EXHIBIT 10.16
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
by and between
PROBUSINESS SERVICES, INC.,
a Delaware corporation
and
COAST BUSINESS CREDIT,
a division of Southern Pacific Bank
Dated as of June 30, 1998
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COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
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TABLE OF CONTENTS
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Page
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1. DEFINITIONS............................................ 1
Account Debtor.................................... 1
Affiliate......................................... 1
Audit............................................. 2
Borrower.......................................... 2
Borrower's Address................................ 2
Business Day...................................... 2
Change of Control................................. 2
Client Acquisition Costs.......................... 2
Closing Date...................................... 2
Coast............................................. 2
Code.............................................. 2
Collateral........................................ 2
Collection Loans.................................. 2
Credit Limit...................................... 2
Default........................................... 2
Deposit Account................................... 2
Dollars or $...................................... 2
Early Termination Fee............................. 2
EBITDA............................................ 2
Eligible Collections.............................. 2
Equipment......................................... 2
Event of Default.................................. 2
Fiduciary Collections............................. 2
GAAP.............................................. 3
General Intangibles............................... 3
Inventory......................................... 3
Investment Property............................... 3
Letter of Credit.................................. 3
Letter of Credit Sublimit......................... 3
Loan Documents.................................... 3
Loans............................................. 3
Material Adverse Effect........................... 3
Maturity Date..................................... 3
Maximum Dollar Amount............................. 3
Minimum Annual Interest........................... 3
Obligations....................................... 3
Other Terms....................................... 4
Permitted Liens................................... 4
Person............................................ 4
Prime Rate........................................ 4
Receivables....................................... 4
Renewal Date...................................... 4
Renewal Fee....................................... 5
Solvent........................................... 5
Total Fixed Debt Service Requirements............. 5
Year 2000 Problem................................. 5
2. CREDIT FACILITIES...................................... 5
2.1 Loans............................................. 5
2.2 Letters of Credit................................. 5
3. INTEREST AND FEES...................................... 6
3.1 Interest.......................................... 6
3.2 Fees.............................................. 6
4. SECURITY INTEREST...................................... 6
5. CONDITIONS PRECEDENT................................... 6
5.1 Status of Accounts at Closing..................... 6
5.2 Intentionally Deleted............................. 6
5.3 Landlord Waiver................................... 6
5.4 Executed Agreement................................ 6
5.5 Intentionally Deleted............................. 6
5.6 Priority of Coast's Liens......................... 6
5.7 Insurance......................................... 6
5.8 Borrower's Existence.............................. 6
5.9 Organizational Documents.......................... 6
5.10 Year 2000 Problem Assessment Certificate.......... 6
5.11 Due Diligence..................................... 6
5.12 Other Documents and Agreements.................... 7
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE BORROWER........................................... 7
6.1 Existence and Authority........................... 7
6.2 Name; Trade Names and Styles...................... 7
6.3 Place of Business; Location of Collateral......... 7
6.4 Title to Collateral; Permitted Liens.............. 7
6.5 Maintenance of Collateral......................... 8
6.6 Books and Records................................. 8
6.7 Financial Condition, Statements and Reports....... 8
6.8 Tax Returns and Payments; Pension Contributions... 8
6.9 Compliance with Law............................... 8
6.10 Litigation........................................ 8
6.11 Use of Proceeds................................... 8
6.12 Year 2000 Compliance.............................. 8
COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
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7. RECEIVABLES............................................. 9
7.1 Representations Relating to Receivables............ 9
7.2 Representations Relating to Documents
and Legal Compliance............................... 9
7.3 Schedules and Documents Relating to Receivables.... 9
7.4 Collection of Receivables.......................... 9
7.5 Remittance of Proceeds............................. 9
7.6 Disputes........................................... 9
7.7 Verification....................................... 10
7.8 No Liability....................................... 10
8. ADDITIONAL DUTIES OF THE BORROWER....................... 10
8.1 Financial and Other Covenants...................... 10
8.2 Insurance.......................................... 10
8.3 Reports............................................ 10
8.4 Access to Collateral, Books and Records............ 10
8.5 Negative Covenants................................. 11
8.6 Litigation Cooperation............................. 11
8.7 Further Assurances................................. 11
9. TERM.................................................... 12
9.1 Maturity Date...................................... 12
9.2 Early Termination.................................. 12
9.3 Payment of Obligations............................. 12
10. EVENTS OF DEFAULT AND REMEDIES.......................... 12
10.1 Events of Default.................................. 12
10.2 Remedies........................................... 13
10.3 Standards for Determining Commercial
Reasonableness..................................... 15
10.4 Power of Attorney.................................. 15
10.5 Application of Proceeds............................ 16
10.6 Remedies Cumulative................................ 16
11. GENERAL PROVISIONS...................................... 16
11.1 Interest Computation............................... 16
11.2 Application of Payments............................ 17
11.3 Charges to Accounts................................ 17
11.4 Monthly Accountings................................ 17
11.5 Notices............................................ 17
11.6 Severability....................................... 17
11.7 Integration........................................ 17
11.8 Waivers............................................ 17
11.9 No Liability for Ordinary Negligence............... 18
11.10 Amendment......................................... 18
11.11 Time of Essence................................... 18
11.12 Attorneys Fees, Costs and Charges................. 18
11.13 Benefit of Agreement.............................. 18
11.14 Publicity......................................... 18
11.15 Paragraph Headings; Construction.................. 18
11.16 Governing Law; Jurisdiction; Venue................ 19
11.17 Mutual Waiver of Jury Trial....................... 19
COAST
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
BORROWER: PROBUSINESS SERVICES, INC., A DELAWARE CORPORATION
ADDRESS: 0000 XXXXXXX XXXX
XXXXXXXXXX, XX 00000
DATE: JUNE 30, 1998
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the "Agreement") is
entered into on the above date between COAST BUSINESS CREDIT, a division of
Southern Pacific Bank ("Coast"), a California corporation, with offices at
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, and the
borrower named above (the "Borrower"), whose chief executive office is
located at the above address ("Borrower's Address"). The Schedule to this
Agreement (the "Schedule") shall for all purposes be deemed to be a part of
this Agreement, and the same is an integral part of this Agreement.
(Definitions of certain terms used in this Agreement are set forth in Section
1 below.)
WHEREAS, Borrower and Coast have previously entered into that certain Loan
and Security Agreement, dated April 30, 1996 between Borrower and Coast,
(the "Loan Agreement") as amended by Amendment Number One to Loan and Security
Agreement, dated October 25, 1996, ("Amendment One") Amendment Number Two to
Loan and Security Agreement, dated January 6, 1997, ("Amendment Two") and
Amendment Number Three to Loan and Security Agreement, dated December 16,
1997 ("Amendment Three") (collectively, the Loan Agreement, Amendment One,
Amendment Two and Amendment Three are, the "Prior Loan Agreement").
WHEREAS, Benesphere Administrators, Inc., a Washington corporation, which was
added as a Co-Borrower in Amendment Two, was subsequently merged into
Borrower and thus is not a party to this Agreement.
NOW THEREFOR, Borrower and Coast desire to amend and restate in its entirety
the Prior Loan Agreement as provided for herein.
1. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
"ACCOUNT DEBTOR" means the obligor on a Receivable or General Intangible.
"AFFILIATE" means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.
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"AUDIT" means to inspect, audit and copy Borrower's books and records and
the Collateral.
"BORROWER" has the meaning set forth in the introduction to this
Agreement.
"BORROWER'S ADDRESS" has the meaning set forth in the introduction to
this Agreement.
"BUSINESS DAY" means a day on which Coast is open for business.
"CHANGE OF CONTROL" shall be deemed to have occurred at such time as a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) (other than the current holders of the
ownership interests in the Borrower) becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or
indirectly, as a result of any single transaction, of more than twenty
percent (20%) of the total voting power of all classes of stock or other
ownership interests then outstanding of any Borrower normally entitled to
vote in the election of directors or analogous governing body.
"CLIENT ACQUISITION COSTS" means sales, marketing and acquisition costs
associated with a new customer account.
"CLOSING DATE" means June 30, 1998.
"COAST" has the meaning set forth in the introduction to this Agreement.
"CODE" means the Uniform Commercial Code as adopted and in effect in the
State of California from time to time.
"COLLATERAL" has the meaning set forth in Section 4 hereof.
"COLLECTION LOANS" means the Loans described in Section 2.1(a) of the
Schedule.
"CREDIT LIMIT" means the maximum amount of Loans that Coast may make to
Borrower pursuant to the amounts and percentages shown on the Schedule.
"DEFAULT" means any event which with notice or passage of time or both,
would constitute an Event of Default.
"DEPOSIT ACCOUNT" has the meaning set forth in Section 9105 of the Code.
"DOLLARS OR $" means United States dollars.
"EARLY TERMINATION FEE" means the amount set forth on the Schedule that
Borrower must pay Coast if this Agreement is terminated by Borrower or Coast
pursuant to Section 9.2 hereof.
"EBITDA" means, in any fiscal period, Borrower's net income (other than
extraordinary or non-recurring items of Borrower for such period), PLUS (i)
the amount of all interest expense, income tax expense, depreciation and
amortization of Borrower for such period, and plus or minus (as the case may
be) (ii) any other non-cash charges which have been added or subtracted, as
the case may be, in calculating Borrower's net income for such period.
"ELIGIBLE COLLECTIONS" means, cash collected from payments on accounts
receivable (including recurring payments from customers pursuant to ACH
agreements), and interest from Fiduciary Collections.
"EQUIPMENT" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, computer equipment, check
processors, readers, office partitions, equipment, furnishings, fixtures,
trade fixtures, motor vehicles, tools, parts, dies, jigs, goods and other
goods (other than Inventory) of every kind and description used in Borrower's
operations or owned by Borrower and any interest in any of the foregoing, and
all attachments, accessories, accessions, replacements, substitutions,
additions or improvements to any of the foregoing, wherever located.
"EVENT OF DEFAULT" means any of the events set forth in Section 10.1 of
this Agreement.
