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PICO HOLDINGS, INC., A CALIFORNIA CORPORATION
LOAN TO
PC QUOTE, INC., A DELAWARE CORPORATION
LOAN AND SECURITY AGREEMENT
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TABLE OF CONTENTS
Page
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1. DEFINITIONS AND CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . 6
2. LOAN AND TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Overadvances . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Interest Rates and Payments. . . . . . . . . . . . . . . . . . . . 6
2.4 Crediting Payments . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.6 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. CONDITIONS OF LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Conditions Precedent to Initial Advance. . . . . . . . . . . . . . 7
3.2 Conditions Precedent to all Advances . . . . . . . . . . . . . . . 8
4. CREATION OF SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . 8
4.1 Grant of Security Interest . . . . . . . . . . . . . . . . . . . . 8
4.2 Delivery of Additional Documentation Required. . . . . . . . . . . 8
4.3 Lender's Rights Upon Default . . . . . . . . . . . . . . . . . . . 9
4.4 Right to Inspect . . . . . . . . . . . . . . . . . . . . . . . . . 9
5. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . 9
5.1 Due Organization and Qualification . . . . . . . . . . . . . . . . 9
5.2 Due Authorization; No Conflict . . . . . . . . . . . . . . . . . . 9
5.3 No Prior Encumbrances. . . . . . . . . . . . . . . . . . . . . . . 9
5.4 Name; Location of Chief Executive Office . . . . . . . . . . . . . 9
5.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.6 No Material Adverse Change in Financial Statements . . . . . . . . 9
5.7 Regulatory Compliance. . . . . . . . . . . . . . . . . . . . . . . 10
5.8 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.9 Government Consents. . . . . . . . . . . . . . . . . . . . . . . . 10
5.10 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 10
6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.1 Good Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.2 Government Compliance. . . . . . . . . . . . . . . . . . . . . . . 10
6.3 Financial Statements, Reports, Certificates. . . . . . . . . . . . 11
6.4 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.5 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.6 Principal Depository . . . . . . . . . . . . . . . . . . . . . . . 12
6.7 Quick Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.8 Current Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.9 Registration of Intellectual Property Rights . . . . . . . . . . . 12
6.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 12
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7. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.1 Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.2 Change in Business . . . . . . . . . . . . . . . . . . . . . . . . 13
7.3 Mergers or Acquisitions. . . . . . . . . . . . . . . . . . . . . . 13
7.4 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.5 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.6 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.7 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 13
7.8 Subordinated Debt. . . . . . . . . . . . . . . . . . . . . . . . . 13
7.9 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.1 Payment Default. . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.2 Covenant Default . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.3 Budget Default . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.4 Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . 14
8.5 Attachment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.6 Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.8 Subordinated Debt. . . . . . . . . . . . . . . . . . . . . . . . . 15
8.9 Judgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.10 Misrepresentations . . . . . . . . . . . . . . . . . . . . . . . . 15
9. LENDER'S RIGHTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . 15
9.1 Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . . 15
9.2 Power of Attorney. . . . . . . . . . . . . . . . . . . . . . . . . 16
9.3 Accounts Collection. . . . . . . . . . . . . . . . . . . . . . . . 16
9.4 Lender Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.5 Lender's Liability for Collateral. . . . . . . . . . . . . . . . . 17
9.6 Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . 17
9.7 Demand; Protest. . . . . . . . . . . . . . . . . . . . . . . . . . 17
10. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. . . . . . . . . . . . . . . 18
12. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 18
12.2 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.3 Time of Essence. . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.4 Severability of Provisions . . . . . . . . . . . . . . . . . . . . 18
12.5 Amendments in Writing, Integration . . . . . . . . . . . . . . . . 18
12.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.7 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
12.8 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . 19
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement") is entered into as of May 5,
1997, by and between PICO HOLDINGS, INC., a California corporation ("Lender")
and PC QUOTE, INC., a Delaware corporation ("Borrower").
RECITALS
Borrower wishes to obtain credit from time to time from Lender, and Lender
desires to extend credit to Borrower. This Agreement sets forth the terms on
which Lender will extend credit to Borrower in a principal amount of up to One
Million Dollars ($1,000,000), and Borrower will repay the amounts owing to
Lender.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following definitions:
"Accounts" means all presently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods (including, without limitation, the
licensing of software and other technology) or the rendering of services by
Borrower, whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.
"Advance" or "Advances" means an Advance under the Revolving
Facility.
"Affiliate" means, with respect to any Person, any Person that
owns or controls directly or indirectly such Person, any Person that controls or
is controlled by or is under common control with such Person, and each of such
Person's senior executive officers, directors, and partners.
"Borrower's Books" means all of Borrower's books and records
including: ledgers; records concerning Borrower's assets or liabilities, the
Collateral, business operations or financial condition; and all computer
programs, or tape files, and the equipment, containing such information.
"Business Day" means any day that is not a Saturday, Sunday, or
other day which is a legal holiday in the State of Illinois.
"Closing Date" means the date of this Agreement.
"Code" means the Illinois Uniform Commercial Code.
"Collateral" means the property described on EXHIBIT A attached
hereto.
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"Committed Line" means the credit available to Borrower under the
Revolving Facility in an amount of up to One Million Dollars ($1,000,000).
