BRIDGE LOAN AGREEMENT
This Bridge Loan Agreement ("Agreement") is entered into as of this 30th
day of April, 1997 by and among Surplus Software, Inc. an Oregon corporation
(the "Borrower"), and Egghead, Inc., a Washington corporation (the "Lender").
RECITALS
A. The Lender and the Borrower are entering into an Agreement and Plan of
Merger (the "Merger Agreement"), contemporaneously with entering into this
Agreement, providing for the acquisition of Borrower by Lender.
B. The Lender and the Borrower wish to enter into this Agreement to
establish the terms and conditions upon which the Lender will make a term loan
to the Borrower for the purpose of funding Borrower's working capital
requirements.
AGREEMENT
In consideration of the mutual covenants herein contained, the parties
hereto agree as follows:
1. DEFINITIONS
The following terms shall have the meanings assigned to them below in this
Section 1:
"BUSINESS DAY" - any day on which commercial banks in Seattle, Washington
are open for the conduct of normal banking business.
"CHANGE OF CONTROL" - any transaction or series of related transactions
(including, without limitation, any reorganization, merger, consolidation, sale
of assets or sale of stock), other than the acquisition of Borrower by Lender
contemplated by the Merger Agreement, that will result in (x) the shareholders
of Borrower immediately prior to such transaction or series of related
transactions not holding (by virtue of their shares of capital stock of Borrower
or securities issued solely with respect thereto) at least a majority of the
voting power of the surviving or continuing entity or the ultimate parent entity
thereof; or (y) a sale of all or substantially all of the assets of the
Borrower, unless the Borrower's shareholders immediately prior to such sale
will, as a result of such sale, hold (by virtue of securities issued as
consideration) at least a majority of the voting power of the purchasing entity.
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"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" - generally accepted
accounting principles which are (i) consistent with the principles promulgated
or adopted by the Financial Accounting Standards Board and its predecessors, in
effect for the fiscal year of the Borrower ending May 31, 1996, and (ii) such
that certified public accountants would, insofar as the use of accounting
principles is pertinent, be in a position to deliver an unqualified opinion as
to financial statements in which such principles have been properly applied.
Unless otherwise provided, all accounting terms used herein shall be construed
in accordance with Generally Accepted Accounting Principles.
"INDEBTEDNESS" - all debt and other similar monetary obligations for
borrowed money, and all capital leases, whether direct or indirect (collectively
herein defined as "Debt"). Indebtedness also includes all guaranties,
endorsements (other than endorsements of notes, bills and checks presented to
banks for collection or deposit in the ordinary course of business) and other
contingent obligations in respect of Debt of others, including any obligations
to supply funds to or in any other manner to invest, directly or indirectly, in
the debtor, to purchase indebtedness, goods, supplies or services from the
debtor, in any such case for the purpose of enabling the debtor to make payment
of any Debt or to assure the owner of the Debt against loss, or otherwise.
"LENDING" - the disbursement by the Lender to the Borrower of the Loan to
be made hereunder.
"LOAN DOCUMENTS" - collectively, this Agreement, the Promissory Note
referred to in Section 2.3 hereof, the Security Agreement referred to in Section
2.10 hereof and any other instruments or agreements executed and delivered by
the Borrower to the Lender in connection with the transactions contemplated by
this Agreement.
"OBLIGATIONS" - all indebtedness, obligations and liabilities of the
Borrower to the Lender arising on or after the date of this Agreement, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract, operation
of law or otherwise, whether arising or incurred under this Agreement or in
respect of the Loan and the Promissory Note or any other agreements or
instruments at any time evidencing or securing any obligations of the Borrower
to the Lender.
"PERSON" - any individual, corporation, partnership, trust, unincorporated
association, joint stock company or other legal entity or organization and any
government or agency or political subdivision thereof.
"PRIME RATE" - the rate of interest designated by Seafirst Bank (or any
successor thereto) ("Seafirst Bank") as its "Prime" rate from time to time;
provided,
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however, that if Seafirst Bank shall discontinue such designation, the Prime
Rate shall thereafter refer to the rate of interest charged to Lender for
commercial loans obtained by Lender in the ordinary course of its business.