"FIDUCIARY COLLECTIONS" means Borrower funds which are segregated from
its general funds and held on behalf of third parties for remittance to
taxing authorities, health and welfare insurance carriers, and certain
persons under Internal Revenue Code Section 125 Flexible Spending Plans.
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"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, consistently applied.
"GENERAL INTANGIBLES" means all general intangibles of Borrower, whether
now owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other
business records, Deposit Accounts, investment property, inventions, designs,
drawings, blueprints, patents, patent applications, trademarks and the
goodwill of the business symbolized thereby, names, trade names, trade
secrets, goodwill, copyrights, registrations, licenses, franchises, customer
lists, security and other deposits, rights in all litigation presently or
hereafter pending for any cause or claim (whether in contract, tort or
otherwise), and all judgments now or hereafter arising therefrom, all claims
of Borrower against Coast, rights to purchase or sell real or personal
property, rights as a licensor or licensee of any kind, royalties, telephone
numbers, proprietary information, purchase orders, and all insurance policies
and claims (including without limitation life insurance, key man insurance,
credit insurance, liability insurance, property insurance and other
insurance), tax refunds and claims, computer programs, discs, tapes and tape
files, claims under guaranties, security interests or other security held by
or granted to Borrower, all rights to indemnification and all other
intangible property of every kind and nature (other than Receivables).
"INVENTORY" means all of Borrower's now owned and hereafter acquired
goods, merchandise or other personal property, wherever located, to be
furnished under any contract of service or held for sale or lease (including
without limitation all raw materials, work in process, finished goods and
goods in transit, and including without limitation all farm products), and all
materials and supplies of every kind, nature and description which are or
might be used or consumed in Borrower's business or used in connection with
the manufacture, packing, shipping, advertising, selling or finishing of such
goods, merchandise or other personal property, and all warehouse receipts,
documents of title and other documents representing any of the foregoing.
"INVESTMENT PROPERTY" has the meaning set forth in Section 9115 of the
Code as in effect as of the date hereof.
"LETTER OF CREDIT" has the meaning set forth in Section 2.2 hereof.
"LETTER OF CREDIT SUBLIMIT" has the meaning set forth in Section 2.2
hereof.
"LOAN DOCUMENTS" means this Agreement, the agreements and documents
listed on Section 5 hereof, and any other agreement, instrument or document
executed in connection herewith or therewith.
"LOANS" has the meaning set forth in Section 2.1 hereof.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, assets, condition (financial or otherwise) or results of operations
of Borrower or any subsidiary of Borrower or any guarantor of any of the
Obligations, (ii) the ability of Borrower or any guarantor of any of the
Obligations to perform its obligations under this Agreement (including,
without limitation, repayment of the Obligations as they come due) or (iii)
the validity or enforceability of this Agreement or any other agreement or
document entered into by any party in connection herewith, or the rights or
remedies of Coast hereunder or thereunder.
"MATURITY DATE" means the date that this Agreement shall cease to be
effective, as set forth on the Schedule, subject to the provisions of Section
9.1 and 9.2 hereof.
"MAXIMUM DOLLAR AMOUNT" has the meaning set forth in Section 2 of the
Schedule.
"MINIMUM ANNUAL INTEREST" has the meaning set forth in Section 3 of the
Schedule.
"OBLIGATIONS" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants,duties and indebtedness at
any time owing by Borrower to Coast, whether evidenced by this Agreement or
any note or other instrument or document, whether arising from an extension
of credit, opening of a letter of credit, banker's acceptance, loan,
guaranty, indemnification or otherwise, whether direct or indirect
(including, without limitation, those acquired by assignment and any
participation by Coast in Borrower's debts owing to others), absolute or
contingent, due or to become due, including, without limitation, all
interest, charges, expenses, fees, attorneys' fees (including attorneys' fees
and expenses incurred in bankruptcy), expert witness fees, audit fees,
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letter of credit fees, collateral monitoring fees, closing fees, facility
fees, termination fees, minimum interest charges and any other sums
chargeable to Borrower under this Agreement or under any other present or
future instrument or agreement between Borrower and Coast.
"OTHER TERMS" means all accounting terms used in this Agreement, unless
otherwise indicated, shall have the meanings given to such terms in
accordance with GAAP. All other terms contained in this Agreement, unless
otherwise indicated, shall have the meanings provided by the Code, to the
extent such terms are defined therein.
"PERMITTED LIENS" means the following:
(a) purchase money security interests in specific items of
Equipment;
(b) leases of specific items of Equipment;
(c) liens for taxes not yet payable;
(d) additional security interests and liens consented to in writing
by Coast, which consent shall not be unreasonably withheld;
(e) security interests being terminated substantially concurrently
with this Agreement;
(f) liens of materialmen, mechanics, warehousemen, carriers, or
other similar liens arising in the ordinary course of business and securing
obligations which are not delinquent;
(g) liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by liens of the type described above
in clauses (a) or (b) above, provided that any extension, renewal or
replacement lien is limited to the property encumbered by the existing lien
and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase;
(h) liens in favor of customs and revenue authorities which secure
payment of customs duties in connection with the importation of goods;
(i) liens in favor of Coast;
(j) liens in existence on the date hereof; or
(k) any judgment, attachment or similar liens, which is fully
covered by insurance or has been discharged or execution thereof is
effectively stayed and bonded against pending appeal within thirty (30) days
of the entry thereof.
Coast will have the right to require, as a condition to its consent under
subparagraph (d) above, that the holder of the additional security interest
or lien sign an intercreditor agreement on Coast's then standard form,
acknowledge that the security interest is subordinate to the security
interest in favor of Coast, and agree not to take any action to enforce its
subordinate security interest so long as any Obligations remain outstanding,
and that Borrower agree that any uncured default in any obligation secured
by the subordinate security interest shall also constitute an Event of
Default under this Agreement.
"PERSON" means any individual, sole proprietorship, general partnership,
limited partnership, limited liability partnership, limited liability
company, joint venture, trust, unincorporated organization, association,
corporation, government, or any agency or political division thereof, or any
other entity.
"PRIME RATE" means the actual "Reference Rate" or the substitute
therefor of the Bank of America NT & SA whether or not that rate is the
lowest interest rate charged by said bank. If the Prime Rate, as defined, is
unavailable, "Prime Rate" shall mean the highest of the prime rates published
in the Wall Street Journal on the first Business Day of the applicable month,
as the base rate on corporate loans at large U.S. money center commercial
banks.
"RECEIVABLES" means all of Borrower's now owned and hereafter acquired
accounts (whether or not earned by performance), letters of credit, contract
rights, chattel paper, instruments, securities, documents, securities
accounts, security entitlements, commodity contracts, commodity accounts,
investment property and all other forms of obligations at any time owing to
Borrower, all guaranties and other security therefor, all merchandise
returned to or repossessed by Borrower, and all rights of stoppage in transit
and all other rights or remedies of an unpaid vendor, lienor or secured party.
"RENEWAL DATE" shall mean the Maturity Date if this Agreement is renewed
pursuant to Section 9.1 hereof, and
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each anniversary thereafter that this Agreement is renewed pursuant to
Section 9.1 hereof.
"RENEWAL FEE" means the fee that Borrower must pay Coast upon renewal of
this Agreement pursuant to Section 9.1 hereof, in the amount set forth on the
Schedule.
"SOLVENT" means, with respect to any Person on a particular date, that
on such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent
liabilities, of such Person, (b) the present fair salable value of the
properties and assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person is able to realize upon its
properties and assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it
will, incur debts beyond such Person's ability to pay as such debts mature,
and (e) such Person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such Person's
properties and assets would constitute unreasonably small capital after
giving due consideration to the prevailing practices in the industry in which
such Person is engaged. In computing the amount of contingent liabilities at
any time, it is intended that such liabilities will be computed at the amount
that, in light of all the facts and circumstances existing at such time,
represents the amount that reasonably can be expected to become an actual or
matured liability.
"TOTAL FIXED DEBT SERVICE REQUIREMENTS" means payments on principal,
interest, and leases on all indebtedness other than trade debt.
"YEAR 2000 PROBLEM" means the risk that computer systems, software and
applications used by a Person may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any dates after
December 31, 1999.
2. CREDIT FACILITIES.
2.1 LOANS. Coast will make loans to Borrower (the "Loans"), in amounts
and in percentages to be determined by Coast in its reasonable discretion, up
to the Credit Limit, provided no Default or Event of Default has occurred and
is continuing. In addition, Coast may create reserves against or reduce its
collections multiple without declaring a Default or an Event of Default if it
determines that there has occurred a Material Adverse Effect.
2.2 LETTERS OF CREDIT. At the request of Borrower, Coast may, in its
sole discretion, arrange for the issuance of letters of credit for the
account of Borrower (collectively, "Letters of Credit"), by issuing
guarantees to the issuer of the letter of credit or by other means. All
Letters of Credit shall be in form and substance satisfactory to Coast in its
sole discretion. The aggregate face amount of all outstanding Letters of
Credit from time to time shall not exceed the amount shown on the Schedule
(the "Letter of Credit Sublimit"), and shall be reserved against Loans which
would otherwise be available hereunder. Borrower shall pay all customary bank
charges for the issuance of Letters of Credit. Any payment by Coast under or
in connection with a Letter of Credit shall constitute a Loan hereunder on
the date such payment is made. Each Letter of Credit shall have an expiry
date no later than thirty (30) days prior to the Maturity Date. Borrower
hereby agrees to indemnify, save, and hold Coast harmless from any loss,
cost, expense, or liability, including payments made by Coast in compliance
with the terms of the relevant Letter of Credit, expenses, and reasonable
attorneys' fees incurred by Coast arising out of or in connection with any
Letters of Credit. Borrower agrees to be bound by the regulations and
interpretations of the issuer of any Letters of Credit guarantied by Coast
and opened for Borrower's account or by Coast's interpretations of any Letter
of Credit issued by Coast for Borrower's account, and Borrower understands
and agrees that Coast shall not be liable for any error, negligence, or
mistake, whether of omission or commission, in following Borrower's
instructions or those contained in the Letters of Credit or any
modifications, amendments, or supplements thereto. Borrower understands that
Letters of Credit may require coast to indemnify the issuing bank for certain
costs or liabilities arising out of claims by Borrower against such issuing
bank. Borrower hereby agrees to indemnify and hold Coast harmless with
respect to any loss, cost, expense, or liability incurred by Coast under any
Letter of Credit as a result of Coast's indemnification of any such issuing
bank. The provisions of this Agreement, as it pertains to Letters of Credit,
and any other present or future documents or agreements between Borrower and
Coast relating to Letters of Credit are cumulative.
