Exhibit 10.22
TBCC
SECURITY AGREEMENT
Obligor: Genie Interative, Inc. Obligor: Internet Online Services, Inc.
a New Jersey corporation a New Jersey corporation
Address: 000 Xxxxx Xxxxxx Address: 000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Obligor: IDT America, Corp., Obligor: Media Response, Inc.
a New Jersey corporation a New Jersey corporation
Address: 000 Xxxxx Xxxxxx Address: 000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Obligor: IDT International, Corp., Obligor: New World
a New Jersey corporation Telecommunications, Corp.,
a New Jersey corporation
Address: 000 Xxxxx Xxxxxx Address: 000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Obligor: IDT Internet Services, Inc., Obligor: Yovelle Renaissance
a Delaware corporation Corporation,
a Delaware corporation
Address: 000 Xxxxx Xxxxxx Address: 000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Date: December 24, 1997
THIS SECURITY AGREEMENT is entered into as of the above date, between the
above Obligor (the "Obligor"), having its chief executive office and
principal place of business at the address shown above, and TRANSAMERICA
BUSINESS CREDIT CORPORATION, a Delaware corporation, ("TBCC") having its
principal office at 0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx
00000 and having an office at 00000 Xxxxxxx Xxxx., Xxxxx 000, Xxxxxx,
Xxxxxxxxxx 00000. (Definitions of certain terms used in this Agreement are
set forth in Section 7 below.) The parties agree as follows:
1. SECURITY
1.1. GRANT OF SECURITY INTEREST. To secure the payment and performance
when due of all of the Obligations, Obligor hereby grants to TBCC a security
interest in all of its present and future Receivables, Inventory, Other
Property, and other Collateral, wherever located.
1.2. Other Liens; Location of Collateral. Obligor represents, warrants
and covenants that all of the Collateral is, and will at all times continue
to be, free and clear of all Liens, other than Permitted Liens and Liens in
favor of TBCC. All Collateral is and will continue to be maintained at the
locations shown on the Schedule.
1.3. Records. Obligor shall maintain full, accurate and complete
records respecting the Receivables, Inventory (including without limitation
records describing the kind, type and quantity of the inventory and
Obligor's cost therefor, withdrawals therefrom and additions thereto,
including a perpetual inventory for work in process and finished goods).
1.5. Further Assurances. Obligor will perform any and all steps that
TBCC may reasonably request to perfect TBCC's security interests in the
Collateral, including, without limitation, executing and filing financing and
continuation statements in form and substance satisfactory to TBCC. TBCC is
hereby authorized by Obligor to sign Obligor's name or file any financing
statements or similar documents or instruments covering the Collateral
whether or not Obligor's signature appears thereon. Obligor agrees, from time
to time, at TBCC's request, to file notices of Liens, financing statements,
similar document or instruments, and amendments, renewals and continuations
thereof, and cooperate with TBCC, in connection with the continued perfection
and protection of the Collateral. If any Collateral is in the possession or
control of any Person other than a public warehouseman where the warehouse
receipt is in the name of or held by TBCC, Obligor shall notify such Person
of TBCC's security interest therein and, upon request, instruct such Person
or Persons to hold all such Collateral for the account of TBCC and subject to
TBCC's instructions. If so requested by TBCC, Obligor will deliver to TBCC
warehouse receipts covering any Collateral located in warehouses showing TBCC
as the beneficiary thereof and will also cause the warehouseman to execute
and deliver such agreements as TBCC may request relating to waivers of liens
by such warehouseman and the release of the Inventory to TBCC on its demand.
Obligor shall defend the Collateral against all claims and demands of all
Persons.
1.6. Power of Attorney. Obligor hereby appoints and constitutes TBCC as
Obligor's attorney-in-fact (i) to request at any time from account debtors
verification of information concerning Receivables and the amount owing
thereon, (ii) upon the occurrence and during the continuance of an Event of
Default, to convey any item of Collateral to any purchaser thereof, (iii) to
give or sign Obligor's name to any notices or statements necessary or
desirable to create or continue the Lien on any Collateral granted hereunder
and (iv) to take any act necessary or desirable to protect or preserve any
Collateral and (v) upon the occurrence and during the continuance of an Event
of Default, to make any payment necessary or desirable to protect or preserve
any Collateral.
TBCC's authority hereunder shall include, without limitation, the
authority to execute and give receipt for any certificate of ownership or any
document, transfer title to any item of Collateral and take any other actions
arising from or incident to the powers granted to TBCC under this Agreement.
This power of attorney is coupled with an interest and is irrevocable.
2. Representations and Warranties of Obligor. Obligor represents and warrants
as follows:
2.1 Organization, Good Standing and Qualification. Obligor (i) is a
corporation duly organized, validly existing and in good standing under the
laws of the State set forth above, (ii) has the corporate power and authority
to own its properties and assets and to transact the businesses in which it
is engaged and (iii) is duly qualified, authorized to do business and in good
standing in each jurisdiction where it is engaged in business, except to the
extent that the failure to so qualify or be in good standing would not have a
Material Adverse Effect.
2.2 Locations of Offices, Records and Collateral. The address of the
principal place of business and chief executive office of Obligor is, and the
books and records of Obligor and all of its chattel paper and records
relating to Collateral are maintained exclusively in the possession of Obligor
at, the address of Obligor specified in heading of this Agreement. Obligor
has places of business, and Collateral is located, only at such address and
at the addresses set forth in the Schedule.
2.3 Authority. Obligor has the requisite corporate power and
authority to execute, deliver and perform its obligations under each of the
Loan Documents. All corporate action necessary for the execution, delivery
and performance by Obligor of the Loan Documents has been taken.
2.4 Enforceability. This Agreement is, and, when executed and
delivered, each other loan Document will be, the legal, valid and binding
obligation of Obligor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of equity.
2.5 No Conflict. The execution, delivery and performance of each Loan
Document by Obligor does not and will not contravene (i) any of the Governing
Documents, (ii) any Requirement of Law or (iii) any Material Contract and
will not result in the imposition of any Liens other than in favor of TBCC.
2.6 Consents and Filings. No consent, authorization or approval of,
or filing with or other act by, any shareholders of Obligor or any
Governmental Authority or other Person is required in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement or any other Loan Document, the consummation of the transactions
contemplated hereby or thereby or the continuing operations of Obligor
following such consummation, except (i) those that have been obtained or
made, and (ii) the filing of financing statements under the Uniform
Commercial Code.
2.7 Solvency. Obligor is Solvent and will be Solvent upon the
completion of all transactions contemplated to occur on or before the date of
this Agreement.
2.8 Financial Data. Obligor has provided to TBCC complete and
accurate Financial Statements, which have been prepared in accordance with
GAAP consistently applied throughout the periods involved and fairly present
the financial position and results of operations of Obligor for each of the
periods covered. Obligor has no Contingent Obligation or
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liability for taxes, unrealized losses, unusual forward or long-term
commitments for long-term leases, which is not reflected in such Financial
Statements or the footnotes thereto. Since the last date covered by such
Financial Statements, there has been no sale, transfer or other disposition by
Obligor of any material part of its business or property and no purchase or
other acquisition of any business or property (including any capital stock of
any other Person) material in relation to the financial condition of Obligor
at said date. Since said date, (i) there has been no change, occurrence,
development or event which has had or could reasonably be expected to have a
Material Adverse Effect and (ii) none of the capital stock of Obligor has
been redeemed, retired, purchased or otherwise acquired for value by Obligor.
2.90. ACCURACY AND COMPLETENESS OF INFORMATION. All data, reports and
information previously, now or hereafter furnished by or on behalf of
Obligor to TBCC or the Auditors are or will be true and accurate in all
material respects on the date as of which said data, reports and information
are dated or certified, and not incomplete by omitting to state any material
fact necessary to make such data, reports and information not materially
misleading at such time. There are no facts now known to Obligor which
individually or in the aggregate would reasonably be expected to have a
Material Adverse Effect and which have not been disclosed in writing to TBCC.
