TBCC
LOAN AND SECURITY AGREEMENT
BORROWER: V-ONE CORPORATION,
A DELAWARE CORPORATION
ADDRESS: 00000 XXXXXXX XXXXXXXXX, XXXXX 000
XXXXXXXXXX, XXXXXXXX 00000
DATE: FEBRUARY 24, 1999
THIS LOAN AND SECURITY AGREEMENT is entered into as of the above date, between
the above borrower (the "Borrower"), having its chief executive office and
principal place of business at the address shown above, and TRANSAMERICA
BUSINESS CREDIT CORPORATION, a Delaware corporation ("TBCC"), having its
principal office at 0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000
and having an office at 00 Xxxxxxxxx Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxx
00000-0000. The Schedule to this Agreement (the "Schedule") being signed
concurrently is an integral part of this Agreement. (Definitions of certain
terms used in this Agreement are set forth in Section 9 below.) The parties
agree as follows:
1. LOANS.
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1.1 LOANS. TBCC, subject to the terms and conditions of this Agreement,
agrees to make loans (the "Loans") to Borrower, from time to time during the
period from the date of this Agreement to the Maturity Date set forth in the
Schedule, at Borrower's request, in an aggregate principal amount at any one
time outstanding not to exceed the Credit Limit shown on the Schedule. Except as
set forth in Section 1 of the Schedule, if at any time the total outstanding
Loans and other monetary Obligations exceed said limit, Borrower shall repay the
excess immediately without demand. Borrower shall use the proceeds of all Loans
solely for lawful general business purposes.
1.2 DUE DATE. The Loans, all accrued interest and all other monetary
Obligations shall be payable in full on the Maturity Date. Borrower may borrow,
repay and reborrow Loans (other than any Term Loans), in whole or in part, in
accordance with the terms of this Agreement.
1.3 LOAN ACCOUNT. TBCC shall maintain an account on its books in the name
of Borrower (the "Loan Account"). All Loans and advances made by TBCC to
Borrower or for Borrower's account and all other monetary Obligations will be
charged to the Loan Account. All amounts received by TBCC from Borrower or for
Borrower's account will be credited to the Loan Account. TBCC will send Borrower
a monthly statement reflecting the activity in the Loan Account, and each such
monthly statement shall be an account stated between Borrower and TBCC and shall
be final, conclusive and binding absent manifest error.
1.4 COLLECTION OF RECEIVABLES. Except as otherwise provided in the
Streamlined Facility Agreement, Borrower shall remit to TBCC all Collections
including all checks, drafts and other documents and instruments evidencing
remittances in payment (collectively referred to as "Items of Payment") within
one Business Day after receipt, in the same form as received, with any necessary
indorsements. For purposes of calculating interest due to TBCC, credit will be
given for Collections and all other proceeds of Collateral and other payments to
TBCC three Business Days after receipt of cleared funds. For all purposes of
this Agreement any cleared funds received by TBCC later than 10:00 a.m.
(California time) on any Business Day shall be deemed to have been received on
the following Business Day and any applicable interest or fee shall continue to
accrue. Borrower's Loan Account will be credited only with the net amounts
actually received in payment of Receivables, and such payments shall be credited
to the Obligations in such order as TBCC shall determine in its discretion.
Pending delivery to TBCC, Borrower will not commingle any Items of Payment with
any of its other funds or property, but will segregate them from the other
assets of Borrower and will hold them in trust and for the account and as the
property of TBCC. Borrower hereby agrees to endorse any Items of Payment upon
the request of TBCC.
1.5 RESERVES. TBCC may, from time to time, in its Good Faith business
judgment: (i) establish and modify reserves against Eligible Receivables and
Eligible Inventory, (ii) modify advance rates with respect to Eligible
Receivables and Eligible Inventory, (iii) modify the standards of eligibility
set forth in the definitions of Eligible Receivables and Eligible Inventory, and
(iv) establish reserves against available Loans.
1.6 TERM.
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(a) The term of this Agreement shall be from the date of this Agreement
to the Maturity Date set forth in the Schedule, unless sooner terminated in
accordance with the terms of this Agreement, provided that the Maturity Date
shall automatically be extended, and this Agreement shall automatically and
continuously renew, for successive additional terms of one year each, unless one
party gives written notice to the other, not less than sixty days prior to the
next Maturity Date, that such party elects to terminate this Agreement effective
on the next Maturity Date. On the Maturity Date or on any earlier termination of
this Agreement Borrower shall pay in full all Obligations, and notwithstanding
any termination of this Agreement all of TBCC's security interests and all of
TBCC's other rights and remedies shall continue in full force and effect until
payment and performance in full of all Obligations.
(b) This Agreement may be terminated prior to the Maturity Date as
follows: (i) by Borrower, effective three business days after written notice of
termination is given to TBCC; or (ii) by TBCC at any time after the occurrence
of an Event of Default, without notice, effective immediately. If this Agreement
is terminated by Borrower or by TBCC under this Section 1.6(b), Borrower shall
pay to TBCC a termination fee (the "Termination Fee") in the amount shown on the
Schedule. The Termination Fee shall be due and payable on the effective date of
termination. Notwithstanding the foregoing, Borrower shall have no right to
terminate this Agreement at any time that any principal of, or interest on any
of the Loans or any other monetary Obligations are outstanding, except upon
prepayment of all Obligations and the satisfaction of all other conditions set
forth in the Loan Documents.
1.7 PAYMENT PROCEDURES. Borrower hereby authorizes TBCC to charge the Loan
Account with the amount of all interest, fees, expenses and other payments to be
made hereunder and under the other Loan Documents. TBCC may, but shall not be
obligated to, discharge Borrower's payment obligations hereunder by so charging
the Loan Account. Whenever any payment to be made hereunder is due on a day that
is not a Business Day, the payment may be made on the next succeeding Business
Day and such extension of time shall be included in the computation of the
amount of interest due.
1.8 CONDITIONS TO INITIAL LOAN. The obligation of TBCC to make the initial
Loan is subject to the satisfaction of the following conditions prior to or
concurrent with such initial Loan, and Borrower shall cause all such conditions
to be satisfied by the Closing Deadline set forth in the Schedule:
(a) Except for the filing of termination statements under the Uniform
Commercial Code by the existing lender to Borrower whose loans are being repaid
with the Loan proceeds and the documents and actions relating to the Liens of
TBCC created hereunder, as provided for in Section 1.8(c) below, no consent or
authorization of, filing with or other act by or in respect of any Governmental
Authority or any other Person is required in connection with the execution,
delivery, performance, validity or enforceability of this Agreement, or the
other Loan Documents or the consummation of the transactions contemplated hereby
or thereby or the continuing operations of the Borrower following the
consummation of such transactions.
(b) TBCC and its counsel shall have performed (i) a review satisfactory
to TBCC of all of the Material Contracts and other assets of the Borrower, the
financial condition of the Borrower, including all of its tax, litigation,
environmental and other potential contingent liabilities, and the corporate and
capital structure of the Borrower and (ii) a pre-closing audit and collateral
review, in each case with results satisfactory to TBCC.
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(c) TBCC shall have received the following, each dated the date of the
initial Loan or as of an earlier date acceptable to TBCC, in form and substance
satisfactory to TBCC and its counsel: (i) (except to the extent otherwise
provided by the Streamlined Facility Agreement) a Blocked Account Agreement,
duly executed by the Borrower and its bank on TBCC's standard form; (ii)
acknowledgment copies of Uniform Commercial Code financing statements (naming
TBCC as secured party and the Borrower as debtor), duly filed in all
jurisdictions that TBCC deems necessary or desirable to perfect and protect the
Liens created hereunder, and evidence that all other filings, registrations and
recordings have been made in the appropriate governmental offices, and all other
action has been taken, which shall be necessary to create, in favor of TBCC, a
perfected first priority Lien on the Collateral; (iii) the opinion of counsel
for the Borrower covering such matters incident to the transactions contemplated
by this Agreement as TBCC may specify in its discretion; (iv) certified copies
of all policies of insurance required by this Agreement and the other Loan
Documents, together with loss payee endorsements for all such policies naming
TBCC as lender loss payee and an additional insured; (v) copies of the
Borrower's articles or certificate of incorporation, certified as true, correct
and complete by the secretary of state of Borrower's state of incorporation
within 45 days of the date hereof; (vi) copies of the bylaws of the Borrower and
a copy of the resolutions of the Board of Directors of the Borrower authorizing
the execution, delivery and performance of this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, attached to
which is a certificate of the Secretary or an Assistant Secretary of the
Borrower certifying (A) that such copies of the bylaws and resolutions are true,
complete and accurate copies thereof, have not been amended or modified since
the date of such certificate and are in full force and effect and (B) the
incumbency, names and true signatures of the officers of the Borrower; (vii) a
good standing certificate from the Secretary of State of Borrower's state of
incorporation and each state in which the Borrower is qualified as a foreign
corporation, each dated within ten days of the date hereof; (viii) the
additional documents and agreements, if any, listed in the Schedule; and (ix)
such other agreements and instruments as TBCC deems necessary in its sole and
absolute discretion in connection with the transactions contemplated hereby.
1.9 CONDITIONS TO LENDING. The obligation of TBCC to make any Loan is
subject to the satisfaction of the following conditions precedent:
(a) There shall be no pending or, to the knowledge of Borrower after
due inquiry, threatened litigation, proceeding, inquiry or other action relating
to this Agreement, or any other Loan Document, which could be expected to have a
Material Adverse Effect in the judgment of TBCC;
(b) Borrower shall be in compliance with all Requirements of Law and
Material Contracts, other than such noncompliance that could not have a Material
Adverse Effect;
(c) The Liens in favor of TBCC shall have been duly perfected and shall
constitute first priority Liens, except for Permitted Liens;
(d) All representations and warranties contained in this Agreement and
the other Loan Documents shall be true and correct on and as of the date of such
Loan as if then made, other than representations and warranties that expressly
relate solely to an earlier date, in which case they shall have been true and
correct as of such earlier date;
(e) No Default or Event of Default shall have occurred and be
continuing or would result from the making of the requested Loan as of the date
of such request; and
(f) No Material Adverse Effect shall have occurred.
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2. INTEREST AND FEES.
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2.1 INTEREST. Borrower shall pay TBCC interest on all outstanding Loans and
other monetary Obligations, at the interest rate set forth in the Schedule.
Interest shall be payable monthly in arrears on the first Business Day of each
month, and on the Maturity Date. Following the occurrence and during the
continuance of any Event of Default, the interest rate applicable to each Loan
shall be increased to the extent provided for in the Note evidencing such Loan,
and the interest rate applicable to all other Obligations shall be increased by
two percent per annum.
2.2 FEES. Borrower shall pay TBCC the fees set forth in the Schedule.
2.3 CALCULATIONS. All interest and fees under this Agreement shall be
calculated on the basis of a year of 360 days for the actual number of days
elapsed in the period for which such interest or fees are payable.
2.4 TAXES. Any and all payments by Borrower under this Agreement or any
other Loan Document shall be made free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions, charges or
withholdings and penalties, interest and all other liabilities with respect
thereto, excluding in the case of TBCC, taxes imposed on its net income and
franchise taxes imposed on it by the jurisdiction under the laws of which TBCC
is organized or any political subdivision thereof.
3. SECURITY.
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3.1 GRANT OF SECURITY INTEREST. To secure the payment and performance when
due of all of the Obligations, Borrower hereby grants to TBCC a security
interest in all of its present and future Receivables, Investment Property,
Inventory, Equipment, Other Property, and other
Collateral, wherever located.
3.2 OTHER LIENS; LOCATION OF COLLATERAL. Except as set forth on the
Borrower Disclosure Schedule, Borrower represents, warrants and covenants that
all of the Collateral is, and will at all times continue to be, free and clear
of all Liens, other than Permitted Liens and Liens in favor of TBCC. All
Collateral is and will continue to be maintained at the locations shown on the
Schedule.
3.3 RECEIVABLES.
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(a) SCHEDULES AND OTHER ACTIONS. As often as requested by TBCC,
Borrower shall execute and deliver to TBCC written schedules of Receivables and
Eligible Receivables (but the failure to execute or deliver any schedule shall
not affect or limit TBCC's security interest in all Receivables). Except as
otherwise provided in the Streamlined Facility Agreement, on TBCC's request,
Borrower shall also furnish to TBCC copies of invoices to customers and shipping
and delivery receipts. Borrower shall deliver to TBCC the originals of all
letters of credit, notes, and instruments in its favor and such endorsements or
assignments as TBCC may reasonably request and, upon the request of TBCC,
Borrower shall deliver to TBCC all certificated securities with respect to any
Investment Property, with all necessary indorsements, and obtain such account
control agreements with securities intermediaries and take such other action
with respect to any Investment Property, as TBCC shall request, in form and
substance satisfactory to TBCC. Upon request of TBCC Borrower additionally shall
obtain consents from any letter of credit issuers with respect to the assignment
to TBCC of any letter of credit proceeds.
(b) RECORDS, COLLECTIONS. Except as otherwise provided in the
Streamlined Facility Agreement, Borrower shall report all customer credits to
TBCC, on the regular reports to TBCC in the form from time to time specified by
TBCC. Borrower shall notify TBCC of all returns and recoveries of merchandise
and of all claims asserted with respect to merchandise, on its regular reports
to TBCC. Borrower shall not settle or adjust any dispute or claim, or grant any
discount, credit or allowance or accept any return of merchandise, except in the
ordinary course of its business, without TBCC's prior written consent.
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(c) REPRESENTATIONS. Borrower represents and warrants to TBCC that
each Receivable with respect to which Loans are requested by Borrower shall, on
the date each Loan is requested and made, represent an undisputed, bona fide,
existing, unconditional obligation of the account debtor created by the sale,
delivery, and acceptance of goods, the licensing of software or the rendition of
services, in the ordinary course of Borrower's business, and meet the Minimum
Eligibility Requirements set forth in Section 9.1(n) below.
3.4 INVENTORY. Borrower shall maintain full, accurate and complete records
respecting the Inventory describing the kind, type and quantity of the Inventory
and Borrower's cost therefor, withdrawals therefrom and additions thereto,
including a perpetual inventory for work in process and finished goods.
3.5 EQUIPMENT. Borrower shall at all times keep correct and accurate
records itemizing and describing the location, kind, type, age and condition of
the Equipment, Borrower's cost therefor and accumulated depreciation thereof and
retirements, sales, or other dispositions thereof. Borrower shall keep all of
its Equipment in a satisfactory state of repair and satisfactory operating
condition in accordance with industry standards, ordinary wear and tear
excepted. Except as set forth on the Borrower Disclosure Schedule, no Equipment
shall be annexed or affixed to or become part of any realty, unless the owner of
the realty has executed and delivered a Landlord Waiver in such form as TBCC
shall specify. Where Borrower is permitted to dispose of any Equipment under
this Agreement or by any consent thereto hereafter given by TBCC, Borrower shall
do so at arm's length, in good faith and by obtaining the maximum amount of
recovery practicable therefor and without impairing the operating integrity or
value of the remaining Equipment.
