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RECEIVABLES LOAN AND SECURITY AGREEMENT
THIS RECEIVABLES LOAN AND SECURITY AGREEMENT (this "Agreement"), dated as
of July 10, 1995, is entered into by and between Flexilnternational Software,
Inc., a Delaware corporation, with its chief executive offices and principal
place of business located at Xxx Xxxxxxxx Xx., Xxxxxxx, XX 00000 Borrower"), and
COMDISCO, INC., a Delaware corporation, with its principal place of business
located at 0000 Xxxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000 ("Lender" or
sometimes, "Comdisco")
RECITALS
A. Borrower has requested Lender to make available to Borrower revolving
loans in the aggregate outstanding principal amount of up to One Million Five
Hundred Thousand DOLLARS ($1,500,000.00).
B. Lender is willing to make the loans on the terms and conditions set
forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, Borrower and Lender hereby agree as follows:
SECTION 1. DEFINITIONS
Unless otherwise defined herein, the following capitalized terms shall
have the following meanings (such meanings being equally applicable to both the
singular and plural forms of the terms defined)
1.1 "Advances" shall mean the funds provided to Borrower by Lender during
the term of this Agreement.
1.2 "Closing Date" shall mean the date the initial Advance hereunder is
made by Lender.
1.3 "Collateral" shall mean and include all of Borrower's right, title and
interest in or to the following types of property, whether now-owned or
hereafter-acquired: (a) all Receivables; (b) all of Borrower's rights and
remedies as an unpaid vendor or lienor against its customers; (c) all amounts
due to Borrower from any Customer, irrespective of whether such amounts have
been specifically assigned to Lender; (d) all other presently owned equipment of
Borrower which is not now subject to a lien or security interest in favor of
another person and equipment (as defined in the UCC) hereafter acquired, the
purchase price for which is not financed,
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and (f) all proceeds of the foregoing types of property, including, without
limitation, the proceeds applicable to the insurance referred to in Section 5
hereof.
1.4 "Customer" shall mean and include each account debtor of obligor in
any way obligated on or in connection with any Receivable.
1.5 "Eligible Receivables" shall mean and include such Receivables which
are and at all times continue to be acceptable to Lender, in its sole discretion
exercised in good faith, in all respects for purposes of this Agreement. Without
limiting Lender's discretion to determine which Receivables are from time to
time Eligible Receivables hereunder, in general, a Receivable shall be deemed to
be an Eligible Receivable provided:
(a) the sale of goods, rendition of services, or licensing of Borrower's
products, giving rise to such Receivable has been completed;
(b) no return, rejection or repossession has occurred;
(c) such goods, services, or licensing of Borrower's products have been
finally accepted by the Customer without dispute, offset, defense or
counterclaim;
(d) such Receivable continues to be in full conformity with the
representations and warranties made by Borrower to Lender with respect thereto;
(e) no more than ninety (90) days have elapsed from the invoice date;
(f) Lender is satisfied in good faith with the creditworthiness of the
Customer;
(g) the Customer is not a subsidiary or an affiliate of Borrower;
(h) the Customer is located within the United States of America, or the
Receivable is supported by a letter of credit acceptable to Lender, in its sole
discretion, which letter of credit has been delivered to Lender;
(i) the Customer is located outside the United States, provided that the
Receivable is collectible in U.S. Dollars ($), and provided further that the
Customer's United States subsidiary or affiliate is a party to the contract and
is jointly and severally liable with Customer to the contract giving rise to the
Receivable;
(j) the Receivable is not evidenced by "chattel paper" (as defined in the
UCC) or an "instrument" (as defined in the UCC) of any kind;
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(k) the Receivable does not arise from a retail purchase of goods made
primarily for the Customer's personal, family or household purposes;
(l) the Receivable is for Base Payments (as that term is used in the
Xxxxxx Agreement) owing under a Software License and Distribution Agreement,
dated as of December 30, 1994, between Borrower and Xxxxxx Technologies, Inc.,
("Xxxxxx"), as hereafter amended, supplemented, or modified. At the Closing
Date, Eligible Receivables for purposes of this subparagraph (1) shall equal
$240,000 plus the present value at the Interest rate set forth in Section 2.2,
of $60,000. The Eligible Receivable shall decrease each month by the amount of
the Base Payments collected by Borrower. Other payments, such as Royalty
Payments and Annual Support Fees (those terms are used in the Xxxxxx Agreement),
shall be determined by Lender to be Eligible in accordance with the other
subparagraphs of this Subsection 1.5.
1.6 "Formula Amount" shall mean an amount el to the lesser of (i) 75% of
Eligible Receivables or (ii) One Million Five Hundred Thousand DOLLARS
($1,500,000.00), in each case minus such reserves as Lender, in its reasonable
credit judgement, determines should be established from time to time.
1.7 "Loan Documents" shall mean and include this Agreement, the Note, and
any other documents executed in connection with the Agreement or the
transactions contemplated hereby, as the same may from time to time be amended,
modified, supplemented or restated.
1.8 "Material Adverse Effect" means a material adverse effect upon: (i)
the business, operations, properties, assets or conditions (financial or
otherwise) of Borrower; or (ii) the ability of Borrower to perform, or of Lender
to enforce, the Obligations.
1.9 "Net Amount of Eligible Receivables" shall mean and include the gross
amount of Eligible Receivables, minus sales, excise or similar taxes with
respect to such Eligible Receivables, and minus returns, discounts, claims,
credits and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed with respect to such Eligible Receivables.
1.10 "Note" shall mean the Secured Promissory Note in the form attached as
Exhibit A hereto, as the same may from time to time be amended, modified,
supplemented or restated.