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to (i) any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn
letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term "Contingent Obligation" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.
"Current Assets" means, as of any applicable date, all amounts
that should, in accordance with GAAP, be included as current assets on the
consolidated balance sheet of Borrower and its Subsidiaries as at such date.
"Current Liabilities" means, as of any applicable date, all
amounts that should, in accordance with GAAP, be included as current liabilities
on the consolidated balance sheet of Borrower and its Subsidiaries, as at such
date, plus, to the extent not already included therein, all outstanding Advances
made under this Agreement, including all Indebtedness that is payable upon
demand or within one year from the date of determination thereof unless such
Indebtedness is renewable or extendable at the option of Borrower or any
Subsidiary to a date more than one year from the date of determination, but
excluding Subordinated Debt.
"Daily Balance" means the amount of the Obligations owed at the
end of a given day.
"Equipment" means all present and future machinery, equipment,
tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments
in which Borrower has any interest.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
"Indebtedness" means (a) all indebtedness for borrowed money or
the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes,
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bonds, debentures or similar instruments, (c) all capital lease obligations
and (d) all Contingent Obligations.
"Insolvency Proceeding" means any proceeding commenced by or
against any person or entity under any provision of the United States Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
"Inventory" means all present and future inventory in which
Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of Borrower, including such
inventory as is temporarily out of its custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above, and Borrower's Books relating
to any of the foregoing.
"Investment" means any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder.
"Lien" means any mortgage, lien, deed of trust, charge, pledge,
security interest or other encumbrance.
"Loan Documents" means, collectively, this Agreement, any note or
notes executed by Borrower, and any other agreement entered into between
Borrower and Lender in connection with this Agreement, all as amended or
extended from time to time.
"Material Adverse Effect" means a material adverse effect on (i)
the business operations or condition (financial or otherwise) of Borrower and
its Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents.
"Maturity Date" means September 30, 1997.
"Negotiable Collateral" means all of Borrower's present and
future letters of credit of which it is a beneficiary, notes, drafts,
instruments, securities, documents of title, and chattel paper, and Borrower's
Books relating to any of the foregoing.
"Obligations" means all debt, principal, interest, Expenses and
other amounts owed to Lender by Borrower pursuant to this Agreement or any other
agreement, whether absolute or contingent, due or to become due, now existing or
hereafter arising, including any interest that accrues after the commencement of
an Insolvency Proceeding and including any debt, liability, or obligation owing
from Borrower to others that Lender may have obtained by assignment or
otherwise.
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"Periodic Payments" means all installments or similar recurring
payments that Borrower may now or hereafter become obligated to pay to Lender
pursuant to the terms and provisions of any instrument, or agreement now or
hereafter in existence between Borrower and Lender.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrower in favor of Lender arising under
this Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed in
the Schedule;
(c) Subordinated Debt; and
(d) Indebtedness to trade creditors incurred in the ordinary
course of business.
"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed in the
Schedule; and
(b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency or any State thereof
maturing within one (1) year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one (1) year from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Corporation or Xxxxx'x Investors Service, Inc., and
(iii) certificates of deposit maturing no more than one (1) year from the date
of investment therein issued by Lender.
"Permitted Liens" means the following:
(a) Any Liens existing on the Closing Date and disclosed in the
Schedule or arising under this Agreement or the other Loan Documents;
(b) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, PROVIDED the same have no priority over any of Lender's
security interests;
(c) Liens (i) upon or in any equipment acquired or held by
Borrower or any of its Subsidiaries to secure the purchase price of such
equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii) existing on such equipment at the time of
its acquisition, PROVIDED that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment;
(d) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in
clauses (a) through (c) above, PROVIDED that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase.
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"Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.
"Expenses" means all: reasonable costs or expenses (including
reasonable attorneys' fees and expenses) incurred by Lender in connection with
the preparation, negotiation, administration, and enforcement of the Loan
Documents; and Lender's reasonable attorneys' fees and expenses incurred in
amending, enforcing or defending the Loan Documents, whether or not suit is
brought.
"Quick Assets" means, at any date as of which the amount thereof
shall be determined, the consolidated cash, cash-equivalents, accounts
receivable and investments, with maturities not to exceed 90 days, of Borrower
determined in accordance with GAAP.
"Responsible Officer" means each of the Chief Executive Officer,
the Chief Financial Officer and the Controller of Borrower.
"Revolving Facility" means the facility under which Borrower may
request Lender to issue cash advances, as specified in Section 2.1 hereof.
"Schedule" means the schedule of exceptions attached hereto.
"Subordinated Debt" means any debt incurred by Borrower that is
subordinated to the debt owing by Borrower to Lender on terms acceptable to
Lender (and identified as being such by Borrower and Lender).
"Subsidiary" means any corporation in which one hundred percent
(100%) of the stock of which is, at the time as of which any determination is
being made, owned by Borrower.
"Tangible Net Worth" means at any date as of which the amount
thereof shall be determined, the consolidated total assets of Borrower and its
Subsidiaries MINUS, without duplication, (i) the sum of any amounts attributable
to (a) goodwill, (b) intangible items such as unamortized debt discount and
expense, patents, trade and service marks and names, copyrights and research and
development expenses except prepaid expenses, and (c) all reserves not already
deducted from assets, AND (ii) Total Liabilities.