3.6 INVESTMENT PROPERTY. *Borrower shall have the right to retain all
Investment Property payments and distributions, unless and until a Default or an
Event of Default has occurred. If a Default or an Event of Default exists,
Borrower shall hold all payments on, and proceeds of, and distributions with
respect to, Investment Property in trust for TBCC, and Borrower shall deliver
all such payments, proceeds and distributions to TBCC, immediately upon receipt,
in their original form, duly endorsed, to be applied to the Obligations in such
order as TBCC shall determine. Upon the request of TBCC, any such distributions
and payments with respect to any Investment Property held in any securities
account shall be held and retained in such securities account as part of the
Collateral.
*EXCEPT AS PROVIDED FOR IN SECTION 5.13 BELOW,
3.7 FURTHER ASSURANCES. Borrower will perform any and all steps that TBCC
may reasonably request to perfect TBCC's security interests in the Collateral,
including, without limitation, executing and filing financing and continuation
statements in form and substance satisfactory to TBCC. TBCC is hereby authorized
by Borrower to sign Borrower's name or file any financing statements or similar
documents or instruments covering the Collateral whether or not Borrower's
signature appears thereon. Borrower agrees, from time to time, at TBCC's
request, to file notices of Liens, financing statements, similar documents or
instruments, and amendments, renewals and continuations thereof, and cooperate
with TBCC, in connection with the continued perfection and protection of the
Collateral. If any Collateral is in the possession or control of any Person
other than a public warehouseman where the warehouse receipt is in the name of
or held by TBCC, Borrower shall notify such Person of TBCC's security interest
therein and, upon request, instruct such Person or Persons to hold all such
Collateral for the account of TBCC and subject to TBCC's instructions. If so
requested by TBCC, Borrower will deliver to TBCC warehouse receipts covering any
Collateral located in warehouses showing TBCC as the beneficiary thereof and
will also cause the warehouseman to execute and deliver such agreements as TBCC
may request relating to waivers of liens by such warehouseman and the release of
the Inventory to TBCC on its demand. Borrower shall defend the Collateral
against all claims and demands of all Persons.
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3.8 POWER OF ATTORNEY. Borrower hereby appoints and constitutes TBCC as
Borrower's attorney-in-fact (i) to request at any time from account debtors
verification of information concerning Receivables and the amount owing thereon,
(ii) upon the occurrence and during the continuance of an Event of Default, to
convey any item of Collateral to any purchaser thereof, (iii) to give or sign
Borrower's name to any notices or statements necessary or desirable to create or
continue the Lien on any Collateral granted hereunder, (iv) to execute and
deliver to any securities intermediary or other Person any entitlement order,
account control agreement or other notice, document or instrument with respect
to any Investment Property, and (v) to make any payment or take any act
necessary or desirable to protect or preserve any Collateral. TBCC's authority
hereunder shall include, without limitation, the authority to execute and give
receipt for any certificate of ownership or any document, transfer title to any
item of Collateral and take any other actions arising from or incident to the
powers granted to TBCC under this Agreement. This power of attorney is coupled
with an interest and is irrevocable.
4. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower represents and warrants
as follows:
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Except as set forth on
the Borrower Disclosure Schedule, Borrower (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State set forth
above, (ii) has the corporate power and authority to own its properties and
assets and to transact the businesses in which it is engaged and (iii) is duly
qualified, authorized to do business and in good standing in each jurisdiction
where it is engaged in business, except to the extent that the failure to so
qualify or be in good standing would not have a Material Adverse Effect.
4.2 LOCATIONS OF OFFICES, RECORDS AND COLLATERAL. The address of the
principal place of business and chief executive office of Borrower is, and the
books and records of Borrower and all of its chattel paper and records relating
to Collateral are maintained exclusively in the possession of Borrower at, the
address of Borrower specified in the heading of this Agreement. Borrower has
places of business, and Collateral is located, only at such address and at the
addresses set forth in the Borrower Disclosure Schedule and at any additional
locations reported to TBCC as provided in Section 5.8(c) as to which TBCC has
taken all necessary action to perfect and protect its security interests in the
Collateral at any such locations.
4.3 AUTHORITY. Borrower has the requisite corporate power and authority to
execute, deliver and perform its obligations under each of the Loan Documents.
All corporate action necessary for the execution, delivery and performance by
Borrower of the Loan Documents has been taken.
4.4 ENFORCEABILITY. This Agreement is, and, when executed and delivered,
each other Loan Document will be, the legal, valid and binding obligation of
Borrower enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity.
4.5 NO CONFLICT. The execution, delivery and performance of each Loan
Document by Borrower does not and will not contravene (i) any of the Governing
Documents, (ii) any Requirement of Law or (iii) any Material Contract and will
not result in the imposition of any Liens other than in favor of TBCC.
4.6 CONSENTS AND FILINGS. No consent, authorization or approval of, or
filing with or other act by, any shareholders of Borrower or any Governmental
Authority or other Person is required in connection with the execution,
delivery, performance, validity or enforceability of this Agreement or any other
Loan Document, the consummation of the transactions contemplated hereby or
thereby or the continuing operations of Borrower following such consummation,
except (i) those that have been obtained or made, (ii) the filing of financing
statements under the Uniform Commercial Code, and (iii) any necessary filings
with U.S. Copyright Office and the U.S.
Patent and Trademark Office.*
*, AND (IV) AS MAY BE REQUIRED UNDER THE UNITED STATES ASSIGNMENT OF CLAIMS
ACT.
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4.7 SOLVENCY. Borrower is Solvent and will be Solvent upon the completion
of all transactions contemplated to occur on or before the date of this
Agreement (including, without limitation, the Loans to be made on the date of
this Agreement).
4.8 FINANCIAL DATA. Except as set forth on the Borrower Disclosure
Schedule, Borrower has provided to TBCC complete and accurate Financial
Statements, which have been prepared in accordance with GAAP consistently
applied throughout the periods involved and fairly present the financial
position and results of operations of Borrower for each of the periods covered,
subject, in the case of any quarterly financial statements, to normal year-end
adjustments and the absence of notes. Borrower has no Contingent Obligation or
liability for taxes, unrealized losses, unusual forward or long-term commitments
or long-term leases, which is not reflected in such Financial Statements or the
footnotes thereto. Since the last date covered by such Financial Statements,
there has been no sale, transfer or other disposition by Borrower of any
material part of its business or property and no purchase or other acquisition
of any business or property (including any capital stock of any other Person)
material in relation to the financial condition of Borrower at said date. Except
as set forth on the Borrower Disclosure Schedule, since said date, (i) there has
been no change, occurrence, development or event which has had or could
reasonably be expected to have a Material Adverse Effect and (ii) none of the
capital stock of Borrower has been redeemed, retired, purchased or otherwise
acquired for value by Borrower.
4.9 ACCURACY AND COMPLETENESS OF INFORMATION. All data, reports and
information previously, now or hereafter furnished by or on behalf of Borrower
to TBCC or the Auditors are or will be true and accurate in all material
respects on the date as of which such data, reports and information are dated or
certified, and not incomplete by omitting to state any material fact necessary
to make such data, reports and information not materially misleading at such
time. Except as set forth on the Borrower Disclosure Schedule, there are no
facts now known to Borrower which individually or in the aggregate would
reasonably be expected to have a Material Adverse Effect and which have not been
disclosed in writing to TBCC.
4.10 NO JOINT VENTURES, PARTNERSHIPS OR SUBSIDIARIES. Borrower is not
engaged in any joint venture or partnership with any other Person. Borrower has
no Subsidiaries.
4.11 CORPORATE AND TRADE NAME. During the past five years, Borrower has not
been known by or used any other corporate, trade or fictitious name except for
its name as set forth on the signature page of this Agreement and the other
names specified in the Borrower Disclosure Schedule.
4.12 NO ACTUAL OR PENDING MATERIAL MODIFICATION OF BUSINESS. There exists no
actual or, to the best of Borrower's knowledge after due inquiry, threatened
termination, cancellation or limitation of, or any modification or change in the
business relationship of Borrower with any customer or group of customers whose
purchases individually or in the aggregate are material to the operation of
Borrower's business or with any material supplier.
4.13 NO BROKER'S OR FINDER'S FEES. Except as set forth on the Borrower
Disclosure Schedule, no broker or finder brought about this Agreement or the
Loans. Except as set forth on the Borrower Disclosure Schedule, no broker's or
finder's fees or commissions will be payable by Borrower to any Person in
connection with the transactions contemplated by this Agreement.
4.14 TAXES AND TAX RETURNS. Borrower has properly completed and timely filed
all income tax returns it is required to file. The information filed is complete
and accurate in all material respects. All deductions taken in such income tax
returns are appropriate and in accordance with applicable laws and regulations,
except deductions that may have been disallowed but are being challenged in good
faith and for which adequate reserves have been made in accordance with GAAP.
All taxes, assessments, fees and other governmental charges for periods
beginning prior to the date of this Agreement have been timely paid (or, if not
yet due, adequate reserves therefor have been established in accordance with
GAAP) and Borrower has no liability for taxes in excess of the amounts so paid
or reserves so established. No deficiencies for taxes have been claimed,
proposed or assessed by any taxing or other Governmental Authority against
Borrower and no notice of any tax Lien has been filed. There are no pending or
threatened audits, investigations or claims for or relating to any liability for
taxes and there are no matters under discussion with any Governmental Authority
which could result in an additional liability for taxes. No extension of a
statute of limitations relating to taxes, assessments, fees or other
governmental charges is in effect with respect to Borrower. Borrower is not a
party to and does not have any obligations under any written tax sharing
agreement or agreement regarding payments in lieu of taxes.
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4.15 NO JUDGMENTS OR LITIGATION. Except as set forth in the Borrower
Disclosure Schedule, no judgments, orders, writs or decrees are outstanding
against Borrower, nor is there now pending or, to the knowledge of Borrower
after due inquiry, threatened litigation, contested claim, investigation,
arbitration, or governmental proceeding by or against Borrower that (i) could
individually or in the aggregate be likely in the reasonable business judgment
of TBCC to have a Material Adverse Effect or (ii) purports to affect the
legality, validity or enforceability of this Agreement, any other Loan Document
or the consummation of the transactions contemplated hereby or thereby.
4.16 INVESTMENTS; CONTRACTS. Borrower (i) has not committed to make any
Investment; (ii) is not a party to any indenture, agreement, contract,
instrument or lease or subject to any charter, by-law or other corporate
restriction or any injunction, order, restriction or decree, which would
materially and adversely affect its business, operations, assets or financial
condition; (iii) is not a party to any "take or pay" contract as to which it is
the purchaser; or (iv) has no material contingent or long-term liability,
including management contracts (excluding employment contracts of full-time
individual officers or employees), which could have a Material Adverse Effect.
4.17 NO DEFAULTS; LEGAL COMPLIANCE. Except as set forth on the Borrower
Disclosure Schedule, Borrower is not in default under any term of any Material
Contract or in violation of any Requirement of Law, nor is Borrower subject to
any investigation with respect to a claimed violation of any Requirement of Law.
4.18 RIGHTS IN COLLATERAL; PRIORITY OF LIENS. Except as set forth on the
Borrower Disclosure Schedule, all Collateral is owned or leased by Borrower,
free and clear of any and all Liens in favor of third parties, other than
Permitted Liens. Except as set forth on the Borrower Disclosure Schedule, the
Liens granted to TBCC pursuant to the Loan Documents constitute valid,
enforceable and perfected first-priority Liens on the Collateral, except for
Permitted Liens.
4.19 INTELLECTUAL PROPERTY. Set forth in the Borrower Disclosure Schedule is
a complete and accurate list of all patents, trademarks, trade names, service
marks and copyrights (registered and unregistered), and all applications
therefor and licenses thereof, of Borrower. Borrower owns or licenses all
material patents, trademarks, service-marks, logos, tradenames, trade secrets,
know-how, copyrights, or licenses and other rights with respect to any of the
foregoing, which are necessary or advisable for the operation of its business as
presently conducted or proposed to be conducted. To the best of its knowledge
after due inquiry, Borrower has not infringed any patent, trademark,
service-xxxx, tradename, copyright, license or other right owned by any other
Person by the sale or use of any product, process, method, substance, part or
other material presently contemplated to be sold or used, where such sale or use
would reasonably be expected to have a Material Adverse Effect and no claim or
litigation is pending, or to the best of Borrower's knowledge, threatened
against or affecting Borrower that contests its right to sell or use any such
product, process, method, substance, part or other material.
4.20 LABOR MATTERS. There are no existing or threatened strikes, lockouts or
other disputes relating to any collective bargaining or similar agreement to
which Borrower is a party which would, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect.
8
4.21 LICENSES AND PERMITS. Borrower has obtained and holds in full force and
effect, all franchises, licenses, leases, permits, certificates, authorizations,
qualifications, easements, rights of way and other rights and approvals which
are necessary or advisable for the operation of its business as presently
conducted and as proposed to be conducted, except where the failure to possess
any of the foregoing (individually or in the aggregate) would not have a
Material Adverse Effect.
4.22 GOVERNMENT REGULATION. Borrower is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, the Investment Company Act of 1940, or any other
Requirement of Law that limits its ability to incur indebtedness or its ability
to consummate the transactions contemplated by this Agreement and the other Loan
Documents.
4.23 BUSINESS AND PROPERTIES. The business of Borrower is not affected by
any fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance) that could reasonably be expected
to have a Material Adverse Effect.
4.24 AFFILIATE TRANSACTIONS. Borrower is not a party to or bound by any
agreement or arrangement (whether oral or written) to which any Affiliate of
Borrower is a party except (i) in the ordinary course of and pursuant to the
reasonable requirements of the business of Borrower and (ii) upon fair and
reasonable terms no less favorable to Borrower than it could obtain in a
comparable arm's-length transaction with an unaffiliated Person.
4.25 SURVIVAL OF REPRESENTATIONS. All representations made by Borrower in
this Agreement and in any other Loan Document executed and delivered by it in
connection herewith shall survive the execution and delivery hereof and thereof
and the closing of the transactions contemplated hereby and thereby.
5. AFFIRMATIVE COVENANTS OF THE BORROWER. Until termination of this Agreement
and payment and satisfaction of all Obligations:
5.1 CORPORATE EXISTENCE. Borrower shall (i) maintain its corporate
existence, (ii) maintain in full force and effect all material licenses, bonds,
franchises, leases, trademarks, qualifications and authorizations to do
business, and all material patents, contracts and other rights necessary or
advisable to the profitable conduct of its business, and (iii) continue in, and
limit its operations to, the same lines of business as presently conducted by
it.