1.11 "Obligations" shall mean all principal, interest, fees, costs, or
other liabilities or obligations for monetary amounts owed by Borrower to
Lender, whether due or to become due, matured or unmatured, liquidated or
unliquidated, contingent or non-contingent, and all covenants and duties
regarding such amounts, of any kind or nature, present or future, arising under
this Agreement, the Note, or any of
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the other Loan Documents, whether or not evidenced by any note, agreement or
other instrument, as the same may from time to time be amended, modified,
supplemented or restated. The Obligations shall not include the Warrant
Agreement or any of the other Agreements between Borrower and lender with
respect to Borrower's $1,000,000 subordinated note, the warrant agreement in
connection therewith for Series B Preferred Stock, or Master Lease Agreement or
the warrant agreement in connection therewith.
1.12 "Payment Due Date" shall mean the first day of each calendar month.
1.13 "Receivables" shall mean and include all amounts owing to Borrower
and rights to payment of Borrower, which arise from Borrower's sale of goods,
provision of services, or license of products to customers including accounts,
instruments, documents, and chattel paper, to the extent they arise from such
accounts, whether secured or unsecured, whether now existing or hereafter
created or arising, and whether or not specifically sold or assigned to Lender
hereunder.
1.14 "UCC" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of Illinois. Unless otherwise defined
herein, terms that are defined in the UCC and used herein shall have the
meanings given to them in the UCC.
1.15 "Warrant Agreement" shall mean the agreement of even date herewith
pursuant to which Borrower granted Lender the right to purchase that number of
shares of Series B Convertible Preferred Stock of Borrower as more particularly
set forth therein.
SECTION 2. THE LOANS
2.1 Maximum Amount. Subject to the terms and conditions. of this
Agreement, Lender will make Advances to Borrower from time to time, up to a
maximum principal amount at any time outstanding equal to the Formula Amount at
such time.
2.2 Interest. Interest shall be computed based upon the daily amount of
the outstanding Advances during each month, for each day during each month at a
rate (computed on the basis of the actual number of days elapsed over a year of
360 days) equal to the Prime Rate published in the "Money Rates" column of The
Wall Street Journal (the "Prime Rate") on the Closing Date. All such interest
shall be due and payable in advance, on the first day of each month.
Notwithstanding any provision in this Agreement, the Note, or any other Loan
Document, it is not the parties' intent to contract for, charge or receive
interest at a rate that is greater than the maximum rate permissible by law
(which under the laws
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of the State of Illinois shall be deemed to be the laws relating to permissible
rates of interest on commercial loans) (the "Maximum Rate") . In the event that
the amount of interest contracted for, charged or received from Borrower or
otherwise in connection with the Advances or under this Agreement, the Note, or
any other Loan Document exceeds the Maximum Rate, then at Lender's option, such
amount shall either be applied as a credit against any then unpaid amounts of
principal, fees, and costs due hereunder or (if all principal, fees, and costs
have been fully repaid) refunded to Borrower, and the effective rate of interest
will be automatically reduced to the Maximum Rate.
2.3 Calculation of Formula Amount. At least five (5) business days prior
to the Closing Date, Borrower shall provide Lender with Borrower's printout of
its accounts receivable, showing the name and address of the account Debtor, the
amount owed and the number of days each amount has been outstanding (as "A/R
Printout"), showing Borrower's accounts receivables as of the last day of the
month immediately preceding the Closing Date, to be used by Lender to calculate
the Eligible Receivables and the Formula Amount as of the Closing Date.
Thereafter, by the fifteenth (15th) day of each month, Borrower shall provide
Lender with Borrower's Printout showing Borrower's accounts receivables as of
the last day of the immediately preceding month, to be used by Lender to
calculate the Eligible Receivables and the Formula Amount as of the first day of
the following month.
2.4 Making of Advances. On the Closing Date and the first day of each
month following Lender's receipt of an A/R Printout, if requested by Borrower in
writing received by Lender no later than 5:00 p.m. Central Standard Time on such
date and so long as no Event of Default (or event which with the passage of
time, the giving of notice, or both, would become an Event of Default) has
occurred and is then continuing, Lender will make Advances so long as the
aggregate outstanding amount of all Advances would not exceed the Formula Amount
as of such date. Advances may be requested by Borrower and shall be made by
Lender only in increments of $5,000.00 or an integral multiple thereof;
provided, that if the unadvanced portion of the Formula Amount is less than
$5,000.00, Borrower may request and Lender shall make an advance equal to the
highest integral multiple of $5,000.00 that does not exceed such unadvanced
portion of the Formula Amount. Each request by Borrower for an Advance and
Borrower's acceptance of the proceeds of each Advance shall each be deemed to be
a representation and warranty by Borrower that all of the representations and
warranties made by Borrower under this Agreement are true and correct and that
no Event of Default (or event which with the passage of time, the giving of
notice, or both, would become an Event of Default) has occurred and is
continuing as of the date of the requested Advance.
2.5 Adjustment of Outstanding Advances. Lender may adjust the amount of
outstanding Advances on a monthly basis, based upon the current level of
Borrower's Eligible Receivables. If the outstanding amount of the Advances is in
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excess of the Formula Amount at any Payment Due Date, Lender may require
Borrower to repay to Lender the amount of the outstanding Advances in excess of
the Formula Amount, in addition to the payment of interest or any other
Obligations that are due on such Payment Due Date.
2.6 Term. On the date that is twelve (12) months from the Closing Date,
Lender's obligation to make any further Advances hereunder shall terminate, and
Borrower shall pay to Lender the full amount of the outstanding Advances, plus
any accrued interest and other outstanding Obligations hereunder.
2.7 Facility Fee. On the Closing Date, Borrower shall pay to Lender a
facility fee of $22,500.00 (the "Facility Fee") . The Facility Fee shall be
fully earned and nonrefundable on the Closing Date, and shall be paid out of the
initial Advance. All Commitment Fees paid by Borrower to Lender pursuant to the
May 4, 1995 Receivables Financing Proposal shall be credited toward this
Facility Fee.