"Total Liabilities" means at any date as of which the amount
thereof shall be determined, all obligations that should, in accordance with
GAAP be classified as liabilities on the consolidated balance sheet of Borrower,
including in any event all Indebtedness, but specifically excluding Subordinated
Debt.
"Weekly Budget" means the budget prepared weekly by Borrower, and
approved by Lender, setting forth (i) Borrower's income and expense projections
for a seven-day period commencing on a Sunday and ending on the following
Saturday, and (ii) adjustments or corrections as to income and expense
projections contained in the previous Weekly Budget for actual income received
and expenses incurred by Borrower. The Weekly Budget must be certified by Xxxxx
Xxxxxx, Xxxxxxx Xxxxx and Xxxxxx Xxxxxxx as being true, accurate and complete,
to the bet of their knowledge, exercise in good faith. In the event any of the
foregoing persons is no longer employed by Borrower, the
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certification shall be made by the persons employed by Borrower performing
similar functions and duties.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP and all calculations made
hereunder shall be made in accordance with GAAP. When used herein, the terms
"financial statements" shall include the notes and schedules thereto.
2. LOAN AND TERMS OF PAYMENT
2.1 ADVANCES. Subject to and upon the terms and conditions of this
Agreement, and provided that no uncured Event of Default exists, Lender agrees
to make Advances to Borrower in an amount equal to the cash needed (such amount
not to exceed the difference by which disbursements exceed revenue) under the
applicable Weekly Budget, provided the Advances shall not exceed an aggregate
amount in excess of the Committed Line. Lender shall not be obligated to make
an Advance for any amount in excess of the cash needs of Borrower supported by
the applicable Weekly Budget. Subject to the terms and conditions of this
Agreement, amounts borrowed pursuant to this Section 2.1 may be repaid and
reborrowed at any time during the term of this Agreement.
Whenever Borrower desires an Advance, Borrower will notify Lender by
facsimile transmission or telephone no later than 10:00 a.m. California time, at
least two days prior to the Business Day upon which the Advance is to be made.
Each such notification shall be promptly confirmed by an Advance Request Form in
substantially the form of EXHIBIT B hereto. Lender is authorized to make
Advances under this Agreement based upon instructions received from a
Responsible Officer. Lender shall be entitled to rely on any telephonic notice
given by a person who Lender reasonably believes to be a Responsible Officer,
and Borrower shall indemnify and hold Lender harmless for any damages or loss
suffered by Lender as a result of such reliance. Lender will wire the amount of
Advances made under this Section 2.1 to Borrower's.
The Revolving Facility shall terminate on the Maturity Date, at which
time all Advances under this Section 2.1 and other amounts due under this
Agreement shall be immediately due and payable.
2.2 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations owed by Borrower to Lender pursuant to Section 2.1 of this Agreement
is greater than the Committed Line, Borrower shall immediately pay to Lender, in
cash, the amount of such excess.
2.3 INTEREST RATES AND PAYMENTS.
(a) INTEREST RATE. Except as set forth in Section 2.3(b), any
Advances shall bear interest, on the Daily Balance, at a fixed rate equal to
fourteen percent (14%) per annum.
(b) DEFAULT RATE. All Obligations shall bear interest, from and
after the occurrence of an Event of Default, at a rate equal to nineteen percent
(19%) per annum.
(c) PAYMENTS. Interest hereunder shall be due and payable on
the Maturity Date. Lender shall, at its option, charge all Expenses against the
Committed Line, in which case those amounts shall thereafter accrue interest at
the rate then applicable hereunder. Any interest not paid
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when due shall be compounded by becoming a part of the Obligations, and such
interest shall thereafter accrue interest at the rate then applicable
hereunder.
(d) COMPUTATION. All interest chargeable under the Loan
Documents shall be computed on the basis of a three hundred sixty (360) day year
for the actual number of days elapsed.
2.4 CREDITING PAYMENTS. Any wire transfer or payment received by
Lender after 12:00 noon California time shall be deemed to have been received by
Lender as of the opening of business on the immediately following Business Day.
Whenever any payment to Lender under the Loan Documents would otherwise be due
(except by reason of acceleration) on a date that is not a Business Day, such
payment shall instead be due on the next Business Day, and additional interest
shall accrue and be payable for the period of such extension.
2.5 FEES. Borrower shall pay to Lender the following:
(a) FACILITY FEE. A Facility Fee equal to Forty Thousand
Dollars ($40,000.00), which fee shall be due on the Closing Date and shall be
fully earned and nonrefundable. Borrower may defer payment of the Facility Fee
until the Maturity Date in which case the Facility Fee shall become part of the
Obligations and bear interest as set forth in Section 2.3 above from the Closing
Date until paid.
(b) FINANCIAL EXAMINATION AND APPRAISAL FEES. Lender's out-of-
pocket expenses for Lender's audits of Borrower's Accounts, and for each
appraisal of Collateral and financial analysis and examination of Borrower
performed from time to time by Lender or its agents;
(c) EXPENSES. Upon the date hereof, all Expenses incurred by
Lender through the Closing Date, including reasonable attorneys' fees and
expenses, and, after the date hereof, all Expenses incurred by Lender, including
reasonable attorneys' fees and expenses, as and when they become due.