5.2 MAINTENANCE OF PROPERTY. Borrower shall keep all property useful and
necessary to its business in good working order and condition (ordinary wear and
tear excepted) in accordance with its past operating practices.
9
5.3 AFFILIATE TRANSACTIONS. Borrower shall conduct transactions with any of
its Affiliates on an arm's-length basis or other basis no less favorable to
Borrower and which are approved by the board of directors of Borrower.
5.4 TAXES. Borrower shall pay when due (i) all tax assessments, and other
governmental charges and levies imposed against it or any of its property and
(ii) all lawful claims that, if unpaid, might by law become a Lien upon its
property; PROVIDED, HOWEVER, that, unless such tax assessment, charge, levy or
claim has become a Lien on any of the property of Borrower, it need not be paid
if it is being contested in good faith, by appropriate proceedings diligently
conducted and an adequate reserve or other appropriate provision shall have been
made therefor as required in accordance with GAAP.
5.5 REQUIREMENTS OF LAW. Borrower shall comply with all Requirements of Law
applicable to it, including, without limitation, all applicable Federal, State,
local or foreign laws and regulations, including, without limitation, those
relating to environmental matters, employee matters, the Employee Retirement
Income Security Act of 1974, and the collection, payment and deposit of
employees' income, unemployment and social security taxes, PROVIDED that
Borrower shall not be deemed in violation hereof if Borrower's failure to comply
with any of the foregoing would not require more than $50,000 to cure the same.
5.6 INSURANCE. Borrower shall maintain public liability insurance, business
interruption insurance, third party property damage insurance and replacement
value insurance on its assets (including the Collateral) under such policies of
insurance, with such insurance companies, in such amounts and covering such
risks as are at all times satisfactory to TBCC in its commercially reasonable
judgment, all of which policies covering the Collateral shall name TBCC as an
additional insured and lender loss payee in case of loss, and contain other
provisions as TBCC may reasonably require to protect fully TBCC's interest in
the Collateral and any payments to be made under such policies.
5.7 BOOKS AND RECORDS; INSPECTIONS. Borrower shall (i) maintain books and
records (including computer records) pertaining to the Collateral in such
detail, form and scope as is consistent with good business practice and (ii)
provide TBCC and its agents access to the premises of Borrower at any time and
from time to time, during normal business hours and upon reasonable notice under
the circumstances, and at any time on and after the occurrence of a Default or
Event of Default, for the purposes of (A) inspecting and verifying the
Collateral, (B) inspecting and copying (at Borrower's expense) any and all
records pertaining thereto, and (C) discussing the affairs, finances and
business of Borrower with any officer, employee or director of Borrower or with
the Auditors. Borrower shall reimburse TBCC for the reasonable travel and
related expenses of TBCC's employees or, at TBCC's option, of such outside
accountants or examiners as may be retained by TBCC to verify or inspect
Collateral, records or documents of Borrower on a regular basis or for a special
inspection if TBCC deems the same appropriate. If TBCC's own employees are used,
Borrower shall also pay therefor $600 per person per day (or such other amount
as shall represent TBCC's then current standard charge for the same), or, if
outside examiners or accountants are used, Borrower shall also pay TBCC such sum
as TBCC may be obligated to pay as fees therefor*.
***, PROVIDED, HOWEVER, THAT (UNLESS A DEFAULT OR EVENT OF DEFAULT SHALL
EXIST) DURING ANY PERIOD OF 12 CONSECUTIVE MONTHS, MEASURED ON A ROLLING
12-MONTH BASIS, (I) BORROWER SHALL NOT BE REQUIRED TO REIMBURSE TBCC MORE THAN
$6,000, PLUS REASONABLE OUT-OF-POCKET EXPENSES INCURRED BY THE EMPLOYEES, AGENTS
AND REPRESENTATIVES OF TBCC IN CARRYING OUT THE ACTIVITIES AUTHORIZED BY THIS
SECTION 5.7, AND (II) BORROWER SHALL NOT BE REQUIRED TO PROVIDE TBCC ACCESS TO
BORROWER'S PREMISES MORE THAN ONCE DURING EACH OF THE FOUR CONSECUTIVE
THREE-MONTH PERIODS OCCURRING THEREIN.
10
5.8 NOTIFICATION REQUIREMENTS. Borrower shall give TBCC the following
notices and other documents:
(a) NOTICE OF DEFAULTS. Borrower shall give TBCC written notice of any
Default or Event of Default within two Business Days after becoming aware of the
same.
(b) PROCEEDINGS OR ADVERSE CHANGES. Borrower shall give TBCC written
notice of any of the following, promptly, and in any event within five Business
Days after Borrower becomes aware of any of the following: (i) any proceeding
being instituted or threatened by or against it in any federal, state, local or
foreign court or before any commission or other regulatory body involving a sum,
together with the sum involved in all other similar proceedings, in excess of
$50,000 in the aggregate, (ii) any order, judgment or decree being entered
against Borrower or any of its properties or assets involving a sum, together
with the sum of all other orders, judgments or decrees, in excess of $50,000 in
the aggregate, and (iii) any actual or prospective change, development or event
which has had or could reasonably be expected to have a Material Adverse Effect.
(c) CHANGE OF NAME OR CHIEF EXECUTIVE OFFICE; OPENING ADDITIONAL PLACES
OF BUSINESS. Borrower shall give TBCC at least 30 days prior written notice of
any change of Borrower's corporate name or its chief executive office or of the
opening of any additional place of business.
(d) CASUALTY LOSS. Borrower shall (i) provide written notice to TBCC,
within ten Business Days, of any material damage to, the destruction of or any
other material loss to any asset or property owned or used by Borrower other
than any such asset or property with a net book value (individually or in the
aggregate) less than $10,000 or any condemnation, confiscation or other taking,
in whole or in part, or any event that otherwise diminishes so as to render
impracticable or unreasonable the use of such asset or property owned or used by
Borrower together with the amount of the damage, destruction, loss or diminution
in value and (ii) diligently file and prosecute its claim or claims for any
award or payment in connection with any of the foregoing.
(e) INTELLECTUAL PROPERTY. Borrower shall promptly give TBCC written
notice of the existence of any copyright registration made by it, any rights
Borrower may obtain to any copyrightable works, new trademarks or any new
patent[able invention]* [bracketed material stricken through on original], and
of any renewal or extension of any trademark registration, or if it shall
otherwise become entitled to the benefit of any patent or patent application or
trademark or trademark application.
* APPLICATIONS
(f) DEPOSIT ACCOUNTS AND SECURITY ACCOUNTS. Borrower shall promptly
give TBCC written notice of the opening of any new bank account or other deposit
account, and any new securities account.
5.9 QUALIFY TO TRANSACT BUSINESS. Borrower shall qualify to transact
business as a foreign corporation in each jurisdiction where the nature or
extent of its business or the ownership of its property requires it to be so
qualified or authorized and where failure to qualify or be authorized would have
a Material Adverse Effect.
5.10 FINANCIAL REPORTING. Borrower shall timely deliver to TBCC the
following financial information: the information set forth in the Schedule, and,
when requested by TBCC in its good-faith judgment, any further information
respecting Borrower or any Collateral. Borrower authorizes TBCC to communicate
directly with its officers, employees and Auditors and to examine and make
abstracts from its books and records. Borrower authorizes its Auditors to
disclose to TBCC any and all financial statements, work papers and other
information of any kind that they may have with respect to Borrower and its
business and financial and other affairs. Borrower shall deliver a letter
11
addressed to the Auditors requesting them to comply with the provisions of this
paragraph when requested by TBCC.
5.11 PAYMENT OF LIABILITIES. Borrower shall pay and discharge, in the
ordinary course of business, all Indebtedness, except where the same may be
contested in good faith by appropriate proceedings and adequate reserves with
respect thereto have been provided on the books and records of Borrower in
accordance with GAAP.
5.12 PATENTS, TRADEMARKS, ETC. Borrower shall do and cause to be done all
things necessary to preserve, maintain and keep in full force and effect all of
its registrations of trademarks, service marks and other marks, trade names and
other trade rights, patents, copyrights and other intellectual property in
accordance with prudent business practices.
5.13 PROCEEDS OF COLLATERAL. Without limiting any of the other terms of this
Agreement, and without implying any consent to any sale or other transfer of
Collateral in violation of any provision of this Agreement, Borrower shall
deliver to TBCC all proceeds of any sale or other transfer or disposition of any
Collateral, immediately upon receipt of the same and in the same form as
received, with any necessary endorsements, and Borrower will not commingle any
such proceeds with any of its other funds or property, but will segregate them
from the other assets of Borrower and will hold them in trust and for the
account and as the property of TBCC.*
* NOTWITHSTANDING THE FOREGOING (AND PROVIDED THAT NO DEFAULT OR EVENT OF
DEFAULT EXISTS), IF AND AT SUCH TIME AS BORROWER COMPLETES THE SALE OF ITS
INVESTMENT IN NETWORK FLIGHT RECORDER, INC., TBCC AGREES TO RELEASE ITS SECURITY
INTEREST THEREIN, PROVIDED THAT BORROWER SHALL REMIT TO TBCC THE LESSER OF (I)
$250,000 (TWO-HUNDRED-FIFTY THOUSAND DOLLARS), OR (II) THE THEN-OUTSTANDING
PRINCIPAL AND ACCRUED INTEREST ON THE LOANS (BUT BORROWER SHALL BE ENTITLED TO
RETAIN FROM SUCH SALE ANY PROCEEDS IN EXCESS OF THE AMOUNT REMITTED TO TBCC
PURSUANT TO THIS SECTION 5.13).
5.14 SOLVENCY. Borrower shall be Solvent at all times.
6. NEGATIVE COVENANTS. Until termination of this Agreement and payment and
satisfaction of all Obligations:
6.1 CONTINGENT OBLIGATIONS. Borrower will not, directly or indirectly,
incur, assume, or suffer to exist any Contingent Obligation, excluding
indemnities given in connection with this Agreement or the other Loan Documents
in favor of TBCC or in connection with the sale of Inventory or other asset
dispositions permitted hereunder.
6.2 CORPORATE CHANGES. Borrower will not, directly or indirectly, merge or
consolidate with any Person, or liquidate or dissolve (or suffer any liquidation
or dissolution)*.
*, EXCEPT THAT IN CONNECTION WITH AN ACQUISITION (AS DEFINED IN THE
SCHEDULE), BORROWER MAY MERGE OR CONSOLIDATE IF (I) THE SURVIVING ENTITY SHALL
BE BORROWER OR, IF NOT BORROWER, SHALL HAVE ASSUMED ALL OBLIGATIONS OF BORROWER
HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS AND SHALL HAVE ACCEDED THERETO,
(II) THE SURVIVING ENTITY SHALL HAVE, IN TBCC'S GOOD FAITH BUSINESS JUDGMENT, A
FINANCIAL CONDITION AT LEAST AS STRONG AS THAT OF BORROWER PRIOR TO SUCH MERGER
OR CONSOLIDATION, (III) SUCH MERGER OR CONSOLIDATION SHALL NOT RESULT IN ANY
EVENT OF DEFAULT, (IV) THE ACQUISITION FEE REFERRED TO IN THE SCHEDULE IS PAID,
(V) TBCC HAS TAKEN ALL NECESSARY STEPS TO PROTECT AND CONTINUE PERFECTED ITS
FIRST PRIORITY SECURITY INTEREST IN THE COLLATERAL (SUBJECT ONLY TO PERMITTED
LIENS), (VI) TBCC SHALL HAVE RECEIVED REASONABLY ADEQUATE FINANCIAL INFORMATION
REGARDING THE ACQUISITION, AND (VII) TBCC AND BORROWER SHALL HAVE EXECUTED ANY
NECESSARY OR APPROPRIATE AMENDMENTS TO THE LOAN DOCUMENTS AS TBCC SHALL
REASONABLY REQUEST IN CONNECTION WITH OR ARISING FROM SUCH TRANSACTION.
6.3 CHANGE IN NATURE OF BUSINESS. Borrower will not at any time make any
material change in the lines of its business as carried on at the date of this
Agreement or enter into any new line of business.
12
6.4 SALES OF ASSETS. Borrower will not, directly or indirectly, in any
fiscal year, sell, transfer or otherwise dispose of any assets, or grant any
option or other right to purchase or otherwise acquire any assets other than (i)
Equipment with an aggregate value of less than $25,000 the proceeds of which
shall be paid to TBCC and applied to the Obligations, (ii) sales of Inventory in
the ordinary course of business and (iii) licenses or sublicenses on a
non-exclusive basis of intellectual property in the ordinary course of
Borrower's business.
6.5 CANCELLATION OF DEBT. Borrower will not cancel any claim or debt owed
to it, except in the ordinary course of business.
6.6 LOANS TO OTHER PERSONS. Borrower will not at any time make loans or
advance any credit (except to trade debtors in the ordinary course of business)
to any Person in excess of $25,000 in the aggregate at any time for all such
loans.
6.7 LIENS. Excep as set forth on the Borrower Disclosure Schedule,
Borrower will not, directly or indirectly, at any time create, incur, assume or
suffer to exist any Lien on or with respect to any of the Collateral, other
than: Liens created hereunder and by any other Loan Document; and Permitted
Liens.
6.8 DIVIDENDS, STOCK REDEMPTIONS. Except as set forth on the Borrower
Disclosure Schedule, Borrower will not, directly or indirectly, pay any
dividends or distributions on, purchase, redeem or retire any shares of any
class of its capital stock or any warrants, options or rights to purchase any
such capital stock, whether now or hereafter outstanding ("Stock"), or make any
payment on account of or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of
its Stock, or make any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of Borrower, except
for dividends paid solely in stock of the Borrower*.
*, OTHER THAN IN CONNECTION WITH CASHLESS TRANSACTIONS DISCLOSED TO AND
APPROVED BY TBCC, SUCH APPROVAL NOT TO BE UNREASONABLY WITHHELD.
6.9 INVESTMENTS IN OTHER PERSONS. Except as set forth on the Borrower
Disclosure Schedule, Borrower will not, directly or indirectly, at any time make
or hold any Investment in any Person (whether in cash, securities or other
property of any kind*) other than Investments in Cash Equivalents**.
