EXHIBIT 10.14
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated as of
October 15, 2003 (as amended, modified or restated from time-to-time, the
"Agreement"), will serve to set forth the terms of the financing transactions by
and among XXXXXXXX FAMILY PARTNERSHIP, LTD., a Texas partnership ("Lender"),
XXXXXXXX.XXX, INC., f/k/a MULTIMEDIA ACCESS CORPORATION, a Delaware corporation
("ViewCast"), OSPREY TECHNOLOGIES, INC., a Delaware corporation ("Osprey"), and
VIDEOWARE, INC., a Delaware corporation ("VideoWare").
RECITALS
WHEREAS, ViewCast and Lender have entered into that certain (a) Loan
Agreement dated as of October 22, 1998 (as amended, modified or restated as of
even date herewith, the "Original Loan Agreement"), (b) that certain Security
Agreement dated as of October 22, 1998 (as amended, modified or restated as of
even date herewith, the "Original Security Agreement"), and (c) Pledge Agreement
dated as of October 22, 1998 (as amended, modified or restated as of even date
herewith, the "Original Pledge Agreement");
WHEREAS, ViewCast, Osprey and VideoWare and Lender desire to amend and
restate the indebtedness evidenced by that certain Promissory Note dated as of
October 22, 1998, in the original principal amount of $9,000,000.00 (as amended,
modified or restated as of even date herewith, the "Original Promissory Note")
executed by ViewCast and payable to the order of Lender and secured by the
Original Loan Agreement, the Original Security Agreement, and the Original
Pledge Agreement, together with all other agreements, instruments and documents
evidencing, securing, governing, guaranteeing or pertaining thereto, the
"Original Loan Documents";
WHEREAS, ViewCast, Osprey and VideoWare desire to establish their
borrowing potential on a consolidated basis to the same extent possible if they
were merged into a single corporate entity and that this Agreement reflects the
establishment of a credit facility which would not otherwise be available to
ViewCast, Osprey and VideoWare if they were not jointly and severally liable for
payment of all of the Indebtedness (as defined below); and
WHEREAS, ViewCast, Osprey and VideoWare have determined that each will
benefit specifically and materially from the Term Loan and Loans (as defined
below) contemplated by this Agreement; and
WHEREAS, ViewCast, Osprey and VideoWare have requested and bargained
for the structure and terms of and security for the transactions contemplated by
this Agreement; and
WHEREAS, it is both a condition precedent to the obligations of Lender
hereunder and a desire of ViewCast, Osprey and VideoWare that each execute and
deliver to Lender this Agreement;
WHEREAS, it is both a condition precedent to the obligations of Lender
hereunder and a desire of ViewCast, Osprey and VideoWare (jointly and severally,
"Borrower") to execute and
LOAN AND SECURITY AGREEMENT - Page 1
deliver to Lender this Agreement;
NOW THEREFORE, the parties hereto, intending to be legally bound, agree
as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the meanings indicated below:
(a) "Code" shall mean the Uniform Commercial Code as in effect
in the State of Texas on the date of this Agreement or as it may
hereafter be amended from time to time.
(b) "Collateral" shall mean:
(i) All present and future accounts, chattel paper,
documents, instruments, deposit accounts, commercial tort claims,
commodity accounts, commodity contracts, instruments, investment
property, letters of credit, letter of credit rights, contract rights,
money and general intangibles now or hereafter owned, held, or acquired
by Borrower.
(ii) All present and hereafter acquired inventory and
goods (including without limitation, all raw materials, work in process
and finished goods) held, possessed, owned, held on consignment, or
held for sale, lease, return or to be furnished under contracts of
services, in whole or in part, by Borrower wherever located.
(iii) All equipment and fixtures of whatsoever kind
and character now or hereafter possessed, held, acquired, leased or
owned by Borrower, together with all replacements, accessories,
additions, substitutions and accessions to all of the foregoing, all
records relating in any way to the foregoing.
(iv) All Patents, Copyrights, Trademarks and Licenses
now or hereafter owned, held, or acquired by Borrower (including
without limitation, those Patents, Copyrights, Trademarks, and Licenses
set forth on Exhibit A attached hereto, if any).
The term "Collateral," as used herein, shall also include all PRODUCTS
and PROCEEDS of all of the foregoing (including without limitation,
insurance payable by reason of loss or damage to the foregoing
property) and any property, securities, guaranties or monies of
Borrower which may at any time come into the possession of Lender. The
term Collateral shall include all of Borrower's records relating in any
way to the foregoing (including, without limitation, any computer
software, whether on tape, disk, card, strip, cartridge or any other
form). The designation of proceeds does not authorize Borrower to sell,
transfer or otherwise convey any of the foregoing property except
finished goods intended for sale or services provided in the ordinary
course of Borrower's business or as otherwise provided herein.
(c) "Consolidated Capital Expenditures" shall mean, for any
period, all capital expenditures of Borrower on a consolidate basis
(i.e, capital expenditures for ViewCast, Osprey and VideoWare) for
such period, as determined in accordance with generally accepted
accounting principals.
LOAN AND SECURITY AGREEMENT - Page 2
(d) "Consolidated EBITDA" shall mean, for any period, the sum
of (i) consolidated net income for Borrower (i.e, net income for
ViewCast, Osprey and VideoWare) for such period, plus (ii) an amount
which, in the determination of consolidated net income for such period,
has been deducted for (A) consolidated interest expense, (B) total
federal, state, local and foreign income, value added and similar taxes
accrued during such period, (C) losses (or minus gains) on the sale or
disposition of assets outside the ordinary course of business, and (D)
depreciation, amortization expense and other non-cash charges, all as
determined in accordance with generally accepted accounting principals.
(e) "Copyright" shall mean all right, title and interest in
and to the copyright applications and copyrights of Borrower and those
copyrights which are hereafter obtained or acquired by Borrower and all
registrations, applications and recordings thereof, including, without
limitation, all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, and all applications,
registrations and recordings in the United States Copyright Office or
in any similar office or agency of the United States, or any State
thereof, all whether now owned or hereafter acquired by Borrower.
(f) "Debt Payments" shall mean, as of any date of
determination for Borrower, the sum of all payments of principal and
interest on indebtedness or Redeemable Preferred Stock for the applied
period ending on the date of determination (including the payments due
on capital leases during the applicable period ending on the date of
determination) and excluding any voluntary or required prepayments on
the Notes.
(g) "Excess Cash Flow" shall mean, with respect to any six
month period of Borrower on a consolidated basis, an amount equal to
(i) Consolidated EBITDA for such period, minus (ii) Consolidated
Capital Expenditures for such period, minus (iii) Debt Payments made
during such period, minus (iv) tax payments for amounts accrued in
respect of federal, state, local and foreign income, franchise,
property, sales, value added and similar taxes with respect to such
period, minus (v) any consolidated negative working capital at the end
of such period, minus (vi) a capital reserve for scheduled payments due
and budgeted operating and capital expenditures for the subsequent
fiscal year period in excess of any consolidated positive net working
capital at the end of such period, and plus (vii) distributions
received by Borrower from any other wholly owned subsidiaries.
(h) "Indebtedness" shall mean (i) all indebtedness,
obligations and liabilities of Borrower to Lender of any kind or
character, now existing or hereafter arising, whether direct, indirect,
related, unrelated, fixed, contingent, liquidated, unliquidated, joint,
several or joint and several, and regardless of whether such
indebtedness, obligations and liabilities may, prior to their
acquisition by Lender, be or have been payable to or in favor of a
third party and subsequently acquired by Lender (it being contemplated
that Lender may make such acquisitions from third parties), including
without limitation all indebtedness, obligations and liabilities of
Borrower to Lender now existing or hereafter arising under the Notes,
this Agreement, the other Loan Documents
LOAN AND SECURITY AGREEMENT - Page 3
or any draft, acceptance, guaranty, endorsement, letter of credit,
assignment, purchase, overdraft, discount, indemnity agreement or
otherwise, (ii) all accrued but unpaid interest on any of the
indebtedness described in (i) above, (iii) all obligations of Borrower
to Lender under the Loan Documents, (iv) all costs and expenses
incurred by Lender in connection with the collection and administration
of all or any part of the indebtedness and obligations described in
(i), (ii) and (iii) above or the protection or preservation of, or
realization upon, the collateral securing all or any part of such
indebtedness and obligations, including without limitation all
reasonable attorneys' fees, and (v) all renewals, extensions,
modifications and rearrangements of the indebtedness and obligations
described in (i), (ii), (iii) and (iv) above.
(i) "Licenses" shall mean the patent, trademark or copyright
license agreements of Borrower as any of the same may from time to time
be amended or supplemented and those licenses which are hereafter
obtained or acquired by Borrower.
(j) "Loan Documents" shall mean this Agreement, the Notes, the
Pledge Agreement, and the other agreements, instruments and documents
evidencing, securing, governing, guaranteeing or pertaining to the
Loans.
(k) "Notes" shall mean the Revolving Credit Note (as defined
below) and the Term Note (as defined below).
(l) "Patents" shall mean all right, title and interest in and
to the patent applications and patents of Borrower and those patents
which are hereafter obtained or acquired by Borrower and all
registrations, applications and recordings thereof, including, without
limitation, all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, and all applications,
registrations and recordings in the United States Patent and Trademark
Office or in any similar office or agency of the United States, or any
State thereof, all whether now owned or hereafter acquired by Borrower.
(m) "Pledge Agreement" shall mean that certain Amended and
Restated Pledge Agreement dated as of even date herewith as amended,
modified, or restated from time-to-time between Borrower and Lender.