2.6 TERM. This Agreement shall become effective on the Closing Date
and, subject to Section 12.7, shall continue in full force and effect for a term
ending on the Maturity Date. Notwithstanding the foregoing, Lender shall have
the right to terminate its obligation to make Advances under this Agreement
immediately and without notice upon the occurrence and during the continuance of
an Event of Default. Notwithstanding termination, Lender's Lien on the
Collateral shall remain in effect for so long as any Obligations are
outstanding.
3. CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of
Lender to make the initial Advance is subject to the condition precedent that
Lender shall have received, in form and substance satisfactory to Lender, the
following:
(a) this Agreement and any other loan documents contemplated by
this Agreement;
(b) a certificate of the Secretary of Borrower with respect to
incumbency and resolutions authorizing the execution and delivery of this
Agreement;
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(c) a warrant to purchase stock of Borrower, duly executed, in
the form of Exhibit E attached hereto.
(d) financing statements (Forms UCC-1);
(e) a first amendment in form and substance acceptable to
Lender, amending a certain Subordinated Debenture in favor of Physicians
Insurance Company of Ohio, an Ohio corporation;
(f) payment of the Lender Expenses then due specified in
Section 2.5 hereof; and
(g) such other documents, and completion of such other matters,
as Lender may reasonably deem necessary or appropriate.
3.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of Lender
to make each Advance, including the initial Advance, is further subject to the
following conditions:
(a) timely receipt by Lender of the Advance Request Form as
provided in Section 2.1; and
(b) timely receipt by Lender of the Weekly Budget, on or before
the first day of the week covered by any such Weekly Budget;
(c) the representations and warranties contained in Section 5
shall be true and correct in all material respects on and as of the date of such
Advance Request Form and on the effective date of each Advance as though made at
and as of each such date, and no Event of Default shall have occurred and be
continuing, or would result from such Advance. The making of each Advance shall
be deemed to be a representation and warranty by Borrower on the date of such
Advance as to the accuracy of the facts referred to in this Section 3.2(b).
4. CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST. Borrower grants and pledges to
Lender a continuing security interest in all presently existing and hereafter
acquired or arising Collateral in order to secure prompt repayment of any and
all Obligations and in order to secure prompt performance by Borrower of each of
its covenants and duties under the Loan Documents. Except as set forth in the
Schedule, such security interest constitutes a valid security interest in the
presently existing Collateral, junior in priority only to Permitted Liens and
such security interest will constitute a valid security interest in Collateral
acquired after the date hereof, junior in priority only to Permitted Liens.
4.2 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Borrower shall
from time to time execute and deliver to Lender, at the request of Lender, all
Negotiable Collateral, all financing statements and other documents that Lender
may reasonably request, in form satisfactory to Lender, to perfect and continue
perfected Lender's security interests in the Collateral and in order to fully
consummate all of the transactions contemplated under the Loan Documents.
4.3 LENDER'S RIGHTS UPON DEFAULT. In the event of a default by the
Borrower under this Agreement, Lender shall be entitled to exercise any and all
rights and remedies available to Lender
8
under the Illinois Uniform Commercial Code and all other rights and remedies
at law in equity available to secured creditors in the State of Illinois.
Borrower further acknowledges that five (5) days' notice of any public or
private sale of the Collateral is commercially reasonable under all
circumstances.
4.4 RIGHT TO INSPECT. Lender (through any of its officers,
employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrower's usual business hours, to inspect Borrower's Books
and to make copies thereof and to check, test, and appraise the Collateral in
order to verify Borrower's financial condition or the amount, condition of, or
any other matter relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND QUALIFICATION. Borrower and each Subsidiary
is a corporation duly existing and in good standing under the laws of its state
of incorporation and qualified and licensed to do business in, and is in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be so qualified.
5.2 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance of the Loan Documents are within Borrower's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Articles of Incorporation or Bylaws, nor will
they constitute an event of default under any material agreement to which
Borrower is a party or by which Borrower is bound.
5.3 NO PRIOR ENCUMBRANCES. Borrower has good and indefeasible title
to the Collateral, free and clear of Liens, except for Permitted Liens.
5.4 NAME; LOCATION OF CHIEF EXECUTIVE OFFICE. Except as disclosed in
the Schedule, Borrower has not done business under any name other than that
specified on the signature page hereof. The chief executive office of Borrower
is located at the address indicated in Section 10 hereof.
5.5 LITIGATION. Except as set forth in the Schedule and as disclosed
in Borrower's most recent Form 10K filing with the Securities and Exchange
Commission and in its 1996 audited statement, there are no actions or
proceedings pending by or against Borrower or any Subsidiary before any court or
administrative agency in which an adverse decision could have a Material Adverse
Effect or a material adverse effect on Borrower's interest or Lender's security
interest in the Collateral. Borrower does not have knowledge of any such
pending or threatened actions or proceedings.
5.6 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All
consolidated financial statements related to Borrower and any Subsidiary that
have been delivered by Borrower to Lender fairly present in all material
respects Borrower's consolidated financial condition as of the date thereof and
Borrower's consolidated results of operations for the period then ended. There
has not been a material adverse change in the consolidated financial condition
of Borrower since the date of the most recent of such financial statements
submitted to Lender. The representations and warranties contained in this
Section 5.6 are made to the best of Borrower's knowledge exercised in good
faith.