* AND INCLUDING ANY DEBT ASSUMPTION
**, ITS INVESTMENT IN NETWORK FLIGHT RECORDER, INC., AND PERMITTED
ACQUISITIONS IN AN AGGREGATE AMOUNT NOT TO EXCEED $1,000,000. AS USED HEREIN,
"PERMITTED ACQUISITION" MEANS ANY INVESTMENT IN, OR OTHER ACQUISITION OF STOCK,
SECURITIES OR ASSETS OF, ANY PERSON, PROVIDED THAT (I) IMMEDIATELY AFTER GIVING
EFFECT THERETO, NO DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE
CONTINUING OR WOULD RESULT THEREFROM, (II) TBCC SHALL HAVE RECEIVED REASONABLY
ADEQUATE FINANCIAL INFORMATION REGARDING THE PERSON TO BE ACQUIRED, (III) PRIOR
TO OR SIMULTANEOUSLY WITH THE CLOSING OF SUCH TRANSACTION, TBCC SHALL HAVE TAKEN
ALL NECESSARY ACTION IN ORDER TO PROTECT AND CONTINUE PERFECTED ITS SECURITY
INTEREST HEREUNDER WITH RESPECT TO THE STOCK, SECURITIES OR ASSETS SO ACQUIRED
AND ALL COLLATERAL RELATING THERETO, AND (IV) TBCC AND BORROWER SHALL HAVE
EXECUTED ANY NECESSARY OR APPROPRIATE AMENDMENTS TO THE LOAN DOCUMENTS, AS TBCC
SHALL REASONABLY REQUEST, IN CONNECTION WITH OR ARISING FROM SUCH TRANSACTION.
6.10 PARTNERSHIPS; SUBSIDIARIES; JOINT VENTURES; MANAGEMENT CONTRACTS.
Borrower will not at any time create any direct or indirect Subsidiary, enter
into any joint venture or similar arrangement or become a partner in any general
or limited partnership or enter into any management contract (other than an
employment contract for the employment of an officer or employee entered into in
the regular course of Borrower's business) permitting third party management
rights with respect to Borrower's business.
6.11 FISCAL YEAR. Borrower will not change its fiscal year.
6.12 ACCOUNTING CHANGES. Except as set forth on the Borrower Disclosure
Schedule, Borrower will not at any time make or permit any change in accounting
policies or reporting practices, except as required by GAAP.
13
6.13 BROKER'S OR FINDER'S FEES. Except as set forth on the Borrower
Disclosure Schedule, Borrower will not pay or incur any broker's or finder's
fees in connection with this Agreement or the transactions contemplated hereby.
6.14 UNUSUAL TERMS OF SALE. Except as set forth on the Borrower Disclosure
Schedule, Borrower will not sell goods or products on extended terms,
consignment terms, on a progress billing or xxxx and hold basis, or on any other
unusual terms.
6.15 AMENDMENTS OF MATERIAL CONTRACTS. Borrower will not amend, modify,
cancel or terminate, or permit the amendment, modification, cancellation or
termination of, any Material Contract, if such amendment, modification,
cancellation or termination could have a Material Adverse Effect.
6.16 SALE AND LEASEBACK OBLIGATIONS. Borrower will not at any time create,
incur or assume any obligations as lessee for the rental of real or personal
property in connection with any sale and leaseback transaction.
6.17 ACQUISITION OF STOCK OR ASSETS. *Borrower will not acquire or commit or
agree to acquire all or any stock, securities or assets of any other Person
other than Inventory and Equipment acquired in the ordinary course of business.
**EXCEPT IN CONNECTION WITH A PERMITTED ACQUISITION,
7. EVENTS OF DEFAULT.
-----------------
7.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "Event of Default":
(a) Borrower shall fail to pay any principal, interest, fees, expenses
or other Obligations when payable, whether at stated maturity, by acceleration,
or otherwise; or
(b) Borrower shall default in the performance or observance of any
agreement, covenant, condition, provision or term contained in Section 1.1, 1.2,
1.4, 3.3, 5.7, 5.13, 6 (and its Sections and subsections), or 8.1 of this
Agreement, or Borrower shall fail to perform any non-monetary Obligation which
by its nature cannot be cured; or
(c) Borrower shall default in the performance or observance of any
other agreement, covenant, condition, provision or term of this Agreement (other
than those referred to in Section 7.1(a) above or Section 7.1(b) above) or any
other Loan Document, and such failure continues uncured for a period of five
Business Days after the date it occurs; or
(d) Borrower or any Guarantor shall dissolve, wind up or otherwise
cease to conduct its business; or
(e) Borrower or any Guarantor shall become the subject of (i) an
Insolvency Event except as set forth in clause (e) of the definition of
Insolvency Event or (ii) an Insolvency Event as set forth in clause (e) of the
definition of Insolvency Event that is not dismissed within sixty days; or
(f) any representation or warranty made by or on behalf of Borrower or
any Guarantor to TBCC, under this Agreement or otherwise, shall be incorrect or
misleading in any material respect when made or deemed made; or
(g) A change in the ownership or control of more than *[20]%
[bracketed material stricken through on original] of the voting stock of the
Borrower compared to such ownership on the date of this Agreement.**
*30
**, PROVIDED, HOWEVER, that no Event of Default shall result from any
Acquisition with respect to which all of the conditions set forth in clauses (i)
through (vii) of Section 6.2 above have been met to TBCC's satisfaction;
14
(h) any judgment or order for the payment of money shall be rendered
against Borrower and shall not be stayed, vacated, bonded or discharged within
thirty days; or
(i) any defined "Event of Default" shall occur under any other Loan
Document; or Borrower or any Guarantor shall deny or disaffirm its obligations
under any of the Loan Documents or any Liens granted in connection therewith or
shall otherwise challenge any of its obligations under any of the Loan
Documents; or any Liens granted in any of the Collateral shall be determined to
be void, voidable or invalid, are subordinated or are not given the priority
contemplated by this Agreement; or
(j) any Loan Document shall for any reason cease to create a valid and
perfected Lien on the Collateral purported to be covered thereby, of first
priority (except for Permitted Liens); or
(k) the Auditors for Borrower shall deliver a Qualified opinion on any
Financial Statement; or
(l) Borrower or any Guarantor (i) shall fail to pay any Indebtedness
owing to TBCC under any other agreement with TBCC or note or instrument in favor
of TBCC, when due (whether at scheduled maturity or by required prepayment,
acceleration, demand or otherwise), or (ii) shall otherwise be in breach of or
default in any of its obligations under any such agreement, note or instrument
with respect to any such Indebtedness; or
(m) Borrower or any Guarantor (i) shall fail to pay any Indebtedness in
excess of $50,000 owing to any Person other than TBCC or any interest or premium
thereon, when due (whether at scheduled maturity or by required prepayment,
acceleration, demand or otherwise), or (ii) shall otherwise be in breach or
default in any of its obligations under any agreement with respect to any such
Indebtedness, if the effect of such breach, default or failure to pay is to
cause such Indebtedness to become due or redeemed or permit the holder or
holders of such Indebtedness (or a trustee or agent on behalf of such holder or
holders) to declare such Indebtedness due or require such Indebtedness to be
redeemed prior to its stated maturity; or
(n) the occurrence of any event or condition that, in TBCC's judgment,
could reasonably be expected to have a Material Adverse Effect.
TBCC may cease making any Loans hereunder during any of the above cure periods,
and thereafter if any Event of Default has occurred and is continuing.
7.2 REMEDIES. Upon the occurrence and during the continuance of an Event of
Default, TBCC shall have all rights and remedies under applicable law and the
Loan Documents, and TBCC may do any or all of the following:
(a) Declare all Obligations to be immediately due and payable (except
with respect to any Event of Default with respect to Borrower set forth in
Section 7.1(e), in which case all Obligations shall automatically become
immediately due and payable) without presentment, demand, protest or any other
action or obligation of TBCC;
(b) Cease making any Loans or other extensions of credit to Borrower of
any kind;
(c) Take possession of all documents, instruments, files and records
(including the copying of any computer records) relating to the Receivables or
other Collateral and use (at the expense of Borrower) such supplies or space of
Borrower at Borrower's places of business necessary to administer and collect
the Receivables and other Collateral;
(d) Accelerate or extend the time of payment, compromise, issue
credits, or bring suit on the Receivables and other Collateral (in the name of
Borrower or TBCC) and otherwise administer and collect the Receivables and other
Collateral;
(e) Collect, receive, dispose of and realize upon any Investment
Property, including withdrawal of any and all funds from any securities
accounts;
(f) Sell, assign and deliver the Receivables and other Collateral, with
or without advertisement, at public or private sale, for cash, on credit or
otherwise, subject to applicable law; and
15
(g) Foreclose on the security interests created pursuant to the Loan
Documents by any available procedure, take possession of any or all of the
Collateral, with or without judicial process and enter any premises where any
Collateral may be located for the purpose of taking possession of or removing
the same.
(h) TBCC may bid or become a purchaser at any sale, free from any right
of redemption, which right is expressly waived by Borrower, if permitted under
applicable law. If notice of intended disposition of any Collateral is required
by law, it is agreed that ten days' notice shall constitute reasonable
notification. Borrower will assemble the Collateral and make it available at
such locations as TBCC may specify, whether at the premises of Borrower or
elsewhere, and will make available to TBCC the premises and facilities of
Borrower for the purpose of TBCC's taking possession of or removing the
Collateral or putting the Collateral in salable form.
(i) Borrower recognizes that TBCC may be unable to make a public sale
of any or all of the Investment Property, by reason of prohibitions contained in
applicable securities laws or otherwise, and expressly agrees that a private
sale to a restricted group of purchasers for investment and not with a view to
any distribution thereof shall be considered a commercially reasonable sale.
7.3 RECEIVABLES. Upon the occurrence and during the continuance of an Event
of Default, or at any time that TBCC believes in good faith that fraud has
occurred or that Borrower has failed to deliver the proceeds of Receivables or
other Collateral to TBCC as required by this Agreement or any other Loan
Document, TBCC may (i) settle or adjust disputes or claims directly with account
debtors for amounts and upon terms which it considers advisable, and (ii) notify
account debtors on the Receivables and other Collateral that the Receivables and
Collateral have been assigned to TBCC, and that payments in respect thereof
shall be made directly to TBCC. If an Event of Default has occurred and is
continuing or TBCC reasonably believes in good faith that fraud has occurred, or
that Borrower has failed to deliver the proceeds of Receivables or other
Collateral to TBCC as required by this Agreement or any other Loan Document,
Borrower hereby irrevocably authorizes and appoints TBCC, or any Person TBCC may
designate, as its attorney-in-fact, at Borrower's sole cost and expense, to
exercise, all of the following powers, which are coupled with an interest and
are irrevocable, until all of the Obligations have been indefeasibly paid and
satisfied in full in cash: (A) to receive, take, endorse, sign, assign and
deliver, all in the name of TBCC or Borrower, any and all checks, notes, drafts,
and other documents or instruments relating to the Collateral; (B) to receive,
open and dispose of all mail addressed to Borrower and to notify postal
authorities to change the address for delivery thereof to such address as TBCC
may designate; and (C) to take or bring, in the name of TBCC or Borrower, all
steps, actions, suits or proceedings deemed by TBCC necessary or desirable to
enforce or effect collection of Receivables and other Collateral or file and
sign Borrower's name on a proof of claim in bankruptcy or similar document
against any obligor of Borrower.
7.4 RIGHT OF SETOFF. In addition to all rights of offset that TBCC may have
under applicable law, upon the occurrence and during the continuance of any
Event of Default, and whether or not TBCC has made any demand or the Obligations
of Borrower have matured, TBCC shall have the right to appropriate and apply to
the payment of the Obligations of Borrower all deposits and other obligations
then or thereafter owing by TBCC to or for the credit or the account of
Borrower. In the event that TBCC exercises any of its rights under this Section,
TBCC shall provide notice to Borrower of such exercise, provided that the
failure to give such notice shall not affect the validity of the exercise of
such rights.
7.5 LICENSE FOR USE OF SOFTWARE AND OTHER INTELLECTUAL PROPERTY. After the
occurrence and during the continuance of an Event of Default, unless expressly
prohibited by any licensor thereof, TBCC is hereby granted a license to use all
computer software programs, data bases, processes, trademarks, tradenames and
materials used by Borrower in connection with Borrower's businesses or in
connection with the Collateral.
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7.6 NO MARSHALLING; DEFICIENCIES; REMEDIES CUMULATIVE. The net cash
proceeds resulting from TBCC's exercise of any of its rights with respect to
Collateral, including any and all Collections (after deducting all of TBCC's
reasonable expenses related thereto), shall be applied by TBCC to such of the
Obligations in such order as TBCC shall elect in its sole and absolute
discretion, whether due or to become due. Borrower shall remain liable to TBCC
for any deficiencies and TBCC shall remit to Borrower or its successor or
assign, any surplus resulting therefrom. The remedies specified in this
Agreement are cumulative, may be exercised in such order and with respect to
such Collateral as TBCC may deem desirable and are not intended to be exclusive,
and the full or partial exercise of any of them shall not preclude the full or
partial exercise of any other available remedy under this Agreement, under any
other Loan Document, at equity or at law.
7.7 WAIVERS. Borrower hereby waives any bonds, security or sureties
required by any statute, rule or any other law as an incident to any taking of
possession by TBCC of any Collateral. Borrower also waives any damages (direct,
consequential or otherwise) occasioned by the enforcement of TBCC's rights under
this Agreement or any other Loan Document including the taking of possession of
any Collateral or the giving of notice to any account debtor or the collection
of any Receivable or other Collateral (other than damages that are the result of
acts or omissions constituting gross negligence or willful misconduct of TBCC).
These waivers and all other waivers provided for in this Agreement and the other
Loan Documents have been negotiated by the parties and Borrower acknowledges
that it has been represented by counsel of its own choice and has consulted such
counsel with respect to its rights hereunder.
7.8 RIGHT TO MAKE PAYMENTS. In the event that Borrower shall fail to
purchase or maintain insurance required hereunder, or to pay any tax,
assessment, government charge or levy, except as the same may be otherwise
permitted hereunder, or in the event that any Lien prohibited hereby shall not
be paid in full or discharged, or in the event that Borrower shall fail to
perform or comply with any other covenant, promise or obligation to TBCC
hereunder or under any other Loan Document, TBCC may (but shall not be required
to) perform, pay, satisfy, discharge or bond the same for the account of
Borrower, and all amounts so paid by TBCC shall be treated as a Loan hereunder
to Borrower and shall constitute part of the Obligations.
8. ASSIGNMENTS AND PARTICIPATIONS.
------------------------------
8.1 ASSIGNMENTS. Borrower shall not assign this Agreement or any right or
obligation hereunder without the prior written consent of TBCC. TBCC may assign
(without the consent of Borrower) to one or more Persons all or a portion of its
rights and obligations under this Agreement and the other Loan Documents.
8.2 PARTICIPATIONS. TBCC may sell participations in or to all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of the Loans); provided, however, that TBCC's
obligations under this Agreement shall remain unchanged.
8.3 DISCLOSURE. TBCC may, in connection with any permitted assignment or
participation or proposed assignment or participation pursuant to this
Agreement, disclose to the assignee or participant or proposed assignee or
participant any information relating to Borrower furnished to TBCC by or on
behalf of Borrower.