(n) "Trademarks" shall mean the registered trademarks and
pending applications of Borrower and those trademarks which are
hereafter adopted or acquired by Borrower, and all right, title and
interest therein and thereto, and all registrations, applications, and
recordings thereof, including, without limitation, applications,
registrations and recordings in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any
State thereof, all whether now owned or hereafter acquired by Borrower.
All words and phrases used herein shall have the meaning specified in the Code
except to the extent such meaning is inconsistent with this Agreement. Terms not
otherwise defined herein shall have the same meanings as in the Notes.
2. CREDIT FACILITIES.
LOAN AND SECURITY AGREEMENT - Page 4
(a) EXISTING DEBT. As of the date of this Agreement, the
outstanding principal balance of the indebtedness under the Original
Loan Documents is $7,509,582.15 and the accrued and unpaid interest
thereunder is $1,243,665.18 (the "Existing Debt"). Borrower and Lender
agree to allocate (i) $600,000.00 of such existing indebtedness to the
Revolving Credit Facility (as defined below), (ii) $6,909,582.15 to the
Term Loan (as defined below), and (iii) 1,243,665.18 to accrued and
unpaid interest (the "Accrued Interest"). As of even date herewith, the
balance of the Loans is $1,100,000.00. Borrower hereby acknowledges and
agrees that no right of offset, defense, counterclaim, claim, causes of
action or objection in favor of Borrower against Lender exists arising
out of or with respect to any of the Existing Debt, the Accrued
Interest, the Original Loan Documents, or with respect to any other
documents or instruments now or heretofore evidencing, securing or in
any way relating to any of the foregoing, and Borrower does hereby
expressly waive, release and relinquish any and all such defenses,
setoffs, claims, counterclaims and causes of action, if any, against
Lender relating to the Existing Debt, the Accrued Interest or the
Original Loan Documents.
(b) REVOLVING CREDIT FACILITY. Subject to the terms and
conditions set forth in this Agreement and the other Loan Documents,
Lender hereby agrees to lend to Borrower an aggregate sum not to exceed
$2,000,000.00 (the "Revolving Credit Facility"), on a revolving basis
from time to time during the period commencing on the date hereof and
continuing until the earlier of (i) written demand for payment, (ii)
the acceleration of the Indebtedness pursuant to the terms of this
Agreement; or (iii) December 31, 2004 (the "Revolving Maturity Date").
Provided that no Event of Default shall have occurred and be
continuing, Lender will automatically renew the Revolving Credit
Facility for a period of one (1) year from December 1, 2004 and for
successive one year periods thereafter (but in no event beyond December
31, 2006) unless Lender notifies Borrower within that the Revolving
Credit Facility will not be renewed within thirty (30) days prior to
such renewal date. If at any time the sum of the aggregate principal
amount of Loans outstanding hereunder exceeds the Credit Facility (an
"Overadvance"), Borrower shall immediately repay the amount of such
Overadvance plus all accrued and unpaid interest thereon.
Notwithstanding anything contained herein to the contrary, an
Overadvance shall be considered a Loan and shall bear interest as such
and be secured by this Agreement. Subject to the terms and conditions
hereof, Borrower may borrow, repay and reborrow the Loans under the
Revolving Credit Facility. All advances under this Agreement shall be
collectively called the "Loans." Lender reserves the right to require
Borrower to give Lender not less than one (1) Business Day prior notice
of each Loan, specifying (i) the aggregate amount of such Loan, (ii)
the requested date of such advance, and (ii) the purpose for such Loan.
All Loans shall be in the sole discretion of Lender.
(c) TERM LOAN. Subject to the terms and conditions set forth
in this Agreement and the other Loan Documents, Lender agrees to make
available to Borrower a term loan credit facility (the "Term Loan")
commencing on the date hereof and until the earlier of (i) the
acceleration of the Indebtedness pursuant to the terms of this
Agreement; or (ii) December 31, 2006 (the "Term Maturity Date") in a
single advance and in an aggregate amount not to exceed $6,909,582.25.
Borrower may not reborrow any sums prepaid under the Term Loan.
LOAN AND SECURITY AGREEMENT - Page 5
(d) MANDATORY PREPAYMENT OF TERM LOAN. Commencing on December
31, 2003, within sixty (60) days after December 31 and June 30 of each
calendar year (each such date, being a "Measuring Date"), Borrower
shall prepay the Term Loan in an amount equal to (i) twenty-five
percent (25%) of the Excess Cash Flow earned during the six (6) month
period immediately preceding the Measuring Date, less (ii) the amount
of any voluntary prepayments of the Term Loan during such prior three
month period. All such prepayments shall be applied to payments due
under the Term Loan in the inverse order of maturity.
(e) MANDATORY PREPAYMENT OF LOANS. Borrower shall prepay the
Loans in an amount equal to $1,100,000 from the net proceeds of (i) any
loan from a third party to Borrower or any subsidiary of Borrower, or
(ii) the proceeds from any equity offering by Borrower or any
subsidiary of Borrower.
(f) ACCRUED INTEREST. The Accrued Interest shall be paid in
thirty-three (33) equal consecutive monthly installments commencing on
April 30, 2004 and continuing on the last Business Day of each calendar
month thereafter, with a final payment being made on the Term Maturity
Date.
3. PROMISSORY NOTES. The Revolving Credit Facility shall be evidenced
by a promissory note (such promissory note in the form of Exhibit B attached
hereto, together with any amendments, modifications, replacements,
substitutions, restatements, renewals, extensions and increases thereof, the
"Revolving Credit Note") duly executed by Borrower and payable to the order of
Lender, in form and substance acceptable to Lender. Interest on the Revolving
Credit Note shall accrue at the rate set forth therein. The principal of and
interest on the Revolving Credit Note shall be due and payable in accordance
with the terms and conditions set forth in the Revolving Credit Note and in this
Agreement. The Term Loan shall be evidenced by a promissory note (such
promissory note in the form of Exhibit C attached hereto, together with any
amendments, modifications, replacements, substitutions, restatements, renewals,
extensions and increases thereof, the "Term Note") duly executed by Borrower and
payable to the order of Lender, in form and substance acceptable to Lender.
Interest on the Term Note shall accrue at the rate set forth therein. The
principal of and interest on the Term Note shall be due and payable in
accordance with the terms and conditions set forth in the Term Note and in this
Agreement.
4. COLLATERAL. As collateral and security for the Indebtedness,
Borrower hereby grants to Lender, its successors and assigns, a first priority
lien and security interest in and to the Collateral.
5. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants, and upon each request for a Loan under the Revolving Credit Facility
or for the Term Loan represents and warrants to Lender as follows:
(a) EXISTENCE. Borrower is (i) duly organized, validly
existing and in good standing under the laws of the State of Delaware,
and (ii) duly qualified and licensed in all other states and
jurisdictions where it is doing business, except where the failure to
be so qualified or licensed would not (A) have a material adverse
effect on Borrower, or (B) effect the enforceability of the lien
granted Lender on the Collateral. Borrower has all requisite power and
authority to execute and deliver the Loan Documents.
LOAN AND SECURITY AGREEMENT - Page 6
(b) BINDING OBLIGATIONS. The execution, delivery, and
performance of the Loan Documents by Borrower have been duly authorized
by all necessary action by Borrower, and constitute legal, valid and
binding obligations of Borrower, enforceable in accordance with their
respective terms, except as limited by bankruptcy, insolvency or
similar laws of general application relating to the enforcement of
creditors' rights and except to the extent specific remedies may
generally be limited by equitable principles.
(c) NO CONSENT. The execution, delivery and performance of the
Loan Documents, and the consummation of the transactions contemplated
thereby, do not (i) conflict with, result in a violation of, or
constitute a default under (1) any provision of its organizational
document or other instrument binding upon Borrower, (2) any law,
governmental regulation, court decree or order applicable to Borrower,
or (3) any agreement, judgment, license, order or permit applicable to
or binding upon Borrower, (ii) require the consent, approval or
authorization of any third party, or (iii) result in or require the
creation of any lien, charge or encumbrance upon any assets or
properties of Borrower or of any person except as may be expressly
contemplated in the Loan Documents.
(d) FINANCIAL CONDITION. Each financial statement of Borrower
supplied to the Lender truly discloses and fairly presents Borrower's
financial condition as of the date of each such statement. There has
been no material adverse change in such financial condition or results
of operations of Borrower subsequent to the date of the most recent
financial statement supplied to the Lender.
(e) LITIGATION. There are no actions, suits or proceedings,
pending or, to the knowledge of Borrower, threatened against or
affecting Borrower, or the assets or properties of Borrower, before any
court or governmental department, commission or board, which, if
determined adversely, would have a material adverse effect on the
financial condition, properties, or operations of Borrower.
(f) TAXES; GOVERNMENTAL CHARGES. Borrower has filed all
federal, state and local tax reports and returns required by any law or
regulation to be filed by it and has either duly paid all taxes, duties
and charges indicated due on the basis of such returns and reports, or
made adequate provision for the payment thereof, and the assessment of
any material amount of additional taxes in excess of those paid and
reported is not reasonably expected.
(g) OWNERSHIP AND LIENS. Borrower has good and marketable
title to the Collateral free and clear of all liens, security
interests, encumbrances or adverse claims, (other than the Permitted
Liens). To Borrower's knowledge, no dispute, right of setoff,
counterclaim or defense exists with respect to all or any part of the
Collateral. Borrower has not executed any other security agreement
currently affecting the Collateral and no effective financing statement
or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording office.
