EXHIBIT 10.4
LOAN AGREEMENT
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THIS LOAN AGREEMENT ("Agreement"), dated as of the 28th day of June, 1996,
is made and entered into on the terms and conditions hereinafter set forth, by
and between SOFTSENSE COMPUTER PRODUCTS, INC., a Georgia corporation
("Borrower"), and SIRROM CAPITAL CORPORATION, a Tennessee corporation
("Lender").
RECITALS:
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WHEREAS, Borrower has requested that Lender make available to Borrower a
term loan in the original principal amount of Three Million Dollars and
No/100ths Dollars ($3,000,000.00) (the "Loan") on the terms and conditions
hereinafter set forth, and for the purpose(s) hereinafter set forth; and
WHEREAS, in order to induce Lender to make the Loan to Borrower, Borrower
has made certain representations to Lender; and
WHEREAS, Lender, in reliance upon the representations and inducements of
Borrower, has agreed to make the Loan upon the terms and conditions hereinafter
set forth.
AGREEMENT:
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NOW, THEREFORE, in consideration of the agreement of Lender to make the
Loan, the mutual covenants and agreements hereinafter set forth, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
ARTICLE 1
THE LOAN
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1.1 Evidence of Loan Indebtedness and Repayment. Subject to the terms and
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conditions hereof, Lender shall make the Loan to Borrower by wire transfer in
immediately available funds. The Loan shall be evidenced by a Secured
Promissory Note in the original principal amount of Three Million and No/100ths
Dollars ($3,000,000.00), substantially in the form of Exhibit A attached hereto
and incorporated herein by this reference (the "Note"), dated as of the date
hereof, executed by Borrower, in favor of Lender. The Loan shall be payable in
accordance with the terms of the Note. The Note, this Agreement and any other
instruments and documents executed by Borrower, any guarantor of Borrower, or
any shareholder of Borrower, now or hereafter evidencing, securing or in any way
related to the indebtedness evidenced by the Note are herein individually
referred to as a "Loan Document" and collectively referred to as the "Loan
Documents."
1.2 Processing Fee. Borrower shall pay a processing fee of $75,000 to
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Lender at closing.
1.3 Purpose(s) of Loan and Use of Proceeds. The purposes of the Loan
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shall be to provide working capital to Borrower, and to pay all costs and
expenses incurred by the parties hereto in connection with the making and
documenting of the Loan, including attorneys' fees and expenses. The proceeds
of the Loan shall not be used for any other purpose.
1.4 Prepayment. Borrower may prepay the indebtedness evidenced by the
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Note in whole or in part at any time and from time to time without premium or
penalty.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
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2.1 Borrower's Representations. Borrower hereby represents and warrants
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to Lender as follows:
(a) Corporate Status. Borrower is a corporation duly organized,
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validly existing and in good standing under the laws of the State of
Georgia; and has the corporate power to own and operate its properties, to
carry on its business as now conducted and to enter into and to perform its
obligations under this Agreement and the other Loan Documents to which it
is a party. Borrower is duly qualified to do business and in good standing
in Georgia and each other state in which a failure to be so qualified and
in good standing would have a material adverse effect on (a) the property,
business, operations or financial condition of Borrower and its
Subsidiaries (as hereafter defined) taken as a whole or (b) the ability of
Borrower to perform its obligations under the Loan Documents (collectively,
a "Material Adverse Effect").
(b) Subsidiaries. Schedule 2.1(b) hereto is a complete list of each
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corporation, partnership, joint venture, limited liability company or other
business organization (the "Subsidiary" or, with respect to all such
organizations, the "Subsidiaries") in which Borrower or any Subsidiary
owns, directly or indirectly, any capital stock or other equity interest,
or with respect to which Borrower or any Subsidiary, alone or in
combination with others, is in a control position, which list shows the
jurisdiction of incorporation or other organization and the percentage of
stock or other equity interest of each Subsidiary owned by Borrower. Each
Subsidiary which is a corporation is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation
and is duly qualified to transact business as a foreign corporation and is
in good standing in the jurisdictions listed in Schedule 2.1(b), which are
the only jurisdictions where the properties owned or leased or the business
transacted by it makes such licensing or qualification to do business as a
foreign corporation necessary, and no other jurisdiction has demanded,
requested or otherwise indicated that (or inquired
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whether) it is required so to qualify. Each Subsidiary which is not a
corporation is duly organized and validly existing under the laws of the
jurisdiction of its organization. The outstanding capital stock of each
Subsidiary which is a corporation is validly issued, fully paid and
nonassessable. Borrower and the Subsidiaries have good and valid title to
the equity interests in the Subsidiaries shown as owned by each of them on
Schedule 2.1(b), free and clear of all liens, claims, charges,
restrictions, security interests, equities, proxies, pledges or
encumbrances of any kind other than Permitted Liens (as hereafter defined)
and other than as set forth on Schedule 2.1(b). Except where otherwise
indicated herein or unless the context otherwise requires, any reference to
Borrower herein shall include Borrower and all of its Subsidiaries.
(c) Authorization. Borrower has full legal right, power and authority
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to conduct its business and affairs. Borrower has full legal right, power
and authority to enter into and perform its obligations under the Loan
Documents, without the consent or approval of any other person, firm,
governmental agency or other legal entity. The execution and delivery of
this Agreement, the borrowing hereunder, the execution and delivery of each
Loan Document to which Borrower is a party, and the performance by Borrower
of its obligations thereunder are within the corporate powers of Borrower
and have been duly authorized by all necessary corporate action properly
taken, have received all necessary governmental approvals, if any were
required, and do not and will not contravene or conflict with any material
provision of law, any applicable judgment, ordinance, regulation or order
of any court or governmental agency, the articles of incorporation or
bylaws of Borrower, or any material agreement binding upon Borrower. The
officer(s) executing this Agreement, the Note and all of the other Loan
Documents to which Borrower is a party are duly authorized to act on behalf
of Borrower.
(d) Validity and Binding Effect. This Agreement and the other Loan
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Documents are the legal, valid and binding obligations of Borrower,
enforceable in accordance with their respective terms, subject to
limitations imposed by bankruptcy, insolvency, moratorium or other similar
laws affecting the rights of creditors generally or the application of
general equitable principles.