9. DEFINITIONS.
-----------
9.1 GENERAL DEFINITIONS. As used herein, the following terms shall have the
meanings herein specified (to be equally applicable to both the singular and
plural forms of the terms defined):
(a) "AFFILIATE" means as to any Person, any other Person who directly
or indirectly controls, is under common control with, is controlled by or is a
director or officer of such Person. As used in this definition, "control"
(including its correlative meanings, "controlled by" and "under common control
with") means possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of voting
securities or partnership or other ownership interests, by contract or
otherwise), provided that, in any event, any Person who owns directly or
indirectly twenty percent (20%) or more of the securities having ordinary voting
power for the election of the members of the board of directors or other
governing body of a corporation or twenty percent (20%) or more of the
partnership or other ownership interests of any other Person (other than as a
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limited partner of such other Person) will be deemed to control such
corporation, partnership or other Person.
(b) "AGREEMENT" means this Loan and Security Agreement, as amended,
supplemented or otherwise modified from time to time.
(c) "AUDITORS" means a nationally recognized firm of independent public
accountants selected by Borrower and reasonably satisfactory to TBCC.
(d) "BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy," as that title may be amended from time to time, or any successor
statute.
(e) "BORROWER DISCLOSURE SCHEDULE" means that certain Borrower
Disclosure Schedule prepared by Borrower and dated the date hereof.
(f) "BORROWING" means a borrowing of Loans.
(g) "BUSINESS DAY" means any day other than a Saturday, Sunday or any
other day on which commercial banks in Chicago, Illinois are required or
permitted by law to close.
(h) "CASH EQUIVALENTS" means (i) securities issued, guaranteed or
insured by the United States or any of its agencies with maturities of not more
than one year from the date acquired; (ii) certificates of deposit with
maturities of not more than one year from the date acquired, issued by any U.S.
federal or state chartered commercial bank of recognized standing which has
capital and unimpaired surplus in excess of $100,000,000; (iii) investments in
money market funds registered under the Investment Company Act of 1940; and (iv)
other instruments, commercial paper or investments acceptable to TBCC in its
sole discretion.
(i) "COLLATERAL" means Receivables, Investment Property, Inventory,
Equipment, and Other Property, and all additions and accessions thereto and
substitutions and replacements therefor and improvements thereon, and all
proceeds (whether cash or other property) and products thereof, including,
without limitation, all proceeds of insurance covering the same and all tort
claims in connection therewith, and all records, files, computer programs and
files, data and writings relating to the foregoing, and all equipment containing
the foregoing.
(j) "COLLECTIONS" means all cash, funds, checks, notes, instruments,
any other form of remittance tendered by account debtors in respect of payment
of Receivables and any other payments received by Borrower with respect to any
other Collateral.
(k) "COMPLIANCE CERTIFICATE" means a certificate as to compliance with
the Obligations, on TBCC's standard form (in effect from time to time).
(l) "CONTINGENT OBLIGATION" means any direct, indirect, contingent or
non-contingent guaranty or obligation for the Indebtedness of another Person,
except endorsements in the ordinary course of business.
(m) "DEFAULT" means any of the events specified in Section 7.1, whether
or not any of the requirements for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
(n) [RESERVED]
(o) "ELIGIBLE RECEIVABLES" means and includes only those Receivables
which TBCC in its sole discretion deems eligible for borrowing, based on such
considerations as TBCC in its sole discretion may deem appropriate from time to
time and less any such reserves as TBCC, in its sole discretion, may require.
Without limiting the fact that the determination of which Receivables are
eligible for borrowing is a matter of TBCC's sole discretion, the following (the
"MINIMUM ELIGIBILITY REQUIREMENTS") are the minimum requirements for a
Receivable to be an Eligible Receivable: (i) the Receivable must not be
outstanding for more than 90 days from its invoice date, (ii) the Receivable
must not represent progress xxxxxxxx, or be due under a fulfillment or
requirements contract with the account debtor, (iii) the Receivable must not be
subject to any contingencies (including Receivables arising from sales on
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consignment, guaranteed sale or other terms pursuant to which payment by the
account debtor may be conditional), (iv) the Receivable must not be owing from
an account debtor with whom the Borrower has any dispute (whether or not
relating to the particular Receivable), (v) the Receivable must not be owing
from an Affiliate of Borrower, (vi) the Receivable must not be owing from an
account debtor which is subject to any insolvency or bankruptcy proceeding, or
whose financial condition is not acceptable to TBCC, or which, fails or goes out
of a material portion of its business, (vii) the Receivable must not be owing
from the United States or any department, agency or instrumentality thereof
(unless there has been compliance, to TBCC's satisfaction, with the United
States Assignment of Claims Act), (viii) the Receivable must not be owing from
an account debtor located outside the United States or Canada (unless
pre-approved by TBCC in its discretion in writing, or backed by a letter of
credit satisfactory to TBCC, or FCIA insured satisfactory to TBCC), (ix) the
Receivable must not be owing from an account debtor to whom Borrower is or may
be liable for goods purchased from such account debtor or otherwise, (x) the
Receivable must not violate any representation or warranty set forth in this
Agreement, and (xi) the Receivable must not be one in which TBCC does not have a
first-priority, valid, perfected Lien. Without limiting the generality of the
foregoing, Borrower must be in compliance with all requirements of the Loan
Documents regarding registration with the U.S. Copyright Office of any
copyrightable software in order for any Receivable arising from any licensing of
such software to constitute an Eligible Receivable hereunder. Receivables owing
from one account debtor will not be deemed Eligible Receivables to the extent
they exceed 20% of the total eligible Receivables outstanding. In addition, if
more than 50% of the Receivables owing from an account debtor are outstanding
more than 90 days from their invoice date (without regard to unapplied credits)
or are otherwise not eligible Receivables, then all Receivables owing from that
account debtor will be deemed ineligible for borrowing. TBCC may, from time to
time, in its sole discretion, revise the Minimum Eligibility Requirements, upon
written notice to the Borrower.
(p) "EQUIPMENT" means all machinery, equipment, furniture, fixtures,
conveyors, tools, materials, storage and handling equipment, hydraulic presses,
cutting equipment, computer equipment and hardware, including central processing
units, terminals, drives, memory units, printers, keyboards, screens,
peripherals and input or output devices, molds, dies, stamps, vehicles, and
other equipment of every kind and nature and wherever situated now or hereafter
owned by Borrower or in which Borrower may have any interest as lessee or
otherwise (to the extent of such interest), together with all additions and
accessions thereto, all replacements and all accessories and parts therefor, all
manuals, blueprints, know-how, warranties and records in connection therewith,
all rights against suppliers, warrantors, manufacturers, sellers or others in
connection therewith, and together with all substitutes for any of the
foregoing.
(q) "EVENT OF DEFAULT" means the occurrence of any of the events
specified in Section 7.1.
(r) "FINANCIAL STATEMENTS" means the balance sheets, profit and loss
statements, statements of cash flow, and statements of changes in intercompany
accounts, if any, for the period specified, prepared in accordance with GAAP and
consistent with prior practices.
(s) "GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances as of the date of determination. Whenever any accounting
term is used herein which is not otherwise defined, it shall be interpreted in
accordance with GAAP.
(t) "GOOD FAITH" means "good faith" as defined in the Uniform
Commercial Code, from time to time in effect in the State of Illinois.
(u) "GOVERNING DOCUMENTS" means the articles or certificate of
incorporation and by-laws of Borrower.
(v) "GOVERNMENTAL AUTHORITY" means any nation or government, any state
or other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions thereof or
pertaining thereto.
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(w) "GUARANTOR" means any present or future guarantor of any or all of
the Obligations.
(x) "INDEBTEDNESS" means, with respect to any Person, as of the date of
determination any indebtedness, liability or obligation of such Person
(including without limitation obligations under capital leases and Contingent
Obligations).
(y) "INSOLVENCY EVENT" means, with respect to any Person, the
occurrence of any of the following: (a) such Person shall be adjudicated
insolvent or bankrupt, or shall generally fail to pay or admit in writing its
inability to pay its debts as they become due, (b) such Person shall seek
dissolution or reorganization or the appointment of a receiver, trustee,
custodian or liquidator for it or a substantial portion of its property, assets
or business or to effect a plan or other arrangement with its creditors, (c)
such Person shall make a general assignment for the benefit of its creditors, or
consent to or acquiesce in the appointment of a receiver, trustee, custodian or
liquidator for a substantial portion of its property, assets or business, (d)
such Person shall file a voluntary petition under any bankruptcy, insolvency or
similar law or take any corporate or similar act in furtherance thereof, or (e)
such Person, or a substantial portion of its property, assets or business shall
become the subject of an involuntary proceeding or petition for its dissolution,
reorganization, and such proceeding is not dismissed or stayed within sixty
days, or the appointment of a receiver, trustee, custodian or liquidator, and
such receiver is not dismissed within sixty days.
(z) "INVENTORY" means all present and future goods intended for sale,
lease or other disposition by Borrower including, without limitation, all raw
materials, work in process, finished goods and other retail inventory, goods in
the possession of outside processors or other third parties, goods consigned to
Borrower to the extent of its interest therein as consignee, materials and
supplies of any kind, nature or description which are or might be used in
connection with the manufacture, packing, shipping, advertising, selling or
finishing of any such goods, and all documents of title or documents
representing the same.
(aa) "INVESTMENT" in any Person means, as of the date of determination
thereof, any payment or contribution, or commitment to make a payment or
contribution, by any Person including, without limitation, property contributed
or committed to be contributed by any Person, on its account for or in
connection with its acquisition of any stock, bonds, notes, debentures,
partnership or other ownership interest or any other security of the Person in
whom such Investment is made or any evidence of indebtedness by reason of a
loan, advance, extension of credit, guaranty or other similar obligation for any
debt, liability or indebtedness of such Person in whom the Investment is made.
(bb) "INVESTMENT PROPERTY" means any and all investment property of
Borrower, including all securities, whether certificated or uncertificated,
security entitlements, securities accounts, commodity contracts and commodity
accounts, and all financial assets held in any securities account or otherwise,
wherever located, and whether now existing or hereafter acquired or arising.
(cc) "LIEN" means any lien, claim, charge, pledge, security interest,
assignment, hypothecation, deed of trust, mortgage, lease, conditional sale,
retention of title or other preferential arrangement having substantially the
same economic effect as any of the foregoing, whether voluntary or imposed by
law.
(dd) "LOAN ACCOUNT" has the meaning specified in Section 1.3.
(ee) "LOAN DOCUMENTS" means this Agreement and all present and future
documents and instruments delivered or to be delivered by Borrower or any of its
Affiliates or any Guarantor under, in connection with or relating to this
Agreement, as each of the same may be amended, supplemented or otherwise
modified from time to time.
(ff) "LOANS" means the loans and financial accommodations made by TBCC
hereunder.
(gg) "MATERIAL ADVERSE EFFECT" means (i) a material adverse effect on
the business, prospects, operations, results of operations, assets, liabilities
or condition (financial or otherwise) of Borrower, (ii) the impairment of
Borrower's ability to perform its obligations under the Loan Documents to which
it is a party or of TBCC to enforce the Obligations or realize upon the
20
Collateral or (iii) a material adverse effect on the value of the Collateral or
the amount which TBCC would be likely to receive (after giving consideration to
delays in payment and costs of enforcement) in the liquidation of the
Collateral.
(hh) "MATERIAL CONTRACT" means any contract or other arrangement to
which Borrower is a party (other than the Loan Documents) for which breach,
nonperformance, cancellation or failure to renew could have a Material Adverse
Effect.
(ii) "OBLIGATIONS" means and includes all loans (including the Loans),
advances, debts, liabilities, obligations, covenants and duties owing by
Borrower to TBCC of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, which may arise under, out
of, or in connection with, this Agreement, any other Loan Document or any other
agreement executed in connection herewith or therewith or otherwise, whether or
not for the payment of money, whether arising by reason of an extension of
credit, opening, guaranteeing or confirming of a letter of credit, loan,
guaranty, indemnification or in any other manner, whether direct or indirect
(including those acquired by assignment, purchase, discount or otherwise),
whether absolute or contingent, due or to become due, now due or hereafter
arising and however acquired. The term includes, without limitation, all
interest (including interest accruing on or after an Insolvency Event, whether
or not an allowed claim), charges, expenses, commitment, facility, closing and
collateral management fees, letter of credit fees, reasonable attorneys' fees,
and any other sum properly chargeable to Borrower under this Agreement, the
other Loan Documents or any other agreement executed in connection herewith or
therewith or otherwise.
(jj) "OTHER PROPERTY" means all present and future: instruments,
documents, documents of title, securities, bonds, notes, promissory notes,
drafts, acceptances, letters of credit and rights to receive proceeds of letters
of credit, deposit accounts, chattel paper, certificates, insurance policies,
insurance proceeds, leases, computer tapes, causes of action, judgments, claims
against third parties, leasehold rights in any personal property, books,
ledgers, files and records, general intangibles (including without limitation,
all contract rights, tax refunds, rights to receive tax refunds, patents, patent
applications, copyrights (registered and unregistered), royalties, licenses,
permits, franchise rights, authorizations, customer lists, rights of
indemnification, contribution and subrogation, computer programs, discs and
software, trade secrets, computer service contracts, trademarks, trade names,
service marks and names, logos, goodwill, deposits, choses in action, designs,
blueprints, plans, know-how, telephone numbers and rights thereto, credits,
reserves, and all forms of obligations whatsoever now or hereafter owing to
Borrower), all property at any time in the possession or under the control of
TBCC, and all security given by Borrower to TBCC pursuant to any other Loan
Document or agreement.
(kk) "PERMITTED LIENS" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced and be continuing: (i) Liens for taxes, assessments and other
governmental charges or levies or the claims or demands of landlords, carriers,
warehousemen, mechanics, laborers, materialmen and other like Persons arising by
operation of law in the ordinary course of business for sums which are not yet
due and payable, (ii) deposits or pledges to secure the payment of workmen's
compensation, unemployment insurance or other social security benefits or
obligations, public or statutory obligations, surety or appeal bonds, bid or
performance bonds, or other obligations of a like nature incurred in the
ordinary course of business (but nothing in this clause (ii) shall permit the
creation of Liens on Receivables, Investment Property, Inventory or Other
Property), (iii) zoning restrictions, easements, encroachments, licenses,
restrictions or covenants on the use of the Property which do not materially
impair either the use of the Property in the operation of the business of
Borrower or the value of the Property, (iv) rights of general application
reserved to or vested in any municipality or other governmental, statutory or
public authority to control or regulate property, or to use property in a manner
which does not materially impair the use of the property for the purposes for
which it is held by Borrower, (v) state and municipal Liens for personal
property taxes which are not yet due and payable, [and][bracketed material
stricken through on original] (vi) Purchase Money Liens*.