2. THE LOAN
2.1 Commitment to Lend
Subject to all of the terms and conditions set forth herein, including,
without limitation, full compliance with all of the conditions precedent set
forth in Section 4 below, the Lender agrees to loan to the Borrower an aggregate
principal amount of $2,000,000 (the "Loan").
2.2 USE OF PROCEEDS
The proceeds of the Loan shall be used by Borrower solely in the ordinary
course of the Borrower's business, including refinancing existing short term
indebtedness.
2.3 PROMISSORY NOTE
The Loan shall be evidenced by the Borrower's promissory note substantially
in the form of Exhibit A hereto (the "Promissory Note") payable in the manner
provided therein to the order of the Lender in the original principal amount of
$2,000,000. The Promissory Note shall be dated the date of the disbursement of
the Loan evidenced thereby and shall be stated to mature on December 31, 1997
(the "Maturity Date"), unless accelerated as provided herein or therein. The
outstanding principal balance of the Loan shall bear interest from the date of
disbursement of the Loan through repayment in full of all principal and accrued
interest at a rate per annum equal to the Prime Rate from time to time in effect
plus five percent (5.00%), provided that any amounts overdue shall bear interest
as provided in Section 2.8.
2.4 OPTIONAL PREPAYMENT
The Borrower shall have the right at any time to prepay the outstanding
principal amount of the Loan plus accrued interest, in whole or in part, without
premium or penalty, upon not less than five Business Days' written or telephonic
notice to the Lender, provided that (a) each partial prepayment shall be in the
principal amount of $25,000 or an integral multiple thereof, and (b) on the date
of each prepayment, the Borrower shall pay accrued interest on the principal so
prepaid to the date of such prepayment. Any amounts so prepaid shall not be
available for reborrowing by the Borrower.
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2.5 OFFSET BY LENDER
In the event that the Merger Agreement is terminated under circumstances
where a termination fee is due from Lender to Borrower pursuant to Section
11.1(c) or 11.1(d) of the Merger Agreement, Lender may offset the amount of such
fee and any expenses due from Lender to Borrower against the outstanding
principal balance of the Loan and accrued interest thereon under the Promissory
Note. Any principal amount and accrued interest so offset shall be deemed to
have been prepaid by Borrower. Any remaining principal balance and accrued
interest shall be paid in accordance with the Promissory Note and this
Agreement.
2.6 COMPUTATIONS
All computations of interest on the Loan shall be computed on the basis of
a 360-day year, and interest shall accrue for the actual number of days elapsed.
The outstanding amount of the Obligations as reflected on the Lender's records
from time to time shall, absent demonstrable error, be conclusive and binding on
the Borrower. Each change in the rate of interest applicable to the Loan
resulting from a change in the Prime Rate shall be effective on the 30th day of
the month in which such change in the Prime Rate occurs. Whenever a payment
under the Promissory Note becomes due on a day which is not a Business Day, the
due date for such payment shall be extended to the next succeeding Business Day
and interest and any applicable fees shall accrue during each such extension.
2.7 FUNDS FOR PAYMENTS
The Loan shall be made in immediately available funds by check or wire
transfer to a bank account designated in writing by Borrower. Borrower's
payments and prepayments under the Loan (whether of principal, interest or other
amount) shall be made in immediately available funds at the Lender's principal
office in Liberty Lake, Washington or to an account specified by written notice
from Lender to Borrower.
2.8 INTEREST ON OVERDUE AMOUNTS
Each overdue amount payable to the Lender under the Promissory Note
(whether principal, interest or other amount) shall bear interest from the due
date thereof to the date such amount is paid in full (whether before or after
judgment) at a rate per annum equal to ten percentage points (10.00%) above the
Prime Rate from time to time in effect, compounded daily and payable on demand.