2.8 Administrative Expenses. (a) Borrower shall reimburse Lender promptly
upon invoice by Lender tb Borrower for all of Lender's reasonable out-of-pocket
expenses consistent with Borrower's travel policy, for transportation, lodging,
meals and all administrative expenses incurred in connection with the audit of
this Agreement, up to a maximum of $2,500 per visit, for payment of Lender or
Lender's representative.
(b) In the event of Borrower's default, the limitation on professional
fees referred to in the previous paragraph shall not apply where incurred in
enforcement of this Agreement.
2.9 Prepayment of Principal. Borrower may prepay the outstanding principal
amount of the Advances, as of any Payment Due Date after the date hereof,
without penalty or premium by paying to Lender such principal amount being
prepaid together with all accrued and unpaid interest with respect to such
principal amount as of the date of such prepayment.
2.10 Performance on Business Days. If any Advance, interest, fee or other
payment under this Agreement, the Note or any of the other Loan Documents is to
be made or is due on a day that is not a business day, then such Advance,
interest, fee or other payment shall be made or due on the first business day
thereafter.
SECTION 3. COLLATERAL AND SECURITY INTEREST
As security for the payment of all Obligations, Borrower hereby assigns to
Lender, and grants to Lender a first priority security interest in, all of
Borrower's right, title, and interest in and to the Collateral.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower represents and warrants to Lender, and agrees with Lender, that:
4.1 Borrower owns all right, title or interest in and to the Collateral
free of all liens, security interests, encumbrances and claims whatsoever,
except for the interest of Lender therein.
4.2 Borrower has the full power and authority to, and does hereby grant
and convey to Lender, a valid first priority security interest in the Collateral
as security for the Obligations. No other lien, security interest, adverse claim
or encumbrance has been created by Borrower, is known by Borrower to exist with
respect to any Collateral, or will be crated by Borrower so long as any
Obligations are outstanding (except as set forth in Subsection 6.4 in favor of
the Connecticut Development Authority).
4.3 Borrower is a corporation duly organized, legally existing and in good
standing under the laws of the State of Delaware, and is duly qualified as a
foreign corporation in all jurisdictions where the property owned or the
business transacted by it make such qualifications necessary.
4.4 Borrower's execution, delivery and performance of the Note, this
Agreement, the financing statements, and all other Loan Documents required to be
delivered or executed in connection herewith have been duly authorized by all
necessary corporate action of Borrower; the individual or individuals executing
the Loan Documents were duly authorized to do so; and the Loan Documents
constitute legal, valid and binding obligations of Borrower, enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization or other similar laws generally affecting the
enforcement of the rights of creditors.
4.5 All of the equipment which is part of the Collateral is personal
property and as used by Borrower is not and will not become fixtures under
applicable law.
4.6 This Agreement and the other Loan Documents do not and will not
violate any provisions of Borrower's articles or certificate of incorporation,
bylaws or any contract, agreement, law, regulation, order, injunction, judgment,
decree or writ to which Borrower is subject, or result in the creation or
imposition of any lien, security interest or other encumbrance upon the
Collateral, other than those created by this Agreement.
4.7 The execution, delivery and performance of this Agreement and the
other Loan Documents does not require the consent or approval of any other
person or entity, including, without limitation, any regulatory authority or
governmental
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body of the United States or any state thereof or any political subdivision of
the United States or any state thereof.
4.8 No event which has occurred, which has had or could reasonably be
expected to have a Material Adverse Effect has occurred and is continuing.
SECTION 5. INSURANCE
5.1 So long as there are any Obligations outstanding, Borrower shall cause
to be carried and maintained comprehensive general liability insurance against
risks customarily insured against in Borrower's line of business. Such risks
shall include, without limitation, the risks of death, bodily injury and
property damage. So long as there are any Obligations outstanding, Borrower
shall also cause to be carried and maintained insurance upon the portion of the
Collateral which is tangible property and Borrower's business, covering
casualty, hazard and such other property risks customarily insured against in
Borrower's line of business if commercially available. In the event that
insurance is not commercially available, Borrower shall insure the Equipment for
the maximum amount commercially available and indemnify Lender for the
difference between the amount paid by such insurance and the casualty loss.
Borrower shall deliver to Lender lender's loss payable endorsements (Form BFU
438 or equivalent) naming Lender as loss payee or additional insured, as
appropriate with respect to the tangible personal property constituting a
portion of the collateral. All policies evidencing insurance for which lender is
named as a loss payee shall provide for at least thirty (30) days prior written
notice by the underwriter or insurance company to Lender in the event of
cancellation or expiration, and shall be issued by such insurers and in such
amounts as are reasonably acceptable to Lender.
5.2 Borrower hereby indemnifies Lender, its agents and shareholders from
and against any and all claims, costs, expenses, damages and liabilities
(including, without limitation, such claims, costs, expenses, damages and
liabilities based on liability in tort, including without limitation, strict
liability in tort), including reasonable attorneys' fees, arising out of the
Collateral except to the extent such claims, costs, expenses, damages and
liabilities are caused by Lender's gross negligence or willful misconduct.