*, (VI) LIENS GRANTED TO LESSORS UNDER OPERATING LEASES OR CAPITAL LEASES
(PROVIDED THAT SUCH LIENS SHALL ATTACH ONLY TO THE ASSET PURCHASED OR ACQUIRED
(AND THE PROCEEDS THEREOF) AND SHALL ONLY SECURE THE PURCHASE OF THE ASSET), AND
(VII) LIENS SET FORTH ON THE BORROWER DISCLOSURE SCHEDULE.
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(ll) "PERSON" means any individual, sole proprietorship, partnership,
joint venture, limited liability company, trust, unincorporated organization,
joint stock company, association, corporation, institution, entity, party or
government (including any division, agency or department thereof) or any other
legal entity, whether acting in an individual, fiduciary or other capacity, and,
as applicable, the successors, heirs and assigns of each.
(mm) "PLAN" means any employee benefit plan, program or arrangement
maintained or contributed to by Borrower or with respect to which it may incur
liability.
(nn) "PURCHASE MONEY LIEN" means a Lien on any item of Equipment
created substantially simultaneously with the acquisition of such Equipment for
the purpose of financing such acquisition, provided that such Lien shall attach
only to the Equipment acquired.
(oo) "QUALIFICATION" or "QUALIFIED" means, with respect to any report
of Auditors covering Financial Statements, a material qualification to such
report (i) resulting from a limitation on the scope of examination of such
Financial Statements or the underlying data, (ii) as to the capability of
Borrower to continue operations as a going concern or (iii) which could be
eliminated by changes in Financial Statements or notes thereto covered by such
report (such as by the creation of or increase in a reserve or a decrease in the
carrying value of assets) and which if so eliminated by the making of any such
change and after giving effect thereto would result in a Default or an Event of
Default.
(pp) "RECEIVABLES" means all present and future accounts and accounts
receivable, together with all security therefor and guaranties thereof and all
rights and remedies relating thereto, including any right of stoppage in
transit.
(qq) "REQUIREMENT OF LAW" means (a) the Governing Documents, (b) any
law, treaty, rule, regulation, order or determination of an arbitrator, court or
other Governmental Authority or (c) any franchise, license, lease, permit,
certificate, authorization, qualification, easement, right of way, right or
approval binding on Borrower or any of its property.
(rr) "SCHEDULE" means the Schedule to this Agreement being signed
concurrently by Borrower and TBCC, as amended from time to time.
(ss) "SOLVENT" means when used with respect to any Person that as of
the date as to which such Person's solvency is to be measured: (a) the fair
salable value of its assets is in excess of the total amount of its liabilities
(including contingent liabilities as valued in accordance with applicable law)
as they become absolute and matured; (b) it has sufficient capital to conduct
its business; and (c) it is able to meet its debts as they mature.
(tt) "STREAMLINED FACILITY AGREEMENT" means the Streamlined Facility
Agreement entered into on the date hereof by TBCC and Borrower.
(uu) "SUBSIDIARY" means, as to any Person, a corporation or other
entity in which that Person directly or indirectly owns or controls shares of
stock or other ownership interests having ordinary voting power to elect a
majority of the board of directors or appoint other managers of such corporation
or other entity.
9.2 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise defined or
specified herein, all accounting terms used in this Agreement shall be construed
in accordance with GAAP, applied on a basis consistent in all material respects
with the Financial Statements delivered to TBCC on or before the date of this
Agreement. All accounting determinations for purposes of determining compliance
with this Agreement shall be made in accordance with GAAP as in effect on the
date of this Agreement and applied on a basis consistent in all material
respects with the audited Financial Statements delivered to TBCC on or before
the date of this Agreement. The Financial Statements required to be delivered
hereunder, and all financial records, shall be maintained in accordance with
GAAP. If GAAP shall change from the basis used in preparing the audited
Financial Statements delivered to TBCC on or before the date of this Agreement,
the Compliance Certificates required to be delivered pursuant to this Agreement
shall include calculations setting forth the adjustments necessary to
demonstrate how Borrower is in compliance with the Financial Covenants (if any)
based upon GAAP as in effect on the date of this Agreement.
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9.3 OTHER TERMS; HEADINGS; CONSTRUCTION. Unless otherwise defined herein,
terms used herein that are defined in the Uniform Commercial Code, from time to
time in effect in the State of Illinois, shall have the meanings set forth
therein. Each of the words "hereof," "herein," and "hereunder" refer to this
Agreement as a whole. The term "including", whenever used in this Agreement,
shall mean "including (but not limited to)". An Event of Default shall
"continue" or be "continuing" unless and until such Event of Default has been
waived or cured within the grace period specified therefor under Section 7.1.
References to Articles, Sections, Annexes, Schedules, and Exhibits are internal
references to this Agreement, and to its attachments, unless otherwise
specified. The headings and any Table of Contents are for convenience only and
shall not affect the meaning or construction of any provision of this Agreement.
This Agreement has been fully reviewed and negotiated between the parties and no
uncertainty or ambiguity in any term or provision of this Agreement shall be
construed strictly against TBCC or Borrower under any rule of construction or
otherwise.
10. GENERAL PROVISIONS.
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10.1 GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY DISPUTE ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, WHETHER
SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS.
10.2 SUBMISSION TO JURISDICTION. ALL DISPUTES BETWEEN THE BORROWER AND TBCC,
WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY
BY STATE AND FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, AND THE COURTS TO
WHICH AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT TBCC SHALL HAVE
THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE
BORROWER OR ITS PROPERTY IN ANY LOCATION REASONABLY SELECTED BY TBCC IN GOOD
FAITH TO ENABLE TBCC TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF TBCC. [RESERVED] THE BORROWER WAIVES ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH TBCC HAS COMMENCED A
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON FORUM NON CONVENIENS.
10.3 SERVICE OF PROCESS. THE BORROWER HEREBY IRREVOCABLY DESIGNATES CT
CORPORATION SYSTEM, 0000 XXXXXX XXXXXX, XXXXXXXXXX, XXXXXXXX 00000, AS THE
DESIGNEE AND AGENT OF THE BORROWER TO RECEIVE, FOR AND ON BEHALF OF THE
BORROWER, SERVICE OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT. IT IS UNDERSTOOD THAT A COPY OF SUCH
PROCESS SERVED ON SUCH AGENT AT ITS ADDRESS WILL BE PROMPTLY FORWARDED BY MAIL
TO THE BORROWER AND ITS LEGAL COUNSEL DESIGNATED IN THE SCHEDULE, BUT THE
FAILURE OF THE BORROWER OR SUCH LEGAL COUNSEL TO RECEIVE SUCH COPY SHALL NOT
AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF TBCC TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
10.4 LIMITATION OF LIABILITY. TBCC SHALL HAVE NO LIABILITY TO THE BORROWER
(WHETHER SOUNDING IN TORT, CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED BY THE
BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THE
TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS AGREEMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY
A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER BINDING ON TBCC THAT THE
LOSSES WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF TBCC. THE BORROWER HEREBY WAIVES ALL FUTURE CLAIMS AGAINST
TBCC FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES.
10.5 DELAYS; PARTIAL EXERCISE OF REMEDIES. No delay or omission of TBCC to
exercise any right or remedy hereunder shall impair any such right or operate as
a waiver thereof. No single or partial exercise by TBCC of any right or remedy
shall preclude any other or further exercise thereof, or preclude any other
right or remedy.
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10.6 NOTICES. Except as otherwise provided herein, all notices and
correspondence hereunder shall be in writing and sent by certified or registered
mail, return receipt requested, by overnight delivery service, with all charges
prepaid, or by telecopier followed by a hard copy sent by regular mail, to the
parties at their addresses set forth in the heading to this Agreement. All such
notices and correspondence shall be deemed given (i) if sent by certified or
registered mail, three Business Days after being postmarked, (ii) if sent by
overnight delivery service, when received at the above stated addresses or when
delivery is refused and (iii) if sent by telecopier transmission, when receipt
of such transmission is acknowledged. Borrower's and TBCC's telecopier numbers
for purpose of notice hereunder are set forth in the Schedule; each party's
number may be changed by written notice to the other party.
10.7 INDEMNIFICATION; REIMBURSEMENT OF EXPENSES OF COLLECTION. Borrower
hereby indemnifies and agrees, whether or not any of the transactions
contemplated by this Agreement or the other Loan Documents are consummated, to
defend and hold harmless (on an after-tax basis) TBCC, its successors and
assigns and their respective directors, officers, agents, employees, advisors,
shareholders, attorneys and Affiliates (each, an "INDEMNIFIED PARTY") from and
against any and all losses, claims, damages, liabilities, deficiencies,
obligations, fines, penalties, actions (whether threatened or existing),
judgments, suits (whether threatened or existing) or expenses (including,
without limitation, reasonable fees and disbursements of counsel, experts,
consultants and other professionals) incurred by any of them (collectively,
"CLAIMS") (except, in the case of each Indemnified Party, to the extent that any
Claim is determined in a final and non-appealable judgment by a court of
competent jurisdiction to have directly resulted from such Indemnified Party's
gross negligence or willful misconduct) arising out of or by reason of (i) any
litigation, investigation, claim or proceeding which arises out of or is related
to (A) Borrower, or this Agreement, any other Loan Document or the transactions
contemplated hereby or thereby, (B) any actual or proposed use by Borrower of
the proceeds of the Loans, or (C) TBCC's entering into this Agreement or any
other Loan Document or any other agreements and documents relating hereto,
including, without limitation, amounts paid in settlement, court costs and the
reasonable fees and disbursements of counsel incurred in connection with any
such litigation, investigation, claim or proceeding, (ii) any remedial or other
action taken by Borrower in connection with compliance by Borrower, or any of
its properties, with any federal, state or local environmental laws, rules or
regulations, and (iii) any pending, threatened or actual action, claim,
proceeding or suit by any shareholder or director of Borrower or any actual or
purported violation of Borrower's charter, by-laws or any other agreement or
instrument to which Borrower is a party or by which any of its properties is
bound. In addition and without limiting the generality of the foregoing,
Borrower shall, upon demand, pay to TBCC all reasonable costs and expenses
incurred by TBCC (including the reasonable fees and disbursements of counsel and
other professionals) in connection with the preparation, execution, delivery,
administration, modification and amendment of the Loan Documents, and pay to
TBCC all reasonable costs and expenses (including the reasonable fees and
disbursements of counsel and other professionals) paid or incurred by TBCC in
order to enforce or defend any of its rights under or in respect of this
Agreement, any other Loan Document or any other document or instrument now or
hereafter executed and delivered in connection herewith, collect the Obligations
or otherwise administer this Agreement, foreclose or otherwise realize upon the
Collateral or any part thereof, prosecute actions against, or defend actions by,
account debtors; commence, intervene in, or defend any action or proceeding;
initiate any complaint to be relieved of the automatic stay in bankruptcy; file
or prosecute any probate claim, bankruptcy claim, third-party claim, or other
claim; examine, audit, copy, and inspect any of the Collateral or any of
Borrower's books and records; protect, obtain possession of, lease, dispose of,
or otherwise enforce TBCC's security interest in, the Collateral; and otherwise
represent TBCC in any litigation relating to Borrower. Without limiting the
generality of the foregoing, Borrower shall pay TBCC a fee with respect to each
wire transfer in the amount of $15 plus all bank charges and a fee of $15 for
all returned checks plus all bank charges. If either TBCC or Borrower files any
lawsuit against the other predicated on a breach of this Agreement, the
prevailing party in such action shall be entitled to recover its reasonable
costs and attorneys' fees, including (but not limited to) reasonable attorneys'
fees and costs incurred in the enforcement of, execution upon or defense of any
order, decree, award or judgment. If and to the extent that the Obligations of
Borrower hereunder are unenforceable for any reason, Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of the Obligations
which is permissible under applicable law. Borrower's obligations under Section
2.4 and this Section shall survive any termination of this Agreement and the
other Loan Documents and the payment in full of the Obligations, and are in
addition to, and not in substitution of, any of the other Obligations.
24
10.8 AMENDMENTS AND WAIVERS. Any provision of this Agreement or any other
Loan Document may be amended or waived if, but only if, such amendment or waiver
is in writing and signed by Borrower and TBCC and then any such amendment or
waiver shall be effective only to the extent set forth therein. The failure of
TBCC at any time or times to require Borrower to strictly comply with any of the
provisions of this Agreement or any other present or future agreement between
Borrower and TBCC shall not waive or diminish any right of TBCC later to demand
and receive strict compliance therewith. Any waiver of any default shall not
waive or affect any other default, whether prior or subsequent, and whether or
not similar. None of the provisions of this Agreement or any other agreement now
or in the future executed by Borrower and delivered to TBCC shall be deemed to
have been waived by any act or knowledge of TBCC or its agents or employees, but
only by a specific written waiver signed by an authorized officer of TBCC and
delivered to Borrower.
10.9 COUNTERPARTS; TELECOPIED SIGNATURES. This Agreement and any waiver or
amendment hereto may be executed in counterparts and by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but both of which shall together constitute one and the same
instrument. This Agreement and each of the other Loan Documents and any notices
given in connection herewith or therewith may be executed and delivered by
telecopier or other facsimile transmission all with the same force and effect as
if the same was a fully executed and delivered original manual counterpart.
10.10 SEVERABILITY. In case any provision in or obligation under this
Agreement or any other Loan Document shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
10.11 JOINT AND SEVERAL LIABILITY. If Borrower consists of more than one
Person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.
10.12 MAXIMUM RATE. Notwithstanding anything to the contrary contained
elsewhere in this Agreement or in any other Loan Document, the parties hereto
hereby agree that all agreements between them under this Agreement and the other
Loan Documents, whether now existing or hereafter arising and whether written or
oral, are expressly limited so that in no contingency or event whatsoever shall
the amount paid, or agreed to be paid, to TBCC for the use, forbearance, or
detention of the money loaned to Borrower and evidenced hereby or thereby or for
the performance or payment of any covenant or obligation contained herein or
therein, exceed the maximum non-usurious interest rate, if any, that at any time
or from time to time may be contracted for, taken, reserved, charged or received
on the Obligations, under the laws of the State of Illinois (or the laws of any
other jurisdiction whose laws may be mandatorily applicable notwithstanding
other provisions of this Agreement and the other Loan Documents), or under
applicable federal laws which may presently or hereafter be in effect and which
allow a higher maximum non-usurious interest rate than under the laws of the
State of Illinois (or such other jurisdiction), in any case after taking into
account, to the extent permitted by applicable law, any and all relevant
payments or charges under this Agreement and the other Loan Documents executed
in connection herewith, and any available exemptions, exceptions and exclusions
(the "Highest Lawful Rate"). If due to any circumstance whatsoever, fulfillment
of any provisions of this Agreement or any of the other Loan Documents at the
time performance of such provision shall be due shall exceed the Highest Lawful
Rate, then, automatically, the obligation to be fulfilled shall be modified or
reduced to the extent necessary to limit such interest to the Highest Lawful
Rate, and if from any such circumstance TBCC should ever receive anything of
value deemed interest by applicable law which would exceed the Highest Lawful
Rate, such excessive interest shall be applied to the reduction of the principal
amount then outstanding hereunder or on account of any other then outstanding
Obligations and not to the payment of interest, or if such excessive interest
exceeds the principal unpaid balance then outstanding hereunder and such other
then outstanding Obligations, such excess shall be refunded to Borrower. All
sums paid or agreed to be paid to TBCC for the use, forbearance, or detention of
the Obligations and other indebtedness of Borrower to TBCC shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such indebtedness, until payment in full thereof, so
that the actual rate of interest on account of all such indebtedness does not
exceed the Highest Lawful Rate throughout the entire term of such indebtedness.