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3. INTEREST AND FEES.
3.1 INTEREST. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule, except where expressly set forth
to the contrary in this Agreement. Interest shall be payable monthly, on the
last day of the month. Interest may, in Coast's discretion, be charged to
Borrower's loan account, and the same shall thereafter bear interest at the
same rate as the other Loans.
3.2 FEES. Borrower shall pay Coast the fee(s) shown on the Schedule,
which are in addition to all interest and other sums payable to Coast and are
deemed fully earned and are nonrefundable.
4. SECURITY INTEREST.
To secure the payment and performance of all of the Obligations when
due, Borrower hereby grants to Coast a security interest in all of Borrower's
interest in the following, whether now owned or hereafter acquired, and
wherever located: All Receivables, Inventory, Equipment, Investment Property,
and General Intangibles, including, without limitation, all of Borrower's
Deposit Accounts except Fiduciary Collections and all money, and all property
now or at any time in the future in Coast's possession (including claims and
credit balances), and all proceeds of any of the foregoing (including
proceeds of any insurance policies, proceeds of proceeds, and claims against
third parties), all products of any of the foregoing, and all books and
records related to any of the foregoing (all of the foregoing, together with
all other property in which Coast may now or in the future be granted a lien
or security interest, is referred to herein, collectively, as the
"Collateral").
5. CONDITIONS PRECEDENT.
The obligation of Coast to make the Loans is subject to the
satisfaction, in the sole and absolute discretion of Coast, at or prior to
the first advance of funds hereunder, of each, every and all of the following
conditions:
5.1 STATUS OF ACCOUNTS AT CLOSING. No accounts payable shall be due
and unpaid ninety (90) days past its due date except for such accounts
payable being contested in good faith in appropriate proceedings and for
which adequate reserves have been provided.
5.2 INTENTIONALLY DELETED.
5.3 LANDLORD WAIVER. Coast shall have received duly executed landlord
waivers and access agreements in form and substance satisfactory to Coast, in
Coast's sole and absolute discretion, and, when deemed appropriate by Coast,
in form for recording in the appropriate recording office, with respect to
all leased locations where Borrower maintains any inventory or equipment in
excess of One Hundred Thousand Dollars ($100,000).
5.4 EXECUTED AGREEMENT. Coast shall have received this Agreement duly
executed by Borrower.
5.5 INTENTIONALLY DELETED.
5.6 PRIORITY OF COAST'S LIENS. Coast shall have received the results
of "of record" searches satisfactory to Coast in its sole and absolute
discretion, reflecting its Uniform Commercial Code filings against Borrower
indicating that Coast has a perfected, first priority lien in and upon all of
the Collateral, subject only to Permitted Liens.
5.7 INSURANCE. Coast shall have received copies of the insurance
binders or certificates evidencing Borrower's compliance with Section 8.2
hereof, including lender's loss payee endorsements.
5.8 BORROWER'S EXISTENCE. Coast shall have received copies of
Borrower's articles of incorporation and all amendments thereto, and a
Certificate of Good Standing, each certified by the Secretary of State of the
state of Borrower's organization, and dated a recent date prior to the
Closing Date, and Coast shall have received Certificates of Foreign
Qualification for Borrower from the Secretary of State of each state wherein
the failure to be so qualified could have a Material Adverse Effect.
5.9 ORGANIZATIONAL DOCUMENTS. Coast shall have received copies of
Borrower's By-laws and all amendments thereto, and Coast shall have received
copies of the resolutions of the board of directors of Borrower, authorizing
the execution and delivery of this Agreement and the other documents
contemplated hereby, and authorizing the transactions contemplated hereunder
and thereunder, and authorizing specific officers of Borrower to execute the
same on behalf of Borrower, in each case certified by the Secretary or other
acceptable officer of
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Borrower as of the Closing Date.
5.10 YEAR 2000 PROBLEM ASSESSMENT CERTIFICATE. Coast shall have
received a certificate from the relevant officer of Borrower to the effect
that, as the result of a comprehensive assessment undertaken by Borrower of
Borrower's computer systems, software and applications and after due inquiry
made to Borrower's material suppliers, vendors and customers, Borrower knows
of no facts that would cause Borrower to reasonably believe that the Year
2000 Problem will cause a Material Adverse Effect.
5.11 DUE DILIGENCE. Coast shall have completed its due diligence with
respect to Borrower.
5.12 OTHER DOCUMENTS AND AGREEMENTS. Coast shall have received such
other agreements, instruments and documents as Coast may require in
connection with the transactions contemplated hereby, all in form and
substance satisfactory to Coast in Coast's sole and absolute discretion, and
in form for filing in the appropriate filing office.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
In order to induce Coast to enter into this Agreement and to make Loans,
Borrower represents and warrants to Coast as follows, and Borrower covenants
that the following representations will continue to be true, and that
Borrower will at all times comply with all of the following covenants:
6.1 EXISTENCE AND AUTHORITY. Borrower is and will continue to be,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Borrower is and will continue to be
qualified and licensed to do business in all jurisdictions in which any
failure to do so would have a Material Adverse Effect. The execution,
delivery and performance by Borrower of this Agreement, and all other
documents contemplated hereby (a) have been duly and validly authorized, (b)
are enforceable against Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to
creditors' rights generally), and (c) do not violate in any material respect
Borrower's articles of incorporation or Borrower's by-laws, or any law or any
material agreement or instrument which is binding upon Borrower or its
property, and (d) do not constitute grounds for acceleration of any material
indebtedness or obligation under any material agreement or instrument which
is binding upon Borrower or its property.
6.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in
the heading to this Agreement is its correct name. Listed on the Schedule are
all prior names of Borrower and all of Borrower's present and prior trade
names. Borrower shall give Coast thirty (30) days' prior written notice
before changing its name or doing business under any other name. Borrower has
complied, and will in the future comply, in all material respects with all
laws relating to the conduct of business under a fictitious business name.
6.3. PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth
in the heading to this Agreement is Borrower's chief executive office. In
addition, Borrower has places of business and Collateral is located only at
the locations set forth on the Schedule. Borrower will give Coast at least
thirty (30) days' prior written notice before opening any additional place of
business, changing its chief executive office, or moving any of the
Collateral to a location other than Borrower's Address or one of the
locations set forth on the Schedule.
6.4 TITLE TO COLLATERAL; PERMITTED LIENS. Borrower is now, and will
at all times in the future be, the sole owner of all the Collateral, except
for items of Equipment which are leased by Borrower. The Collateral now is
and will remain free and clear of any and all liens, charges, security
interests, encumbrances and adverse claims, except for Permitted Liens. Coast
now has, and will continue to have, a first-priority perfected and
enforceable security interest in all of the Collateral, subject only to the
Permitted Liens, and Borrower will at all times defend Coast and the
Collateral against all claims of others. None of the Collateral now is or
will be affixed to any real property in such a manner, or with such intent,
as to become a fixture. Borrower is not and will not become a lessee under
any real property lease pursuant to which the lessor may obtain any rights in
any of the Collateral and no such lease now prohibits, restrains, impairs or
will prohibit, restrain or impair Borrower's rights to remove any Collateral
from the leased premises except to the extent that a landlord waiver is
obtained from lessor pursuant to the terms hereof. Whenever any Collateral is
located upon premises in which any third party has an interest (whether as
owner, mortgagee, beneficiary under a deed of trust, lien or
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otherwise), Borrower shall, whenever requested by Coast, use its best efforts
to cause such third party to execute and deliver to Coast, in form reasonably
acceptable to Coast, such waivers and subordinations as Coast shall specify,
so as to ensure that Coast's rights in the Collateral are, and will continue
to be, superior to the rights of any such third party. Borrower will keep in
full force and effect, and will comply in all material respects with the
terms of, any lease of real property where any of the Collateral now or in
the future may be located.
6.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the Collateral
in good working condition (ordinary wear and tear excepted), and Borrower
will not use the Collateral for any unlawful purpose. Borrower will
immediately notify Coast in writing of any material loss or damage to the
Collateral.
6.6 BOOKS AND RECORDS. Borrower has maintained and will maintain at
Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with GAAP.
6.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial
statements now or in the future delivered to Coast have been, and will be,
prepared in conformity with GAAP (except, in the case of unaudited financial
statements, for the absence of footnotes and subject to normal year-end
adjustments) and now and in the future will fairly reflect in all material
respects the financial condition of Borrower, at the times and for the
periods therein stated. Between the last date covered by any such statement
provided to Coast and the date hereof, there has been no Material Adverse
Effect. Borrower is now and will continue to be Solvent.
6.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has
timely filed, and will timely file, all tax returns and reports required by
foreign, federal, state and local law, and Borrower has timely paid, and will
timely pay, all foreign, federal, state and local taxes, assessments,
deposits and contributions now or in the future owed by Borrower. Borrower
may, however, defer payment of any contested taxes, provided that Borrower
(i) in good faith contests Borrower's obligation to pay the taxes by
appropriate proceedings promptly and diligently instituted and conducted,
(ii) notifies Coast in writing of the commencement of, and any material
development in, the proceedings, and (iii) establishes adequate reserves for
or takes any other steps required to keep the contested taxes from becoming
a lien upon any of the Collateral. As of the date hereof, Borrower is unaware
of any claims or adjustments proposed for any of Borrower's prior tax years
which would result in additional taxes becoming due and payable by Borrower.