(h) SECURITY INTEREST. Borrower has and will have at all times
full right, power and authority to grant a security interest in the
Collateral to Lender in the manner provided herein, free and clear of
any lien, security interest or other charge or
LOAN AND SECURITY AGREEMENT - Page 7
encumbrance other than for the Permitted Liens. This Agreement creates
a legal, valid and binding security interest in favor of Lender in the
Collateral securing the Indebtedness. Possession by Lender of certain
types of Collateral from time to time or the filing of the financing
statements delivered prior hereto or concurrently herewith by Borrower
to Lender will perfect and establish the first priority of Lender's
security interest hereunder in the Collateral other than for the
Permitted Liens.
(i) LOCATION. Borrower's chief executive office and the office
where the records concerning the Collateral are kept is at its address
set forth on the signature page hereof. All Collateral shall be kept at
such address and at such other locations as identified to Lender in
writing from time-to-time.
(j) OPERATION OF BUSINESS. To the best of it's knowledge,
Borrower possesses all licenses, permits, franchises, patents,
copyrights, trademarks, and trade names, or rights thereto, to conduct
business as now conducted and as presently proposed to be conducted,
and Borrower is not in violation of any valid rights or others with
respect to any of the foregoing.
6. AFFIRMATIVE COVENANTS. Until all Indebtedness of Borrower under the
Loan Documents is fully paid and satisfied, and Lender has no further commitment
to lend hereunder, Borrower agrees and covenants that it will, unless Lender
shall otherwise consent in writing:
(a) ACCOUNTS AND RECORDS. Maintain its books and records in
accordance with generally accepted accounting principles.
(b) RIGHT OF INSPECTION. Permit Lender to visit its properties
and installations and to examine, audit and make and take away copies
or reproductions of Borrower's books and records, at all reasonable
times and upon prior written notice.
(c) RIGHT TO ADDITIONAL INFORMATION. Furnish Lender with such
information and statements, lists of assets and liabilities, tax
returns, and other reports with respect to Borrower's financial
condition and business operations as Lender may reasonably request from
time to time.
(d) COMPLIANCE WITH LAWS. Conduct its business in an orderly
and efficient manner consistent with good business practices, and
perform and comply with all applicable statutes, rules, regulations or
ordinances imposed by any governmental unit upon Borrower, its
businesses, operations and properties (including without limitation,
all applicable environmental statutes, rules, regulations and
ordinances), where the failure to perform or comply could have a
material adverse effect on the business, operations or properties of
Borrower.
(e) TAXES. Pay and discharge when due all of its indebtedness
and obligations, including without limitation, all assessments, taxes,
governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, prior to
the date on which penalties would attach, and all lawful claims that,
if unpaid, might become a lien or charge upon any of Borrower's
properties, income, or profits; provided, however, Borrower will not be
required to pay and discharge any
LOAN AND SECURITY AGREEMENT - Page 8
such assessment, tax, charge, xxxx, xxxx or claim so long as (i) the
legality of the same shall be contested in good faith by appropriate
judicial, administrative or other legal proceedings, and (ii) Borrower
shall have established on its books adequate reserves with respect to
such contested assessment, tax, charge, xxxx, xxxx or claim in
accordance with generally accepted accounting principles, consistently
applied.
(f) INSURANCE. Maintain insurance, including but not limited
to, fire insurance, comprehensive property damage, public liability,
worker's compensation, business interruption and other insurance deemed
reasonably necessary. Borrower will, at its own expense, maintain
insurance with respect to all Collateral in such amounts, against such
risks, in such form and with such insurers, as shall be satisfactory to
Lender from time to time. Each policy of insurance maintained by
Borrower shall (i) name Borrower and Lender as insured parties
thereunder (without any representation or warranty by or obligation
upon Lender) as their interests may appear, (ii) contain the agreement
by the insurer that any loss thereunder shall be payable to Lender
notwithstanding any action, inaction or breach of representation or
warranty by Borrower, (iii) provide that there shall be no recourse
against Lender for payment of premiums or other amounts with respect
thereto, and (iv) provide that at least thirty (30) days prior written
notice of cancellation or of lapse shall be given to Lender by the
insurer. Borrower will deliver to Lender original or duplicate policies
of such insurance and, as often as Lender may reasonably request, a
report of a reputable insurance broker with respect to such insurance.
Borrower will also, at the request of Lender, duly execute and deliver
instruments of assignment of such insurance policies and cause the
respective insurers to acknowledge notice of such assignment. All
insurance payments in respect of loss of or damage to any Collateral
shall be paid to Lender and applied by Lender in accordance with the
Loan Documents.
(g) NOTICE OF INDEBTEDNESS. Promptly inform Lender of the
creation, incurrence or assumption by Borrower of any actual or
contingent liabilities not permitted under this Agreement.
(h) NOTICE OF LITIGATION. Promptly after the commencement
thereof, notify Lender of all actions, suits and proceedings before any
court or any governmental department, commission or board in which
Borrower is a plaintiff or defendant or any of the properties or assets
of Borrower are the subject of such actions, suits or proceedings.
(i) NOTICE OF MATERIAL ADVERSE CHANGE. Promptly inform Lender
of (i) any and all material adverse changes in Borrower's financial
condition, and (ii) all claims made against Borrower that could
materially affect the financial condition of Borrower.
(j) OWNERSHIP AND LIENS. Borrower will maintain good and
marketable title to all Collateral free and clear of all liens,
security interests, encumbrances or adverse claims, except for the
security interest created by this Agreement or Permitted Liens.
Borrower will cause any financing statement or other security
instrument with respect to the Collateral to be terminated, except for
Permitted Liens. Borrower will defend at its expense Lender's right,
title and security interest in and to the Collateral against the claims
of any third party.
LOAN AND SECURITY AGREEMENT - Page 9
(k) FURTHER ASSURANCES. Borrower will from time to time at its
expense promptly execute and deliver all further instruments and
documents and take all further action necessary or appropriate or that
Lender may reasonably request in order (i) to perfect and protect the
security interest created or purported to be created hereby and the
priority of such security interest, (ii) to enable Lender to exercise
and enforce its rights and remedies hereunder in respect of the
Collateral, and (iii) to otherwise effect the purposes of this
Agreement, including without limitation: (1) executing and filing such
financing or continuation statements, or amendments thereto; and (2)
furnishing to Lender from time to time statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral, all in reasonable detail satisfactory
to Lender..
(l) ACCOUNTS AND GENERAL INTANGIBLES. Borrower will, except as
otherwise provided herein, collect, at Borrower's own expense, all
amounts due or to become due under each of the accounts and general
intangibles. In connection with such collections, Borrower may and, at
Lender's direction, will take such action not otherwise forbidden
herein as Borrower or Lender may deem reasonably necessary or advisable
to enforce collection or performance of each of the accounts and
general intangibles. Borrower will also duly perform and cause to be
performed all of its material obligations with respect to the goods or
services, the sale or lease or rendition of which gave rise or will
give rise to each account and all of its obligations to be performed
under or with respect to the general intangibles. Borrower also
covenants and agrees to take any action and/or execute any documents
that Lender may request in order to comply with the Federal Assignment
of Claims Act, as amended.
(m) CHATTEL PAPER, DOCUMENTS AND INSTRUMENTS. Borrower will
take such action as may be requested by Lender in order to cause any
chattel paper, documents or instruments to be valid and enforceable and
will cause all chattel paper to have only one original counterpart.
Upon request by Lender, Borrower will deliver to Lender all originals
of chattel paper, documents or instruments and will xxxx all chattel
paper with a legend indicating that such chattel paper is subject to
the security interest granted hereunder.
(n) MAINTENANCE OF EXISTENCE. Preserve and maintain its
corporate existence and good standing in the jurisdiction of its
organization, and qualify and remain qualified as a foreign entity in
each jurisdiction in which such qualification is required.
(o) MAINTENANCE OF PROPERTIES. Maintain, keep, and preserve
all of its properties (tangible and intangible) necessary or useful in
the conduct of its business.
(p) CONDUCT OF BUSINESS. Continue to engage in an efficient
and economical manner in a business of the same general type as now
conducted by it on the date of this Agreement within Borrower's powers
under organizational documents.
7. NEGATIVE COVENANTS. Until all Indebtedness of Borrower under the
Loan Documents is fully paid and satisfied, and the Lender has no further
commitment to lend hereunder, Borrower will not, without the prior written
consent of Lender:
LOAN AND SECURITY AGREEMENT - Page 10
(a) NATURE OF BUSINESS. Make any material change in the nature
of its business as carried on as of the date hereof.
(b) LIQUIDATIONS, MERGERS, CONSOLIDATIONS. Liquidate, merge or
consolidate with or into any other entity.
(c) LIENS. Create or incur any lien or encumbrance on any of
its assets, other than (i) liens and security interests securing
indebtedness owing to Lender, (ii) liens for taxes, assessments or
similar charges either (1) not yet due, or (2) being contested in good
faith by appropriate proceedings and for which Borrower has established
adequate reserves, and (iii) liens approved in writing by Lender
(collectively, the "Permitted Liens").
(d) INDEBTEDNESS. Create, incur or assume any indebtedness for
borrowed money or issue or assume any other note, debenture, bond or
other evidences of indebtedness, or guarantee any such indebtedness or
such evidences of indebtedness of others, other than (i) borrowings
from Lender, (ii) Borrower's for a permitted purpose not to exceed
$250,000.00 per year, (iii) trade payables in the ordinary course of
business, or (iv) as previously consented to in writing by Lender.
(e) LOANS. Make loans that aggregate $100,000 to, or guarantee
any obligation of any other person, firm, or corporation, without
written permission from the Lender.
(f) TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any Affiliate of
Borrower, 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 would be obtained
in a comparable arm's-length transaction with a person or entity not an
Affiliate of Borrower. As used herein, the term "Affiliate" means any
individual or entity directly or indirectly controlling, controlled by,
or under common control with, another individual or entity.