The terms and provisions of this Section shall control every other provision of
this Agreement, the other Loan Documents and all other agreements between the
parties hereto.
25
10.13 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement* [and]
[bracketed material stricken through on original] the other Loan Documents**
constitute the entire agreement between the parties, supersede any prior written
and verbal agreements between them, and shall bind and benefit the parties and
their respective successors and permitted assigns. THERE ARE NO ORAL
UNDERSTANDINGS, ORAL REPRESENTATIONS OR ORAL AGREEMENTS BETWEEN THE PARTIES
WHICH ARE NOT SET FORTH IN THIS AGREEMENT OR IN OTHER WRITTEN AGREEMENTS SIGNED
BY THE PARTIES IN CONNECTION HEREWITH.
*,
**, AND THAT CERTAIN MUTUAL CONFIDENTIALITY AGREEMENT DATED JANUARY 7,
1999, BETWEEN BORROWER AND TBCC
10.14 MUTUAL WAIVER OF JURY TRIAL. TBCC AND BORROWER EACH HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,
OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT; OR (II) ANY OTHER PRESENT OR
FUTURE INSTRUMENT OR AGREEMENT BETWEEN TBCC AND BORROWER; OR (III) ANY CONDUCT,
ACTS OR OMISSIONS OF TBCC OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH TBCC OR
BORROWER; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT
OR OTHERWISE.
10.15 RELEASE. At such time as Borrower shall completely satisfy all of the
Obligations and this Agreement shall be terminated, TBCC shall execute and
deliver to Borrower all assignments and other instruments as may be reasonably
necessary or proper to terminate TBCC's security interest in the Collateral,
subject to any disposition of the Collateral which may have been made by TBCC
pursuant to any of the Loan Documents. For the purpose of this Agreement, the
Obligations shall be deemed to continue if Borrower enters into any bankruptcy
or similar proceeding at a time when any amount paid to TBCC could be ordered to
be repaid as a preference or pursuant to a similar theory, and shall continue
until it is finally determined that no such repayment can be ordered.
BORROWER:
V-ONE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------
Title: Senior Vice President and
Chief Financial Officer
-------------------------
TBCC:
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /s/ Xxx Xxxxxxxx
---------------------
Title: Senior Vice President
---------------------
26
TBCC
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: V-ONE CORPORATION,
A DELAWARE CORPORATION
ADDRESS: 00000 XXXXXXX XXXXXXXXX, XXXXX 000
XXXXXXXXXX, XXXXXXXX 00000
DATE: FEBRUARY 24, 1999
This Schedule is an integral part of the Loan and Security Agreement between
TRANSAMERICA BUSINESS CREDIT CORPORATION ("TBCC") and the above borrower
("Borrower") of even date.
1. CREDIT LIMIT (Section 1.1): (A) TERM LOAN: The initial Loan (the "Term Loan") will be made in a
single disbursement in the amount of $3,000,000.
The Term Loan shall be evidenced by a Term Note in form and substance
satisfactory to TBCC. On the Term Loan Maturity Date (as defined below),
provided no Default or Event of Default exists, the Term Loan shall
convert to a Revolving Loan (but only to the extent of the Revolving
Loan Credit Limit, as set forth below). If, on the Term Loan Maturity
Date, the principal amount of the outstanding Term Loan exceeds the
Revolving Loan Credit Limit, Borrower shall repay the Term Loan in an
amount equal to such excess. Concurrently with and following the
conversion of the Term Loan to a Revolving Loan, Borrower shall be
entitled to borrow, repay and reborrow additional Revolving Loans to the
extent of the Revolving Loan Credit Limit set forth below. The Term Loan
may be prepaid at any time, together with accrued interest thereon and
any Acquisition Fee due hereunder.
(B) REVOLVING LOANS: Subject to the terms and conditions set forth
above, Revolving Loans shall be available in an amount not to exceed the
lesser of (1) or (2) below:
(1) $3,000,000 at any one time outstanding; or
(2) 80% of the amount of Borrower's Eligible Receivables (as defined in
Section 9.1(o) above).
Revolving Loans shall be evidenced by a Revolving Credit Note in the
form of Exhibit A hereto.
2. INTEREST (Section 2.1): 1. Interest on the Term Loan shall accrue at 12% per annum, as set
forth in the Term Note, PROVIDED, HOWEVER, that on the date of
disbursement of the Term Loan, TBCC shall be entitled to increase the
foregoing interest rate to the extent that the weekly average of the
interest rates for three-year U.S. Treasury securities (as published in
THE WALL STREET JOURNAL) exceeds 4.42%.
2. The interest rate for the Revolving Loans in effect throughout each
calendar month during the term of this Agreement shall be the highest
"Base Rate" in effect during such month, plus 2.5% per annum, provided
that the interest rate in effect in each month shall not be less than 9%
per annum, and provided that the interest charged for each month in
respect of the revolving credit facility shall be a minimum of $3,000,
regardless of the amount of the Obligations outstanding. Interest shall
be calculated on the basis of a 360-day year for the actual number of
days elapsed. "Base Rate" shall mean the highest prime, base or
equivalent rate of interest announced from time to time by Citibank,
N.A. (which may not be the lowest rate of interest charged by such
bank).
3. FEES (Section 2.2): LOAN FEE: $150,000, payable as follows: Upon the making of the Term
Loan, $90,000 of an aggregate fee of $150,000 (the "Loan Fee") shall be
due and payable. To effect payment of the aforesaid $90,000, TBCC shall
deduct $65,000 from the Term Loan proceeds and shall apply the $25,000
application fee paid by Borrower to TBCC to the balance. The remaining
$60,000 of the Loan Fee shall be due and payable upon the initial
Maturity Date, PROVIDED, HOWEVER, that if an Acquisition Fee (as defined
below) shall have been paid in full to TBCC prior to such date, the
remaining $60,000 fee shall be waived.
ACQUISITION FEE: If Borrower is acquired by any Person during the term
hereof pursuant to an Acquisition (as defined below), a $360,000 fee
(the "Acquisition Fee") shall be due and payable by Borrower to TBCC as
follows: (i) $180,000 at the time of such Acquisition (the "Acquisition
Date"), and (ii) $180,000 at the earliest of (x) one year following the
Acquisition Date, (y) the initial Maturity Date, or (z) prepayment in
full of (1) the Term Loan, or (2) the Revolving Loans (together with
termination hereof). For the purposes hereof, "Acquisition" means the
acquisition by any Person, in a negotiated transaction, of a majority of
the outstanding shares of Borrower's voting stock or a substantial
portion of Borrower's operating assets. (For the avoidance of doubt, it
is understood and agreed by TBCC and Borrower that the maximum
Acquisition Fee payable by Borrower hereunder shall be $360,000.)
Notwithstanding the payment of any Acquisition Fee, an Acquisition must
be made in compliance with this Agreement (including Section 6.2
hereof), or an Event of Default will result from such Acquisition.
TERMINATION FEE: In lieu of the Termination Fee referred to in Section
1.6, the balance of the Acquisition Fee shall be due and payable on the
effective date of termination (whether or not an Acquisition has been
consummated).
4. MATURITY DATE (Section 1.6): With respect to the Revolving Loans, AUGUST 31, 2000 (the "Maturity
Date"), subject to automatic renewal and early termination as provided
in Section 1.6 above. With respect to the Term Loan, the "Term Loan
Maturity Date" shall be AUGUST 31, 1999.
5. REPORTING (Section 5.10): Borrower shall provide TBCC with the following reports:
(a) MONTHLY FINANCIAL STATEMENTS. Monthly unaudited financial
statements, as soon as available, and in any event within 30 days
after the end of each month.
(b) MONTHLY RECEIVABLE AGINGS. Monthly Receivable agings, aged by
invoice date, within 10 days after the end of each month.
(c) MONTHLY PAYABLE AGINGS. Monthly accounts payable agings, aged by
invoice date, and outstanding or held check registers within 10 days
after the end of each month.
(d) MONTHLY INVENTORY REPORTS. 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 generally accepted accounting
principles) or such other inventory reports as are reasonably
requested by TBCC, all within 30 days after the end of each month.
-2-
(e) MONTHLY COMPLIANCE CERTIFICATES. As soon as available, but not later
than thirty days after the end of each month, a Compliance
Certificate, with an attached schedule of calculations demonstrating
compliance or indicating non-compliance with any Financial
Covenants.
(f) QUARTERLY FINANCIAL STATEMENTS. Quarterly unaudited financial
statements, as soon as available, and in any event within 45 days
after the end of each fiscal quarter of Borrower.
(g) ANNUAL FINANCIAL STATEMENTS. As soon as available, but not later
than 120 days after the end of the Borrower's fiscal year, (A)
Borrower's annual audited Financial Statements; (B) a comparison in
reasonable detail to the prior year's audited Financial Statements;
(C) the Auditors' opinion without Qualification, and a "Management
Letter"; (D) a narrative discussion of Borrower's financial
condition and results of operations and the liquidity and capital
resources for such fiscal year.
(h) OTHER REPORTS. Copies of the regular, periodical or special reports
(including Forms 10-K, 10-Q, and 8-K) that Borrower or any
subsidiary of Borrower may make to, or file with, the SEC, within 5
days after the earlier of the date such reports are filed or are
required to be filed with the SEC.
As to any information contained in materials furnished pursuant to
subsection (h), Borrower shall not be separately required to furnish
such information under subsections (f) or (g) , but the foregoing
shall not be in derogation of the obligation of Borrower to furnish
the information and materials described in subsections (f) and (g)
at the times specified therein.
6. BORROWER INFORMATION: (a) Prior Names of Borrower (Section 4.11): See Borrower Disclosure
Schedule.
(b) Prior Trade Names of Borrower (Section 4.11): See Borrower
Disclosure Schedule.
(c) Existing Trade Names of Borrower (Section 4.11): See Borrower
Disclosure Schedule.
(d) Other Places of Business and Locations of Collateral (Section 4.2).
See Borrower Disclosure Schedule.
(e) Litigation, etc. (Section 4.15): See Borrower Disclosure Schedule.
(f) Borrower Legal Counsel (Section 10.3): Xxxxxxxxxxx & Xxxxxxxx LLP,
0000 Xxxxxxxxxxxxx Xxxxxx, X.X., 0xx Xxxxx, Xxxxxxxxxx, X.X. 00000,
Attn: Xxxx X. Xxxx, Esq.
7. FACSIMILE NUMBERS: Borrower: (000) 000-0000
TBCC: 000-000-0000
8. CLOSING DEADLINE (SECTION 1.8): March 8, 1999.
9. ADDITIONAL CLOSING The following additional agreements, in form and substance satisfactory
CONDITIONS (SECTION 1.8): to TBCC and its counsel, shall be executed and delivered by Borrower as
as conditions precedent to closing:
(a) Streamlined Facility Agreement;
(b) Patent and Trademark Security Agreement; and
(c) Security Agreement in Copyrighted Works.
-3-
10. ADDITIONAL PROVISIONS: 1. COPYRIGHT REGISTRATION. Borrower agrees promptly, and in any event
not later than 10 Business Days after the date hereof (the
"Registration Completion Date"), to file applications for registration
with the U.S. Copyright Office in Washington, D.C. (the "Copyright
Office"), the software identified in Schedule B to the Security
Agreement in Copyrighted Works as software to be registered, and to
promptly provide TBCC with evidence of such filings.. Borrower will,
on an ongoing basis, promptly register any future unregistered material
copyrightable software, computer programs and other materials (each
such item individually a "Registrable Item", and collectively,
"Registrable Items") with the Copyright Office. Effective the
Registration Completion Date, no Loan request may be made with respect
to any Registrable Item Receivables if TBCC has not made its filing
with the Copyright Office with respect to the item giving rise to such
Registrable Item Receivables. For purposes hereof, a Registrable Item
will be considered material (i) if Borrower derives any revenues from
such Registrable Item in excess of (A) $100,000 in any fiscal quarter
or (B) $200,000 during the calendar year in which such fiscal quarter
occurs, (ii) such Registrable Item has a value in excess of $100,000,
(iii) such item consists of any derivative work for which Borrower
seeks compensation or receives economic benefit in excess of (C)
$100,000 in any fiscal quarter or (D) $200,000 during the calendar year
in which such fiscal quarter occurs, or (iv) if, in connection with the
sale or disposition of such Registrable Item, the absence of such
registration would have a Material Adverse Effect on the price or
marketability thereof.
2. NETWORK FLIGHT RECORDER, INC. SHARE CERTIFICATES. Borrower shall have
10 Business Days from the date hereof to arrange for the cancellation,
re-issuance, and delivery to TBCC of (i) the share certificates
representing Borrower's investment in Network Flight Recorder, Inc., and
(ii) stock powers in respect of such share certificates, executed in
blank.
Borrower: TBCC:
V-ONE CORPORATION TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxx Xxxxxxxx
------------------------- ---------------------
Title: Senior Vice President and Title: Senior Vice President
Chief Financial Officer ---------------------
-------------------------
-4-
TBCC
STREAMLINED FACILITY AGREEMENT
February 24, 1999
Ladies and Gentlemen:
This Streamlined Facility Agreement (this "Agreement") is entered
into between Transamerica Business Credit Corporation ("TBCC") , and V-ONE
Corporation ("Borrower"), in connection with the Loan and Security between TBCC
and Borrower dated February 24, 1999 (the "Loan Agreement"). (This Agreement,
the Loan Agreement, and all other written documents and agreements between TBCC
and Borrower are referred to herein collectively as the "Loan Documents".
Capitalized terms used but not defined in this Agreement, shall have the
meanings set forth in the Loan Agreement.)