(e) Capitalization. As of the date hereof, the authorized capital
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stock of Borrower consists solely of 30,000,000 shares of capital stock
with 20,000,000 shares designated no par value per share ("Voting Common
Stock"), of which 6,857,132 shares are issued and outstanding (the "Voting
Common Shares") and 1,050,601 shares of which shall be reserved for
issuance upon exercise of the Stock Purchase Warrant dated as of the date
hereof and issued to Lender (the "Warrant") and with 10,000,000 shares
designated as Class A Common Stock, no par value per share ("Class A Common
Stock") (Voting Common Stock and Class A Common Stock are sometimes
referred to herein collectively as "Common Stock"), of which 1,142,889
shares are issued and outstanding ("Class A Shares") (the Voting Common
Shares and the Class A Shares are sometimes referred to herein collectively
as the "Shares"); provided, however, that the number of shares reserved for
issuance upon exercise of
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the Warrant shall be increased from time to time in accordance with the
terms of the Warrant. As of the date hereof, Borrower shall not have
outstanding any stock or securities convertible or exchangeable for any
shares of its Common Stock or containing any profit participation features,
nor shall it have outstanding any rights or options to subscribe for or to
purchase its Common Stock or any stock or securities convertible into or
exchangeable for its Common Stock or any stock appreciation rights or
phantom stock plans, except as set forth on Schedule 2.1(e) and for the
Warrant. Schedule 2.1(e) accurately sets forth the following with respect
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to all outstanding options and rights to acquire the Common Stock from
Borrower: (i) the total number of shares issuable upon exercise of all
outstanding options, (ii) the range of exercise prices for all such
outstanding options, (iii) the number of shares issuable, the exercise
price and the expiration date for each such outstanding option and (iv)
with respect to all outstanding options, warrants and rights to acquire
Borrower's capital stock other than the Warrant, the holder, the number of
shares covered, the exercise price and the expiration date. As of the date
hereof, Borrower shall not be subject to any obligation (contingent or
otherwise) to repurchase, redeem, retire or otherwise acquire any shares of
its capital stock or any warrants, options or other rights to acquire its
capital stock, except as set forth in the Warrant or on Schedule 2.1(e). As
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of the date hereof, all of the outstanding shares of Borrower's capital
stock shall be validly issued, fully paid and nonassessable. Except as set
forth on Schedule 2.1(e), there are no statutory or contractual preemptive
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rights, rights of first refusal, anti-dilution rights or any similar
rights, held by stockholders or option holders of Borrower, with respect to
the issuance of the Warrant or the issuance of the Common Stock upon
exercise of the Warrant. All such rights granted in the documents listed
on Schedule 2.1(e) have been effectively waived with regard to the issuance
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of the Warrant, the exercise of the Warrant and the issuance of the Common
Stock upon exercise of the Warrant. Assuming the accuracy of certain
representations to be made by the holder of the Warrant, Borrower has not
violated any applicable federal or state securities laws in connection with
the offer, sale or issuance of any of its capital stock, and the offer,
sale and issuance of the Warrant hereunder does not require registration
under the Securities Act of 1933, as amended or any applicable state
securities laws. To the best of Borrower's knowledge, there are no
agreements among Borrower's stockholders with respect to any other aspect
of Borrower's affairs, except as set forth on Schedule 2.1(e).
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(f) Trademarks, Patents, Etc. Schedule 2.1(f) is an accurate and
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complete list of all patents, trademarks, tradenames, trademark
registrations, service names, service marks, copyrights, licenses, formulas
and applications therefor owned by Borrower or used or required by Borrower
in the operation of its business, title to each of which is, except as set
forth in Schedule 2.1(f) hereto, held by Borrower free and clear of all
adverse claims, liens, security agreements, restrictions or other
encumbrances other than Permitted Liens. To the knowledge of Borrower,
there is no infringement action, lawsuit, claim or complaint which asserts
that Borrower's operations violate or infringe the rights or the trade
names, trademarks, trademark
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registration, service name, service xxxx or copyright of others with
respect to any apparatus or method of Borrower or any adversely held
trademark, trade name, trademark registration, service name, service xxxx
or copyright, nor is Borrower in any way making use of any confidential
information or trade secrets of any person except with the consent of such
person.
(g) No Conflicts. Consummation of the transactions hereby
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contemplated and the performance of the obligations of Borrower under and
by virtue of the Loan Documents will not result in any breach of, or
constitute a default under, any mortgage, security deed or agreement, deed
of trust, lease, bank loan or credit agreement, corporate charter or
bylaws, agreement or certificate of limited partnership, partnership
agreement, license, franchise or any other instrument or agreement to which
Borrower is a party or by which Borrower, or its respective properties may
be bound or affected which, individually or in the aggregate, could have a
Material Adverse Effect or to which Borrower has not obtained an effective
waiver.
(h) Litigation. There are no actions, suits or proceedings pending,
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or, to the knowledge of Borrower, threatened, against or affecting Borrower
or involving the validity or enforceability of any of the Loan Documents at
law or in equity, or before any governmental or administrative agency which
if adversely determined could have a Material Adverse Effect; and to
Borrower's knowledge, Borrower is not in default with respect to any order,
writ, injunction, decree or demand of any court or any governmental
authority.
(i) Financial Statements. The financial statements of Borrower, dated
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April 30, 1996, attached hereto as Schedule 2.1(i)(A), are true and correct
in all material respects have been prepared on the basis of accounting
principles consistently applied, and fairly present the financial condition
of Borrower as of the date(s) thereof. No material adverse change has
occurred in the financial condition of Borrower since the date(s) thereof,
and no additional borrowings have been made by Borrower since the date(s)
thereof other than as set forth on Schedule 2.1(i)(B).
(j) Other Agreements; No Defaults. Borrower is not a party to
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indentures, loan or credit agreements, leases or other agreements or
instruments, or subject to any articles of incorporation or corporate
restrictions that could have a Material Adverse Effect. Borrower is not in
default in any respect in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any agreement or
instrument material to its business to which it is a party, including but
not limited to this Agreement and the other Loan Documents where such
default, individually or in the aggregate with any other defaults, could
reasonably be expected to have a Material Adverse Effect, and no other
default or event has occurred and is continuing that with notice or the
passage of time or both would constitute a default or event of default
under any of same.
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(k) Compliance With Law. Borrower has obtained all material
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licenses, permits and approvals and authorizations necessary or required in
order to conduct its business and affairs as heretofore conducted and as
hereafter intended to be conducted except where the failure to have any
such license, permit, approval or authorization would not have a Material
Adverse Effect. To Borrower's knowledge, Borrower is in compliance with all
laws, regulations, decrees and orders applicable to it (including but not
limited to laws, regulations, decrees and orders relating to environmental,
occupational and health standards and controls, antitrust, monopoly,
restraint of trade or unfair competition), except to the extent that
noncompliance, in the aggregate, cannot reasonably be expected to have a
Material Adverse Effect.
(l) Debt. Schedule 2.1(l) is a complete and correct list of all
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credit agreements, indentures, purchase agreements, promissory notes and
other evidences of indebtedness, guaranties, capital leases and other
instruments, agreements and arrangements presently in effect providing for
or relating to extensions of credit (including agreements and arrangements
for the issuance of letters of credit or for acceptance financing) in
respect of which Borrower, or any of the properties thereof is in any
manner directly or contingently obligated; and the maximum principal or
face amounts of the credit in question that are outstanding and that can be
outstanding are correctly stated, and all liens of any nature given or
agreed to be given as security therefor are correctly described or
indicated in such Schedule.
(m) Taxes. Except as set forth on Schedule 2.1(m), Borrower has
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filed or caused to be filed all tax returns that to Borrower's knowledge
are required to be filed (except for returns that have been appropriately
extended), and has paid, or will pay when due, all taxes shown to be due
and payable on said returns and all other taxes, impositions, assessments,
fees or other charges imposed on them by any governmental authority, agency
or instrumentality, prior to any delinquency with respect thereto (other
than taxes, impositions, assessments, fees and charges currently being
contested in good faith by appropriate proceedings, for which appropriate
amounts have been reserved). To the knowledge of Borrower, no tax liens
have been filed against Borrower, or any of the property thereof.