5.7 REGULATORY COMPLIANCE. Borrower and each Subsidiary has met the
minimum funding requirements of ERISA with respect to any employee benefit plans
subject to ERISA. No event
9
has occurred resulting from Borrower's failure to comply with ERISA that is
reasonably likely to result in Borrower's incurring any liability that could
have a Material Adverse Effect. Borrower is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940. Borrower is not engaged principally, or as
one of the important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulations G, T and U of the Board of Governors of the Federal Reserve
System). Borrower has complied with all the provisions of the Federal Fair
Labor Standards Act. Borrower has not violated any statutes, laws,
ordinances or rules applicable to it, violation of which could have a
Material Adverse Effect.
5.8 TAXES. Borrower and each Subsidiary has filed or caused to be
filed all tax returns required to be filed, and has paid, or has made adequate
provision for the payment of, all taxes reflected therein.
5.9 GOVERNMENT CONSENTS. Borrower and each Subsidiary has obtained
all consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of Borrower's business as currently conducted.
5.10 FULL DISCLOSURE. To the best of Borrower's knowledge, exercised
in good faith, no representation, warranty or other statement made by Borrower
in any certificate or written statement furnished to Lender contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained in such certificates or statements not
misleading.
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as Lender may have any commitment to
make an Advance hereunder, Borrower shall do all of the following:
6.1 GOOD STANDING. Borrower shall maintain its and each of its
Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify could have a Material Adverse Effect. Borrower shall
maintain, and shall cause each of its Subsidiaries to maintain, to the extent
consistent with prudent management of Borrower's business, in force all
licenses, approvals and agreements, the loss of which could have a Material
Adverse Effect.
6.2 GOVERNMENT COMPLIANCE. Borrower shall meet, and shall cause each
Subsidiary to meet, the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA. Borrower shall comply, and shall
cause each Subsidiary to comply, with all statutes, laws, ordinances and
government rules and regulations to which it is subject, noncompliance with
which could have a Material Adverse Effect or a material adverse effect on the
Collateral or the priority of Lender's Lien on the Collateral.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Borrower shall
deliver to Lender: (a) as soon as available, but in any event within forty (40)
days after the end of each month, a company prepared consolidated balance sheet
and income statement covering Borrower's consolidated operations during such
period; (b) as soon as available, but in any event within ninety (90) days after
10
the end of Borrower's fiscal year, audited consolidated financial statements of
Borrower prepared in accordance with GAAP, consistently applied, together with
an unqualified opinion on such financial statements of an independent certified
public accounting firm reasonably acceptable to Lender; (c) within five (5) days
upon becoming available, copies of all statements, reports and notices sent or
made available generally by Borrower to its security holders or to any holders
of Subordinated Debt and all reports on Form 10-K and 10-Q filed with the
Securities and Exchange Commission; (d) promptly upon receipt of notice thereof,
a report of any legal actions pending or threatened against Borrower or any
Subsidiary that could result in damages or costs to Borrower or any Subsidiary
of Fifty Thousand Dollars ($50,000) or more; and (e) such budgets, sales
projections, operating plans or other financial information as Lender may
reasonably request from time to time. Any and all financial information to be
provided hereunder by Borrower to Lender shall be certified by Xxxxx Xxxxxx,
Xxxxxxx Xxxxx and Xxxxxx Xxxxxxx, as true, accurate and complete, to the best of
their knowledge, exercise in good faith. In the event that one or more of the
foregoing persons is no longer employed by Borrower, the certification shall be
made by the persons employed by the Borrower performing similar duties and
functions.
On the first business day of each week in which this Revolving Facility is
outstanding, Borrower shall deliver to Lender a Weekly Budget signed by a
Responsible Officer in substantially the form of EXHIBIT C hereto.
Borrower shall deliver to Lender with the monthly financial statements a
Compliance Certificate signed by a Responsible Officer in substantially the form
of EXHIBIT D hereto.
Lender shall have a right from time to time hereafter to audit Borrower's
Accounts at Borrower's expense, provided that such audits will be conducted no
more often than every two (2) months unless an Event of Default has occurred and
is continuing.
6.4 TAXES. Borrower shall make, and shall cause each Subsidiary to
make, due and timely payment or deposit of all material federal, state, and
local taxes, assessments, or contributions required of it by law, and will
execute and deliver to Lender, on demand, appropriate certificates attesting to
the payment or deposit thereof; and Borrower will make, and will cause each
Subsidiary to make, timely payment or deposit of all material tax payments and
withholding taxes required of it by applicable laws, including, but not limited
to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
state, and federal income taxes, and will, upon request, furnish Lender with
proof satisfactory to Lender indicating that Borrower or a Subsidiary has made
such payments or deposits; provided that Borrower or a Subsidiary need not make
any payment if the amount or validity of such payment is contested in good faith
by appropriate proceedings and is reserved against (to the extent required by
GAAP) by Borrower.
