may become subject and the expiration of
any labor contract to which Borrower is a party or bound;
6.1.7 VIOLATIONS OF LAW. Promptly notify FINOVA in writing of
any violation of any law, statute, regulation or ordinance of any governmental
entity, or of any agency thereof, applicable to Borrower and of which Borrower
becomes aware which may materially and adversely affect the Collateral or
Borrower's business, assets, prospects, operations or condition, financial or
otherwise;
6.1.8 DEFAULTS. Notify FINOVA in writing within five (5)
Business Days of Borrower's default under any note, indenture, loan agreement,
mortgage, lease or other agreement to which Borrower is a party or by which
Borrower is bound, or of any other default under any Indebtedness of Borrower
under which at least $25,000 remains outstanding;
6.1.9 CAPITAL EXPENDITURES. Promptly notify FINOVA in writing
of the making of any Capital Expenditure in excess of $100,000;
6.1.10 BOOKS AND RECORDS. Keep adequate records and books of
account with respect to its business activities in which proper entries are made
in accordance with GAAP, reflecting all of its financial transactions;
6.1.11 LEASES; WAREHOUSE AGREEMENTS. Provide FINOVA, promptly
after entering into any Lease, storage agreement, or similar arrangement, with
(i) copies of all agreements between Borrower and any landlord, warehouseman or
bailee which owns any premises at which any Collateral may, from time to time,
be located (whether for processing, storage or otherwise), and (ii) without
limiting the landlord, bailee and/or mortgagee waivers to be provided
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pursuant to Section 4.1(k) hereof, additional landlord, bailee and/or mortgagee
waivers in form acceptable to FINOVA with respect to all locations reasonably
requested by FINOVA where any Collateral is hereafter located. In addition,
Javelin covenants that it will not modify, nor will it permit the modification
of, its lease for the Irvine, California facility on terms less favorable to
Javelin;
6.1.12 ADDITIONAL DOCUMENTS. At FINOVA's reasonable request,
promptly execute or cause to be executed and delivered to FINOVA any and all
documents, instruments or agreements deemed necessary by FINOVA to facilitate
the collection of the Obligations or the Collateral or otherwise to give effect
to or carry out the terms or intent of this Agreement or any of the other Loan
Documents. Without limiting the generality of the foregoing, if any of the
Receivables with a face value in excess of $25,000 arises out of a contract with
the United States of America or any department, agency, subdivision or
instrumentality thereof, Borrower shall promptly notify FINOVA of such fact in
writing;
6.1.13 FINANCIAL COVENANTS. Comply with the financial covenants
set forth on the Schedule;
6.1.14 YEAR 2000. Borrower shall take all action necessary to
assure that there will be no material adverse change to Borrower's business by
reason of the advent of the year 2000, including without limitation that all
computer-based systems, embedded microchips and other processing capabilities
effectively recognize and process dates after April 1, 1999. At FINOVA's
reasonable request, Borrower shall provide to FINOVA assurance reasonably
acceptable to FINOVA that Borrower's computer-based systems, embedded microchips
and other processing capabilities are year 2000 compatible;
6.1.15 COPYRIGHTS. Borrower shall promptly and duly register
with the United States Copyright Office all of Borrower's copyrightable
material, unless FINOVA consents in writing to Borrower's election not to so
register such material; and
6.1.16 LOCATIONS OF COLLATERAL; WAIVERS. Not later than June 30,
1998, all Collateral pledged by Javelin and Posnet will be situated at 00000
Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx 00000, and Borrower shall have delivered to
FINOVA a landlord waiver duly executed and notarized by the owner of such real
property, and not later than September 5, 1998, all Collateral pledged by CCI
will be situated at CCI's new Earth City, Missouri location, and Borrower shall
have delivered to FINOVA a landlord waiver duly executed and notarized by the
owner of such real property, each such landlord waiver to be acceptable to
FINOVA in its discretion. Without limiting the foregoing, FINOVA shall
establish a Loan Reserve against CCI's revolving line of credit in an amount
equal to three months' rent at 00000 Xxxxx Xxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxx,
such Loan Reserve to remain in place until CCI has completed its move to the new
location. Until such move has been completed, CCI shall deliver to FINOVA each
month a copy of its rent check for the 00000 Xxxxx Xxxxx North location.
6.2 NEGATIVE COVENANTS. Without FINOVA's prior written consent, so
long as any Obligation remains outstanding and this Agreement is in effect,
Borrower shall not:
6.2.1 MERGERS. Merge or consolidate with (other than the merger
of CCI and/or Posnet with and into Javelin, so long as Javelin is the surviving
entity and FINOVA has received not less than ten Business Days prior
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notice of such merger) or acquire any other Person, or make any other material
change in its capital structure or in its business or operations which might
have a Material Adverse Effect;
6.2.2 LOANS. Make advances, loans or extensions of credit to
(other than trade credit in the ordinary course of Borrower's business,
consistent with past practice), or invest in, any Person, except for loans or
cash advances to employees which are permitted in the Schedule;
6.2.3 DIVIDENDS. Declare or pay cash dividends upon any of its
stock or distribute any of its property or redeem, retire, purchase or acquire
directly or indirectly any of its stock; PROVIDED THAT Javelin may pay cash
dividends on its common stock if, and only if, both immediately before and
immediately after giving effect to such distribution (i) no Default or Event of
Default exists, (ii) Borrower has Excess Availability of not less than
$1,500,000, and (iii) Borrower's Total Debt Service Coverage Ratio is not less
than 1.5:1.0;
6.2.4 ADVERSE TRANSACTIONS. Enter into any transaction which
materially and adversely affects the Collateral or its ability to repay the
Obligations in full as and when due;
6.2.5 INDEBTEDNESS OF OTHERS. Guarantee or become directly or
contingently liable for the Indebtedness of any Person, except by endorsement of
instruments for deposit and except for the existing guarantees made by Borrower
prior to the date hereof, if any, which are set forth in the Schedule and the
Guaranties in favor of FINOVA;
6.2.6 REPURCHASE. Make a sale to any customer on a
xxxx-and-hold, guaranteed sale, sale and return, sale on approval, consignment,
or any other repurchase or return basis, other than sales to Nimax, Inc. and
Scansource, Inc. pursuant to which such customers have the option, on a
quarterly basis, to return inventory, but only so long as (i) such customer is
required to place an offsetting order of equal or greater value, and (ii) the
maximum return in any given quarter is limited to 15% of the prior quarter's net
sales to such customer; PROVIDED that if Borrower's Senior Debt Service Coverage
Ratio is below 1.3:1.0 at any time, FINOVA may (in addition to its other rights
and remedies hereunder) consider such Receivables ineligible or create
appropriate Loan Reserves.
6.2.7 NAME. Use any corporate or fictitious name other than its
corporate name as set forth in its Articles or Certificate of Incorporation on
the date hereof or as set forth on the Schedule;
6.2.8 PREPAYMENT. Prepay any Indebtedness other than trade
payables and other than the Obligations;
6.2.9 CAPITAL EXPENDITURE. Make or incur any Capital
Expenditure if, after giving effect thereto, the aggregate amount of all Capital
Expenditures by Borrower in any fiscal year would exceed the amount set forth on
the Schedule;
6.2.10 COMPENSATION. Pay total compensation, including salaries,
withdrawals, fees, bonuses, commissions, drawing accounts and other payments,
whether directly or indirectly, in money or otherwise, during any fiscal year to
all of Borrower's executives, officers and directors (or any relative thereof)
in an amount in excess of the amount set forth on the Schedule;
6.2.11 INDEBTEDNESS. Create, incur, assume or permit to exist
any Indebtedness (including Indebtedness in connection with Capital Leases) in
excess of the amount set forth on the Schedule, other than (i) the Obligations,
(ii) trade payables and other contractual obligations to suppliers and
26
customers incurred in the ordinary course of business, and (iii) other
Indebtedness existing on the date of this Agreement and reflected in the
Prepared Financials (except Indebtedness paid on the date of this Agreement from
proceeds of the initial advances hereunder), and (iv) Subordinated Debt;
6.2.12 AFFILIATE TRANSACTIONS. Except as set forth below, sell,
transfer, distribute or pay any money or property to any Affiliate, or invest in
(by capital contribution or otherwise) or purchase or repurchase any stock or
Indebtedness, or any property, of any Affiliate, or become liable on any
guaranty of the indebtedness, dividends or other obligations of any Affiliate
(other than pursuant to the Guaranties in favor of FINOVA and the unsecured
guaranty, if any, by Javelin of lease payments owing by Javelin Systems Europe,
Ltd.). Notwithstanding the foregoing, Borrower may pay compensation permitted
by Section 6.2.10 to employees who are Affiliates and, if no Event of Default
has occurred, each company comprising Borrower may (i) engage in transactions
with Affiliates in the normal course of business, in amounts and upon terms
which are fully disclosed to FINOVA and which are no less favorable to such
company than would be obtainable in a comparable arm's length transaction with a
Person who is not an Affiliate, (ii) make transfers to another company
comprising Borrower, provided that the aggregate amount of such transfers by any
such company do not exceed $150,000 (in cash or fair market value of property)
in any 12 consecutive month period, and (iii) make loans to another company
comprising Borrower, provided that the aggregate outstanding amount of such
loans by any such company do not exceed $150,000 (in cash or fair market value
of property) at any time;
6.2.13 NATURE OF BUSINESS. Enter into any new business or make
any material change in any of Borrower's business objectives, purposes or
operations;
6.2.14 FINOVA'S NAME. Use the name of FINOVA in connection with
any of Borrower's business or activities, except in connection with internal
business matters or as required in dealings with governmental agencies and
financial institutions or with trade creditors of Borrower, solely for credit
reference purposes; or
6.2.15 MARGIN SECURITY. Borrower will not (and has not in the
past) engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation G or Regulation U issued by the Board of
Governors of the Federal Reserve System), and no proceeds of any Loan or other
advance 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, or in any
manner which might cause such Loan or other advance or the application of such
proceeds to violate (or require any regulatory filing under) Regulation G,
Regulation T, Regulation U, Regulation X or any other regulation of the Board of
Governors of the Federal Reserve System, in each case as in effect on the date
or dates of such Loan or other advance and such use of proceeds. Further, no
proceeds of any Loan or other advance will be used to acquire any security of a
class which is registered pursuant to Section 12 of the Securities Exchange Act
of 1934.
6.2.16 REAL PROPERTY. Purchase or acquire any real property
without FINOVA's prior written consent, which consent shall not be unreasonably
withheld but a condition of which consent may at FINOVA's election include
delivery of appropriate environmental reports and analysis, in form and
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substance satisfactory to FINOVA and its counsel.
7. DEFAULT AND REMEDIES.
7.1 EVENTS OF DEFAULT. Any one or more of the following events shall
constitute an Event of Default under this Agreement:
(a) Borrower fails to pay when due and payable any
portion of the Obligations at stated maturity, upon acceleration or otherwise
(subject to the proviso at the end of the first sentence of Section 2.3 hereof);
(b) (i) Borrower fails or neglects to perform, keep or
observe any covenant contained in Sections 6.1.1, 6.1.4, 6.1.5, 6.1.14, 6.1.16
or 6.2.2, or the Net Worth or Current Ratio Covenants set forth on the Schedule,
and such failure or neglect shall continue for more than five (5) days after
such performance was due, or if such failure is not suspectible to cure within
such period, Borrower shall have such additional time as is reasonably required
to effect such cure, not to exceed ten (10) additional days; or (ii) Borrower or
any Guarantor fails or neglects to perform, keep, or observe any other
Obligation including, but not limited to, any other term, provision, condition,
covenant or agreement contained in any Loan Document to which Borrower or such
other Loan Party is a party;
(c) Any material adverse change occurs in Borrower's
business, assets, operations, prospects or condition, financial or otherwise (on
a consolidated basis);
(d) The prospect of repayment of any portion of the
Obligations or the value or priority of FINOVA's security interest in the
Collateral is materially impaired;
(e) Any portion of Borrower's assets with an aggregate
value in excess of $50,000 is seized, attached, subjected to a writ or distress
warrant, is levied upon or comes into the possession of any judicial officer;
(f) Borrower shall generally not pay its debts as they
become due or shall enter into any agreement (whether written or oral), or offer
to enter into any agreement, with all or a significant number of its creditors
regarding any moratorium or other indulgence with respect to its debts or the
participation of such creditors or their representatives in the supervision,
management or control of the business of Borrower;
(g) Any bankruptcy or other insolvency proceeding is
commenced by Borrower, or any such proceeding is commenced against Borrower and
remains undischarged or unstayed for forty-five (45) days;
(h) Any notice of lien, levy or assessment is filed of
record with respect to any of Borrower's assets with an aggregate value in
excess of $50,000;
(i) Any judgments are entered against Borrower in an
aggregate amount exceeding $50,000 in any fiscal year;
(j) Any default shall occur under (i) any material
agreement between Borrower and any third party, which default could reasonably
be expected to have a Material Adverse Effect, including, without limitation,
any default which would result in a right by such third party to accelerate the
maturity of any Indebtedness of Borrower to such third party having an aggregate
amount outstanding of at least $50,000, or (ii) any Subordinated Debt;
(k) Any representation or warranty made or deemed to be
made by Borrower or any Guarantor, any Affiliate or any other Loan Party in any
Loan Document or any other statement, document or
28
report made or delivered to FINOVA in connection therewith shall prove to have
been misleading in any material respect;
(l) Any Guarantor terminates or attempts to terminate
its Guaranty or any security therefor or becomes subject to any bankruptcy or
other insolvency proceeding;
(m) Any of the following which could have a material
adverse effect on the financial condition of Borrower: any Prohibited
Transaction or any Reportable Event shall occur with respect to a Plan; any lien
upon the assets of Borrower in connection with any Plan shall arise; Borrower or
any of its ERISA Affiliates shall fail to make full payment when due of all
amounts which Borrower or any of its ERISA Affiliates may be required to pay to
any Plan or any Multiemployer Plan as one or more contributions thereto;
Borrower or any of its ERISA Affiliates creates or permits the creation of any
accumulated funding deficiency in any Plan, whether or not waived; or
(n) Any one of the Xxxxxx Xxxxx, Xxxxxxx X. Xxxxx or C.
Xxxxxx Xxxxxxxx shall cease to be employed by Borrower in an executive capacity,
and Borrower shall fail to replace such person within 90 days with a person
reasonably acceptable to FINOVA.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, FINOVA
RESERVES THE RIGHT TO CEASE MAKING ANY LOANS DURING ANY CURE
PERIOD STATED ABOVE, AND THEREAFTER IF AN EVENT OF DEFAULT HAS
OCCURRED.
7.2 REMEDIES. Upon the occurrence of an Event of Default, FINOVA may,
at its option and in its sole discretion and in addition to all of its other
rights under the Loan Documents, cease making Loans, terminate this Agreement
and/or declare all of the Obligations to be immediately payable in full.
Borrower agrees that FINOVA shall also have all of its rights and remedies under
applicable law, including, without limitation, the default rights and remedies
of a secured party under the Code, and upon the occurrence of an Event of
Default Borrower hereby consents to the appointment of a receiver by FINOVA in
any action initiated by FINOVA pursuant to this Agreement and to the
jurisdiction and venue set forth in Section 9.26 hereof, and Borrower waives
notice and posting of a bond in connection therewith. Further, FINOVA may, at
any time, take possession of the Collateral and keep it on Borrower's premises,
at no cost to FINOVA, or remove any part of it to such other place(s) as FINOVA
may desire, or Borrower shall, upon FINOVA's demand, at Borrower's sole cost,
assemble the Collateral and make it available to FINOVA at a place reasonably
convenient to FINOVA. FINOVA may sell and deliver any Collateral at public or
private sales, for cash, upon credit or otherwise, at such prices and upon such
terms as FINOVA deems advisable, at FINOVA's discretion, and may, if FINOVA
deems it reasonable, postpone or adjourn any sale of the Collateral by an
announcement at the time and place of sale or of such postponed or adjourned
sale without giving a new notice of sale. Borrower agrees that FINOVA has no
obligation to preserve rights to the Collateral or marshal any Collateral for
the benefit of any Person. FINOVA is hereby granted a license or other right to
use, without charge, Borrower's labels, patents, copyrights, name, trade
secrets, trade names, trademarks and advertising matter, or any similar
property, in completing production, advertising or selling any Collateral and
Borrower's rights under all licenses and all franchise agreements shall inure to
FINOVA's benefit. Any requirement of reasonable notice shall be met if such
notice is mailed postage prepaid to Borrower at its address set forth in the
heading to this Agreement at least five (5)
29
days before sale or other disposition. The proceeds of sale shall be applied,
first, to all attorneys fees and other expenses of sale, and second, to the
Obligations in such order as FINOVA shall elect, in its sole discretion. FINOVA
shall return any excess to Borrower and Borrower shall remain liable for any
deficiency to the fullest extent permitted by law.