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2.9 SUBORDINATION
The Obligations shall be subordinate to the Borrower's existing and future
Indebtedness to U.S. Bank of Oregon up to a maximum of $4,500,000 (the "Senior
Debt"). Lender agrees to execute and deliver a subordination agreement with
such lender in substantially the form of Exhibit B. Except for the Senior Debt,
and except for the $2,000,000 principal amount of subordinated Indebtedness of
Borrower, plus accrued interest, currently owing to SV Capital Partners, L.P., a
Texas limited partnership ("SV Capital") (the "SV Subordinated Debt"), the
Obligations shall have priority over any and all other existing and future
Indebtedness of the Borrower. The obligees under any existing Indebtedness,
other than the Senior Debt and the SV Subordinated Debt, of Borrower shall
execute and deliver to Lender a subordination agreement in substantially the
form of Exhibit C hereto. Prior to incurring any other Indebtedness after the
date hereof, the Borrower shall obtain executed subordination agreements in
substantially the form of Exhibit C hereto from each prospective obligee of any
such Indebtedness.
2.10 SECURITY AGREEMENT
The Obligations shall be secured by all assets of the Borrower pursuant to
the terms and conditions of a Security Agreement in substantially the form of
Exhibit D hereto to be entered into by the Borrower, the Lender and SV Capital
as a condition precedent to the Lending.
3. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender as of the date of this
Agreement that:
3.1 CORPORATE EXISTENCE AND POWER
The Borrower is a corporation duly organized and validly existing under the
laws of the state of Oregon and has all requisite corporate power and authority
to own and operate its properties, to carry on its business as now conducted and
proposed by the Borrower to be conducted, to enter into this Agreement and the
other Loan Documents and to consummate the transactions contemplated hereby and
thereby. The Borrower is duly qualified and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary and where the
failure to be so qualified would have a material adverse effect on the business,
properties, operations, condition (financial or other) or prospects of the
Borrower (a "Borrower Adverse Effect"). The Borrower has obtained from the
appropriate governmental authorities all approvals and licenses necessary for
the conduct of its business and operations as currently
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conducted, which approvals and licenses are valid and remain in full force and
effect, except where the failure to have obtained such approvals or licenses or
the failure of such licenses and approvals to be valid and in full force and
effect would not have a Borrower Adverse Effect.
3.2 AUTHORIZATION AND ENFORCEABILITY
The execution, delivery and performance of this Agreement and the other
Loan Documents by the Borrower and the borrowings and transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of the Borrower, and this Agreement and the other Loan Documents
have been duly and validly executed and delivered by the Borrower and constitute
legal, valid and binding obligations of the Borrower, enforceable against the
Borrower in accordance with their respective terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
3.3 NO CONFLICT
The execution, delivery and performance of this Agreement and the other
Loan Documents by the Borrower and the borrowings and transactions contemplated
hereby and thereby do not and will not (with or without due notice, lapse of
time, or both) (a) violate or contravene (i) any law, statute, rule, regulation,
instrument, order, judgment or decree to which the Borrower or any of its
properties are subject, (ii) the Restated Articles of Incorporation or Bylaws of
the Borrower, or (iii) any material agreement or instrument to which the
Borrower is a party or to which any of its properties are subject; or (b) result
in the creation of any lien, security interest, charge or encumbrance upon the
Borrower's capital stock or assets. Without limiting the generality of the
foregoing, the Borrower represents that it is in full compliance with all notes,
loan agreements, note purchase agreements, credit agreements, security
agreements and other documents or instruments evidencing, securing or otherwise
pertaining to any Indebtedness of the Borrower.
3.4 NO EVENT OF DEFAULT
No Event of Default under this Agreement, and no condition which with the
giving of notice or the passage of time or both would constitute an Event of
Default, exists at the delivery of this Agreement.
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3.5 FINANCIAL STATEMENTS
There has been furnished to the Lender the (a) audited consolidated
financial statements of the Borrower as of and for the fiscal years ended
May 31, 1994, 1995 and 1996, including the reports and opinions of the
Borrower's independent auditors relating thereto, (b) unaudited consolidated
financial statements of the Borrower as of and for the fiscal quarters ended
February 28, 1997, each consisting of a balance sheet and statements of income
and changes in financial position (collectively, the "Financials"). The
Financials have been, and all financial statements to be furnished in accordance
with Section 5.1 hereof will be, prepared in accordance with the books and
records of the Borrower and fairly present or will fairly present, as the case
may be, the financial condition of the Borrower at the dates thereof and the
results of operations for the periods indicated (subject, in the case of
unaudited financial statements, to normal year-end adjustments, none of which
are or will be material). The Financials have been, and all financial
statements to be furnished in accordance with Section 5.1 hereof will be,
prepared in accordance with GAAP. Since the date of the most recent Financials,
there has been no Borrower Adverse Effect.