Borrower has paid, and shall continue to pay all amounts necessary to fund all
present and future pension, profit sharing and deferred compensation plans in
accordance with their terms, and Borrower has not and will not withdraw from
participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any such plan which could
result in any liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental
agency.
6.9 COMPLIANCE WITH LAW. Borrower has complied, and will comply, in
all material respects, with all provisions of all material foreign, federal,
state and local laws and regulations relating to Borrower, including, but not
limited to, the Fair Labor Standards Act, and those relating to Borrower's
ownership of real or personal property, the conduct and licensing of
Borrower's business, and environmental matters.
6.10 LITIGATION. Except as disclosed in the Schedule, there is no
claim, suit, litigation, proceeding or investigation pending or (to best of
Borrower's knowledge) threatened by or against or affecting Borrower in any
court or before any governmental agency (or any basis therefor known to
Borrower) which may result, either separately or in the aggregate, in any
Material Adverse Effect. Borrower will promptly inform Coast in writing of
any claim, proceeding, litigation or investigation in the future threatened
or instituted by or against Borrower involving an amount set forth on the
Schedule.
6.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely
for lawful business purposes. Borrower is not purchasing or carrying any
"margin stock" (as defined in Regulation G of the Board of Governors of the
Federal Reserve System) and no part of the proceeds of any Loan will be used
to purchase or carry any "margin stock" or to extend credit to others for the
purpose of purchasing or carrying any "margin stock."
6.12 YEAR 2000 COMPLIANCE. As the result of a comprehensive review and
assessment undertaken by Borrower of Borrower's computer systems, software
and
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applications and after due inquiry made of Borrower's material suppliers,
vendors and customers, Borrower represents and warrants that the Year 2000
Problem will not result in a Material Adverse Effect.
7. RECEIVABLES.
7.1 REPRESENTATIONS RELATING TO RECEIVABLES. Borrower represents and
warrants to Coast as follows: All Eligible Collections with respect to which
Loans are requested by Borrower shall, on the date each Loan is requested and
made, represent undisputed bona fide existing collections from Account
Debtors on Receivables created by the sale, delivery and acceptance of goods
or the rendition of services in the ordinary course of Borrower's business and
interest earned on the Fiduciary Collections.
7.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE.
Borrower represents and warrants to Coast as follows: All statements made and
all unpaid balances appearing in all invoices, instruments and other
documents evidencing the Receivables are and shall be true and correct in all
material respects and all such invoices, instruments and other documents and
all of Borrower's books and records are and shall be genuine and in all
material respects what they purport to be. All sales and other transactions
underlying or giving rise to each Receivable shall fully comply with all
applicable laws and governmental rules and regulations. To the best of
Borrower's knowledge, all signatures and indorsements on all documents,
instruments, and agreements relating to all Receivables are and shall be
genuine, and all such documents, instruments and agreements are and shall be
legally enforceable in accordance with their terms.
7.3 SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES. Borrower shall
deliver to Coast via facsimile, unless otherwise directed by Coast, at such
locations and at such intervals as Coast may request, transaction reports and
loan requests, and schedules of collections, all on Coast's standard forms;
PROVIDED, HOWEVER, that Borrower's failure to execute and deliver the same
shall not affect or limit Coast's security interest and other rights in all
of Borrower's Receivables, nor shall Coast's failure to advance or lend
against a specific Receivable affect or limit Coast's security interest and
other rights therein. Loan requests received after 11:00 A.M. Pacific time,
will not be considered by Coast until the next Business Day. Borrower shall
also furnish to Coast an aged accounts receivable trial balance in such form
and at such intervals as Coast shall request. In addition, Borrower shall
deliver to Coast as and when requested the originals of all instruments,
chattel paper, security agreements, guarantees and other documents and
property evidencing or securing any Receivables, upon receipt thereof and in
the same form as received, with all necessary indorsements, all of which
shall be with recourse. Borrower shall also provide Coast with copies of all
credit memos as and when requested by Coast.
7.4 COLLECTION OF RECEIVABLES. Borrower shall have the right to
collect all Receivables, unless and until an Event of Default has occurred.
Borrower shall hold all payments on, and proceeds of, Receivables in trust
for Coast, and upon the earlier of (a) at any time the amount of the
outstanding Obligations exceeds Ten Million Dollars ($10,000,000) or (b) an
Event of Default has occurred, Borrower shall deliver all such payments and
proceeds to Coast within one (1) Business Day after receipt by Borrower, in
their original form, duly endorsed to Coast, to be applied to the Obligations
in such order as Coast shall determine. Coast may, in its discretion, require
that all proceeds of Collateral be deposited by Borrower into a lockbox
account, or such other "blocked account" as Coast may specify, pursuant to a
blocked account agreement in such form as is reasonably satisfactory to
Coast. Coast or its designee may, upon the occurrence and continuance of any
default or Event of Default, notify Account Debtors that Coast has been
granted a security interest in the Receivables.
7.5. REMITTANCE OF PROCEEDS. Upon the earlier of (a) at any time the
amount of the Obligations exceeds Ten Million Dollars ($10,000,000) or (b) an
Event of Default has occurred, all proceeds arising from the disposition of
any Collateral shall be delivered to Coast within one (1) Business Day after
receipt by Borrower, in their original form, duly endorsed to Coast, to be
applied to the Obligations in such order as Coast shall determine. Borrower
agrees that it will not commingle proceeds of Collateral with any of
Borrower's other funds or property, but will hold such proceeds separate and
apart from such other funds and property and in an express trust for Coast.
Nothing in this Section limits the restrictions on disposition of Collateral
set forth elsewhere in this Agreement.
7.6 DISPUTES. Borrower shall notify Coast promptly of all disputes or
claims relating to Receivables exceeding One Hundred Thousand Dollars
($100,000) in the
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COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
------------------------------------------------------------------------
aggregate. Borrower shall not forgive (completely or partially), compromise
or settle any Receivable for less than payment in full, or agree to do any of
the foregoing, except that Borrower may do so, provided that: (a) Borrower
does so in good faith, in a commercially reasonable manner, in the ordinary
course of business, and in arm's length transactions, which are reported to
Coast on the regular reports provided to Coast; (b) no Default or Event of
Default has occurred and is continuing; and (c) taking into account all such
discounts settlements and forgiveness, the total outstanding Loans will not
exceed the Credit Limit. Coast may, at any time after the occurrence and
continuance of an Event of Default, settle or adjust disputes or claims
directly with Account Debtors for amounts and upon terms which Coast
considers advisable in its reasonable credit judgment and, in all cases,
Coast shall credit Borrower's Loan account with only the net amounts received
by Coast in payment of any Receivables.
7.7 VERIFICATION. Coast may, from time to time, verify directly with
the respective Account Debtors the validity, amount and other matters
relating to the Receivables, by means of mail, telephone or otherwise, either
in the name of Borrower or Coast or such other name as Coast may choose.
7.8 NO LIABILITY. Coast shall not under any circumstances be
responsible or liable for any shortage or discrepancy in, damage to, or loss
or destruction of, any goods, the sale or other disposition of which gives
rise to a Receivable, or for any error, act, omission or delay of any kind
occurring in the settlement, failure to settle, collection or failure to
collect any Receivable, or for settling any Receivable in good faith for less
than the full amount thereof, nor shall Coast be deemed to be responsible for
any of Borrower's obligations under any contract or agreement giving rise to
a Receivable. Nothing herein shall, however, relieve Coast from liability for
its own gross negligence or willful misconduct.
8. ADDITIONAL DUTIES OF THE BORROWER.
8.1 FINANCIAL AND OTHER COVENANTS. Borrower shall at all times comply
with the financial and other covenants set forth in the Schedule.
8.2 INSURANCE. Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Coast, in such form and amounts as Coast
may reasonably require, and Borrower shall provide evidence of such insurance
to Coast, so that Coast is satisfied that such insurance is, at all times, in
full force and effect. All liability insurance policies of Borrower shall
name Coast as an additional insured, and all property casualty and related
insurance policies of Borrower shall name Coast as a loss payee thereon and
Borrower shall cause a lender's loss payee endorsement in form reasonably
acceptable to Coast. If the amount of the Loans outstanding exceeds Ten
Million Dollars ($10,000,000) then Coast shall retain all such proceeds of
insurance provided to it by the insurer; provided, however, in the event that
the Loans outstanding are Ten Million Dollars ($10,000,000) or less, then
Coast shall promptly remit to Borrower all such insurance proceeds. Upon
receipt of the proceeds of any such insurance, Coast shall apply such
proceeds in reduction of the Obligations as Coast shall determine in its sole
discretion. Any such proceeds respecting Equipment remitted by Coast to
Borrower shall be utilized by Borrower solely for the replacement or repair
of the Equipment with respect to which the insurance proceeds were paid.
Coast may require reasonable assurance that the insurance proceeds so
released will be so used. If Borrower fails to provide or pay for any
insurance, Coast may, but is not obligated to, obtain the same at Borrower's
expense. Borrower shall promptly deliver to Coast copies of all reports made
to insurance companies.
8.3 REPORTS. Borrower, at its expense, shall provide Coast with the
written reports set forth in Section 8 of the Schedule, and such other
written reports with respect to Borrower (including budgets, sales
projections, operating plans and other financial documentation), as Coast
shall from time to time reasonably specify.
8.4 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times
during regular business hours but not less frequently than semi-annually in
the event that there are Loans outstanding hereunder, and on three (3)
Business Day's notice, Coast, or its agents, shall have the right to perform
Audits. Coast shall take reasonable steps to keep confidential all
confidential information obtained in any Audit, but Coast shall have the
right to disclose any such information to its auditors, regulatory agencies,
and attorneys, and pursuant to any subpoena or other legal process. The
Audits shall be at Borrower's expense and the charge for the Audits shall be
Seven Hundred Fifty Dollars ($750) per person per day (or such higher amount
as shall
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COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
------------------------------------------------------------------------
represent Coast's then current standard charge for the same), plus reasonable
out-of-pocket expenses. Borrower will not enter into any agreement with any
accounting firm, service bureau or third party to store Borrower's books or
records at any location other than Borrower's Address, without first
notifying Coast of the same and obtaining the written agreement from such
accounting firm, service bureau or other third party to give Coast the same
rights with respect to access to books and records and related rights as
Coast has under this Loan Agreement. Borrower shall also take all necessary
steps to assure that this material accounting and software, systems and
applications, and those of its accounting firm, service bureau or any other
third party vendor or supplier, will, on a timely basis, adequately and
completely address the Year 2000 Problem in all material respects.