SECTION 6. COVENANTS OF BORROWER
Borrower covenants and agrees as follows at all times while any of the
Obligations remain outstanding:
6.1 Borrower shall furnish to Lender the financial statements listed
hereinafter, each prepared in accordance with generally accepted accounting
principles consistently applied (the "Financial Statements"):
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(a) as soon as practicable (and in any event within thirty (30) days)
after the end of each month, unaudited interim financial statements as of the
end of such month (prepared on a consolidated and consolidating basis, if
applicable), including balance sheet and related statements of income and cash
flows, accompanied by reports detailing (i) list of contracts signed listing the
licensed products, other products and services, and the associated amounts due
as of the end of such month, (ii) financial statements as prepared for the Board
of Directors, on a departmental basis, derived from the general ledger and (iii)
material contingencies (including the commencement of any material litigation by
or against Borrower provided that the details of such disclosure shall not
abrogate the attorney client privilege), all of which shall be certified by
Borrower's Chief Executive Officer, or President, or Chief Financial Officer to
be true and correct;
(b) as soon as practicable (and in any event within one hundred fifty
(150) days) after the end of each fiscal year, unqualified audited financial
statements as of the end of such year (prepared on a consolidated and
consolidating basis, if applicable), including balance sheet and related
statements of income and cash flows, and setting forth in comparative form the
corresponding figures for the preceding fiscal year, certified by a nationally
recognized firm of independent certified public accountants selected by
Borrower, accompanied by any management report from such accountants;
(c) promptly after the sending or filing thereof, as the case may be,
copies of any proxy statements, financial statements or reports which Borrower
has made available to its shareholders and copies of any regular, periodic and
special reports or registration statements which Borrower files with the
Securities and Exchange Commission or any governmental authority which may be
substituted therefor, or any national securities exchange; and
(d) promptly, any additional information, financial or otherwise as Lender
reasonably believes necessary to evaluate Borrower's continuing ability to meet
its financial obligations.
6.2 Borrower shall permit any authorized representative of Lender and its
attorneys and accountants on reasonable notice to inspect, examine and make
copies and abstracts of the books of account and records of Borrower at such
reasonable times during normal business hours as are mutually convenient to
Borrower and Lender, subject to Borrower's operational and security
requirements. In addition, such representative of Lender and its attorneys and
accountants shall have the right to meet with management and officers of the
Company to discuss such books of account and records at a mutually convenient
time.
6.3 Borrower will from time to time execute, deliver and file, alone or
with Lender, any financing statements, and take all further action that may be
necessary or
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desirable, or that Lender may request, to confirm, perfect, preserve and protect
the security reasonable interests intended to be granted hereby. Borrower hereby
authorizes Lender to execute and deliver on behalf of Borrower and to file such
financing statements, without the signature of Borrower either in Lender's name
or in the name of Borrower as agent and attorney-in-fact for Borrower to the
extent reasonably necessary to perfect the security interests granted in the
Collateral, provided the Lender promptly notifies Borrower in writing of such
filings and delivers copies of such filings to Borrower within a reasonable
time. The parties agree that a carbon, photographic or other reproduction of
this Agreement shall be sufficient as a financing statement and may be filed in
any appropriate office in lieu thereof. If any amount payable under or in
connection with any of the Collateral is or shall become evidenced by any
instrument or chattel paper, such instrument or chattel paper, shall be duly
endorsed in a manner satisfactory to Lender and delivered to Lender promptly
upon Borrower's receipt thereof, if so requested by Lender.
6.4 Borrower shall protect and defend Borrower's title as well as the
interest of Lender against all persons claiming any interest adverse to Borrower
or Lender and shall at all times keep the Collateral free and clear from any
legal process, liens or encumbrances whatsoever (except any placed thereon by
Lender) and shall give Lender immediate written notice thereof. Notwithstanding
the foregoing, Lender acknowledges that Borrower may place a second lien on the
Receivables component of the Collateral subordinate to this Agreement, in favor
of Connecticut Development Authority for a Convertible Loan.
6.5 Borrower shall not, without Lender's prior written consent, grant any
extension of the time of payment of any of the Receivables, compromise, compound
or settle the same for less than the full amount thereof, release, wholly or
partly, any Person liable for the payment thereof, or allow any credit or
discount whatsoever thereon other than extensions, compromises, discussions or
settlements made by borrower in the ordinary course of business of Borrower
consistent with past practices or such other commercially reasonable practices
as determined in good faith by Borrower. In no event shall any such extensions
of time, settlements, or the like convert an otherwise ineligible Receivable
into an Eligible Receivable.
6.6 Borrower shall maintain and protect its properties, assets and
facilities, including without limitation, its equipment and fixtures, in good
order and working repair and condition (taking into consideration ordinary wear
and tear) and from time to time make or cause to be made all necessary and
proper repairs, renewals and replacements thereto and shall competently manage
and care for its property in accordance with prudent industry practices.
6.7 Borrower shall not merge or consolidate with any other entity; nor
acquire all or any substantial part of the property of any other person or
entity
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without Lender's prior written consent, which consent shall not be unreasonably
withheld. Lender shall not withhold its consent to a merger where Borrower is a
surviving entity of a majority interest, provided that in any such case in which
Borrower is not the surviving entity, such entity's financial strength is at
least a Xxxxx Bond rating of BAA or better or annual earnings are in excess of
ten times the remaining loan payments.
6.8 Borrower shall not relocate any item of the Collateral, unless twenty
(20) days prior to such relocation, Borrower shall first have notified Lender in
writing of such proposed relocation and cause to be filed and/or delivered to
Lender all Uniform Commercial Code financing statements, certificates or other
documents or instruments necessary to continue in effect the first priority
perfected security interest of Lender in the Collateral. Any relocation shall be
limited to within the continental United States.
SECTION 7. RIGHTS OF LENDER; COLLECTION OF ACCOUNTS
7.1 Notwithstanding anything contained in this Agreement to the contrary,
Borrower expressly agrees that it shall remain liable with respect to all of the
Collateral to observe and perform all the conditions and obligations to be
observed and performed by it thereunder or with respect thereto, and that it
shall perform all of its duties and obligations thereunder or with respect
thereto, all in accordance with and pursuant to the terms and provisions
applicable thereto, unless contested in good faith. Lender shall not have any
obligation or liability under or with respect to any Collateral by reason of or
arising out of this Agreement or the granting to Lender of a security interest
therein or the receipt by Lender of any payment relating to any Collateral
pursuant hereto, nor shall Lender be required or obligated in any manner to
perform or fulfill any of the obligations of Borrower under or with respect to
any Collateral, or to make any payment, or to make any inquiry as to the nature
or the sufficiency of any payment received by it or the sufficiency of any
performance by any party under or with respect to any Collateral, or to present
or file any claim, or to take any action to collect or enforce any performance
or the payment of any amounts which may have been assigned to it or to which it
may be entitled at any time or times.
