Exhibit 10.27
AGREEMENT FOR SECURED
LINE OF CREDIT
PHOENIX, ARIZONA
SEPTEMBER __, 2001
This agreement for a secured line of credit (the "AGREEMENT"), effective
September __, 2001, between and among EBIZ ENTERPRISES, INC. ("EBIZ") and XXXXX
BUSINESS SYSTEMS, INC. ("JBSI") ("MAKERS"), and CALDERA SYSTEMS, INC.
("LENDER").
RECITALS
A. Makers are in the business of manufacture and sale of computers and
computer components.
B. JBSI and Lender are parties to that certain Distribution Agreement dated
November 8, 2000 (the "DISTRIBUTION AGREEMENT"), pursuant to which JBSI served
as the nonexclusive distributor of certain products sold by Lender identified in
the Distribution Agreement and certain other goods and products (the
"PRODUCTS"), and participated in a long term and mutually beneficial business
relationship relating to the purchase, distribution and sale by Makers of
Lender's products.
C. Lender previously extended credit terms to Makers to facilitate the
purchase by Makers of the Products. The outstanding balance due to Lender by
Makers as of the date of this Agreement is $542,125.61 (the "OUTSTANDING
BALANCE").
D. Lender is willing to provide the additional credit and financing needed
by Makers up to $250,000.00 through a line of credit on a secured basis,
pursuant to the terms and conditions of this Agreement (the "LINE OF CREDIT")
conditioned upon the execution of a promissory note in the amount of the
Outstanding Balance of even date herewith (the "SECURED PROMISSORY NOTE") and a
security agreement by Makers conveying a security interest in all of the assets
of Makers in order to secure the Outstanding Balance and all amounts that may
become due and owing under the Line of Credit. In the event that Makers file a
petition for relief under Chapter 11 of the Bankruptcy Code, Lender agrees to
continue to provide the Line of Credit to Makers conditioned upon approval of
this Agreement, pursuant to 11 U.S.C. ss.364, by the Bankruptcy Court.
E. A necessary precondition to the Lender entering into this Agreement is
for the Makers to execute this Agreement, the Secured Promissory Note, the
Security Agreement, a UCC-1 Financing Statement, (collectively referred to
hereinafter as the "LOAN DOCUMENTS").
F. Obtaining credit and financing from Lender is critical to the ability of
Makers to continue their business operations and without such financing Makers
believe they would likely not be able to operate successfully as a going
concern. Entering into this Agreement and executing each of the Loan Documents
is, in the exercise of Makers' best business judgment, in the best interest of
Makers.
In consideration of the above recitals, the following representations,
warranties, covenants and conditions, and other good and valuable consideration,
the receipt of which is acknowledged, the parties agree as follows:
SECTION ONE
REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS
Makers represent, warrant, and covenant that:
(1) Makers have been duly incorporated and organized and are existing as
corporations in good standing under the laws of their jurisdiction of
incorporation; Makers have the power and authority to own the property that
shall serve as collateral for all of the advances and loans made by Lender to
Makers (the "Collateral"), pursuant to this Agreement and the Secured Promissory
Note, to enter into and perform this Agreement, and any other document or
instrument delivered in connection herewith.
(2) Makers have good title to the Collateral and are the legal and
beneficial owner thereof;
(3) Makers shall execute, acknowledge, deliver, record and file such
further instruments and do such further acts (including delivery of financing
statements) as Lender in its sole and absolute judgment deems necessary,
desirable or proper to carry out the purposes of this Agreement and to subject
to the security interest created hereby any property intended to be covered
hereby;
SECTION TWO
AMOUNT OF CREDIT
Until further notice, and on the condition that Makers not be in default
with respect to any of the terms of this Agreement, Lender will make available
to Makers the Line of Credit in an amount not to exceed Two Hundred Fifty
Thousand Dollars ($250,000.00) in order to permit Makers to purchase Products
from Lender.