8.5 NEGATIVE COVENANTS. Borrower shall not, without Coast's prior
written consent, do any of the following:
(a) merge or consolidate with another entity, except in a
transaction in which (i) the owners of the Borrower hold at least fifty
percent (50%) of the ownership interest in the surviving entity immediately
after such merger or consolidation, and (ii) the Borrower is the surviving
entity;
(b) Intentionally Deleted;
(c) enter into any other transaction outside the ordinary course
of business;
(d) sell or transfer any Collateral, except for the sale of
finished Inventory in the ordinary course of Borrower's business, and except
for the sale of obsolete or unneeded Equipment in the ordinary course of
business;
(e) store any Inventory or other Collateral with any warehouseman
or other third party;
(f) sell any Inventory on a sale-or-return, guaranteed sale,
consignment, or other contingent basis;
(g) make any loans of any money or other assets, except (i)
advances to customers or suppliers in the ordinary course of business, (ii)
travel advances, employee relocation loans and other employee loans and
advances in the ordinary course of business, and (iii) loans to employees,
officers and directors for the purpose of purchasing equity securities of the
Borrower;
(h) incur any debts, outside the ordinary course of business,
which would have a Material Adverse Effect;
(i) guarantee or otherwise become liable with respect to the
obligations of another party or entity, other than guarantees limited to Two
Hundred Fifty Thousand Dollars ($250,000) or less with respect to (a)
advances to customers or suppliers in the ordinary course of business, (b)
travel advances, employee relocation loans and other employee loans and
advances in the ordinary course of business, and (c) loans to employees,
officers and directors for the purpose of purchasing equity securities of the
Borrower;
(j) pay or declare any dividends or distributions on the ownership
interests in Borrower (except for dividends or distributions payable solely
in stock form of ownership interests in Borrower);
(k) make any change in Borrower's capital structure which would
have a Material Adverse Effect; or
(l) dissolve or elect to dissolve.
Transactions permitted by the foregoing provisions of this Section are
only permitted if no Default or Event of Default is continuing or would occur
as a result of such transaction.
8.6 LITIGATION COOPERATION. Should any third-party suit or proceeding
be instituted by or against Coast with respect to any Collateral or relating
to Borrower which reasonably would be likely to result in a Material Adverse
Effect, Borrower shall, without expense to Coast, make available Borrower and
its officers, employees and agents and Borrower's books and records, to the
extent that Coast may deem them reasonably necessary in order to prosecute or
defend any such suit or proceeding.
8.7 FURTHER ASSURANCES. Borrower agrees, at its expense, on request by
Coast, to execute all documents and take all actions, as Coast, may deem
reasonably necessary or useful in order to perfect and maintain Coast's
perfected security interest in the Collateral, and in order to fully
consummate the transactions contemplated by this
11 Amend & Restated
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COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
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Agreement.
9. TERM.
9.1 MATURITY DATE. This Agreement shall continue in effect until the
Maturity Date; provided that the Maturity Date shall automatically be
extended, and this Agreement shall automatically and continuously renew, for
successive additional terms of one year each, unless one party gives written
notice to the other, not less than sixty (60) days prior to the Maturity Date
or the next Renewal Date, that such party elects to terminate this Agreement
effective on the Maturity Date or such next Renewal Date.
9.2 EARLY TERMINATION. This Agreement may be terminated prior to the
Maturity Date as follows: (a) by Borrower, effective three (3) Business Days
after written notice of termination is given to Coast; or (b) by Coast at any
time after the occurrence and continuance of an Event of Default, effective
immediately upon notice. If this Agreement is terminated by Borrower or by
Coast under this Section 9.2, Borrower shall pay to Coast an Early
Termination Fee in the amount shown in Section 3 of the Schedule. The Early
Termination Fee shall be due and payable on the effective date of termination
and thereafter shall bear interest at a rate equal to the rate applicable to
the Collection Loans.
9.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether
or not all or any part of such Obligations are otherwise then due and
payable. Without limiting the generality of the foregoing, if on the Maturity
Date, the Renewal Date, or on any earlier effective date of termination,
there are any outstanding Letters of Credit issued by Coast or issued by
another institution based upon an application, guarantee, indemnity or
similar agreement on the part of Coast, then on such date Borrower shall
provide to Coast cash collateral in an amount equal to the face amount of all
such Letters of Credit plus all interest, fees and costs due or to become due
in connection therewith, to secure all of the Obligations relating to said
Letters of Credit, pursuant to Coast's then standard form cash pledge
agreement. Notwithstanding any termination of this Agreement, all of Coast's
security interests in all of the Collateral and all of the terms and
provisions of this Agreement shall continue in full force and effect until
all Obligations have been paid and performed in full; provided that, without
limiting the fact that Loans are subject to the discretion of Coast, Coast
may, in its sole discretion, refuse to make any further Loans after
termination. No termination shall in any way affect or impair any right or
remedy of Coast, nor shall any such termination relieve Borrower of any
Obligation to Coast, until all of the Obligations have been paid and
performed in full. Upon payment and performance in full of all the
Obligations and termination of this Agreement, Coast shall promptly deliver
to Borrower termination statements, requests for reconveyances and such other
documents as may be required to fully terminate Coast's security interests.
10. EVENTS OF DEFAULT AND REMEDIES.
10.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and Borrower
shall give Coast immediate written notice thereof:
(a) Any warranty, representation, statement, report or certificate
made or delivered to Coast by Borrower or any of Borrower's officers,
employees or agents, now or in the future, shall be untrue or misleading and
results in a Material Adverse Effect; or
(b) Borrower shall fail to pay within three (3) Business Days
after due any Loan or any interest thereon or any other monetary Obligation;
or
(c) The total Loans and other Obligations outstanding at any time
shall exceed the Credit Limit which is not cured within five (5) Business
Days after the occurrence thereof; or
(d) Borrower shall fail to deliver the proceeds of Collateral to
Coast as provided in Section 7.5 above, or shall fail to give Coast access to
its books and records or Collateral as provided in Section 8.4 above, or
shall breach any negative covenant set forth in Section 8.5 above; or
(e) Borrower shall fail to comply with the financial covenants (if
any) set forth in the Schedule or shall fail to perform any other
non-monetary Obligation which by its nature cannot be cured; or
(f) Borrower shall fail to perform any other non-monetary
Obligation, which failure is not cured within
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COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
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five (5) Business Days after the date due; or
(g) Any levy, assessment, attachment, seizure, lien or encumbrance (other
than a Permitted Lien) is made on all or any part of the Collateral which is
not cured or satisfied within ten (10) Business Days after the occurrence of
the same; or
(h) Any default or event of default occurs under any obligation secured
by a Permitted Lien, which is not cured within any applicable cure period or
waived in writing by the holder of the Permitted Lien; or
(i) Borrower breaches any material contract or obligation, which has or
may reasonably be expected to have a Material Adverse Effect; or
(j) Dissolution, termination of existence, insolvency or business failure
of Borrower or any guarantor of any of the Obligations; or appointment of a
receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any
proceeding by Borrower or any guarantor of any of the Obligations under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect; or
(k) The commencement of any proceeding against Borrower or any guarantor
of any of the Obligations under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction, now or in the future in effect, which is (i) not timely
controverted, or (ii) not cured by the dismissal thereof within forty-five
(45) days after the date commenced; or
(l) Revocation or termination of, or limitation or denial of liability
upon, any guaranty of the Obligations or any attempt to do any of the
foregoing, or commencement of proceedings by any guarantor of any of the
Obligations under any bankruptcy or insolvency law; or
(m) Revocation or termination of, or limitation or denial of liability
upon, any pledge of any certificate of deposit, securities or other property
or asset of any kind pledged by any third party to secure any or all of the
Obligations, or any attempt to do any of the foregoing, or commencement of
proceedings by or against any such third party under any bankruptcy or
insolvency law; or
(n) Borrower or any guarantor of any of the Obligations makes any
payment on account of any indebtedness or obligation which has been
subordinated to the Obligations, other than as permitted in the applicable
subordination agreement, or if any Person who has subordinated such
indebtedness or obligations terminates or in any way limits his subordination
agreement; or
(o) Except as permitted under Section 8.5(a) or as a result of a public
offering of Borrower's common stock on a nationally recognized market,
Borrower shall suffer or experience any Change of Control without Coast's
prior written consent, which consent shall be in the discretion of Coast in
the exercise of its reasonable business judgement; or
(p) Borrower shall generally not pay its debts as they become due, or
Borrower shall conceal, remove or transfer any part of its property, with
intent to hinder, delay or defraud its creditors, or make or suffer any
transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law; or
(q) there shall be any Material Adverse Effect.
Coast may cease making any Loans or extending any credit hereunder during any
of the above cure periods.