7.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and
FINOVA agree that the following conduct by FINOVA with respect to any
disposition of Collateral shall conclusively be deemed commercially reasonable
(but other conduct by FINOVA, including, but not limited to, FINOVA's use in its
sole discretion of other or different times, places and manners of noticing and
conducting any disposition of Collateral shall not be deemed unreasonable): Any
public or private disposition: (i) which is conducted at any place designated by
FINOVA, with or without the Collateral being present; and (ii) which commences
at any time between 8:00 a.m. and 5:00 p.m. Without limiting the generality of
the foregoing, Borrower expressly agrees that, with respect to any disposition
of accounts, instruments and general intangibles, it shall be commercially
reasonable for FINOVA to direct any prospective purchaser thereof to ascertain
directly from Borrower any and all information concerning the same, including,
but not limited to, the terms of payment, aging and delinquency, if any, the
financial condition of any obligor or account debtor thereon or guarantor
thereof, and any collateral therefor.
8. EXPENSES AND INDEMNITIES
8.1 EXPENSES. Borrower covenants that, so long as any Obligation
remains outstanding and this Agreement remains in effect, it shall promptly
reimburse FINOVA for all reasonable costs, fees and expenses incurred by FINOVA
in connection with the negotiation, preparation, execution, delivery,
administration and enforcement of each of the Loan Documents, including, but not
limited to, the attorneys' and paralegals' fees of in-house and outside counsel,
expert witness fees, lien, title search and insurance fees, appraisal fees, all
charges and expenses incurred in connection with any and all environmental
reports and environmental remediation activities, and all other costs, expenses,
taxes and filing or recording fees payable in connection with the transactions
contemplated by this Agreement, including without limitation all such costs,
fees and expenses as FINOVA shall incur or for which FINOVA shall become
obligated in connection with (i) any inspection or verification of the
Collateral, (ii) any proceeding relating to the Loan Documents or the
Collateral, (iii) actions taken with respect to the Collateral and FINOVA's
security interest therein, including, without limitation, the defense or
prosecution of any action involving FINOVA and Borrower or any third party,
(iv) enforcement of any of FINOVA's rights and remedies with respect to the
Obligations or Collateral and (v) consultation with FINOVA's attorneys and
participation in any workout, bankruptcy or other insolvency or other proceeding
involving any Loan Party or any Affiliate, whether or not suit is filed or the
issues are peculiar to federal bankruptcy or state insolvency laws. Borrower
shall also pay all FINOVA charges in connection with bank wire transfers,
forwarding of loan proceeds, deposits of checks and other items of payment,
returned checks, establishment and maintenance of Dominion Accounts, and all
other bank and administrative matters, in accordance with FINOVA's schedule of
bank and administrative fees and charges in effect from time to time.
8.2 ENVIRONMENTAL MATTERS. The Environmental Certificates executed
by each of Javelin, CCI and Posnet, each dated on or about the date of this
Agreement, are incorporated herein for all purposes as if fully stated in this
Agreement.
30
9. MISCELLANEOUS.
9.1 EXAMINATION OF RECORDS; FINANCIAL REPORTING.
(a) EXAMINATIONS. FINOVA shall at all reasonable times
and upon reasonable notice have full access to and the right to examine, audit,
make abstracts and copies from and inspect Borrower's records, files, books of
account and all other documents, instruments and agreements relating to the
Collateral and the right to check, test and appraise the Collateral; PROVIDED,
that FINOVA shall have such access and other rights at any time, with or without
notice to Borrower, during the continuance of an Event of Default or at any time
that FINOVA reasonably believes that a fraud or other material breach has
occurred. Borrower shall deliver to FINOVA any instrument necessary for FINOVA
to obtain records from any service bureau maintaining records for Borrower. All
instruments and certificates prepared by Borrower showing the value of any of
the Collateral shall be accompanied, upon FINOVA's request, by copies of related
purchase orders and invoices. FINOVA may, at any time after the occurrence of
an Event of Default, remove from Borrower's premises Borrower's books and
records (or copies thereof) or require Borrower to deliver such books and
records or copies to FINOVA. Borrower shall have no liability for more than
four audits during any calendar year in which no Event of Default occurred or
was continuing (for purposes of such limitation, an audit of Borrower shall
consist of an audit of each of Javelin, CCI and Posnet, whether or not conducted
concurrently). FINOVA may, without expense to FINOVA, use such of Borrower's
personnel, supplies and premises as may be reasonably necessary for maintaining
or enforcing FINOVA's security interest.
(b) REPORTING REQUIREMENTS. Borrower shall furnish
FINOVA, upon request, such information and statements as FINOVA shall reasonably
request from time to time regarding Borrower's business affairs, financial
condition and the results of its operations. Without limiting the generality of
the foregoing, Borrower shall provide FINOVA with: (i) FINOVA's standard form
collateral and loan report, daily, and upon FINOVA's request, copies of sales
journals, cash receipt journals, and deposit slips; (ii) upon FINOVA's request,
copies of sales invoices, customer statements and credit memoranda issued,
remittance advices and reports; (iii) copies of shipping and delivery documents,
upon request; (iv) on or prior to the date set forth on the Schedule, monthly
agings (aged from invoice date) and reconciliations of Receivables (with
listings of concentrated accounts), payables reports, inventory reports,
compliance certificates and unaudited financial statements with respect to the
prior month prepared on a basis consistent with such statements prepared in
prior months and otherwise in accordance with GAAP; (v) audited annual
consolidated and consolidating financial statements, prepared in accordance with
GAAP applied on a basis consistent with the most recent Prepared Financials
provided to FINOVA by Borrower, including balance sheets, income and cash flow
statements, accompanied by the unqualified report thereon of independent
certified public accountants acceptable to FINOVA, as soon as available, and in
any event, within ninety (90) days after the end of each of Borrower's fiscal
years; (vi) promptly after the sending or filing thereof, as the case may be,
copies of any proxy statements, financial statements or reports which Javelin
has made available to its shareholders and copies of any regular, periodic and
special reports or registration statements which Javelin files with the
Securities and Exchange Commission or any governmental authority which may be
substituted therefor, or any national securities exchange; and (vii) such
certificates relating to the foregoing as FINOVA
31
may reasonably request, including, without limitation, a monthly certificate
from the president and the chief financial officer of Borrower showing
Borrower's compliance with each of the financial covenants set forth in this
Agreement, and stating whether any Event of Default has occurred or event which,
with giving of notice or the passage of time, or both, would constitute an Event
of Default, and if so, the steps being taken to prevent or cure such Event of
Default. All reports or financial statements submitted by Borrower shall be in
reasonable detail and shall be certified by the principal financial officer of
Borrower as being complete and correct.
9.2 TERM; TERMINATION.
(a) TERM. The Initial Term of the Revolving Credit
Loans facility and the obligation of FINOVA to made advances with respect
thereto in accordance with this Agreement shall be as set forth on the Schedule,
and the Revolving Credit Loans facility and this Agreement shall be
automatically renewed for one or more Renewal Term(s) as set forth in the
Schedule, unless earlier terminated as provided herein.
(b) PRIOR NOTICE. Each party shall have the right to
terminate this Agreement effective at the end of the Initial Term or at the end
of any Renewal Term by giving the other party written notice not less than sixty
(60) days prior to the effective date of such termination, by registered or
certified mail.
(c) PAYMENT IN FULL. Upon the effective date of
termination, the Obligations shall become immediately due and payable in full in
cash.
(d) EARLY TERMINATION; TERMINATION FEE. In addition to
the procedure set forth in Section 9.2(b), Borrower may terminate this Agreement
at any time but only upon sixty (60) days' prior written notice and prepayment
of the Obligations. Upon any such early voluntary termination by Borrower or
any termination of this Agreement by FINOVA upon the occurrence of an Event of
Default, then, and in any such event, Borrower shall pay to FINOVA upon the
effective date of such termination a fee (the "TERMINATION FEE") in an amount
equal to the amount shown on the Schedule; PROVIDED, HOWEVER, that if Borrower
terminates this Agreement within one hundred twenty (120) days after an
assignment by FINOVA contemplated by clause (iii) of the third sentence of
Section 9.7, after giving proper notice pursuant to Section 9.2(b), no
Termination Fee shall be payable.
9.3 RECOURSE TO SECURITY; CERTAIN WAIVERS. All Obligations shall be
payable by Borrower as provided for herein and, in full, at the termination of
this Agreement; recourse to security shall not be required at any time.
Borrower waives presentment and protest of any instrument and notice thereof,
notice of default and, to the extent permitted by applicable law, all other
notices to which Borrower might otherwise be entitled.
9.4 NO WAIVER BY FINOVA. Neither FINOVA's failure to exercise any
right, remedy or option under this Agreement, any supplement, the Loan Documents
or other agreement between FINOVA and Borrower nor any delay by FINOVA in
exercising the same shall operate as a waiver. No waiver by FINOVA shall be
effective unless in writing and then only to the extent stated. No waiver by
FINOVA shall affect its right to require strict performance of this Agreement.
FINOVA's rights and remedies shall be cumulative and not exclusive.
9.5 BINDING ON SUCCESSOR AND ASSIGNS. All terms, conditions,
promises, covenants, provisions and warranties shall inure to the benefit of and
bind FINOVA's and
32
Borrower's respective representatives, successors and assigns.
9.6 SEVERABILITY. If any provision of this Agreement shall be
prohibited or invalid under applicable law, it shall be ineffective only to such
extent, without invalidating the remainder of this Agreement.
9.7 AMENDMENTS; ASSIGNMENTS. This Agreement may not be modified,
altered or amended, except by an agreement in writing signed by Borrower and
FINOVA. Borrower may not sell, assign or transfer any interest in this
Agreement or any other Loan Document, or any portion thereof, including, without
limitation, any of Borrower's rights, title, interests, remedies, powers and
duties hereunder or thereunder. FINOVA may, at any time or times hereafter,
without Borrower's consent (i) sell participations in this Agreement and the
other Loan Documents, (ii) assign, sell, transfer or otherwise dispose of all or
any part of this Agreement and the other Loan Documents, so long as FINOVA
serves as agent for purposes of managing the Loans, and (iii) assign, sell,
transfer or otherwise dispose of all of this Agreement and the other Loan
Documents in connection with a sale of all or substantially all of FINOVA's Los
Angeles based loan portfolio or in connection with a merger by or acquisition of
FINOVA, in each case including, without limitation, FINOVA's rights, title,
interests, remedies, powers and duties hereunder or thereunder. In connection
therewith, FINOVA may disclose all documents and information which FINOVA now or
hereafter may have relating to Borrower or Borrower's business provided that
such Person has previously agreed to be bound by the confidentiality provisions
contained in Section 9.28. To the extent that FINOVA assigns its rights and
obligations hereunder to a third party, FINOVA shall thereafter be released from
such assigned obligations to Borrower and such assignment shall effect a
novation between Borrower and such third party.
9.8 INTEGRATION. This Agreement, together with the Schedule (which is
a part hereof) and the other Loan Documents, reflect the entire understanding of
the parties with respect to the transactions contemplated hereby and supercede
any prior or contemporaneous agreements between or among the parties.
9.9 SURVIVAL. All of the representations and warranties of Borrower
contained in this Agreement shall survive the execution, delivery and acceptance
of this Agreement by the parties. No termination of this Agreement or of any
guaranty of the Obligations shall affect or impair the powers, obligations,
duties, rights, representations, warranties or liabilities of the parties hereto
and all shall survive such termination.
9.10 EVIDENCE OF OBLIGATIONS. Each Obligation may, in FINOVA's
discretion, be evidenced by notes or other instruments issued or made by
Borrower to FINOVA. If not so evidenced, such Obligation shall be evidenced
solely by entries upon FINOVA's books and records.
9.11 LOAN REQUESTS. Each oral or written request for a loan by any
Person who purports to be any employee, officer or authorized agent of Borrower
shall be made to FINOVA on or prior to 11:00 a.m., Pacific time, on the Business
Day on which the proceeds thereof are requested to be paid to Borrower and shall
be conclusively presumed to be made by a Person authorized by Borrower to do so
and the crediting of a loan to Borrower's operating account shall conclusively
establish Borrower's obligation to repay such loan. Unless and until Borrower
otherwise directs FINOVA in writing, all loans shall be wired to Borrower's
operating account set forth on the Schedule.
33
9.12 NOTICES. Any notice required hereunder shall be in writing and
addressed to the Borrower and FINOVA at their addresses set forth at the
beginning of this Agreement. Notice properly given to Javelin shall be proper
notice also to CCI and Posnet. Notices hereunder shall be deemed received on
the earlier of receipt, whether by mail, personal delivery, facsimile, or
otherwise, or upon deposit in the United States mail, postage prepaid.
9.13 BROKERAGE FEES. Borrower represents and warrants to FINOVA that,
with respect to the financing transaction herein contemplated, no Person is
entitled to any brokerage fee or other commission (other than the fee payable by
Borrower to L.H. Friend, Weinress, Xxxxxxxx & Xxxxxxx, Inc.), and Borrower
agrees to indemnify and hold FINOVA harmless against any and all such claims.
9.14 DISCLOSURE. No representation or warranty made by Borrower in
this Agreement, or in any financial statement, report, certificate or any other
document furnished in connection herewith contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to Borrower
or which reasonably should be known to Borrower which Borrower has not disclosed
to FINOVA in writing with respect to the transactions contemplated by this
Agreement which materially and adversely affects the business, assets,
operations, prospects or condition (financial or otherwise), of Borrower.
9.15 PUBLICITY. FINOVA is hereby authorized to issue appropriate press
releases and to cause a tombstone to be published announcing the consummation of
this transaction and the aggregate amount thereof.
9.16 CAPTIONS. The Section titles contained in this Agreement are
without substantive meaning and are not part of this Agreement.
9.17 INJUNCTIVE RELIEF. Borrower recognizes that, in the event
Borrower fails to perform, observe or discharge any of its Obligations under
this Agreement, any remedy at law may prove to be inadequate relief to FINOVA.
Therefore, FINOVA, if it so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
9.18 COUNTERPARTS; FACSIMILE EXECUTION. This Agreement may be executed
in one or more counterparts, each of which taken together shall constitute one
and the same instrument, admissible into evidence. Delivery of an executed
counterpart of this Agreement by telefacsimile shall be equally as effective as
delivery of a manually executed counterpart of this Agreement. Any party
delivering an executed counterpart of this Agreement by telefacsimile shall also
deliver a manually executed counterpart of this Agreement, but the failure to
deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement.
9.19 CONSTRUCTION. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments
or exhibits hereto.
9.20 TIME OF ESSENCE. Time is of the essence for the performance by
Borrower of the Obligations set forth in this Agreement.
9.21 LIMITATION OF ACTIONS. Borrower agrees that any claim or cause of
action by Borrower against FINOVA, or any of
34
FINOVA's directors, officers, employees, agents, accountants or attorneys, based
upon, arising from, or relating to this Agreement, or any other present or
future agreement, or any other transaction contemplated hereby or thereby or
relating hereto or thereto, or any other matter, cause or thing whatsoever,
whether or not relating hereto or thereto, occurred, done, omitted or suffered
to be done by FINOVA, or by FINOVA's directors, officers, employees, agents,
accountants or attorneys, whether sounding in contract or in tort or otherwise,
shall be barred unless asserted by Borrower by the commencement of an action or
proceeding in a court of competent jurisdiction by the filing of a complaint
within one year after the latest of (a) the first act, occurrence or omission
upon which such claim or cause of action, or any part thereof, is based or (b)
Borrower's first becoming aware thereof, and service of a summons and complaint
on an officer of FINOVA or any other Person authorized to accept service of
process on behalf of FINOVA, within 30 days thereafter. Borrower agrees that
such one-year period of time is a reasonable and sufficient time for Borrower to
investigate and act upon any such claim or cause of action. The one-year period
provided herein shall not be waived, tolled, or extended except by a specific
written agreement of FINOVA. This provision shall survive any termination of
this Loan Agreement or any other agreement.
9.22 LIABILITY. Neither FINOVA nor any FINOVA Affiliate shall be
liable for any indirect, special, incidental or consequential damages in
connection with any breach of contract, tort or other wrong relating to this
Agreement or the Obligations or the establishment, administration or collection
thereof (including without limitation damages for loss of profits, business
interruption, or the like), whether such damages are foreseeable or
unforeseeable, even if FINOVA has been advised of the possibility of such
damages. Neither FINOVA, nor any FINOVA Affiliate shall be liable for any
claims, demands, losses or damages, of any kind whatsoever, made, claimed,
incurred or suffered by the Borrower through the ordinary negligence of FINOVA,
or any FINOVA Affiliate. "FINOVA AFFILIATE" shall mean FINOVA's directors,
officers, employees, agents, attorneys or any other Person or entity affiliated
with or representing FINOVA.