This will confirm our agreement that the following provisions (the
"Streamlined Provisions") shall apply, effective on the date hereof, until
terminated as provided below:
1. Borrower will provide TBCC with a monthly Borrowing Base
Certificate, in such form as TBCC shall from time to time specify,
within 10 days after the end of each month, and TBCC shall not
require more frequent schedules of Receivables or other Collateral
reporting with respect to the Receivables, except for the
information required in connection with an advance request. In the
event, as of the end of any month, the total of all Loans and all
other Obligations exceeds the Credit Limit, Borrower shall
immediately pay the amount of the excess to TBCC.
2. Delivery of the proceeds of Receivables and other Collateral
within one Business Day after receipt, as called for by Section 1.4
of the Loan Agreement, will not be required.
3. TBCC will also not require any Blocked Account Agreement, as
called for by Section 1.8 of the Loan Agreement. In addition,
Borrower will not be required to provide TBCC with copies of
invoices to customers or shipping and delivery receipts, as called
for by Section 3.3(a) of the Loan Agreement, or to report customer
credits, returns and recoveries of merchandise as called for by
Section 3.3(b) of the Loan Agreement.
The Streamlined Provisions shall immediately terminate if any
Default or Event of Default occurs and is continuing.
Upon any termination of the Streamlined Provisions, Borrower shall,
then and thereafter, provide TBCC with such other or additional reporting of
Receivables as TBCC shall request under Section 3.3(a) of the Loan Agreement,
comply in all respects with Section 3.3(b) of the Loan Agreement, and deliver
all proceeds of Receivables and other Collateral to TBCC, within one Business
Day after receipt, as called for by Section 1.4 of the Loan Agreement.
Additionally, Borrower and its bank shall execute and deliver a Blocked Account
Agreement, in form and substance satisfactory to TBCC.
Please confirm your agreement to the foregoing by signing the
enclosed copy of this Agreement and returning it to us.
Sincerely yours,
Transamerica Business Credit Corporation
By: /s/ Xxx Xxxxxxxx
---------------------
Title: Senior Vice President
---------------------
Acknowledged and Agreed:
V-ONE Corporation
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------
Title: Senior Vice President and
Chief Financial Officer
-------------------------
-2-
EXHIBIT A TO SCHEDULE TO LOAN AND SECURITY AGREEMENT
REVOLVING CREDIT NOTE
$3,000,000 CHICAGO, ILLINOIS ______________, 1999
FOR VALUE RECEIVED, V-ONE CORPORATION, a Delaware corporation having
its chief executive office and principal place of business at 00000 Xxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000 (the "Borrower"), hereby
unconditionally and absolutely promises to pay to the order of TRANSAMERICA
BUSINESS CREDIT CORPORATION, a Delaware corporation ("TBCC"), on the Maturity
Date, at TBCC's office at 0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx
00000, or at such other location as TBCC may from time to time designate, in
lawful money of the United States of America and in immediately available funds,
the principal amount equal to $3,000,000 or such greater or lesser amount as
represents the aggregate unpaid principal amount of all Loans made by TBCC to
the Borrower under the revolving credit facility made available pursuant to the
Loan and Security Agreement between TBCC and Borrower dated February 24, 1999
(the "Loan Agreement"). The Borrower further promises to pay interest in like
money and funds at TBCC's office specified above (or at such other location as
TBCC may from time to time designate) on the unpaid principal amount hereof from
time to time outstanding from and including the date hereof until paid in full
(both before and after judgment) at the rates and on the dates set forth in the
Loan Agreement; provided, however, that following the occurrence and during the
continuance of any Event of Default, the interest rate hereunder shall be
increased by two percent per annum. All capitalized terms used herein which are
not defined herein shall have the meanings ascribed to such terms in the Loan
Agreement.
Whenever any payment to be made hereunder shall be stated to be due on a
day that is not a Business Day, the payment may be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the amount of interest due hereunder.
This Note is entitled to the benefit of all terms and conditions of, and
the security of all security interests, liens, mortgages, deeds of trust and
rights granted pursuant to, the Loan Agreement and the other Loan Documents, and
is subject to optional and mandatory prepayment as provided therein.
Upon the occurrence of any one or more Events of Default, all amounts then
remaining unpaid on this Note may be declared to be or may automatically become
immediately due and payable as provided in the Loan Agreement.
The Borrower acknowledges that the holder of this Note may assign,
transfer or sell all or a portion of its rights and interests to and under this
Note to one or more Persons as provided in the Loan Agreement and that such
Persons shall thereupon become vested with all of the rights and benefits of
TBCC in respect hereof as to all or that portion of this Note which is so
assigned, transferred or sold.
In the event of any conflict between the terms hereof and the terms and
provisions of the Loan Agreement, the terms and provisions of the Loan Agreement
shall control.
The Borrower and all other parties that at any time may be liable hereupon
in any capacity, jointly or severally, waive presentment, demand for payment,
protest and notice of dishonor of this Note and authorize the holder hereof,
without notice, to increase or decrease the rate of interest on any amount owing
under this Note in accordance with the Loan Agreement. The Borrower further
waives promptness, diligence, notice of acceptance and any other notice with
respect to any of the Obligations and any requirement that TBCC exhaust any
rights or take any action against any other Person or any Collateral. The
Borrower further hereby waives notice of or proof of reliance by TBCC upon this
Note, and the Obligations shall conclusively be deemed to have been created,
contracted, incurred, renewed, extended, amended or waived in reliance upon this
Note. The Borrower shall make all payments hereunder and under the Loan
Agreement without defense, offset or counterclaim. No failure to exercise and no
delay in exercising any rights hereunder on the part of the holder hereof shall
operate as a waiver of such rights. This Note may not be changed orally, but
only by an agreement in writing, which is signed by the party or parties against
whom enforcement of any waiver, change, modification or discharge is sought.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS NOTE AND THE OTHER
LOAN DOCUMENTS AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS NOTE,
WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY
THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) AND DECISIONS
OF THE STATE OF ILLINOIS.
ALL DISPUTES ARISING UNDER OR IN CONNECTION WITH THIS NOTE AND ANY OTHER
LOAN DOCUMENT BETWEEN THE BORROWER AND TBCC, WHETHER SOUNDING IN CONTRACT, TORT,
EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL COURTS LOCATED
IN CHICAGO, ILLINOIS, AND THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE TAKEN;
PROVIDED, HOWEVER, THAT TBCC SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, TO PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN ANY LOCATION
REASONABLY SELECTED BY TBCC IN GOOD FAITH TO ENABLE TBCC TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF TBCC
[RESERVED] THE BORROWER WAIVES ANY OBJECTION THAT THE BORROWER MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH TBCC HAS COMMENCED A PROCEEDING, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON
CONVENIENS.
THE BORROWER HEREBY IRREVOCABLY DESIGNATES CT CORPORATION SYSTEM, 0000
XXXXXX XXXXXX, XXXXXXXXXX, XXXXXXXX 00000, AS THE DESIGNEE AND AGENT OF THE
BORROWER TO RECEIVE, FOR AND ON BEHALF OF THE BORROWER, SERVICE OF PROCESS IN
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS NOTE OR ANY OTHER LOAN
DOCUMENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT AT
ITS ADDRESS WILL BE PROMPTLY FORWARDED BY MAIL TO THE BORROWER AND ITS LEGAL
COUNSEL DESIGNATED IN THE SCHEDULE, BUT THE FAILURE OF THE BORROWER OR SUCH
LEGAL COUNSEL TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF
SUCH PROCESS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF TBCC TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
THE BORROWER AND, BY ITS ACCEPTANCE HEREOF, TBCC EACH HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,
OR IN ANY WAY RELATING TO: (I) THIS NOTE; OR (II) ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN TBCC AND BORROWER; OR (III) ANY CONDUCT, ACTS OR
OMISSIONS OF TBCC OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH TBCC OR BORROWER; IN EACH
OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
V-ONE CORPORATION
By:
---------------------------------
Title:
---------------------------------
-2-
SCHEDULE
TO REVOLVING CREDIT NOTE
DATED _________, 1999
OF V-ONE CORPORATION TO
TRANSAMERICA BUSINESS CREDIT CORPORATION
Amount of Unpaid Principal Notation
Date Amount of Loan Interest Rate Principal Paid Balance Made by
---- -------------- ------------- -------------- ---------------- ---------
-3-
TERM NOTE
$3,000,000 CHICAGO, ILLINOIS FEBRUARY 24, 1999
FOR VALUE RECEIVED, V-ONE CORPORATION, a Delaware corporation having its
chief executive office and principal place of business at 00000 Xxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000 (the "Borrower"), hereby
unconditionally and absolutely promises to pay to the order of TRANSAMERICA
BUSINESS CREDIT CORPORATION, a Delaware corporation ("TBCC"), at TBCC's office
at 0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000, or at such other
location as TBCC may from time to time designate, in lawful money of the United
States of America and in immediately available funds, the principal amount equal
to $3,000,000 on August 31, 1999 (the "Term Loan Maturity Date"). On the Term
Loan Maturity Date the entire unpaid principal balance of this Note, plus any
and all accrued and unpaid interest, shall be due and payable. The Borrower
further promises to pay interest in like money and funds at TBCC's office
specified above (or at such other location as TBCC may from time to time
designate) on the unpaid principal amount hereof from time to time outstanding
from and including the date hereof until paid in full (both before and after
judgment), on the first Business Day of each month, and on the Term Loan
Maturity Date, at a rate equal to 12.53% per annum, and provided further that
following the occurrence and during the continuance of any Event of Default, the
interest rate hereunder shall be increased by two percent per annum. Interest
shall be calculated on the basis of a 360-day year for the actual number of days
elapsed. All capitalized terms used herein which are not defined herein shall
have the meanings ascribed to such terms in the Loan and Security Agreement
between TBCC and Borrower dated February 24, 1999 (the "Loan Agreement").
Whenever any payment to be made hereunder shall be stated to be due on a
day that is not a Business Day, the payment may be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the amount of interest due hereunder.
This Note is entitled to the benefit of all terms and conditions of, and
the security of all security interests, liens, mortgages, deeds of trust and
rights granted pursuant to, the Loan Agreement and the other Loan Documents, and
is subject to optional and mandatory prepayment as provided therein.
Upon the occurrence of any one or more Events of Default, all amounts then
remaining unpaid on this Note may be declared to be or may automatically become
immediately due and payable as provided in the Loan Agreement.
The Borrower acknowledges that the holder of this Note may assign,
transfer or sell all or a portion of its rights and interests to and under this
Note to one or more Persons as provided in the Loan Agreement and that such
Persons shall thereupon become vested with all of the rights and benefits of
TBCC in respect hereof as to all or that portion of this Note which is so
assigned, transferred or sold.
In the event of any conflict between the terms hereof and the terms and
provisions of the Loan Agreement, the terms and provisions of the Loan Agreement
shall control.
The Borrower and all other parties that at any time may be liable hereupon
in any capacity, jointly or severally, waive presentment, demand for payment,
protest and notice of dishonor of this Note and authorize the holder hereof,
without notice, to increase or decrease the rate of interest on any amount owing
under this Note in accordance with the Loan Agreement. The Borrower further
waives promptness, diligence, notice of acceptance and any other notice with
respect to any of the Obligations and any requirement that TBCC exhaust any
rights or take any action against any other Person or any Collateral. The
Borrower further hereby waives notice of or proof of reliance by TBCC upon this
Note, and the Obligations shall conclusively be deemed to have been created,
contracted, incurred, renewed, extended, amended or waived in reliance upon this
Note. The Borrower shall make all payments hereunder and under the Loan
Agreement without defense, offset or counterclaim. No failure to exercise and no
delay in exercising any rights hereunder on the part of the holder hereof shall
operate as a waiver of such rights. This Note may not be changed orally, but
only by an agreement in writing, which is signed by the party or parties against
whom enforcement of any waiver, change, modification or discharge is sought.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS NOTE AND THE OTHER
LOAN DOCUMENTS AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS NOTE,
WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY
THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) AND DECISIONS
OF THE STATE OF ILLINOIS.
ALL DISPUTES ARISING UNDER OR IN CONNECTION WITH THIS NOTE AND ANY OTHER
LOAN DOCUMENT BETWEEN THE BORROWER AND TBCC, WHETHER SOUNDING IN CONTRACT, TORT,
EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL COURTS LOCATED
IN CHICAGO, ILLINOIS, AND THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE TAKEN;
PROVIDED, HOWEVER, THAT TBCC SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, TO PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN ANY LOCATION
REASONABLY SELECTED BY TBCC IN GOOD FAITH TO ENABLE TBCC TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF TBCC.
[RESERVED] THE BORROWER WAIVES ANY OBJECTION THAT THE BORROWER MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH TBCC HAS COMMENCED A PROCEEDING, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON
CONVENIENS.
THE BORROWER HEREBY IRREVOCABLY DESIGNATES CT CORPORATION SYSTEM, 0000
XXXXXX XXXXXX, XXXXXXXXXX, XXXXXXXX 00000, AS THE DESIGNEE AND AGENT OF THE
BORROWER TO RECEIVE, FOR AND ON BEHALF OF THE BORROWER, SERVICE OF PROCESS IN
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS NOTE OR ANY OTHER LOAN
DOCUMENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT AT
ITS ADDRESS WILL BE PROMPTLY FORWARDED BY MAIL TO THE BORROWER AND ITS LEGAL
COUNSEL DESIGNATED IN THE SCHEDULE, BUT THE FAILURE OF THE BORROWER OR SUCH
LEGAL COUNSEL TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF
SUCH PROCESS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF TBCC TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
THE BORROWER AND, BY ITS ACCEPTANCE HEREOF, TBCC EACH HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,
OR IN ANY WAY RELATING TO: (I) THIS NOTE; OR (II) ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN TBCC AND BORROWER; OR (III) ANY CONDUCT, ACTS OR
OMISSIONS OF TBCC OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH TBCC OR BORROWER; IN EACH
OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
V-ONE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------
Senior Vice President and
Chief Financial Officer
-------------------------
-2-
NOTICE OF SECURITY INTEREST
February 24, 1999
Certified Mail, Return Receipt Requested
Citibank, F.S.B.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Ms. Xxxxx Xxxxxx, Branch Manager
Re: V-ONE CORPORATION
Ladies and Gentlemen:
Notice is hereby given that your above-named customer has granted a
security interest in all of its present and future deposit accounts maintained
with your institution, general and special, and of every other kind, to:
Transamerica Business Credit
Corporation
Technology Finance Division
00 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000-0000
Please contact the undersigned at 000-000-0000 if you have any questions
about this matter.
Sincerely yours,
Transamerica Business Credit Corporation
By: /s/ Xxx Xxxxxxxx
---------------------
Title: Senior Vice President
---------------------
Acknowledged and Agreed:
V-ONE Corporation
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------
Title: Senior Vice President and
Chief Financial Officer
-------------------------
Citibank, F.S.B.
By:
----------------------------
Title:
----------------------------