2.10. NO JOINT VENTURES, PARTNERSHIPS OR SUBSIDIARIES. Obligor is not
engaged in any joint venture or partnership with any other Person other than
those disclosed to TBCC in writing from time to time and which involve a
commitment of the assets of the Obligor (in the aggregate) of at least
$500,000. Obligor has no Subsidiaries other than those disclosed to TBCC in
writing from time to time.
2.11. CORPORATE AND TRADE NAME. During the past five years, Obligor has
not been known by or used any other corporate, trade or fictitious name except
for its name as set forth on the signature page of this Agreement and the
other names specified in the Schedule.
2.12. NO ACTUAL OR PENDING MATERIAL MODIFICATION OF BUSINESS. There exists
no actual or, to the best of Obligor's knowledge after due inquiry,
threatened termination, cancellation or limitation of, or any modification or
change in the business relationship of Obligor with any customer or group of
customers whose purchases individually or in the aggregate are material to
the operation of Obligor's business or with any material supplier.
2.13. TAXES AND TAX RETURNS. Obligor has properly completed and timely
filed all income tax returns it is required to file. The information filed is
complete and accurate in all material respects. All deductions taken in such
income tax returns are appropriate and in accordance with applicable laws and
regulations, except deductions that may have been disallowed but are being
challenged in good faith and for which adequate reserves have been made in
accordance with GAAP. All taxes, assessments, fees and other governmental
charges for periods beginning prior to the date of this Agreement have been
timely paid (or, if not yet due, adequate reserves therefor have been
established) and Obligor has no liability for taxes in excess of the amounts
so paid or reserves so established. No deficiencies for taxes have been
claimed, proposed or assessed by any taxing or other Governmental Authority
against Obligor and no notice of any tax Lien has been filed. There are no
pending or threatened audits, investigations or claims for or relating to
any liability for taxes and there are no matters under discussion with any
Governmental Authority which could result in an additional liability for
taxes. No extension of a statute of limitations relating to taxes,
assessments, fees or other governmental charges is in effect with respect to
Obligor. Obligor is not a party to and does not have any obligations under
any written tax sharing agreement or agreement regarding payments in lieu of
taxes.
2.14. NO JUDGMENTS OR LITIGATION. No judgments, orders, writs or decrees
are outstanding against Obligor, nor is there now pending or, to the
knowledge of Obligor after due inquiry, threatened litigation, contested
claim, investigation, arbitration, or governmental proceeding by or against
Obligor that (i) could individually or in the aggregate be likely in the
reasonable business judgment of TBCC to have a Material Adverse Effect or
(ii) purports to affect the legality, validity or enforceability of this
Agreement, any other Loan Document or the consummation of the transactions
contemplated hereby or thereby.
2.15. INVESTMENTS; CONTRACTS. Obligor (i) has not committed to make any
Investment which could have a Material Adverse Effect; (ii) is not a party to
any indenture, agreement, contract, instrument or lease or subject to any
charter, by-law or other corporate restriction or any injunction, order,
restriction or decree, which would materially and adversely affect its
business, operations, assets or financial condition; (ii) is not a party to
any "take or pay" contract as to which it is the purchaser which could have a
Material Adverse Effect; or (iv) has no material contingent or long-term
liability, including management contracts excluding employment contracts of
full-time individual officers or employees), which could have a Material
Adverse Effect.
2.16. NO DEFAULTS; LEGAL COMPLIANCE. Obligor is not in default under any
term of any Material Contract or in violation of any Requirement of Law, nor
is Obligor subject to any investigation with respect to a claimed violation
of any Requirement of Law.
2.17. RIGHTS IN COLLATERAL; PRIORITY OF LIENS. All Collateral is owned or
leased by Obligor, free and clear of any and all Liens in favor of third
parties, other than Permitted Liens. The Liens granted to TBCC pursuant to
the Loan Documents constitute valid, enforceable and perfected first-priority
Liens on the Collateral, except for Permitted Liens.
2.18. INTELLECTUAL PROPERTY. Set forth in the written Representations and
Warranties of Obligor previously delivered to TBCC is a complete and accurate
list of all patents, trademarks, trade names, service marks and copyrights
(registered and unregistered), and all applications therefor and licenses
thereof, of Obligor. Obligor owns or licenses all material patents,
trademarks, service-marks, logos, tradenames, trade secrets, know-how,
copyrights, or licenses and other rights with respect to any of the
foregoing, which are necessary or advisable for the operation of its
business as presently conducted or proposed to be conducted. To the best of
its knowledge after due inquiry, Obligor has not infringed any patent,
trademark, service-
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xxxx, tradename, copyright license or other right owned by any other Person
by the sale or use of any product, process, method, substance, part or other
material presently contemplated to be sold or used, where such sale or use
would reasonably be expected to have a Material Adverse Effect and no claim
or litigation is pending, or to the best of Obligor's knowledge, threatened
against or affecting Obligor that contests its right to sell or use any such
product, process, method, substance, part or other material.
2.19. Labor Matters. There are no existing or threatened strikes,
lockouts or other disputes relating to any collective bargaining or similar
agreement to which Obligor is a party which would, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.
2.20. Licenses and Permits. To the best of its knowledge, Obligor has
obtained and holds in full force and effect, all franchises, licenses,
leases, permits, certificates, authorizations, qualifications, easements,
rights of way and other rights and approvals which are necessary or advisable
for the operation of its business as presently conducted and as proposed to
be conducted, except where the failure to possess any of the foregoing
(individually or in the aggregate) would not have a Material Adverse Effect.
2.21. Government Regulation. Obligor is not subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, the Investment Company Act of 1940, or any other
Requirement of Law that limits its ability to incur indebtedness or its
ability to consummate the transactions contemplated by this Agreement and the
other Loan Documents.
2.22. Business and Properties. The business of Obligor is not affected by
any fire, explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy
or other casualty (whether or not covered by insurance) that could reasonably
be expected to have a Material Adverse Effect.
2.23. Affiliate Transactions. Obligor is not a party to or bound by any
agreement or arrangement (whether oral or written) to which any Affiliate of
Obligor is a party except (i) in the ordinary course of and pursuant to the
reasonable requirements of the business of Obligor and (ii) upon fair and
reasonable terms no less favorable to Obligor than it could obtain in a
comparable arm's-length transaction with an unaffiliated Person.
2.24. Survival of Representations. All representations made by Obligor in
this Agreement and in any other Loan Document executed and delivered by it in
connection herewith shall survive the execution and delivery hereof and
thereof and the closing of the transactions contemplated hereby and thereby.
3. AFFIRMATIVE COVENANTS OF THE OBLIGOR. Until termination of this Agreement
and payment and satisfaction of all Obligations:
3.1. Corporate Existence. Obligor shall (i) maintain its corporate
existence, (ii) maintain in full force and effect all material licenses,
bonds, franchises, leases, trademarks, qualifications and authorizations to
do business, and all material patents, contracts and other rights necessary
or advisable to the profitable conduct of its business, and (iii) continue
in, and limit its operations to, the same lines of business as presently
conducted by it.
3.2. Maintenance of Property. Obligor shall keep all property useful and
necessary to its business in good working order and condition (ordinary wear
and tear expected) in accordance with its past operating practices.
3.3. Affiliate Transactions. Obligor shall conduct transactions with any
of its Affiliates on an arm's-length basis or other basis no less favorable
to Obligor and which are approved by the board of directors of Obligor.