7.2 Lender authorizes Borrower to collect its Receivables, provided that
Lender may, upon the occurrence and during the continuation of any Event of
Default, limit or terminate said authority at any time. If required by Lender at
any time during the continuation of any Event of Default, any proceeds, when
first collected by Borrower, received in payment of any such Receivables or in
payment for or on account of any of other Collateral shall be promptly delivered
by Borrower to Lender in precisely the form received (with all necessary
endorsements) and until so turned over shall be deemed to be held in trust by
Borrower for and as Lender's property, on behalf and for the benefit of Lender,
and shall not be commingled with
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Borrower's other funds or properties. Such proceeds, when deposited, shall
continue to be collateral security for all of the Obligations and shall not
constitute payment thereof until applied as hereinafter provided. Upon the
occurrence and during the continuation of any Event of Default, Lender may, in
its sole discretion, apply all or a part of the funds on deposit in any account
maintained by Lender to hold proceeds of Collateral to the payment of any of the
Obligations in accordance with the provisions of Section 11, below, and any part
of such funds which Lender elects not so to apply and deems not required as
collateral security for the Obligations shall be paid over by Lender to
Borrower.
7.3 Lender may upon the occurrence and during the continuation of any
Event of Default, after first notifying Borrower of its intention to do so,
notify Customers of Borrower in a form reasonably satisfactory to Borrower that
the Receivables have been assigned to Lender, and that payments shall be made
directly to Lender. Upon the request of Lender, Borrower is given five (5)
business days to notify such Customers. Lender may, at any time, in Borrower's
name, or in the name of it's accountants, communicate with such Customers to
verify with such parties, to Lender's satisfaction, the existence, amount and
terms of any such Receivables.
SECTION 8. LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT
8.1 Subject to Subsection 8.2 below, Borrower hereby irrevocably
constitutes and appoints Lender, and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Borrower and in the
name of Borrower or in its own name, from time to time at Lender's discretion,
for the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute and deliver any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement and, without limiting the generality of the foregoing, hereby
gives Lender the power and right, on behalf of Borrower, without notice to or
assent by Borrower to do the following:
(a) to ask, demand, collect, receive and give acquittances and
receipts for any and all monies due or to become due under any Collateral
and, in the name of Borrower, in its own name or otherwise, to take
possession of, endorse and collect any checks, drafts, note, acceptances
or other instruments for the payment of monies due under any Collateral
and to file any claim or to take or commence any other action or
proceeding in any court of law or equity or otherwise deemed appropriate
by Lender for the purpose of collecting any and all such monies due under
any Collateral whenever payable;
(b) to pay or discharge any liens, including, without limitation,
any tax lien, levied or placed on or threatened against the Collateral, to
effect any repairs or any insurance called for by the terms of this
Agreement and to pay
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all or any part of the premiums there for and the costs thereof, which
actions shall be for the benefit of Lender and not Borrower; and
(c) to (1) direct any person liable for any payment under or in
respect of any of the Collateral to make payment of any and all monies due
or to become due thereunder directly to Lender or as Lender shall direct,
(2) receive payment of any and all monies, claims and other amounts due or
to become due at any time arising out of or in respect of any Collateral,
(3) sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts and
other instruments and documents constituting or relating to the
Collateral, (4) commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any other right in respect
of any Collateral, (5) defend any suit, action or proceeding brought
against Borrower with respect to any Collateral, (6) settle, compromise or
adjust any suit, action or proceeding described above and, in connection
therewith, give such discharges or releases as Lender may deem
appropriate, and (7) sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though Lender were the absolute owner thereof for all
purposes, and to do, at Lender's option and Borrower's expense, at any
time, or from time to time, all acts and things which Lender may
reasonably deem necessary to protect, preserve or realize upon the
Collateral and Lender's security interest therein in order to effect the
intent of this Agreement, all as fully and effectively as Borrower might
do.
8.2 Lender agrees that, except upon the occurrence and during the
continuation of an Event of Default, it shall not exercise the power of attorney
or any rights granted to Lender pursuant to this Section 8. The power of
attorney granted pursuant to this Section 8 is a power coupled with an interest
and shall be irrevocable until the Obligations are completely and indefeasibly
paid and performed in full and Lender's obligations to make any further Advances
is terminated.
8.3 The powers conferred on Lender hereunder are solely to protect
Lender's interests in the Collateral and shall not impose any duty upon Lender
to exercise any such powers. Lender shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers and neither it
nor any of its officers, directors, employees, agents or representatives shall
be responsible to Borrower for any act or failure to act, except for its own
gross negligence or willful misconduct.
8.4 If Borrower fails to perform or comply with any of its agreements
contained herein and Lender, as provided for by the terms of this Agreement,
shall
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perform or comply, or otherwise cause performance or compliance, with such
agreement, the reasonable expenses, including attorneys' fees and costs, of
Lender incurred in connection with such performance or compliance, together with
interest thereon at the Maximum Rate, shall be payable by Borrower to Lender
within three (3) business days of demand and shall constitute Obligations
secured hereby.