SECTION THREE
TERMS OF LOAN
Makers may from time to time order and purchase Products from Lender
without paying for such Products at the time of placing the order. By doing so,
Makers are requesting and shall be deemed to have requested an extension of
credit under the Line of Credit (a "CREDIT REQUEST"). The aggregate value of the
Products shipped by Lender in response to any order of Products for which Makers
have made a Credit Request shall constitute a draw and a reduction in the amount
of available unused credit available under the Line of Credit (the "DRAW
Amount"). Each such Draw Amount shall be due and owing to Lender on that date
which is 30 days from date that the Products, which were the subject of the
Credit Request giving rise to the Draw Request, were shipped to Makers or the
customers designated by Makers (the "DUE DATE"). All amounts advanced by Lender
hereunder shall bear interest from the date the funds are advanced until paid at
the rate of ten percent (10%) per annum (the "STATED RATE"). Makers shall also
execute the form of Secured Promissory Note in the amount of the Outstanding
Balance, attached hereto as Exhibit "A." All amounts are payable in lawful money
of the United States.
SECTION FOUR
TERMINATION OF AGREEMENT
This Agreement, each of the Loan Documents, and the rights and obligations
of each of the parties hereunder and thereunder shall terminate and be of no
further force or effect on the date that all amounts due and owing under this
Agreement and the Secured Promissory Note have been paid in full to Lender (the
"TERMINATION DATE"). Upon the Termination Date, Lender shall (and Lender shall
cause its nominees and any affiliates that have any rights under this Agreement
or any of the Loan Documents to) execute, acknowledge, deliver, record and/or
file any and documents, releases, termination of security interest statements
and the like, execute, deliver, record and/or file such documents of
reassignment, reconveyance and the like, and take any and all actions reasonably
requested by Makers or any successor to Makers as may be necessary to release
all security interests, liens, charges and the like on the assets of Makers, any
securities of Makers or which otherwise arise under or with respect to this
Agreement, the Loan Documents or any such related agreements, documents or
instruments.
SECTION FIVE
SECURITY FOR LOANS
All funds advanced to Makers by Lender, including all amounts evidenced by
the Secured Promissory Note are secured by collateral pursuant to the Security
Agreement.
SECTION SIX
EVENTS OF DEFAULT AND LENDER'S RIGHTS AND REMEDIES
The occurrence of any one or more of the following events shall constitute
an "EVENT OF DEFAULT" hereunder:
(A) Nonpayment of any Draw Amount on any Due Date;
(B) Failure to perform any duty or obligation of Makers under this
Agreement or to pay any sum due or otherwise advanced under this Agreement of
the Secured Promissory Note;
(C) Any material representation or warranty made by Makers to Lender in
connection with or pursuant to this Agreement is false in any material respect
on the date as of which it was made or becomes false in any material respect;
(D) Makers defaults in the performance or observance of any of the other
Loan Documents;
Upon the occurrence of an Event of Default, Lender shall provide to Makers
a written Notice of Default at the address set forth herein and a period of
thirty (30) days from the date of the Notice of Default in order to cure all
defaults under this Agreement and/or any of the other Loan Documents. If any
such defaults remain uncured as of the close of business on the thirtieth day
following the date of the Notice of Default: (i) the unpaid principal balance,
and accrued unpaid interest and all other amounts due or otherwise advanced
under this Agreement and the Secured Promissory Note shall automatically without
notice bear interest at a rate equal to fifteen percent (15%) percentage points
(the "DEFAULT RATE") until the default has been cured, at which time interest
shall again accrue at the Stated Rate; (ii) the whole sum of principal, accrued
interest and all other amounts due under this Agreement and the Secured
Promissory Note may, at the option of the Lender be declared due and payable,
with interest thereon to accrue at the Default Rate from the date of the Event
of Default until the Event of Default has been cured at which time interest
shall again accrue at the Stated Rate; and (iii) the Lender may exercise any of
the rights and remedies contained herein, in the Secured Promissory Note, or in
the Security Agreement.
The rights or remedies of Lender as provided in this Agreement, the Secured
Promissory Notes and the Security Documents shall be cumulative and concurrent,
and may be pursued singly, successively, or together against Makers, any
guarantor hereof and any other funds, property or security held by Lender for
payment hereof or otherwise at the sole, absolute and uncontrolled discretion of
Lender. No single or partial exercise of any power hereunder or under any of the
Loan Documents shall preclude other or further exercise of such power or the
exercise of any other right, remedy or power.