3.4. Taxes. Obligor shall pay when due (i) all tax assessments, and other
governmental charges and levies imposed against it or any of its property and
(ii) all lawful claims that, if unpaid, might by law become a Lien upon its
property; provided, however, that, unless such tax assessment, charge, levy
or claim has become a Lien on any of the property of Obligor, it need not be
paid if it is being contested in good faith, by appropriate proceedings
diligently conducted and an adequate reserve or other appropriate provision
shall have been made therefor as required in accordance with GAAP.
3.5. Requirements of Law. Obligor shall comply with all Requirements of
Law applicable to it, including, without limitation, all applicable Federal,
State, local or foreign laws and regulations, including, without limitation,
those relating to environmental matters, employee matters, the Employee
Retirement Income Security Act of 1974, and the collection, payment and
deposit of employees' income, unemployment and social security taxes,
provided that Obligor shall not be deemed in violation hereof if Obligor's
failure to comply with any of the foregoing would not require more than
$50,000 to cure the same.
3.6. Insurance. Obligor shall maintain public liability insurance,
business interruption insurance, third party property damage insurance and
replacement value insurance on its assets (including the Collateral) under
such policies of insurance, with such insurance companies, in such amounts
and covering such risks as are at all times satisfactory to TBCC in its
commercially reasonable judgment, all of which policies covering the
Collateral shall name TBCC as an additional insured and lender loss payee in
case of loss, and contain other provisions as TBCC may reasonably require to
protect fully TBCC's interest in the Collateral and any payments to be made
under such policies.
3.7. Books and Records; Inspections. Obligor shall (i) maintain books
and records (including computer records) pertaining to the Collateral in such
detail, form and scope as is consistent with good business practice and (ii)
provide TBCC and its agents access to the premises of Obligor at any time and
from time to time, during normal business hours and upon reasonable notice
under the circumstances, and at any time on and after the occurrence of a
Default or Event of Default, for the purposes of (A) inspecting and
verifying the Collateral, (B) inspecting and copying (at Obligor's expense)
any and all
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records pertaining thereto, and (C) discussing the affairs, finances and
business of Obligor with any officer, employee or director of Obligor or with
the Auditors. Obligor shall reimburse TBCC for the reasonable travel and
related expenses of TBCC's employees or, at TBCC's option, of such outside
accountants or examiners as may be retained by TBCC to verify or inspect
Collateral, records or documents of Obligor on a regular basis or for a
special inspection if TBCC deems the same appropriate. If TBCC's own
employees are used, Obligor shall also pay therefor $600 per person per day
(or such other amount as shall represent TBCC's then current standard charge
for the same), or, if outside examiners or accountants are used, Obligor
shall also pay TBCC such sum as TBCC may be obligated to pay as fees therefor.
3.8. Notification Requirements. Obligor shall give TBCC the following
notices and other documents:
(a) Notice of Defaults. Obligor shall give TBCC written notice of
any Default or Event of Default within two Business Days after becoming aware
of the same.
(b) Proceedings or Adverse Changes. Obligor shall give TBCC written
notice of any of the following, promptly, and in any event within ten
Business Days after Obligor becomes aware of any of the following: (i) any
proceeding being instituted or threatened by or against it in any federal,
state, local or foreign court or before any commission or other regulatory
body involving a sum, together with the sum involved in all other similar
proceedings, in excess of $500,000 in the aggregate, (ii) any order, judgment
or decree being entered against Obligor or any of its properties or assets
involving a sum, together with the sum of all other orders, judgments or
decrees, in excess of $500,000 in the aggregate, and (iii) any actual or
prospective change, development or event which has had or could reasonably be
expected to have a Material Adverse Effect.
(c) Change of Name or Chief Executive Office; Opening Additional
Places of Business. Obligor shall give TBCC at least 30 days prior written
notice of any change of Obligor's corporate name or its chief executive
office or of the opening of any additional place of business.
(d) Casualty Loss. Obligor shall (i) provide written notice to
TBCC, within ten Business Days, of any material damage to, the destruction of
or any other material loss to any asset or property owned or used by Obligor
other than any such asset or property with a net book value (individually or
in the aggregate) less than $250,000 or any condemnation, confiscation or
other taking, in whole or in part, or any event that otherwise diminishes so
as to render impracticable or unreasonable the use of such asset or property
owned or used by Obligor together with the amount of the damage, destruction,
loss or diminution in value and (ii) diligently file and prosecute its claim
or claims for any award or payment in connection with any of the foregoing.
3.9. Qualify to Transact Business. Obligor shall qualify to transact
business as a foreign corporation in each jurisdiction where the nature or
extent of its business or the ownership of its property requires it to be so
qualified or authorized and where failure to qualify or be authorized would
have a Material Adverse Effect.
3.10. Financial Reporting. Obligor shall timely deliver to TBCC such
information respecting Obligor or any Collateral as TBCC may from time to
time request in its good-faith business judgment. Obligor authorizes TBCC to
communicate directly with its officers, employees and Auditors and to examine
and make abstracts from its books and records. Obligor authorizes its
Auditors to disclose to TBCC any and all financial statements, work papers
and other information of any kind that they may have with respect to Obligor
and its business and financial and other affairs. Obligor shall deliver a
letter addressed to the Auditors requesting them to comply with the
provisions of this paragraph when requested by TBCC.
3.11. Payment of Liabilities. Obligor shall pay and discharge, in the
ordinary course of business, all Indebtedness, except where the same may be
contested in good faith by appropriate proceedings and adequate reserves with
respect thereto have been provided on the books and records of Obligor in
accordance with GAAP.
3.12. Trademarks. Obligor shall do and cause to be done all things
necessary to preserve and keep in full force and effect all of its material
registrations of trademarks, service marks and other marks, trade names and
other trade rights.
3.13. Proceeds of Collateral. Without limiting any of the other terms of
this Agreement, and without implying any consent to any sale or other
transfer of Collateral in violation of any provision of this Agreement,
Obligor shall deliver to TBCC all proceeds of any sale or other transfer or
disposition of any Collateral, immediately upon receipt of the same and in
the same form as received, with any necessary endorsements, and Obligor will
not commingle any such proceeds with any of its other funds or property, but
will segregate them from the other assets of Obligor and will hold them in
trust and for the account and as the property of TBCC.
3.14. Solvency. Obligor shall be Solvent at all times.
3.15. Interest. Obligor shall pay TBCC interest on all sums due from
Obligor to TBCC hereunder at an interest rate equal to the highest interest
rate applicable to any of the Loans, from the date due to the date paid.
4. NEGATIVE COVENANTS. termination of this Agreement and payment and
satisfaction of all Obligations:
4.1. Contingent Obligations. Obligor will not, directly or indirectly,
incur, assume, or suffer to exist any Contingent Obligation, excluding
indemnities given in connection with this Agreement or the other Loan
Documents in favor of TBCC or in connection with the sale of Inventory or
other asset dispositions permitted hereunder.
4.2. Corporate Changes. Obligor will not, directly or indirectly, merge or
consolidate with any Person (the result of which merger or consolidation, the
Obligor is not the surviving the entity), or liquidate or dissolve (or suffer
any liquidation or dissolution).
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4.3. Change in Nature of Business. Obligor will not at any time make any
material change in the lines of its business as carried on at the date of
this Agreement or enter into any new material line of business.
4.4. Sales of Assets. Obligor will not, directly or indirectly, in any
fiscal year, sell, transfer or otherwise dispose of any assets (other than
Collateral), or grant any option or other right to purchase or otherwise
acquire any assets (other than Collateral) other than (i) assets (other than
Collateral) with an aggregate value of less than $500,000, and (ii) sales of
Inventory in the ordinary course of business.
4.5. Cancellation of Debt. Obligor will not cancel any claim or debt owed
to it, except in the ordinary course of business.
4.6. Loans to Other Persons. Obligor will not at any time make loans or
advance any credit (except to trade debtors in the ordinary course of
business) to any Person in excess of $200,000 in the aggregate at any time
for all such loans.