10.2 REMEDIES. Upon the occurrence, and during the continuance, of any
Event of Default, Coast, at its option, and without demand of any kind (all
of which are hereby expressly waived by Borrower), may do any one or more of
the following:
(a) Cease making Loans or otherwise extending credit to Borrower under
this Agreement or any other document or agreement;
(b) Accelerate and declare all or any part of the Obligations to be
immediately due, payable and performable, notwithstanding any deferred or
installment payments allowed by any instrument evidencing or relating to any
Obligation;
(c) Take possession of any or all of the Collateral wherever it may be
found, and for that purpose
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Borrower hereby authorizes Coast without judicial process to enter onto any
of Borrower's premises without interference to search for, take possession
of, keep, store or remove any of the Collateral, and remain on the premises
or cause a custodian to remain on the premises in exclusive control thereof,
without charge for so long as Coast deems it reasonably necessary in order to
complete the enforcement of its rights under this Agreement or any other
agreement; PROVIDED, HOWEVER, that should Coast seek to take possession of
any of the Collateral by Court process, Borrower hereby irrevocably waives:
(i) any bond and any surety or security relating thereto required
by any statute, court rule or otherwise as an incident to such possession;
(ii) any demand for possession prior to the commencement of any
suit or action to recover possession thereof; and
(iii) any requirement that Coast retain possession of, and not
dispose of, any such Collateral until after trial or final judgement;
(d) Require Borrower to assemble any or all of the Collateral and make
it available to Coast at places designated by Coast which are reasonably
convenient to Coast and Borrower, and to remove the Collateral to such
locations as Coast may deem advisable;
(e) Complete the processing, manufacturing or repair of any Collateral
prior to a disposition thereof and, for such purpose and for the purpose of
removal, Coast shall have the right to use Borrower's premises, vehicles,
hoists, lifts, cranes, equipment and all other property without charge. Coast
is hereby granted a license or other right to use, without charge, Borrower's
labels, patents, copyrights, rights of use of any name, trade secrets, trade
names, trademarks, service marks, and advertising matter, or any property of
a similar nature, as it pertains to the Collateral, in completing production
of, advertising for sale, and selling any Collateral and Borrower's rights
under all licenses and all franchise agreements shall inure to Coast's
benefit;
(f) Sell, lease or otherwise dispose of any of the Collateral, in its
condition at the time Coast obtains possession of it or any further
manufacturing, processing or repair, at one or more public and/or private
sales, in lots or in bulk, for cash, exchange or other property, or on
credit, and to adjourn any such sale from time to time without notice other
than oral announcement at the time scheduled for sale. Coast shall have the
right to conduct such disposition on Borrower's premises without charge, for
such time or times as Coast deems reasonable, or on Coast's premises, or
elsewhere and the Collateral need not be located at the place of disposition.
Coast may directly or through any affiliated company purchase or lease any
Collateral at any such public disposition, and if permissible under
applicable law, at any private disposition. Any sale or other disposition of
Collateral shall not relieve Borrower of any liability Borrower may have if
any Collateral is defective as to title or physical condition or otherwise at
the time of sale;
(g) Demand payment of, and collect any Receivables and General
Intangibles comprising Collateral and, in connection therewith, Borrower
irrevocably authorizes Coast to endorse or sign Borrower's name on all
collections, receipts, instruments and other documents, to take possession of
and open mail addressed to Borrower and remove therefrom payments made with
respect to any item of the Collateral or proceeds thereof, and, in Coast's
sole discretion, to grant extensions of time to pay, compromise claims and
settle Receivables and the like for less than face value; and
(h) Offset against any sums in any of Borrower's general, special or
other Deposit Accounts with Coast;
(i) Demand and receive possession of any of Borrower's federal and state
income tax returns and the books and records utilized in the preparation
thereof or referring thereto.
All reasonable attorneys' fees, expenses, costs, liabilities and
obligations incurred by Coast (including attorneys' fees and expenses
incurred in connection with bankruptcy) with respect to the foregoing shall
be due from the Borrower to Coast within five (5) Business Days following
receipt of invoice. If Borrower has not paid the same when due, Coast may
charge the same to Borrower's loan account, and the same shall thereafter bear
interest at the same rate as is applicable to the Collection Loans. Without
limiting any of Coast's rights and remedies, from and after the occurrence of
any Event of Default, the interest rate applicable to the Obligations shall
be increased
14 Amend & Restated
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COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
------------------------------------------------------------------------------
by an additional three percent per annum.
10.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and
Coast agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable:
(a) Notice of the sale is given to Borrower at least seven (7) days
prior to the sale, and, in the case of a public sale, notice of the sale is
published at least seven (7) days before the sale in a newspaper of general
circulation in the county where the sale is to be conducted;
(b) Notice of the sale describes the collateral in general, non-specific
terms;
(c) The sale is conducted at a place designated by Coast, with or
without the Collateral being present;
(d) The sale commences at any time between 8:00 a.m. and 6:00 p.m.
Pacific time;
(e) Payment of the purchase price in cash or by cashier's check or wire
transfer is required; and
(f) With respect to any sale or any of the Collateral, Coast may (but is
not obligated to) direct any prospective purchaser to ascertain directly from
Borrower any and all information concerning the same.
Coast shall be free to employ other methods of noticing and selling the
Collateral, in its discretion, if they are commercially reasonable.
10.4 POWER OF ATTORNEY. Borrower grants to Coast an irrevocable power of
attorney with full power of substitution coupled with an interest,
authorizing and permitting Coast (acting through any of its employees,
attorneys or agents) at any time, at its option, but without obligation, with
or without notice to Borrower, and at Borrower's expense, to do any or all of
the following, in Borrower's name or otherwise, but Coast agrees to exercise
the following powers in a commercially reasonable matter:
(a) Execute on behalf of Borrower any documents that Coast may, in its
sole discretion, deem advisable in order to perfect and maintain Coast's
security interest in the Collateral, or in order to exercise a right of
Borrower or Coast, or in order to fully consummate all the transactions
contemplated under this Agreement, and all other present and future
agreements;
(b) Upon the occurrence and continuance of an Event of Default, execute
on behalf of Borrower any document exercising, transferring or assigning any
option to purchase, sell or otherwise dispose of or to lease (as lessor or
lessee) any real or personal property which is part of Coast's Collateral or
in which Coast has an interest;
(c) Upon the occurrence and continuance of an Event of Default, execute
on behalf of Borrower, any invoices relating to any Receivable, any draft
against any Account Debtor and any notice to any Account Debtor, any proof of
claim in bankruptcy, any Notice of Lien, claim of mechanic's, materialman's
or other lien, or assignment or satisfaction of mechanic's, materialman's
or other lien;
(d) Take control in any manner of any cash or non-cash items of payment
or proceeds of Collateral; endorse the name of Borrower upon any instruments,
or documents, evidence of payment or Collateral that may come into Coast's
possession;
(e) Endorse all checks and other forms of remittances received by Coast;
(f) Upon the occurrence and continuance of an Event of Default, pay,
contest or settle any lien, charge, encumbrance, security interest and
adverse claim in or to any of the Collateral, or any judgement based thereon,
or otherwise take any action to terminate or discharge the same;
(g) Upon the occurrence and continuance of an Event of Default, grant
extensions of time to pay, compromise claims and settle Receivables and
General Intangibles for less than face value and execute all releases and
other documents in connection therewith;
(h) If Borrower has not done so by the due date or other applicable
date, pay any sums required on account of Borrower's taxes or to secure the
release of any liens therefor, or both;
(i) Upon the occurrence and continuance of an Event of Default, settle
and adjust, and give releases of,
15 Amend & Restated
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COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------
any insurance claim that relates to any of the Collateral and obtain payment
therefor;
(j) Instruct any third party having custody or control of any books
or records belonging to, or relating to, Borrower to give Coast the same
rights of access and other rights with respect thereto as Coast has under
this Agreement; and
(k) If Borrower has not done so by the due date or other applicable
date, take any action or pay any sum required of Borrower pursuant to this
Agreement and any other present or future agreements.
Any and all sums paid and any and all costs, expenses, liabilities,
obligations and attorneys' fees incurred by Coast (including attorneys' fees
and expenses incurred pursuant to bankruptcy) with respect to the foregoing
shall be added to and become part of the Obligations, and shall be payable on
demand. Coast may charge the foregoing to Borrower's loan account and the
foregoing shall thereafter bear interest at the same rate applicable to the
Collection Loans. In no event shall Coast's rights under the foregoing power
of attorney or any of Coast's other rights under this Agreement be deemed to
indicate that Coast is in control of the business, management or properties
of Borrower. Borrower shall pay, indemnify, defend, and hold Coast and each
of its officers, directors, employees, counsel, agents, and attorneys-in-fact
(each, an "Indemnified Person") harmless (to the fullest extent permitted by
law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, and damages, and all attorneys fees and
disbursements and other costs and expenses actually incurred in connection
therewith (as and when they are incurred and irrespective of whether suit is
brought), at any time asserted against, imposed upon, or incurred by any of
them in connection with or as a result of or related to the execution,
delivery, enforcement, performance, and administration of this Agreement and
any other Loan Documents or the transactions contemplated herein, and with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities").
Borrower shall have no obligation to any Indemnified Person hereunder with
respect to any Indemnified Liability that a court of competent jurisdiction
finally determines to have resulted from the gross negligence or willful
misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations.
10.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of
any sale of the Collateral shall be applied by Coast first to the costs,
expenses, liabilities, obligations and reasonable attorneys' fees incurred by
Coast in the exercise of its rights under this Agreement, second to the
interest due upon any of the Obligations, and third to the principal of the
Obligations, in such order as Coast shall determine in its sole discretion.
Any surplus shall be paid to Borrower or other Persons legally entitled
thereto; Borrower shall remain liable to Coast for any deficiency. If, Coast,
in its sole discretion, directly or indirectly enters into a deferred payment
or other credit transaction with any purchaser at any sale of Collateral,
Coast shall have the option, exercisable at any time, in its sole discretion,
of either reducing the Obligations by the principal amount of purchase price
or deferring the reduction of the Obligations until the actual receipt by
Coast of the cash therefor.
10.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set
forth in this Agreement, Coast shall have all the other rights and remedies
accorded a secured party in equity, under the Code, and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between Coast and Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise
by Coast of one or more of its rights or remedies shall not be deemed an
election, nor bar Coast from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Coast to exercise any
rights or remedies shall not operate as a waiver thereof, but all rights and
remedies shall continue in full force and effect until all of the
Obligations have been indefeasibly paid and performed.