SECTION 9. CONDITIONS PRECEDENT TO CLOSING
The obligation of Lender to fund the initial Advance shall be subject to
satisfaction by Borrower or waiver by Lender, in Lender's sole discretion, of
the following conditions:
9.1 Document Delivery. Borrower, on or prior to the Closing Date, shall
have delivered to Lender the following:
(a) executed originals of this Agreement, the Note, the Warrant and
all other Loan Documents;
(b) certified copy of resolutions of Borrower's board of directors
evidencing approval of the borrowing and other transactions evidenced by
the Loan Documents;
(c) certified copies of the Articles or Charter, and the Bylaws, of
Borrower;
(d) certificate of good standing for Borrower from its state of
incorporation and similar certificates from all other jurisdictions in
which it does business and where the failure to be qualified would have a
Material Adverse Effect;
(e) an opinion of counsel in the form attached as Exhibit B hereto;
(f) an incumbency certificate regarding Borrower's officers;
(g) payment of the Facility Fee (Lender acknowledges that prior to
the date hereof Borrower has delivered to Lender a Commitment Fee in the
amount of Two Thousand Five Hundred Dollars ($2,500.00), which amount
shall be applied on the Closing Date towards payment of the Facility Fee);
(h) Borrower's written instructions to Lender regarding the manner
of disbursement of the initial Advance, which must be reasonably
satisfactory to Lender; and
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(i) such other documents as Lender may reasonably request.
(j) Accounts Receivable list of Aging.
(k) Borrower's travel expense reimbursement policy.
9.2 Perfection of Security Interests. Borrower shall have taken or caused
to be taken such actions as Lender shall have reasonably requested in such a
manner so that Lender has a valid and perfected security interest in all of the
Collateral. Such actions shall include, without limitation, the delivery to
Lender of executed financing statements, as to the Collateral granted by
Borrower for all jurisdictions as may be necessary or desirable to perfect the
security interest of Lender in the Collateral.
9.3 Absence of Events of Default. As of the Closing Date, no fact or
condition exists that would (or would, with the passage of time, the giving of
notice, or both) constitute an Event of Default.
SECTION 10. DEFAULT
The occurrence of any one or more of the following events (herein called
"Events of Default") shall constitute a default hereunder and under the Note and
other Loan Documents:
10.1 Borrower defaults in the payment of any principal, interest or other
Obligation involving the payment of money under this Agreement, the Note or any
of the other Loan Documents, arid such default continues for more than five (5)
business days after the due date thereof; or
10.2 Borrower defaults in the performance of any other Obligation of
Borrower hereunder or under the Note or any of the other Loan Documents, and
such default continues for more than ten (10) business days after xxxxxx has
given written notice of such default to Borrower; or
10.3 Any representation or warranty made herein by Borrower shall prove to
have been false or misleading in any material respect; or
10.4 Borrower shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts as they become due, or
shall file a voluntary petition in bankruptcy, or shall file any petition or
answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation pertinent to such circumstances; or Borrower
or its directors or majority shareholders shall take any action initiating the
dissolution or liquidation of Borrower; or
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10.5 Thirty (30) days shall have expired after the commencement of an
action against Borrower seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, without such action being dismissed or all
orders or proceedings thereunder affecting the operations or the business of
Borrower being stayed; or a stay of any such order or proceedings shall
thereafter be set aside and the action setting it aside shall not be timely
appealed; or Borrower shall file any answer admitting or not contesting the
material allegations of a petition filed against Borrower in any such
proceedings; or the court in which such proceedings are pending shall enter a
decree or order granting the relief sought in any such proceedings; or
10.6 Thirty (30) days shall have expired after the appointment without the
consent or acquiescence of Borrower, of any trustee, receiver or liquidator of
Borrower or of all or any substantial part of the properties of Borrower without
such appointment being vacated; or
10.7 The occurrence of an event of default under any other promissory
note, agreement for borrowed money, any lease or other agreement between
Borrower and Lender which has not been cured within any applicable grace period
after written notice of such default; or
10.8 The occurrence of any event of default under any agreement of
Borrower for borrowed money in an amount in excess of $250,000 which occurrence
has resulted in the acceleration of the maturity of such obligation. The entry
of a judgment against Borrower in excess of $500,000 or if not for a monetary
amount the entry of which that would have a Material Adverse Effect, which in
either case has not been bonded or stayed pending appeal within ten (10)
business days.
SECTION 11. REMEDIES
11.1 Upon the occurrence of any one or more Events of Default, Lender, at
its option, may declare the Note and all of the other Obligations to be
accelerated and immediately due and payable (provided, that upon the occurrence
of an Event of Note Default of the type described in Subsections 10.4 or 10.5,
the and all of the other Obligations shall automatically be accelerated and made
due and payable without any further act), whereupon the unpaid principal of and
accrued interest on such Note and all other outstanding Obligations shall become
immediately due and payable, and Lender may exercise all rights and remedies
with respect to the Collateral under the Loan Documents or otherwise available
to it under applicable law, including the right to release, hold or otherwise
dispose of all or any part of the Collateral. Lender may impose upon Borrower,
as additional Obligations hereunder (a) a late fee of 5% of the overdue amount
for the each month (or any portion thereof) such amounts remain unpaid, and (b)
reimbursement for all reasonable costs
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and expenses, including reasonable attorneys' fees and reasonable legal expenses
incurred by Lender in exercising such rights and remedies, including, without
limitation, receiving and collecting Collateral from Customers.
11.2 Upon the happening and during the continuance of any Event of
Default, Lender may then, or at any time thereafter and from time to time,
apply, collect, sell in one or more sales, lease or otherwise dispose of, any or
all of the Collateral, in its then condition or following any commercially
reasonable preparation or processing, in such order as Lender may elect, and any
such sale may be made either at public or private sale at its place of business
or elsewhere. Lender may require Borrower to assemble the Collateral and make it
available to Lender at a place designated by Lender which is reasonably
convenient to Lender and Borrower. The proceeds of any sale, disposition or
other realization upon all or any part of the Collateral shall be distributed by
Lender in the following order of priorities:
(a) First, to Lender in an amount sufficient to pay in full lender's
costs in connection with such sale, custody, preservation, disposition or
other realization;
(b) Second, to Lender in an amount equal to the then unpaid amount
of the Obligations; and
(c) Finally, upon payment in full of all of the Obligations, to
Borrower or its representatives or as a court of competent jurisdiction
may direct.