(n) Small Business Concern. Borrower, together with its "affiliates"
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(as that term is defined in Title 13, Code of Federal Regulations, (S)
121.103), is a "small business concern" within the meaning of the Small
Business Investment Act of 1958, as amended, and the regulations
promulgated thereunder. The information set forth in the Small Business
Administration Forms 480, 652 and Part A of Form 1031 regarding Borrower
upon delivery, pursuant to Section 4.1 hereof, will be accurate and
complete in all material respects. Borrower does not presently engage in,
and it will not hereafter engage in, any activities which, and Borrower
will not, directly or indirectly, use the proceeds from the Loan for any
purpose for which a Small Business Investment Company is prohibited from
providing funds by the Small Business Investment Act and the regulations
thereunder, including Title 13, Code of Federal Regulations (S)107.720.
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(o) Certain Transactions. Except as set forth on Schedule 2.1(o)
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hereto, Borrower is not indebted, directly or indirectly, to any of its
shareholders, officers, or directors or to their respective spouses or
children, in any amount whatsoever; none of said shareholders, officers or
directors or any members of their immediate families, are indebted to
Borrower or have any direct or indirect ownership interest in any firm or
corporation with which Borrower has a business relationship, or any firm or
corporation which competes with Borrower, except that shareholders,
officers and/or directors of Borrower may own no more than 4.9% of
outstanding stock of publicly traded companies which may compete with
Borrower. No officer or director of Borrower or any member of their
immediate families, is, directly or indirectly, interested in any material
contract with Borrower. Borrower is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
(p) Statements Not False or Misleading. No representation or
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warranty given as of the date hereof by Borrower contained in this
Agreement or any schedule attached hereto or any statement in any document,
certificate or other instrument furnished or to be furnished by Borrower to
Lender pursuant hereto, taken as a whole, contains or will (as of the time
so furnished) contain any untrue statement of a material fact, or omits or
will (as of the time so furnished) omit to state any material fact which is
necessary in order to make the statements contained therein or herein, in
light of the circumstances under which they were made, not misleading.
(q) Margin Regulations. Borrower is not engaged in the business of
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extending credit for the purpose of purchasing or carrying margin stock.
No proceeds received pursuant to this Agreement will be used to purchase or
carry any equity security of a class which is registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended.
(r) Significant Contracts. Schedule 2.1(r) is a complete and correct
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list of all contracts, agreements and other documents pursuant to which
Borrower receives revenues in excess of $25,000 per fiscal year. To the
knowledge of Borrower, each such contract, agreement and other document is
in full force and effect as of the date hereof and Borrower knows of no
reason why such contracts, agreements and other documents would not remain
in full force and effect pursuant to the terms thereof.
(s) Environment. Borrower has duly complied with, and its business,
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operations, assets, equipment, property, leaseholds or other facilities are
in compliance with, the provisions of all federal, state and local
environmental, health, and safety laws, codes and ordinances, and all rules
and regulations promulgated thereunder, except to the extent that failure
to do so would not have a Material Adverse Effect. Borrower has been
issued and will maintain all required federal, state and local permits,
licenses, certificates and approvals relating to (1) air emissions; (2)
discharges to surface water or groundwater; (3) noise emissions; (4) solid
or liquid waste disposal; (5) the use, generation, storage, transportation
or disposal of toxic or hazardous substances or wastes (which shall include
any and all
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such materials listed in any federal, state or local law, code or ordinance
and all rules and regulations promulgated thereunder as hazardous or
potentially hazardous); or (6) other environmental, health or safety
matters, except to the extent that failure to do so would not have a
Material Adverse Effect. Borrower has not received notice of, or knows of,
facts which might reasonably be deemed to constitute a material violation
of any federal, state or local environmental, health or safety laws, codes
or ordinances, and any rules or regulations promulgated thereunder with
respect to its businesses, operations, assets, equipment, property,
leaseholds, or other facilities. To the knowledge of Borrower, except in
accordance with a valid governmental permit, license, certificate or
approval, there has been no emission, spill, release or discharge into or
upon (1) the air; (2) soils, or any improvements located thereon; (3)
surface water or groundwater; or (4) the sewer, septic system or waste
treatment, storage or disposal system servicing the premises, of any toxic
or hazardous substances or wastes at or from any premises owned or leased
by Borrower in connection with the operation of its business. Borrower has
not received any complaint, order, directive, claim, citation or notice by
any governmental authority or any person or entity with respect to (1) air
emissions; (2) spills, releases or discharges to soils or improvements
located thereon, surface water, groundwater or the sewer, septic system or
waste treatment, storage or disposal systems servicing the premises; (3)
noise emissions; (4) solid or liquid waste disposal; (5) the use,
generation, storage, transportation or disposal of toxic or hazardous
substances or waste; or (6) other environmental, health or safety matters
affecting Borrower or its business, operations, assets, equipment,
property, leaseholds or other facilities. Borrower has no indebtedness,
obligation or liability (absolute or contingent, matured or not matured),
with respect to the storage, treatment, cleanup or disposal of any solid
wastes, hazardous wastes or other toxic or hazardous substances (including
without limitation any such indebtedness, obligation, or liability with
respect to any current regulation, law or statute regarding such storage,
treatment, cleanup or disposal).
(t) Fees; Commissions. Except as set forth in Schedule 2.1(t),
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Borrower has not agreed to pay any finder's fee, commission, origination
fee (except for the processing and commitment fees due pursuant to Section
1.2) or other similar fee or charge to any person or entity with respect to
the Loan and investment transactions contemplated hereunder.
(u) ERISA. Borrower is in compliance in all material respects with
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all applicable provisions of ERISA (as defined in Section 3.11 hereof).
Neither a reportable event nor a prohibited transaction (as defined in
ERISA) has occurred and is continuing with respect to any Plan (as defined
in Section 3.11 hereof); no notice of intent to terminate a Plan has been
filed nor has any Plan been terminated; no circumstances exist which
constitute grounds entitling the Pension Benefit Guaranty Corporation
(together with any entity succeeding to or all of its functions, the
"PBGC") to institute proceedings to terminate, or appoint a trustee to
administer, a Plan, nor has the PBGC instituted any such proceedings;
neither Borrower nor any commonly controlled entity (as defined in ERISA)
has completely or partially
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withdrawn from a multiemployer plan (as defined in ERISA); Borrower and
each commonly controlled entity has met its minimum funding requirements
under ERISA with respect to all of its Plans and the present fair market
value of all Plan property exceeds the present value of all vested benefits
under each Plan, as determined on the most recent valuation date of the
Plan and in accordance with the provisions of ERISA and the regulations
thereunder for calculating the potential liability of Borrower or any
commonly controlled entity to the PBGC or the Plan under Title IV of ERISA;
and neither Borrower nor any commonly controlled entity has incurred any
liability to the PBGC under ERISA.
(v) Title to Properties. Borrower has good, marketable and insurable
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title to, or valid leasehold interests in, all its real properties and good
title to its other assets, free and clear of all liens other than Permitted
Liens (as defined in Section 3.15 hereof) and the liens set forth on
Schedule 2.1(v).