11. GENERAL PROVISIONS.
11.1 INTEREST COMPUTATION. In computing interest on the Obligations,
all checks, wire transfers and other items of payment received by Coast
(including proceeds of Receivables and payment of the Obligations in full)
shall be deemed applied by Coast on account of the Obligations one (1)
Business Day after receipt by Coast of immediately available funds, and, for
purposes of the foregoing, any such funds received after 11:00 AM Pacific
time, on any
16 Amend & Restated
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COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
day shall be deemed received on the next Business Day. Coast shall be entitled
to charge Borrower's account for such one (1) Business Day of "clearance" or
"float" at the rate(s) set forth in Section 3 of the Schedule on all checks,
wire transfers and other items received by Coast, regardless of whether such
one (1) Business Day of "clearance" or "float" actually occur, and shall be
deemed to be the equivalent of charging one (1) Business Day of interest on
such collections. This across-the-board one (1) Business Day clearance or float
charge on all collections is acknowledged by the parties to constitute an
integral aspect of the pricing of Coast's financing of Borrower. Coast shall
not, however, be required to credit Borrower's account for the amount of any
item of payment which is unsatisfactory to Coast in its reasonable discretion,
and Coast may charge Borrower's loan account for the amount of any item of
payment which is returned to Coast unpaid.
11.2 APPLICATION OF PAYMENTS. Subject to Section 7.5 hereof, all
payments with respect to the Obligations may be applied, and in Coast's sole
discretion reversed and re-applied, to the Obligations, in such order and
manner as Coast shall determine in its sole discretion.
11.3 CHARGES TO ACCOUNTS. Coast may, in its discretion, require that
Borrower pay monetary Obligations in cash to Coast, or charge them to
Borrower's Loan account, in which event they will bear interest from the date
due to the date paid at the same rate applicable to the Loans.
11.4 MONTHLY ACCOUNTINGS. Coast shall provide Borrower monthly with an
account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall constitute PRIMA FACIE evidence of the items
stated and shall be an account stated (except for reverses and reapplications
of payments made and corrections of errors discovered by Coast), unless
Borrower notifies Coast in writing to the contrary within thirty (30) days
after each account is rendered, describing the nature of any alleged errors or
omissions.
11.5 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service or by regular first-class mail, facsimile or certified mail return
receipt requested, addressed to Coast or Borrower at the addresses shown in
the heading to this Agreement, or at any other address designated in writing
by one party to the other party. Notices to Coast shall be directed to the
Commercial Finance Division, to the attention of the Division Manager or the
Division Credit Manager. All notices shall be deemed to have been given upon
delivery in the case of notices personally delivered, faxed (at time of
confirmation of transmission), or at the expiration of one (1) Business Day
following delivery to the private delivery service, or two (2) Business Days
following the deposit thereof in the United States mail, with postage prepaid.
11.6 SEVERABILITY. Should any provision of this Agreement be held by
any court of competent jurisdiction to be void or unenforceable, such defect
shall not affect the remainder of this Agreement, which shall continue in
full force and effect.
11.7 INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between Borrower and Coast and supersede
all prior and contemporaneous negotiations and oral representations and
agreements, all of which are merged and integrated in this Agreement. THERE
ARE NO ORAL UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES
WHICH ARE NOT SET FORTH IN THIS AGREEMENT OR IN OTHER WRITTEN AGREEMENTS
SIGNED BY THE PARTIES IN CONNECTION HEREWITH.
11.8 WAIVERS. The failure of Coast at any time or times to require
Borrower to strictly comply with any of the provisions of this Agreement or
any other present or future agreement between Borrower and Coast shall not
waive or diminish any right of Coast 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 Borrower and delivered to Coast shall be deemed to have
been waived by any act or knowledge of Coast or its agents or employees, but
only by a specific written waiver signed by an authorized officer of Coast and
delivered to Borrower. Borrower waives demand, protest, notice of protest and
notice of default or dishonor, notice of payment and nonpayment, release,
compromise, settlement, extension or renewal of any commercial paper,
instrument, account, General Intangible, document or guaranty at any time
held by Coast on which Borrower is or may in any way be liable, and notice
of any action taken by Coast, unless expressly required by this Agreement.
17 Amend & Restated
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COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
11.9 NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Coast, nor any of its
directors, officers, employees, agents, attorneys or any other Person
affiliated with or representing Coast shall be liable for any claims,
demands, losses or damages, of any kind whatsoever, made, claimed, incurred
or suffered by Borrower or any other party through the ordinary negligence of
Coast, or any of its directors, officers, employees, agents, attorneys or any
other Person affiliated with or representing Coast, but nothing herein shall
relieve Coast from liability for its own gross negligence or willful
misconduct.
11.10 AMENDMENT. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by Borrower and a duly
authorized officer of Coast.
11.11 TIME OF ESSENCE. Time is of the essence in the performance by
Borrower of each and every obligation under this Agreement.
11.12 ATTORNEYS FEES, COSTS AND CHARGES. Borrower shall reimburse Coast
for all reasonable attorneys' fees (including attorneys' fees and expenses
incurred pursuant to bankruptcy) and all filing, recording, search, title
insurance, appraisal, audit, and other reasonable costs incurred by Coast,
pursuant to, or in connection with, or relating to this Agreement (whether or
not a lawsuit is filed), including, but not limited to, any reasonable
attorneys' fees and costs (including attorneys' fees and expenses incurred
pursuant to bankruptcy) Coast incurs in order to do the following: prepare
and negotiate this Agreement and the documents relating to this Agreement;
obtain legal advice in connection with this Agreement or Borrower; enforce,
or seek to enforce, any of its rights; 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 Borrower's books and records; protect, obtain
possession of, lease, dispose of, or otherwise enforce Coast=s security
interest in, the Collateral; and otherwise represent Coast in any litigation
relating to Borrower. If either Coast or Borrower 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 attorneys'
fees (including attorneys' fees and expenses incurred pursuant to
bankruptcy), 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. Borrower shall also pay Coast's standard charges
for returned checks and for wire transfers, in effect from time to time. All
attorneys' fees, costs and charges (including attorneys' fees and expenses
incurred pursuant to bankruptcy) and other fees, costs and charges to which
Coast may be entitled pursuant to this Agreement may be charged by Coast to
Borrower's loan account and shall thereafter bear interest at the same rate as
the Collection Loans.
11.13 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of Borrower and Coast; provided,
however, that Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of Coast, and any prohibited
assignment shall be void. No consent by Coast to any assignment shall release
Borrower from its liability for the Obligations. Coast may assign its rights
and delegate its duties hereunder without the consent of Borrower. Coast
reserves the right to syndicate all or a portion of the transaction created
herein or sell, assign, transfer, negotiate, or grant participations in all or
any part of, or any interest in Coast's rights and benefits hereunder. In
connection with any such syndication, assignment or participation, Coast may
disclose all documents and information which Coast now or hereafter may have
relating to Borrower or Borrower's business. To the extent that Coast assigns
its rights and obligations hereunder to a third Person, Coast thereafter shall
be released from such assigned obligations to Borrower.
11.14 PUBLICITY. Coast is hereby authorized, at its expense, to issue
appropriate press releases and to cause a tombstone to be published
announcing the consummation of this transaction and the aggregate amount
thereof.
11.15 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used
in this Agreement for convenience. Borrower and Coast acknowledge that the
headings may not describe completely the subject matter of the applicable
paragraph, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement. The term
"including", whenever used in this Agreement, shall mean
18 Amend & Restated
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COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
"including (but not limited to)". 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 Coast or
Borrower under any rule of construction or otherwise.
11.16 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts
and transactions hereunder and all rights and obligations of Coast and
Borrower shall be governed by the internal laws of the State of California,
without regard to its conflicts of law principles. As a material part of the
consideration to Coast to enter into this Agreement, Borrower (a) agrees that
all actions and proceedings relating directly or indirectly to this Agreement
shall be litigated in courts located within California, and that the
exclusive venue therefor shall be Los Angeles County; (b) consents to the
jurisdiction and venue of any such court and consents to service of process
in any such action or proceeding by personal delivery or any other method
permitted by law; and (c) waives any and all rights Borrower may have to
object to the jurisdiction of any such court, or to transfer or change the
venue of any such action or proceeding.
11.17 MUTUAL WAIVER OF JURY TRIAL. BORROWER AND COAST 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, THIS AGREEMENT OR ANY OTHER PRESENT OR
FUTURE INSTRUMENT OR AGREEMENT BETWEEN COAST AND BORROWER, OR ANY CONDUCT,
ACTS OR OMISSIONS OF COAST OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH COAST OR
BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE.
BORROWER:
PROBUSINESS SERVICES, INC., a Delaware corporation
By /s/ [Illegible]
------------------------------
President or Vice President
By /s/ [Illegible]
------------------------------
Secretary or Ass't Secretary
COAST:
COAST BUSINESS CREDIT,
a division of Southern Pacific Bank
By /s/ [Illegible]
------------------------------
Title: VP
--------------------------
19 Amend & Restated
Loan and Security Agmt
--------------------------------------------------------------------------------
COAST
SCHEDULE TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
BORROWER: PROBUSINESS SERVICES, INC., A DELAWARE CORPORATION
ADDRESS: 0000 XXXXXXX XXXX
XXXXXXXXXX, XX 00000
DATE: JUNE 30, 1998
This Schedule forms an integral part of the Amended and Restated Loan and
Security Agreement between Coast Business Credit, a division of Southern
Pacific Bank, and the above-borrower of even date.
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--------------------------------------------------------------------------------
SECTION 2 - CREDIT FACILITIES
SECTION 2.1 - CREDIT LIMIT: Loans in a total amount at any time
outstanding not to exceed the lesser
of a total of Twenty Million Dollars
($20,000,000) at any one time
outstanding (the "Maximum Dollar
Amount"), or the sum of (a)(b) and
(c) below:
(a) Collection Loans in an amount not to
exceed five (5) times Borrower's
average monthly net collections of
Eligible Collections for each
preceding three (3) month period (net
of W-2 xxxxxxxx/collections). The
multiple shall be decreased by a
factor of one (1) for each
twenty-five percent (25%) decrease in
Borrower's collections when comparing
the prior three (3) month period with
the most recent three (3) month
period. The multiple may be increased
by a factor of one (1) (up to the
maximum of five (5)) with each five
percent (5%) increase in collections,
sustained for a two (2) month period
when comparing the most recent three
(3) months collections to the
previous three (3) months
collections.