(g) DIVIDENDS. Declare or pay any dividends on any equity
interest of Borrower, make any other distributions with respect to any
payment on account of the purchase, redemption, or other acquisition or
retirement of any equity interest of Borrower, or make any other
distribution, sale, transfer or lease of any of Borrower's assets other
than in the ordinary course of business, unless any such amounts are
directly utilized for the payment of (i) principal or interest on
indebtedness and obligations owing from time to time by Borrower to
Lender, or (ii) taxes owing by a shareholder of Borrower to the extent
that such taxes are incurred as a result of the business operations of
Borrower.
(h) TRANSFER OR ENCUMBRANCE. Borrower will not (i) sell,
assign (by operation of law or otherwise), transfer, exchange, lease or
otherwise dispose of any of the Collateral, (ii) xxxxx x xxxx or
security interest in or execute, file or record any financing statement
or other security instrument with respect to the Collateral than the
Permitted Liens, or (iii) deliver actual or constructive possession of
any of the Collateral
LOAN AND SECURITY AGREEMENT - Page 11
to any party other than Lender, except for (1) transfers previously
disclosed to Lender, (2) sales of inventory in the ordinary course of
business, and (3) the sale or other disposal of any item of equipment
which is worn out or obsolete and which has been replaced by an item of
equal suitability and value, owned by Borrower and made subject to the
security interest under this Agreement, but which is otherwise free and
clear of any lien, security interest, encumbrance or adverse claim
other than Permitted Liens; provided, however, the exceptions permitted
in clauses (1) through (3) above shall automatically terminate upon the
occurrence of an Event of Default.
(i) IMPAIRMENT OF SECURITY INTEREST. Take any action that
would in any manner impair the value or enforceability of Lender's
security interest in any Collateral.
(j) COMPROMISE OF COLLATERAL. Adjust, settle, compromise,
amend or modify any Collateral, except an adjustment, settlement,
compromise, amendment or modification in good faith and in the ordinary
course of business; provided, however, this exception shall
automatically terminate upon the occurrence of an Event of Default.
Borrower shall provide to Lender such information concerning (i) any
adjustment, settlement, compromise, amendment or modification of any
Collateral, and (ii) any claim asserted by any account debtor for
credit, allowance, adjustment, dispute, setoff or counterclaim, as
Lender may reasonably request from time to time.
(k) FINANCING STATEMENT FILINGS. Cause or permit any change in
the location of (i) any Collateral, (ii) any records concerning any
Collateral, (iii) Borrower's chief executive office, or (iv) the state
of Borrower's organization to a jurisdiction other than as represented
herein unless Borrower shall have notified Lender in writing of such
change at least sixty (60) days prior to the effective date of such
change, and shall have first taken all action required by Lender for
the purpose of further perfecting or protecting the security interest
in favor of Lender in the Collateral.
(l) CAPITAL EXPENDITURES. Make capital expenditures in any
fiscal year in excess of $100,000.00 in the aggregate.
(m) LEASES. Create, incur, assume, or suffer to exist, any
obligation as lessee for the rental or hire of any real or personal
property, except leases totaling in the aggregate $500,000.00 in any
fiscal year of Borrower.
(n) INVESTMENTS. Purchase any stock or debt obligations for
cash (except obligations of the U.S. government).
(o) CHANGES IN MANAGEMENT OR OWNERSHIP. Make any changes in
management that might materially change the character or operating
philosophy of Borrower.
8. REPORTING REQUIREMENTS. Until the Indebtedness of Borrower under
this Agreement and the other Loan Documents is fully paid and satisfied, and the
Lender has no further commitment to lend hereunder, Borrower will, unless Lender
shall otherwise consent in writing, furnish to Lender:
LOAN AND SECURITY AGREEMENT - Page 12
(a) INTERIM FINANCIAL STATEMENTS. As soon as available, and in
any event within forty-five (45) days after the end of each calendar
quarter, financial statements of Borrower as of the end of such
calendar quarter all in form and substance and in reasonable detail
satisfactory to Lender and duly certified (subject to year-end review
adjustments) by an appropriate person (i) as being true and correct in
all material aspects to the best of his or her knowledge (subject to
year end adjustments), and (ii) as having been prepared in accordance
with generally accepted accounting principles, consistently applied.
(b) ANNUAL FINANCIAL STATEMENTS AND TAX RETURNS. As soon as
available and in any event within (i) one hundred-twenty (120) days
after the end of each fiscal year of Borrower, a balance sheet, cash
flow and income statement of Borrower as of the end of such fiscal
year, in each case compiled by independent public accountants of
recognized standing acceptable to Lender, and (ii) within thirty (30)
days of filing, annual income tax returns for Borrower.
(c) NOTICE OF LITIGATION. Promptly after the commencement
thereof, notice of all actions, suits, and proceedings before any court
or governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, affecting Borrower which, if
determined adversely to Borrower could have a material adverse effect
on the financial condition, properties, or operations of Borrower.
(d) NOTICE OF DEFAULT AND EVENTS OF DEFAULT. As soon as
possible and in any event within thirty (30) days after the concurrence
of each default or event of default, a written notice setting forth the
details of such default or event of default and the action which is
proposed to be taken by Borrower with respect thereto.
(e) GENERAL INFORMATION. Such other information respecting the
condition or operations, financial or otherwise, of Borrower or any
subsidiary as the Lenders may from time to time reasonably request,
including copies of all filings with the Securities and Exchange
Commission.
9. RIGHTS OF LENDER. Lender shall have the rights contained in this
Section at all times that this Agreement is effective.
(a) ADDITIONAL FINANCING STATEMENTS FILINGS. Borrower hereby
authorizes Lender to file, without the signature of Borrower, one or
more financing or continuation statements, and amendments thereto,
relating to the Collateral. Borrower hereby irrevocably authorizes
Lender at any time and from time to time to file in any Uniform
Commercial Code jurisdiction any initial financing statements and
amendments thereto that (i) indicate the Collateral (A) as all assets
of Borrower or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of
Article or Chapter 9 of the Code, or (B) as being of an equal or lesser
scope or with greater detail, and (ii) contain any other information
required by Chapter 9 of the Code for the sufficiency or filing office
acceptance of any financing statement or amendment.
LOAN AND SECURITY AGREEMENT - Page 13
(b) POWER OF ATTORNEY. Borrower hereby irrevocably appoints
Lender as Borrower's attorney-in-fact, such power of attorney being
coupled with an interest, with full authority in the place and stead of
Borrower and in the name of Borrower or otherwise, from time to time in
Lender's reasonable discretion, to take any action and to execute any
instrument which Lender may deem necessary or appropriate to accomplish
the purposes of this Agreement, including without limitation: (i) to
obtain and adjust insurance required by Lender hereunder; (ii) to
demand, collect, xxx for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in
respect of the Collateral; (iii) to receive, endorse and collect any
drafts or other instruments, documents and chattel paper in connection
with clause (i) or (ii) above; and (iv) to file any claims or take any
action or institute any proceedings which Lender may deem necessary or
appropriate for the collection and/or preservation of the Collateral or
otherwise to enforce the rights of Lender with respect to the
Collateral.
(c) PERFORMANCE BY LENDER. If Borrower fails to perform any
agreement or obligation provided herein, Lender may itself perform, or
cause performance of, such agreement or obligation, and the expenses of
Lender incurred in connection therewith shall be a part of the
Indebtedness, secured by the Collateral and payable by Borrower on
demand.
(d) BORROWER'S RECEIPT OF PROCEEDS. All amounts and proceeds
(including instruments and writings) received by Borrower in respect of
such accounts or general intangibles shall be received in trust for the
benefit of Lender hereunder and, upon request of Lender, shall be
segregated from other property of Borrower and shall be forthwith
delivered to Lender in the same form as so received (with any necessary
endorsement) and applied to the Indebtedness in accordance with the
Loan Documents.
(e) NOTIFICATION OF ACCOUNT DEBTORS. Lender may at its
reasonable discretion from time to time notify any or all obligors
under any accounts or general intangibles (i) of Lender's security
interest in such accounts or general intangibles and direct such
obligors to make payment of all amounts due or to become due to
Borrower thereunder directly to Lender, and (ii) to verify the accounts
or general intangibles with such obligors. Lender shall have the right,
at the expense of Borrower, to enforce collection of any such accounts
or general intangibles and to adjust, settle or compromise the amount
or payment thereof, in the same manner and to the same extent as
Borrower.
10. EVENTS OF DEFAULT. Each of the following shall constitute an "Event
of Default" under this Agreement:
(a) The failure, refusal or neglect of Borrower to pay when
due any part of the principal of, or interest on, the Notes, or any
other Indebtedness owing to Lender by Borrower from time to time and
such failure, refusal or neglect shall continue unremedied for a period
of five (5) Business Days after written notice from Lender to Borrower.
(b) The failure of Borrower to timely and properly observe,
keep or perform any covenant, agreement, warranty or condition required
herein or in any of the other Loan Documents which is not cured within
ten (10) Business Days following written notice from Lender to
Borrower.
LOAN AND SECURITY AGREEMENT - Page 14
(c) The occurrence of an event of default under any of the
other Loan Documents or under any other agreement now existing or
hereafter arising between Lender and Borrower which is not cured within
ten (10) Business Days following written notice from Lender to
Borrower.
(d) Any representation contained herein or in any of the other
Loan Documents made by Borrower is false or misleading in any material
respect.
(e) The occurrence of any event which permits the acceleration
of the maturity of any indebtedness owing by Borrower or any of its
subsidiaries to any third party under any agreement or understanding.