3.6 LEGAL PROCEEDINGS
There is no action, suit, or proceeding pending or, to Borrower's
knowledge, threatened, at law or in equity, before or by any governmental
authority, domestic or foreign, which would be reasonably expected to result in
a Borrower Adverse Effect.
4. CONDITIONS OF LENDING
The obligation of the Lender to make the Loan hereunder shall be subject to
the following conditions precedent:
4.1 EXECUTION AND DELIVERY OF LOAN DOCUMENTS AND SUBORDINATION AGREEMENTS
All of the Loan Documents shall have been duly executed and delivered by
the Borrower (and any other party thereto) to the Lender, and any subordination
agreements in substantially the form of Exhibit C hereto required to be executed
and delivered under Section 2.9 hereof in respect of Indebtedness of Borrower
that is to be subordinated to the Obligations shall have been executed and
delivered to Lender and shall be in full force and effect and binding on the
parties thereto.
4.2 REPRESENTATIONS AND WARRANTIES
The representations and warranties contained in Section 3 hereof and in
each of the other Loan Documents shall have been true and correct as of the date
on which
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made and shall also be true and correct at and as of the date of the Lending
with the same effect as if made at and as of such date.
4.3 PERFORMANCE; NO EVENT OF DEFAULT
The Borrower shall have performed and complied with all terms and
conditions of the Loan Documents, and each of them, required to be performed or
complied with by it prior to or at the time of the Lending, and at the time of
the Lending there shall exist no Event of Default or condition which, with
either the giving of notice or the lapse of time or both, would result in an
Event of Default under this Agreement, or under any of the Loan Documents upon
consummation of the Lending.
4.4 CORPORATE ACTION
All corporate action on the part of the Borrower necessary for the valid
execution, delivery and performance by the Borrower of the Loan Documents shall
have been duly and effectively taken.
4.5 PROCEEDINGS AND DOCUMENTS
All proceedings in connection with the transactions contemplated by this
Agreement, the Loan Documents and all documents incident hereto and thereto,
shall be reasonably satisfactory in substance and in form to the Lender and its
counsel, and the Lender and its counsel shall have received all information and
such counterpart originals or certified or other copies of such documents as the
Lender or its counsel may reasonably request.
4.6 FORBEARANCE AGREEMENTS
Waiver and Forbearance Agreements between the Borrower, the Lender and each
of U.S. Bank of Oregon and SV Capital, in substantially the forms of Exhibits
E-1 and E-2, shall have been executed and delivered by all parties thereto other
than the Lender and shall be in full force and effect and binding on such
parties as of the date of the Lending.
5. COVENANTS
The Borrower covenants and agrees that, so long as the Promissory Note is
outstanding:
5.1 FINANCIAL AND OTHER INFORMATION
In the event the Merger Agreement is terminated, from and after the time of
such termination, the Borrower shall furnish to Lender:
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(a) As soon as available and in any event within 20 days after the end of
each month, a balance sheet of the Borrower as of the end of such month, and a
statement of income and of changes in cash of the Borrower for such month and
for the portion of the calendar year ending with such month, setting forth, in
comparative form, figures for the corresponding periods in the previous calendar
year, all in reasonable detail, and certified by the controller and chief
financial officer of the Borrower as prepared in accordance with generally
accepted accounting principles GAAP, and fairly presenting the financial
condition and results of operations of the Borrower.
(b) As soon as available and in any event within 90 days after the end of
each fiscal year of the Borrower, a balance sheet of the Borrower as at the end
of such fiscal year, and statements of income and changes in cash of the
Borrower for such fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and certified by independent auditors selected by the Borrower of
nationally recognized standing;
(c) Promptly upon receipt thereof, but in any event prior to the end of
each fiscal year, a budget approved by the Board of Directors of the Borrower
for the next fiscal year;
(d) Promptly upon receipt thereof, copies of all material reports or
letters submitted to the Borrower by the Borrower's independent auditors or any
other independent certified public accountants in connection with any annual,
interim or special audit of the Borrower, including without limitation the
comment letter submitted to management in connection with any such audit; and
(e) Promptly upon request, such other information concerning the condition
or operations of the Borrower, financial or otherwise, as Purchaser may from
time to time reasonably request.