11.3 Lender shall be deemed to have acted reasonably in the custody and
preservation of any of the Collateral if it complies with the obligations of a
secured party under Section 9-207 of the UCC.
11.4 Additional Warrant Coverage: If for any reason Borrower fails to pay
all principal owed under this Agreement as required, then the Warrant coverage
of Nine Percent (9%) shall automatically be modified and increased, and Borrower
shall grant to Lender additional Warrants as follows. Effective as of the first
day of the thirteenth (13th) month, and including the 13th month, and for each
additional month, or portion thereof, thereafter that the principal is not
repaid, the Borrower shall grant to the Lender an additional number of Warrants
to purchase shares of Series B Preferred Stock, pursuant to the same terms and
conditions as the Warrant Agreement between the parties dated June 30, 1995,
equal to 0.5% for each month, of the greater of $1,000,000 or the unpaid
Principal balance, unless otherwise agreed in writing by Lender at Lender's sole
discretion. At the twenty-fourth (24th) month, the warrant coverage shall
increase to One Percent (1%) per month of the greater of $1,000,000 or the
unpaid Principal balance, and Borrower's obligation to grant
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Warrants to Lender shall accrue and continue at this rate for each corresponding
month until such time as the principal is repaid in full.
SECTION 12. MISCELLANEOUS
12.1 Continuation of Security Interest. This is a continuing Agreement and
the grant of a security interest hereunder shall remain in full force and effect
and all the rights, powers and remedies of Lender hereunder shall continue to
exist until the Obligations are paid in full as the same become due and payable
and until Lender has executed a written termination statement (which Lender
shall execute within a reasonable time after full payment of the Obligations
hereunder), reassigning to Borrower, without recourse, the Collateral and all
rights conveyed hereby and returning possession of the Collateral to Borrower.
The rights, powers and remedies of Lender hereunder shall be in addition to all
rights, powers and remedies given by statute or rule of law and are cumulative.
The exercise of any one or more of the rights, powers and remedies provided
herein shall not be construed as a waiver of any other rights, powers and
remedies of Lender.
12.2 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective only to the extent
and duration of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
12.3 Notice. Except as otherwise provided herein, all notices and service
of process required, contemplated, or permitted hereunder or with respect to the
subject matter hereof shall be in writing, and shall be deemed to have been
validly served, given or delivered upon the earlier of: (i) the first business
day after transmission by facsimile or hand delivery or deposit with an
overnight express service or overnight mail delivery service; or (ii) the third
calendar day after deposit in the United States mails, with proper first class
postage prepaid, and shall be addressed to the party to be notified as follows:
(a) If to Lender:
COMDISCO, INC.
Legal Department
Attention:
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Facsimile: 000 000-0000
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With a copy to:
COMDISCO INC./VENTURE GROUP
Attention: Xxxxx Xxxx
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Facsimile:
(b) If to Borrower:
FlexiInternational Software, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: President Xxxxxxxx X. Xxxxx
With a copy to:
Xxxxx X. Xxxxx, Ph.X.
Xxxx and Xxxx
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X.X. Xxxxx
Facsimile:
or to such other address as each party may designate for itself by like notice.
12.4 Entire Agreement; Amendments. This Agreement, the Note, and the other
Loan Documents, and the Warrant Agreement constitute the entire agreement and
understanding of the parties hereto in respect of the subject matter hereof and
thereof, and supersede and replace in their entirety any prior proposals, term
sheets, letters, negotiations or other documents or agreements, whether written
or oral, with respect to the subject matter hereof or thereof (including,
without limitation, Lender's proposal letter dated May 4, 1994) and, all of
which are merged herein and therein. None of the terms of this Agreement, the
Note or any of the other Loan Documents may be amended except by an instrument
executed by each of the parties hereto.
12.5 Headings. The various headings in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provisions hereof.
12.6 No Waiver. The powers conferred upon Lender by this Agreement are
solely to protect its interest in the Collateral and shall not impose any duty
upon Lender to exercise any such powers. No omission, or delay, by Lender at any
time to enforce any right or remedy reserved to it, or to require performance of
any of the terms, covenants or provisions hereof by Borrower at any time
designated, shall be a
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waiver of any such right or remedy to which Lender is entitled, nor shall it in
any way affect the right of Lender to enforce such provisions thereafter.
12.7 Survival. All agreements, representations and warranties contained in
this Agreement, the Note, and the other Loan Documents or in any document
delivered pursuant hereto or thereto shall be for the benefit of Lender and
shall survive the execution and delivery of this Agreement and the expiration or
other termination of this Agreement.
12.8 Successor and Assigns. The provisions of this Agreement and the other
Loan Documents shall inure to the benefit of and be binding on Borrower and its
permitted assigns (if any). Borrower shall not assign its obligations under this
Agreement, the Note or any of the other Loan Documents without Lender's express
written consent or as otherwise permitted by Section 6.9, above, and any such
attempted assignment shall be void and of no effect. Lender may assign,
transfer, or indorse its rights hereunder and under the other Loan Documents to
a Permitted Assignee without prior notice to Borrower, and all of such rights
shall inure to the benefit of Lender's successors and assigns. For purposes of
this Section 12.8 Permitted Assignee shall mean any state or federal chartered
bank with a net worth and/or capital and surplus of at least 500,000,000. In no
event may Permitted Assignee include a person or entity that competes directly
with the business of Borrower.
12.9 Further Indemnification. Borrower agrees to pay, and to save Lender
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all excise, sales or other similar taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Agreement.