(f) If Borrower: (i) becomes insolvent, or makes a transfer in
fraud of creditors, or makes an assignment for the benefit of
creditors, or admits in writing its inability to pay its debts as they
become due; (ii) generally is not paying its debts as such debts become
due; (iii) has a receiver, trustee or custodian appointed for, or take
possession of, all or substantially all of its assets, either in a
proceeding brought by it or in a proceeding brought against it and such
appointment is not discharged or such possession is not terminated
within sixty (60) days after the effective date thereof or it consents
to or acquiesces in such appointment or possession; (iv) files a
petition for relief under the United States Bankruptcy Code or any
other present or future federal or state insolvency, Bankruptcy or
similar laws (all of the foregoing hereinafter collectively called
"Applicable Bankruptcy Law") or an involuntary petition for relief is
filed against it under any Applicable Bankruptcy Law and such
involuntary petition is not dismissed within sixty (60) days after the
filing thereof, or an order for relief naming it is entered under any
Applicable Bankruptcy Law, or any composition, rearrangement,
extension, reorganization or other relief of Borrowers now or hereafter
existing is requested or consented to by it; (v) fails to have
discharged within a period of thirty (30) days any attachment,
sequestration or similar writ levied upon any property of it; or (vi)
fails to pay within thirty (30) days any final money judgment against
it.
(g) Except as otherwise provided in this Agreement, the
liquidation, dissolution, merger or consolidation of any such entity.
(h) The entry of any judgment against Borrower or the issuance
or entry of any attachments or other liens against any of the property
of Borrower for an amount in excess of $10,000.00 (individually or in
the aggregate) if undischarged, unbonded or undismissed on the date on
which such judgment could be executed upon.
(i) The Collateral or any portion thereof is taken on
execution or other process of law in any action against Borrower.
(j) The holder of any lien or security interest on any of the
assets of Borrower, including without limitation, the Collateral
(without hereby implying the consent of Lender to the existence or
creation of any such lien or security interest on the Collateral),
declares a default thereunder or institutes foreclosure or other
proceedings for the enforcement of its remedies thereunder.
LOAN AND SECURITY AGREEMENT - Page 15
(k) This Agreement shall at any time after its execution and
delivery and for any reason cease (i) to create a valid and perfected
first priority security interest in and to the property purported to be
subject to this Agreement; or (ii) to be in full force and effect or
shall be declared null and void, or the validity of enforceability
hereof shall be contested by Borrower, or Borrower shall deny it has
any further liability or obligation under this Agreement or the other
Loan Documents.
Nothing contained in this Agreement shall be construed to limit the events of
default enumerated in any of the other Loan Documents and all such events of
default shall be cumulative.
11. REMEDIES AND RELATED RIGHTS. If an Event of Default shall have
occurred, and without limiting any other rights and remedies provided herein,
under any of the Loan Documents or otherwise available to Lender, Lender may
exercise one or more of the rights and remedies provided in this Section.
(a) REMEDIES. Upon the occurrence of any one or more of the
foregoing Events of Default, (i) the entire unpaid balance of principal
of the Notes, together with all accrued but unpaid interest thereon,
and all other indebtedness owing to Lender by Borrower at such time
shall, at the option of Lender, become immediately due and payable
without further notice, demand, presentation, notice of dishonor,
notice of intent to accelerate, notice of acceleration, protest or
notice of protest of any kind, all of which are expressly waived by
Borrower, and (ii) Lender may, at its option, cease further advances
under the Notes and this Agreement; provided, however, concurrently and
automatically with the occurrence of an Event of Default under
Subsection 13(f): (i) further advances under the Notes and this
Agreement, and (ii) the Notes and all other Indebtedness owing to
Lender by Borrower at such time shall, without any action by Lender,
become due and payable, without further notice, demand, presentation,
notice of dishonor, notice of acceleration, notice of intent to
accelerate, protest or notice of protest of any kind, all of which are
expressly waived by Borrower. All rights and remedies of Lender set
forth in this Agreement and in any of the other Loan Documents may also
be exercised by Lender, at its option to be exercised in its sole
discretion, upon the occurrence of an Event of Default, and not in
substitution or diminution of any rights now or hereafter held by
Lender under the terms of any other agreement.
(b) OTHER REMEDIES. Lender may from time to time at its
discretion, without limitation and without notice except as expressly
provided in any of the Loan Documents:
(i) exercise in respect of the Collateral all the
rights and remedies of a Lender under the Code (whether or not
the Code applies to the affected Collateral);
(ii) require Borrower to, and Borrower hereby agrees
that it will at its expense and upon request of Lender,
assemble the Collateral as directed by Lender and make it
available to Lender at a place to be designated by Lender
which is reasonably convenient to both parties;
LOAN AND SECURITY AGREEMENT - Page 16
(iii) reduce its claim to judgment or foreclose or
otherwise enforce, in whole or in part, the security interest
granted hereunder by any available judicial procedure;
(iv) sell or otherwise dispose of, at its office, on
the premises of Borrower or elsewhere, the Collateral, as a
unit or in parcels, by public or private proceedings, and by
way of one or more contracts (it being agreed that the sale or
other disposition of any part of the Collateral shall not
exhaust Lender's power of sale, but sales or other
dispositions may be made from time to time until all of the
Collateral has been sold or disposed of or until the
Indebtedness has been paid and performed in full), and at any
such sale or other disposition it shall not be necessary to
exhibit any of the Collateral;
(v) buy the Collateral, or any portion thereof, at
any public sale;
(vi) buy the Collateral, or any portion thereof, at
any private sale if the Collateral is of a type customarily
sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations;
(vii) apply for the appointment of a receiver for the
Collateral, and Borrower hereby consents to any such
appointment; and
(viii) at its option, retain the Collateral in
satisfaction of the Indebtedness whenever the circumstances
are such that Lender is entitled to do so under the Code or
otherwise.
Borrower agrees that in the event Borrower is entitled to
receive any notice under the Uniform Commercial Code, as it
exists in the state governing any such notice, of the sale or
other disposition of any Collateral, reasonable notice shall
be deemed given when such notice is deposited in a depository
receptacle under the care and custody of the United States
Postal Service, postage prepaid, at Borrower's address set
forth on the signature page hereof, five (5) days prior to the
date of any public sale, or after which a private sale, of any
of such Collateral is to be held. Lender shall not be
obligated to make any sale of Collateral regardless of notice
of sale having been given. Lender may adjourn any public or
private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so
adjourned.
(c) APPLICATION OF PROCEEDS. If any Event of Default shall
have occurred, Lender may at its discretion apply or use any cash held
by Lender as Collateral, and any cash proceeds received by Lender in
respect of any sale or other disposition of, collection from, or other
realization upon, all or any part of the Collateral as follows in such
order and manner as Lender may elect:
(i) to the repayment or reimbursement of the
reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred by Lender in
connection with (1) the administration of the Loan Documents,
(2) the custody, preservation, use or operation of, or the
sale of, collection from, or other
LOAN AND SECURITY AGREEMENT - Page 17
realization upon, the Collateral, and (3) the exercise or
enforcement of any of the rights and remedies of Lender
hereunder;
(ii) to the payment or other satisfaction of any
liens and other encumbrances upon the Collateral;
(iii) to the satisfaction of the Indebtedness;
(iv) by holding such cash and proceeds as Collateral;
(v) to the payment of any other amounts required by
applicable law (including without limitation, Section
9.504(a)(3) of the Code or any other applicable statutory
provision); and
(vi) by delivery to Borrower or any other party
lawfully entitled to receive such cash or proceeds whether by
direction of a court of competent jurisdiction or otherwise.
(d) DEFICIENCY. In the event that the proceeds of any sale of,
collection from, or other realization upon, all or any part of the
Collateral by Lender are insufficient to pay all amounts to which
Lender is legally entitled, Borrower and any party who guaranteed or is
otherwise obligated to pay all or any portion of the Indebtedness shall
be liable for the deficiency, together with interest thereon as
provided in the Loan Documents.
(e) NON-JUDICIAL REMEDIES. In granting to Lender the power to
enforce its rights hereunder without prior judicial process or judicial
hearing, Borrower expressly waives, renounces and knowingly
relinquishes any legal right which might otherwise require Lender to
enforce its rights by judicial process. Borrower recognizes and
concedes that non-judicial remedies are consistent with the usage of
trade, are responsive to commercial necessity and are the result of a
bargain at arm's length. Nothing herein is intended to prevent Lender
or Borrower from resorting to judicial process at either party's
option.
(f) OTHER RECOURSE. Borrower waives any right to require
Lender to proceed against any third party, exhaust any Collateral or
other security for the Indebtedness, or to have any third party joined
with Borrower in any suit arising out of the Indebtedness or any of the
Loan Documents, or pursue any other remedy available to Lender.
Borrower further waives any and all notice of acceptance of this
Agreement and of the creation, modification, rearrangement, renewal or
extension of the Indebtedness. Borrower further waives any defense
arising by reason of any disability or other defense of any third party
or by reason of the cessation from any cause whatsoever of the
liability of any third party. Until all of the Indebtedness shall have
been paid in full, Borrower shall have no right of subrogation and
Borrower waives the right to enforce any remedy which Lender has or may
hereafter have against any third party, and waives any benefit of and
any right to participate in any other security whatsoever now or
hereafter held by Lender. Borrower authorizes Lender, and without
notice or demand and without any reservation of rights against Borrower
and without affecting Borrower's liability hereunder or on the
LOAN AND SECURITY AGREEMENT - Page 18
Indebtedness to (i) take or hold any other property of any type from
any third party as security for the Indebtedness, and exchange,
enforce, waive and release any or all of such other property, (ii)
apply such other property and direct the order or manner of sale
thereof as Lender may in its discretion determine, (iii) renew, extend,
accelerate, modify, compromise, settle or release any of the
Indebtedness or other security for the Indebtedness, (iv) waive,
enforce or modify any of the provisions of any of the Loan Documents
executed by any third party, and (v) release or substitute any third
party.