(w) Material Adverse Effect. Since April 30, 1996, no event has
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occurred which has resulted or which Borrower reasonably believes could be
expected to result in a Material Adverse Effect. No default or event of
default under any other material agreement will occur as a result of the
transactions contemplated by this Agreement or by the Warrant.
(x) Financial Solvency. Borrower is not entering into the
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arrangements contemplated by this Agreement and the other Loan Documents
with actual intent to hinder, delay or defraud either present or future
creditors. On and as of the date hereof on a pro forma basis after giving
effect to the transactions contemplated by the Loan Documents and to all
debts incurred or to be created in connection herewith:
(i) the present fair salable value of the assets of Borrower
(on a going concern basis) will exceed the probable liability of
Borrower on its debts (including its contingent obligations);
(ii) Borrower has not incurred, nor does it intend to or
believe that it will incur, debts (including contingent obligations)
beyond its ability to pay such debts as such debts mature (taking into
account the timing and amounts of cash to be received from any source,
and of amounts to be payable on or in respect of debts); and the
amount of cash available to Borrower after taking into account all
other anticipated uses of funds is anticipated to be sufficient to pay
all such amounts on or in respect of debts, when such amounts are
required to be paid; and
(iii) Borrower will have sufficient capital with which to
conduct its present and proposed business and the property of Borrower
does not constitute unreasonably small capital with which to conduct
its current business at present levels of operations.
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For purposes of this Section 2.1(y) "debt" means any liability on a
(i) right to payment whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured; or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such a right to an equitable remedy is reduced to
judgment, fixed, contingent, unmatured, disputed, undisputed, secured, or
unsecured.
(y) Offering of Note and Warrant. Neither Borrower nor anyone acting
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on its behalf has offered the Note, the Warrant or any similar securities
for sale to, or solicited any offer to buy any of the same from, or
otherwise approached or negotiated in respect thereof, with, any person
other than Lender and not more than 35 other institutional investors.
Neither Borrower nor anyone acting on its behalf has taken, or will take,
any action which would subject the issuance or sale of the Note and Warrant
to Section 5 of the Securities Act of 1933, as amended, or the registration
or qualification provisions of the blue sky laws of any state.
(z) Registration Rights. Except as described in the Warrant,
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Borrower is not under any obligation to register under the Securities Act
of 1933, as amended, or the Trust Indenture Act of 1939, as amended, any of
its presently outstanding securities or any of its securities that may
subsequently be issued.
(aa) Employees. Borrower has no current labor problems or disputes
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which have resulted, or Borrower reasonably believes could reasonably be
expected to result in, Material Adverse Effect.
(ab) Issuance Taxes. All taxes imposed on Borrower in connection with
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the issuance, sale and delivery of the Note, the Warrant and the capital
stock issuable upon exercise of the Warrant have been or will be fully
paid, and all laws imposing such taxes have been or will be fully satisfied
by Borrower.
(ac) List of Deposit Institutions. Schedule 2.1(ac) hereto sets forth
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a true and complete list of all deposit institutions at which Borrower has
or maintains an account or deposits of any kind.
(ad) Locations and Names. Except as set forth on Schedule 2.1(ad)(A)
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Borrower has not, during the five years preceding the date of this
Agreement, been known as or used any other corporate, trade or fictitious
name, nor acquired all or substantially all of the assets, capital stock or
operating units of any person. Borrower has not, during the five years
preceding the date of this Agreement, had a business location at any
address other than addresses set forth on Schedule 2.1(ad)(B).
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ARTICLE 3
COVENANTS AND AGREEMENTS
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Borrower covenants and agrees that during the term of this Agreement:
3.1 Payment of Obligations. Borrower shall pay the indebtedness evidenced
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by the Note according to the terms thereof, and shall timely pay or perform, as
the case may be, all of the other obligations of Borrower to Lender, direct or
contingent, however evidenced or denominated, and however and whenever incurred,
including but not limited to indebtedness incurred pursuant to any present or
future commitment of Lender to Borrower, together with interest thereon, and any
extensions, modifications, consolidations and/or renewals thereof and any notes
given in payment thereof.
3.2 Financial Statements and Reports. Borrower shall furnish to Lender
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(i) as soon as practicable and in any event within ninety (90) days after the
end of each fiscal year of Borrower, a consolidated balance sheet of Borrower as
of the close of such fiscal year, a consolidated statement of earnings and
retained earnings of Borrower as of the close of such fiscal year and a
consolidated statement of cash flows for Borrower for such fiscal year, prepared
in accordance with generally accepted accounting principles consistently applied
("GAAP"), audited by an independent certified public accountant acceptable to
Lender and certified by an officer of Borrower and accompanied by a certificate
of the President of Borrower, stating that to the best of the knowledge of such
officer, Borrower has kept, observed, performed and fulfilled each covenant,
term and condition of this Agreement and the other Loan Documents during the
preceding fiscal year and that no Event of Default, as herein defined, has
occurred and is continuing (or if an Event of Default has occurred and is
continuing, specifying the nature of same, the period of existence of same and
the action Borrower has taken or proposes to take in connection therewith), (ii)
within fifteen business (15) days of the end of each calendar month, a
consolidated balance sheet of Borrower as of the close of such month and a
consolidated statement of earnings and retained earnings of Borrower as of the
close of such month, all in reasonable detail (including financial information
for the preceding six (6) months), and prepared substantially in accordance with
GAAP (except for the absence of footnotes and subject to year-end adjustments),
and (iii) with reasonable promptness, such other financial data as Lender may
reasonably request.
3.3 Maintenance of Books and Records; Inspection. Borrower shall
--------------------------------------------
maintain its books, accounts and records in accordance with GAAP, and after
reasonable notice from Lender, shall permit Lender, its officers, employees and
any professionals designated by Lender in writing, at Borrower's expense, to
visit, inspect and/or audit any of its properties, books and financial records,
and to discuss its accounts, affairs and finances with Borrower or the principal
officers of Borrower during reasonable business hours, all at such times as
Lender may reasonably request; provided that such visit, inspection and/or audit
shall not (i) occur more frequently than annually unless an Event of Default
shall have occurred and be continuing and (ii) no such visit, inspection and/or
audit shall materially interfere with the
11
conduct of Borrower's business. Borrower shall reimburse Lender for all
reasonable fees and costs incurred in connection with such visits, audits or
inspections.
3.4 Insurance. Without limiting any of the requirements of any of the
---------
other Loan Documents, Borrower shall maintain in amounts customary for entities
engaged in comparable business activity (i) to the extent required by applicable
law, worker's compensation insurance (or maintain a legally sufficient amount of
self insurance against worker's compensation liabilities, with adequate
reserves, under a plan approved by Lender, such approval not to be unreasonably
withheld or delayed) and (ii) fire and "all risk" casualty insurance on its
properties against such hazards and in at least such amounts as are customary in
Borrower's business. Borrower will make reasonable efforts to obtain and
maintain public liability insurance in an amount, and at a cost, deemed
reasonable to the Borrower's Board of Directors. At the request of Lender,
Borrower will deliver forthwith a certificate specifying the details of such
insurance in effect.