12.10 GOVERNING LAW. This Agreement and the other Loan Documents have been
negotiated and delivered to Lender in the State of Illinois, and shall not
become effective until accepted by Lender in the State of Illinois. Payment to
Lender by Borrower of the Obligations is due in the State of Illinois. This Loan
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State of Illinois, excluding conflict of laws principles that
would cause the application of laws of any other jurisdiction.
12.11 CONSENT TO JURISDICTION AND VENUE. All judicial proceedings arising
in or under or related to this Agreement, the Note or any of the other Loan
Documents may be brought in any state or federal court of competent jurisdiction
located in the State of Illinois. By execution and delivery of this Agreement,
each party hereto generally and unconditionally: (a) consents to personal
jurisdiction in Xxxx County, State of Illinois; (b) waives any objection as to
jurisdiction or venue in Xxxx County, State of Illinois; (c) agrees not to
assert any defense based on lack of
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jurisdiction or-venue in the aforesaid courts; and (d) irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement, the
Note and the other Loan Documents. Service of process on any party hereto in any
action arising out of or relating to this agreement shall be effective if given
in accordance with the requirements for notice set forth in Subsection 12.3,
above and shall be deemed effective and received as set forth in Subsection
12.3, above. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of either party to bring
proceedings in the courts of any other jurisdiction.
12.12 MUTUAL WAIVER OF JURY TRIAL. Because disputes arising in connection
with complex financial transactions are most quickly and economically resolved
by an experienced and expert person and the parties wish applicable state and
federal laws to apply (rather than arbitration rules), the parties desire that
their disputes be resolved by a judge applying such applicable laws. EACH OF
BORROWER AND LENDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY
OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR
ANY OTHER CLAIM (COLLECTIVELY, "CLAIMS") ASSERTED BY BORROWER AGAINST LENDER OR
ITS ASSIGNEE AND/OR BY LENDER OR ITS ASSIGNEE AGAINST BORROWER. This waiver
extends to all such Claims, including, without limitation, Claims which involve
persons or entities other than Borrower and Lender; Claims which arise out of or
are in any way connected to the relationship between Borrower and Lender; and
any Claims for damages, breach of contract arising out of this Agreement or any
other Loan Document, specific performance, or any equitable or legal relief of
any kind.
12.13 Counterparts. This Agreement and any amendments, waivers, consents
or supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.
12.14 Confidentiality and Non-Disclosure. Lender and Borrower hereby
incorporate the terms and conditions of the Confidentiality and Non-Disclosure
Agreement entered into by the parties on June 13, 1994.
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IN WITNESS WHEREOF, Borrower and Lender have duly executed and delivered
this Agreement as of the day and year first above written.
BORROWER FLEXIINTERNATIONAL SOFTWARE, INC.
Signature: /s/ Xxxxxx X. Xxxxx
----------------------
Print Name: Xxxxxx X. Xxxxx
-----------------------
Title: CEO
----------------------------
ACCEPTED IN ROSEMONT, ILLINOIS:
LENDER
COMDISCO, INC.
Signature:
------------------------
Print Name:
------------------------
Title:
----------------------------
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EXHIBIT A
SECURED PROMISSORY NOTE
$1,500,000.00 July 10, 1995
FOR VALUE RECEIVED, FlexiInternational, a Delaware corporation
("Borrower"), hereby promises to pay to the order of COMDISCO, INC., a Delaware
corporation ("Lender"), at X.X. Xxx 00000, Xxxxxxx, Xxxxxxxx 00000, or at such
other place of payment as the holder of this Secured Promissory Note (this
Note") may specify from time to time in writing, in lawful money of the United
States of America, the principal sum of One Million Five Hundred Thousand and
00/100 Dollars ($1,500,000.00), or such lesser principal amount as may be
outstanding from time to time (the "Loan"), together with interest on the unpaid
principal balance of this Note outstanding from time to time at the rate
provided in the Loan Agreement (as defined below).
This Note is the Note referred to in, and is executed and delivered in
connection with, that certain Receivables Loan and Security Agreement of even
date herewith by and between Borrower and Lender (as the same may from time to
time be amended, modified or supplemented in accordance with its terms, the
"Loan Agreement"), and is entitled to the benefit and security of the Loan
Agreement and the other Loan Documents (as defined in the Loan Agreement), to
which reference is made for a statement of all of the terms and conditions
thereof. All terms defined in the Loan Agreement shall have the same definitions
when used herein, unless otherwise defined herein.
The principal amount of this Note shall be payable in the amounts and on
the dates specified in the Loan Agreement. Interest on the outstanding principal
amount shall be paid until such principal amount is paid in full, at such times
and on such dates as are specified in the Loan Agreement.
Upon and after the occurrence of an Event of Default, all unpaid
principal, accrued interest, costs, and other amounts owing hereunder shall, at
the option of Lender, be immediately due and payable in full.
Borrower waives presentment and demand for payment, notice of dishonor,
protest and notice of protest and any other notice as permitted under the UCC or
any applicable law.
This Note has been negotiated and delivered to Lender and is payable in
the State of Illinois, and shall not become effective until accepted by Lender
in the State of Illinois. This Note shall be governed by, and construed and
enforced in
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accordance with, the laws of the State of Illinois, excluding conflict of laws
principles that would cause the application of laws of any other jurisdiction.
BORROWER
FLEXIINTERNATIONAL SOFTWARE, INC.
Signature: /s/ Xxxxxx X. Xxxxx
----------------------------
Print Name: Xxxxxx X. Xxxxx
----------------------------
Title: CEO
----------------------------------
ACCEPTED IN ROSEMONT, ILLINOIS
COMDISCO, INC.
Signature: /s/ Xxxx Xxxxxx
----------------------------
Print Name: Xxxx Xxxxxx
-----------------------------
Title:
----------------------------------
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