12. INDEMNITY. Borrower hereby indemnifies and agrees to hold harmless
Lender, and its officers, directors, employees, agents and representatives (each
an "Indemnified Person") from and against any and all liabilities, obligations,
claims, losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind or nature (collectively, the "Claims") which may be
imposed on, incurred by, or asserted against, any Indemnified Person arising in
connection with the Loan Documents, the Indebtedness or the Collateral
(including without limitation, the enforcement of the Loan Documents and the
defense of any Indemnified Person's actions and/or inactions in connection with
the Loan Documents). WITHOUT LIMITATION, THE FOREGOING INDEMNITIES SHALL APPLY
TO EACH INDEMNIFIED PERSON WITH RESPECT TO ANY CLAIMS WHICH IN WHOLE OR IN PART
ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH AND/OR ANY OTHER
INDEMNIFIED PERSON, except to the limited extent the Claims against an
Indemnified Person are proximately caused by such Indemnified Person's gross
negligence or willful misconduct. If Borrower or any third party ever alleges
such gross negligence or willful misconduct by any Indemnified Person, the
indemnification provided for in this Section shall nonetheless be paid upon
demand, subject to later adjustment or reimbursement, until such time as a court
of competent jurisdiction enters a final judgment as to the extent and effect of
the alleged gross negligence or willful misconduct. The indemnification provided
for in this Section shall survive the termination of this Agreement and shall
extend and continue to benefit each individual or entity who is or has at any
time been an Indemnified Person hereunder.
13. WAIVER AND AGREEMENT. Neither the failure nor any delay on the part
of Lender to exercise any right, power or privilege herein or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. No
waiver of any provision in this Agreement or in any of the other Loan Documents
and no departure by Borrower therefrom shall be effective unless the same shall
be in writing and signed by Lender, and then shall be effective only in the
specific instance and for the purpose for which given and to the extent
specified in such writing. No modification or amendment to this Agreement or to
any of the other Loan Documents shall be valid or effective unless the same is
signed by the party against whom it is sought to be enforced.
14. BENEFITS. This Agreement shall be binding upon and inure to the
benefit of Lender and Borrower, and their respective successors and assigns,
provided, however, that Borrower may not, without the prior written consent of
Lender, assign any rights, powers, duties or obligations under this Agreement or
any of the other Loan Documents.
LOAN AND SECURITY AGREEMENT - Page 19
15. NOTICES. All notices, requests, demands or other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and given by (a) personal delivery, (b) expedited delivery service with proof of
delivery, or (c) United States mail, postage prepaid, registered or certified
mail, return receipt requested, sent to the intended addressee at the address
set forth on the signature page hereof and shall be deemed to have been received
either, in the case of personal delivery, as of the time of personal delivery,
in the case of expedited delivery service, as of the time of the expedited
delivery and in the manner provided herein, or in the case of mail, upon the
third day after deposit in a depository receptacle under the care and custody of
the United States Postal Service. Either party shall have the right to change
its address for notice hereunder to any other location within the continental
United States by notice to the other party of such new address at least thirty
(30) days prior to the effective date of such new address.
16. CONSTRUCTION. This Agreement and the other Loan Documents have been
executed and delivered in the State of Texas, shall be governed by and construed
in accordance with the laws of the State of Texas, and shall be performable by
the parties hereto in the county in Texas where the Lender's address set forth
on the signature page hereof is located.
17. INVALID PROVISIONS. If any provision of this Agreement or any of
the other Loan Documents are held to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable and the
remaining provisions of this Agreement or any of the other Loan Documents shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance.
18. EXPENSES. Borrower shall pay all costs and expenses (including,
without limitation, reasonable attorneys' fees) in connection with (a) the
drafting and execution of the Loan Documents and the transactions contemplated
therein (b) any action required in the course of administration of the
indebtedness and obligations evidenced by the Loan Documents, and (c) any action
in the enforcement of Lender's rights upon the occurrence of an Event of
Default.
19. PARTICIPATION OF THE LOANS. Borrower agrees that Lender may, at its
option, sell interests in the Loans and its rights under this Agreement to a
financial institution or institutions and, in connection with each such sale,
Lender may disclose any financial and other information available to Lender
concerning Borrower to each perspective purchaser subject to obtaining a
confidentiality agreement with each prospective purchaser prior to disclosing
Borrower's confidential information.
20. CONFLICTS. In the event any term or provision hereof is
inconsistent with or conflicts with any provision of the other Loan Documents,
the terms and provisions contained in this Agreement shall be controlling.
21. COUNTERPARTS. This Agreement may be separately executed in any
number of counterparts, each of which shall be an original, but all of which,
taken together, shall be deemed to constitute one and the same instrument.
22. AMENDMENT AND CONSOLIDATION. This Agreement is an amendment,
restatement and consolidation of the Original Loan Agreement and the Original
Security Agreement.
LOAN AND SECURITY AGREEMENT - Page 20
NOTICE OF FINAL AGREEMENT
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES, AND THE SAME MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
LOAN AND SECURITY AGREEMENT - Page 21
AGREED and accepted as of the date first written above.
LENDER: ADDRESS:
XXXXXXXX FAMILY PARTNERSHIP, LTD. 0000 Xxxxxxxxxx Xxxxx,
Xxxxxxxxxx, XX 00000
By: _________________________
Name: X.X. Xxxxxxxx, Xx.
Title: General Partner
BORROWER: ADDRESS:
XXXXXXXX.XXX, INC.
By: _______________________ 00000 X. Xxxxxx Xxxxxxx
Name:______________________ Suite 2000
Title:_____________________ Xxxxxx, XX 00000
OSPREY TECHNOLOGIES, INC.
By: _______________________ 00000 X. Xxxxxx Xxxxxxx
Name:______________________ Suite 2000
Title:_____________________ Xxxxxx, XX 00000
VIDEOWARE, INC.
By: _______________________ 00000 X. Xxxxxx Xxxxxxx
Name:______________________ Suite 2000
Title:_____________________ Xxxxxx, XX 00000
LOAN AND SECURITY AGREEMENT - Page 22
STATE OF TEXAS Section
COUNTY___________________ Section
This instrument was acknowledged before me on October __, 2003, by
XXXXXX X. XXXXXXXX, XX., the General Partner of the XXXXXXXX FAMILY TRUST, LTD.
[SEAL] ____________________________________
Notary Public, State of Texas
STATE OF TEXAS Section
COUNTY OF________________ Section
This instrument was acknowledged before me on October __, 2003, by
________________, the ____________________ of XXXXXXXX.XXX, INC.
[SEAL] ____________________________________
Notary Public, State of Texas
STATE OF TEXAS Section
COUNTY OF________________ Section
This instrument was acknowledged before me on October __, 2003, by
________________, the ____________________ of OSPREY TECHNOLOGIES, INC.
[SEAL] ____________________________________
Notary Public, State of Texas
STATE OF TEXAS Section
COUNTY OF________________ Section
This instrument was acknowledged before me on October __, 2003, by
________________, the ____________________ of VIDEOWARE, INC.
[SEAL] ____________________________________
Notary Public, State of Texas
LOAN AND SECURITY AGREEMENT - Page 23
EXHIBIT A
TRADEMARKS, PATENTS, COPYRIGHTS AND LICENSES
LOAN AND SECURITY AGREEMENT - Page 24
EXHIBIT B
AMENDED AND RESTATED
PROMISSORY NOTE
(REVOLVING CREDIT NOTE)
$2,000,000.00 October 15, 2003
FOR VALUE RECEIVED, on or before the Revolving Maturity Date,
XXXXXXXX.XXX, INC. a Delaware corporation, OSPREY TECHNOLOGIES, INC., a Delaware
corporation, and VIDEOWARE, INC., a Delaware corporation (jointly and severally,
"Borrower"), promises to pay to the order of XXXXXXXX FAMILY PARTNERSHIP, LTD.
("Lender") at its offices at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, XX 00000 the
principal amount of TWO MILLION AND NO/100 DOLLARS ($2,000,000.00) or such which
is outstanding from time to time (the "Total Principal Amount") under this
promissory note ("Note"), together with interest on such portion of the Total
Principal Amount which has been advanced to Borrower from the date advanced
until paid at a rate per annum equal to the lesser of (a) the Maximum Rate (as
defined below), (b) a rate (the "Contract Rate") equal to the sum of (i) the
Prime Rate (as defined below), plus (ii) three percent (3%), or (c) nine and
one-half percent (9.50%), each change in the rate to be charged on this Note to
become effective without notice to Borrower on the effective date of each such
change in the Maximum Rate or the Prime Rate, as the case may be; provided,
however, that if at any time the Contract Rate shall exceed the Maximum Rate,
thereby causing the interest on this Note to be limited to the Maximum Rate,
then any subsequent reduction in the Prime Rate shall not reduce the rate of
interest on this Note below the Maximum Rate until the total amount of interest
accrued on this Note equals the amount of interest which would have accrued on
this Note if the Contract Rate had at all times been in effect.
"Prime Rate" means the rate of interest per annum which is equal to the
variable rate of interest per annum equal to the prime rate as published from
time to time in the "Money Rates" table of The Wall Street Journal (Southwest
Edition) as of the date of this Note and as of the first Business Day of each
calendar year thereafter. If the prime rate is no longer published in the "Money
Rates" table of The Wall Street Journal (Southwest Edition), then Lender will
choose a substitute index that is based upon comparable information. "Maximum
Rate," means at the particular time in question the maximum rate of interest
that, under applicable law, may then be charged on this Note.