5.2 FURTHER ASSURANCES
The Borrower shall cooperate with the Lender and execute such further
instruments and documents as the Lender shall reasonably request to carry out to
its satisfaction the transactions contemplated by this Agreement and the other
Loan Documents.
5.3 NOTICES
Borrower shall promptly give written notice to Lender of (a) all litigation
affecting Borrower where the uninsured amount is at least $50,000; (b) any
substantial dispute which may exist between Borrower and any governmental
regulatory body or law enforcement authority (c) any Event of Default or any
default under any other
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agreement between Borrower and Lender or any other creditor, or any event which,
upon notice or lapse of time, or both, would become an Event of Default (d) any
other matter which has resulted or is expected by the Borrower to result in a
Borrower Adverse Effect. Lender shall maintain the confidentiality of any
nonpublic information received pursuant to this Section 5.3 which Borrower
designates as confidential information.
5.4 INSURANCE
From and after any termination of the Merger Agreement, Borrower shall
maintain in effect insurance with responsible insurance companies in such
amounts and against such risks as is customarily maintained by persons engaged
in businesses similar to that of Borrower, including, without limitation, a
policy covering products liability with policy limits of not less than
$2,000,000. Borrower agrees to deliver to Lender such evidence of such
insurance as Lender may reasonably request.
5.5 COMPLIANCE WITH LAWS
Borrower shall comply with all applicable federal, state and municipal
laws, ordinances, rules and regulations relating to its properties, charters,
businesses and operations.
5.6 Dividends; Insider Loans
Borrower shall not without the written consent of Lender (a) pay any
dividends or otherwise distribute earnings or (b) make any loans or advances to
any of its officers, directors or shareholders or assume, guarantee, endorse or
otherwise become directly or contingently liable in connection with any
obligation of any of its officers, directors or shareholders or any third party.
5.7 NO ADDITIONAL INDEBTEDNESS
Prior to any termination of the Merger Agreement, without the prior written
consent of Lender, Borrower shall not incur any Indebtedness after the date
hereof, except that Borrower's total Indebtedness to U.S. Bank may be increased
from time to time after the date hereof in the ordinary course of business, but
in no event shall the amount of such Indebtedness at any time outstanding exceed
$4,500,000 without Lender's prior written consent. After any termination of the
Merger Agreement, additional Indebtedness may be incurred by Borrower without
such prior written consent, subject to the last sentence of Section 2.9 hereof.
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5.8 COMPLIANCE WITH AGREEMENTS
The Borrower shall at all times comply with and perform its obligations
under its agreements with U.S. Bank of Oregon and SV Capital, including without
limitation the subordination and forbearance agreements referred to above.