4.7. Liens. Obligor will not, directly or indirectly, at any time create,
incur, assume or suffer to exist any Lien on or with respect to any of the
Collateral, other than: Liens created hereunder and by any other Loan
Document; and Permitted Liens.
4.8. Dividends, Stock Redemptions. Obligor will not, directly or
indirectly, pay any dividends or distributions on, purchase, redeem or retire
any shares of any class of its capital stock or any warrants, options or
rights to purchase any such capital stock, whether now or hereafter
outstanding ("Stock"), or make any payment on account of or set apart assets
for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of its Stock, or make any other
distribution in respect thereof, either directly or indirectly, whether in
cash or property or in obligations of Obligor, except for dividends paid
solely in stock of the Obligor.
4.9. Investments in Other Persons. Obligor will not, directly or
indirectly, at any time make or hold any Investment in any Person (whether in
cash, securities or other property of any kind) other than Investments in
Cash Equivalents.
4.10. Partnerships; Subsidiaries; Joint Ventures; Management Contracts.
Obligor will not at any time create any direct or indirect Subsidiary, enter
into any joint venture or similar arrangement or become a partner in any
general or limited partnership or enter into any management contract (other
than an employment contract for the employment of an officer or employee
entered into in the regular course of Obligor's business) permitting third
party management rights with respect to Obligor's business.
4.11. Fiscal Year. Obligor will not change its fiscal year.
4.12. Accounting Changes. Obligor will not at any time make or permit any
change in accounting policies or reporting practices, except as required by
GAAP.
4.13. Broker's or Finder's Fees. Obligor will not pay or incur any
broker's or finder's fees in connection with this Agreement or the
transactions contemplated hereby.
4.14. Unusual Terms of Sale. Obligor will not sell goods or products on
extended terms, consignment terms, on a progress billing or xxxx and hold
basis, or on any other unusual terms.
4.15. Amendments of Material Contracts. Obligor will not amend, modify,
cancel or terminate, or permit the amendment, modification, cancellation or
termination of, any Material Contract, if such amendment, modification,
cancellation or termination could have a Material Adverse Effect.
4.16. Sale and Leaseback Obligations. Obligor will not at any time
create, incur or assume any obligations as lessee for the rental of real or
personal property in connection with any sale and leaseback transaction.
4.17. Acquisition of Stock or Assets. Obligor will not acquire or commit
or agree to acquire all or any stock, securities or assets of any other
Person other than Inventory and Equipment acquired in the ordinary course of
business.
5. EVENTS OF DEFAULT.
5.1. Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default":
(a) Obligor shall fail to pay any Obligation when payable, whether at
stated maturity, by acceleration, or otherwise; or
(b) Obligor shall default in the performance or observance of any
agreement, covenant, condition, provision or term contained in Section 3.7,
3.13, 4 (and its Sections and subsections), or 6.2 of this Agreement, or
Obligor shall fail to perform any non-monetary Obligation which by its nature
cannot be cured; or
(c) Obligor shall default in the performance or observance of any
other agreement, covenant, condition, provision or term of this Agreement
(other than those referred to in Section 5.1(a) above or Section 5.1(b)
above) or any other Loan Document, and such failure continues uncured for a
period of ten Business Days after the earlier of (i) Obligor's actual
knowledge of such default or (ii) notice from TBCC of such default; or
(d) Obligor shall dissolve, wind up or otherwise cease to conduct its
business; or
(e) Obligor shall become the subject of (i) an Insolvency Event
except as set forth in clause (e) of the definition of Insolvency Event or
(ii) an Insolvency Event as set forth in clause (e) of the definition of
Insolvency Event that is not dismissed within sixty days; or
(f) any representation or warranty made by or on behalf of Obligor to
TBCC, under this Agreement or otherwise, shall be incorrect or misleading in
any material respect when made or deemed made; or
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(g) A change in the ownership or control of more than 40% of the voting
stock of the Obligor compared to such ownership on the date of this Agreement;
(h) any judgment or order for the payment of money shall be rendered
against Obligor in an amount of at least $250,000 and shall not be stayed,
vacated, bonded or discharged within thirty days; or
(i) Obligor shall deny or disaffirm its obligations under any of the
Loan Documents or any Liens granted in connection therewith or shall
otherwise challenge any of its obligations under any of the Loan Documents;
or any Liens granted in any of the Collateral shall be determined to be void,
voidable or invalid; are subordinated or are not given the priority
contemplated by this, Agreement; or
(j) any Loan Document shall for any reason cease to create a valid and
perfected Lien on the Collateral purported to be covered thereby, of first
priority (except for Permitted Liens); or
(k) the independent public accountants for Obligor shall deliver a
Qualified opinion on any Financial Statement; or
(l) Obligor (i) shall fail to pay any Indebtedness in excess of
$250,000 owing to any Person other than TBCC or any interest or premium
thereon, when due (whether at scheduled maturity or by required prepayment,
acceleration, demand or otherwise), or (ii) shall otherwise be in breach or
default in any of its obligations under any agreement with respect to any
such Indebtedness, if the effect of such breach, default or failure to pay is
to cause such Indebtedness to become due or redeemed or permit the holder or
holders of such Indebtedness (or a trustee or agent on behalf of such holder
or holders) to declare such Indebtedness due or require such Indebtedness to
be redeemed prior to its stated maturity; or
(m) the occurrence of any event or condition that, in TBCC's judgment,
could reasonably be expected to have a Material Adverse Effect.
5.2. Remedies. Upon the occurrence and during the continuance of an Event
of Default, TBCC shall have all rights and remedies under applicable law and
the Loan Documents, and TBCC may do any or all of the following:
(a) Declare all Obligations to be immediately due and payable (except
with respect to any Event of Default with respect to Obligor set forth in
Section 5.1(e), in which case all Obligations shall automatically become
immediately due and payable) without presentment, demand, protest or any
other action or obligation of TBCC.
(b) Cease making any extensions of credit to Obligor of any kind.
(c) Take possession of all documents, instruments, files and records
(including the copying of any computer records) relating to the Receivables
or other Collateral and use (at the expense of Obligor) such supplies or
space of Obligor at Obligor's places of business necessary to administer and
collect the Receivables and other Collateral;
(d) Accelerate or extend the time of payment, compromise, issue
credits, or bring suit on the Receivables and other Collateral (in the name
of Obligor or TBCC) and otherwise administer and collect the Receivables and
other Collateral;
(e) Sell, assign and deliver the Receivables and other Collateral, with
or without advertisement, at public or private sale, for cash, on credit or
otherwise, subject to applicable law; and
(f) Foreclose the security interests created pursuant to the Loan
Documents by any available procedure, take possession of any or all of the
Collateral, with or without judicial process and enter any premises where any
Collateral may be located for the purpose of taking possession of or removing
the same.
(g) TBCC may bid or become a purchaser at any sale, fee from any right
of redemption, which right is expressly waived by Obligor, if permitted under
applicable law. If notice of intended disposition of any Collateral is
required by law, it is agreed that ten days' notice shall constitute
reasonable notification. Obligor will assemble the Collateral and make it
available at such locations as TBCC may specify, whether at the premises of
Obligor or elsewhere, and will make available to TBCC the premises and
facilities of Obligor for the purpose of TBCC's taking possession of or
removing the Collateral or putting the Collateral in salable form.