The principal balance of and all accrued but unpaid interest on this
Note shall be due and payable as follows:
(a) Interest shall be due and payable on demand as it accrues; and
(b) Thereafter, one (1) final installment of all outstanding principal
and all accrued and unpaid interest hereunder shall be due and payable
on the Revolving Maturity Date.
This Note evidences Indebtedness from time to time owing by Borrower to
Lender pursuant to that certain Amended and Restated Loan and Security Agreement
dated as of October 15, 2003 by and between Borrower and Lender (as amended,
restated and modified from
Amended and Restated Promissory Note - Page 1
time to time, the "Loan Agreement"). The holder of this Note is entitled to the
benefits and security provided in the Loan Documents. This Note is the note
referred to in the Loan Agreement as the "Revolving Credit Note." Capitalized
terms not otherwise defined herein, shall have the same meanings as in the Loan
Agreement.
Under the Loan Agreement, and pursuant to the terms thereof, Borrower
may request advances and make payments hereunder from time to time, provided
that it is understood and agreed that the aggregate principal amount outstanding
from time to time hereunder shall not at any time exceed the Total Principal
Amount. The unpaid balance of this Note shall increase and decrease with each
new advance or payment hereunder, as the case may be. This Note shall not be
deemed terminated or canceled prior to the Revolving Maturity Date set forth for
this Note, although the entire principal balance hereof may from time to time be
paid in full. Pursuant to the terms of the Loan Agreement, Borrower may borrow,
repay and reborrow hereunder. Unless otherwise agreed to in writing, or
otherwise required by applicable law, payments will be applied first to unpaid
accrued interest, then to principal, and any remaining amount to any unpaid
collection costs, delinquency charges and other charges; provided, however, upon
occurrence of another Event of Default, Lender reserves the right to apply
payments among principal, interest, delinquency charges, collection costs and
other charges, at its discretion. All payments of principal or interest on this
Note shall be made in lawful money of the United States of America in
immediately available funds, at the address of Lender indicated above, or such
other place as the holder of this Note shall designate in writing to Borrower.
If any payment of principal or interest on this Note shall become due on a day,
which is not a Business Day (as hereinafter defined), such payment shall be made
on the next succeeding Business Day and any such extension of time shall be
included in computing interest in connection with such payment. As used herein,
the term "Business Day" shall mean any day other than a Saturday, Sunday or any
other day on which national banking associations are authorized to be closed.
The books and records of Lender shall be prima facie evidence of all outstanding
principal and accrued and unpaid interest on this Note.
Borrower agrees that upon the occurrence of any one or more Events of
Default the holder of this Note may, at its option, without further notice or
demand, (i) declare the outstanding principal balance of and accrued but unpaid
interest on this Note at once due and payable, (ii) foreclose all liens securing
payment hereof, (iii) pursue any and all other rights, remedies and resources
available to the holder hereof, including but not limited to any such rights,
remedies or resources under the Loan Documents, at law or in equity, or (iv)
pursue any combination of the foregoing.
The failure to exercise the option to accelerate the maturity of this
Note or any other right, remedy or recourse available to the holder hereof upon
the occurrence of an Event of Default hereunder shall not constitute a waiver of
the right of the holder of this Note to exercise the same at that time or at any
subsequent time with respect to such Event of Default or any other Event of
Default. The rights, remedies and resources of the holder hereof, as provided in
this Note and in any of the other Loan Documents, shall be cumulative and
concurrent and may be pursued separately, successively or together as often as
occasion therefore shall arise, at the sole discretion of the holder hereof. The
acceptance by the holder hereof of any payment under this Note which is less
than the payment in full of all amounts due and payable at the time of such
payment shall not (i) constitute a waiver of or impair, reduce, release or
extinguish any right, remedy or recourse of the holder hereof, or nullify any
prior exercise of any such right, remedy
Amended and Restated Promissory Note - Page 2
or recourse, or (ii) impair, reduce, release or extinguish the obligations of
any party liable under any of the Loan Documents as originally provided herein
or therein.
This Note and all of the other Loan Documents are intended to be
performed in accordance with, and only to the extent permitted by, all
applicable usury laws. If any provision hereof or of any of the other Loan
Documents or the application thereof to any person or circumstance shall, for
any reason and to any extent, be invalid or unenforceable, neither the
application of such provision to any other person or circumstance nor the
remainder of the instrument in which such provision is contained shall be
affected thereby and shall be enforced to the greatest extent permitted by law.
It is expressly stipulated and agreed to be the intent of the holder hereof to
at all times comply with the usury and other applicable laws now or hereafter
governing the interest payable on the indebtedness evidenced by this Note. If
the applicable law is ever revised, repealed or judicially interpreted so as to
render usurious any amount called for under this Note or under any of the other
Loan Documents, or contracted for, charged, taken, reserved or received with
respect to the indebtedness evidenced by this Note, or if Lender's exercise of
the option to accelerate the Revolving Maturity of this Note, or if any
prepayment by Borrower results in Borrower having paid any interest in excess of
that permitted by law, then it is the express intent of Borrower and Lender that
all excess amounts theretofore collected by Lender be credited on the principal
balance of this Note (or, if this Note and all other indebtedness arising under
or pursuant to the other Loan Documents have been paid in full, refunded to
Borrower), and the provisions of this Note and the other Loan Documents
immediately be deemed reformed and the amounts thereafter collectable hereunder
and thereunder reduced, without the necessity of the execution of any new
document, so as to comply with the then applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid, or agreed to be paid, by Borrower for the use, forbearance,
detention, taking, charging, receiving or reserving of the indebtedness of
Borrower to Lender under this Note or arising under or pursuant to the other
Loan Documents shall, to the maximum extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the rate or amount of interest on
account of such indebtedness does not exceed the usury ceiling from time to time
in effect and applicable to such indebtedness for so long as such indebtedness
is outstanding. To the extent federal law permits Lender to contract for, charge
or receive a greater amount of interest, Lender will rely on federal law instead
of the Texas Finance Code, as supplemented by Texas Credit Title for the purpose
of determining the Maximum Rate. Additionally, to the maximum extent permitted
by applicable law now or hereafter in effect, Lender may, at its option and from
time to time, implement any other method of computing the Maximum Rate under the
Texas Finance Code, as supplemented by Texas Credit Title, or under other
applicable law by giving notice, if required, to Borrower as provided by
applicable law now or hereafter in effect. Notwithstanding anything to the
contrary contained herein or in any of the other Loan Documents, it is not the
intention of Lender to accelerate the Revolving Maturity of any interest that
has not accrued at the time of such acceleration or to collect unearned interest
at the time of such acceleration.
If this Note is placed in the hands of an attorney for collection, or
is collected in whole or in part by suit or through probate, bankruptcy or other
legal proceedings of any kind, Borrower agrees to pay, in addition to all other
sums payable hereunder, all costs and expenses of collection, including but not
limited to reasonable attorneys' fees.
Amended and Restated Promissory Note - Page 3
Borrower and any and all endorsers and guarantors of this Note
severally waive presentment for payment, notice of nonpayment, protest, demand,
notice of protest, notice of intent to accelerate, notice of acceleration and
dishonor, diligence in enforcement and indulgences of every kind and without
further notice hereby agree to renewals, extensions, exchanges or releases of
collateral, taking of additional collateral, indulgences or partial payments,
either before or after Revolving Maturity.
THIS NOTE IS GIVEN IN AMENDMENT, RESTATEMENT AND EXTENSION, BUT NOT
EXTINGUISHMENT OF ALL AMOUNTS LEFT OWING AND UNPAID UNDER THAT CERTAIN
PROMISSORY NOTE DATED OCTOBER 22, 1998 (AS THE SAME HAS BEEN AMENDED, MODIFIED
OR RESTATED TO EVEN DATE HEREWITH), EXECUTED BY BORROWER AND PAYABLE TO THE
ORDER OF LENDER IN THE ORIGINAL PRINCIPAL AMOUNT OF $9,000.000.00.
THIS NOTE HAS BEEN EXECUTED UNDER, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, EXCEPT AS SUCH LAWS ARE
PREEMPTED BY APPLICABLE FEDERAL LAWS.
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Amended and Restated Promissory Note - Page 4
EXECUTED as of the date first written above.
BORROWER:
XXXXXXXX.XXX, INC.
By: _________________________
Name:________________________
Title:_______________________
OSPREY TECHNOLOGIES, INC.
By: _________________________
Name:________________________
Title:_______________________
VIDEOWARE, INC.
By: _________________________
Name:________________________
Title:_______________________
Amended and Restated Promissory Note - Page 5
EXHIBIT C
PROMISSORY NOTE
(TERM NOTE)
$6,909,582.25 October 15, 2003
FOR VALUE RECEIVED, on or before the Term Maturity Date, XXXXXXXX.XXX,
INC. a Delaware corporation, OSPREY TECHNOLOGIES, INC., a Delaware corporation,
and VIDEOWARE, INC., a Delaware corporation (jointly and severally, "Borrower"),
promises to pay to the order of XXXXXXXX FAMILY PARTNERSHIP, LTD. a Texas
partnership ("Lender") at its offices at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, XX
00000 the principal amount of SIX MILLION NINE HUNDRED AND NINE THOUSAND FIVE
HUNDRED AND EIGHTY-TWO AND 25/100 DOLLARS ($6,909,582.25) or such which is
outstanding from time to time (the "Total Principal Amount") under this
promissory note ("Note"), together with interest on the Total Principal Amount
from the date hereof until paid at a fluctuating rate per annum which shall from
be equal to the lesser of (a) the Maximum Rate (as defined below), (b) a rate
(the "Contract Rate") equal to the sum of (i) the Prime Rate (as defined below),
plus (ii) three percent (3%), or (c) nine and one-half percent (9.50%), each
change in the rate to be charged on this Note to become effective without notice
to Borrower on the effective date of each such change in the Maximum Rate or the
Prime Rate, as the case may be; provided, however, that if at any time the
Contract Rate shall exceed the Maximum Rate, thereby causing the interest on
this Note to be limited to the Maximum Rate, then any subsequent reduction in
the Prime Rate shall not reduce the rate of interest on this Note below the
Maximum Rate until the total amount of interest accrued on this Note equals the
amount of interest which would have accrued on this Note if the Contract Rate
had at all times been in effect.