6.5 INSURANCE.
(a) Borrower, at its expense, shall keep the Collateral insured
against loss or damage by fire, theft, explosion, sprinklers, and all other
hazards and risks, and in such amounts, as ordinarily insured against by other
owners in similar businesses conducted in the locations where Borrower's
business is conducted on the date hereof. Borrower shall also maintain
insurance relating to Borrower's ownership and use of the Collateral in amounts
and of a type that are customary to businesses similar to Borrower's.
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(b) All such policies of insurance shall be in such form, with
such companies, and in such amounts as reasonably satisfactory to Lender. All
such policies of property insurance shall contain a lender's loss payable
endorsement, in a form satisfactory to Lender, showing Lender as an additional
loss payee thereof and all liability insurance policies shall show the Lender as
an additional insured, and shall specify that the insurer must give at least
twenty (20) days notice to Lender before canceling its policy for any reason.
Upon Lender's request, Borrower shall deliver to Lender certified copies of such
policies of insurance and evidence of the payments of all premiums therefor.
All proceeds payable under any such policy shall, at the option of Lender, be
payable to Lender to be applied on account of the Obligations.
6.6 PRINCIPAL DEPOSITORY. Borrower shall maintain its principal
depository and operating accounts with Lakeside Bank, an Illinois banking
corporation.
6.7 QUICK RATIO. Borrower shall maintain, as of the last day of each
calendar month, a ratio of Quick Assets to Current Liabilities of at least .1 to
1.0.
6.8 CURRENT RATIO. Borrower shall maintain, as of the last day of
each calendar month, a ratio of Current Assets to Current Liabilities of at
least .12 to 1.0.
6.9 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS. If Borrower
registers or causes to be registered with the United States Patent and Trademark
Office or the United States Copyright Office, as applicable, any intellectual
property rights covered by the blanket description contained in Exhibit A,
Borrower shall notify Lender in writing before the effective date of such
registration, and Borrower shall execute and deliver such additional instruments
and documents from time to time as Lender shall reasonably request to perfect
Lender's security interest in such additional intellectual property rights.
6.10 FURTHER ASSURANCES. At any time and from time to time Borrower
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Lender to effect the purposes of this
Agreement.
7. NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until payment in full of the outstanding Obligations or
for so long as Lender may have any commitment to make any Advances, Borrower
will not do any of the following:
7.1 DISPOSITIONS. Without the prior written consent of Lender, which
shall not be unreasonably withheld, convey, sell, lease, transfer or otherwise
dispose of (collectively, a "Transfer"), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, other than: (i) Transfers
of non-exclusive licenses and similar arrangements for the use of the property
of Borrower or its Subsidiaries; or (ii) Transfers of worn-out or obsolete
Equipment.
7.2 CHANGE IN BUSINESS. Engage in any business, or permit any of its
Subsidiaries to engage in any business, other than the businesses currently
engaged in by Borrower and any business substantially similar or related thereto
(or incidental thereto), or suffer a material change in Borrower's ownership.
Borrower will not, without thirty (30) days prior written notification to
Lender, relocate its chief executive office.
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7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any of
its Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person.
7.4 ENCUMBRANCES. Create, incur, assume or suffer to exist any Lien
with respect to any of its property, or assign or otherwise convey any right to
receive income, including the sale of any Accounts, or permit any of its
Subsidiaries so to do, except for Permitted Liens.
7.5 DISTRIBUTIONS. Pay any dividends or make any other distribution
or payment on account of or in redemption, retirement or purchase of any capital
stock.
7.6 INVESTMENTS. Directly or indirectly acquire or own, or make any
Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments.
7.7 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into
or permit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a nonaffiliated Person.
7.8 SUBORDINATED DEBT. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without Lender's prior written consent.
7.9 COMPLIANCE. Become an "investment company" controlled by an
"investment company," within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Advance for such purpose.
Fail to meet the minimum funding requirements of ERISA, permit a Reportable
Event or Prohibited Transaction, as defined in ERISA, to occur, fail to comply
with the Federal Fair Labor Standards Act or violate any law or regulation,
which violation could have a Material Adverse Effect or a material adverse
effect on the Collateral or the priority of Lender's Lien on the Collateral, or
permit any of its Subsidiaries to do any of the foregoing.
8. EVENTS OF DEFAULT
Any one or more of the following events shall constitute an Event of
Default by Borrower under this Agreement:
8.1 PAYMENT DEFAULT. If Borrower fails to pay the principal of, or
any interest on, any Advances when due and payable; or fails to pay any portion
of any other Obligations not constituting such principal or interest, including
without limitation Lender Expenses, within thirty (30) days of receipt by
Borrower of an invoice for such other Obligations;
8.2 COVENANT DEFAULT. If Borrower fails to perform any obligation
under Article 6 or violates any of the covenants contained in Article 7 of this
Agreement, or fails or neglects to perform, keep, or observe any other material
term, provision, condition, covenant, or agreement contained in this Agreement,
in any of the Loan Documents, or in any other present or future agreement
between Borrower and Lender and as to any default under such other term,
provision,
13
condition, covenant or agreement that can be cured, has failed to cure such
default within ten (10) days after Borrower receives notice thereof or any
officer of Borrower becomes aware thereof; provided, however, that if the
default cannot by its nature be cured within the ten (10) day period or
cannot after diligent attempts by Borrower be cured within such ten (10) day
period, and such default is likely to be cured within a reasonable time, then
Borrower shall have an additional reasonable period (which shall not in any
case exceed thirty (30) days) to attempt to cure such default, and within
such reasonable time period the failure to have cured such default shall not
be deemed an Event of Default (provided that no Advances will be required to
be made during such cure period);
8.3 BUDGET DEFAULT. Borrower's actual weekly cash flow shall be more
than $20,000 less than that set forth in any Weekly Budget. Such Event of
Default shall not be curable.