9.23 NOTICE OF BREACH BY FINOVA. Borrower agrees to give FINOVA
written notice of (i) any action or inaction by FINOVA or any attorney of FINOVA
in connection with any Loan Documents that may be actionable against FINOVA or
any attorney of FINOVA or (ii) any defense to the payment of the Obligations for
any reason, including, but not limited to, commission of a tort or violation of
any contractual duty or duty implied by law. Borrower agrees that unless such
notice is fully given as promptly as possible (and in any event within one
hundred eighty (180) days) after Borrower has knowledge, or with the exercise of
reasonable diligence should have had knowledge, of any such action, inaction or
defense (but not later than the date of termination of this Agreement and
payment in full of the Obligations), Borrower shall not assert, and Borrower
shall be deemed to have waived, any claim or defense arising therefrom.
9.24 APPLICATION OF INSURANCE PROCEEDS. The net proceeds of any
casualty insurance insuring the Collateral, after deducting all costs and
expenses (including attorneys' fees) of collection, shall be applied, at
FINOVA's option, either toward replacing or restoring the Collateral, in a
manner and on terms satisfactory to FINOVA, or toward payment of the
Obligations. Any proceeds applied to the payment of Obligations shall be
applied in such manner as FINOVA may elect. In no event shall such application
relieve Borrower from payment in full of all installments of principal and
interest which
35
thereafter become due in the order of maturity thereof.
9.25 POWER OF ATTORNEY. Borrower appoints FINOVA and its designees as
Borrower's attorney, with the power to endorse Borrower's name on any checks,
notes, acceptances, money orders or other forms of payment or security that come
into FINOVA's possession; after the occurrence and during the continuance of any
Event of Default to sign Borrower's name on any invoice or xxxx of lading
relating to any Receivable, on drafts against customers, on assignments of
Receivables, on notices of assignment, financing statements and other public
records, on verifications of accounts and on notices to customers or account
debtors; to send requests for verification of Receivables to customers or
account debtors; to notify the post office authorities to change the address for
delivery of Borrower's mail to an address designated by FINOVA and to open and
dispose of all mail addressed to Borrower; and to do all other things FINOVA
deems necessary or desirable to carry out the terms of this Agreement. Borrower
hereby ratifies and approves all acts of such attorney. Neither FINOVA nor any
of its designees shall be liable for any acts or omissions nor for any error of
judgment or mistake of fact or law while acting as Borrower's attorney except
for FINOVA's gross negligence or willful misconduct. This power, being coupled
with an interest, is irrevocable until the Obligations have been fully satisfied
and FINOVA's obligation to provide loans hereunder shall have terminated
9.26 GOVERNING LAW; WAIVERS. THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION ENFORCEMENT OF THE OBLIGATIONS, SHALL BE INTERPRETED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE CONFLICT OF LAWS RULES) OF THE STATE OF
ARIZONA GOVERNING CONTRACTS TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED
THAT TO THE EXTENT THE UNIFORM COMMERCIAL CODE AS ADOPTED IN A PARTICULAR STATE
HAS PROVISIONS GOVERNING THE ATTACHMENT AND PERFECTION OF A SECURITY INTEREST IN
DEPOSIT ACCOUNTS (e.g. CALIFORNIA HAWAII, IDAHO, ILLINOIS AND OREGON) THE LAW OF
THAT JURISDICTION SHALL APPLY BUT ONLY WITH RESPECT TO SUCH DEPOSIT ACCOUNTS AND
WITHOUT OTHERWISE AFFECTING THE ARIZONA CHOICE OF LAW HEREUNDER. BORROWER
HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF MARICOPA IN THE STATE OF ARIZONA OR, AT THE SOLE
OPTION OF FINOVA, IN ANY OTHER COURT IN WHICH FINOVA SHALL INITIATE LEGAL OR
EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER
IN CONTROVERSY. BORROWER WAIVES ANY OBJECTION OF FORUM NON CONVENIENS AND
VENUE. BORROWER FURTHER WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT,
AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE IN THE MANNER SET FORTH IN
SECTION 9.12 HEREOF FOR THE GIVING OF NOTICE. BORROWER FURTHER WAIVES ANY RIGHT
IT MAY OTHERWISE HAVE TO COLLATERALLY ATTACK ANY JUDGMENT ENTERED AGAINST IT.
9.27 MUTUAL WAIVER OF RIGHT TO JURY TRIAL. FINOVA and Borrower each
hereby waives the right to trial by jury in any action or proceeding based upon,
arising out of, or in any way relating to: (i) this Agreement or any other Loan
Document; (ii) any other present or future instrument or agreement between
FINOVA and Borrower; or (iii) any conduct, acts or omissions
36
of FINOVA or Borrower or any of their directors, officers, employees, agents,
attorneys or any other persons affiliated with FINOVA or Borrower; in each of
the foregoing cases, whether sounding in contract or tort or otherwise.
9.28 CONFIDENTIAL INFORMATION. FINOVA agrees to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all information identified as "confidential" by Borrower and provided to it by
Borrower in connection with this Agreement or any other Loan Document, and
neither it nor any of its affiliates shall use any such information for any
purpose or in any manner other than pursuant to the terms contemplated by this
Agreement, EXCEPT to the extent such information (i) was or becomes generally
available to the public other than as a result of a disclosure by FINOVA, or
(ii) was or becomes available on a non-confidential basis from a source other
than Borrower, PROVIDED that such source is not bound by a confidentiality
agreement with the Borrower known to FINOVA; PROVIDED, HOWEVER, that FINOVA may
disclose such information (A) at the request or pursuant to any requirement of
any governmental authority to which FINOVA is subject or in connection with an
examination of FINOVA by any such authority; (B) pursuant to subpoena or other
court process or in connection with any litigation to which FINOVA is a party;
(C) when required to do so in accordance with the provisions of any applicable
law; and (D) to FINOVA's independent auditors and other professional advisors,
PROVIDED that such auditors and professional advisors shall be required to
similarly protect the confidentiality of such information. Notwithstanding the
foregoing, Borrower authorizes FINOVA to disclose to any participant or assignee
(each, a "Transferee") and to any prospective Transferee, such financial or
other information in FINOVA's possession concerning Borrower which has been
delivered to FINOVA pursuant to this Agreement or which has been delivered to
FINOVA by Borrower in connection with FINOVA's credit evaluation of Borrower
prior to entering into this Agreement; PROVIDED that, unless otherwise agreed by
Borrower, such Transferee agrees in writing to keep such information
confidential to the same extent required of FINOVA hereunder.
BORROWER:
JAVELIN SYSTEMS, INC.
FED. TAX ID #00-0000000
BY
-------------------------------------
PRESIDENT OR VICE PRESIDENT
CCI GROUP, INC.
FED. TAX ID #00-0000000
BY
-------------------------------------
PRESIDENT OR VICE PRESIDENT
POSNET COMPUTERS, INC.
FED. TAX ID #00-0000000
BY
-------------------------------------
PRESIDENT OR VICE PRESIDENT
FINOVA:
FINOVA CAPITAL CORPORATION
BY
-------------------------------------
TITLE
----------------------------------
37
STATE OF CALIFORNIA )
) ss.
LOS ANGELES )
On ____________, 199___ , before me,
__________________________________________
(Name and Title of Officer)
personally appeared ___________________________________________________________
/ / personally known to me
-OR-
/ / proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
WITNESS my hand and official seal.
-------------------------------------------
Signature Of Notary
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER
/ / Individual DESCRIPTION OF ATTACHED DOCUMENT
/ / Corporate Officer
-------------------------------- --------------------------------------------
Title Or Type Of Document
/ / Partner(s) / / Limited
/ / General --------------------------------------------
/ / Attorney-In-Fact Number Of Pages
/ / Trustee(s)
/ / Guardian/Conservator
/ / Other:__________________ --------------------------------------------
Date Of Document
Signer is representing:
Name Of Person(s) Or Entity(ies) --------------------------------------------
Signer(s) Other Than Named Above
--------------------------------
--------------------------------
STATE OF CALIFORNIA )
) ss.
LOS ANGELES )
On ____________, 199___ , before me,
__________________________________________
(Name and Title of Officer)
personally appeared ___________________________________________________________
/ / personally known to me
-OR-
/ / proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
WITNESS my hand and official seal.
-------------------------------------------
Signature Of Notary
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER
/ / Individual DESCRIPTION OF ATTACHED DOCUMENT
/ / Corporate Officer
-------------------------------- --------------------------------------------
Title Or Type Of Document
/ / Partner(s) / / Limited
/ / General --------------------------------------------
/ / Attorney-In-Fact Number Of Pages
/ / Trustee(s)
/ / Guardian/Conservator
/ / Other:_________________ --------------------------------------------
Date Of Document
Signer is representing:
Name Of Person(s) Or Entity(ies) --------------------------------------------
Signer(s) Other Than Named Above
--------------------------------
--------------------------------
STATE OF CALIFORNIA )
) ss.
LOS ANGELES )
On ____________, 199___ , before me,
__________________________________________
(Name and Title of Officer)
personally appeared ___________________________________________________________
/ / personally known to me
-OR-
/ / proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
WITNESS my hand and official seal.
-------------------------------------------
Signature Of Notary
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER
/ / Individual DESCRIPTION OF ATTACHED DOCUMENT
/ / Corporate Officer
-------------------------------- --------------------------------------------
Title Or Type Of Document
/ / Partner(s) / / Limited
/ / General --------------------------------------------
/ / Attorney-In-Fact Number Of Pages
/ / Trustee(s)
/ / Guardian/Conservator
/ / Other:__________________ --------------------------------------------
Date Of Document
Signer is representing:
Name Of Person(s) Or Entity(ies) --------------------------------------------
Signer(s) Other Than Named Above
--------------------------------
--------------------------------
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWERS: JAVELIN SYSTEMS, INC.
0000 XXXXXXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
FED. TAX ID NO. 00-0000000
CCI GROUP, INC.
00000 XXXXX XXXXX XXXXX
XXXXX XXXX, XXXXXXXX 00000
FED. TAX ID NO. 00-0000000
AND
POSNET COMPUTERS, INC.
00000 XXXXXXX, XXXXX X
XXXXXXXXXX XXXXX, XXXXXXXXXX 00000
FED. TAX ID NO. 00-0000000
DATE: JUNE 8, 1998
This Schedule forms an integral part of the Loan and Security Agreement between
the above Borrower and FINOVA Capital Corporation dated the above date, and all
references herein and therein to "this Agreement" shall be deemed to refer to
said Agreement and to this Schedule.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
DEFINITIONS (SECTION 1):
"GUARANTOR(S)" means each of Javelin, CCI and Posnet
"PERMITTED SENIOR INDEBTEDNESS" means: not applicable
"SUBORDINATING CREDITOR" means: not applicable
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL FACILITY (SECTION 2.1):
$7,500,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LOANS (SECTION 2.2):
REVOLVING CREDIT LOANS: Revolving Credit Loans shall be made directly to each
of Javelin, CCI and Posnet, consisting of loans against Eligible Receivables
("RECEIVABLE LOANS") and against Eligible Inventory ("INVENTORY LOANS") (the
Receivable Loans and the Inventory Loans shall be collectively
S-1
referred to as the "REVOLVING CREDIT LOANS") based on the following borrowing
formula for each such company, and provided that the aggregate outstanding
Revolving Credit Loans to Javelin, CCI and Posnet shall at no time exceed
$6,000,000 (the "REVOLVING CREDIT LIMIT"):
JAVELIN: A revolving line of credit to Javelin consisting of loans
against Javelin's Eligible Receivables and against Javelin's Eligible
Inventory in an aggregate outstanding principal amount not to exceed
the lesser of (a) or (b) below:
(a) Six Million Dollars ($6,000,000), LESS any Loan Reserves, or
(b) the sum of
(i) an amount equal to 80% of the net amount of Javelin's
Eligible Receivables; PLUS
(ii) an amount not to exceed the lesser of:
(A) 50% of the value of Javelin's Eligible Inventory,
calculated at the lower of cost or market value and
determined on a first-in, first-out basis; or
(B) $2,000,000; LESS
(iii) any Loan Reserves.
CCI: A revolving line of credit to CCI consisting of loans against
CCI's Eligible Receivables and against CCI's Eligible Inventory in an
aggregate outstanding principal amount not to exceed the lesser of (a)
or (b) below:
(a) Two Million Dollars ($2,000,000), LESS any Loan Reserves, or
(b) the sum of
(i) an amount equal to 80% of the net amount of CCI's Eligible
Receivables; PLUS
(ii) an amount not to exceed the lesser of:
(A) 50% of the value of CCI's Eligible Inventory,
calculated at the lower of cost or market value and
determined on a first-in, first-out basis; or
(B) $1,000,000; LESS
(iii) any Loan Reserves.
POSNET: A revolving line of credit to Posnet consisting of loans
against Posnet's Eligible Receivables and against Posnet's Eligible
Inventory in an aggregate outstanding principal amount not to exceed
the lesser of (a) or (b) below:
(a) Five Hundred Thousand Dollars ($500,000), LESS any Loan Reserves,
or
S-2
(b) the sum of
(i) an amount equal to 80% of the net amount of Posnet's
Eligible Receivables; PLUS
(ii) an amount not to exceed the lesser of:
(A) 50% of the value of Posnet's Eligible Inventory,
calculated at the lower of cost or market value and
determined on a first-in, first-out basis; or
(B) $300,000; LESS
(iii) any Loan Reserves.
TERM LOAN: a term loan to Javelin against the value of Javelin's
machinery, equipment and/or real estate ("TERM LOAN") in an aggregate
outstanding principal amount not to exceed $1,500,000; PROVIDED, that
the Terms Loan shall be in such amount and on such terms as are set
forth on a separate promissory note of Javelin in the form of
EXHIBIT A hereto. The Term Loan shall be amortized on a straight line
basis over a period of 60 months, with all principal and accrued but
unpaid interest due at the end of the Initial Term or upon any earlier
termination of this Agreement. Subject to payment of the fees and
other amounts described below, along with accrued interest on the
amount prepaid, the Term Loan may be prepaid in whole, but not in
part, at any time.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
INTEREST AND FEES (SECTION 2.6):
REVOLVING INTEREST RATE. Borrower shall pay FINOVA interest on the
daily outstanding balance of Borrower's Revolving Credit Loans at a
fluctuating per annum rate of 1.75% in excess of the rate of interest
announced publicly by Citibank, N.A., (or any successor thereto), from
time to time as its "prime rate" (the "PRIME RATE") which may not be
such institution's lowest rate. The interest rate chargeable
hereunder in respect of the Revolving Credit Loans (herein, the
"REVOLVING INTEREST RATE") shall be increased or decreased, as the
case may be, without notice or demand of any kind, upon the
announcement of any change in the Prime Rate. Each change in the
Prime Rate shall be effective hereunder on the first day following the
announcement of such change. Interest charges and all other fees and
charges herein shall be computed on the basis of a year of 360 days
and actual days elapsed and shall be payable to FINOVA in arrears on
the first day of each month.
TERM INTEREST RATE: Javelin shall pay FINOVA interest on the daily
outstanding balance of the Term Loan at a fixed per annum rate of
13.65%. Interest charges and all other fees and charges herein shall
be computed on the basis of a year of 360 days and actual days elapsed
and shall be payable to FINOVA in arrears on the first day of each
month. FINOVA may in its
S-3
discretion establish Loan Reserves from time to time against the
Revolving Credit Loans for interest rate risk on the Term Loan.
MINIMUM INTEREST CHARGE. With respect to each calendar month or
portion thereof during the term of this Agreement (excluding the
calendar month in which this Agreement is executed), Borrower shall
also pay FINOVA, on the first day of the next month, as a minimum
charge, the amount by which accrued interest pursuant to the Revolving
Interest Rate section above for such month or portion thereof is less
than $10,000 (the "MINIMUM INTEREST CHARGE"). Notwithstanding the
occurrence of any Event of Default hereunder or termination of this
Agreement by FINOVA as a result thereof, the Minimum Interest Charge
shall be paid by Borrower for the unexpired portion of the Initial
Term or any Renewal Term of this Agreement, not to exceed $100,000.
COLLATERAL MONITORING FEE. At the closing of this transaction and on
the first day of each calendar month thereafter, Borrower shall pay
FINOVA a collateral monitoring fee of $1,000 ("COLLATERAL MONITORING
FEE").
CLOSING FEE. At the closing of this transaction, Borrower shall pay
to FINOVA a closing fee in the amount of $56,250 ("CLOSING FEE"),
which fee was fully earned upon execution of the April 24, 1998
Commitment Letter by Borrower. FINOVA shall apply to the Closing Fee
the unexpended portion (if any) of the good faith deposit previously
received by FINOVA.