"Prime Rate" means the rate of interest per annum which is equal to the
variable rate of interest per annum equal to the prime rate as published from
time to time in the "Money Rates" table of The Wall Street Journal (Southwest
Edition) as of the date of this Note and as of the first Business Day of each
calendar year thereafter. If the prime rate is no longer published in the "Money
Rates" table of The Wall Street Journal (Southwest Edition), then Lender will
choose a substitute index that is based upon comparable information. "Maximum
Rate," means at the particular time in question the maximum rate of interest
that, under applicable law, may then be charged on this Note.
The principal balance of and all accrued but unpaid interest on this
Note shall be due and payable as follows:
(a) Thirty (33) consecutive monthly principal payments in the amount
equal to a thirty (30) year amortization (monthly) of the Total
Principal Amount outstanding as of the date of this Note shall be due
and payable commencing on April 30, 2004 and continuing on the last day
of each calendar month thereafter; and
(b) One (1) final installment of all outstanding principal and all
accrued and unpaid interest hereunder shall be due and payable on the
Term Maturity Date.
At maturity (whether by acceleration or otherwise), Borrower must repay the
entire principal balance of this Note and unpaid interest then due. Lender is
under no obligation to refinance the
Promissory Note - Page 1
Term Loan at that time. Borrower will, therefore, be required to make payment
out of other assets Borrower may own; or Borrower will have to find a lender
willing to lend Borrower the money at prevailing market rates, which may be
considerably higher than the interest rate on the Loan.
This Note evidences Indebtedness owing by Borrower to Lender pursuant
to that certain Amended and Restated Loan and Security Agreement dated as of
October 15, 2003 by and between Borrower and Lender (as amended, restated and
modified from time to time, the "Loan Agreement"). The holder of this Note is
entitled to the benefits and security provided in the Loan Documents. This Note
is the note referred to in the Loan Agreement as the "Term Note." Capitalized
terms not otherwise defined herein, shall have the same meanings as in the Loan
Agreement. This Note may be prepaid in whole or in part at any time. This Note
is subject to the mandatory prepayment provisions set forth in the Loan
Agreement.
Unless otherwise agreed to in writing, or otherwise required by
applicable law, payments will be applied first to unpaid accrued interest, then
to principal, and any remaining amount to any unpaid collection costs,
delinquency charges and other charges; provided, however, upon occurrence of
another Event of Default, Lender reserves the right to apply payments among
principal, interest, delinquency charges, collection costs and other charges, at
its discretion. All payments of principal or interest on this Note shall be made
in lawful money of the United States of America in immediately available funds,
at the address of Lender indicated above, or such other place as the holder of
this Note shall designate in writing to Borrower. If any payment of principal or
interest on this Note shall become due on a day, which is not a Business Day (as
hereinafter defined), such payment shall be made on the next succeeding Business
Day and any such extension of time shall be included in computing interest in
connection with such payment. As used herein, the term "Business Day" shall mean
any day other than a Saturday, Sunday or any other day on which national banking
associations are authorized to be closed. The books and records of Lender shall
be prima facie evidence of all outstanding principal and accrued and unpaid
interest on this Note.
Borrower agrees that upon the occurrence of any one or more Events of
Default the holder of this Note may, at its option, without further notice or
demand, (i) declare the outstanding principal balance of and accrued but unpaid
interest on this Note at once due and payable, (ii) foreclose all liens securing
payment hereof, (iii) pursue any and all other rights, remedies and resources
available to the holder hereof, including but not limited to any such rights,
remedies or resources under the Loan Documents, at law or in equity, or (iv)
pursue any combination of the foregoing.
The failure to exercise the option to accelerate the maturity of this
Note or any other right, remedy or recourse available to the holder hereof upon
the occurrence of an Event of Default hereunder shall not constitute a waiver of
the right of the holder of this Note to exercise the same at that time or at any
subsequent time with respect to such Event of Default or any other Event of
Default. The rights, remedies and resources of the holder hereof, as provided in
this Note and in any of the other Loan Documents, shall be cumulative and
concurrent and may be pursued separately, successively or together as often as
occasion therefore shall arise, at the sole discretion of the holder hereof. The
acceptance by the holder hereof of any payment under this Note which is less
than the payment in full of all amounts due and payable at the time of such
payment shall not (i) constitute a waiver of or impair, reduce, release or
extinguish any right,
Promissory Note - Page 2
remedy or recourse of the holder hereof, or nullify any prior exercise of any
such right, remedy or recourse, or (ii) impair, reduce, release or extinguish
the obligations of any party liable under any of the Loan Documents as
originally provided herein or therein.
This Note and all of the other Loan Documents are intended to be
performed in accordance with, and only to the extent permitted by, all
applicable usury laws. If any provision hereof or of any of the other Loan
Documents or the application thereof to any person or circumstance shall, for
any reason and to any extent, be invalid or unenforceable, neither the
application of such provision to any other person or circumstance nor the
remainder of the instrument in which such provision is contained shall be
affected thereby and shall be enforced to the greatest extent permitted by law.
It is expressly stipulated and agreed to be the intent of the holder hereof to
at all times comply with the usury and other applicable laws now or hereafter
governing the interest payable on the indebtedness evidenced by this Note. If
the applicable law is ever revised, repealed or judicially interpreted so as to
render usurious any amount called for under this Note or under any of the other
Loan Documents, or contracted for, charged, taken, reserved or received with
respect to the indebtedness evidenced by this Note, or if Lender's exercise of
the option to accelerate the Term Maturity of this Note, or if any prepayment by
Borrower results in Borrower having paid any interest in excess of that
permitted by law, then it is the express intent of Borrower and Lender that all
excess amounts theretofore collected by Lender be credited on the principal
balance of this Note (or, if this Note and all other indebtedness arising under
or pursuant to the other Loan Documents have been paid in full, refunded to
Borrower), and the provisions of this Note and the other Loan Documents
immediately be deemed reformed and the amounts thereafter collectable hereunder
and thereunder reduced, without the necessity of the execution of any new
document, so as to comply with the then applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid, or agreed to be paid, by Borrower for the use, forbearance,
detention, taking, charging, receiving or reserving of the indebtedness of
Borrower to Lender under this Note or arising under or pursuant to the other
Loan Documents shall, to the maximum extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the rate or amount of interest on
account of such indebtedness does not exceed the usury ceiling from time to time
in effect and applicable to such indebtedness for so long as such indebtedness
is outstanding. To the extent federal law permits Lender to contract for, charge
or receive a greater amount of interest, Lender will rely on federal law instead
of the Texas Finance Code, as supplemented by Texas Credit Title for the purpose
of determining the Maximum Rate. Additionally, to the maximum extent permitted
by applicable law now or hereafter in effect, Lender may, at its option and from
time to time, implement any other method of computing the Maximum Rate under the
Texas Finance Code, as supplemented by Texas Credit Title, or under other
applicable law by giving notice, if required, to Borrower as provided by
applicable law now or hereafter in effect. Notwithstanding anything to the
contrary contained herein or in any of the other Loan Documents, it is not the
intention of Lender to accelerate the Term Maturity of any interest that has not
accrued at the time of such acceleration or to collect unearned interest at the
time of such acceleration.
If this Note is placed in the hands of an attorney for collection, or
is collected in whole or in part by suit or through probate, bankruptcy or other
legal proceedings of any kind, Borrower agrees to pay, in addition to all other
sums payable hereunder, all costs and expenses of collection, including but not
limited to reasonable attorneys' fees.
Promissory Note - Page 3
Borrower and any and all endorsers and guarantors of this Note
severally waive presentment for payment, notice of nonpayment, protest, demand,
notice of protest, notice of intent to accelerate, notice of acceleration and
dishonor, diligence in enforcement and indulgences of every kind and without
further notice hereby agree to renewals, extensions, exchanges or releases of
collateral, taking of additional collateral, indulgences or partial payments,
either before or after Term Maturity.
THIS NOTE IS GIVEN IN AMENDMENT, RESTATEMENT AND EXTENSION, BUT NOT
EXTINGUISHMENT OF ALL AMOUNTS LEFT OWING AND UNPAID UNDER THAT CERTAIN
PROMISSORY NOTE DATED OCTOBER 22, 1998 (AS THE SAME HAS BEEN AMENDED, MODIFIED
OR RESTATED TO EVEN DATE HEREWITH), EXECUTED BY BORROWER AND PAYABLE TO THE
ORDER OF LENDER IN THE ORIGINAL PRINCIPAL AMOUNT OF $9,000.000.00.
THIS NOTE HAS BEEN EXECUTED UNDER, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, EXCEPT AS SUCH LAWS ARE
PREEMPTED BY APPLICABLE FEDERAL LAWS.
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Promissory Note - Page 4
EXECUTED as of the date first written above.
BORROWER:
XXXXXXXX.XXX, INC.
By: _________________________
Name:________________________
Title:_______________________
OSPREY TECHNOLOGIES, INC.
By: _________________________
Name:________________________
Title:_______________________
VIDEOWARE, INC.
By: _________________________
Name:________________________
Title:_______________________
Promissory Note - Page 5