3.5 Taxes and Assessments. Borrower shall (i) file all tax returns and
---------------------
appropriate schedules thereto that are required to be filed under applicable
law, prior to the date of delinquency, (ii) pay and discharge all taxes,
assessments and governmental charges or levies imposed upon Borrower upon its
income and profits or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and (iii) pay all taxes, assessments and
governmental charges or levies that, if unpaid, might become a lien or charge
upon any of its properties; provided, however, that Borrower in good faith may
contest any such tax, assessment, governmental charge or levy described in the
foregoing clauses (ii) and (iii) so long as appropriate reserves are maintained
with respect thereto.
3.6 Corporate Existence. Borrower shall maintain its corporate existence
-------------------
and good standing in the state of its incorporation, and its qualification and
good standing as a foreign corporation in each jurisdiction in which such
qualification is necessary pursuant to applicable law.
3.7 Compliance with Law and Other Agreements. Except where the failure to
----------------------------------------
do so would not have a Material Adverse Effect, Borrower shall maintain its
business, operations and property owned or used in connection therewith in
compliance with (i) all applicable federal, state and local laws, regulations
and ordinances governing such business operations and the use and ownership of
such property, and (ii) all agreements, licenses, franchises, indentures and
mortgages to which Borrower is a party or by which Borrower or any of its
properties is bound. Without limiting the foregoing, Borrower shall pay all of
its indebtedness promptly in accordance with the terms thereof, if adversely
determined, could reasonably be expected to have a Material Adverse Effect.
3.8 Notice of Default. Borrower shall give written notice to Lender of
-----------------
the occurrence of any default, event of default or Event of Default under this
Agreement or any other Loan Document promptly upon the occurrence thereof.
12
3.9 Notice of Litigation. Borrower shall give notice, in writing, to
--------------------
Lender of (i) any actions, suits or proceedings instituted by any persons
whomsoever against Borrower, or affecting any of the assets of Borrower, wherein
the amount at issue is in excess of Twenty-Five Thousand and No/100ths Dollars
($25,000.00), and (ii) any dispute, not resolved within sixty (60) days of the
commencement thereof, between Borrower on the one hand and any governmental
regulatory body on the other hand, which dispute, if adversely determined, could
reasonably be expected to have a Material Adverse Effect.
3.10 Conduct of Business. Borrower will continue to engage in a business
-------------------
of the same general type and manner as conducted by it on the date of this
Agreement. Without Lender's prior written consent, Borrower shall not modify or
change any terms or conditions of any contracts and/or agreements to which
Borrower is a party on the date hereof which modification or change could
reasonably be expected to have a Material Adverse Effect.
3.11 ERISA Plan. If Borrower has in effect, or hereafter institutes, a
----------
pension plan that is subject to the requirements of Title IV of the Employee
Retirement Income Security Act of 1974, Pub. L. No. 93-406, September 2, 1974,
00 Xxxx. 000, 00 X.X.X.X. (S) 1001 et seq. (1975), as amended from time to time
------
("ERISA"), then the following warranty and covenants shall be applicable during
such period as any such plan (the "Plan") shall be in effect: (i) Borrower
hereby warrants that no fact that could reasonably be expected to constitute
grounds for the involuntary termination of the Plan, or for the appointment by
the appropriate United States District Court of a trustee to administer the
Plan, exists at the time of execution of this Agreement, (ii) Borrower hereby
covenants that throughout the existence of the Plan, Borrower's contributions
under the Plan will meet the minimum funding standards required by ERISA and
Borrower will not institute a distress termination of the Plan, and (iii)
Borrower covenants that it will send to Lender a copy of any notice of a
reportable event (as defined in ERISA) required by ERISA to be filed with the
Labor Department or the Pension Benefit Guaranty Corporation, at the time that
such notice is so filed.
3.12 Dividends, Distributions, Stock Rights, etc. Borrower shall not
--------------------------------------------
declare or pay any dividend of any kind (other than stock dividends payable to
all holders of any class of capital stock), in cash or in property, on any class
of the capital stock of Borrower, or purchase, redeem, retire or otherwise
acquire for value any shares of such stock, nor make any distribution of any
kind in cash or property in respect thereof, nor make any return of capital of
shareholders, nor make any payments in cash or property in respect of any stock
options, stock bonus or similar plan (except as required or permitted
hereunder), nor grant any preemptive rights with respect to the capital stock of
Borrower, without the prior written consent of Lender, except for (i) cash
dividends or distributions made to Borrower's shareholders in amounts not to
exceed federal and state tax liability owned by each such shareholder on account
of the net income of Borrower as long as the Borrower is and remains and
"electing small business corporation" for purposes of Subchapter S of the
Internal Revenue Code of 1986, as amended, (ii) scheduled payments to Xx.
Xxxxxxxx X. Xxxxxx pursuant to that certain Stock Repurchase Agreement dated as
of October 31, 1994, (iii) the exercise of Borrower's right to repurchase shares
held by Xx. Xxxxxx Xxxxxxxx at
13
a price not to exceed $1.88/per share; (iv) the exercise of the Borrower's
rights of first refusal and repurchase pursuant to the Borrower's rights of
first refusal and repurchase pursuant to the Borrower's 1995 Incentive Stock
Option Plan (up to but not exceeding $100,000 per year); provided that no
payments shall be made pursuant to the foregoing if at the time such payment is
to be made an Event of Default exists or existed within the previous six (6)
months.
3.13 Guaranties; Loans; Payment of Debt. Without Lender's prior express
----------------------------------
written consent, Borrower shall not guarantee nor be liable in any manner,
whether directly or indirectly, or become contingently liable after the date of
this Agreement in connection with the obligations or indebtedness of any person
or entity whatsoever, except for (i) the endorsement of negotiable instruments
payable to Borrower for deposit or collection in the ordinary course of
business, and (ii) guaranties of obligations of Subsidiaries incurred in the
ordinary course of business (other than guaranties with respect to money
borrower). Without Lender's prior express written consent, Borrower shall not
(i) make any loan, advance or extension of credit to any person other than in
the normal course of its business, or (ii) make any payment on any debt for
money borrowed (other than (A) regularly scheduled payments, without
acceleration, made in the ordinary course of business and (B) regularly
scheduled payments with respect to that certain Promissory Note issued by the
Borrower to Xx. Xxxxxxxx X. Xxxxxx).
3.14 Debt. Without the express prior written consent of Lender, Borrower
----
shall not create, incur, assume or suffer to exist indebtedness of any
description whatsoever, (excluding (i) the indebtedness evidenced by the Note,
(ii) the endorsement of negotiable instruments payable to Borrower for deposit
or collection in the ordinary course of business, (iii) indebtedness incurred in
the ordinary course of business (each of which, individually, does not exceed
$25,000), (iv) the indebtedness listed on Schedule 2.1(l) hereto, (v) purchase
money indebtedness incurred after the date hereof in an aggregate principal
amount at any time not exceeding $150,000, and (vi) additional indebtedness of
Borrower up to but not exceeding $150,000 at any time outstanding).