UNUSED LINE FEE. With respect to each calendar month, or portion
thereof during the term of this Agreement, Borrower shall
unconditionally pay to FINOVA a fee equal to one-half of one percent
(0.50%) per annum of the difference between the Revolving Credit Limit
and the average daily outstanding balance of the Revolving Credit
Loans during such month, or portion thereof ("UNUSED LINE FEE"), which
fee shall be calculated and payable monthly, in arrears, and shall be
due and payable, commencing on the first Business Day of the first
calendar month following the Closing Date and continuing on the first
Business Day of each calendar month thereafter; PROVIDED, that, for
any month in which a Minimum Interest Charge is payable, the Revolving
Credit Limit shall be reduced (for purposes of this calculation only)
by the amount of additional Revolving Credit Loans which would have
had to be outstanding during such month in order for no Minimum
Interest Charge to be payable.
EXAMINATION FEE. Borrower agrees to pay to FINOVA an examination fee
in the amount of $600 per person per day in connection with each audit
or examination of Borrower performed by FINOVA prior to or after the
date hereof, plus all reasonable costs and expenses incurred in
connection therewith (the "EXAMINATION FEE"), subject to
Section 9.1(a). All Examination Fees
S-4
incurred prior to the date hereof have been fully earned and shall be
due and payable upon the closing of this transaction, and shall be
deducted from any good faith deposit paid by Borrower to FINOVA prior
to the date of this Agreement.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CONDITIONS OF CLOSING (SECTION 4.1):
The obligation of FINOVA to make the initial advance hereunder is
subject to the fulfillment, to the satisfaction of FINOVA and its
counsel, of each of the following conditions, in addition to the
conditions set forth in Sections 4.1 and 4.2 above:
(a) MINIMUM EXCESS AVAILABILITY (SECTION 4.1(b)). Not less than
$3,000,000 in the aggregate. Accounts payable outstanding: 30 days
or more from their due date.
(b) LEASE AND LANDLORD'S CONSENT (SECTION 4.1(k)). Location(s):
00000 Xxxxx Xxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxx 00000
00000 Xxxxxxx, Xxxxx X, Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
(c) LIFE INSURANCE (SECTION 4.1(t)). One or more life insurance
policies shall be maintained on the following individual and at
the following amount:
Xxxxxxx X. Xxxxx, of not less than $1,000,000
(d) NO MATERIAL ADVERSE CHANGE (SECTION 4.1(v)). Further, no
material adverse change has occurred in the Borrower's business,
operations, financial condition, or assets or in the prospect of
repayment of the Obligations since February 28, 1998.
(e) INTENTIONALLY OMITTED.
(f) TRANSACTION COSTS (SECTION 4.1(ff)). Not to exceed $250,000
(g) WARRANTS. Borrower shall have delivered to FINOVA prior to
the Closing Date separate and detachable warrants to purchase
100,000 shares of common stock of Javelin ("WARRANTS"). The
Warrants shall be in all respects acceptable to FINOVA in its
sole discretion and shall include, among other things,
anti-dilution and piggy-back registration provisions, and shall
have an expiration date 5 years from the Closing Date. The
per-share exercise price for the Warrants shall be equal to the
lesser of (i) $9.00 or (ii) the trailing 20 trading day moving
average per-share price for Javelin's common stock.
Borrower shall cause the conditions precedent set forth in
Section 4.1 of this Agreement and set forth above in this
Schedule to be satisfied, and shall provide evidence to FINOVA
that all such conditions precedent have been satisfied, on or
before June 11, 1998.
S-5
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
BORROWER INFORMATION:
Borrower's State of Incorporation (Section 5.1): Javelin: Delaware
CCI: Missouri
Posnet: California
Borrower's copyrights, patents trademarks, and licenses (Section 5.5):
None
Fictitious Names/Prior Corporate Names (Section 5.2):
Prior Corporate Names: Javelin's prior corporate name was:
Sunwood Research, Inc.
Fictitious Names: None
Borrower Locations (Section 5.16)
JAVELIN: 0000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000
(prior to June 27, 1998)
00000 Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx 00000 (after
June 27, 1998)
CCI: 00000 Xxxxx Xxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxx 00000
(new location in Earth City, Missouri commencing on or about
September 1, 1998)
POSNET: 00000 Xxxxxxx, Xxxxx X, Xxxxxxxxxx Xxxxx, Xxxxxxxxxx
00000 (prior to June 27, 1998)
00000 Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx 00000 (after
June 27, 1998)
Borrower's Federal Tax Identification Number (Section 5.16):
Javelin: 00-0000000
CCI: 00-0000000
Posnet: 00-0000000
Permitted Encumbrances (Section 1.1): See EXHIBIT B.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FINANCIAL COVENANTS (SECTION 6.1.13):
Borrower shall comply with all of the following
covenants. Compliance shall be determined as of the
end of each month (or, for so long as no Event of
Default exists and Borrower maintains Excess
Availability of not less than $1,500,000 and a Total
Debt Service Coverage Ratio of not less 1.25:1.0,
quarterly), except as otherwise specifically provided
below:
CURRENT RATIO. Borrower shall maintain a ratio of Current Assets to
Current Liabilities of not less than 1.15 to 1.0;
NET WORTH. Borrower shall maintain Net Worth of not less than
Three Million Dollars ($3,000,000);
S-6
SENIOR DEBT SERVICE
COVERAGE RATIO As of the last day of each calendar month (or quarter,
if applicable), Borrower's Operating Cash Flow/Actual
for the consecutive 12-month period ending as of such
last day must be at least 1.3 times (or, for the months
of May, June, July and August of 1998, 1.0 times) the
amount necessary to meet Borrower's Senior Contractual
Debt Service for such 12-month period; PROVIDED
HOWEVER, that, with respect to the calculations for the
first 12 months after the Closing Date, Borrower's
Operating Cash Flow/Actual and Senior Contractual Debt
Service shall be determined over the period beginning
on the Closing Date and ending on the respective
measurement dates; and, PROVIDED FURTHER, that all such
determinations shall be made on a consolidated basis.
TOTAL DEBT SERVICE
COVERAGE RATIO As of the last day of each calendar month (or quarter,
if applicable), Borrower's Operating Cash Flow/Actual
for the consecutive 12-month period ending as of such
last day must be at least 1.25 times (or, for the
months of May, June, July and August of 1998, 0.95
times) the amount necessary to meet Borrower's Total
Contractual Debt Service for such 12-month period;
PROVIDED HOWEVER, that, with respect to the
calculations for the first 12 months after the Closing
Date, Borrower's Operating Cash Flow/Actual and Total
Contractual Debt Service shall be determined over the
period beginning on the Closing Date and ending on the
respective measurement dates; and, PROVIDED FURTHER,
that all such determinations shall be made on a
consolidated basis.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NEGATIVE COVENANTS (SECTION 6.2):
EMPLOYEE ADVANCES: Borrower shall not make any loans or advances to
Employees except in the ordinary course of
business and consistent with past practices of
Borrower in an aggregate amount not exceeding at
any time $20,000.
EXISTING GUARANTIES: None.
CAPITAL EXPENDITURES: Borrower shall not make or incur any Capital
Expenditure if, after giving effect thereto, the
aggregate amount of all Capital Expenditures by
Borrower in any fiscal year (beginning with the 1998
fiscal year) would exceed $800,000.
COMPENSATION: Borrower shall not pay total compensation, including
salaries, withdrawals, fees, bonuses, commissions,
drawing accounts and other payments, whether directly
or indirectly, in money or otherwise, during any fiscal
year to all of Borrower's executives, officers and
directors (or any relative thereof) in an amount in
excess of that set forth in EXHIBIT C.
INDEBTEDNESS: Borrower shall not create, incur, assume or permit to
exist any Indebtedness (including Indebtedness in
connection with Capital Leases) in excess of $100,000
other than (i) the Obligations, (ii) trade payables and
other contractual obligations to suppliers and
customers incurred in the
S-7
ordinary course of business and (iii) other
Indebtedness existing on the date of this Agreement and
reflected in EXHIBIT D attached hereto (other than
Indebtedness paid on the date of this Agreement from
proceeds of the initial advances hereunder).
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
REPORTING REQUIREMENTS (SECTION 9.1):
1. Borrower shall provide FINOVA with monthly agings aged by invoice date
and reconciliations of Receivables within ten (10) days after the end
of each month.
2. Borrower shall provide FINOVA with monthly accounts payable agings
aged by invoice date, outstanding or held check registers and
inventory certificates within ten (10) days after the end of each
month.
3. Borrower shall provide FINOVA with monthly perpetual inventory reports
for the Inventory valued on a first-in, first-out basis at the lower
of cost or market (in accordance with GAAP) or such other inventory
reports as are reasonably requested by FINOVA, all within ten (10)
days after the end of each month.
4. Borrower shall provide FINOVA with monthly unaudited financial
statements (i) of each of Javelin, Posnet and CCI, on an
unconsolidated basis, within thirty (30) days after the end of each
month and (ii) of Borrower, on a consolidated basis, within forty-five
(45) days after the end of each month.
5. Borrower shall provide FINOVA with audited consolidated and
consolidating fiscal financial statements within ninety (90) days
after the end of each fiscal year, as more specifically described in
Section 9.1(b) hereof, and with an opinion issued by a Certified
Public Accountant which is acceptable to FINOVA.
6. Borrower shall provide FINOVA with annual operating budgets (including
income statements, balance sheets and cash flow statements, by month)
for the then current fiscal year of Borrower within thirty (30) days
after the beginning of such fiscal year of Borrower.
7. Borrower's balance sheets for purposes of the definition of Prepared
Financials shall be as of June 30, 1997.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TERM (SECTION 9.2):
The initial term of this Agreement shall be three (3) years from the date
hereof (the "INITIAL TERM") and shall be automatically renewed for
successive periods of one (1) year each (each, a "RENEWAL TERM"), unless
earlier terminated as provided in Section 7 or 9.2 above or elsewhere in
this Agreement.
S-8
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TERMINATION FEE (SECTION 9.2):
(A) REVOLVING CREDIT LOANS FACILITY. The Termination Fee applicable
to the Revolving Credit Loans facility provided for in Section 9.2(d)
shall be an amount equal to the following percentage of the Revolving
Credit Limit:
(i) three percent (3%), if such early termination occurs on or prior
to the first anniversary of the date of this Agreement;
(ii) two percent (2%), if such early termination occurs after the
first anniversary of the date of this Agreement but prior to the
second anniversary of the date of this Agreement; and
(iii) one percent (1%) if such early termination occurs after the
second anniversary of the date of this Agreement.
(B) TERM LOANS. The Termination Fee applicable to the Term Loans
provided for in Section 9.2(d) (upon a prepayment of the Term Loan
only, without a termination of the Agreement), shall be equal to:
(i) two percent (2%) of the amount prepaid if such prepayment is made
during the Loan Year beginning on the Closing Date; and
(ii) zero percent (0%) of the amount prepaid if such prepayment is
made at any time thereafter.
Notwithstanding the foregoing, if the Term Loan is prepaid within 90
days of a prepayment of the Total Facility and termination of the
Agreement, then Borrower shall pay a Termination Fee equal to the
following percentage of the outstanding amount of the Term Loan at the
time of prepayment:
(i) three percent (3%) if such early termination occurs on or prior to
the first anniversary of the date of this Agreement;
(ii) two percent (2%) if such early termination occurs after the first
anniversary of the date of this Agreement but prior to the second
anniversary of the date of this Agreement; and
(iii) one percent (1%) if such early termination occurs after the
second anniversary of the date of this Agreement.
(C) MAKE WHOLE PREMIUM. Any prepayment of the Term Loan using a fixed
interest rate and not a floating interest rate, other than a
prepayment made pursuant to the Excess Cash Flow Sweep described below
under "Additional Provisions," shall also be accompanied by a payment
equal to the Make Whole Premium. The following definitions shall
apply:
1. "MAKE WHOLE PREMIUM" means the positive difference, if any,
between (i) the Discounted Value immediately prior to any
S-9
prepayment of that portion of the Term Loan which is being
prepaid and (ii) the principal balance of the Term Loan being
prepaid as of the date of any such prepayment.
2. "DISCOUNTED VALUE" means the amount determined by discounting the
Remaining Scheduled Payment Amounts from their respective due
dates to the date of the prepayment of the Term Loan, at a
discount factor equal to the Reinvestment Yield.
3. "REMAINING SCHEDULED PAYMENT AMOUNT" means the amount of each
scheduled payment of principal of and interest on a Term Loan
that would be due on or after the date of a prepayment of such
Term Loan if no payment of the Term Loan were made prior to its
scheduled due date.
4. "REINVESTMENT YIELD" means the rates shown under the column
heading "Ask YLD" for "Govt. Bonds & Notes" in the "Treasury
Bonds, Notes & Bills" section of the Wall Street Journal, Eastern
Edition, published on the Business Day prior to the date of any
proposed prepayment of a Term Loan for the government bond or
note with a maturity date having the closest matching maturity to
the Weighted Average Life to Maturity, or, if there is more than
one government bond or note with a maturity date having the
closest matching maturity to the Weighted Average Life to
Maturity, the highest of the rates shown in the "Ask YLD" column
for any such bond or note, plus 8%.
4. "WEIGHTED AVERAGE LIFE TO MATURITY" means the number of years
(calculated to the nearest one-twelfth year) obtained by dividing
(i) the sum of the products obtained by multiplying each
remaining scheduled payment of principal under the Term Loan by
the number of years (calculated to the nearest one-twelfth) which
will elapse between the date of a prepayment of the Term Loans
and the scheduled due date of such remaining scheduled principal
payments, by (ii) the outstanding principal balance of the Term
Loans on such prepayment date.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
DISBURSEMENT (SECTION 9.11):
Unless and until Borrower otherwise directs FINOVA in writing, all
loans shall be wired to Borrower's following operating account:
IF TO JAVELIN: City National Bank, 0000 XxxXxxxxx Xxxxxxxxx, Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000. Account No. 0123717727, Routing No.
000000000.
IF TO CCI: ______________________________
IF TO POSNET: ____________________________
S-10
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ADDITIONAL PROVISIONS:
EXCESS CASH FLOW PREPAYMENTS. Within sixty (60) days following
receipt by FINOVA of Borrower's annual audited financial statements,
commencing with such financial statements for Borrower's fiscal year
ending June 30, 1998, FINOVA may deliver a notice to Borrower
requiring Borrower to prepay the Term Loan in an amount up to thirty
percent (30%) of Borrower's Excess Cash Flow for such year. Any
prepayments required under this section are strictly at the sole
option of FINOVA, and are payable within thirty (30) days following
the date of demand by FINOVA. All amounts paid pursuant to this
section shall be applied to the Term Loan in the inverse order of
maturity of payments. No Termination Fee or other form of prepayment
premium shall be applied to any payments made under this section.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
S-11
BORROWER: FINOVA:
JAVELIN SYSTEMS, INC. FINOVA CAPITAL
FED. TAX ID #00-0000-000 CORPORATION
BY______________________________
BY_______________________________ TITLE____________________________
PRESIDENT OR VICE PRESIDENT
CCI GROUP, INC.
FED. TAX ID #00-0000000
BY______________________________
PRESIDENT OR VICE PRESIDENT
POSNET COMPUTERS, INC.
FED. TAX #00-0000000
BY______________________________
PRESIDENT OR VICE PRESIDENT
S-12
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On ____________, 199___ , before me,
__________________________________________
(Name and Title of Officer)
personally appeared ___________________________________________________________
/ / personally known to me
-OR-
/ / proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
WITNESS my hand and official seal.
-------------------------------------------
Signature Of Notary
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER
/ / Individual DESCRIPTION OF ATTACHED DOCUMENT
/ / Corporate Officer
-------------------------------- --------------------------------------------
Title Or Type Of Document
/ / Partner(s) / / Limited
/ / General --------------------------------------------
/ / Attorney-In-Fact Number Of Pages
/ / Trustee(s)
/ / Guardian/Conservator
/ / Other:__________________ --------------------------------------------
Date Of Document
Signer is representing:
Name Of Person(s) Or Entity(ies) --------------------------------------------
Signer(s) Other Than Named Above
--------------------------------
--------------------------------
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On ____________, 199___ , before me,
__________________________________________
(Name and Title of Officer)
personally appeared ___________________________________________________________
/ / personally known to me
-OR-
/ / proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
WITNESS my hand and official seal.
-------------------------------------------
Signature Of Notary
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER
/ / Individual DESCRIPTION OF ATTACHED DOCUMENT
/ / Corporate Officer
-------------------------------- --------------------------------------------
Title Or Type Of Document
/ / Partner(s) / / Limited
/ / General --------------------------------------------
/ / Attorney-In-Fact Number Of Pages
/ / Trustee(s)
/ / Guardian/Conservator
/ / Other:__________________ --------------------------------------------
Date Of Document
Signer is representing:
Name Of Person(s) Or Entity(ies) --------------------------------------------
Signer(s) Other Than Named Above
--------------------------------
--------------------------------
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On ____________, 199___ , before me,
__________________________________________
(Name and Title of Officer)
personally appeared ___________________________________________________________
/ / personally known to me
-OR-
/ / proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
WITNESS my hand and official seal.