5.3. Receivables. Upon the occurrence and during the continuance of an
Event of Default, or at any time that TBCC believes in good faith that fraud
has occurred or that Obligor has failed to deliver the proceeds of
Receivables or other Collateral to TBCC as required by this Agreement or any
other Loan Document, TBCC may (i) settle or adjust disputes or claims
directly with account debtors for amounts and upon terms which it considers
advisable, and (ii) notify account debtors on the Receivables and other
Collateral that the Receivables and Collateral have been assigned to TBCC,
and that payments in respect thereof shall be made directly to TBCC. If an
Event of Default has occurred and is continuing or TBCC reasonably believes
in good faith that fraud has occurred, or that Obligor has failed to deliver
the proceeds of Receivables or other Collateral to TBCC as required by this
Agreement or any other Loan Document, Obligor hereby irrevocably authorizes
and appoints TBCC, or any Person TBCC may designate, as its attorney-in-fact,
at Obligor's sole cost and expense, to exercise, all of the following powers,
which are coupled with an interest and are irrevocable, until all of the
Obligations have been indefeasibly paid and satisfied in full in cash: (A) to
receive, take, endorse, sign, assign and deliver, all in the name of TBCC or
Obligor, any and all checks, notes, drafts, and other documents or
instruments relating to the Collateral; (B) to receive, open and dispose of
all mail addressed to Obligor and to notify postal authorities to change the
address for delivery thereof to such address as TBCC may designate; and (C)
to take or bring, in the name of TBCC or Obligor, all steps, actions, suits
or proceedings deemed by TBCC necessary or desirable to enforce or effect
collection of Receivables and other Collateral or file and sign Obligor's
name on a proof of claim in bankruptcy or similar document against any
obligor of Obligor.
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5.4. Right of Setoff. In addition to all rights of offset that TBCC may
have under applicable law, upon the occurrence and during the continuance of
any Event of Default, and whether or not TBCC has made any demand or the
Obligations of Obligor have matured, TBCC shall have the right to appropriate
and apply to the payment of the Obligations of Obligor all deposits and other
obligations then or thereafter owing by TBCC to or for the credit or the
account of Obligor. In the event that TBCC exercises any of its rights under
this Section, TBCC shall provide notice to Obligor of such exercise, provided
that the failure to give such notice shall not affect the validity of the
exercise of such rights.
5.5. License for Use of Software and Other Intellectual Property. After
the occurrence and during the continuance of an Event of Default, unless
expressly prohibited by any licensor thereof, TBCC is hereby granted a
license to use all computer software programs, data bases, processes,
trademarks, tradenames and materials used by Obligor in connection with its
businesses or in connection with the Collateral.
5.6. No Marshalling; Deficiencies; Remedies Cumulative. The net cash
proceeds resulting from TBCC's exercise of any of its rights with respect to
Collateral, including any and all Collections (after deducting all of TBCC's
reasonable expenses related thereto), shall be applied by TBCC to such of the
Obligations in such order as TBCC shall elect in its sole and absolute
discretion, whether due or to become due. Obligor shall remain liable to TBCC
for any deficiencies and TBCC shall remit to Obligor or its successor or
assign, any surplus resulting therefrom. The remedies specified in this
Agreement are cumulative, may be exercised in such order and with respect to
such Collateral as TBCC may deem desirable and are not intended to be
exclusive, and the full or partial exercise of any of them shall not preclude
the full or partial exercise of any other available remedy under this
Agreement, under any other Loan Document, at equity or at law.
5.7. Waivers. Obligor hereby waives any bonds, security or sureties
required by any statute, rule or any other law as an incident to any taking
of possession by TBCC of any Collateral. Obligor also waives any damages
(direct, consequential or otherwise) occasioned by the enforcement of TBCC's
rights under this Agreement or any other Loan Document including the taking
of possession of any Collateral or the giving of notice to any account debtor
or the collection of any Receivable or other Collateral (other than damages
that are the result of acts or omissions constituting gross negligence or
willful misconduct of TBCC). These waivers and all other waivers provided for
in this Agreement and the other Loan Documents have been negotiated by the
parties and Obligor acknowledges that it has been represented by counsel of
its own choice and has consulted such counsel with respect to its rights
hereunder.
5.8. Right to Make Payments. In the event that Obligor shall fail to
purchase or maintain insurance required hereunder, or to pay any tax,
assessment, government charge or levy, except as the same may be otherwise
permitted hereunder, or in the event that any Lien prohibited hereby shall
not be paid in full or discharged, or in the event that Obligor shall fail to
perform or comply with any other covenant, promise or obligation to TBCC
hereunder or under any other Loan Document, TBCC may (but shall not be
required to) perform, pay, satisfy, discharge or bond the same for the
account of Obligor, and Obligor shall immediately reimburse TBCC for all
amounts so paid by TBCC.
6. TERMS, ASSIGNMENTS AND PARTICIPATIONS.
6.1. Term. This Agreement shall continue in effect until all of the
Obligations have been paid and performed in full and the Loan Agreement has
terminated.
6.2. Assignments. Obligor shall not assign this Agreement or any right or
obligation hereunder without the prior written consent of TBCC. TBCC may
assign (without the consent of Obligor) to one or more Persons all or a
portion of its rights and obligations under this Agreement and the other Loan
Documents.
6.3. Participations. TBCC may sell participations in or to all or a
portion of its rights and obligations under this Agreement, provided,
however, that TBCC's obligations under this Agreement shall remain unchanged.
6.4. Disclosure. TBCC may, in connection with any permitted assignment or
participation or proposed assignment or participation pursuant to this
Agreement, disclose to the assignee or participant or proposed assignee or
participant any information relating to Obligor furnished to TBCC by or on
behalf of Obligor.
7. DEFINITIONS.
7.1. General Definitions. As used herein, the following terms shall have
the meanings herein specified (to be equally applicable to both the singular
and plural forms of the terms defined):
(a) "Affiliate" means as to any Person, any other Person who directly
or indirectly controls, is under common control with, is controlled by or is
a director or officer of such Person. As used in this definition, "control"
(including its correlative meanings, "controlled by" and "under common
control with") means possession, directly or indirectly, of the power to
direct or cause the direction of management or policies (whether through
ownership of voting securities or partnership or other ownership interests,
by contract or otherwise), provided that, in any event, any Person who owns
directly or indirectly twenty percent (20%) or more of the securities having
ordinary voting power for the election of the members of the board of
directors or other governing body of a corporation or twenty percent (20%) or
more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to
control such corporation, partnership or other Person.
(b) "Agreement" means this Loan and Security Agreement, as amended,
supplemented or otherwise modified from time to time.
(c) "Auditors" means a nationally recognized firm of independent
public accountants selected by Obligor and reasonably satisfactory to TBCC.
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(d) "Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy," as that title may be amended from time to time, or any
successor statute.
(e) "Borrower" means IDT Corporation, and its successors.
(f) "Business Day" means any day other than a Saturday, Sunday or any
other day on which commercial banks in Chicago, Illinois are required or
permitted by law to close.
(g) "Cash Equivalents" means (i) securities issued, guaranteed or insured
by the United States or any of its agencies with maturities of not more than
one year from the date acquired; (ii) certificates of deposit with maturities
of not more than one year from the date acquired, issued by any U.S. federal
or state chartered commercial bank of recognized standing which has capital
and unimpaired surplus in excess of $100,000,000; (iii) investments in money
market funds registered under the Investment Company Act of 1940; and (iv)
other instruments, commercial paper or investments acceptable to TBCC in its
sole discretion.
(h) "Collateral" means Receivables, Inventory, and Other Property, and
all additions and accessions thereto and substitutions and replacements
therefor and improvements thereon, and all proceeds (whether cash or other
property) and products thereof, including, without limitation, all proceeds
of insurance covering the same and all tort claims in connection therewith,
and all records, files, computer programs and files, data and writing
relating to the foregoing, and all equipment containing the foregoing.
(i) "Collections" means all cash, funds, checks, notes, instruments, any
other form of remittance tendered by account debtors in respect of payment of
Receivables and any other payments received by Obligor with respect to any
other Collateral.
(j) "Compliance Certificate" means a certificate as to compliance with the
Obligations, on TBCC's standard form (in effect from time to time).
(k) "Contingent Obligation" means any direct, indirect, contingent or
non-contingent guaranty or obligation for the Indebtedness of another Person,
except endorsements in the ordinary course of business.