3.15 No Liens. Borrower shall not create, incur, assume or suffer to exist
--------
any lien, security interest, security title, mortgage, deed of trust or other
encumbrance upon or with respect to any of its properties, now owned or
hereafter acquired, except the following permitted liens (the "Permitted
Liens"):
(a) liens in favor of Lender;
(b) liens for taxes or assessments or other governmental charges or
levies if not yet due and payable;
(c) liens in connection with the leasing of equipment in favor of the
Lessor of such equipment;
(d) liens described on Schedule 2.1(l) hereto;
14
(e) carriers, warehousemen's, mechanic's materialmen's, repairmen's
or other like liens arising in the ordinary course of business which are
not overdue for a period of more than 60 days or which are being contested
in good faith;
(f) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(g) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of
business;
(h) easements, rights of way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on use
of property or minor imperfection in title thereto;
(i) additional liens upon real and/or personal property acquired
after the date hereof (by purchase, construction or otherwise), each of
which liens (a) existed on such property prior to the time of its
acquisition or (b) was created solely for the purposes of securing
indebtedness representing, or incurred to finance, refinance or refund, the
cost of such property;
(j) additional liens upon real and/or personal property created after
the date hereof, provided that the aggregate indebtedness secured thereby
and incurred on or after the date hereof shall not exceed $150,000 in the
aggregate at any time outstanding; and
(k) any, extension, renewal or replacement of the foregoing, provided
that the liens permitted hereunder shall not be permitted to spread to
cover any additional indebtedness or property (other than the substitution
of like property).
3.16 Mergers, Consolidations, Acquisitions and Sales. Except as set forth
-----------------------------------------------
on Schedule 3.16 hereto, without the prior written consent of Lender, Borrower
-------------
shall not (a) be a party to any merger, consolidation or corporate
reorganization, nor (b) purchase or otherwise acquire all or substantially all
of the assets or stock of, or any partnership or joint venture interest in, any
other person, firm or entity, nor (c) sell, transfer, convey, grant a security
interest in or lease all or any substantial part of its assets, nor (d) create
any Subsidiaries nor convey any of its assets to any Subsidiary.
3.17 Transactions With Affiliates. Except as set forth on Schedule 3.17
---------------------------- -------------
hereto, Borrower shall not enter into any transaction, including, without
limitation, the purchase, sale or exchange of property or the rendering of any
service, with any affiliate, except in the ordinary course of and pursuant to
the reasonable requirements of Borrower's business and upon fair and reasonable
terms no less favorable to Borrower than Borrower would obtain in a comparable
arm's length transaction with a person not an affiliate; provided that any
affiliate who is an
15
individual may serve as a director, officer or employee of Borrower or any of
its Subsidiaries and receive reasonable compensation for his or her service in
such capacity. For the purposes of this Section 3.17, "affiliate" shall mean a
person, corporation, partnership or other entity controlling, controlled by or
under common control with Borrower.
3.18 Environment. Borrower shall be and remain in compliance in all
-----------
material respects with the provisions of all federal, state and local
environmental, health, and safety laws, codes and ordinances, and all rules and
regulations issued thereunder; notify Lender promptly of any notice of a
hazardous discharge or environmental complaint received from any governmental
agency or any other party; notify Lender promptly of any hazardous discharge
from or affecting Borrower's premises; proceed with due diligence to contain and
remove the same, in compliance with all applicable laws; promptly pay any fine
or penalty assessed in connection therewith; permit Lender to inspect the
premises, to conduct tests thereon, and to inspect all books, correspondence,
and records pertaining thereto; and at Lender's request, and at Borrower's
expense, provide a report of a qualified environmental engineer, satisfactory in
scope, form, and content to Lender, and such other and further assurances
reasonably satisfactory to Lender that the condition has been corrected.
ARTICLE 4
CONDITIONS TO CLOSING
---------------------
4.1 Closing of the Loan. The obligation of Lender to fund the Loan on the
-------------------
date hereof (the "Closing Date") is subject to the fulfillment, on or prior to
the Closing Date, of each of the following conditions:
(a) Borrower shall have performed and complied in all material
respects with all of the covenants, agreements, obligations and conditions
required by this Agreement.
(b) Lender shall have received an opinion of the Borrower's counsel,
Xxxxx, Xxxxxxxx & Xxxxxxx, dated the Closing Date, in form and substance
satisfactory to Lender's counsel, Xxxxxxxxx & Xxxxxx, PLLC.
(c) Borrower shall have delivered to Lender the Note executed by
Borrower.
(d) Borrower shall have delivered to Lender a Stock Purchase Warrant
executed by Borrower, in a form acceptable to Lender.
(e) Borrower shall have delivered to Lender a Security Agreement
executed by Borrower (in form acceptable to Lender) and related UCC-1
Financing Statement(s) (in form acceptable to Lender) executed by Borrower.
(f) Borrower shall have delivered to Lender Pledge and Security
Agreements (all in a form acceptable to Lender) and related stock proxies,
stock powers, and stock certificates (all in form acceptable to Lender),
executed by each shareholder of
16
Borrower, respectively, and related stock pledge letters (all in form
acceptable to Lender) executed by Borrower.
(g) Borrower shall have delivered to Lender a Pledge and Security
Agreement (in a form acceptable to Lender) and related stock proxy, stock
power, and stock certificate (all in form acceptable to Lender), executed
by Borrower, and related stock pledge letter (in a form acceptable to
Lender) executed by Borrower's subsidiary.
(h) Borrower shall have delivered to Lender the Small Business
Administration Forms 480, 652 and 1031 (Parts A and B) completed by
Borrower.
(i) Borrower shall have delivered to Lender a Small Business
Administration Economic Impact Assessment completed by Borrower, in a form
acceptable to Lender.
(j) Borrower shall have delivered to Lender a Landlord's Consent and
Subordination of Lien, executed by Borrower's landlord, in a form
acceptable to Lender.
(k) Lender shall have received copies of the articles of
incorporation and other publicly filed organizational documents of
Borrower, certified by the Secretary of State or other appropriate public
official in the jurisdiction in which Borrower is incorporated.
(l) Lender shall have received certified (as of the date of this
Agreement) copies of all corporate action taken by Borrower, including
resolutions of its Board of Directors, authorizing the execution, delivery
and performance of the Loan Documents.
(m) Lender shall have received a certificate as to the legal
existence and good standing of Borrower, issued by the Secretary of State
or other appropriate public official in the jurisdiction in which Borrower
is incorporated.
(n) Lender shall have received certificates of the Secretaries of
State or other appropriate public officials as to Borrower's qualification
to do business and good standing in each jurisdiction in which a failure to
be so qualified would have a material adverse effect on its financial
positions or its ability to conduct its business in the manner now
conducted and as hereafter intended to be conducted.
(o) Borrower shall have delivered to Lender a Collateral Assignment
of Membership Interest executed by Borrower (in form acceptable to Lender)
and related UCC-1 Financing Statement(s) (in form acceptable to Lender)
executed by Borrower with respect to Borrower's membership interest in
Prysm Tech, L.L.C.
(p) Borrower shall have delivered to Lender a Trademark and Patent
Security Agreement executed by Borrower (in form acceptable to Lender) and
related UCC-1 Financing Statement(s) (in form acceptable to Lender)
executed by Borrower.
17
(q) Borrower shall have delivered to Lender a Collateral Assignment
of Note executed by Borrower, in a form acceptable to Lender, together with
all original promissory notes held by Borrower.
(r) Borrower shall have delivered to Lender a Copyright and Royalty
Security Agreement executed by Borrower (in form acceptable to Lender).