-------------------------------------------
Signature Of Notary
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER
/ / Individual DESCRIPTION OF ATTACHED DOCUMENT
/ / Corporate Officer
-------------------------------- --------------------------------------------
Title Or Type Of Document
/ / Partner(s) / / Limited
/ / General --------------------------------------------
/ / Attorney-In-Fact Number Of Pages
/ / Trustee(s)
/ / Guardian/Conservator
/ / Other:__________________ --------------------------------------------
Date Of Document
Signer is representing:
Name Of Person(s) Or Entity(ies) --------------------------------------------
Signer(s) Other Than Named Above
--------------------------------
--------------------------------
EXHIBIT A
FORM OF TERM NOTE
SECURED PROMISSORY NOTE
$1,500,000 Phoenix, Arizona
June 8, 1998
FOR VALUE RECEIVED, JAVELIN SYSTEMS, INC., a Delaware corporation
("Borrower"), promises to pay to the order of FINOVA CAPITAL CORPORATION, a
Delaware corporation ("FINOVA"), at its offices at 000 Xxxxx Xxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or at such other place or places as FINOVA
may from time to time designate in writing, the principal sum of One Million
Five Hundred Thousand Dollars ($1,500,000), plus interest in the manner and upon
the terms and conditions set forth below. This Secured Promissory Note ("Note")
is made pursuant to that certain Loan and Security Agreement of even date among
FINOVA, Borrower, CCI Group, Inc. and Posnet Computers, Inc. (the "LOAN
AGREEMENT"), the provisions of which are incorporated herein by this reference.
Capitalized terms herein, unless otherwise noted, shall have the meaning set
forth in the Loan Agreement.
1.0 SCHEDULE OF PAYMENTS; RATE AND PAYMENT OF INTEREST; PREPAYMENT.
1.1 This Note shall be payable as follows:
a. Thirty-five (35) equal successive monthly installments of
principal of Twenty-five Thousand Dollars ($25,000) each on
the first Business Day of each month, beginning July 1,
1998, and continuing through and including June 1, 2001; and
b. A final installment of all remaining principal on June 7,
2001, together with accrued interest on the principal
balance from time to time remaining unpaid, payable
monthly on the first day of each and every month, beginning
July 1, 1998. Without limiting the foregoing, this Note
shall be subject to the mandatory Excess Cash Flow
Prepayments provided for in the Loan Agreement.
1.2 Prepayment may be made under this Note in whole but not in part,
subject to the prepayment provisions set forth in the Loan Agreement, provided
that such prepayment (if of this Note only) is preceded by not less than five
(5) Business Days prior written notice to FINOVA and accompanied by all accrued
but unpaid interest and the full amount of the applicable Termination Fee and,
if applicable, the Make Whole Premium. Notwithstanding anything herein to the
contrary, in the event the Loan Agreement is terminated by Borrower, by FINOVA
or by any other person at any time for any reason, then the entire unpaid
principal balance of this Note, together with all accrued and unpaid interest
hereon and, to the extent applicable, the full amount of the Termination Fee
and, if applicable, the Make Whole Premium, shall become immediately due and
payable in full on the effective date of such termination, without presentment,
notice or demand of any kind.
1.3 Interest shall be computed on the basis of a 360-day year for the
actual number of days elapsed, and shall be at the fixed rate of 13.65%,
computed on the basis of a 360-day year; provided, however, upon the occurrence
and during the continuance of an event of default (as hereinafter defined),
A-1
interest shall at FINOVA's option accrue on the outstanding principal balance of
this Note at a default rate (the "DEFAULT RATE") of two (2) percentage points
above such rate, and shall be payable on demand.
2.0 EVENTS OF DEFAULTS; REMEDIES.
2.1 Upon the occurrence of any Event of Default, in addition to FINOVA's
right to charge interest on the Obligations at the Default Rate: (a)
at the option of FINOVA, the entire unpaid amount of all of the
Obligations, including without limitation the Termination Fee and, if
applicable, the Make Whole Premium, shall become immediately due and
payable without demand, notice or legal process of any kind; (b)
FINOVA may, at its option, without demand, notice or legal process of
any kind, exercise any and all rights and remedies granted to it by
the Loan Agreement or by any other agreement now or hereafter existing
between FINOVA and Borrower or between FINOVA and any guarantor of
part or all of Borrower's liabilities to FINOVA; and (c) FINOVA may at
its option exercise from time to time any other rights and remedies
available to it under the Uniform Commercial Code or other law of the
State of Arizona.
2.2 The remedies of FINOVA as provided herein and in the Loan Agreement
shall be cumulative and concurrent, and may be pursued singularly,
successively, or together, at the sole discretion of FINOVA. No act of
omission or commission of FINOVA, including specifically any failure
to exercise any right, remedy or recourse, shall be deemed to be a
waiver or release of the same, such waiver or release to be effected
only through a written document executed by FINOVA and then only to
the extent specifically recited therein. A waiver or release with
reference to any one event shall not be construed as continuing, as a
bar to, or as a waiver or release of, any subsequent right, remedy or
recourse as to a subsequent event.
3.0 GENERAL PROVISIONS.
3.1 Borrower warrants and represents to FINOVA that Borrower has used and
will continue to use the loans and advances represented by this Note
solely for proper business purposes, and consistent with all
applicable laws and statutes and with the Loan Agreement.
3.2 This Note is secured by the Collateral described in the Loan
Agreement.
3.3 Borrower waives presentment, demand and protest, notice of protest,
notice of presentment and all other notices and demands in connection
with the enforcement of FINOVA's rights hereunder, except as
specifically provided and called for by this Note, and hereby consents
to, and waives notice of, the release, addition, or substitution, with
or without consideration, of any collateral or of any person liable
for payment of this Note. Any failure of FINOVA to exercise any right
available hereunder or otherwise shall not be construed as a waiver of
the right to exercise the same or as a waiver of any other right at
any other time.
3.4 If this Note is not paid when due or upon the occurrence of an Event
of Default, Borrower further promises to pay all costs of collection,
foreclosure fees, attorneys' fees and expert
A-2
witness fees incurred by FINOVA, whether or not suit is filed hereon,
and the fees, costs and expenses as provided in the Loan Agreement.
3.5 The contracted for rate of interest of the loan contemplated hereby,
without limitation, shall consist of the following: (i) the interest
rate set forth in Section 1.3 hereof, calculated and applied to the
principal balance of this Note in accordance with the provisions of
this Note; (ii) interest after an Event of Default, calculated and
applied to the amounts due under this Note in accordance with the
provisions hereof; and (iii) all Additional Sums (as herein defined),
if any. Borrower agrees to pay an effective contracted for rate of
interest which is the sum of the above-referenced elements. All
examination fees, attorneys fees, expert witness fees, letter of
credit fees, collateral monitoring fees, closing fees, facility fees,
Termination Fees, other charges, goods, things in action or any other
sums or things of value paid or payable by Borrower (collectively, the
"ADDITIONAL SUMS"), whether pursuant to this Note, the Loan Agreement
or any other documents or instruments in any way pertaining to this
lending transaction, or otherwise with respect to this lending
transaction, that under any applicable law may be deemed to be
interest with respect to this lending transaction, for the purpose of
any applicable law that may limit the maximum amount of interest to be
charged with respect to this lending transaction, shall be payable by
Borrower as, and shall be deemed to be, additional interest and for
such purposes only, the agreed upon and "contracted for rate of
interest" of this lending transaction shall be deemed to be increased
by the rate of interest resulting from the inclusion of the Additional
Sums.
3.6 It is the intent of the parties to comply with the usury law of the
State of Arizona (the "APPLICABLE USURY LAW"). Accordingly, it is
agreed that notwithstanding any provisions to the contrary in this
Note, or in any of the documents securing payment hereof or otherwise
relating hereto, in no event shall this Note or such documents require
the payment or permit the collection of interest in excess of the
maximum Interest Rate, then in any such event (1) the provisions of
the paragraph shall govern and control, (2) neither Borrower nor any
other person or entity now or hereafter liable for the payment hereof
shall be obligated to pay the amount of such interest to the extent
that it is in excess of the Maximum Interest Rate, (3) any such excess
which may have been collected shall be either applied as a credit
against the then unpaid principal amount hereof or refunded to
Borrower, at FINOVA's option, and (4) the effective rate of interest
shall be automatically reduced to the Maximum Interest Rate. It is
further agreed, without limiting the generality of the foregoing, that
to the extent permitted by the Applicable Usury Law; (x) all
calculations of interest which are made for the purpose of determining
whether such rate would exceed the Maximum Interest Rate shall be made
by amortizing, prorating, allocating and spreading during the period
of the full stated term of the loan evidenced hereby, all interest at
any time contracted for, charged or received from Borrower or
otherwise in connection with such loan; and (y) in the event that the
effective rate of interest on the loan should at any time exceed the
Maximum Interest Rate, such excess interest that would otherwise have
been collected had there been no ceiling imposed by the Applicable
Usury Law shall be paid to FINOVA from time to time, if and when the
effective interest rate on the loan otherwise falls below the Maximum
Interest Rate, until the entire amount of interest which would
otherwise have been collected had there been no ceiling imposed by the
Applicable Usury Law has been
A-3
paid in full. Borrower further agrees that should the Maximum
Interest Rate be increased at any time hereafter because of a change
in the Applicable Usury Law, then to the extent not prohibited by the
Applicable Usury Law, such increases shall apply to all indebtedness
evidenced hereby regardless of when incurred; but, again to the extent
not prohibited by the Applicable Usury Law, should the Maximum
Interest Rate be decreased because of a change in the Applicable Usury
Law, such decreases shall not apply to the indebtedness evidenced
hereby regardless of when incurred.
3.7 FINOVA may transfer this Note and FINOVA's rights in any or all
collateral securing this Note in accordance with the terms set forth
in Section 9.7 of the Loan Agreement, and FINOVA thereafter shall be
relieved from all liability with respect to such collateral arising
after the date of such transfer.
3.8 This Note shall be binding upon Borrower and its legal
representatives, successors and assigns. Wherever possible, each
provision of this Note shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of the
Note shall be prohibited by or invalid under such law, such provision
shall be severable, and be ineffective to the extent of such
prohibition or invalidity, without invalidating the remaining
provisions of this Note.
THIS NOTE HAS BEEN DELIVERED FOR ACCEPTANCE BY FINOVA IN PHOENIX,
ARIZONA AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) OF THE STATE OF ARIZONA, AS
THE SAME MAY FROM TIME TO TIME BE IN EFFECT, INCLUDING, WITHOUT LIMITATION, THE
UNIFORM COMMERCIAL CODE AS ADOPTED IN ARIZONA. BORROWER HEREBY (i) IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN MARICOPA
COUNTY, ARIZONA OVER ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER
ARISING FROM OR RELATED TO THIS NOTE; (ii) WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON BORROWER, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE
BY MESSENGER, CERTIFIED MAIL OR REGISTERED MAIL DIRECTED TO BORROWER AT THE
ADDRESS SET FORTH BELOW AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON
THE EARLIER OF ACTUAL RECEIPT OR THREE (3) DAYS AFTER THE SAME SHALL HAVE BEEN
POSTED TO BORROWER'S ADDRESS; (iii) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
BORROWER MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING; (iv) AGREES THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY
OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW; (v) AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST FINOVA
OR ANY OF FINOVA'S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY,
CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THIS NOTE IN ANY COURT OTHER
THAN ONE LOCATED IN MARICOPA COUNTY, ARIZONA; AND (vi) IRREVOCABLY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING UNDER OR IN CONNECTION WITH THIS
NOTE. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR IMPAIR FINOVA'S RIGHT TO SERVE
LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW
A-4
OR FINOVA'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST
BORROWER OR BORROWER'S PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
"Borrower"
JAVELIN SYSTEMS, INC.
a Delaware corporation
By:
---------------------------------------
Name:
Title:
Federal Taxpayer Identification
Number: 00-0000000
Address: 0000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
A-5
EXHIBIT B
PERMITTED ENCUMBRANCES
"PERMITTED ENCUMBRANCES" means the following:
(1) liens and security interests existing as of this date and
disclosed in EXHIBIT B-1 attached hereto and incorporated herein by this
reference;
(2) liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith
by appropriate proceedings; provided in each case that no lien could arise
in favor of a taxing authority, which lien could impair the enforceability
or priority of FINOVA's security interest in the Collateral;
(3) liens and security interests (a) upon any equipment acquired
or held by Borrower to secure the purchase price of such equipment or
indebtedness incurred solely for the purpose of financing the acquisition
of such equipment and in an amount not greater than the purchase price
thereof or (b) existing on such equipment at the time of its acquisition,
PROVIDED that the lien and security interest is confined solely to the
property so acquired and improvements thereon, and the proceeds of such
equipment, in each case to the extent the acquisition of such equipment in
permitted hereunder;
(4) liens consisting of leases or subleases and licenses and
sublicenses granted to others in the ordinary course of Borrower's business
not interfering in any material respect with the business of Borrower and
any interest or title of a lessor or licensor under any lease or license,
as applicable;
(5) liens securing claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like persons or entities
imposed without action of such parties, PROVIDED that the payment thereof
is not yet required, and subject to the waivers required in the Agreement;
(6) liens incurred or deposits made in the ordinary course of
Borrower's business in connection with worker's compensation, unemployment
insurance, social security and other like laws;
(7) liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default;
(8) easements, reservations, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or
encumbrances affecting real property not interfering in any material
respect with the ordinary conduct of Borrower's business;
(9) liens in favor of customs and revenue authorities arising as
a matter of law to secure payment of customs duties in connection with the
importation of goods;
(10) liens that are not prior to FINOVA's security interest
which constitute rights of set-off of a customary nature;
B-1
(11) any interest or title of a lessor in equipment subject
to any Capital Lease otherwise permitted hereunder; and
(12) any liens arising from the filing of any financing
statements relating to true leases otherwise permitted hereunder.
B-2
EXHIBIT B-1
1. liens in existence on the date hereof encumbering only the
following motor vehicles owned by Posnet: 1994 Ford, serial
no. IFMCA11U3RZA69027; 1990 Ford, serial no. IFMDA31U5LZB10619; 1990 Mitsubishi,
serial no. XX00X0000XX000000.
B-1-1
EXHIBIT C
COMPENSATION
Until such time as FINOVA has reviewed Javelin's proposed new salary structure,
as proposed by Javelin's independent compensation consultant (after the
completion of the report related to the new salary structure) (the "Review
Date"), total annual cash compensation (other than commissions, compensation in
stock of Javelin, options or securities convertible into stock of Javelin)
("Annual Compensation") to each of the following individuals shall not exceed
the following amounts: Xxxxxxx Xxxxx, $150,000; Xxxx Xxxxxxxx, $130,000; and
Xxxxxx Xxxxx, $130,000. After FINOVA's review of such proposal, the Annual
Compensation of such individuals may change as provided in the proposal, so long
as Borrower's Senior Debt Service Coverage Ratio for the period from January 1,
1998 to the Review Date (giving effect on a pro forma basis to such revised
compensation, as if implemented on January 1, 1998) would be at least 1.3:1.0
(the "Minimum Ratio"). In the event that Borrower's Senior Debt Service
Coverage Ratio is below the Minimum Ratio after giving effect on a pro forma
basis to such revised compensation, then such individuals' Annual Compensation
may be increased, in the discretion of Javelin's Compensation Committee, such
that the Senior Debt Service Coverage Ratio for the period from January 1, 1998
to the Review Date (giving effect on a pro forma basis to such revised
compensation, as if implemented on January 1, 1998) is at least 1.3:1.0.
Thereafter, in any fiscal year of Javelin, such Annual Compensation may increase
for such individuals by the following percentages, provided that the average of
Borrower's Senior Debt Service Coverage Ratio for the preceding 12 months was
not less than the corresponding ratio:
Percent Increase Permitted Senior Debt Service Coverage Ratio
-------------------------- ----------------------------------
15% 1.3:1.0
30% 1.5:1.0
50% 1.7:1.0
unlimited 2.0:1.0
The foregoing relates to potential increases and in no way contemplates or
requires the reduction of such individuals' compensation regardless of Javelin's
performance.
C-1
EXHIBIT D
EXISTING INDEBTEDNESS
CCI owes Javelin $600,000
Posnet owes Javelin $200,000
D-1
SECURED PROMISSORY NOTE
$1,500,000 Phoenix, Arizona
June 8, 1998
FOR VALUE RECEIVED, JAVELIN SYSTEMS, INC., a Delaware corporation
("Borrower"), promises to pay to the order of FINOVA CAPITAL CORPORATION, a
Delaware corporation ("FINOVA"), at its offices at 000 Xxxxx Xxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or at such other place or places as FINOVA
may from time to time designate in writing, the principal sum of One Million
Five Hundred Thousand Dollars ($1,500,000), plus interest in the manner and upon
the terms and conditions set forth below. This Secured Promissory Note ("Note")
is made pursuant to that certain Loan and Security Agreement of even date among
FINOVA, Borrower, CCI Group, Inc. and Posnet Computers, Inc. (the "LOAN
AGREEMENT"), the provisions of which are incorporated herein by this reference.