(b) Collection Loans on the interest
earned on Fiduciary Collections;
loans in an amount not to exceed the
lesser of:
20 Amend & Restated
Loan and Security Agmt
COAST BUSINESS CREDIT SCHEDULE TO LOAN AND SECURITY AGREEMENT
----------------------------------------------------------------------
(i) five (5) times Borrower's average
monthly collections of the interest
on tax investment funds for each
preceding three (3) months. The
multiple shall be decreased by a
factor of one (1) for each
twenty-five percent (25%) decrease in
Borrower's collections when comparing
the prior three (3) month period with
the most recent three (3) month
period. The multiple may be increased
by a factor of one (1) (up to the
maximum of five (5)) with each five
percent (5%) increase in collections,
sustained for a two (2) month period
when comparing the most recent three
(3) months collections to the
previous three (3) months
collections; PROVIDED, HOWEVER, to
the extent that Borrower receives
collections of interest from the tax
funds resulting from investments with
a term greater than one (1) month,
then Borrower shall be permitted to
demonstrate to Coast, and Coast may
consider, the impact the longer term
investment has had on the present and
prior three month collections.
(ii) Five Million Dollars
($5,000,000); PLUS
EXAMPLE
For (a) & (b) above, if collections
decrease by fifty percent (50%) in
the current three month period from
100M to 50M then the multiple if it
was at five (5) shall be lowered to
three (3) (one for each twenty-five
percent (25%) decrease).
(c) Letter of Credit Sublimit: One
Million Five Hundred Thousand Dollars
($1,500,000).
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SECTION 3 - INTEREST AND FEES
SECTION 3.1 - INTEREST RATE: A rate equal to the Prime Rate plus
1% per annum, calculated on the basis
of a 360-day year for the actual
number of days elapsed. The interest
rate applicable to all Loans shall be
adjusted monthly as of the first day
of each month, and the interest to be
charged for each month shall be based
on the highest Prime Rate in effect
during the prior month, but in no
event shall the rate of interest
charged on any Loans in any month be
less than 7.5% per annum.
SECTION 3.1 - MINIMUM ANNUAL
INTEREST: NONE
SECTION 3.2 - LOAN FEE: One Hundred Fifty Thousand Dollars
($150,000) fully earned and payable
21 Amend & Restated
Loan and Security Agmt
COAST BUSINESS CREDIT SCHEDULE TO LOAN AND SECURITY AGREEMENT
----------------------------------------------------------------------
concurrently with the execution of this
Agreement, and Two Hundred Thousand
($200,000) fully earned and payable on
December 31, 1999.
SECTION 3.2 - LETTER OF CREDIT
FEES: Two percent (2%) of the face amount of
all outstanding Letters of Credit per
annum, plus bank charges and fees.
SECTION 9.1 - RENEWAL FEE: NONE
SECTION 9.2 - EARLY TERMINATION
FEE: An amount equal to three percent (3%)
of the Maximum Dollar Amount (as
defined in the Schedule), if
termination occurs on or before the
first anniversary of the effective
date of this Agreement; two percent
(2%) of the Maximum Dollar Amount, if
termination occurs after the first
anniversary and before the Maturity
Date of this Agreement; and one
percent (1%) of the Maximum Dollar
Amount, if termination occurs at any
time during the term of this
Agreement because the obligations are
indefeasibly paid in full via a
public offering of the stock of
Borrower or as a result of Borrower
being merged or acquired.
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SECTION 6 - REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 6.2 - PRIOR NAMES OF
BORROWER: ProBusiness Centers, Inc.
SECTION 6.2 - PRIOR TRADE NAMES
OF BORROWER: Benesphere Administrators, Inc.
SECTION 6.2 - EXISTING TRADE NAMES
OF BORROWER: ProBusiness Administrative Services
SECTION 6.3 - OTHER LOCATIONS AND
ADDRESSES: 0000 Xxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxxxx 00000
000 000xx Xxxxxx, X.X., Xxxxx 000,
Xxxxxxxx, Xxxxxxxxxx 00000
SECTION 6.10 - MATERIAL ADVERSE
LITIGATION: None.
SECTION 6.10 - FUTURE CLAIMS AND
LITIGATION: Borrower will promptly inform Coast
in writing of any claim, proceeding,
litigation or investigation in the
future threatened or instituted by or
against Borrower involving any single
claim of One Hundred Thousand
($100,000) or more, or involving Two
Hundred
22 Amend & Restated
Loan and Security Agmt
COAST BUSINESS CREDIT SCHEDULE TO LOAN AND SECURITY AGREEMENT
----------------------------------------------------------------------
Thousand ($200,000) or more in the aggregate.
--------------------------------------------------------------------------------
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SECTION 8 - ADDITIONAL DUTIES OF BORROWER
SECTION 8.1 - OTHER PROVISIONS: (1) Borrower shall provide Coast with
reasonable advance notice for the
initial request to borrow so that
Coast may obtain an Audit
satisfactory to Coast prior to the
requested borrowing.
(2) As long as the Obligations are less
than Ten Million Dollars
($10,000,000) a blocked account
agreement will not be required,
however, before the Obligations may
exceed Ten Million Dollars
($10,000,000) Borrower, Coast and a
bank, reasonably acceptable to Coast,
shall enter into a blocked account
agreement so as to permit Coast to
receive Borrower's daily collections.
(3) Borrower's Book Net Worth (as defined
by GAAP) shall always be greater than
or equal to Fourteen Million Dollars
($14,000,000).
(4) Assuming for the calculation of this
covenant that the Maximum Dollar
Amount is fully drawn and outstanding
and is being amortized over sixty
(60) months and measured quarterly,
Borrower shall at all times maintain
a minimum ratio of (EBITDA + Client
Acquisition Costs) to (Total Fixed
Debt Service Requirements) of
1.5:1.0.
SECTION 8.3 - REPORTING: Borrower shall provide Coast with the
following, provided, however, Coast,
at its sole discretion shall have the
right to receive upon its request
additional and enhanced financial
requests from Borrower:
1. Quarterly internally prepared
financial statements, as soon as
available, and in any event within
forty-five (45) days after the end of
each fiscal quarter of Borrower.
2. Annual financial statements, as soon
as available, and in any event within
ninety (90) days following the end of
Borrower's fiscal year and audited
by, an independent certified public
accountant acceptable to Coast.
3. Prior to any borrowing, and fifteen
(15) days after the end of each month
when there are borrowings, Borrower
shall provide to Coast a cash
collection certificate.
23 Amend & Restated
Loan and Security Agmt
COAST BUSINESS CREDIT SCHEDULE TO LOAN AND SECURITY AGREEMENT
----------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECTION 9 - TERM
SECTION 9.1 - MATURITY DATE: December 31, 2000, subject to
automatic renewal as provided in
Section 9.1 of the Agreement, and
early termination as provided in
Section 9.2 of the Agreement.
24 Amend & Restated
Loan and Security Agmt
[LOGO] 0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
(000) 000-0000
xxx.xxxxxxxxxxx.xxx
PROBUSINESS SERVICES, INC.,
SECRETARY'S CERTIFICATE
In connection with the Amended and Restated Loan and Security
Agreement, dated as of June 30, 1998, between ProBusiness Services, Inc., a
Delaware corporation ("Company"), on the one hand, and Coast Business Credit
("Coast"), a division of Southern Pacific Bank, a California corporation, on
the other hand, (the "Agreement"), I, Xxxxx Xxxx, certify that I am the
Secretary of the Company and hereby further certify that:
1. The below-named persons are the duly elected and duly
qualified officers of the Company and have held the respective offices set
forth below at all times since the dates set forth below to and including the
date hereof and set forth opposite their names are their genuine signatures.
NAME OFFICE DATE SIGNATURE
---- ------ ---- ---------
Xxx Xxxxxx President & CEO 6/30/98 /s/ Xxx Xxxxxx
-------------------
Xxxxx Xxxx SVP & CFO 6/30/98 /s/ Xxxxx Xxxx
-------------------
Xxxxxx Xxxxxxxx Corporate Controller 6/30/98 /s/ Xxxxxx Xxxxxxxx
-------------------
Xxxx Xxxxxxx Director - Treasury 6/30/98 /s/ Xxxx Xxxxxxx
-------------------
2. Attached hereto as EXHIBIT "A" is a true and correct copy of
the Certificate of Incorporation of the Company as filed in and certified by
the office of the Secretary of State of Delaware, together with all
amendments thereto, adopted through the date hereof.
3. Attached hereto as EXHIBIT "B" is a true and correct copy of
the Bylaws of the Company as in effect on the date hereof, together with all
amendments thereto, adopted through the date hereof.
4. Attached hereto as EXHIBIT "C" are true and correct copies of
resolutions duly adopted by the Board of Directors of the Company by
unanimous written consent on the date indicated in such resolutions, which
resolutions have not been revoked, modified, amended, or rescinded and are
still in full force and effect. Except for those resolutions contained in
EXHIBIT "C", no resolutions have been adopted by the Board of Directors of
the Company regarding the execution, delivery or performance of the Agreement
or any of the documents required to be executed, delivered or performed
pursuant to the Agreement.
5. I know of no proceeding for the dissolution or liquidation of
the company or threatening its existence.
IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of
June, 1998.
/s/ Xxxxx Xxxx
----------------------------
Xxxxx Xxxx, Secretary
-----------------------------------------------------------------------------
I, Xxx Xxxxxx, President & CEO of the Company, do hereby certify
that Xxxxx Xxxx is the duly elected or appointed Secretary of the Company and
the signatures on the foregoing certificate is his genuine signature.
IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of
June, 1998.
/s/ Xxx Xxxxxx
----------------------------
Xxx Xxxxxx, President & CEO