ARTICLE 5
DEFAULT AND REMEDIES
--------------------
5.1 Events of Default. The occurrence of any of the following shall
-----------------
constitute an Event of Default hereunder:
(a) Default by Borrower in the payment of the principal of or
interest on the indebtedness evidenced by the Note in accordance with the
terms of the Note, which default is not cured within five (5) days;
(b) Any misrepresentation by Borrower, any guarantor of Borrower, or
any shareholder of Borrower as to any material matter hereunder or under
any of the other Loan Documents, or delivery by Borrower of any schedule,
statement, resolution, report, certificate, notice or writing to Lender
that is untrue in any material respect on the date as of which the facts
set forth therein are stated or certified;
(c) Failure of Borrower, any guarantor of Borrower, or any
shareholder of Borrower to perform any of its material obligations,
covenants or agreements under this Agreement, the Note or any of the other
Loan Documents;
(d) Borrower (i) shall generally not pay or shall be unable to pay
its debts as such debts become due; or (ii) shall make an assignment for
the benefit of creditors or petition or apply to any tribunal for the
appointment of a custodian, receiver or trustee for it or a substantial
part of its assets; or (iii) shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution
or liquidation law or statute of any jurisdiction, whether now or hereafter
in effect; or (iv) shall have had any such petition or application filed or
any such proceeding commenced against it in which an order for relief is
entered or an adjudication or appointment is made; or (v) shall indicate,
by any act or intentional and purposeful omission, its consent to, approval
of or acquiescence in any such petition, application, proceeding or order
for relief or the appointment of a custodian, receiver or trustee for it or
a substantial part of its assets; or (vi) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for a
period of sixty (60) days or more;
(e) Borrower shall be liquidated, dissolved, partitioned or
terminated, or the charter thereof shall expire or be revoked;
18
(f) A default or event of default shall occur under any of the other
Loan Documents and, if subject to a cure right, such default or event of
default shall not be cured within the applicable cure period;
(g) Borrower shall default in the timely payment or performance of
any obligation now or hereafter owed to Lender in connection with any other
indebtedness of Borrower now or hereafter owed to Lender;
(h) Borrower shall have defaulted and continue to be in default in
the timely payment or performance of any other indebtedness or obligation,
which in the aggregate exceeds Seventy-Thousand and No/100ths Dollars
($75,000.00) or materially adversely affects Borrower's financial
condition;
(i) Neither Xxxx Xxxxx nor Xxxx Xxxxx shall be significantly involved
in the management and/or daily operations of Borrower.
With respect to any Event of Default described above that is capable of
being cured and that does not already provide its own cure procedure (a "Curable
Default"), the occurrence of such Curable Default shall not constitute an Event
of Default hereunder if such Curable Default is fully cured and/or corrected
within thirty (30) days (fifteen (15) days, if such Curable Default may be cured
by payment of a sum of money) of notice thereof to Borrower given in accordance
with the provisions hereof; provided, however, that this provision shall not
require notice to Borrower and an opportunity to cure any Curable Default of
which Borrower has had actual knowledge for the requisite number of days set
forth.
5.2 Acceleration of Maturity; Remedies. Upon the occurrence of any Event
----------------------------------
of Default described in subsection 5.1(d), the indebtedness evidenced by the
Note as well as any and all other indebtedness of Borrower to Lender shall be
immediately due and payable in full; and upon the occurrence of any other Event
of Default described above, Lender at any time thereafter may at its option
accelerate the maturity of the indebtedness evidenced by the Note as well as any
and all other indebtedness of Borrower to Lender; all without notice of any
kind. Upon the occurrence of any such Event of Default and the acceleration of
the maturity of the indebtedness evidenced by the Note:
(a) Lender shall be immediately entitled to exercise any and all
rights and remedies possessed by Lender pursuant to the terms of the Note
and all of the other Loan Documents; and
(b) Lender shall have any and all other rights and remedies that
Lender may now or hereafter possess at law, in equity or by statute.
5.3 Remedies Cumulative; No Waiver. No right, power or remedy conferred
------------------------------
upon or reserved to Lender by this Agreement or any of the other Loan Documents
is intended to be exclusive of any other right, power or remedy, but each and
every such right, power and remedy shall be cumulative and concurrent and shall
be in addition to any other right, power
19
and remedy given hereunder, under any of the other Loan Documents or now or
hereafter existing at law, in equity or by statute. No delay or omission by
Lender to exercise any right, power or remedy accruing upon the occurrence of
any Event of Default shall exhaust or impair any such right, power or remedy or
shall be construed to be a waiver of any such Event of Default or an
acquiescence therein, and every right, power and remedy given by this Agreement
and the other Loan Documents to Lender may be exercised from time to time and as
often as may be deemed expedient by Lender.
5.4 Proceeds of Remedies. Any or all proceeds resulting from the exercise
--------------------
of any or all of the foregoing remedies shall be applied as set forth in the
Loan Document(s) providing the remedy or remedies exercised; if none is
specified, or if the remedy is provided by this Agreement, then as follows:
First, to the costs and expenses, including, without limitation,
reasonable attorney's fees incurred by Lender in connection with the
exercise of its remedies;
Second, to the expenses of curing the default that has occurred, in
the event that Lender elects, in its sole discretion, to cure the default
that has occurred;
Third, to the payment of the obligations of Borrower under the Loan
Documents (the "Obligations"), including but not limited to the payment of
the principal of and interest on the indebtedness evidenced by the Note, in
such order of priority as Lender shall determine in its sole discretion;
and
Fourth, the remainder, if any, to Borrower.
ARTICLE 6
TERMINATION
-----------
6.1 Termination of this Agreement. This Agreement shall remain in full
-----------------------------
force and effect until the later of (i) the Maturity Date (as defined in the
Note), or (ii) the payment by Borrower of all amounts owed to Lender, at which
time Lender shall cancel the Note and deliver it to Borrower; provided, however,
that if at any time Borrower has satisfied all obligations to Lender, Borrower
may terminate this Agreement by providing written notice to Lender.
ARTICLE 7
MISCELLANEOUS
-------------
7.1 Performance By Lender. If Borrower shall default in the payment,
---------------------
performance or observance of any covenant, term or condition of this Agreement,
which default is not cured within the applicable cure period, then Lender may,
at its option, pay, perform or observe the same, and all payments made or costs
or expenses incurred by Lender in connection therewith
20
(including but not limited to reasonable attorney's fees), with interest thereon
at the highest default rate provided in the Note (if none, then at the maximum
rate from time to time allowed by applicable law), shall be immediately repaid
to Lender by Borrower and shall constitute a part of the Obligations. Lender
shall be the sole judge of the necessity for any such actions and of the amounts
to be paid.
7.2 Successors and Assigns Included in Parties. Whenever in this
------------------------------------------
Agreement one of the parties hereto is named or referred to, the heirs, legal
representatives, successors, successors-in-title and assigns of such parties
shall be included, and all covenants and agreements contained in this Agreement
by or on behalf of Borrower or by or on behalf of Lender shall bind and inure to
the benefit of their respective heirs, legal representatives, successors-in-
title and assigns, whether so expressed or not.