Capitalized terms herein, unless otherwise noted, shall have the meaning set
forth in the Loan Agreement.
1.0 SCHEDULE OF PAYMENTS; RATE AND PAYMENT OF INTEREST; PREPAYMENT.
1.1 This Note shall be payable as follows:
a. Thirty-five (35) equal successive monthly installments of
principal of Twenty-five Thousand Dollars ($25,000) each on the first Business
Day of each month, beginning July 1, 1998, and continuing through and including
June 1, 2001; and
b. A final installment of all remaining principal on June 7,
2001, together with accrued interest on the principal balance from time to time
remaining unpaid, payable monthly on the first day of each and every month,
beginning July 1, 1998. Without limiting the foregoing, this Note shall be
subject to the mandatory Excess Cash Flow Prepayments provided for in the Loan
Agreement.
1.2 Prepayment may be made under this Note in whole but not in
part, subject to the prepayment provisions set forth in the Loan Agreement,
provided that such prepayment (if of this Note only) is preceded by not less
than five (5) Business Days prior written notice to FINOVA and accompanied by
all accrued but unpaid interest and the full amount of the applicable
Termination Fee and, if applicable, the Make Whole Premium. Notwithstanding
anything herein to the contrary, in the event the Loan Agreement is terminated
by Borrower, by FINOVA or by any other person at any time for any reason, then
the entire unpaid principal balance of this Note, together with all accrued and
unpaid interest hereon and, to the extent applicable, the full amount of the
Termination Fee and, if applicable, the Make Whole Premium, shall become
immediately due and payable in full on the effective date of such termination,
without presentment, notice or demand of any kind.
1.3 Interest shall be computed on the basis of a 360-day year for
the actual number of days elapsed, and shall be at the fixed rate of 13.65%,
computed on the basis of a 360-day year; provided, however, upon the occurrence
and during the continuance of an event of default (as hereinafter defined),
interest shall at FINOVA's option accrue on the outstanding principal balance of
this Note at a default rate (the "DEFAULT RATE") of two (2) percentage points
above such rate, and shall be payable on demand.
2.0 EVENTS OF DEFAULTS; REMEDIES.
2.1 Upon the occurrence of any Event of Default, in addition to
FINOVA's right to charge interest on the Obligations at the Default Rate: (a)
at the option of FINOVA, the entire unpaid amount of all of the Obligations,
including without limitation the Termination Fee and, if applicable, the Make
Whole Premium, shall become immediately due and payable without demand, notice
or legal process of any kind; (b) FINOVA may, at its option, without demand,
notice or legal process of any kind, exercise any and all rights and remedies
granted to it by the Loan Agreement or by any other agreement now or hereafter
existing between FINOVA and Borrower or between FINOVA and any guarantor of part
or all of Borrower's liabilities to FINOVA; and (c) FINOVA may at its option
exercise from time to time any other rights and remedies available to it under
the Uniform Commercial Code or other law of the State of Arizona.
2.2 The remedies of FINOVA as provided herein and in the Loan
Agreement shall be cumulative and concurrent, and may be pursued singularly,
successively, or together, at the sole discretion of FINOVA. No act of omission
or commission of FINOVA, including specifically any failure to exercise any
right, remedy or recourse, shall be deemed to be a waiver or release of the
same, such waiver or release to be effected only through a written document
executed by FINOVA and then only to the extent specifically recited therein. A
waiver or release with reference to any one event shall not be construed as
continuing, as a bar to, or as a waiver or release of, any subsequent right,
remedy or recourse as to a subsequent event.
3.0 GENERAL PROVISIONS.
3.1 Borrower warrants and represents to FINOVA that Borrower has
used and will continue to use the loans and advances represented by this Note
solely for proper business purposes, and consistent with all applicable laws and
statutes and with the Loan Agreement.
3.2 This Note is secured by the Collateral described in the Loan
Agreement.
3.3 Borrower waives presentment, demand and protest, notice of
protest, notice of presentment and all other notices and demands in connection
with the enforcement of FINOVA's rights hereunder, except as specifically
provided and called for by this Note, and hereby consents to, and waives notice
of, the release, addition, or substitution, with or without consideration, of
any collateral or of any person liable for payment of this Note. Any failure of
FINOVA to exercise any right available hereunder or otherwise shall not be
construed as a waiver of the right to exercise the same or as a waiver of any
other right at any other time.
3.4 If this Note is not paid when due or upon the occurrence of an
Event of Default, Borrower further promises to pay all costs of collection,
foreclosure fees, attorneys' fees and expert witness fees incurred by FINOVA,
whether or not suit is filed hereon, and the fees, costs and expenses as
provided in the Loan Agreement.
3.5 The contracted for rate of interest of the loan contemplated
hereby, without limitation, shall consist of the following: (i) the interest
rate set forth in Section 1.3 hereof, calculated and applied to the principal
balance of this Note in accordance with the
-2-
provisions of this Note; (ii) interest after an Event of Default, calculated and
applied to the amounts due under this Note in accordance with the provisions
hereof; and (iii) all Additional Sums (as herein defined), if any. Borrower
agrees to pay an effective contracted for rate of interest which is the sum of
the above-referenced elements. All examination fees, attorneys fees, expert
witness fees, letter of credit fees, collateral monitoring fees, closing fees,
facility fees, Termination Fees, other charges, goods, things in action or any
other sums or things of value paid or payable by Borrower (collectively, the
"ADDITIONAL SUMS"), whether pursuant to this Note, the Loan Agreement or any
other documents or instruments in any way pertaining to this lending
transaction, or otherwise with respect to this lending transaction, that under
any applicable law may be deemed to be interest with respect to this lending
transaction, for the purpose of any applicable law that may limit the maximum
amount of interest to be charged with respect to this lending transaction, shall
be payable by Borrower as, and shall be deemed to be, additional interest and
for such purposes only, the agreed upon and "contracted for rate of interest" of
this lending transaction shall be deemed to be increased by the rate of interest
resulting from the inclusion of the Additional Sums.
3.6 It is the intent of the parties to comply with the usury law
of the State of Arizona (the "APPLICABLE USURY LAW"). Accordingly, it is agreed
that notwithstanding any provisions to the contrary in this Note, or in any of
the documents securing payment hereof or otherwise relating hereto, in no event
shall this Note or such documents require the payment or permit the collection
of interest in excess of the maximum Interest Rate, then in any such event (1)
the provisions of the paragraph shall govern and control, (2) neither Borrower
nor any other person or entity now or hereafter liable for the payment hereof
shall be obligated to pay the amount of such interest to the extent that it is
in excess of the Maximum Interest Rate, (3) any such excess which may have been
collected shall be either applied as a credit against the then unpaid principal
amount hereof or refunded to Borrower, at FINOVA's option, and (4) the effective
rate of interest shall be automatically reduced to the Maximum Interest Rate.
It is further agreed, without limiting the generality of the foregoing, that to
the extent permitted by the Applicable Usury Law; (x) all calculations of
interest which are made for the purpose of determining whether such rate would
exceed the Maximum Interest Rate shall be made by amortizing, prorating,
allocating and spreading during the period of the full stated term of the loan
evidenced hereby, all interest at any time contracted for, charged or received
from Borrower or otherwise in connection with such loan; and (y) in the event
that the effective rate of interest on the loan should at any time exceed the
Maximum Interest Rate, such excess interest that would otherwise have been
collected had there been no ceiling imposed by the Applicable Usury Law shall be
paid to FINOVA from time to time, if and when the effective interest rate on the
loan otherwise falls below the Maximum Interest Rate, until the entire amount of
interest which would otherwise have been collected had there been no ceiling
imposed by the Applicable Usury Law has been paid in full. Borrower further
agrees that should the Maximum Interest Rate be increased at any time hereafter
because of a change in the Applicable Usury Law, then to the extent not
prohibited by the Applicable Usury Law, such increases shall apply to all
indebtedness evidenced hereby regardless of when incurred; but, again to the
extent not prohibited by the Applicable Usury Law, should the Maximum Interest
Rate be decreased because of a change in the Applicable Usury Law, such
decreases shall not apply to the indebtedness evidenced hereby regardless of
when incurred.
-3-
3.7 FINOVA may transfer this Note and FINOVA's rights in any or
all collateral securing this Note in accordance with the terms set forth in
Section 9.7 of the Loan Agreement, and FINOVA thereafter shall be relieved from
all liability with respect to such collateral arising after the date of such
transfer.
3.8 This Note shall be binding upon Borrower and its legal
representatives, successors and assigns. Wherever possible, each provision of
this Note shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Note shall be prohibited by or
invalid under such law, such provision shall be severable, and be ineffective to
the extent of such prohibition or invalidity, without invalidating the remaining
provisions of this Note.
THIS NOTE HAS BEEN DELIVERED FOR ACCEPTANCE BY FINOVA IN PHOENIX,
ARIZONA AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) OF THE STATE OF ARIZONA, AS
THE SAME MAY FROM TIME TO TIME BE IN EFFECT, INCLUDING, WITHOUT LIMITATION, THE
UNIFORM COMMERCIAL CODE AS ADOPTED IN ARIZONA. BORROWER HEREBY (i) IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN MARICOPA
COUNTY, ARIZONA OVER ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER
ARISING FROM OR RELATED TO THIS NOTE; (ii) WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON BORROWER, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE
BY MESSENGER, CERTIFIED MAIL OR REGISTERED MAIL DIRECTED TO BORROWER AT THE
ADDRESS SET FORTH BELOW AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON
THE EARLIER OF ACTUAL RECEIPT OR THREE (3) DAYS AFTER THE SAME SHALL HAVE BEEN
POSTED TO BORROWER'S ADDRESS; (iii) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
BORROWER MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING; (iv) AGREES THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY
OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW; (v) AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST FINOVA
OR ANY OF FINOVA'S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY,
CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THIS NOTE IN ANY COURT OTHER
THAN ONE LOCATED IN MARICOPA COUNTY, ARIZONA; AND (vi) IRREVOCABLY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING UNDER OR IN CONNECTION WITH THIS
NOTE. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR IMPAIR FINOVA'S RIGHT TO SERVE
LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW
-4-
OR FINOVA'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR
BORROWER'S PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
"Borrower"
JAVELIN SYSTEMS, INC.
a Delaware corporation
By:
-----------------------------------------
Name:
Title:
Federal Taxpayer Identification
Number: 00-0000000
Address: 0000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
-5-
SECURED CONTINUING CORPORATE GUARANTY
OF JAVELIN SYSTEMS, INC.
FOR VALUE RECEIVED, and in consideration of any loan or other
financial accommodation heretofore or hereafter at any time made or granted to
either CCI Group, Inc., a Missouri corporation, or Posnet Computers, Inc., a
California corporation (jointly and severally, "Borrower"), by FINOVA CAPITAL
CORPORATION ("Lender"), the undersigned, Javelin Systems, Inc., a Delaware
corporation ("Guarantor"), hereby agrees as follows:
1. GUARANTY OF OBLIGATIONS. Guarantor unconditionally,
absolutely and irrevocably guarantees the full and prompt payment and
performance when due, whether by acceleration or otherwise, and at all times
thereafter, of all obligations of Borrower to Lender, howsoever created, arising
or evidenced, whether direct or indirect, absolute or contingent, or now or
hereafter existing or due or to become due, including, without limitation, under
or in connection with that certain Loan and Security Agreement of even date,
among Borrower, Guarantor and Lender (the "Loan Agreement") and each of the
documents, instruments and agreements executed and delivered in connection
therewith, as each may be modified, amended, supplemented or replaced from time
to time (all such obligations are herein referred to collectively as the
"Liabilities", and all documents evidencing or securing any of the Liabilities
are herein referred to, collectively, as the "Loan Documents"). This Secured
Continuing Corporate Guaranty (this "Continuing Guaranty") is a guaranty of
payment and performance when due and not of collection.
In the event of any default by Borrower in making payment of, or
default by Borrower in performance of, any of the Liabilities, Guarantor agrees
on demand by Lender to pay and perform all of the Liabilities as are then or
thereafter become due and owing or are to be performed under the terms of the
Loan Documents. Guarantor further agrees to pay all expenses (including
reasonable attorneys' fees and expenses) paid or incurred by Lender in
endeavoring to collect the Liabilities, or any part thereof, and in enforcing
this Continuing Guaranty.
2. SECURITY FOR CONTINUING GUARANTY. This Continuing Guaranty is
secured by the collateral pledged by Guarantor pursuant to the Loan Agreement
and the other Loan Documents.
3. CONTINUING NATURE OF GUARANTY AND LIABILITIES. This
Continuing Guaranty shall be continuing and shall not be discharged, impaired or
affected by:
(a) the insolvency of Borrower or the payment in full of
all of the Liabilities at any time or from time to time;
(b) the power or authority or lack thereof of Borrower to
incur the Liabilities;
(c) the validity or invalidity of any of the Loan Documents
or the documents securing the same;
(d) the existence or non-existence of Borrower as a legal
entity;
(e) any transfer by Borrower of all or any part of any
collateral in which Lender has been granted a lien or security interest
pursuant to the Loan Documents;
(f) any statute of limitations affecting the liability of
Guarantor under this Continuing Guaranty or the Loan Documents or the
ability of Lender to enforce this Continuing Guaranty or any provision of
the Loan Documents; or
(g) any right of offset, counterclaim or defense of
Guarantor, including, without limitation, those which have been waived by
Guarantor pursuant to Paragraph 7 hereof.
4. INSOLVENCY OF BORROWER OR GUARANTOR. Without limiting the
generality of any other provision hereof, Guarantor agrees that, in the event of
the dissolution or insolvency of Borrower or Guarantor or the inability of
Borrower or Guarantor to pay their respective debts as they mature, or an
assignment by Borrower or Guarantor for the benefit of creditors, or the
institution of any proceeding by or against Borrower or Guarantor alleging that
Borrower or Guarantor is insolvent or unable to pay its respective debts as they
mature, Guarantor will pay to Lender forthwith the full amount which would be
payable hereunder by Guarantor if all of the Liabilities were then due and
payable, whether or not such event occurs at a time when any of the Liabilities
are otherwise due and payable.
5. PAYMENT OF THE LIABILITIES. Any amounts received by Lender
from whatever source on account of the Liabilities may be applied by Lender
toward the payment of such of the Liabilities, and in such order of application,
as Lender may from time to time elect, and notwithstanding any payments made by
or for the account of Guarantor pursuant to this Continuing Guaranty.
Guarantor agrees that, if at any time all or any part of any payment
theretofore applied by Lender to any of the Liabilities is or must be rescinded
or returned by Lender for any reason whatsoever (including, without limitation,
the insolvency, bankruptcy or reorganization of Borrower), such Liabilities
shall, for the purposes of this Continuing Guaranty and to the extent that such
payment is or must be rescinded or returned, be deemed to have continued in
existence notwithstanding such application by Lender, and this Continuing
Guaranty shall continue to be effective or be reinstated, as the case may be, as
to such Liabilities, all as though such application by Lender had not been made.
6. PERMITTED ACTIONS OF LENDER. Lender may from time to time, in
its sole discretion and without notice to Guarantor, take any or all of the
following actions:
(a) retain or obtain a security interest in any assets of
Borrower or any third party to secure any of the Liabilities or any
obligations of Guarantor hereunder;
2
(b) retain or obtain the primary or secondary obligation of
any obligor or obligors, in addition to Guarantor, with respect to any of
the Liabilities;
(c) extend or renew for one or more periods (whether or not
longer than the original period), alter or exchange any of the Liabilities;
(d) waive, ignore or forbear from taking action or
otherwise exercising any of its default rights or remedies with respect to
any default by Borrower under the Loan Documents;
(e) release, waive or compromise any obligation of
Guarantor hereunder or any obligation of any nature of any other obligor
primarily or secondarily obligated with respect to any of the Liabilities;
(f) release its security interest in, or surrender, release
or permit any substitution or exchange for, all or any part of any
collateral now or hereafter securing any of the Liabilities or any
obligation hereunder, or extend or renew for one or more periods (whether
or not longer than the original period) or release, waive, compromise,
alter or exchange any obligations of any nature of any obligor with respect
to any such property; and
(g) demand payment or performance of any of the Liabilities
from Guarantor at any time or from time to time after they shall have
become due (whether at maturity, by acceleration, or otherwise), whether or
not Lender shall have exercised any of its rights or remedies with respect
to any property securing any of the Liabilities or any obligation hereunder
or proceeded against any other obligor primarily or secondarily liable for
payment or performance of any of the Liabilities.