(l) "Default" means any of the events specified in Section 5.1, whether or
not any of the requirements for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
(m) "Equipment" means all machinery, equipment, furniture, fixtures,
conveyors, tools, materials, storage and handling equipment, hydraulic
presses, cutting equipment, computer equipment and hardware, including
central processing units, terminals, drives, memory units, printers,
keyboards, screens, peripherals and input or output devices, molds, dies,
stamps, vehicles, and other equipment of every kind and nature and wherever
situated now or hereafter owned by Obligor or in which Obligor may have any
interest as lessee or otherwise (to the extent of such interest), together
with all additions and accessions thereto, all replacements and all
accessories and parts therefor, all manuals, blueprints, know-how, warranties
and records in connection therewith, all rights against suppliers,
warrantors, manufacturers, sellers or others in connection therewith, and
together with all substitutes for any of the foregoing.
(n) "Event of Default" means the occurrence of any of the events specified
in Section 5.1.
(o) "Financial Statements" means the balance sheets, profit and loss
statements, statements of cash flow, and statements of changes in
intercompany accounts, if any, for the period specified, prepared in
accordance with GAAP and consistent with prior practices.
(p) "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are
applicable to the circumstances as of the date of determination. Whenever any
accounting term is used herein which is not otherwise defined, it shall be
interpreted in accordance with GAAP.
(q) "Governing Documents" means the articles or certificate of
incorporation and by-laws of Obligor.
(r) "Governmental Authority" means any nation or government, any state or
other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions thereof or
pertaining thereto.
(s) "Indebtedness" means, with respect to any Person, as of the date of
determination any indebtedness, liability or obligation of such Person
(including without limitation obligations under capital leases and contingent
obligations).
(t) "Insolvency Event" means, with respect to any Person, the occurrence
of any of the following: (a) such Person shall be adjudicated insolvent or
bankrupt, or shall generally fail to pay or admit in writing its inability to
pay its debts as they become due, (b) such Person shall seek dissolution or
reorganization or the appointment of a receiver, trustee, custodian or
liquidator for it or a substantial portion of its property, assets or
business or to effect a plan oar other arrangement with its creditors, (c)
such Person shall make a general assignment for the benefit of its creditors,
or consent to or acquiesce in the appointment of a receiver, trustee,
custodian or liquidator for a substantial portion of its property, assets or
business, (d) such Person shall file a voluntary petition under any
bankruptcy, insolvency or similar law or take any corporate or similar act in
furtherance thereof, or (e) such Person, or a substantial portion of its
property, assets or business shall become the subject of an involuntary
proceeding or petition for its dissolution, reorganization, and such
proceeding is not dismissed or stayed
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within sixty days, or the appointment of a receiver, trustee, custodian or
liquidator, and such receiver is not dismissed within sixty days.
(u) "Inventory" means all present and future goods intended for sale,
lease or other disposition by Obligor including, without limitation, all raw
materials, work in process, finished goods and other retail inventory, goods
in the possession of outside processors or other third parties, goods
consigned to Obligor to the extent of its interest therein as consignee,
materials and supplies of any kind, nature or description which are or might
be used in connection with the manufacture, packing, shipping, advertising,
selling or finishing of any such goods, and all documents of title or
documents representing the same.
(v) "Investment" in any Person means, as of the date of determination
thereof, any payment or contribution, or commitment to make a payment or
contribution, by any Person including, without limitation, property
contributed or committed to be contributed by any Person, on its account for
or in connection with its acquisition of any stock, bonds, notes, debentures,
partnership or other ownership interest or any other security of the Person
in whom such Investment is made or any evidence of indebtedness by reason of
a loan, advance, extension of credit, guaranty or other similar obligation
for any debt, liability or indebtedness of such Person in whom the Investment
is made.
(w) "Lien" means any lien, claim, charge, pledge, security interest,
assignment, hypothecation, deed of trust, mortgage, lease, conditional sale,
retention of title or other preferential arrangement having substantially the
same economic effect as any of the foregoing, whether voluntary or imposed by
law.
(x) "Loan Agreement" means the Loan and Security Agreement dated
December 24, 1997 between TBCC and the Borrower (and all extensions,
renewals, replacements and modifications, thereof).
(y) "Loan Documents" means this Agreement, the Loan Agreement, and all
present and future documents and instruments delivered or to be delivered by
Borrower, Obligor or any of their Affiliates under, in connection with or
relating to this Agreement or the Loan Agreement as each of the same may be
amended, supplemented or otherwise modified from time to time.
(z) "Material Adverse Effect" means (i) a material adverse change occurs
in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Obligor, (ii) the
impairment of Obligor's ability to perform its obligations under the Loan
Documents to which it is a party or of TBCC to enforce the Obligations or
realize upon the Collateral or (iii) a material adverse effect on the value
of the Collateral or the amount which TBCC would be likely to receive (after
giving consideration to delays in payment and costs of enforcement) in the
liquidation of the Collateral.
(aa) "Material Contract" means any contract or other arrangement to
which Obligor is a party (other than the Loan Documents) for which breach,
nonperformance, cancellation or failure to renew could have a Material
Adverse Effect.
(bb) "Obligations" means and includes all debts, liabilities,
obligations, guaranties, covenants and duties owing by Obligor to TBCC of any
kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, which may arise under, out of, or in connection
with, that certain Guaranty dated December 24, 1997 executed by Obligor in
favor of TBCC with respect to the Borrower (and all extensions, renewals,
replacements and modifications thereof), this Agreement, any other Loan
Document or any other agreement executed in connection herewith or therewith,
whether or not for the payment of money, whether arising by reason of an
extension of credit, opening, guaranteeing or confirming of a letter of
credit, loan, guaranty, indemnification or in any other manner, whether
direct or indirect (including those acquired by assignment, purchase,
discount or otherwise), whether absolute or contingent, due or to become due,
now due or hereafter arising and however acquired. The term includes, without
limitation, all interest (including interest accruing on or after an
Insolvency Event, whether or not an allowed claim), charges, expenses,
reasonable attorneys' fees, and any other sum properly chargeable to Obligor
under this Agreement, the other Loan Documents or any other agreement
executed in connection herewith or therewith.
(cc) "Other Property" means all present and future: instruments,
documents, documents of title, securities, investment securities, bonds,
notes, promissory notes, drafts, acceptances, letters of credit and rights to
receive proceeds of letters of credit, deposit accounts, chattel paper,
certificates, insurance policies, insurance proceeds, leases, computer tapes,
causes of action, judgments, claims against third parties, leasehold rights in
any personal property, books, ledgers, files and records, general intangibles
(including without limitation, all contract rights, tax refunds, rights to
receive tax refunds, patents, patent applications, copyrights (registered and
unregistered), royalties, licenses, permits, franchise rights,
authorizations, customer lists, rights of indemnification, contribution and
subrogation, computer programs, discs and software, trade secrets, computer
service contracts, trademarks, trade names, service marks and names, logos,
goodwill, deposits, choses in action, designs, blueprints, plans, know-how,
telephone numbers and rights thereto, credits, reserves, and all forms of
obligations whatsoever now or hereafter owing to Obligor), all property at any
time in the possession or under the control of TBCC, and all security given
by Obligor to TBCC pursuant to any other Loan Document or agreement.