6. EVENTS OF DEFAULT; ACCELERATION
If any of the following events ("Events of Default") shall occur and be
continuing:
(a) if the Borrower shall default in the payment of any principal or
interest or other amounts under the Promissory Note, whether at maturity or at
any date fixed for payment or prepayment or by declaration or otherwise and such
default shall not have been remedied within ten days after occurrence thereof;
or
(b) if the Borrower shall default in the performance of or compliance
with any other term contained herein or in any of the other Loan Documents and
such default shall not have been remedied within ten days after occurrence
thereof; or
(c) if any representation, warranty or certification made in writing
by or on behalf of the Borrower herein, in any of the Loan Documents or in
connection with any of the transactions contemplated hereby shall prove to have
been false or incorrect in any material respect on the date as of which made; or
(d) if the Borrower shall default (as principal or guarantor or other
surety) in the payment of any principal of, premium, if any, or interest on any
Indebtedness to any party (other than the Obligations to the Lender hereunder),
or shall default in the performance of or compliance with any other obligation
contained in any agreement or instrument evidencing or securing such
Indebtedness, and such default (i) in the case of the Senior Debt results in
such Indebtedness being accelerated or otherwise becoming immediately due and
payable or (ii) in the case of any other Indebtedness gives to the holder of
such Indebtedness the right to accelerate such Indebtedness (whether or not the
holder has, in fact, accelerated such Indebtedness), or the right to take action
with respect to any collateral securing such Indebtedness, and such default
shall continue for longer than the period of grace, if any, specified therein;
or
(e) if either the Borrower makes an assignment for the benefit of
creditors, or petitions or applies for the appointment of a liquidator or
receiver or custodian (or similar official) of the Borrower or of any
substantial part of its assets, or commences any proceeding or case relating to
the Borrower under any bankruptcy,
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reorganization, arrangements, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any jurisdiction, now or hereafter in effect; or
(f) if any such petition or application is filed or any such
proceeding or case is commenced against the Borrower and the Borrower indicates
its approval thereof, consent thereto or acquiescence therein, or an order is
entered appointing any such liquidator or receiver or custodian (or similar
official), or adjudicating the Borrower bankrupt or insolvent, or approving a
petition in any such proceeding or a decree or order for relief is entered in
respect of the Borrower in an involuntary case under any bankruptcy,
reorganization, arrangements, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any jurisdiction, now or hereafter in effect, and
such order remains in effect for more than 30 days, whether or not consecutive;
or
(g) if any order is entered in any proceeding by or against the
Borrower decreeing or permitting its dissolution or split-up or the winding up
of its affairs; or
(h) if the Borrower shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debt generally;
or
(i) if there shall occur or be continuing, after any termination of
the Merger Agreement, any event, circumstance or condition that has a Borrower
Adverse Effect and such Borrower Adverse Effect is not cured within ten days
after the occurrence thereof; or
(j) if there shall occur, or if Borrower shall enter into any
agreement providing for, a Change of Control of Borrower, other than the Merger
Agreement and any amendments thereto and the acquisition of Borrower by Lender
contemplated thereby; or
(k) if the Merger Agreement shall be terminated under circumstances
where the Borrower is obligated to pay a termination fee to Lender pursuant to
Section 11.1 of the Merger Agreement.
then and in each and every such event the Lender may, by written notice to the
Borrower, declare all amounts owing with respect to the Promissory Note to be
due and payable (unless there shall occur any event specified in any of
paragraphs (e), (f), (g), (h), (j) or (k) of this Section 6, in which case all
amounts owing with respect to this Agreement and the Promissory Note shall
automatically become due and payable), and thereupon in either instance the same
shall forthwith mature (the definition of "Maturity Date" hereunder being deemed
to be automatically amended to mean the date of such Event of Default) and
become immediately due and payable together with interest thereon and all other
amounts then owing under this Agreement
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and the Promissory Note, without presentment, demand, protest or notice, all of
which are hereby waived.
7. REMEDIES ON EVENT OF DEFAULT
7.1 RIGHTS OF LENDER
In case any one or more of the Events of Default specified in Section 6
shall have occurred and be continuing, and whether or not all amounts owing with
respect to this Agreement and the Promissory Note have been declared due and
payable, as provided in Section 6, the Lender may proceed to protect and enforce
its rights (whether such rights arise under this Agreement or otherwise) by suit
in equity, action at law and/or other appropriate proceeding, and shall have
and may exercise all available rights and remedies, including, without
limitation, the obtaining of an ex parte appointment of a receiver and the
obtaining of specific performance of any covenant or agreement contained in this
Agreement, the Promissory Note or any other Loan Document .
7.2 SET-OFF
During the continuance of any Event of Default, any deposits or other sums
credited by or due from the Lender to the Borrower under any agreement now or
hereafter in effect, including without limitation the Merger Agreement, may be
set off against any and all liabilities, direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, of the
Borrower to the Lender.
8. EXPENSES
The fees and expenses of both Lender and Borrower incurred in connection
with the negotiation, execution and delivery of this Agreement and the other
Loan Documents shall be paid by the party incurring such fees and expenses.
Borrower agrees to reimburse Lender and any other holder of the Promissory Note
on demand for all legal fees and other costs and expenses incurred in collecting
and enforcing the Promissory Note.