7.3 Costs and Expenses. Borrower agrees to pay all reasonable costs and
------------------
expenses incurred by Lender in connection with the making of the Loan, including
but not limited to filing fees, recording taxes, indebtedness taxes, and
reasonable attorneys' fees, promptly upon demand of Lender. Borrower further
agrees to pay all premiums for insurance required to be maintained by Borrower
pursuant to the terms of the Loan Documents and all of the out-of-pocket costs
and expenses incurred by Lender in connection with the collection of the Loan,
amendment to the Loan Documents, or prepayment of the Loan, including but not
limited to reasonable attorneys' fees, promptly upon demand of Lender.
7.4 Assignment. The Note, this Agreement and the other Loan Documents may
----------
be endorsed, assigned and/or transferred in whole or in part by Lender, and any
such holder and/or assignee of the same shall succeed to and be possessed of the
rights and powers of Lender under all of the same to the extent transferred and
assigned. Lender may grant participations in all or any portion of its interest
in the indebtedness evidenced by the Note, and in such event Borrower shall
continue to make payments due under the Loan Documents to Lender and Lender
shall have the sole responsibility of allocating and forwarding such payments in
the appropriate manner and amounts. Borrower shall not assign any of its rights
nor delegate any of its duties hereunder or under any of the other Loan
Documents without the prior express written consent of Lender.
7.5 Time of the Essence. Time is of the essence with respect to each and
-------------------
every covenant, agreement and obligation of Borrower hereunder and under all of
the other Loan Documents.
7.6 Severability. If any provision(s) of this Agreement or the
------------
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
7.7 Interest and Loan Charges Not to Exceed Maximum Allowed by Law.
--------------------------------------------------------------
Anything in this Agreement, the Note or any of the other Loan Documents to the
contrary notwithstanding, in no event whatsoever, whether by reason of
advancement of proceeds of the
21
Loan, acceleration of the maturity of the unpaid balance of the Loan or
otherwise, shall the interest and loan charges agreed to be paid to Lender for
the use of the money advanced or to be advanced hereunder exceed the maximum
amounts collectible under applicable laws in effect from time to time. It is
understood and agreed by the parties that, if for any reason whatsoever the
interest or loan charges paid or contracted to be paid by Borrower in respect of
the indebtedness evidenced by the Note shall exceed the maximum amounts
collectible under applicable laws in effect from time to time, then ipso facto,
----------
the obligation to pay such interest and/or loan charges shall be reduced to the
maximum amounts collectible under applicable laws in effect from time to time,
and any amounts collected by Lender that exceed such maximum amounts shall be
applied to the reduction of the principal balance of the indebtedness evidenced
by the Note and/or refunded to Borrower so that at no time shall the interest or
loan charges paid or payable in respect of the indebtedness evidenced by the
Note exceed the maximum amounts permitted from time to time by applicable law.
7.8 Article and Section Headings; Defined Terms. Numbered and titled
-------------------------------------------
article and section headings and defined terms are for convenience only and
shall not be construed as amplifying or limiting any of the provisions of this
Agreement.
7.9 Notices. Any and all notices, elections or demands permitted or
-------
required to be made under this Agreement or any of the Loan Documents shall be
in writing, signed by the party giving such notice, election or demand and shall
be delivered personally, telecopied, or sent by certified mail or overnight via
nationally recognized courier service (such as Federal Express), to the other
party at the address set forth below, or at such other address as may be
supplied in writing and of which receipt has been acknowledged in writing. The
date of personal delivery, telecopy or telex or two (2) business days after the
date of mailing (or the next business day after delivery to such courier
service), as the case may be, shall be the date of such notice, election or
demand. For the purposes of this Agreement:
The Address of Lender is: Sirrom Capital Corporation
Xxxxx 000
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Telecopy: 615/726-1208
with a copy to: Xxxxxxxxx & Xxxxxx, PLLC
0000 Xxxxxx Xxxxxxxx
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: J. Xxxxxxx Xxxxxx, Esq.
Telecopy: 423/265-9574
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The Address of Borrower is: Softsense Computer Products, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx X
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Telecopy: 770/772-3057
with a copy to: Xxxxx, Xxxxxxxx & Xxxxxxx
Promenade II, Suite 3100
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Telecopy: 404/815-3509
7.10 Entire Agreement. This Agreement and the other written agreements
----------------
between Borrower and Lender represent the entire agreement between the parties
concerning the subject matter hereof, and all oral discussions and prior
agreements are merged herein; provided, if there is a conflict between this
Agreement and any other document executed contemporaneously herewith with
respect to the Obligations, the provision of this Agreement shall control. The
execution and delivery of this Agreement and the other Loan Documents by the
Borrower were not based upon any fact or material provided by Lender, nor was
the Borrower induced or influenced to enter into this Agreement or the other
Loan Documents by any representation, statement, analysis or promise by Lender.
7.11 Governing Law and Amendments. This Agreement and all of the Loan
----------------------------
Documents shall be construed and enforced under the laws of the State of
Tennessee applicable to contracts to be wholly performed in such State except to
the extent certain rights and privileges may be granted Lender under applicable
federal laws in which event federal law shall control. No amendment or
modification hereof shall be effective except in a writing executed by each of
the parties hereto.
7.12 Survival of Representations and Warranties. All covenants,
------------------------------------------
representations and warranties contained herein or in any of the Loan Documents,
or made by or furnished on behalf of the Borrower in connection herewith or any
of the Loan Documents, shall survive the execution and delivery of this
Agreement and all other Loan Documents and shall continue in full force and
effect so long as the Obligations are unpaid.
7.13 Jurisdiction and Venue. Borrower hereby consents to the non-exclusive
----------------------
jurisdiction of the United States District Court for the Middle District of
Tennessee, as well as to the jurisdiction of all courts from which an appeal may
be taken from such courts, for the purpose of any suit, action or other
proceeding arising out of any of its obligations arising under this Agreement or
any other Loan Documents or with respect to the transactions contemplated
hereby, and expressly waives any and all objections it may have as to venue in
any of such courts.
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7.14 Waiver of Trial by Jury. LENDER AND BORROWER HEREBY WAIVE TRIAL BY
-----------------------
JURY IN ANY ACTIONS, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT
OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS
AGREEMENT OR THE LOAN DOCUMENTS.
7.15 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.
7.16 Construction and Interpretation. Should any provision of this
-------------------------------
Agreement require judicial interpretation, the parties hereto agree that the
court interpreting or construing the same shall not apply a presumption that the
terms hereof shall be more strictly construed against one party by reason of the
rule of construction that a document is to be more strictly construed against
the party that itself or through its agent prepared the same, it being agreed
that the Borrower, Lender and their respective agents have participated in the
preparation hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
have caused this Agreement to be executed by their duly authorized officers, as
of the day and year first above written.
LENDER:
------
SIRROM CAPITAL CORPORATION, a Tennessee
corporation
By: /s/ Xxxxx Xxxxxx
-----------------------------------------
Title: Vice President
--------------------------------------
BORROWER:
--------
SOFTSENSE COMPUTER PRODUCTS, INC., a Georgia
corporation
By: /s/ Xxxx Xxxxxx
-----------------------------------------
Title: VP/CFO
--------------------------------------
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