8.4 MATERIAL ADVERSE CHANGE. If there occurs a material adverse
change in Borrower's business or financial condition, or if there is a material
impairment of the prospect of repayment of any portion of the Obligations or a
material impairment of the value or priority of Lender's security interests in
the Collateral;
8.5 ATTACHMENT. If any material portion of Borrower's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within ten (10) days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
that no Advances will be required to be made during such cure period);
8.6 INSOLVENCY. If an Insolvency Proceeding is commenced by
Borrower, or if an Insolvency Proceeding is commenced against Borrower and is
not dismissed or stayed within ten (10) days (provided that no Advances will be
made prior to the dismissal of such Insolvency Proceeding);
8.7 LITIGATION. If Borrower is named as a defendant in any legal
action that could result in damages or costs to Borrower or any Subsidiary of
One Hundred Thousand Dollars ($100,000.00) or more;
8.8 SUBORDINATED DEBT. If Borrower makes any payment on account of
Subordinated Debt, except to the extent such payment is allowed under any
subordination agreement entered into with Lender;
8.9 JUDGMENTS. If a judgment or judgments for the payment of money
in an amount, individually or in the aggregate, of at least Fifty Thousand
Dollars ($50,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of ten (10) days (provided that no
Advances will be made prior to the satisfaction or stay of such judgment); or
14
8.10 MISREPRESENTATIONS. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to Lender by any Responsible
Officer pursuant to this Agreement or to induce Lender to enter into this
Agreement or any other Loan Document.
9. LENDER'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES. Upon the occurrence and during the
continuance of an Event of Default, Lender may, at its election, without notice
of its election and without demand, do any one or more of the following, all of
which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
Section 8.5 all Obligations shall become immediately due and payable without any
action by Lender);
(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement or under any other agreement between
Borrower and Lender;
(c) Settle or adjust disputes and claims directly with account
debtors for amounts, upon terms and in whatever order that Lender reasonably
considers advisable;
(d) Without notice to or demand upon Borrower, make such
payments and do such acts as Lender considers necessary or reasonable to protect
its security interest in the Collateral. Borrower agrees to assemble the
Collateral if Lender so requires, and to make the Collateral available to Lender
as Lender may designate. Borrower authorizes Lender to enter the premises where
the Collateral is located, to take and maintain possession of the Collateral, or
any part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in Lender's determination appears to be prior or superior
to its security interest (other than Permitted Liens) and to pay all expenses
incurred in connection therewith. With respect to any of Borrower's owned
premises, Borrower hereby grants Lender a license to enter into possession of
such premises and to occupy the same, without charge, in order to exercise any
of Lender's rights or remedies provided herein, at law, in equity, or otherwise;
(e) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Lender is hereby granted a license or other right,
solely pursuant to the provisions of this Section 9.1, to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Lender's exercise of its rights under this Section 9.1,
Borrower's rights under all licenses and all franchise agreements shall inure to
Lender's benefit;
(f) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Borrower's premises) as Lender
determines is commercially reasonable, and apply any proceeds to the Obligations
in whatever manner or order Lender deems appropriate;
(g) Lender may credit bid and purchase at any public sale; and
15
(h) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower.
9.2 POWER OF ATTORNEY. Effective only upon the occurrence and during
the continuance of an Event of Default, Borrower hereby irrevocably appoints
Lender (and any of Lender's designated officers, or employees) as Borrower's
true and lawful attorney to: (a) send requests for verification of Accounts or
notify account debtors of Lender's security interest in the Accounts;
(b) endorse Borrower's name on any checks or other forms of payment or security
that may come into Lender's possession; (c) sign Borrower's name on any invoice
or xxxx of lading relating to any Account, drafts against account debtors,
schedules and assignments of Accounts, verifications of Accounts, and notices to
account debtors; (d) make, settle, and adjust all claims under and decisions
with respect to Borrower's policies of insurance; and (e) settle and adjust
disputes and claims respecting the accounts directly with account debtors, for
amounts and upon terms which Lender determines to be reasonable; provided Lender
may exercise such power of attorney to sign the name of Borrower on any of the
documents described in Section 4.2 regardless of whether an Event of Default has
occurred. The appointment of Lender as Borrower's attorney in fact, and each
and every one of Lender's rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully repaid and performed
and Lender's obligation to provide advances hereunder is terminated.
9.3 ACCOUNTS COLLECTION. At any time from the date of this
Agreement, Lender may notify any Person owing funds to Borrower of Lender's
security interest in such funds and verify the amount of such Account. Borrower
shall collect all amounts owing to Borrower for Lender, receive in trust all
payments as Lender's trustee, and immediately deliver such payments to Lender in
their original form as received from the account debtor, with proper
endorsements for deposit.