9. SURVIVAL OF COVENANTS
All covenants, agreements, representations and warranties made herein and
in any certificates or other papers delivered by or on behalf of the Borrower
pursuant hereto are material and shall be deemed to have been relied upon by the
Lender, any investigation heretofore or hereafter made by it notwithstanding,
and shall survive the making of the Loan, as herein contemplated, and shall
continue in full force and effect so long as the Loan or other amounts due under
this Agreement or the Promissory
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Note remain outstanding and unpaid. All statements contained in any certificate
or other paper delivered to the Lender at any time by or on behalf of the
Borrower pursuant hereto or in connection with the transactions contemplated
hereby shall constitute representations and warranties by the Borrower
hereunder.
10. PARTIES IN INTEREST
All of the terms of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns, provided that the Borrower shall not assign or transfer
its rights or obligations hereunder without the prior written consent of the
Lender.
11. NOTICES
Except as otherwise provided herein, any notice to the Borrower or to the
Lender shall be in writing, and such notice shall be given by delivery in hand;
by telecopy with original posted first class mail, postage prepaid, within three
days thereafter; by certified mail, postage prepaid, return receipt requested;
or by private overnight courier requesting evidence of receipt as a part of its
service, addressed as follows:
(a) if to the Borrower, as follows:
Surplus Software, Inc.
000 Xxxxx 0xx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxx 00000
Attn: President
with a copy to:
Tonkon, Xxxx, Xxxxx, Marmaduke and Booth
1600 Pioneer Tower
000 X.X. Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
(b) if to the Lender, as follows:
Egghead, Inc.
00000 X. Xxxxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
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with a copy to:
Xxxxxxx Coie
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx, Esq.
or to such other address as may be designated in writing by either party from
time to time in accordance herewith. Notices shall be deemed delivered upon the
earliest to occur of delivery by hand, when so telecopied, when so placed in the
mails or when delivered to such delivery service as aforesaid.
12. GOVERNING LAW
This Agreement shall be construed, enforced and otherwise governed by the
laws of the state of Oregon.
13. ENTIRE AGREEMENT
This Agreement and any other documents executed in connection herewith
express the entire understanding of the parties with respect to the transactions
contemplated hereby. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally or in writing, except as provided in
Section 14.
14. CONSENTS, AMENDMENTS AND WAIVERS
Except as otherwise expressly set forth in any particular provision of this
Agreement, any consent or approval required or permitted by this Agreement to be
given by the Lender may be given, and any term of this Agreement or of any other
instrument related hereto or mentioned herein may be amended, and the
performance or observance by the Borrower of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Lender. No
waiver shall extend to or affect any obligation not expressly waived or impair
any right consequent thereon. No course of dealing or delay or omission on the
part of the Lender in exercising any right shall operate as a waiver thereof or
otherwise be prejudicial thereto. No notice to or demand upon the Borrower
shall entitle the Borrower to other or further notice or demand in similar or
other circumstances.
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15. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION
The Borrower hereby waives any right it may have to trial by jury in any
action or proceeding of any kind or nature, in any court in which an action may
be commenced, arising out of or in connection with this Agreement, any other
Loan Document or any other matters related thereto. The Borrower hereby
consents to the jurisdiction of the federal and state courts located in the
state of Washington; and to the extent permitted by law, the Borrower hereby
waives personal service of the summons and complaint or other process of the
papers issued therein and agrees that service may be made by registered or
certified mail addressed to the Borrower at its address set forth herein.
16. MISCELLANEOUS
The rights and remedies herein expressed are cumulative and not exclusive
of any other rights which the Lender would otherwise have. Any instruments
required by any of the provisions hereof to be in the form annexed hereto as an
exhibit shall be substantially in such form with such changes therefrom, if any,
as may be approved by the Lender. The captions in this Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof. This Agreement or any amendment may be executed in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which together shall constitute one instrument. In making proof of
this Agreement, it shall not be necessary to produce or account for more than
one counterpart executed by the party against which enforcement thereof is
sought.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized undersigned officers as of the date first written
above.
SURPLUS SOFTWARE, INC.
By: XXXXXXXX X. XXXXXXX
-------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: President
EGGHEAD, INC.
By: XXXXX X. XXXXXX
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Financial Officer
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