Lender shall not be obligated to accept any delinquent payment, nor shall
acceptance of any delinquent payment or any late charges prejudice Lender's
right to collect any other amounts under this Agreement or the Secured
Promissory Note, to declare a default under or to accelerate this Agreement or
the Secured Promissory Note in the event of any subsequent Event of Default or
to exercise any other rights or remedies provided herein or by law.
SECTION SEVEN
AMENDMENT AND MODIFICATION
This Agreement and the Secured Promissory Note may not be amended, modified
or changed, nor shall any waiver of any provision hereof be effective, except
only by an instrument in writing and signed by the party against whom
enforcement of any waiver, amendment, change, modification or discharge is
sought; provided, however, that this paragraph shall in no way be a limitation
on the provisions of the consents and waivers set forth above.
SECTION EIGHT
SEVERABILITY, ENFORCEABILITY AND CONSTRUCTION
Each provision of this Agreement is intended to be severable. Makers and
Lender further intend and believe that each provision in this Agreement and the
Secured Promissory Note complies with all applicable local, state and federal
laws and court decisions. However, if any provision or provisions in this
Agreement or the Secured Promissory Note is or are found by a court of law to be
in violation of an applicable local, state or federal ordinance, statute, law,
administrative or judicial decision, or public policy, and if such court should
declare such portion or provision(s) of this Agreement or the Secured Promissory
Note to be illegal, invalid, unlawful, void or unenforceable as written, then it
is the intent of Makers that such portion, provision(s) shall be given full
force and effect to the fullest possible extent that they are legal, valid and
enforceable, that the remainder of this Agreement and such Note shall be
construed as if such illegal, invalid, unlawful, void or unenforceable portion,
provision(s) are not contained herein, and that the rights, obligations and
interests of the Makers under the remainder of this Agreement and the Secured
Promissory Note shall continue in full force and effect.
SECTION NINE
TIME OF THE ESSENCE
Time is of the essence of this Agreement.
SECTION TEN
GOVERNING LAW, JURISDICTION AND VENUE
The enforcement, performance, discharge, lack of performance and formation
of this Agreement shall be governed by, and construed and enforced in accordance
with, the law of the State of Arizona, regardless of any applicable
conflict-of-law rules to the contrary.
The Makers and Lender also hereby:
(A) irrevocably submit to the jurisdiction of the Superior Court of
Maricopa County, State of Arizona, or any successor to said court, and to the
jurisdiction of the United States District Court for the District of Arizona, or
any successor to said court (hereinafter referred to as the "ARIZONA COURTS")
for purposes of any suit, action or other proceeding which relates to the
transactions contemplated in this Agreement;
(B) to the extent permitted by applicable law, waive and agree not to
assert by way of motion, as a defense or otherwise in any such suit, action or
proceeding, any claim that they are not personally subject to the jurisdiction
of the Arizona Courts; that the suit, action or proceeding is brought in an
inconvenient forum; that the venue of the suit, action or proceeding is
improper; or that this Agreement or any transaction provided for herein may not
be enforced in or by the Arizona Courts; and
(C) agree not to seek, and hereby waive, any collateral review by any
other court with the exception of any timely filed appeal, which may be called
upon to enforce the judgment or any of the Arizona Courts, of the merits of any
such suit, action or proceeding or the jurisdiction of said Arizona Court.
SECTION ELEVEN
ADDITIONAL ACTIONS
Each party hereto agrees to do all acts and things and to make, execute,
and deliver such written instruments and documents as shall from time to time be
reasonably required to carry out the terms and provisions of this Agreement.
SECTION TWELVE
ATTORNEYS' FEES
In the event of any claim, controversy or dispute arising out of or
relating to this Agreement, or the breach thereof, the prevailing party shall be
entitled to recover reasonable attorneys' fees incurred in connection with any
arbitration or court proceeding set by the court sitting without a jury.
SECTION THIRTEEN
REMEDIES CUMULATIVE
The remedies of the parties hereto under this Agreement are cumulative and
shall not exclude any other remedies to which any party may be lawfully
entitled.