(dd) "Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced and be continuing: (i) Liens for taxes, assessments and other
governmental charges or levies or the claims or demands of landlords,
carriers, warehousemen, mechanics, laborers, materialmen and other like
Persons arising by operation of law in the ordinary course of business for
sums which are not yet due and payable, (ii) deposits or pledges to secure
the payment of workmen's compensation, unemployment insurance or other social
security benefits or obligations, public or statutory obligations, surety or
appeal bonds, bid or performance bonds, or other obligations of a like nature
incurred in the ordinary course of business (but nothing in this clause (ii)
shall permit the creation
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of Liens on Receivables or Inventory or Other Property), (iii) zoning
restrictions, easements, encroachments, licenses, restrictions or covenants
on the use of the Property which do not materially impair either the use of
the Property in the operation of the business of Obligor or the value of the
Property, (iv) rights of general application reserved to or vested in any
municipality or other governmental, statutory or public authority to control
or regulate property, or to use property in a manner which does not
materially impair the use of the property for the purposes for which it is
held by Obligor, (v) state and municipal Liens for personal property taxes
which are not yet due and payable, and (vi) Purchase Money Liens.
(ee) "Person" means any individual, sole proprietorship,
partnership, joint venture, limited liability company, trust, unincorporated
organization, joint stock company, association, corporation, institution,
entity, party or government (including any division, agency or department
thereof) or any other legal entity, whether acting in an individual,
fiduciary or other capacity, and, as applicable, the successors, heirs and
assigns of each.
(ff) "Plan" means any employee benefit plan, program or arrangement
maintained or contributed to by Obligor or with respect to which it may incur
liability.
(gg) "Purchase Money Lien" means a Lien on any item of Equipment
created substantially simultaneously with the acquisition of such Equipment
for the purpose of financing such acquisition, provided that such Lien shall
attach only to the Equipment acquired.
(hh) "Qualification" or "Qualified" means, with respect to any
report of independent public accountants covering Financial Statements, a
material qualification to such report (i) resulting from a limitation on the
scope of examination of such Financial Statements or the underlying data,
(ii) as to the capability of Obligor to continue operations as a going
concern or (iii) which could be eliminated by changes in Financial Statements
or notes thereto covered by such report (such as by the creation of or
increase in a reserve or a decrease in the carrying value of assets) and
which if so eliminated by the making of any such change and after giving
effect thereto would result in a Default or an Event of Default.
(ii) "Receivables" means all present and future accounts and accounts
receivable, together with all security therefor and guaranties thereof and
all rights and remedies relating thereto, including any right of stoppage in
transit.
(jj) "Requirement of Law" means (a) the Governing Documents, (b) any
law, treaty, rule, regulation, order or determination of an arbitrator,
court or other Governmental Authority or (c) any franchise, license, lease,
permit, certificate, authorization, qualification easement, right of way,
right or approval binding on Obligor or any of its property.
(kk) "Schedule" means the Schedule to this Agreement being signed
concurrently by Obligor and TBCC, as amended from time to time.
(ll) "Solvent" means when used with respect to any Person that as of
the date as to which such Person's solvency is to be measured: (a) the fair
salable value of its assets is in excess of the total amount of its
liabilities (including contingent liabilities as valued in accordance with
applicable law) as they become absolute and matured; (b) it has sufficient
capital to conduct its business; and (c) it is able to meet its debts as they
mature.
(mm) "Subsidiary" means, as to any Person, a corporation or other
entity in which that Person directly or indirectly owns or controls shares of
stock or other ownership interests having ordinary voting power to elect a
majority of the board of directors or appoint other managers of such
corporation or other entity.
7.2. Accounting Terms and Determinations. Unless otherwise defined or
specified herein, all accounting terms used in this Agreement shall be
construed in accordance with GAAP, applied on a basis consistent in all
material respects with the Financial Statements delivered to TBCC on or
before the date of this Agreement. All accounting determinations for
purposes of determining compliance with this Agreement shall be made in
accordance with GAAP as in effect on the date of this Agreement and applied
on a basis consistent in all material respects with the audited Financial
Statements delivered to TBCC on or before the date of this Agreement. The
Financial Statements required to be delivered hereunder, and all financial
records, shall be maintained in accordance with GAAP. If GAAP shall change
from the basis used in preparing the audited Financial Statements delivered
to TBCC on or before the date of this Agreement, the Compliance Certificates
required to be delivered pursuant to this Agreement shall include
calculations setting forth the adjustments necessary to demonstrate how
Obligor is in compliance with the Financial Covenants (if any) based upon
GAAP as in effect on the date of this Agreement.
7.3. Other Terms; Headings; Construction. Capitalized terms used in
this Agreement, which are not defined, shall have the meanings set forth in
the Loan Agreement. Unless otherwise defined herein, terms used herein that
are defined in the Uniform Commercial Code, from time to time in effect in
the State of Illinois, shall have the meanings set forth therein. Each of
the words "hereof," "herein," and "hereunder" refer to this Agreement as a
whole. The term "including", whenever used in this Agreement, shall mean
"including (but not limited to)". An Event of Default shall "continue" or be
"continuing" unless and until such Event of Default has been waived or cured
within the grace period specified therefor under Section 5.1. References
to Articles, Sections, Annexes, Schedules, and Exhibits are internal
references to this Agreement, and to its attachments, unless otherwise
specified. The headings and any Table of Contents are for convenience only
and shall not affect the meaning or construction of any provision of this
Agreement. This Agreement has been fully reviewed and negotiated between the
parties and no uncertainty or ambiguity in any term or provision of this
Agreement shall be construed strictly against TBCC or Obligor under any rule
of construction or otherwise.
8. GENERAL PROVISIONS.
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8.1. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY DISPUTE ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, WHETHER
SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS.
8.2. SUBMISSION TO JURISDICTION. ALL DISPUTES BETWEEN THE OBLIGOR AND
TBCC, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE
RESOLVED ONLY BY STATE AND FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, AND
THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT
TBCC SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO
PROCEED AGAINST THE OBLIGOR OR ITS PROPERTY IN ANY LOCATION REASONABLY
SELECTED BY TBCC IN GOOD FAITH TO ENABLE TBCC TO REALIZE ON SUCH PROPERTY, OR
TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF TBCC. THE OBLIGOR
AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR
CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY TBCC. THE OBLIGOR WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH TBCC HAS
COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED OR FORUM NON CONVENIENS.
8.3. SERVICE OF PROCESS. THE OBLIGOR HEREBY IRREVOCABLY DESIGNATES CT
CORPORATION SYSTEM, 0000 XXXXXX XXXXXX, XXXXXXXXXX, XXXXXXXX 00000, AS THE
DESIGNEE AND AGENT OF THE OBLIGOR TO RECEIVE, FOR AND ON BEHALF OF THE
OBLIGOR, SERVICE OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT. IT IS UNDERSTOOD THAT A COPY OF
SUCH PROCESS SERVED ON SUCH AGENT AT ITS ADDRESS WILL BE PROMPTLY FORWARDED
BY MAIL TO THE OBLIGOR, BUT THE FAILURE OF THE OBLIGOR TO RECEIVE SUCH COPY
SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.
8.4. LIMITATION OF LIABILITY. TBCC SHALL HAVE NO LIABILITY TO THE
OBLIGOR (WHETHER SOUNDING IN TORT, CONTRACT, OR OTHERWISE) FOR LOSSES
SUFFERED BY THE OBLIGOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY
RELATED TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS AGREEMENT,
OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS
DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER BINDING ON
TBCC THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF TBCC. THE OBLIGOR HEREBY WAIVES ALL
FUTURE CLAIMS AGAINST TBCC FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES.
8.5. DELAYS; PARTIAL EXERCISE OF REMEDIES. No delay or omission of TBCC
to exercise any right or remedy hereunder shall impair any such right or
operate as a waiver thereof. No single or partial exercise by TBCC of any
right or remedy shall preclude any other or further exercise thereof, or
preclude any other right or remedy.
8.6. NOTICES. Except as otherwise provided herein, all notices and
correspondence hereunder shall be in writing and sent by certified or
registered mail, return receipt requested, by overnight delivery service,
with all charges prepaid, or by telecopier followed by a hard copy sent by
regular mail, to the parties at their addresses set forth in the heading to
this Agreement. All such notices and correspondence shall be deemed given (i)
if sent by certified or registered mail, three Business Days after being
postmarked, (ii) if sent by overnight delivery service, when received at the
above stated addresses or when delivery is refused and (iii) if sent by
telecopier transmission, when receipt of such transmission is acknowledged.