7. SPECIFIC WAIVERS. Without limiting the generality of any
other provision of this Continuing Guaranty, Guarantor hereby expressly waives:
(a) notice of the acceptance by Lender of this Continuing
Guaranty;
(b) notice of the existence, creation, payment, nonpayment,
performance or nonperformance of all or any of the Liabilities;
(c) presentment, demand, notice of dishonor, protest,
notice of protest and all other notices whatsoever with respect to the
payment or performance of the Liabilities or the amount thereof or any
payment or performance by Guarantor hereunder;
(d) all diligence in collection or protection of or
realization upon the Liabilities or any thereof, any obligation hereunder
or any security for or guaranty of any of the foregoing;
(e) any right to direct or affect the manner or timing of
Lender's enforcement of its rights or remedies;
3
(f) any and all defenses which would otherwise arise upon
the occurrence of any event or contingency described in Paragraph 1 hereof
or upon the taking of any action by Lender permitted hereunder;
(g) any defense, right of set-off, claim or counterclaim
whatsoever and any and all other rights, benefits, protections and other
defenses available to Guarantor now or at any time hereafter, including,
without limitation, under California Civil Code Sections 2787 to 2855,
inclusive, and California Code of Civil Procedure Sections 580a, 580b, 580d
or 726, and all successor sections; and
(h) all other principles or provisions of law, if any, that
conflict with the terms of this Continuing Guaranty, including, without
limitation, the effect of any circumstances that may or might constitute a
legal or equitable discharge of a guarantor or surety.
8. IRREVOCABILITY. Guarantor hereby further waives all rights to
revoke this Continuing Guaranty at any time, and all rights to revoke any
agreement executed by Guarantor at any time to secure the payment and
performance of Guarantor's obligations under this Continuing Guaranty,
including, without limitation, the Loan Documents.
9. STATUTORY WAIVER OF RIGHTS AND DEFENSES REGARDING ELECTION OF
REMEDIES. Guarantor waives all rights and defenses arising out of an election
of remedies by Lender, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a guaranteed obligation,
has destroyed Guarantor's rights of subrogation and reimbursement against
Borrower by the operation of any applicable law, including without limitation
Section 580d of the California Code of Civil Procedure, or otherwise.
10. SUBORDINATION. Except as specifically provided to the
contrary in the Loan Agreement, including the permitted loans and indebtedness
between Borrower and Guarantor as set forth therein (i) Guarantor hereby
subordinates any and all indebtedness of Borrower to Guarantor to the full and
prompt payment and performance of all of the Liabilities and (ii) Guarantor
agrees that Lender shall be entitled to receive payment of all Liabilities prior
to Guarantor's receipt of payment of any amount of any indebtedness of Borrower
to Guarantor. Any payments on such indebtedness to Guarantor if made in
violation of this provision, if Lender so requests, shall be collected, enforced
and received by Guarantor, in trust, as trustee for Lender and shall be paid
over to Lender on account of the Liabilities, but without reducing or affecting
in any manner the liability of Guarantor under the other provisions of this
Guaranty. So long as an Event of Default has occurred and is continuing, Lender
is authorized and empowered, but not obligated, in its discretion, (a) in the
name of Guarantor, to collect and enforce, and to submit claims in respect of,
any indebtedness of Borrower to Guarantor and to apply any amounts received
thereon to the Liabilities, and (b) to require Guarantor (i) to collect and
enforce, and to submit claims in respect of, any indebtedness of Borrower to
Guarantor, and (ii) to pay any amounts received on such indebtedness to Lender
for application to the Liabilities.
11. SUBROGATION. Guarantor will not exercise any rights which it
may acquire by way of subrogation under this Continuing Guaranty, by any payment
hereunder or
4
otherwise, until all of the Liabilities have been paid in full, in cash, and
Lender shall have no further obligations to Borrower under the Loan Documents or
otherwise. If any amount shall be paid to Guarantor on account of such
subrogation rights at any other time, such amount shall be held in trust for the
benefit of Lender and shall be forthwith paid to Lender to be credited and
applied to the Liabilities, whether matured or unmatured, in such manner as
Lender shall determine in its sole discretion.
12. ASSIGNMENT OF LENDER'S RIGHTS. Lender may, from time to time,
to the same extent provided in Section 9.7 of the Loan Agreement, assign or
transfer any or all of the Liabilities or any interest therein and,
notwithstanding any such assignment or transfer of the Liabilities or any
subsequent assignment or transfer thereof, the Liabilities shall be and remain
the Liabilities for the purpose of this Continuing Guaranty. Each and every
immediate and successive assignee or transferee of any of the Liabilities or of
any interest therein shall, to the extent of such party's interest in the
Liabilities, be entitled to the benefits of this Continuing Guaranty to the same
extent as if such assignee or transferee were Lender; provided, however, that
unless Lender shall otherwise consent in writing, Lender shall have an
unimpaired right, prior and superior to that of any such assignee or transferee,
to enforce this Continuing Guaranty for its own benefit as to those of the
Liabilities which Lender has not assigned or transferred.
13. INDULGENCES NOT WAIVERS. No delay in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by Lender of any right or remedy shall preclude other or further
exercise thereof or the exercise of any other right or remedy; nor shall any
modification or waiver of any of the provisions of this Continuing Guaranty be
binding upon Lender, except as expressly set forth in a writing duly signed and
delivered by Lender. No action of Lender permitted hereunder shall in any way
affect or impair the rights of Lender or the obligations of Guarantor under this
Continuing Guaranty.
14. FINANCIAL CONDITION OF BORROWER. Guarantor represents and
warrants that it is fully aware of the financial condition of Borrower, and
Guarantor delivers this Continuing Guaranty based solely upon its own
independent investigation of Borrower's financial condition and in no part upon
any representation or statement of Lender with respect thereto. Guarantor
further represents and warrants that it is in a position to and hereby does
assume full responsibility for obtaining such additional information concerning
Borrower's financial condition as Guarantor may deem material to its obligations
hereunder, and Guarantor is not relying upon, nor expecting Lender to furnish it
any information in Lender's possession concerning Borrower's financial condition
or concerning any circumstances bearing on the existence or creation, or the
risk of nonpayment or nonperformance of the Liabilities.
Guarantor hereby waives any duty on the part of Lender to disclose to
Guarantor any facts it may now or hereafter know about Borrower, regardless of
whether Lender has reason to believe that any such facts materially increase the
risk beyond that which Guarantor intends to assume or has reason to believe that
such facts are unknown to Guarantor.
Guarantor hereby knowingly accepts the full range of risk encompassed
within a contract of "Continuing Guaranty" which includes, without limitation,
the possibility that Borrower
5
will contract for additional indebtedness for which Guarantor may be liable
hereunder after Borrower's financial condition or ability to pay its lawful
debts when they fall due has deteriorated.
15. REPRESENTATIONS AND WARRANTIES. Guarantor represents and
warrants to Lender that each of the following statements is accurate and
complete as of the date of this Continuing Guaranty:
(a) this Continuing Guaranty has been duly executed and
delivered by Guarantor and constitutes a legal, valid and binding
obligation of Guarantor, enforceable against Guarantor in accordance with
its terms, except as limited by bankruptcy, insolvency or other laws of
general application relating to or affecting the enforcement of creditors'
rights generally, and except as may be limited by the application of
principles of equity;
(b) the execution, delivery and performance of this
Continuing Guaranty do not (i) violate any provisions of law or any order
of any court or other agency of government (each, a "Requirement of Law")
applicable to Guarantor, (ii) contravene any provision of any material
contract or agreement to which Guarantor is a party or by which Guarantor
or Guarantor's assets are expressly bound (each, a "Contractual
Obligation"), or (iii) result in the creation or imposition of any lien,
charge or encumbrance of any nature upon any property, asset or revenue of
Guarantor except pursuant to or as set forth in the Loan Documents;
(c) all consents, approvals, orders and authorizations of,
and registrations, declarations and filings with, any governmental agency
or authority or other person or entity (including, without limitation, the
shareholders or partners of any entity), if any, which are required to be
obtained in connection with the execution and delivery of this Continuing
Guaranty or the performance of Guarantor's obligations hereunder have been
obtained, and each is in full force and effect;
(d) Guarantor has paid all taxes and other charges imposed
by any governmental agency or authority due and payable by Guarantor other
than those which are being challenged in good faith by appropriate
proceedings;
(e) Guarantor is not in violation of any Requirement of Law
or Contractual Obligation other than any violation the consequences of
which could not have a material adverse effect on Guarantor's ability to
perform its obligations hereunder (a "Material Adverse Effect");
(f) no action, proceeding, investigation or litigation is
pending or, to the knowledge of Grantor, overtly threatened against
Guarantor by any person or entity which, if adversely determined, could
have a Material Adverse Effect; and
(g) each of the representations and warranties in the Loan
Agreement is accurate and complete on and as of the date hereof.
6
16. GUARANTOR FINANCIAL INFORMATION. Guarantor will provide
Lender in writing such financial and other information with respect to
Guarantor's assets and liabilities as Lender shall reasonably request from time
to time, in form satisfactory to Lender.
17. BINDING UPON SUCCESSORS. This Continuing Guaranty shall be
binding upon Guarantor and Guarantor's successors and assigns and shall inure to
the benefit of Lender and its successors and assigns.
All references herein to Borrower shall be deemed to include its
successors and assigns, and all references herein to Guarantor shall be deemed
to include Guarantor and Guarantor's successors and assigns.
In addition and notwithstanding anything to the contrary contained in
this Continuing Guaranty or in any other document, instrument or agreement
between or among any of Lender, Borrower, Guarantor or any third party, the
obligations of Guarantor with respect to the Liabilities shall be joint and
several with any other person or entity that now or hereafter executes a
guaranty of any of the Liabilities separate from this Continuing Guaranty.
18. NOTICES. All notices required or permitted to be given
hereunder shall be in writing and shall be given and deemed received in
accordance with Section 9.12 of the Loan Agreement.
19. GOVERNING LAW; ADDITIONAL WAIVERS. This Continuing Guaranty
has been delivered and shall be governed by and construed in accordance with the
internal laws (as opposed to the conflicts of law provisions) of the State of
Arizona, provided that Guarantor agrees that each of the waivers and agreements
of Guarantor herein which refer to provisions of the California Civil Code and
the California Code of Civil Procedure shall be effective and enforceable to the
extent permitted under applicable law, and to the extent that any court of
competent jurisdiction shall apply the laws of the State of California to
determine the relative rights or remedies of Lender and Guarantor hereunder,
such waivers and agreements by Guarantor shall be governed by the laws of the
State of California.
GUARANTOR HEREBY
(i) WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION TO ENFORCE
OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS CONTINUING GUARANTY,
AND ACKNOWLEDGES THAT LENDER ALSO WAIVES SUCH RIGHT;
(ii) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED IN MARICOPA COUNTY, ARIZONA, OVER ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS
CONTINUING GUARANTY;
(iii) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT GUARANTOR MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN
7
INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING;
(iv) agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in any other jurisdictions by suit
on the judgment or in any other manner provided by law; and
(v) agrees not to institute any legal action or proceeding against
Lender or any of Lender's directors, officers, employees, agents or
property concerning any matter arising out of or relating to this
Continuing Guaranty in any court other than one located in Maricopa County,
Arizona.
(vi) Nothing herein shall affect or impair Lender's right to serve
legal process in any manner permitted by law or Lender's right to bring any
action or proceeding against Guarantor or its property in the courts of any
other jurisdiction. Wherever possible each provision of this Continuing
Guaranty shall be interpreted as to be effective and valid under applicable
law, but if any provision of this Continuing Guaranty shall be prohibited
by or invalid under such law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Continuing
Guaranty.
20. ADVICE OF COUNSEL. GUARANTOR ACKNOWLEDGES THAT GUARANTOR HAS
EITHER OBTAINED THE ADVICE OF COUNSEL OR HAS HAD THE OPPORTUNITY TO OBTAIN SUCH
ADVICE IN CONNECTION WITH THE TERMS AND PROVISIONS OF THIS CONTINUING GUARANTY.
8
21. ENTIRE AGREEMENT. This Continuing Guaranty contains the
complete understanding of the parties hereto with respect to the subject matter
herein. Guarantor acknowledges that Guarantor is not relying upon any
statements or representations of Lender not contained in this Continuing
Guaranty and that such statements or representations, if any, are of no force or
effect and are fully superseded by this Continuing Guaranty. This Continuing
Guaranty may only be modified by a writing executed by Guarantor and Lender.
IN WITNESS WHEREOF, Guarantor has executed this Continuing Guaranty
this _____ day of June, 1998.
"Guarantor"
JAVELIN SYSTEMS, INC.
By:
--------------------------------------------
Title:
-----------------------------------------
Fed. Tax ID# 00-0000000
9
PLEDGE AGREEMENT
This Pledge Agreement is entered into as of the 8th day of June, 1998,
by and between:
PLEDGOR: JAVELIN SYSTEMS, INC., a Delaware corporation
AND
PLEDGEE: FINOVA CAPITAL CORPORATION
1. PLEDGE OF COLLATERAL AND DELIVERY OF PLEDGED COLLATERAL.
1.1 Pledgor hereby pledges and assigns to Pledgee and
grants to Pledgee a security interest in all of the Collateral described in
Section 2 below, whether now owned or hereafter acquired, now or at any time
hereafter in the possession, custody or control of Pledgee or its agents,
whether held for safekeeping, in a safe deposit box, or otherwise ("Collateral")
to secure prompt payment and full performance of the obligations described in
Section 3 below (collectively, "Obligations").
1.2 All certificates or instruments representing or
evidencing the Collateral shall be delivered to and held by or on behalf of
Pledgee pursuant hereto and shall be in suitable form for transfer by delivery,
or shall be accompanied by duly executed instruments of transfer or assignment
in blank, all in form and substance satisfactory to Pledgee. In addition,
Pledgee shall have the right at any time to exchange certificates or instruments
representing or evidencing Collateral for certificates or instruments of smaller
or larger denominations.
2. COLLATERAL. The Collateral consists of the following:
2.1 All the shares of common stock of CCI Group, Inc., a
Missouri corporation ("CCI"), and Posnet Computers, Inc., a California
corporation ("Posnet"), owned beneficially and of record by Pledgor and listed
on Schedule I attached hereto and made a part hereof, and all cash, dividends,
other securities, instruments, rights and other property at any time and from
time to time received or receivable in respect thereof or in exchange for all or
any part thereof, including without limitation, stock dividends, warrants,
rights to subscribe, conversion rights, liquidating dividends and other stock
rights, and in the event Pledgor receives any of the foregoing, subject to
Section 7.1.2, Pledgor acknowledges that the same shall be received IN TRUST for
Pledgee and agrees immediately to deliver the same to Pledgee in original form
of receipt, together with any stock or bond powers, assignments, endorsements or
other documents or instruments as Pledgee may reasonably request to establish,
protect or perfect Pledgee's interest in respect of such Collateral; and
2.2 All other property hereafter delivered to Pledgee (or
any agent or bailee holding on behalf of Pledgee) by Pledgor in substitution for
or in addition to any of the foregoing, all certificates and instruments
representing or evidencing such other property and all cash, dividends, other
securities, instruments, rights and other property at any time and from time
to time received or receivable in respect thereof or in exchange for all or any
part thereof, including without limitation, stock dividends, warrants, rights to
subscribe, conversion rights, liquidating dividends and other stock rights, and
in the event Pledgor receives any of the foregoing, subject to Section 7.1.2,
Pledgor acknowledges that the same shall be received IN TRUST for Pledgee and
agrees immediately to deliver the same to Pledgee in original form of receipt,
together with any stock or bond powers, assignments, endorsements or other
documents or instruments as Pledgee may request to establish, protect or perfect
Pledgee's interest in respect of such Collateral; and
2.3 All proceeds of all of the foregoing.
3. OBLIGATIONS. The Obligations secured under this Pledge
Agreement are the obligations of Pledgor under (i) the Loan Agreement (defined
below), (ii) its Secured Continuing Corporate Guaranty of even date herewith
made in favor of Pledgee ("Guaranty"); and (iii) this Pledge Agreement, and all
extensions, amendments, modifications and renewals of any of the foregoing.
4. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants on the date hereof, and shall be deemed to represent and warrant on the
date of each loan or advance made by Pledgee to Borrower (as defined in the Loan
Agreement), that:
4.1 Except as heretofore disclosed to Pledgee in writing,
Pledgor is the sole legal, beneficial and, if applicable, record owner of the
Collateral (or, in the case of after-acquired Collateral, will be the sole such
owner thereof), having good and marketable title thereto, free of all liens,
security interests, encumbrances or claims of any kind except Permitted
Encumbrances;
4.2 All information heretofore, herein or hereafter given
to Pledgee by or on behalf of Pledgor is complete, true and correct in all
material respects;
4.3 All shares of stock constituting Collateral (a) have
been duly and validly issued in compliance with all applicable state and federal
laws (including, without limitation, the Securities Act of 1933, as amended (the
"Securities Act")), (b) are fully paid, nonassessable and free of preemptive
rights, (c) are not subject to any restrictions upon the voting rights or upon
the transfer thereof other than as may appear on the face of the certificates
evidencing such Collateral, (d) constitute all securities of CCI and Posnet
owned beneficially and of record by Pledgor and/or any of its affiliates and
(e) include 100% of the issued and outstanding shares of each class of voting
stock of CCI and Posnet;
4.4 The fair salable value of Pledgor's assets exceeds
Pledgor's liabilities, and Pledgor meets its debts as they mature;
4.5 Pledgor's balance sheet and income statements, copies
of which have been delivered to Pledgee, fairly represent Pledgor's financial
condition as it existed as of the date thereof, and since such date there has
been no material adverse change in the financial condition of Pledgor;
-2-
4.6 No Event of Default has occurred and is continuing;
4.7 The execution, delivery and performance by Pledgor of
this Pledge Agreement have been authorized by all necessary corporate action and
do not and shall not constitute a violation of any applicable law or of
Pledgor's Certificate of Incorporation or bylaws or any other document,
agreement or instrument to which Pledgor is a party or by which Pledgor or any
of its assets are bound; and
4.8 This Pledge Agreement is the legal, valid and binding
obligation of Pledgor enforceable against Pledgor in accordance with its terms,
except to the extent enforcement thereof is limited by bankruptcy, insolvency or
other laws of general application relating to or affecting enforcement of
creditors rights generally and except as limited by the application of
principles of equity.
5. COVENANTS OF PLEDGOR. Until the Obligations are paid in full,
Pledgor agrees to:
5.1 Preserve and protect the Collateral;
5.2 Not create, incur, assume or permit to exist any liens,
encumbrances, security interests, levies, assessments or charges on or in any of
the Collateral, except those approved in writing by Pledgee;
5.3 Promptly pay and discharge before the same become
delinquent all taxes, assessments and governmental charges or levies imposed on
Pledgor or any of the Collateral except to extent the same are being contested
in good faith by appropriate proceedings and the amount thereof is being
reserved in accordance with GAAP, provided that in any such case no lien could
arise in favor of a taxing authority, which lien could impair the enforceability
or priority of Pledgee's security interest in the Collateral;
5.4 Not sell, encumber, or otherwise dispose of or transfer
any Collateral, or any right or interest therein and agrees that it will (i)
cause CCI and Posnet not to issue any other voting stock in addition to or in
substitution for the Collateral, except to Pledgor, or in connection with
outstanding stock options or with the prior written consent of Pledgee and
(ii) pledge hereunder, immediately upon Pledgor's acquisition (directly or
indirectly) thereof, any and all additional shares of stock or other securities
of CCI and Posnet;
5.5 Appear in and defend, at Pledgor's own expense, any
action or proceeding which may affect Pledgor's title to or Pledgee's interest
in the Collateral;
5.6 Procure or execute and deliver, from time to time, in
form and substance satisfactory to Pledgee, any stock powers, bond powers,
endorsements, assignments, financing statements, estoppel certificates or other
writings reasonably deemed necessary or appropriate by Pledgee to perfect,
maintain or protect Pledgee's security interest in the Collateral and the
priority thereof, and take such other action and deliver such other documents,
instruments and agreements pertaining to the Collateral as Pledgee may
reasonably request to effectuate the intent of this Pledge Agreement;
-3-
5.7 If Pledgee gives value for the stated purpose of
enabling Pledgor to acquire rights in or use of any Collateral, use such value
only for such purpose;
5.8 Keep separate, accurate and complete records of the
Collateral and provide Pledgee with access thereto and to Pledgor's financial
records, in each case with the right to make extracts therefrom in accordance
with the Loan Agreement;
5.9 Provide Pledgee with copies of all reports, if any,
filed by Pledgor with the Securities and Exchange Commission within ten (10)
business days after the last date such report is required to be filed;
5.10 Provide Pledgee with such other information pertaining
to the Collateral as Pledgee may reasonably request from time to time; and
5.11 Maintain and preserve its corporate or other legal
existence and all rights, privileges, franchises and other authority necessary
for the conduct of its business.
6. AUTHORIZED ACTION BY PLEDGEE.
6.1 After the occurrence and during the continuation of an
Event of Default (as defined herein), Pledgor hereby irrevocably appoints
Pledgee as its attorney-in-fact to do (but Pledgee shall not be obligated to and
shall not incur any liability to Pledgor or any third party for failure so to
do) any act which Pledgor is obligated by this Pledge Agreement to do, and to
exercise such rights and powers as Pledgor might exercise with respect to the
Collateral, including, without limitation, the right to:
6.1.1 collect by legal proceedings or otherwise and
endorse, receive and receipt for all payments, proceeds and other sums and
property now or hereafter payable on or in respect of proceeds and other sums
and property now or hereafter payable on or in respect of the Collateral,
including dividends and interest payments;
6.1.2 enter into any extension, reorganization,
deposit, merger or consolidation agreement or other agreement pertaining to the
Collateral, and in connection therewith may deposit or surrender control of the
Collateral thereunder, accept other property in exchange therefor, and do and
perform such acts and things as it may deem proper, and any money or property
secured in exchange therefor shall be applied to the Obligations or held by
Pledgee pursuant to the provisions of this Pledge Agreement;
6.1.3 insure (if applicable), protect and preserve
the Collateral;
6.1.4 transfer the Collateral to its own or its
nominee's name; and
6.1.5 make any compromise, settlement or adjustment,
and take any action it deems advisable, with respect to the Collateral.
6.2 Pledgor agrees to reimburse Pledgee upon demand for any
costs and expenses, including reasonable attorneys' fees, Pledgee may incur
while acting as Pledgor's attorney-in-fact hereunder, all of which costs and
expenses are included in the Obligations
-4-
secured hereby and are payable upon demand. It is further agreed and understood
between the parties hereto that such care as Pledgee gives to the safekeeping of
its own property of like kind shall constitute reasonable care of the Collateral
when in Pledgee's possession; provided, however, that Pledgee shall not be
required to make any presentment, demand or protest, or give any notice and need
not take any action to preserve any rights against any prior party or any other
person in connection with the Obligations or with respect to the Collateral.
6.3 All the foregoing powers authorized herein, being
coupled with an interest, are irrevocable so long as any Obligations are
outstanding.
7. TRANSFER, VOTING, DIVIDENDS, ETC.
7.1 Notwithstanding any other provision hereof, so long as
no Event of Default (as defined herein) shall have occurred and be continuing:
7.1.1 Pledgor shall be entitled to exercise all
voting powers pertaining to all shares of stock and other securities
constituting Collateral for all purposes not inconsistent with the terms of this
Pledge Agreement;
7.1.2 Pledgor shall be entitled to receive and retain
all dividends (other than stock or liquidating dividends) and all interest
payments payable in respect of the Collateral; PROVIDED, HOWEVER, that such
dividends and/or interest payments are made in accordance with the terms of the
Loan Documents (as that term is defined in the Loan and Security Agreement of
even date herewith among Pledgor, Pledgee, CCI and Posnet ("Loan Agreement"));
and PROVIDED FURTHER, HOWEVER, that all stock or property representing stock or
liquidating dividends or a distribution or return of capital upon or in respect
of the shares of stock constituting Collateral or resulting from a split-up,
revision or reclassification of such Collateral or received in exchange
therefor, as a result of a merger, consolidation or otherwise, shall be paid or
transferred directly to Pledgee immediately upon receipt thereof by Pledgor, and
shall be retained by Pledgee as Collateral hereunder (or applied to the
Obligations, consistent with the terms of the Loan Agreement); and
7.1.3 in order to permit Pledgor to exercise such
voting powers and to receive such dividends Pledgee shall, if necessary, upon
the written request of the Pledgor, from time to time, execute and deliver to
Pledgor appropriate proxies.
7.2 If any Event of Default (as defined herein) shall have
occurred and while the same is continuing:
7.2.1 Pledgee, or its nominee or nominees, shall, if
Pledgee so elects, upon prior reasonable notice to Pledgor, have the sole and
exclusive right to exercise all voting powers pertaining to the shares of stock
constituting Collateral, and shall exercise such powers in such manner as
Pledgee may elect, and Pledgor hereby grants Pledgee an irrevocable proxy,
coupled with an interest to vote such shares of stock; PROVIDED, HOWEVER, that
such proxy shall terminate upon termination of Pledgee's security interest
therein; and
-5-
7.2.2 All dividends and other distributions made upon
or in respect of shares of stock constituting Collateral and all interest
payments shall be paid directly to and shall be retained by Pledgee as
Collateral hereunder (or applied to the Obligations, consistent with the terms
of the Loan Agreement).
8. DEFAULT AND REMEDIES.
8.1 The occurrence of an Event of Default under and as
defined in the Loan Agreement shall constitute an "Event of Default" hereunder.
8.2 Upon the occurrence and during the continuation of any
Event of Default, Pledgee may, at its option, without notice to or demand on
Pledgor, declare all Obligations immediately due and payable, and Pledgee shall
have all the default rights and remedies of a secured party under Chapter 5 of
Division 9 of the Arizona Uniform Commercial Code and other applicable law as
well as the following rights and remedies, all of which may be exercised with or
without further notice to Pledgor, at Pledgee's sole option and as Pledgee in
its sole discretion may deem advisable:
8.2.1 to notify any and all obligors on the
Collateral that the same has been assigned to Pledgee and that all payments
thereon are to be made directly to Pledgee;
8.2.2 to settle, compromise or release, on terms
acceptable to Pledgee, in whole or in part, any amounts owing on the Collateral,
and to extend the time of payment, in Pledgee's name or in the name of Pledgor,
in respect thereof;
8.2.3 to apply to the payment of the Obligations, or
collect the Collateral, notwithstanding any forfeiture of interest or loss of
other rights of Pledgor against any obligor on the Collateral resulting from
such action; and
8.2.4 to sell or otherwise dispose of the Collateral,
or any part thereof, either at public or private sale, on any broker's board or
securities exchange, in lots or in bulk, for cash, on credit or otherwise, with
or without representations or warranties, and upon such terms as shall be
acceptable to Pledgee.
8.3 The net cash proceeds resulting from the collection,
liquidation, sale, or other disposition of the Collateral shall be applied
first, to the expenses (including all attorneys' fees) of holding, storing,
preparing for sale, selling, collecting, liquidating and the like, including any
brokerage commissions and stamp or transfer taxes, and then to the satisfaction
of all Obligations secured hereby, application as to any particular obligation
or indebtedness or against principal or interest to be in Pledgee's absolute
discretion.
8.4 If by reason of any prohibition contained in the
Securities Act of 1933, as now or hereafter in effect, or in applicable Arizona
or other state securities laws, as now or hereafter in effect, or in any rules
or regulations pertaining to any of the foregoing laws, Pledgee believes in its
sole judgment that it is compelled to resort to one or more private sales of
shares of stock constituting Collateral to a single purchaser or a restricted
group of purchasers
-6-
who will be obliged to agree, among other things, to acquire such securities for
their own account, for investment and not with a view to the distribution or
resale thereof, Pledgor acknowledges and agrees that private sales of such
Collateral may be held notwithstanding that such sales may be at prices and on
other terms less favorable to Pledgor than if such Collateral were sold at
public sale. Pledgor further agrees that Pledgee has no obligation to delay the
sale of any such Collateral for the period of time necessary to permit
registration of the Collateral, even if the issuer thereof would, or should,
agree to register such Collateral for public sale under applicable securities
laws. Pledgor specifically agrees that private sales made under the foregoing
circumstances shall be deemed to have been made in a "commercially reasonable"
manner.
8.5 Pledgor further acknowledges and recognizes that
Pledgee may be unable to effect a public sale of all or a part of the Collateral
and may be compelled to resort to one or more private sales of shares of stock
constituting Collateral to a single purchaser or a restricted group of
purchasers who will be obligated to agree, among other things, to acquire the
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Pledgor acknowledges that any such private
sales may be at prices and on terms less favorable to Pledgee than those of
public sales, and agrees that such private sales shall be deemed to have been
made in a commercially reasonable manner and that Pledgee has no obligation to
delay the sale of any Collateral to permit the issuer thereof to register it for
public sale under the Securities Act.
9. DUTY OF PLEDGEE. Pledgee shall not be under any duty or
obligation whatsoever to collect any dividends, interest or other payments due
or accruing in respect of the Collateral or to take any action to preserve
rights in connection with any Collateral, including, without limitation, making
or giving any presentment, demands for performance, notices of non-performance,
protests, notices of protest or notices of dishonor in connection with any
Collateral.
10. CUMULATIVE RIGHTS. The rights, powers and remedies of Pledgee
under this Pledge Agreement shall be in addition to all rights, powers and
remedies given to Pledgee under any statute or rule of law or any other
agreement, all of which rights, powers and remedies shall be cumulative and may
be exercised successively or concurrently.
11. WAIVER. Any forbearance, failure or delay by Pledgee in
exercising any right, power or remedy shall not preclude the further exercise
thereof, and every right, power or remedy of Pledgee shall continue in full
force and effect until such right, power or remedy is specifically waived in a
writing executed by Pledgee. Pledgor waives any right to require Pledgee to
proceed against any person or to exhaust any Collateral or to pursue any remedy
in Pledgee's power prior to pursuing Pledgor in respect of the Obligations.
12. BINDING UPON SUCCESSORS. All rights of Pledgee under this
Pledge Agreement shall inure to the benefit of its successors and assigns, and
all obligations of Pledgor shall bind the representatives, executors,
administrators, heirs, successors and assigns of the Pledgor.
13. ENTIRE AGREEMENT; SEVERABILITY. This Pledge Agreement
contains the entire pledge agreement between Pledgee and Pledgor with respect to
the Collateral. If any of
-7-
the provisions of this Pledge Agreement shall be held invalid or unenforceable,
this Pledge Agreement shall be construed as if not containing those provisions
and the rights and obligations of the parties hereto shall be construed and
enforced accordingly.
14. RETURN; ACQUITTANCE. Pledgee may at any time deliver any
Collateral to Pledgor and the receipt thereof by Pledgor shall be a complete and
full acquittance in respect of the Collateral so delivered, and Pledgee shall
thereafter be discharged from any liability or responsibility therefor.
15. REFERENCES. The singular includes the plural. The captions
or titles of the sections of this Pledge Agreement are for convenience of
reference only and shall not define or limit the provisions hereof.
16. CHOICE OF LAW. This Pledge Agreement shall be construed in
accordance with and governed by the laws of the State of Arizona, and, where
applicable and except as otherwise defined herein, terms used herein shall have
the meanings given them in the Arizona Uniform Commercial Code. Pledgor
irrevocably and unconditionally submits to the jurisdiction of the Superior
Court of the State of Arizona for the County of Maricopa or the United States
District Court for the District of Arizona, as Pledgee may deem appropriate, or
if required, the Municipal Court of the State of Arizona for the County of
Maricopa, in connection with any legal action or proceeding arising out of or
relating to this Pledge Agreement, and Pledgor waives any objection relating to
the basis for personal or in rem jurisdiction or to venue which it may now or
hereafter have in any such suit, action or proceeding.
17. JURY TRIAL. PLEDGOR AND PLEDGEE WAIVE THE RIGHT TO TRIAL BY
JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF
OR RELATED TO ANY OF THE OBLIGATIONS HEREIN.
18. NOTICE. Any written notice, consent or other communication
provided for in this Pledge Agreement shall be given and deemed received as
provided in Section 9.12 of the Loan Agreement.
19. EXPENSES. Pledgor will reimburse Pledgee for all reasonable
out-of-pocket expenses incurred by Pledgee arising out of the enforcement of
this Agreement, including without limitation, reasonable attorneys' fees and
costs whether or not suit is filed.
20. INDEMNIFICATION. Pledgor agrees to pay, and on demand to
indemnify and hold harmless, Pledgee, its successors, assigns, agents and
servants, from and against any and all claims, damages, losses, liabilities,
demands, suits, judgments, causes of action and all legal proceedings, whether
civil or criminal, penalties, fines and other sanctions, and any costs and
expenses incurred in connection therewith, including reasonable attorneys' fees,
which may result from, relate to or arise out of this Pledge Agreement or any
Collateral, including the ownership, purchase, delivery, acceptance or
rejection, use, possession or disposition of any item of Collateral, but not
including any claims arising out of the gross negligence or willful misconduct
of Pledgee or its agents and servants.
EXECUTED as of June 8, 1998.
-8-
PLEDGOR: JAVELIN PLEDGEE: FINOVA CAPITAL
SYSTEMS, INC. CORPORATION
By: By:
---------------------------- -----------------------------
Its: Its:
--------------------------- ----------------------------
-9-
SCHEDULE I
CLASS OF STOCK NO. OF SHARES
1. Common Stock of CCI Group, Inc.
registered in the name of ------------------------------
Javelin Systems, Inc.
2. Common Stock of Posnet Computers, Inc.
registered in the name of ------------------------------
Javelin Systems, Inc.