SECTION FOURTEEN
COMPUTATION OF TIME
Whenever the last day for the exercise of any privilege or discharge of any
duty hereunder shall fall upon Saturday, Sunday or any public or legal holiday,
whether under federal or state law, the party having such privilege or duty
shall have until 5:00 p.m. (Mountain time) on the next succeeding regular
business day to exercise such right or to discharge such duty.
SECTION FIFTEEN
AUTHORITY
Any individual signing below on behalf of a corporation, partnership or
other entity hereby personally represents that he or she has full authority to
bind the party or parties on whose behalf he or she is signing subject only to
Bankruptcy Court approval.
SECTION SIXTEEN
ENTIRE AGREEMENT
This Agreement, including the exhibits and schedules hereto, and the Loan
Documents contain the entire understanding and agreement among the parties
hereto with respect to the subject matter hereof, and supersedes all prior
agreements and understandings, express or implied, oral or written, among the
parties with respect to such subject matter. The express terms of this Agreement
shall control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof. Each of the exhibits and schedules
hereto is incorporated herein by this reference and constitutes a part of this
Agreement.
SECTION SEVENTEEN
TERMINOLOGY
All captions, headings or titles in the paragraphs or sections of this
Agreement are inserted for convenience of reference only and shall not
constitute a part of this Agreement or a limitation of the scope of the
particular paragraph or section to which they apply. All personal pronouns used
in this Agreement, whether used in the masculine, feminine, or neuter gender,
shall, where appropriate, include all other genders and the singular shall
include the plural and vice versa.
SECTION EIGHTEEN
NOTICES
All communications or notices required or permitted to be given or served
under this Agreement shall be in writing and shall be deemed to have been duly
given or made if: (a) delivered in person or by courier (e.g., Federal Express),
(b) deposited in the United States mail, postage prepaid, for mailing by
certified or registered mail, return receipt requested, or (c) sent by facsimile
and addressed to the intended recipient at the address and/or the facsimile
number set forth below such party's signature at the end of this Agreement. All
communications and notices shall be effective upon delivery in person or by
courier, three (3) days after being deposited in the United States mail or two
(2) business hours after being sent by facsimile. Any party may change his or
her address and/or facsimile number by giving notice in writing, stating his or
her new address and/or facsimile number, to all of the other parties in the
foregoing manner. Copies of all notices to Makers shall also be sent to
Xxxxxxxxxxx X. Xxxx, Esq., Xxxxxxx & Bosco, P.A., 0000 Xxxxx Xxxxxxx, Xxxxx
Xxxxx, Xxxxxxx, Xxxxxxx 00000, facsimile: 602-255-0103.
SECTION NINETEEN
SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective assigns, legal representatives, executors,
heirs and successors, provided, however, that no party hereto shall have the
right to assign any right hereunder or delegate any obligation hereunder, in
whole or in part, without the prior written consent of the other parties hereto,
and any attempt to do so shall be void.
SECTION TWENTY
COUNTERPARTS
This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which together shall constitute one and the same
agreement. This Agreement shall become binding when one or more counterparts
have been signed by each of the parties hereto and delivered to the other
parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
written above,
LENDER:
CALDERA SYSTEMS, INC.
By: /s/ Ransom H. Love
--------------------------------------
Its President
Address: 000 Xxxx Xxxxxx Xxxxxx
Xxxx XX 00000
STATE OF UTAH )
) ss.
County of Utah )
The foregoing instrument was acknowledged before me this ____ day of
September, 2001, by __________________________ the President of Caldera Systems,
Inc.
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Notary Public
My Commission Expires:
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MAKERS:
EBIZ ENTERPRISES, INC.
XXXXX BUSINESS SYSTEMS, INC.
By: /s/ Xxxx Xxxx
--------------------------------------
Xxxx Xxxx
President of JBSI
CEO of EBIZ
Address: 10225 East Via Xxxxx
Suite 300
Scottsdale, Arizona 85258-5314
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this ____ day of
September, 2001 by Xxxx Xxxx, the CEO of EBIZ Enterprises, Inc., and President
of Xxxxx Business Systems, Inc.
-------------------------------------
Notary Public
My Commission Expires:
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