9.4 LENDER EXPENSES. If Borrower fails to pay any amounts or furnish
any required proof of payment due to third persons or entities, as required
under the terms of this Agreement, then Lender may do any or all of the
following: (a) make payment of the same or any part thereof; or (b) set up such
reserves under the Revolving Facility as Lender deems necessary to protect
Lender from the exposure created by such failure. Any amounts so paid or
deposited by Lender shall constitute Lender Expenses, shall be immediately due
and payable, and shall bear interest at the then applicable rate hereinabove
provided, and shall be secured by the Collateral. Any payments made by Lender
shall not constitute a waiver by Lender of any Event of Default under this
Agreement.
9.5 LENDER'S LIABILITY FOR COLLATERAL. Lender shall not in any way
or manner be liable or responsible for: (a) the safekeeping of the Collateral;
(b) any loss or damage thereto occurring or arising in any manner or fashion
from any cause; (c) any diminution in the value thereof; or (d) any act or
default of any carrier, warehouseman, bailee, forwarding agency, or other person
whomsoever. All risk of loss, damage or destruction of the Collateral shall be
borne by Borrower.
9.6 REMEDIES CUMULATIVE. Lender's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Lender shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Lender of one
right or remedy shall be deemed an election, and no waiver by Lender of any
Event of Default on Borrower's part shall be deemed a continuing waiver. No
delay by Lender shall constitute a waiver, election, or acquiescence by it. No
waiver by Lender shall be effective unless made in a written document signed on
behalf of Lender and then shall be effective only in the specific instance and
for the specific purpose for which it was given.
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9.7 DEMAND; PROTEST. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Lender on which Borrower may in any way be
liable.
10. NOTICES
Unless otherwise provided in this Agreement, all notices or demands by
any party relating to this Agreement or any other agreement entered into in
connection herewith shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by a recognized overnight
delivery service, certified mail, postage prepaid, return receipt requested, or
by telefacsimile to Borrower or to Lender, as the case may be, at its addresses
set forth below:
If to Borrower: PC QUOTE, INC.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Att'n: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
If to Lender: PICO HOLDINGS, INC.
0000 Xxxxxx xx xx Xxxxx
Xx Xxxxx, XX 00000
Att'n: Xxxx X. Xxxx
Fax: (000) 000-0000
The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
This Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of Illinois, without regard to principles of
conflicts of law. BORROWER AND LENDER EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY
OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH
PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
Lender's Initials ______ Borrower's Initials ______
12. GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the respective successors and permitted assigns of each of the
parties; PROVIDED, HOWEVER, that neither this Agreement nor any rights hereunder
may be assigned by Borrower without Lender's prior written consent, which
consent may be granted or withheld in Lender's sole discretion.
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12.2 INDEMNIFICATION. Borrower shall defend, indemnify and hold
harmless Lender and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Lender Expenses in any way suffered, incurred, or paid by
Lender as a result of or in any way arising out of, following, or consequential
to transactions between Lender and Borrower whether under this Agreement, or
otherwise (including without limitation reasonable attorneys fees and expenses),
except for losses caused by Lender's gross negligence or willful misconduct.
12.3 TIME OF ESSENCE. Time is of the essence for the performance of
all obligations set forth in this Agreement.
12.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION. This Agreement cannot be
amended or terminated orally. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement and the Loan Documents.
12.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
12.7 SURVIVAL. All covenants, representations and warranties made in
this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify Lender
with respect to the expenses, damages, losses, costs and liabilities described
in Section 12.2 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Lender have run,
provided that so long as the obligations set forth in the first sentence of this
Section 12.7 have been satisfied, and Lender has no commitment to make any
Advances or to make any other loans to Borrower, Lender shall release all
security interests granted hereunder and redeliver all Collateral held by it in
accordance with applicable law.
12.8 CONFIDENTIALITY. In handling any confidential information Lender
shall exercise the same degree of care that it exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of any
non-public information thereby received or received pursuant to this Agreement
except that disclosure of such information may be made (i) to the subsidiaries
or affiliates of Lender in connection with their present or prospective business
relations with Borrower, (ii) to prospective transferees or purchasers of any
interest in the Loans, provided that they have entered into a comparable
confidentiality agreement in favor of Borrower and have delivered a copy to
Borrower, (iii) as required by law, regulations, rule or order, subpoena,
judicial order or similar order, (iv) as may be required in connection with the
examination, audit or similar investigation of Lender and (v) as Lender may
determine in connection with the enforcement of any remedies hereunder.
Confidential information hereunder shall not include information that either:
(a) is in the public domain or in the knowledge or possession of Lender when
disclosed to Lender, or becomes part of the public domain after disclosure to
Lender through no fault of Lender; or (b) is disclosed to Lender by a third
party, provided Lender does not have actual knowledge that such third party is
prohibited from disclosing such information.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
PC QUOTE, INC., PICO HOLDINGS, INC., a California
a Delaware corporation corporation
By: ____________________________________
By: ________________________________
_________________________________________
_____________________________________ [Print Name and Office of Person Signing]
[Print Name and Office of Person
Signing]
By: ________________________________
_____________________________________
[Print Name and Office of Person
Signing]
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