Obligor's and TBCC's telecopier numbers for purpose of notice hereunder are
set forth in the Schedule; each party's number may be change by written
notice to the other party.
8.7. INDEMNIFICATION; REIMBURSEMENT OF EXPENSES OF COLLECTION. Obligor
hereby indemnifies and agrees, whether or not any of the transactions
contemplated by this Agreement or the other Loan Documents are consummated,
to defend and hold harmless (on an after-tax basis) TBCC, its successors and
assigns and their respective directors, officers, agents, employees,
advisors, shareholders, attorneys and Affiliates (each, an "Indemnified
Party") from and against any and all losses, claims, damages, liabilities,
deficiencies, obligations, fines, penalties, actions (whether threatened or
existing), judgments, suits (whether threatened or existing) or expenses
(including, without limitation, reasonable fees and disbursements of counsel,
experts, consultants and other professionals) incurred by any of them
(collectively, "Claims") (except, in the case of each Indemnified Party, to
the extent that any Claim is determined in a final and non-appealable
judgment by a court of competent jurisdiction to have directly resulted from
such Indemnified Party's gross negligence or willful misconduct) arising out
of or by reason of (i) any litigation, investigation, claim or proceeding
which arises out of or is related to (A) Obligor, or this Agreement, any
other Loan Document or the transactions contemplated hereby or thereby, (B)
any actual or proposed use by Borrower of the proceeds of the Loans, or (C)
TBCC's entering into this Agreement or any other Loan Document or any other
agreements and documents relating hereto, including, without limitation,
amounts paid in settlement, court costs and the reasonable fees and
disbursements of counsel incurred in connection with any such litigation,
investigation, claim or proceeding, (ii) any remedial or other action taken by
Obligor in connection with compliance by Obligor, or any of its properties,
with any federal, state or local environmental laws, rules or regulations,
and (iii) any pending, threatened or actual action, claim, proceeding or suit
by any shareholder or director of Obligor or any actual or purported
violation of Obligor's
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TBCC Security Agreement
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charter, by-laws or any other agreement or instrument to which Obligor is a
party or by which any of its properties is bound. In addition and without
limiting the generality of the foregoing. Obligor shall, upon demand, pay to
TBCC all reasonable costs and expenses incurred by TBCC (including the
reasonable fees and disbursements of counsel and other professionals) in
connection with the preparation, execution, delivery, administration,
modification and amendment of the Loan Documents, and pay to TBCC all
reasonable costs and expenses (including the reasonable fees and
disbursements of counsel and other professionals) paid or incurred by TBCC in
order to enforce or defend any of its rights under or in respect of this
Agreement, any other Loan Document or any other document or instrument now or
hereafter executed and delivered in connection herewith, collect the
Obligations or otherwise administer this Agreement, foreclose or otherwise
realize upon the Collateral or any part thereof, prosecute actions against,
or defend actions by, account debtors, commence, intervene in, or defend any
action or proceeding; initiate any complaint to be relieved of the automatic
stay in bankruptcy; file or prosecute any probate claim, bankruptcy claim,
third-party claim, or other claim; examine, audit, copy, and inspect any of
the Collateral or any of Obligor's books and records; protect, obtain
possession of, lease, dispose of, or otherwise enforce TBCC's security
interest in, the Collateral; and otherwise represent TBCC in any litigation
relating to Obligor. If either TBCC or Obligor files any lawsuit against the
other predicated on a breach of this Agreement, the prevailing party in such
action shall be entitled to recover its reasonable costs and attorney's fees,
including (but not limited to) reasonable attorneys' fees and costs incurred
in the enforcement of, execution upon or defense of any order, decree, award
or judgment. If and to the extent that the Obligations of Obligor hereunder
are unenforceable for any reason, Obligor hereby agrees to make the maximum
contribution to the payment and satisfaction of the Obligations which is
permissible under applicable law. Obligor's obligations under this Section
shall survive any termination of this Agreement and the other Loan Documents
and the payment in full of the Obligations, and are in addition to, and not
in substitution of, any of the other Obligations.
8.8 AMENDMENTS AND WAIVERS. Any provision of this Agreement or any
other Loan Document may be amended or waived if, but only if, such amendment
or waiver is in writing and signed by Obligor and TBCC and then any such
amendment or waiver shall be effective only to the extent set forth therein.
The failure of TBCC at any time or times to require Obligor to strictly
comply with any of the provisions of this Agreement or any other present or
future agreement between Obligor and TBCC shall not waive or diminish any
right of TBCC later to demand and receive strict compliance therewith. Any
waiver of any default shall not waive or affect any other default, whether
prior or subsequent, and whether or not similar. None of the provisions of
this Agreement or any other agreement now or in the future executed by
Obligor and delivered to TBCC shall be deemed to have been waived by any act
or knowledge of TBCC or its agents or employees, but only by a specific
written waiver signed by an authorized officer of TBCC and delivered to
Obligor.
8.9 COUNTERPARTS; TELECOPIED SIGNATURES. This Agreement and any waiver
or amendment hereto may be executed in counterparts and by the parties hereto
in separate counterparts, each of which when so executed and delivered shall
be an original, but both of which shall together constitute one and the same
instrument. This Agreement and each of the other Loan Documents and any
notices given in connection herewith or therewith may be executed and
delivered by telecopier or other facsimile transmission all with the same
force and effect as if the same was a fully executed and delivered original
manual counterpart.
8.10 SEVERABILITY. In case any provision in or obligation under this
Agreement or any other Loan Document shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
8.11 JOINT AND SEVERAL LIABILITY. If Obligor consists of more than one
Person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Obligor shall not constitute a compromise
with, or a release of, any other Obligor.
8.12 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement and the
other Loan Documents constitute the entire agreement between the parties,
supersede any prior written and verbal agreements between them, and shall
bind and benefit the parties and their respective successors and permitted
assigns. There are no oral understandings, oral representations or oral
agreements between the parties which are not set forth in this Agreement or
in other written agreements signed by the parties in connection herewith.
8.13 MUTUAL WAIVER OF JURY TRIAL. TBCC AND OBLIGOR EACH HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO: (i) THIS AGREEMENT; OR (ii) ANY OTHER PRESENT
OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN TBCC AND OBLIGOR, OR (iii) ANY
CONDUCT, ACTS OR OMISSIONS OF TBCC OR OBLIGOR OR ANY OF THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH
TBCC OR OBLIGOR; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT
OR TORT OR OTHERWISE.
Obligor:
GENIE INTERACTIVE, INC.
By: /s/ Xxxxxxx Xxxxx
Title: Chief Financial Officer
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TBCC Security Agreement
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IDT AMERICA, CORP.
By /s/ Xxxxxxx Xxxxx
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Title Chief Financial Officer
IDT INTERNATIONAL, CORP.
By /s/ Xxxxxxx Xxxxx
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Title Chief Financial Officer
IDT INTERNET SERVICES, INC.
By /s/ Xxxxxxx Xxxxx
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Title Chief Financial Officer
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INTERNET ONLINE SERVICES, INC.
By /s/ Xxxxxxx Xxxxx
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Title Chief Financial Officer
MEDIA RESPONSE, INC.
By /s/Xxxxxxx Xxxxx
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Title Chief Financial Officer
NEW WORLD TELECOMMUNICATIONS, CORP.
By /s/Xxxxxxx Xxxxx
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Title Chief Financial Officer
YOVELLE RENAISSANCE CORPORATION
By /s/Xxxxxxx Xxxxx
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Title Chief Financial Officer
TBCC:
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By ___________________________
Title_________________________
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